Personal Finance

Why the coronavirus should make you pause if you're thinking about retiring overseas

Key Points
  • The new coronavirus, COVID-19, has spread to more than 70 countries and is expected by the World Health Organization to reach most, if not all, nations around the globe.
  • With older individuals vulnerable to complications from some pathogens, as well as susceptible to age-related conditions, anyone considering an overseas retirement should pay close attention to the health-care system in their possible new home country.
  • Medicare, which is relied on by most Americans over age 65, does not provide coverage beyond U.S. borders, except in limited circumstances.

If you've been considering overseas retirement spots, the rapid spread of the new coronavirus around the globe might be giving you pause.

That may not be a bad thing, say some experts. While it's tricky to predict where and when any contagion — whether this coronavirus or another pathogen — will emerge, a key consideration of retiring abroad should be how you'd handle medical care in a foreign place.

"This is the point in your life when health care is going to be really important," said Howard Pressman, a certified financial planner and partner at Egan, Berger & Weiner in Vienna, Virginia. "I'd recommend fully understanding the care you can expect to receive ... not just the cost, but also the access and quality." 

People wear face masks in Times Square New York on March 03, 2020. New York confirms second coronavirus case, as flights cancelations and Jewish schools close over virus fears.
Eduardo Munoz | VIEWpress | Getty Images

The new coronavirus, or COVID-19, has infected at least 95,000 people globally, and caused some 3,280 deaths. The outbreak has spread to more than 79 countries and is expected by the World Health Organization to reach most, if not all, nations around the globe. In the U.S., the case count had reached 233, with 14 deaths, as of Friday. 

The virus appears to take a bigger toll on those with underlying health conditions (i.e., a weakened immune system) and older folks. That's similar to the influenza virus — better known as the flu, which has already sickened an estimated 32 million to 45 million people in the U.S. since Oct. 1, according to the Centers for Disease Control and Prevention.

Of those cases, an estimated 18,000 to 46,000 patients in the U.S. have succumbed to complications from the flu in the last five months, according to the CDC. The majority of those deaths — 70% to 85% — are in people age 65 or older. And, an estimated 50% to 70% of flu-related hospitalizations have involved that cohort.

How the age you retire changes your Social Security benefits on a $50,000 salary
How the age you retire changes your Social Security benefits

In other words, with age come increased health risks, and germs are ever-present, whether in the form of the new coronavirus or some other sneaky pathogen — regardless of where in the world you live. There's also a chance that you'll develop age-related conditions, whether hearing or vision loss, or things like high blood pressure, diabetes, heart disease or cognitive impairment. About 80% of Americans age 65 or older have at least one chronic condition, and 77% have at least two, according to the National Council on Aging.

In the U.S., most people age 65 or older rely on Medicare as their primary medical insurance, and most doctors, hospitals and other providers accept it. Original, or basic, Medicare consists of Part A (hospital coverage) and Part B (outpatient services).

People generally pay no premium for Medicare Part A because they have at least a 10-year work history of paying into the system. Part B comes with a standard monthly premium of $144.60 for 2020, although beneficiaries with higher incomes pay more.

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However, basic Medicare provides no coverage beyond U.S. borders, except in specific circumstances. That includes when you're on a ship within the territorial waters adjoining the country — within six hours of a U.S. port — or you're in, say, Alaska, and the closest hospital to treat your emergency is in Canada. (Limited coverage for overseas travel — versus residency — may be available through an Advantage Plan or a so-called Medigap policy).

Medicare Part D is prescription drug coverage and is sold through private plans — either as a standalone policy or as part of an Advantage Plan. The average cost is about $33 monthly for 2020 (again, higher-income enrollees pay more). Like basic Medicare, it provides no overseas coverage.

Although it may make sense to be enrolled in basic Medicare even if you retire overseas, its limitations mean you'd need a plan to cover your health-care costs in your new country.

I'd recommend fully understanding the care you can expect to receive ... not just the cost, but also the access and quality.
Howard Pressman
Partner at Egan, Berger & Weiner

Exactly how many U.S. expats are retirees is hard to come by. In 2016, the State Department estimated that roughly 9 million non-military Americans were living overseas, according to various reports. Separately, Social Security Administration data show that about 672,000 monthly checks go to overseas addresses.

By and large, health care is cheaper in other countries. Due to higher costs of procedures, medications and services, the U.S. spent about $9,900 per person on health care in 2016, according to research from the Johns Hopkins Bloomberg School of Public Health. That amount doubled from 2000, and was 25% higher than the next-biggest spender, Switzerland, at $7,900.

Lower health-care costs elsewhere can be a big lure for people in search of a place to retire beyond U.S. borders. For Edd and Cynthia Staton, expats who retired in Ecuador ten years ago, health care was a factor they weighed before making a decision on where to settle.

Cynthia and Edd Staton say an unusual strategy saved their retirement.
Courtesy: Edd and Cynthia Staton

"Availability of quality and affordable health care was one of our wish-list items," said Edd Staton, 71, who along with wife Cynthia, 66, operates a website for people considering a retirement abroad. 

He said that because of the low cost of health care in Ecuador — including for office visits, procedures and prescriptions — they paid their medical expenses out of pocket for several years before joining the country's national health-care system.

Under that plan, their combined monthly premium is $84, with no deductible or restrictions on age or pre-existing conditions. 

However, cost wasn't their only consideration — access was, as well. Edd Staton said he has seen people pick a retirement spot overseas due to the low cost of living and the view — without considering what their day-to-day life will be like, including "how far they are from quality medical care, especially in the case of an emergency," he said. 

"Big mistake," he added.

In addition to their coverage in Ecuador, the Statons also are enrolled in Medicare — which means they have coverage during their visits to the States. And, if they unexpectedly relocate back to U.S. soil, they won't pay extra for enrolling late. Basically, unless you meet an exception, failing to enroll in Medicare when you're first eligible at age 65 can result in life-lasting penalties.

If the country you're thinking about for retirement has a national health plan, you may be able to join it. The rules differ among nations, such as requiring at least one year of residency first, or whether you pay an amount based on your income for certain types of care.

However, these national plans often restrict you to certain providers, which means timely access can become an issue.

Pressman, of Egan, Berger & Weiner, had a client whose overseas retirement included relying on a national health plan. While an emergency was handled expediently with a good outcome for the client, getting an appointment for a chronic condition would have meant waiting about a year, Pressman said.

Like some expats, the couple chose to purchase additional insurance, which allows them a broader choice of providers than those available through the national plan.

Expats we know either pay out of pocket or participate in local private or public plans.
Cynthia Staton
U.S. expat living in Ecuador

In some countries, you can purchase a private policy that's particular to that country. You also can consider an international medical policy — which is intended to cover you in different countries — although they can come with a price tag of a few thousand dollars per year. And, a policy may impose age restrictions or exclude coverage (or charge you more) for pre-existing conditions.

"It's certainly the most expensive option," said Cynthia Staton. "Expats we know either pay out of pocket or participate in local private or public plans."

As for the Statons' view of the coronavirus while they're far from the U.S. health-care system: They aren't particularly worried about it showing up in Ecuador.

"We have no concern the care here would be anything less than the best," Cynthia Staton said.

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