Imagine Retiring Abroad? The Reality: Medicare Doesn't Travel Well

When Karen Schirack, 67, slipped on her behalf distance to her house in January and broke her left femur in multiple places, she'd a decision to make. Should she get surgery to correct the fractured thigh bone and replace her hip near Ajijic, Mexico, where she has lived for 20 years, or perhaps be airlifted back to her home state of Ohio for surgery and rehab?

As the amount of American retirees living overseas grows, more of them are confronting choices like Schirack's about health care. When they were living in the United States, Medicare would certainly be their coverage option. But Medicare doesn't pay for care outside the U.S., except in limited circumstances.

Expatriate retirees might find private insurance policies and national health plans far away. However these might not provide the high-quality, comprehensive care at a reasonable cost that retirees expect through Medicare. Faced with imperfect choices, some retirees cobble together different types of insurance, a mix which includes Medicare.

That's what Schirack has been doing. She pays about $3,700 annually for a private insurance plan through Allianz that covered her surgery at a private hospital in Guadalajara, about an hour from Ajijic. She also has a medical evacuation policy that will have taken care of her flight to the States, if she'd opted for that. That policy costs roughly $3,000 for five years. And she will pay for Medicare Part B, which she can use for care when she visits family within the U.S. (The standard Part B fees are $135.50 monthly.)

Schirack has a scar running from her waist to the middle of her thigh, but she does not need home nursing care and ended months of physical therapy in June. After five more months of healing, she wishes to return to normal.

Her private plan paid the same as about $20,000 on her surgery. Before she left the hospital, Schirack had to cover her portion of the total, about $2,400, plus bills for other expenses, including blood transfusions.

After she left the hospital, she was responsible for paying for other services – home nurses, physical therapy and medicines – and submitting receipts towards the insurer for reimbursement. She estimates she's spent about $10,000 and it has been reimbursed for around two-thirds of this so far.

If she'd had surgery in the usa, she may have faced fewer paperwork hassles, Schirack said, “but all in all, I'm not likely to complain.”

The quality of health care varies widely based on country, as do the help open to foreign residents. And there are very a few of these transplanted Americans.

From 2012 to 2021, the number of retired workers living in foreign countries who have been receiving Social Security benefits grew by nearly 15% to more than 413,000, according to the Social Security Administration. The largest numbers were in Canada (nearly 70,000) and Japan (more than 45,000). Mexico was third, home to nearly 30,000 retired workers.

Commercial health care policies on their behalf may provide decent coverage, but people can generally be denied an insurance policy or charged higher rates for medical reasons. The plans may refuse to cover some preexisting conditions. Schirack's policy, for example, doesn't cover any services associated with her allergies.

Private policies could be problematic for another reason: They've already age limits. The GeoBlue Xplorer Essential plan, for example, enrolls only those who are 74 or younger, and coverage expires when people turn 84. In comparison, Medicare eligibility generally begins at 65 and continues until a beneficiary dies.

And the policies aren’t cheap. A 70-year-old might pay $1,900 a month for an Xplorer Essential plan with a $1,000 deductible, said Todd Taylor, a sales director for GeoBlue. A plan having a $5,000 deductible might run $1,400 monthly. That does not include coverage for services in the usa.

Rates may also vary based on country. A 67-year-old American residing in Costa Rica who buys a midlevel Cigna plan having a deductible of $750 for hospital care and $150 for outpatient care might pay $1,164 a month, said David Tompkins, president of TFG Global Insurance Solutions. The same policy might cost $913 in France, Tompkins said.

Claudia Peresman moved from Connecticut to San Miguel de Allende, Mexico, last November. She's chosen a personal insurance plan, that she pays about $100 per month. “What I wanted was catastrophic coverage,” she says. “Things are extremely affordable here that, outside of being admitted towards the hospital, I'm able to probably afford it.”(Thanks to Claudia Peresman)

Since health care is sometimes much less expensive overseas, some retirees choose to shell out of pocket for minor or routine services.

Claudia Peresman, 63, moved from Stonington, Conn., to San Miguel de Allende in central Mexico last November. On her behalf first night there, she tripped within the bathroom, hit her face on a wall and split her lip. Her neighbors helped her get a cab to a 24-hour emergency room at a hospital about 5 minutes away, where staff cleaned up the cut and sent her home. She paid the roughly $25 fee in cash.

Peresman recently obtained a private insurance plan having a $2,500 deductible, that she pays about $100 a month.

“What I needed was catastrophic coverage,” she said. “Things are so affordable here that, outside of being admitted towards the hospital, I'm able to probably afford it.”

Even when retirees purchase a private policy, Medicare is yet another bit of the puzzle that they need to consider. Once people become entitled to Medicare coverage, usually at 65, they face a 10% premium penalty for each Twelve months they aren't signed up for Part B, which covers outpatient services. (People who are 65 but still included in a company plan generally do not face that penalty.)

After paying into the Medicare system for many years, it is no surprise some expats are frustrated they can't generally use the program away from United States.

That's just the way what the law states is written, an official at the federal Centers for Medicare & Medicaid Services said.

“CMS cannot speak to or speculate on congressional intent,” the state said.

And retirees should honestly consider whether they will spend the remainder of their lives overseas.

“Even if that's their goal, is the health insurance and mobility going to permit them to accomplish that?” said Dr. David Shlim, 69, who treated many expats when he ran a medical clinic in Kathmandu, Nepal, in the 1980s and '90s. “People should suppose they might have to come back to the U.S. and ask themselves how are they likely to do this and afford that.”

Rules on whether noncitizens can enroll in a national health plan vary by country.

After living in america for pretty much 30 years and families here, Alberto Avenda~no, 61, is moving to northern Spain in August with his wife, Zuni Garro, also 61. Avenda~no has dual citizenship, and his wife is a citizen of the us. The pair can enroll in the Spanish universal health system and receive care there. Additionally they intend to purchase a private plan to use if they want to get medical services with no wait, said Avenda~no.

Once they turn 65, they may enroll in Medicare too, Avenda~no said, depending on their circumstances. Their two children reside in america.

“It is one thing that is part of our American system, and that we wish to have it,” he said.

Peresman also offers a couple of years before turning 65 and making the decision, but she's leaning within the other way. She's worried that the Medicare program may not exist in its current form when the time comes to decide.

“I'd register whether it were absolutely free,” she said. “But I'm already paying $100 per month here.”