US Health Care

stethoscopeContributed by John Rice, CFA,CFP®One of the challenges to coming to the US is what to do about health insurance. If you are coming to the US as more than just a snowbird you will need to address health care in your plans.

The optimal long-term solution to health care in the US is to get onto the Medicare system. This is the coverage that most US persons over age 65 depend on for their health coverage. To obtain US Medicare you will need to be in the US on a permanent basis for five years and be age 65 or older. There are many nuances to the US Medicare system that are beyond the scope of this article, such as Medicare supplemental insurance. This article is instead about what to do for the time period up to US Medicare.

There is much changing in the US health care system as we approach 2014 because of Obamacare.  Obamacare should have  a favorable outcome for Canadians that are coming to the US and need a solution for their health care needs. One source for up-to-date information on Obamacare and the new health care exchanges that are being set up around the country is here:

 http://www.forbes.com/sites/carolynmcclanahan/

The most common question we get is can I keep my Canadian provincial health care when coming to the US as a legal permanent resident. The answer to this question is no. If you are switching permanent residency to the US you will no longer qualify for your Canadian health coverage. However, you can go back to Canada and in some provinces you will be covered immediately and other provinces will have short-term waiting periods.

One option that may be available to you is to secure private insurance from one of the large insurance providers that operate in the US. If you are able to obtain private insurance through one of these providers this is often the best alternative. It can be expensive for Canadians that are not used to paying for health insurance but the tax savings you achieve with your residency switch will often be much greater than your increased cost of health insurance. Private health insurance in the US offers you access to the best medical care available in the world.

International health insurance policies are another option that can cover you for the time it takes to get onto the US Medicare system. These policies are often easy to obtain but generally have relatively low coverage limits and may have exclusions for pre-existing conditions.

A coverage limit is a maximum amount that will be covered under the insurance. Exclusion is an area that the policy will not cover. A policy with a coverage limit will pay for qualifying medical care above your deductible up to the coverage limit. For example, a policy with a $5,000 deductible and $100,000 coverage limit will cover your medical care between these two amounts. If you have an emergency and need to go into the hospital for a few days and have a $20,000 hospital bill, you would pay the first $5,000 and the remaining $15,000 would be covered by the insurance company. If you had a major medical procedure that cost $125,000 you would pay the first $5,000, the insurance would cover the next $100,000, and then you would pay the final $20,000. It is not ideal to have a health insurance policy with a low policy limit, but in some cases this may be one of few alternatives.

A worse case is when a policy is issued with exclusions. To obtain this kind of insurance you fill out a health assessment and this may be the extent of the underwriting to determine whether you get the coverage or not. If you have health issues some policies will be issued with exclusions for these pre-existing conditions. An example of this is if you had heart disease in the past the policy may be issued with exclusion of heart coverage. A policy with exclusions is not going to be useful to you. Why would you pay for health coverage that excludes the thing that is most likely to cause you additional health concerns in the future?

We expect to see a lot of changes to the US health care system over the next couple of years as Obamacare is implemented in all states. This should be favorable to Canadians seeking reasonably priced health coverage that covers pre-existing conditions.

 

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