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In this week’s column, Phil Moeller, the author of Get What’s Yours for Medicare: Maximize Your Coverage, Minimize Your Costs and co-author of the updated edition of How to Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security, offers advice on Medicare Part B to a couple of retirees spending their post career living abroad.
Depending on how long you plan on living abroad, you may have to choose between incurring a penalty for every year you refuse Medicare Part B or paying for Part B without being able to use it.
Should I apply for Medicare Part B if I plan on living abroad?
Question:
Dear Phil,
Your valuable time is certainly appreciated so I’ll be as brief as possible. I permanently retired earlier this year when I turned 65; I’ve been receiving Social Security benefits since I turned 63. I just received my Medicare card and I have a question about Part B, which I understand covers doctors’ expenses.
My family history includes a lot of cancer so I am especially concerned about doing whatever I can to help identify cancerous conditions as early as possible and treating them aggressively. I live in Bulgaria now and have fine doctors here.
However, if my wife or I want to return to the U.S. for any treatments as we get older, would Part B be a wise investment now, or would it be better to wait until we expect to need U.S. care and then pay the 10% late-enrollment penalty for each year we don’t have Part B?
My wife is also a U.S. citizen and will get her Medicare card next year, so the monthly Part B premiums for both of us would exceed $270 for coverage we cannot use here.
I know this one is a tricky question.
Thanks,
Robert — Ruse, Bulgaria
Phil Moeller:
Dear Robert:
I get asked this question a lot. The financial “answer” depends on how long a person is going to be outside the U.S. before they need to return. The Part B penalty, as you correctly note, tacks on 10% a year to your premium for each full year of the penalty.
Regardless of how many years your penalty turned out to be, it would take you 10 years of paying those penalties before the cumulative expense equaled the amount of money you will save by not paying for Part B.
This assumes you would be coming back to the U.S. to live permanently and that you thus would need Part B for the rest of your life. If that’s not the case, and you would plan to return to Bulgaria after getting your care in the U.S., then the less time you’re in the U.S., the more likely it would be that it makes sense for you to drop Part B now and re-enroll later when you want care in the U.S.
Another important factor is how likely it will be that you or your wife would need emergency care in the U.S. If you did, it’s a good bet you wouldn’t be able to get enrolled in Medicare in time for your coverage to take effect to help pay for emergency care.
If I had oodles of money, I’d keep Parts A and B of Medicare and accept the cost as a necessary price of being covered for the unexpected.
This, of course, is exactly what insurance was created to do, but few people appreciate paying for protection against an event that does not occur.
No one complains when their insured home does not burn down, but they often view health insurance differently.
