Medicare and Moving Abroad: Keep It or Drop It?

Medicare is the rare American institution people miss before they’ve lost it. Here’s the uncomfortable core fact: Medicare provides essentially no coverage outside the United States. So why would anyone abroad keep paying for it? Because the decision isn’t about this year — it’s about the year you come back.

The three moving parts

• Part A (hospital): premium-free for most people who worked 10+ years in the US. Since it costs nothing, virtually everyone keeps it — enrolment is automatic and harmless.
• Part B (medical): the real decision. It carries a monthly premium (income-adjusted) for coverage you cannot use abroad.
• Part D (drugs) and Medigap/Advantage: generally dropped when leaving, with their own re-entry considerations — Medigap in particular can involve medical underwriting when you return, which matters if your health has changed.

The Part B dilemma, honestly

Dropping Part B saves real money — years of premiums for unusable coverage. The cost: a permanent late-enrolment penalty of roughly 10% of the premium for every 12 months you weren’t enrolled when you could have been, payable for the rest of your life once you re-enrol — plus a potential wait for a general enrolment window, meaning months back in the US without coverage.

Keeping Part B costs the premiums but keeps your re-entry instant and penalty-free — effectively an insurance policy on the possibility of coming home.

How expats actually decide

• “We might come back” (family, health, uncertainty): many keep Part B, treating premiums as re-entry insurance. Common for the first few exploratory years abroad.
• “This move is permanent”: many drop Part B after the move proves itself, accepting the penalty math on the small chance of return — often reasoning that a return would likely be late-life, when penalties, while permanent, apply to fewer years.
• The middle path: keep Part B during the trial period abroad, set a review date (say, year three), and decide with real information. A perfect calendar item for our annual review.

What replaces Medicare abroad

Usually a combination that costs less than Americans expect: your visa’s required private policy, then residency-based access to public healthcare in many European countries, plus affordable private top-ups. The full landscape: health cover abroad. Also note: IRMAA planning still matters — if you keep Part B, your premiums scale with income, and large Roth conversions or capital gains abroad can bump them.

Special case: still working abroad at 65

Enrolment windows, foreign employer coverage and penalty exceptions interact in genuinely confusing ways around your 65th birthday abroad. One common trap: only group coverage tied to current employment — yours or your spouse’s, and the employer does not have to be in the US — lets you delay Part B without penalty. A national health system you belong to as a non-working resident, retiree coverage or private insurance does not stop the penalty clock, so retiring abroad at 65 usually means enrolling at 65 or accepting the penalty. And there is no “pause” option: you keep Part B or you drop it and re-enrol later with the penalty. If that’s you, take specific advice before your birthday month — some windows don’t reopen kindly.

In practice the test is the word current: employed in Munich with a group plan, you can wait; retire from that job and the clock starts, whether or not the national system now covers you. Keep the employer’s confirmation of coverage dates — Medicare will want proof.

What “years of premiums” costs in 2026 money

The standard Part B premium for 2026 is $202.90 a month; the annual deductible is $283. Multiply it out: $202.90 a month is $2,434.80 a year, so a five-year trial abroad with Part B kept costs roughly $12,174 and a ten-year stint roughly $24,348 at today’s rate. That is the price of the re-entry insurance described above.

The IRMAA surcharge starts once income passes $109,000 for a single filer or $218,000 for a couple filing jointly, and it is assessed on the income from two years earlier. Sell the US house or do a large Roth conversion in your first year abroad and the bill lands in your premium two years later.

The penalty, worked through

The late-enrolment penalty is 10% of the standard premium for every full 12 months you could have had Part B but did not, payable for as long as you have Part B. Drop Part B at 66, live abroad for five years and come home at 71: five full years means a 50% surcharge. On the 2026 standard premium that is an extra $101.45 a month, so $304.35 instead of $202.90, for the rest of your Medicare life — and because it is a percentage of the standard premium, it grows as premiums do.

Then there is the wait. Without a special enrolment period you can only sign up in the general enrolment period, 1 January to 31 March, with coverage starting the month after you sign up. Come back in April and the earliest you can apply is the following January, with coverage from February: potentially ten months uninsured. Price bridging cover early (travel versus expat insurance).

Part D has its own, smaller clock

Part D carries a separate late penalty: 1% of the national base premium ($38.99 in 2026) for every month without creditable drug coverage. Thirty months without cover adds 30% of $38.99, about $11.70 a month, for as long as you hold Part D. It is counted by the month, so a short gap registers immediately. Whether a foreign policy counts as “creditable” is a question to ask in writing before you cancel, not a thing to assume.

What Medigap does and does not do abroad

The exceptions to Medicare’s no-coverage rule are narrow: a foreign hospital that happens to be closer during an emergency inside the US, travel between Alaska and another state through Canada, living near the border, and a limited cruise-ship rule. None of them describes living abroad. Several Medigap plans (C, D, F, G, M and N) add a foreign travel emergency benefit: after a $250 deductible they pay 80% of emergency care abroad, but only during the first 60 days of a trip and only up to $50,000 over your lifetime. Once you live abroad you are not on a trip, and one serious hospital stay can exhaust the lifetime cap. It is a benefit designed for a fortnight in Italy, not a retirement there — which is why most expats let Medigap go in favour of proper expat health cover.

The bottom line

Keep Part A (it’s free). Decide Part B based on your honest probability of returning — and revisit that answer on a schedule instead of by accident. It’s a standard checkpoint in the Expat Money Assessment for anyone 60+.

This article is general information, not insurance or benefits advice. Medicare rules and premiums change annually — verify current figures at medicare.gov before deciding.