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Medical Coverage in the USA

Medical CoverageThere are a number of rumors and opinions about the healthcare systems in both Canada and the US. We believe both health systems offer some of the best care in the world. But, because of the availability of services in the US, our opinion is that the US has the better health care system.  Despite popular opinion, the medical system in the US will not leave you “dying in the gutter” because you don’t have a health insurance card in your wallet. This is against the law and the liability lawsuits would be flying if such an incident occurred.

Provincial Coverage

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 permanent medical coverage as soon as you become resident of the US. Fortunately for those with “pre-existing” conditions, permanent US healthcare is now “guaranteed issue” because of the Affordable Care Act. Insurers can no longer deny coverage because of “pre-existing” conditions. When you apply for coverage, you will be issued a policy that is priced primarily on age.

US Employers

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 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. At age 65, you can enroll in Medicare if you are eligible. Premiums for Part A (hospital coverage) are discounted, or free, depending on how many years you worked in the US. You will have to pay the full monthly premium (U$411 – 2016) if you did not work at least 30 quarters in the US. Premiums for Part B (doctor visits) vary depending on income.

Individual Policies

In the US, individual health insurance policies are available to anyone who applies. Most people take advantage of employer plans or government plans if they have them available, but every US resident can now purchase private health insurance thanks to the Affordable Care Act (ACA). These private plans typically offer “catastrophic” medical coverage and have high deductibles of $6,000 or more (deductibles have increased significantly since the passing of ACA). This means, you pay for the first $6,000 in medical expenses until your policy kicks in (and excludes vision and dental), at which point the insurance policy will typically pay 80% – 90% of medical expenses until the out-of-pocket maximum is reached (typically $12,000 or more, or double the deductible). This can be quite shocking for most Canadians. Because of the skyrocketing health insurance premiums, deductibles, and out-of-pocket maximums under ACA, it is unclear which system is more expensive for the consumer where the US was clearly less expensive prior to ACA.


US Medicare

US citizens and Canadians living legally in the US for at least five years (one year with qualifying event) 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 prescription drug plan.

Once you have established the required 40 quarters of Medicare eligible earnings, you qualify for free Medicare Part A medical coverage. In 2016, Part A cost $\411 per month ($4,932 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 ($5,040 in 2016) for at least 10 years.  Once 30 quarters have been established, the premium for Part A drops 45% to $226 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.

Premiums for Part B coverage for doctors and outpatient hospital care range from $121.80 – $389.80/month per person depending on your income, and it is not free no matter how many quarters of eligibility you have. Premiums for Part D prescription drug coverage can vary widely depending on what plans are available in your area, at what age your enrolled, and your annual income.

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 and excess doctor billings are not covered ). 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 $2,180 per year per person.