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Choosing Between Original Medicare and Medicare Advantage if You Live Abroad

September 1, 2020

 

Living abroad seasonally has become more common among retiree homeowners. Indeed, spending the winter or summer months in another country can be appealing and stimulating. As of 2019, there were 29,553 American retirees collecting Social Security checks in in Mexico. While some retirees have chosen to live year-round in another country, most spend around nine months each year in their US residence. Since winter can often aggravate arthritis in some people over age 65 – and summer can aggravate allergies – spending winter or summer in a low-cost locale with a mild climate can seem like a preferable option.

 

However, health needs do not disappear just because you are traveling overseas. Therefore, planning for a lengthy stay overseas needs to involve ensuring that your healthcare coverage is adequate in case you need medical care while residing outside of the US.

 

Medicare Decision-making for Part-time Overseas Residents

 

Medicare Advantage plans do not cover medical care in another country, and some do not cover care in another US state. Although contracted by the federal Centers for Medicare and Medicaid Services (CMS), these are privately-administered health plans.

 

If you frequently travel to another state, choosing a Medicare Advantage plan that offers coverage for both “in-network” and “out-of-network” providers makes good sense for the following reason. While you may incur a higher percentage of the cost for treatment by an “out-of-network” provider, most of the treatment cost will still be covered by your insurer. In contrast, a Medicare Advantage plan requiring you to solely utilize “in-network” providers may be risky for someone who frequently travels to another state.

 

The monthly costs of Parts A and B of Original Medicare increase if you do not enroll at age 65 as a financial penalty is applied. However, Original Medicare does not cover healthcare received overseas (with a few exceptions). Since the financial penalty for not enrolling in Part A and/or Part B increases each month enrollment is delayed, it makes sense to enroll in both Parts even if you live a few months each year in another country – but with additional insurance purchased.

 

Travel Insurance and Medigap Health Plans

 

Travel insurance typically covers health emergencies, so is recommended for short-term travel adventures. On the other hand, some Medicare Supplemental Plans (also called Medigap plans) do cover healthcare costs incurred while overseas. If you are enrolled in Original Medicare and planning to remain for more than one month each year in another country, it may be prudent to purchase a Medigap plan that includes overseas coverage in case you need healthcare services.

 

Which Countries Do US Retirees Favor as Overseas Retirement Destinations?

 

According to MarketWatch in 2019, the following were three of the foremost retirement destinations among US retirees besides Mexico:

 

  • Canada – 69,942 US retiree recipients of Social Security;

  • Japan – 45,336 US retiree recipients of Social Security;

  • Germany – 24,922 US retiree recipients of Social Security.

 

Panama and Costa Rica are also foremost retirement destinations, and particularly for retirees choosing a part-time residence in winter while living in the US during the other seasons.

 

During this difficult time period due to the Covid-19 pandemic, choosing to live part-time in another country as an older-aged person may not be possible. However, planning to rent a condo or hotel suite overseas some months every year that is both inexpensive and meets your needs takes time – so such planning needs to begin well ahead of your actual arrival.

 

Consulting with an agent at Life First Financial & Insurance can enable you to choose an insurance plan that will cover your healthcare costs while living overseas.

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