In the US, once you turn 65, your health insurance choices suddenly become narrower. For most of us, Medicare is the only game in town, and our choices beyond Medicare parts A and B come down to deciding whether we want to enhance our standard Medicare coverage with either a Medigap or a Medicare Advantage supplemental plan. If you have assets you need to protect, it is pretty much a given that you will need to purchase a Medicare supplemental plan because, without one of these plans to limit your maximum out-of-pocket costs, standard Medicare can happily bankrupt you if you end up with a very expensive illness.
As I write this, Ger and I are both nearing age 63, and our Medicare decision is still a few years away, but we are doing our research and looking at our options and all those options look bad. The problem is that we want to travel….a lot…at least six months per year for many years. Right now our Obamacare-subsidized silver plan gives us fairly good coverage at low cost (because our modified adjusted gross income is low). It even covers emergency treatment while out of the country. We still need to buy evacuation insurance, but if one of us has a life-threatening emergency in Uruguay or Thailand, we can be treated there and our plan will cover the expenses, at least for whatever our medical emergency qualifies us.
Medicare is useless for world travel
Once we go on standard Medicare, no treatment outside the US is covered, even for emergencies. There are selected supplemental plans that provide limited coverage outside the U.S. but the coverage is of short duration (typically 60 days maximum per trip) and has very low fixed lifetime limits on coverage (like $50,000 lifetime, which is peanuts for a serious illness or injury). For our situation, where we plan to be out of the country much longer, we have really found no options available from Medicare and its supplemental plans to provide us with the coverage we need.
The other problem is, while we are living in the U.S., Medicare provides our only “somewhat” affordable health insurance coverage option. I say “somewhat” because it is only affordable compared to astronomically unaffordable private health insurance plans which are the only other alternative in this country. Compared to just about any other private health insurance plan in any other country on the planet it would still be considered an extremely expensive plan. However, if we choose to purchase an alternative private health plan which may have better international coverage, our insurance costs will double, at a minimum. In addition, if we decide to enroll in Medicare later, we are slapped with a 10% per year penalty for each year we delay enrolling after age 65. At age 70, our premiums are 150% of the original cost. At age 75, they are 200%, and so on.
It’s even worse for people who plan to live outside the U.S. full-time and eventually return. Let’s say you were going to live abroad from age 65 to 70 and then move back to the U.S. for the duration of your life. You can either sign up for Medicare at 65 and pay the premiums for five years, knowing you are paying for health insurance that gives you zero coverage while you are away. Or you can enroll at age 70, when you return, and pay the 150% premiums for the rest of your life. For example, If your part B premiums are $210 per month for a couple, for the five years from age 65 to 70, you pay $12600 for your worthless coverage. If the premiums didn’t change for inflation (which they will, of course), and you chose to start Medicare at age 70 instead, your premiums would be $315 per month (150%) for the remainder of your lives. If you live to age 85, you end up paying $18900 extra for starting later, or $7300 more than if you’d just started at age 65. It turns out that the breakeven point is about 10 years, so if you think you are going to live to a ripe old age you are better off starting at age 65.
Paying for health care outside the US
The really annoying thing about all this is that once you’ve decided how you are going to pay for your partially-worthless or fully-worthless Medicare coverage, then you must plan what you are going to do for your international medical coverage, the one that will actually cover you while you are abroad. When considering what to do about medical coverage while travelling abroad there are several options to consider.
Option 1: Just pay out of pocket
Medical procedures in many third world countries can be extremely cheap compared to the U.S. If you need a filling in Mexico, just bite the bullet and pay the $35-50 for the filling that would cost $140-200 in the U.S. Need a crown? Sure, pay the $150-200 for the crown that would cost you $500-600 back home, even with dental insurance. The same goes for sore throats, gut infections, etc. The cost for doctor visits and standard tests is often close to what we pay for our normal insurance copays. Many people these days, so-called “medical tourists”, actually plan trips to countries where medical care is good and cheap in order to have serious operations performed at a fraction of the cost they’d pay back home.
Of course, there is a higher risk to this option, particularly once you get past age 65 and medical conditions like strokes, heart attacks, and so on become more possible. And there is always the possibility that you will be one of the people riding in the chicken bus that goes off the cliff and you end up seriously injured and in need of long-term care.
Some bloggers I’ve read, mainly younger ones, treat each trip like a health savings account. Rather than spending $1000 on travel medical insurance for the trip, they bank that money into a savings account for future medical costs. After five trips without any serious medical situations, they have $5000 in the account. Then on trip number six, when daredevil hubby crashes the moped and fractures his femur and needs a week in the hospital in Cancun, they have saved the money to pay for that. If they never have any serious illnesses or injuries, they have saved themselves a bunch of money. But in any case, it’s a crapshoot
Option 2: Buy travel evacuation insurance, pay out of pocket for the rest
The thinking here is that you have Medicare coverage back home, so if you can just get back home you are covered. The only problem with this plan is if you have an accident or illness that prevents you from being evacuated. This could be anything from a communicable disease, a serious injury that prevents you being moved, or you need an immediate surgical procedure to save your life (for example, you need an emergency heart bypass or stent). If everything goes fine, this is a relatively cheap option. Evacuation insurance doesn’t cost a lot. However, if everything doesn’t go fine, and you end up with a condition where you can’t be returned home for treatment, you end up paying for a possibly very expensive treatment out of pocket.
Option 3: Buy travel medical insurance
Here you are paying for actual medical insurance that will cover you in the countries you specify for the amount of time you specify. Often these policies have a maximum limit of six months duration. The policies usually have a fairly generous coverage amount for evacuation back home and offer a variety of deductibles and maximum medical treatment coverage amounts which are priced accordingly. I’ve looked at a lot of these plans for travel to various third world destinations and was actually surprised at how affordable some of them were. Many were much cheaper than long-term private health insurance plans in the U.S. Then it dawned on me why. It’s because it’s NOT THE U.S. You are paying for coverage in Mexico, or Guatemala, or wherever country where healthcare costs are a fraction of costs in this country. Of course the insurance is cheaper. Choose this option if you really want to be covered for anything that might befall you.
Option 4: Buy private local medical insurance
This option is really only available to you if you are planning on living full-time in a particular country for an extended period of time, for example living on a pensioner or temporary resident visa in a country. Again, because overall health care costs in your destination country may be much lower than in the U.S. , private health insurance in the country may be much lower than the U.S. as well. There are two gotchas to be aware of in trying to purchase private health insurance in other countries. The first is that many private carriers have maximum age restrictions on obtaining policies and, unfortunately, often this age will be 64 or 65 years of age. So, if you are already over 65, you may have difficulty finding a medical insurance company that will accept you. The second gotcha is that there may be waiting periods for coverage for various medical conditions, even if you have no pre-existing conditions. In addition, if you do have pre-existing conditions you may receive no coverage for those conditions or have very long waiting periods to receive treatment for those pre-existing conditions. It doesn’t do you much good if you plan to stay in a country for a year and your waiting period for coverage for most serious health issues is also a year. If you are considering staying in a country for several years, look at the available plans and be sure to check on maximum age and waiting periods carefully. I have read many blog posts from retirees who have moved to various countries and who have obtained private medical insurance coverage in those countries. Many don’t give age details, but certainly some were over age 65 when they got the coverage, so it is possible to find private insurance over 65, although choices may be more limited and expensive in that age group.
Option 5: Get on your destination country’s national health plan
Countries that have universal health care for their citizens often have options for expats to join their national health plans. Again, this typically requires that you live there fulltime on a pensioner or at least temporary resident visa. Often these plans will not have maximum age restrictions, but they may have waiting periods for various conditions. Usually you will be required to have the equivalent of a national social security card for the country. Since the national health plan is funded by taxes on citizens, you will be required to pay into the plan (usually fairly low cost) and will receive coverage similar to what the residents receive. Often in countries with national health plans the basic level of coverage is not great and there may be long waiting lines for specialized treatments and surgeries. Typically, wealthier citizens of these countries will also purchase private health insurance for themselves in order to receive better and quicker treatment. At some point I plan to put together a detailed report on this topic, but for now you should research each country you are considering moving to and find out the current situation.
Option 6: Pay for a private global health care plan
There are insurance companies that offer global health coverage plans that will cover your medical costs in most countries you would travel in. These plans are usually fairly expensive, depending on the countries covered. Often they have plans which cover various subsets of the world’s countries, such as Europe-Only, or Global-Excluding-U.S. The country most commonly excluded from these plans is the United States because healthcare here is so insanely expensive. By excluding the U.S., plan costs are reduced significantly. If you plan to be outside the U.S. for several years and travel to many other countries, one of these plans might be a good choice for you.
Our current plan (which could change depending on what happens during the next 2 years) is to enroll in Medicare Part B at age 65 and probably sign up for a cheap (or no cost) Medicare Advantage plan in order to limit out-of-pocket costs to some finite amount. When we travel we will buy travel insurance with evacuation coverage with a fairly high deductible (like $1000+) and limit our medical coverage amount in order to keep the monthly fees low. We will set the medical coverage amount based on the typical maximum cost in the countries we are traveling in for emergency procedures that would prevent evacuation. The most expensive of these would probably be something like heart surgery. More expensive long-term treatments like cancer treatments we could be shipped home to receive.