Medicare is really a two-part benefit program – and both programs can be used to help cover emergency medical costs for retirees in Mexico.
First, there is original Medicare, which is comprised of Part A (hospital coverage) and Part B (physicians and most other covered services). About 20 years ago, an important benefit was added as Part D to help Medicare beneficiaries cover the costs of prescription drugs. In addition, a semi-official part of original Medicare is the Medicare Supplement program, which is also known as Medigap. it comes in eight alternatives specified by Medicare and is offered by private insurers. Four of these plan types – D,G,M and N – offer emergency medical coverage. Finally, there is Medicare Advantage, also known as Part C, which is a combined program including Part A and Part B coverage, and frequently includes Part D benefits, as well as a variety of benefits not included in original Medicare. Importantly for expats living in Mexico, it includes emergency care outside the U.S.
Medigap Travel Coverage Outside the U.S.
Medicare Supplement Plans D, G, M and N all provide up to US$50,000 lifetime benefit of coverage to travelers outside the United States on an indemnity basis, paying 80 percent of valid claims. This coverage is for emergency care coverage and will not apply for non-emergent services. These claims must be paid for first, and then claims presented back in the U.S. to the Plan provider. While $50,000 may not sound like much, it should cover almost all emergency care coverage in Mexico (accident, heart attack, stroke etc.) until you can get back to the U.S. This is really travel insurance intended for trips up to 60 days in length. For people retired in Mexico who return frequently to the U.S., Medigap coverage is terrific and eliminates the need for additional policies for travel anywhere in the world.
Let me use myself as a real-life example for cost and coverage. My wife and I travel about one-third of the time from our home in Nashville. The two downsides to Medigap plans are that they require fairly short trips abroad and are pretty expensive – in my case about $100.00 per month for a G Plan (maximum coverage). To participate in Medigap plans, you must have Part B insurance, which is a very good idea anyway, but costs $148.50 per month. I also have a Part D plan, which cost around $25.00 per month. So, in total I pay around $273.50 per month for great coverage in the United States and abroad.
The best thing about it is I can go to any doctor in the U.S. with extremely low annual out-of-pocket costs. I have over 60 G Plans to choose from where I live, and availability is dictated by geography. Purchasing a Medigap Supplement is great for young, active retirees, and once purchased can move around with you. Medigap Plans do require a physical address in the United States, not just a P.O. Box. Medigap Plans change very little year by year, but premiums do increase, typically based on age and inflation.
Medicare Advantage Plans Provide Flexibility and Low Cost
Many Medicare Advantage Plans offer great offshore coverage for low-cost or no-cost in premiums, which applies directly to beneficiaries in Mexico. Medicare Advantage covers both Part A and Part B expenses (Part B participation is a requirement) and many Plans cover Part D benefits as well. Increasingly Medicare Advantage Plans are being offered with vision, dental and hearing coverage, and additional benefits such as transportation and meals, which are less important to expats spending large amounts of time in Mexico.
Advantage Plans are issued based on very specific geography in the U.S., often at the county or even zip code level. Having a physical address is a requirement for all Advantage Plans, and the home address is the basis for the service area associated with each Plan.
These plans historically allowed a maximum of six months of time outside the U.S. service area, and coverage caps of $50,000, just like Medigap Plans. And while this is still the case for most plans, this year we are starting to see plan offerings that expand coverage to $250,000, some relief for Part B fees (around $25 per month) and greatly relaxed residency requirements in the U.S. In fact, some plans do not have any residency requirement for certain market service areas.
These plans operate on some sort of managed care basis, so care in the United States is either within a specified network or is subject to increased utilization fees. Medicare caps the maximum annual out-of-pocket for Part C plans at $7,550 for in-network services and $11,300 for out-of-network, although many plans offer substantial reduction from these maximum amounts.
Using myself as an example again, I have 42 Medicare Advantage Plans available to me in Nashville, 39 of which offer coverage outside the U.S., and many have no premium. My total cost for purchasing this coverage would be only my Part B coverage cost, which is US$148.50 per month.
As noted above, we are starting to see plans in some markets where there is no residency requirement during the year of coverage, which means that all 12 months out of the local U.S. service market is OK. Medicare Advantage is a great alternative for those who spend a lot of time at vacation homes in Mexico or with family outside the U.S.
One important feature to remember is that you can expect great coverage and service from Medicare Advantage Plans when you return to the U.S. for care.
Make Sure You Can Get Home!
You will need to return to the United States after an accident or emergent illness, which are not covered by Medicare. We strongly suggest that if you need to get back to the U.S. for care, purchase emergency evacuation insurance. It is not terribly expensive, but well worth it!
Everybody’s Needs Are Different – Let US Help Get You the Right Solution
We hope that this educational article helps you frame the range of alternatives and coverage available to you. Get in touch today or give us a call and let us help you figure out the best solution for your needs.