Medicare Outside US?
Sometimes my client is doing extensive traveling. Other times, someone is physically moving to another country. And…sometimes I get asked this question from a person who is already living in another country.
Do you need Medicare if you don’t live in the US?
The long answer is that you need to consider the potential costs. You typically cannot use Medicare outside of the USA. So if you don’t have a USA address, it makes it a little more difficult to decide, but not impossible.
I recommend that my own clients who travel should maintain a local state/US address. There are many services out there that will accept mail then scan it and email it to you. By keeping a service like this while you travel, you are less likely to lose your benefits. We talked about traveling in an RV in a previous article.
Now… back to foreign travel or living abroad. Here’s the issue:
You typically cannot use your Medicare benefits overseas
Many times you can get great care in other countries for a fraction of what it would cost in the USA. Most people do not pay for Part A (because they pre-paid for it while they were working) but must pay for Part B.
The standard Part B premium in 2019 is $135.50 or more if you are a high-income earner. That can take a big bite out of your budget.
Not only that but when you start Part B, your ability to get a Medicare Supplement Insurance Plan without having to answer medical questions is limited to six months. After that, you might not be able to get it because of a pre-existing condition.
So to answer the question, “Do I need Medicare if I don’t live in the US”, we must look at the circumstances.
1. Do you intend to return to the USA to live?
Do you need Medicare if you never return to the US? If you never return to the USA, then you probably won’t need the coverage.
2. If you do return to the USA, will you be able to get a short-term policy that will cover you through the gap?
You will only be able to sign up for Part B during General Open Enrollment, which is January 1- March 31 of every year and is different from the MAPD open enrollment. Additionally, your coverage will not start until July 1st. So there could be a huge period where you have NO medical insurance. Of course, you will still have hospitalization and Skilled Nursing insurance through Part A but beware of the deductibles, copays, and limitations.
3. Have you calculated what your Part B penalty might be?
When you do finally sign up for Part B, there will probably be a penalty of 10% for every year that you were eligible and didn’t enroll. This is a lifetime penalty, it doesn’t go away.
4. Don’t forget the Part D (drug plan) penalty of 1% for every MONTH you were eligible and didn’t enroll.
This is also a lifetime penalty.
5. Do you intend to return to the USA for extended visits?
Do you need Medicare if you don't live in the US but visit for several months at a time? You might need insurance coverage while you are in the US. Does your foreign insurance cover travel inside the US? If not, then you’ll want to consider Medicare insurance.
6. Are you eligible for Social Security?
If NOT, then you might not need to enroll in Medicare until you return to the USA. You won’t have to pay a higher premium as long as you enroll in Part B within 3 months of returning and establishing a residence.
So in closing, only YOU can answer the question, Do you need Medicare if you don't live in the US?
As long as you understand the penalties and potential pitfalls, you should be able to weigh the pros and cons of purchasing Medicare insurance and then make a decision. Personally, if I were eligible for Social Security and planning to ever return to the US, I would go ahead and buy it along with a drug plan because the penalties are so high. If I wasn’t eligible for social security, then I would hold off on purchasing it. But that’s just me. Talk with your financial adviser about your specific situation.
This article is not intended to be legal or financial advice. Please discuss your personal situation with an attorney or financial adviser.