American expats who retire abroad need to be aware of how this decision can effect the access to healthcare under Medicare that they are entitled to. In this article we take a look at the US Medicare system and assess how the rules and regulations that determine access to this healthcare can impact US citizens who choose to live overseas.
What is Medicare?
Medicare is a social insurance program that provides eligible American citizens with health care coverage. The underlying principle of Medicare is to allow vulnerable American citizens with access to medical care later in life. Generally speaking, all American citizens that are over the age of 65 and have been a legal resident in the USA for at least five years are eligible for healthcare coverage under Medicare. However, the system is funded and financed via payroll taxes. As such, citizens must have contributed a minimum amount of tax payments while they were working in the U.S.
- Eligible citizens must have contributed enough through paying Medicare taxes while living in the United States. This is currently the equivalent of 10 years of taxes or 40 quarters.
- Those who did not contribute the minimum payments prior to retirement must continue to make contributions beyond their retirement years.
- Individuals whose spouses have not made sufficient contributions must pay a monthly premium to remain enrolled in the Medicare system.
American citizens who have made sufficient contributions are entitled to the following:
- Part A: Hospital insurance free of any monthly premium.
- Part B: Medical insurance if an additional premium is paid.
- Part D: Prescription drug insurance if an additional premium is paid.
Does Medicare cover care that is provided abroad?
Unfortunately Medicare is only available for the provision of healthcare services inside U.S. borders. This means that Medicare is really only of use to those that live in America and expats who want to benefit from the health insurance that they have previously contributed have only two main options:
1. Return to America to live permanently
2. Return to the US if and when they require medical treatment.
While this may be feasible for minor injuries or non-urgent conditions, it is no use in an emergency and expats are therefore required to fund their own care while abroad. They may choose to do this on an ‘as-required’ basis or can choose to take out long-term health insurance.
Do I need to continue to contribute to the Part B, C and D premiums?
Given that the Medicare benefits are only available to U.S. citizens that accept care and medical attention inside the United States, you may decide that there is no point continuing with premium payments. However, if you do decide to drop Part B contributions while you are living abroad, you need to be aware that if you do need to return to live in America at some point in the future, you will be required to enrol again and will have to pay a premium that is 10% higher for each 12-month period that you did not have coverage. Furthermore, returning expats are only permitted to re-enrol between January and March each year and the coverage will not resume until July of that same year.
Do American expats who work abroad need to contribute to Medicare taxes?
If you currently live and work abroad and are not expecting to return to the U.S. for your retirement you may wish to cease your Medicare tax contributions as it is highly likely that you will never use the service. However, it is worth noting that the system may change and, in the future, healthcare may be offered and foreign soil. Furthermore, if you did return to the U.S. at any point and wanted to access the system, you would be required to pay extremely large premiums (10% extra per year you have not made payments) to gain access to just the most basic element of Medicare, namely Part A. As such, many U.S. citizens living abroad continue to make contributions to Medicare
For more information about Medicare see the Medicare website: http://www.medicare.gov/
Read the full article: http://www.medicare.gov/