Medical Coverage in the USA

Your Provincial medical coverage may be good for up to six months after you leave Canada , depending on your Province of residence (some terminate it immediately).  There are several problems in continuing your Provincial coverage in the US that make it of virtually no use to you.  First, your Provincial healthcare will only pay “table” rates.  For example, the table rate for a skin graft in Canada may be C$400 . . . that is all that will be paid.  If you need a skin graft while resident in the US, and it costs U$650, your Provincial medical coverage will pay C$400 and you will be billed by the US hospital for the balance.  Second, there are limits on the daily rate that will be paid for hospitalization that provide a very small portion of what is required (B.C. pays C$75 per day) and is inclusive of everything required for that hospital stay including the room, bandages, food, medicines, etc.  In the US , however, there is one fee for the room, another for the doctor and each bandage, pill and needle is tracked separately.  Needless to say, this leaves you with the balance to pay personally. Third, you will have to prove to the provincial health authorities that your intent was to remain in Canada and not move to the US . The other risk you face is being subject to double taxation from Canada because you have not severed your ties, and from the US , because you are resident there.

Travel insurance can provide medical coverage on a temporary basis (usually less than six months) for any balance owing but if you have a “pre-existing” condition, you may not be able to get insurance coverage for it. Likewise, the insurance company will attempt to attribute any illness to the pre-existing condition so they don’t have to pay benefits.  Therefore, you should apply for medical coverage before you leave the safety of Canada ‘s healthcare system in the event you are “uninsurable.”

 For those making the transition to the US for employment, the best medical coverage typically available is the group healthcare plan through your US employer. Typically, the larger the employer, the better the health plan. However, as with almost any healthcare plan in the US , be prepared to pay by cash, check or credit card a “co-pay” for any doctor, lab, x-ray visit, etc.

For those hoping to retire before age 65, you must be cognizant of the fact you will be without healthcare once you leave your US employer unless you are employed long enough to qualify for retiree medical coverage. The situation is not the same as in Canada where you automatically qualify for Provincial medical coverage provided you make the monthly premium payments. There is a government law (called COBRA) that allows you to take your employer health insurance benefits with you for up to 18 months after you leave as long as you take over the premium payments, which tend to be very expensive. If you are not eligible for retiree medical coverage, you will have to obtain an individual health insurance policy.

 In the US , individual health insurance policies are available to those that do not qualify for any group or government benefits. These typically offer “catastrophic” medical coverage and have high deductibles of $2,500 or more. This means, you pay for the first $2,500 of your medical expenses until your policy kicks in (and excludes prescriptions, vision and dental). This can be quite shocking for most Canadians, however, when you calculate the lower taxes and lower medical insurance premiums you pay in the US , you typically come out ahead.

The problem with an individual policy is if you have a “pre-existing” condition, there may be a “rider” on your policy excluding it, or you may not be underwritten at all. If there is an exclusion, any illness that occurs may have the insurance company trying to blame it on your pre-existing condition so they do not have to pay benefits. You have to understand that the health insurance companies are in business to make money (and they make millions!) They try to offer insurance to those they believe on average they can make money from. There are health insurance companies that will offer individual health insurance policies at reasonable rates to those making the transition to the US , including those with some pre-existing conditions! Of course, it depends on your individual circumstances and financial situation to determine the best company and policy for you and your family’s medical coverage.

US citizens and Canadians living legally in the US for at least five years become eligible for US Medicare at age 65.  Medicare is currently made up of three parts – Part A, Part B and Part D. Part A is hospital insurance and helps pay the cost for care while in a hospital. Part B is medical coverage and helps pay for the doctors, outpatient hospital care and a variety of other medical services not covered by Part A. Part D is the optional drug prescription plan, which is still being finalized.

Once you have established the required 40 quarters of Medicare eligible earnings, you qualify for free Medicare Part A medical coverage. In 2004, Part A cost $343 per month ($4,116 annually) per person. However, to qualify for free Medicare Part A, you must have earned income that you paid Social Security taxes on in excess of the required amount (around $3,500 in 2004) for at least 10 years.  Once 30 quarters have been established, the premium for Part A drops 45% to $189 per month. At times, Medicare planning can make or break your finances and your pending transition to the US .  There are many strategies to get you eligible for free Medicare Part A but it depends on what stage of your life you are in, your unique financial situation and your individual goals and objectives.

Part B coverage for doctors and outpatient hospital care costs $66.60 per month in 2004 ($799.20 annually) per person and is not free no matter how many quarters of eligibility you have. At this point, it appears that Part D drug coverage will cost approximately $35 – $43 per month with a $250 deductible. Prescriptions from $250.01 to $1,250 will be on an 80%/20% coinsurance plan.

While Medicare provides good base medical coverage, it should not be relied on to cover all of your medical expenses (i.e. hospital stays greater than 150 days are not covered and excess doctor billings). You will need to purchase a Medicare Supplement policy to cover the expenses not covered by Medicare. Medicare Supplements have ten government-defined types of policies, ranging from basic (“A”) to comprehensive (“J”). These are all the same no matter who provides them so it becomes a matter of shopping price. We typically recommend an “F” policy as it provides the best value but again, that depends on your individual financial situation and medical coverage needs. Your Medicare Supplement does require underwriting but it is very broad and we have not heard an instance of anyone being turned down. Medicare Supplements cost approximately $1,200 per year per person.