Should I enroll in Medicare if I live overseas?

Introduction

Why do so many Americans choose to retire overseas? For some, they’re looking for a lower cost of living and better weather. Others want to be closer to family. Some retirees are chasing a dream of living in and experiencing a whole new culture in a foreign country.

This wanderlust lifestyle seems to be a growing trend. As of December 2020, more than 441,000 retired workers received their Social Security benefits while living in foreign countries.

Making the decision to retire and live overseas requires significant planning. This article will discuss how living overseas might affect your Medicare coverage.

What should you know about having Medicare overseas?

Enrolling in Medicare

Part A (Hospital insurance)

If you become eligible for premium-free Medicare Part A while living abroad, there are two ways to enroll:

1. Visit the nearest U.S. embassy or consulate.
2. Enroll upon your return to the U.S. Your special enrollment period (SEP) begins the month you return and ends on the third month after your arrival.

However, if you do not meet the requirements for premium-free Part A, you cannot sign up from overseas. The only way is to enroll once you are back in the U.S. Make sure to sign up within three months after your return to avoid late enrollment penalties.

If you do not enroll when you are first eligible and decide to join later, your Medicare premiums will be higher as a result of these penalties.

Part B (Medical Insurance)

There is no option for automatic enrollment in Medicare Part B while overseas. You can sign up for Part B by going to the nearest U.S. embassy or consulate in foreign countries.

If you are eligible for Part B but delay your enrollment while living overseas, you will incur late penalties once you decide to join.

One exception is when you (or your spouse) is working abroad, and you have health care coverage from any of the following:

• Employer-sponsored group health insurance
• National health service, whether you are self-employed or working for an employer
• Health insurance from the sponsoring organization of your voluntary service abroad

However, once you (or your spouse) stop working or lose your health care coverage, you should utilize your special enrollment period to enroll in  Medicare. You have an eight-month period to enroll.

Another exception is when you are not eligible for Social Security and turned 65 overseas. Upon your return to the U.S., you should enroll in Part B within three months.

Part C (Medicare Advantage) and Part D (Prescription Drug Plan)

You can join a Medicare Advantage plan or Prescription Drug Plan upon your arrival back in the U.S. You should enroll within the first two full months after moving back to the U.S.

Some Medicare Advantage plans provide cover for emergencies while traveling overseas – providing you an option if you have already enrolled in Medicare and wish to travel overseas.

Paying for premiums

You can pay for Medicare premiums even while living in foreign countries. Use your Medicare account, online banking, or Medicare Easy Pay.

If you are receiving Social Security or Railroad Retirement Board benefits, Part B premiums are automatically deducted.

Your coverage is limited while overseas

You can only access Medicare benefits within the U.S.  However, Medicare will cover services in foreign countries if you live in the U.S. and you find yourself in one of the following situations:

• For both medical and non-medical emergencies: The foreign hospital is closer than the nearest U.S. hospital that can treat you.
• For a medical emergency while traveling to Alaska through Canada without reasonable delay: When a Canadian hospital is closer than the nearest U.S. hospital

Because you have minimal coverage when abroad, you should consider enrolling in additional travel insurance plans for more comprehensive healthcare coverage.

Should you continue paying for Medicare overseas?

Whether you decide to keep your Medicare coverage or not while overseas depends on how long you intend to stay abroad.

Here are four scenarios to consider:

1. Temporarily living abroad

If you live abroad temporarily and travel back to the U.S. frequently, you should keep your Medicare plan. Whenever you are in the U.S, you can get Medicare benefits.

However, even if you have Medicare, traveling is not covered. A supplemental Medigap plan can help to cover medical emergencies during the first 60 days of your trip. Medigap Plans C, D, F, G, M, or N all offer coverage for emergencies while traveling overseas.

As mentioned above, some Medicare Advantage plans also provide cover for medical emergencies while traveling overseas.

2. Living abroad but flying back frequently to the U.S.

The Social Security Administration (SSA) defines “living abroad” as living outside the U.S. for at least 30 consecutive days.

Quick note: Once you stay in the U.S. for more than 30 days in a row, the term “living abroad” no longer applies.  

If you are “living abroad” and are receiving Social Security benefits, this could qualify you for premium-free Part A.

Therefore, you should keep Original Medicare to provide benefits whenever you are in the U.S. You should also add travel insurance to cover health emergencies while traveling overseas.

3. Permanently living abroad

If you are living abroad permanently, here are some considerations and recommendations:

• Part A: If you are entitled to free premiums, keep your Part A coverage. There is no disadvantage to keeping this coverage, and it may be useful if you do return to the U.S.If you are not eligible for premium-free Part A, it may be unnecessary to pay premiums for hospitalization services that you cannot use while living abroad. However, you may want to enroll in Part A to avoid future late enrollment penalties.
• Part B: Enrolling in Part B depends on your budget and how frequently you return to visit the U.S. Case 1: If you plan to visit the U.S. frequently and are willing to pay premiums, enroll in Part B. Remember, you should enroll in Part B when you are first eligible. Otherwise, you will likely face additional premium costs as a result of a late enrollment penalty. Case 2: If you rarely visit the U.S., it might not be worth the cost to continue paying Part B premiums because Medicare will not cover your expenses while overseas. You can disenroll from Part B by notifying SSA.

• Part C and Part D: Since both are only available in the U.S., enrollment is unnecessary while you’re living overseas permanently. If you already have Part C or D plans before moving overseas, you should disenroll and stop paying premiums since these plans require you to live in their service area. You cannot claim any benefits from these plans while living permanently overseas.

Consider the following options to access healthcare coverage as an alternative to Medicare while overseas.

• International health insurance is helpful if you often travel while overseas.
• Most foreign countries have national health insurance. Check the requirements in the country where you are living. There are often residency or work requirements.
• Local private health insurance is a good option if you permanently stay in one country.
• Travel health insurance will cover your medical emergencies during trips.
• A medical evacuation plan may be necessary if you live in a remote area with inadequate access to healthcare.
• Private insurance for expatriates is also offered in foreign countries.

4. Returning to the U.S permanently

SSA requires that you live permanently in the U.S. (or its territories) before obtaining Medicare coverage.

Upon your return to the U.S, there is an initial enrollment period (IEP) to sign up for Medicare Parts A and B. This timeframe begins on the month of your return and expires on the third month after your return. For example, if you return in January, your IEP expires on April 30.

If you miss your initial enrollment period, your next opportunity is the Open Enrollment Period (OEP) – January 1 to March 31.

For enrollment in Part D, the special enrollment period falls within two months of your return to the U.S.

What are factors you should consider before moving overseas?

The following questions will help guide your decision regarding whether you should sign up for Medicare while traveling and living overseas:

• How long are you staying overseas? It typically makes sense to continue your Medicare coverage if you foresee moving back to the U.S. at some point in the future. But if you have decided to stay in a foreign country permanently, explore their best health insurance options.
• Do you frequently travel? Is there a high probability of medical emergencies? If yes, consider Medigap plans which can provide emergency coverage for the first 60 days of your trip. You can also consider a Medicare Advantage plan, which can offer some coverage for emergencies while overseas. 

• How much are you willing to spend on health insurance? It might not make sense to keep paying Medicare premiums when you cannot receive Medicare benefits abroad. But remember, there is a tradeoff.  If you miss your enrollment periods and decide to join Medicare later, you will incur late enrollment penalties. These will be added to your premiums and take effect during your coverage.

• What is your health condition? What is the healthcare situation in the foreign country? Always compare the medical expertise available in the U.S. against foreign countries and compare costs.

Final words

Living in a foreign country is an exciting way to spend your retirement. However, you should put thoughtful consideration into what healthcare coverage is right for you. Careful research and planning will help to avoid potentially costly medical situations if you are not correctly insured.