Health care is a pivotal issue for most expats but it poses problems for insurance companies

By Tim Greene

For the well-traveled, the idea of retirement abroad can seem an idyll. You pick a place you’ve loved visiting, whether it’s the thrumming avenues of Paris or the sunny strands of Panama or the mountains of Ecuador, and jet off for the perfect permanent vacation.

Health care is a major challenge for expats.

But the fantasy can become less carefree if you haven’t figured out in advance what to do about health insurance. The best policies, those offering the broadest coverage and giving access to the best hospitals, can be jarringly costly. More affordable alternatives can come with exceptions that may surprise people accustomed to the comprehensive coverage offered through many United States employers. Many countries offer high-quality care — France is a prominent example — but retirees won’t be able to access it without insurance or paying out of pocket. And in almost all cases, Medicare doesn’t pay for health care provided outside of the United States.

“Health insurance really is a primary consideration when retiring overseas,” said Brendan Sharkey, director of individual products for HTH, which sells and administers GeoBlue international health insurance. “People may want sunshine and affordable living, but they’ll also want to make sure they’ll be covered adequately.” That means not just buying a policy, but also assessing the quality of health care in the country where they plan to settle.

“If you’ve had two heart attacks, you have to ask yourself if it makes sense to retire in Nicaragua, where the underlying quality of care just isn’t there,” Mr. Sharkey said. More practical alternatives might be Panama, Ecuador or Thailand — warm, affordable countries known for better-quality care, he said.

For health insurers, age equals risk — senescence brings sickness. So older people can expect to pay up for international health insurance, especially as they reach their middle to late 70s. “It’s the same everywhere in the world — the older you get, the more expensive the premiums,” said Steve Nelson, product development manager at Medibroker, an insurance brokerage in North Shields, England.

At Cigna, international health premiums can range from a couple of hundred dollars a month for the most basic plan to several thousand for a comprehensive one, said James T. O’Brien, head of the Americas region for Cigna’s global individual plans.

While some insurance companies don’t impose no age limits on their plans, others do.

“Our product is designed to take all comers — we’ve made it modular and flexible,” Mr. O’Brien said. Cigna offers three levels of inpatient coverage, with total annual limits of $1 million, $2 million or $3 million. A customer can then choose among several deductibles, ranging up to $10,000 a year, and can add coverage for such things as outpatient care, medical evacuation and vision and dental services.

Anyone shopping around should understand that insurers individually assess applicants for international medical policies, Mr. O’Brien added. Coverage isn’t automatic, as it is with Medicare. The insurer reviews an applicant’s health, typically either through a questionnaire, an examination of medical history or both. The insurer then decides whether to offer coverage, what the premium will be and whether to exclude any conditions.

Cigna imposes no age limits on its plans, but some insurers won’t cover people who have crossed an age threshold. Allianz Worldwide Care, for example, won’t accept applications from people past their 76th birthday, said Alexander Bender, a senior manager for client relations, based in Dublin. Once Allianz does enroll people, it guarantees lifelong coverage as long as they pay their premiums, he said. HTH sets a similar limit for its longer-term GeoBlue policies.

Age also can bring ailments that complicate coverage. “The older you are, the more underlying conditions you may have,” said Mr. Sharkey. “Once somebody starts having multiple conditions — maybe high blood pressure, obesity and high cholesterol — it becomes difficult to cover them in one of our long-term plans.”

Like many insurers, HTH offers policies that can cover either short or long stays abroad. The short-term ones are intended for travelers and snowbirds, while the long-term ones are for full-time foreign residents. “For longer-term coverage, there are medical conditions that are an automatic decline — if you’re a pacemaker recipient, if you’re diabetic and insulin-dependent, if you’re undergoing cancer treatment,” said Mr. Sharkey.

In some countries, insurance companies are finding out the hard way how expensive it is to insure older expats, particularly those from the U.S. Several local insurers in Cuenca, Ecuador, a mid-sized Andean city that has attracted thousands of foreign residents, are considering large premium increases or dropping coverage for older expats altogether.

An administrator at one insurance plan who asked not to be named, said that many of the expats in her program come to Cuenca in poor condition and seem to have no interest in getting better. “We have clients who want hip replacements but ignore their doctors’ advice to lose weight, which could mean they don’t need the replacements,” she said. “We have other clients who take as many as 13 medications, some that only counteract the effects of other medications, and refuse to get off the medicines even though their doctors say they don’t need them. We are beginning to see why health care is so expensive in the U.S.”

The good news about Ecuador, however, is that it is one of the few countries in Latin America that has invested heavily in recent years to upgrade public health care. Foreign retirees are allowed to buy health care through a national program operated by the country’s Social Security system. Monthly cost per person is about $70. Like any other government health program, however, those covered must navigate an often daunting bureaucracy to get the care they need.

Another consideration for expats is whether you want to maintain coverage in the United States. Some international health insurers won’t cover domestic care, and others charge more for it. Allianz, for example, offers policies that provide coverage that is worldwide or worldwide minus the United States. Allianz singles out this country, sometimes even doubling its policy premiums, because health care costs more here than elsewhere, Mr. Bender said.

Despite the many factors, expatriate retirees find ways to cover their health costs that are as varied as the places they pick as their new homes.

When Joseph S. Coyle and his wife, Sigun, retired to Paris about a decade ago, they acquired coverage by joining the Association of Americans Resident Overseas, a Paris-based group that represents United States expatriates. Members can buy into a group plan insured by Swiss Life in Zurich. The Coyles pay about 10,000 euros a year (around $13,720), Mr. Coyle said.

“When we started, it was much less, but I’m 78, so the coverage has bumped up for me,” he said. It has gotten expensive enough that the Coyles are considering returning the United States. “If one of us gets seriously sick, we’re going to have to go back,” he said.

Not everyone opts for American-style insurance coverage. Holly S. Carter and her husband, Scott, signed up for the health plan offered through the nearby Chiriquí Hospital when they retired from California to Boquete, Panama. The plan operates like a traditional H.M.O.; members pay a monthly fee, plus an annual rider for cancer coverage.

The Carters pay $75 a month for the basic insurance, and $100 extra a year for the cancer coverage, Ms. Carter said. Those rates are probably lower than many retirees would see because they retired early — she’s 48, and he’s 47. But according to the hospital’s current rates, they’d pay only $200 a month if they were both 80, she said.

The Carters arrived in Panama last year, and have already used the hospital, when Mr. Carter had a hernia operation. Ms. Carter said the care was excellent and much cheaper than in California. “It was going to be $8,000 out-of-pocket in California after insurance,” she said. “Here, he stayed a night in the hospital, and it was $2,500.” They paid the full cost because Mr. Carter had the hernia before they joined Chiriquí’s plan.

Some retirees forgo health insurance. That’s what Kristin Cunningham and her husband, Joel, opted to do. Ms. Cunningham was a registered nurse in the United States before they retired to David, Panama. Her medical knowledge, plus low health care prices there, led the Cunninghams to choose to pay out of pocket. “We looked around for international health insurance, but it was more than we wanted to pay,” she said.

In Ecuador, where health care costs are even lower than they are in Panama, retired Cuenca expats Ron and Brenda Ellis also chose to be self-insured. “We discovered that major medical procedures in Ecuador cost less than 10% what they do back in the States,” Ron Ellis said. “We’re in good health and since we maintain our Medicare accounts back home, it makes sense for us to pay out of pocket.” Mr. Ellis added that a visit to the family practitioner in Cuenca costs only $30.

Josef D. Woodman, author of “Patients Beyond Borders,” a book that guides people on finding affordable health care outside of the United States, said that a few countries allow retirees who have established residency to participate in their national health plans. But gaining access to these plans can entail the use of public hospitals and lengthy waits for nonemergency services, he said.

Mr. Woodman cautioned against going without coverage, and said most retirees should consider buying at least a high-deductible policy covering catastrophic illness.

“Even in places like Thailand where good health care is really cheap, cancer is going to be expensive,” he said. “I can’t think of any country where cancer or a serious car accident wouldn’t be financially disastrous.”