I recently got emails and a phone call from people living outside the U.S. who are turning 65 soon. Their questions were the same: Do I need to enroll in Medicare Part B and pay the $99.90 per month premium if I am living outside the United States? (Medicare does not cover medical services received outside the U.S.)

WORKING OUTSIDE THE U.S. AFTER 65

Bill lives in France and is working for Airbus, a very big employer. Because he is working and covered by an employer group health plan, you would think he meets the criteria in the 2012 Medicare & You Handbook (page 24).  It says a person who is working and has health insurance through an employer or union can keep that coverage and doesn’t need to enroll in Medicare Part B. This is what I wrote when I first posted on this topic last week – but it turns out that this rule might not apply to a person living and working overseas.

UPDATE:  It turns out that working outside the U.S. with health insurance is not necessarily treated the same as working inside the U.S.  I talked to Medicare and Social Security and got different and confusing answers. I also got scolded by someone with lots of experience writing about Medicare.

Patricia Barry, who writes the“Ask Ms. Medicare” column for the AARP Bulletin, read my original post and told me I was wrong to assume that foreign health coverage through employment would be treated the same as American coverage. Here’s what she wrote:

When I was in contact with SSA about this question, they defined for me the kind of coverage that would count as creditable for Part B purposes and they emphasized not only that national health services do not count but also that it had to be “American style” group health insurance — a kind that hardly exists in other countries.

Airbus is a European company and I doubt very much whether it would provide employees with American-style group health insurance, unless it made a special exception in his case.  Airbus is based in France, which has an excellent national health system, so it does not need to provide health insurance in the way that companies do in the U.S.  

I contacted Bill and told him he needed to talk directly to Social Security.  Here is his report from his call to Social Security (from France):

After being on hold forever I talked to SS yesterday, the woman did not know the answer but put me on hold and eventually came back and said I had to enroll and pay if I wanted to avoid the penalty.  It did not matter that I am completely covered here.  That is  not the way I read the outline online.  Going to try someone from the Louisiana delegation to see if I can get an answer in writing or email.

**LATEST UPDATE: See a later post with documentation that says Bill does not need to enroll in Medicare Part B because his group health plan, based on a national health plan, is recognized by Medicare as creditable coverage.  Click here for that info.

RETIRED AND LIVING OUTSIDE THE U.S.

Jim and his wife live in Mexico along with tens of thousands of other retired Americans. He is not working, but he and his wife are enrolled with the Mexican national health plan. The answer to his question was….. not clear when I called 1-800-Medicare. The person with whom I spoke could not find a definitive answer, so he took my phone number and said Medicare would get back to me. He told me this was the first time he had been stumped by a question about Medicare.

The eventual answer I got was “yes”, Jim must enroll in Medicare Part B when he turns 65, or he will begin to accrue a penalty of 10% for each year he is not enrolled in Part B. So if Jim returns to the US after 5 years and wants his Medicare Part B, he will pay a 50% higher premium.  At today’s rate, he would be paying $150 per month rather than the standard $99.90

The Medicare rep told me I should call Social Security, since they handle enrollment in Medicare.  The person I spoke with at Social Security was very clear about Jim’s situation in Mexico. She said enrollment in a country’s health plan does not count as creditable coverage. I asked her about employer coverage and she said that would exempt a person from the Part B enrollment requirement – but “Ask Ms Medicare” says this was incorrect information.

Here’s what else I found out:

People living in the U.S. and collecting Social Security when they turn 65  are automatically enrolled in Medicare Part A and B, and receive their Medicare card about three months before their 65th birthday. Medicare figures they want Medicare Part B. (I knew that.)

HOWEVER, people living outside the US who are collecting Social Security are not automatically enrolled in Part B. This is rather odd, since they are supposed to sign up for Part B even though they are living abroad, as explained above. I guess Medicare figures they might not want Part B.

What about Medicare supplements?

Jim in Mexico said he will sign up for Part B and would want a Medicare supplement – but his official address is in Mexico. He is registered with the local US Consulate as being a resident of Lake Chapala.

I know a person must use a physical address (not a P.O. Box) when filling out a Medicare supplement application. And I know Medigap premiums are based on the state in which a person resides. So I emailed a manager for UnitedHealthcare’s AARP Medicare supplements.

This question stumped my UHC contact. He trains brokers who sell their plans, and he always has answers to my questions – but not this one. He emailed me back a few days later with an answer from the UHC compliance department: A person must have a physical address in the U.S. to enroll in an AARP Medicare supplement. They cannot use a relative’s address.

Jim in Mexico cannot tell a Medigap company  he has a primary address in the U.S. because he is registered with the local US Consulate and Social Security as residing in Lake Chapala. So, he can have Medicare A and B  in case he gets really sick and needs to return to the US for care – but he is left with potentially big medical bills because he can’t enroll in a Medigap plan (or a Medicare Advantage plan).

That doesn’t seem right. Jim will be penalized if he doesn’t sign up for Part B. But if he enrolls in Part B, he doesn’t have the option of other Medicare coverage that would protect him from huge medical bills – options other Americans have. It seems like he is being penalized even if he does enroll in Part B.

WHY ISN’T THERE SOMETHING IN WRITING?

This is all very confusing and kind of disturbing. I got one answer from Social Security while Bill in France got a different answer.  And why wouldn’t Bill’s excellent coverage in France not count? Why should Americans working overseas have to pay for something they don’t need – especially when they have coverage that is BETTER than what they would get on Medicare (without paying additional money for a supplement).  And why isn’t this topic addressed in written form so people won’t make a wrong and potentially costly assumption based on what they find in the Medicare & You Handbook?

CLARIFICATION ON ENROLLING IN PART B: Enrolling in Part B is “voluntary”, BUT a person is penalized if they delay enrollment (unless they are working and covered by employer health  insurance. (This employment exception seems to apply only to people who have “american-style” health insurance.)

The  never-ending discussions on reducing government spending are targeting Medicare. Seniors must pay more for their medical care, or they will use the health care system too much. Several plans have been proposed to force seniors to pay more and rely less on Medicare supplement insurance (a.k.a. “Medigap”).

About 50% of people on Medicare have some form of Medicare supplement insurance, through an employer retirement plan (31%) or an individual Medicare supplement policy (19%).  Another 21% of Medicare beneficiaries are enrolled in Medicare Advantage. These figures are based on 2008 data from Medicare.

Medicare supplement policies fill the gaps in Medicare and pay some or all of the co-insurance and deductibles that are built into Medicare.  The most popular Medigap plans are plan F, which fills all the gaps, and Plan C, which covers everything but the excess charges.  So seniors with these plans pay their monthly Medicare premium and their Medigap premium, and don’t have to worry about medical bills when they get sick.  New rules being proposed for Medigap plans would not allow this kind of  “first dollar coverage”.

Apparently, some actuary has determined that seniors should expect to pay out between $3,000 and $5,000 per year in medical costs.  So they should not be allowed to protect themselves from those costs with insurance. For example, a person who pays $150 per month for a Plan F Medigap can figure that $150 x 12 months = $1,800 per year to cover their medical expenses. This is a lot less than $4,000 or $5,000 that is part of several proposals being considered in Washington.

As an insurance agent, I recommend a Plan F Medigap, but I guess I am part of the Medicare budget-busting problem.  Some of my clients live in gated communities and can certainly afford their Medigap premium, or an extra $5,000 each year for medical expenses.  But most of my Medigap clients  live very modestly, and I don’t know if they can afford to put out $5,000 every year for medical bills.

I recently read that about half of Americans who are over 65 have less than $50,000 in savings.  The millionaires who serve in Congress think these seniors with very limited savings will be able to find extra money for their medical care. I guess they should know.  These ideas on deductibles and higher co-pays slowing down the use of the health care system are straight from the for-profit insurance industry. It is called “consumer-driven heath care”. What it means is that the government doesn’t ration the care people get – seniors will ration their own care based on how much they are willing or able to pay. What a system!