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NOTE: Information below touches on only a few points of this very complex subject. The Medicare website (www.medicare.gov) is a rich source of information and personalized advice.

For more information on the healthcare & Medicare issues facing Americans abroad, see here.

If you already live abroad, you should contact the US Federal Benefits Unit serving the country where you reside for advice. They have direct access to the Social Security files, and have experience with problems specific to people residing outside the US. You can find the Federal Benefits Unit serving your location here: ssa.gov/foreign/foreign.htm .

The single most basic fact to remember is that you are NOT covered by Medicare while living abroad (with very rare exceptions). That said, you may still need to consider enrolling in one or more parts of Medicare.

Basic rules on qualifying for coverage

Workers (and spouses of workers) who have contributed at least 40 quarters (10 years) to Social Security are eligible for Medicare coverage at age 65 even if your Social Security "full retirement age" is over 65.

Individuals who are eligible for railroad retirement benefits, or who have worked long enough in a US federal, state, or local government job can also qualify for coverage.

Certain other categories of individuals (such as those on Social Security disability) may qualify for one or more parts of Medicare earlier than age 65 or under certain conditions.

For greater detail on qualifying for Medicare, see: faq.ssa.gov/link/portal/34011/34019/Article/3771/What-is-Medicare-and-who-can-get-it

A succinct overview of Medicare can be found at: www.socialsecurity.gov/pubs/10043.html#a0=2

General information on Medicare is available at: www.medicare.gov/people-like-me/new-to-medicare/getting-started-with-medicare.html

Basic rules on non-coverage abroad

In most cases, Medicare won't pay for health care or medical supplies you get outside the US.

There are a few narrow exceptions to this rule:

  • When a foreign hospital (Canada, Mexico) is nearer than the nearest US hospital to:

    - The place in the US where you have a medical emergency, or

    - Your home, for treatment of your medical condition (regardless of whether it is an emergency).

  • You are traveling through Canada between Alaska and another US state when a medical emergency occurs, and a Canadian hospital is closer than the nearest US hospital that can treat your illness/injury.

  • Medically-necessary health care services on a cruise ship which is no more than six hours away from a US port.

For greater detail on these exceptions, see: www.youtube.com/watch?v=yq2WbpPK-9c

Parts of Medicare

Part A is Hospital Insurance

Individuals who have paid into Social Security for 40 quarters (10 years) or more are eligible to receive Medicare Part A at age 65 (or earlier, under several exceptions). There is no cost for qualified individuals for this coverage. There will be automatic enrollment if you start drawing Social Security (or railroad retirement) benefits at 65. If you start receiving Social Security payments at a later age, you should sign up at 65 for Medicare Part A https://www.medicare.gov/sign-up-change-plans/how-do-i-get-parts-a-b/part-a-part-b-sign-up-periods

People who do not qualify for premium-free Part A can pay up to $451 a month to buy into it (and are generally required to buy Part B as well).

If you do not sign up for Part A when first eligible, you may have to pay a penalty equal to 10% of the Part A premium for twice the number of years you could have had Part A, but didn't sign up.

Part B is Medical Insurance (doctors' fees, etc.)

If you are living abroad, you will not automatically receive Part B, for which there are monthly premiums. It does not cover expenses while abroad; however American medical insurances may require that you sign up for it. TRICARE, the medical care program for military (active and retirees) and their families, which does provide coverage abroad, also requires signing up for Part B.

IMPORTANT: There is a penalty attached to late sign-up for Medicare Part B: for each 12-month period you are eligible for Part B but do not sign up, your premiums for life are increased by 10%. So, for instance, if you sign up five years after becoming eligible, your premium will be 50% higher than someone who had signed up when initially qualified. 

People currently living abroad who anticipate returning to the US in their later years – as well as those who regularly spend time in the US – may find it financially advantageous to pay the premiums for Part B while still living abroad (in order to avoid the Part B late enrollment penalty).

However, in some cases it may be advantageous to delay applying for Part B if:

  • you're NOT eligible for Social Security benefits because you haven't worked in the US at all or only a few years.

  • you or your spouse currently work for a company that provides you with health insurance, or you or your spouse work in a country with a national health system. In this case you MAY qualify for a Special Enrollment Period to enroll in Part B without penalty. This SEP begins at any time while you (or your spouse) are still working and for up to eight months after you lose your health coverage or stop working.

  • you volunteer internationally for at least 12 months for a tax-exempt non-profit organization (such as the Peace Corps) and have health insurance during that time. You will have a six-month Special Enrollment Period to enroll in Medicare without gaps or penalties. This SEP begins once your volunteer work stops or your health insurance outside of the US ends, whichever is earlier.

If any of the above situations applies to you, you're eligible to enroll in Part B the month you return to the US to establish your new residence there and you can probably avoid a late enrollment penalty if you enroll in Part B within three months of when you first return to the US.

For more information see the Medicare website .

Or contact your nearest Social Security office, consulate or embassy.

  

Part C is called Medicare Advantage Plans (private group health care plans approved by Medicare – available only within the US).

Anyone who has both Medicare Part A and Part B is eligible. If you move back to the US after living abroad, you can join for the first two full months after the month you move back.

People who don't enoll in a Medicare Advantage Plan often buy Medicare Supplement Insurance ("Medigap"). These policies cover differences between actual health care costs and Medicare coverage limits.

Part D is the Medicare Prescription Drug Plan (available only within the US).

Anyone who has both Medicare Part A and Part B is eligible. If you move back to the US after living abroad, you can join for the first two full months after the month you move back. There is a monthly base premium, with additional cost for higher-income people. If you join later than your initial sign-up period, you may have to pay a penalty for as long as you maintain the prescription drug coverage.

NOTE: For an overview of Medicare costs see: www.medicare.gov/your-medicare-costs/index.html

When to sign up for Medicare Plans

When you sign up for the various Medicare coverages – and when each one comes into effect – varies with the different Plans. A general outline follows; specific situations or health conditions touch off a number of different enrollment periods. For fuller details see the publications.

Enrolling in Medicare parts A & B:

www.medicare.gov/sign-up-change-plans/get-parts-a-and-b/when-how-to-sign-up-for-part-a-and-part-b.html

Part A & Part B sign up periods:

www.medicare.gov/sign-up-change-plans/how-do-i-get-parts-a-b/part-a-part-b-sign-up-periods

Understanding Medicare Enrollment Periods parts C & D:

www.medicare.gov/Pubs/pdf/11219-Understanding-Medicare-Part-C-D.pdf.

Part A (hospital insurance)

For qualified individuals, you should sign up during the "Initial Enrollment Period" of seven months around the month you turn 65 (three months before your birthday month through three months after your birthday month). Note that this may be before you can – or choose to – file for Social Security benefits. If you enroll prior to the birthday month, you will start being covered as of your birthday month. If you enroll during the last four months of the period, coverage will start with an additional month's delay.

If you didn't sign up for Part A during your Initial Enrollment Period, you can sign up during the "General Enrollment Period" between January 1 and March 31 each year. Coverage will begin July 1. If you are a qualified individual, there may be a penalty premium for late sign-up, as mentioned above (in case you do not qualify for premium-free Part A).

In certain cases, if you did not sign up for Plan A when initially eligible because you were covered under a group health plan based on current employment, you can sign up later during a "Special Enrollment Period". See Publication 11219 for details.

If you're volunteering abroad: You may also qualify for a Special Enrollment Period if you're a volunteer serving in a foreign country. Usually, you don't pay a late enrollment penalty if you sign up during a Special Enrollment Period. See the Medicare website for more details.

Part B (medical insurance):

For qualified individuals, the rules are generally the same as for Part A (see above), with the exception of the higher and permanent penalty premium for late sign-up mentioned under the description of Plan B, see above.

Part C (Medicare Advantage) and Part D (prescription drugs):

Sign-up is during your Initial Enrollment Period when you first become eligible for Medicare. There are additional enrollment periods each year for switching or joining – see Publication 11219 for details. Note that late sign-up for Part D may engender a permanently higher premium.

If you move back to the United States after living outside the country, your chance to join Part C and/or Part D lasts for two full months after the month you move back to the US.

Some addiitonal information on Medicare sign up can be found at the following non-US government links:

https://www.medicareinteractive.org/get-answers/medicare-health-coverage-options/medicare-and-living-abroad/how-to-enroll-in-medicare-for-those-who-first-qualify-when-living-abroad

https://www.medicareinteractive.org/get-answers/medicare-health-coverage-options/medicare-and-living-abroad/medicare-coverage-for-those-who-live-abroad-but-plan-to-move-back-to-the-united-states-or-travel-back-frequently 

The Affordable Care Act and Americans Overseas: Coverage, Penalties and Taxes

Can Americans overseas apply for insurance coverage through the Affordable Care Act?

The Affordable Care Act, also informally known as "Obamacare," is an attempt to reform the American healthcare system in order to expand coverage to millions of currently uninsured Americans and rein in the soaring cost of healthcare in the US.

The Affordable Care Act is not a federal entitlement program like Medicare, Medicaid or unemployment insurance. You cannot “enroll” in Obamacare. It is not a single payer system that many of you have enjoyed while living abroad. You can only buy private insurance more efficiently. To be eligible for coverage you must be resident in the United States and must be a US citizen or national (lawfully present).  See more on eligiblity here: https://www.healthcare.gov/quick-guide/eligibility/

The Affordable Care Act hopes to rein in the cost of health insurance by providing a more structured efficient marketplace than existed before. Every State now has its own “exchange” or Internet marketplace for its own State registered insurance companies. If you live in Illinois, you can’t buy insurance from an Indiana insurance company. 

Tax Penalty for lack of insurance coverage. Does it apply to Americans overseas?

Another feature of the Affordable Care Act is a mandate to acquire insurance or pay a tax penalty. US residents pay a tax penalty if they can’t show proof of insurance. This is the only way the risk pool adds up to affordable care. However, Americans who are bona-fide residents overseas are presumed to have minimum essential coverage and as such do not have to pay a tax penalty.

So, for those moving abroad, the health insurance policy you own will determine if it has any value to you abroad. This information would be found in your policy details. For those moving back to the US, you will have to purchase insurance in the State where you establish residency and you’re good to go (so to speak). The Affordable Care Act has helped solve some of the lingering insurance issues such as pre-existing conditions. With the Affordable Care Act individuals can no longer be denied coverage based on pre-existing conditions. Also, dependents (children) can remain on their parent's policy up to the age of 26.

For more detailed information on the Affordable Care Act see the government’s website at:

https://www.healthcare.gov/

The Affordable Care Act and increased taxes for Americans overseas: Net Investment Income Tax (NIIT)

The Affordable Care Act includes an additional Medicare tax in the form of a 3.8% Net Investment Income Tax (NIIT) on some net investment income of individuals, estates, and trusts that have income above the statutory threshold amounts. Individuals are subject to the NIIT if they have 1) Net Investment Income and, 2) Modified Adjusted Gross Income (“MAGI”) over certain applicable thresholds. Even if you are exempt from Medicare taxes, you may still be subject to the NIIT.

Filing Status

Threshold

Married filing jointly

$250,000

Married filing separately

$125,000

Single

$200,000

Head of household (with qualifying person)

$200,000

Qualifying widow(er) with dependent child

$250,000

Be sure not to overlook this new tax as Americans abroad who fall into the categories referred to will owe the tax to the US since foreign tax credits are not applicable against this tax. This is due to the way the tax code is structured. (/us-tax-code-niit-3-point-8.pdf)

This new tax leads to double taxation of those Americans resident abroad since foreign tax credits cannot be applied against this tax due to a simple drafting technicality. ACA, Inc. has urged Congress to apply tax fairness on Obamacare and to allow foreign tax credits against the additional Medicare tax: December 2013 ACA, Inc. Press Release

Complete information on the NIIT tax can be found here: http://www.irs.gov/uac/Newsroom/Net-Investment-Income-Tax-FAQs

This ACA webpage about the Affordable Care Act was update in July 2019.

Frequently asked Questions concerning Medicare and the Affordable Health Care Act

NOTE: The Medicare website (www.medicare.gov) is a rich source of information and personalized advice. If you already live abroad, you should consult with the Federal Benefits Unit of the American embassy in the country where you reside for personalized advice. They have direct access to the Social Security files, and have experience with problems specific to people residing outside the US. Website links to American embassies worldwide can be found at http://www.usembassy.gov/.

Q: I am 71 years old. I enrolled in Medicare Part B when I was 65 years old. Then we moved abroad, I dropped Part B and have used the local health system in our country of residence for four years. Now we are returning to the US and need to re-enroll with Part B. What are the penalties after a hiatus?

A: Your best bet is to consult with the Federal Benefits Unit serving your country of residence. The general rule is that your premium is permanently increased by 10% for each full 12-month period in which you were eligible for Medicare Part B but were not enrolled. It is wise to plan your return ahead of time because, unless you qualify to be able to sign up during a Special Enrollment Period, you would have to sign up during the annual General Enrollment Period, from January 1 through March 31 of each year. Coverage would be effective as of July 1. For fuller details see: Medicare A and B Enrollment Periods, available at: www.medicare.gov/sign-up-change-plans/get-parts-a-and-b/when-sign-up-parts-a-and-b/when-sign-up-parts-a-and-b.html ; for Medicare parts C and D, see: www.medicare.gov/pubs/pdf/11219-Understanding-Medicare-Part-C-D.pdf

Q: What are the implications of the Affordable Care Act for Americans abroad? Will I be penalized for not having American health insurance coverage?

A: Under the Affordable Health Care Act (Public Law 111-148, popularly known as "Obamacare") there is a specific provision that individuals residing outside the United States or residents of territories "shall be treated as having minimum essential coverage" for any month they are qualified under the tax code as "residing abroad."

Q: What effect will the Affordable Health Care Act ("Obamacare") have on Medicare?

A: Your Medicare coverage will remain the same. An excellent article in the AARP Magazine discusses common confusions on the topic: http://www.aarp.org/health/health-insurance/info-09-2012/medicare-and-health-care-reform-myths.html?intcmp=HPBB1C

Q: Will I be subject to the 3.8% NIIT tax as a result of the Affordable Care Act?

Americans overseas who meet the threshold reporting requirements for Net Investment Income, will be subjected to the NIIT tax. ACA recommends that individuals who meet the threshold levels contact a qualified tax professional who can best advise as to how the NIIT may affect their tax filing.

For resources on tax preparation please see: www.acareturnpreparerdirectory.com