The spirit of travel and adventure certainly wasn’t born in America, but there’s no denying it as part of the fabric of our nation. As such, an appreciable percentage of the population chooses to travel, and often relocate permanently, to countries far away from the United States and the lifestyle and social benefits that come with life stateside.
One of those social benefits is Medicare. The questions arise almost instantly for those who dream about travel after retirement – what do people who leave the United States do about Medicare coverage?
Medicare, as a rule, does not provide health coverage outside of the United States. For practical purposes, this includes American Samoa, the U.S. Virgin Islands, Guam, Puerto Rico, the Northern Mariana Islands and the District of Columbia.
If you’re not moving to one of those places, then you have some decisions to make about whether to keep paying into the Medicare program – or drop it altogether.
If you have not yet enrolled in Medicare
If you are not yet enrolled in Medicare and you are planning to relocate a destination outside of the 50 states, (and the territories listed above) it may be to your advantage to avoid enrolling. If, for example, you chose to enroll and subsequently retire in Panama, you would have to make your way to the nearest territory, or back to the contiguous U.S. in order to receive medical care. For many retirees (or most people, in general) this is far too expensive to be practical.
Usually, there are comparable options for health insurance in most countries – making Medicare irrelevant or unnecessary. The Medicare premiums would be deducted from your Social Security checks – leaving you with less income.
If you have already enrolled in Medicare
If you’re already enrolled in Medicare and are considering leaving the United States to live out your retirement/golden years, you have the option to cancel your enrollment penalty-free. It makes no sense to pay premiums on insurance that is impractical (or near impossible) to use. Let’s face it, if you’re retired, you probably want every penny you can get into your pocket from Social Security. We’re talking about money that could pay for more trips to see the grandkids, or money to visits parts of the world you’ve always wanted to see.
Be forewarned though, if you cancel out of Medicare and then decide to re-join the federally-funded insurance program, you will pay a 10 percent premium on top of your monthly premiums for each year you were eligible for Medicare, but not enrolled.
There is no “right” answer that applies to everybody, so you should look at the details specific to your situation and consult an expert if you need help. We’ve constructed an example to give you an idea of the savings an ‘average’ couple could save.
A married expat couple pays $109.70 each per month ($219.40 total) for Medicare, deducted from their Social Security checks. They also pay $342 per year for supplemental coverage and $227 for drug coverage.
The total expense for the year for our example couple is $3770.80 – which, in some countries, can buy comparable (and in some cases, better) insurance without the added cost of travel every time you use it. That kind of money also pays for a lot of trips to see family/grandkids.
For some people, this may be an expense they’re willing to carry for the sake of having access to the U.S. healthcare system which is arguably one of the best in the world.
A word of caution regarding expats and Medicare
As with most things that involve government, insurance and your health, you should make your decision only after gathering all the relevant information. It may also be wise to consult and attorney, or other expert, who is trained in the legal and practical implications of Medicare and U.S. expats. There are people out there who get paid to know everything there is to know about the subject.
Medicare is not the only subject that expats need to address, overseas property and taxes are another. You can find out more in our post about FACTA.