Demystifying US Medicare Eligibility for Canadians

There’s widespread misinformation out there about the eligibility requirements for Canadian retirees to be able to enroll in US Medicare. With US health care such a threshold issue, both Canadian resident snowbirds who winter down south and Canadians who may be planning to move to the US full-time are eager to learn whether they will qualify for Medicare coverage.

Generally, you’ll read that to be eligible for US Medicare coverage, you need to be: a) at least 65 years old; AND b) either a US citizen or a green card holder who’s been living continuously in the US for at least five years.

The age 65 requirement is true barring certain qualifying disabilities or medical conditions. However, the US citizenship / five-year US residency with a green card requirement is not necessarily true. Canadians who aren’t US citizens / green card holders and who don’t even live in the US year-round can get on to Medicare.

In another blog, I’ll provide an overview of the various parts of Medicare. For now, I’ll just be zeroing in on the eligibility requirements for Original Medicare, which consists of Part A (Hospital Insurance) and Part B (Medical Insurance).

Eligibility for Part A

Free Part A

Most Americans qualify for Part A at age 65 for free based on their US work history. As you earn US income on which you pay US payroll taxes, you earn Social Security credits, also known as “quarters of coverage.” The amount of income needed to earn one credit is subject to annual change with inflation – in 2019 it takes $1,360 USD. Since you earn a maximum of four credits in one year, in 2019 it only takes $5,440 USD to earn the maximum four credits.

You qualify for free Part A Medicare as long as you or your spouse have at least 40 credits (having paid US payroll taxes on US employment income for at least 10 years).

What’s important for Canadians to know is that having the 10-year minimum US work history is actually all you need to enroll in free Part A (and as we’ll see below, Part B). Contrary to popular belief then, you don’t need to be a US citizen, green card holder or resident to sign up for Medicare.

A 65 year-old Canadian who worked for at least 10 years in the US can therefore enroll in free Part A Medicare. The same goes for spouses – the Canadian spouse of a 10-year US worker will also qualify for free Part A (not to mention also spousal Social Security benefits) even if that spouse has never set foot in the US.

Paid Part A

Those who don’t have the 10-year minimum US work history must pay a monthly premium to enroll in Part A. Someone with at least 7 ½ years of US work history (30 credits) qualifies to buy Part A at a reduced rate of $240 USD per month in 2019. Someone with fewer than 30 credits must pay the full monthly premium of $437 USD per month in 2019.

For married Canadians then, making it to the 10-year US employment income mark is worth a combined annual savings of over $10,000 USD in Part A premiums as a couple.

To be eligible for paid Part A, you must also be enrolled in Part B.

Eligibility for Part B

Unlike Part A, Part B is never free. The basic monthly premium for Part B in 2019 is $135.50 USD. Higher income earners above certain thresholds pay more.

If you qualify for free Part A

Those who qualify for free Part A are also automatically eligible for Part B. So our 65 year-old Canadian with the 10-year US work history and his / her spouse will automatically qualify for Part B.

If you don’t qualify for free Part A

Here’s where the confusing misinformation about US citizenship / five-year green card status comes from. This requirement only applies to those who must buy into Part A, i.e. those who don’t have the 10 years (40 credits) of US work history either through their own record or that of their spouse.

Canadians age 65 and above who don’t have a 10-year US work history therefore need to either be US citizens or US green card holders living continuously in the US for 5 years to get onto US Medicare.

The Part B Decision

Keep in mind that Medicare offers very little medical coverage outside US soil – it’s only intended for people living or spending a lot of time in the US. While participating in free Part A is a no-brainer, it may not make sense for a Canadian resident who doesn’t spend much time in the US to pay for Part B. That said, the decision isn’t always clear-cut because someone may wish to preserve the option to retire or spend more time in the US in the future and a penalty typically applies for late Part B enrollment.

Conclusion

Navigating the topic of US health care can feel daunting to Canadians because it’s an unfamiliar system with complex rules. Adding to the challenge, there’s also a lot of misinformation and it’s nearly impossible to find someone with cross-border health care expertise.

To sort through the complexity and better understand your US health care options, we recommend consulting a Canada / US Health Care Advisor. The advisor will help you by:

1. identifying the most appropriate US health care strategy; and
2. supporting you to implement the chosen strategy through guidance on enrollment, using the services, renewal, and understanding any legal / political changes.

Jonah Ravel, B.A., F.Pl., CFP, is a Senior Cross-Border Financial Planner and Canada & US Health Care Advisor at MCA Cross Border Advisors Inc.