We know that persons living in foreign countries can receive social security benefits.
Medicare benefits are not usually payable outside the United States.
A major stumbling block to secession is how medicare recipients would fare.
Part A premiums are essentially paid through the medicare deduction from paychecks.
Part B us mandatory when you reach age 65. Premiums are normally deducted directly from your social security checks.
Part C is any of the Medicare Advantage plans, and are managed by private insurance providers. Premiums are usually deducted directly from your social security checks.
Part D is the prescription drug coverage; enrollment is mandatory within 63 days of turning 65. If you have a Medicare Advantage plan, drug coverage is included.
Part A coverage is usually not available until you have worked for 10 years, paying into the Medicare program. But it is possible to enroll in Part A if you enroll later than you were eligible to. You pay a penalty of 10% of the Part B premium that is deducted from your social security check, for a period equal to twice the number of years that you could have enrolled but didn’t.
Part B is cancelable. If you are not enrolled in Part A, or are paying the penalty for late enrollment, I assume that it would also be cancelled with Part B cancellation.
Part C enrollment is dependent on maintaining enrollment in both parts A and B.
Part D enrollment is administered by private insurance providers. If you do not obtain Part D coverage within 63 days of the earliest eligibility date, usually when you enroll in Parts A & B when you turn 65, a penalty is paid, equal to 1% of the “national base beneficiary premium” for every month you delayed after the earliest eligibility date. The “national base beneficiary premium” will be $34.70 in 2024.
Assuming that private insurance providers can do at least as well as Medicare, and assuming that everyone who is enrolled would not be able to receive Medicare payments, what would the scenario look like?
Part A would normally be covered when you turn 65. But when the switch to private insurance carriers occurs, they would not have the advantage of having received all the payroll deduction payments people have had over their lifetimes. So let’s assume that the 10% penalty on the Part B premiums would go into effect.
The Part B premium will be $174 per month in 2024. Part B plus the Part A buy-in would be $191.40 per month.
Part C, Medicare Advantage plans, would remain the same, since enrollment is completely voluntary.
Part D cost would be a minimum of $34.70, plus the 1% penalty, which could be calculated from the time of Medicare enrollment at age 65. This value would be different for each private insurance provider, and for each individual.
Normally Part A is not cancelable, but that is of no consequence since we would not be paying into the system via payroll deductions.
Part B is cancelable. After cancellation, it would no longer be deducted from social security benefits.
Part C is managed by private insurance providers.
Part D is managed by private insurance providers.
How would this all be paid for?
If you have not been paying for Part A through payroll deductions, then you have not been getting Part A benefits anyway. Nothing would change. If you are not working in the U.S. as an American citizen, Part A is not being taken out of your paychecks anyway. Transferring to private insurers would likely require that something like the 10%, possibly more, would be required because they will not have been getting Part A deductions for all those year.
Cancelling Part B would add the amount of that premium back into your social security checks.
Part C requires enrollment in both Parts A and B. If you have not been getting Part A you cannot get Part C coverage. If, however, you are enrolled in both Parts A and B, cancelling these would return the amount of the premium for Part C back into your social security checks.
Part D premiums are also taken out of social security checks. Part D is also cancelable, and would return the amount of the premium to your social security checks. This is true even if you have a Medicare Advantage plan.
If you stayed in Medicare, even with the penalties, the difference in costs would be $17.40 plus the penalty for late enrollment in a drug plan.
For most people, it would not even be that.
If all of your Medicare payments and benefits are transferred to private insurance providers, and you have followed the guidelines for securing Medicare Advantage and Part D, the most you should have to pay is that 10% penalty for late enrollment in Part A. I’m no expert, but I seem to remember that insurance providers often require a certain amount to
join their insurance programs, a kind of membership fee.
This assumes that private insurance carriers can provide the same services at the same cost overall.
[Edit: Many people receiving Medicare benefits are also working to a much older age.
These people would have the additional perk of not having the Medicare payroll deduction taken out of their pay with each paycheck!]