Just as in the case of Social security, the rules regarding Medicare eligibility and benefits are subject to change in the coming years. It is important to understand the current regulations, however.
First, some basics about Medicare:
- Medicare is a Federal health insurance program for those people who are 65+ years of age, or have certain disabilities. You qualify for Medicare if you are 65 years of age and if you are eligible for Social Security retirement benefits.
- Even if you opt for Social security payments later than age 65, you are still eligible for Medicare at 65. If you opt for early Social security benefits before the age of 65, you will not be eligible for Medicare benefits until you are 65.
- To be eligible for Medicare, you must be a legal US resident. You do not have to be a US citizen.
- Medicare comes in three parts:
- Part A (Hospital Insurance) covers hospital stays.
- Part B (Medical Insurance) covers doctor bills and outpatient care.
- Part D (Prescription Drug Coverage) covers prescription drugs
- Part A is free (i.e. you do not pay any premiums) if you have made at least 10 years of Medicare contributions during your working years.
- Parts B and D are not free; the amount you pay for these depends on your income at the time, and the level of benefits you choose. It does not depend on how many years you have worked (assuming a minimum of 10). Nor does it depend on your assets.
- You must enroll for Medicare coverage when you are eligible, i.e., at 65. If you decline Medicare during the initial enrollment period, your premiums for Part B may be increased by 10% for every 12 month period that you did not have Part B. If you have coverage through an employer, you may be eligible for delaying Medicare enrollment. There's a similar rule for Part D as well.
- To stay enrolled in Medicare you need to continue making premium payments for Part B ($93.50 monthly for 2007, for most people). Normally, Medicare premiums are deducted from your social security payments.
- In addition to Medicare, many retirees sign up for Medigap supplemental insurance. This is health insurance sold by private insurance companies to fill the “gaps” in Medicare Plan coverage.
Here are some specifics about Medicare for those who plan to live or travel outside the US:
- Medicare benefits are available only if you live in the US. If you currently have Medicare and you move outside the US, medical expenses outside the US will not be covered by Medicare.
- If and when you return to the US, Medicare Part A will be available to you. For Part B coverage, you have the option to continue paying your monthly premium while living outside the US. Since Medicare benefits are only available inside the US, it is strange to have to continue to pay a monthly premium for a service not available to you.
- If you drop your Part B coverage, then return to the US, you will be required to re-enroll and pay a premium that is 10% higher for each 12-month period that you did not have coverage. This is just as if you had declined coverage when it was first available to you.
- If you are re-enrolling for Part B, you may only do so from January through March each year. Coverage will not resume until July of that year.
So what other options are available for overseas retirees besides Medicare?
- The Social Security Administration recommends that those on Medicare who wish to travel abroad consider getting short-term coverage designed for travelers. There are several companies that provide such coverage, but most companies will not cover pre-existing medical conditions. Such coverage will only help for short trips abroad, not for retirees.
- For those who travel outside the US frequently, Medigap (Medicare Supplement) provides foreign coverage, with no extra cost for eligible treatments. These are reimbursement plans, so you have to pay the bill first and then submit it for compensation. They only cover the first 60 days you're outside the US. These plans usually also have a dollar cap per trip.
- This leaves long-term retirees overseas with only three options: buy private coverage individually or through a group, pay into the government-sponsored system or buy a private policy in the country where you live, or go without coverage.