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Choosing The Best Health Insurance Overseas

“Kathleen, do you know if some of these countries you write about offer the same healthcare coverage to nonresidents that they give their own citizens? In other words, I’m trying to figure out how the healthcare system works in some of these areas. Do foreigners all pay their hospital bills out of pocket—and they are just cheaper—or are some of them covered by the healthcare plans of the countries they are in, or is Medicare and the insurance coverage they brought with them from the US accepted down there?”

–Dan W., United States

Medicare doesn’t work outside the United States. That’s an important starting point. Medicare is useless anywhere in the world outside the States. However, I recommend that people keep it if they are eligible, as a back-up plan. If they ever needed to, they could return to the States for care using their Medicare coverage.

Most U.S. health insurance policies are, likewise, not valid outside the States. That is, your U.S. health insurance, whatever it is, probably won’t cover you anywhere else. Exceptions include military policies.

So the question is: Do you want to buy non-U.S. health insurance to cover you where you relocate…or do you want to “go naked,” as I refer to it, without any health insurance. This idea seems scary and crazy to most Americans, but it can be a sensible choice, depending on the country where you relocate and your circumstances in general. I know many people retired in different countries in Asia, for example, who have chosen not to invest in health insurance. Medical care is so cheap that insuring against it doesn’t really make sense. What these folks do, typically, is to create their own “self-insurance” funds. They put aside some lump sum of money…or they pay into a special investment account month by month. This way, they have cash available should they need it for catastrophic or long-term care…but they aren’t paying out the money to an insurance firm. They’re paying it out to themselves, as it were, even earning an investment return (say from a CD). But the point is that they’re paying for day-to-day medical expenses out of pocket while creating a fund of capital in case of serious medical emergency.

If one preferred to purchase insurance, he’d have two choices—a local health insurance policy or an international one from an international insurer (the biggest is Bupa International).

A local health insurance policy, as the reference suggests, is purchased in the country where you’re living and it covers you in the country where you’re living, only. That is the downside. It won’t cover you anywhere else in the world. So if you travel a lot or move around among countries, this probably won’t be a good choice. On the other hand, it’s a very, very affordable choice. Local health insurance can cost as little as $100 per month or even less, depending, mostly, on your age.

An international health insurance policy can cover you anywhere in the world, even everywhere in the world, including the United States. Note, though, that it must be based in the foreign country where you’re residing. Bupa, for example, will not sell you an international insurance policy if your home country is the United States.

Say you retire to Panama, decide you want health insurance, and, further, decide you want an international policy (rather than a “Panama” policy, because you’re going to be traveling regularly and outside Panama for many weeks or months each year). In this case, you’d buy a policy from Bupa (say) that would be based in Panama but that would include coverage for the region where you’d be traveling most…or maybe for the whole world not including the United States…or maybe for the whole world including the United States. This last option would be the most expensive by far because the United States is the most expensive place in the world to receive medical care.

An international policy gives you the ultimate coverage and protection but is more expensive than a local policy. Maybe three or four or more times as costly…which still can be much more affordable than a typical U.S. health insurance policy.

Finally, many countries do offer “free” state health care. To qualify for this, you must pay into the social system. In other words, this isn’t an option for retirees. Living in Ireland, for example, we were legal residents running a business and paying into the social system…so we qualified for “free” health care at the state facilities. But, again, this won’t work for a retiree.

I hope that helps to clarify. This is a complicated topic and a very personal decision.

We have produced a complete guide to healthcare and health insurance overseas that covers all of this in much greater detail, walks you through how to make the best choice for you and how to evaluate different insurance policies, premiums, deductibles, coverages, etc., both in general and specifically for 20 countries in particular. More information on this resource is here.

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