My First Experience with Medicare

“One quarter of Medicare beneficiaries have five or more chronic conditions, sees an average of 13 physicians each year, and fills 50 prescriptions per year.”
― Clayton M. Christensen, The Innovator’s Prescription: A Disruptive Solution for Health Care

I went to see my eye doctor in Tennessee the other day. When the nurse entered my information into the electronic files, she asked me, “Are you sure you don’t take any medications?” I replied, “Yes. Nothing.”

She couldn’t get over the fact that I had no pre-existing conditions, took no prescription medications, and had no medical history other than my appendectomy and tonsillectomy, which were removed when I was a teenager.

“I have to put something in the spaces,” she commented. “Do you take any vitamins?”
“Once in a while I take glucosamine,” I replied. With almost a sigh of relief, she asked me how many milligrams and how often I took glucosamine. “You are the best and easiest patient I have ever had,” she said. “But, you aren’t normal.”

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Expats and Obamacare for los Idiotas

“Everyone should have health insurance? I say everyone should have health care. I’m not selling insurance.” ― Dennis Kucinich

A blogging friend from Ecuador recently wrote a post asking many questions about expats and Obamacare.  The second phase of the Affordable Health Care Act will start on January 1, 2014 requiring all USA citizens to buy health insurance. But, how will this effect expats living abroad?

Did you ever try to decipher the IRS tax code? The statute states that there’s an exemption for USA citizens living overseas tied to Section 911. The Secretary of Health and Human Services cannot override it, though the Treasury Department can issue regulations interpreting it.

“Any applicable individual shall be treated as having minimum essential coverage for any month . . . if such month occurs during any period described in subparagraph (A) or ( B ) of section 911(d)(1) which is applicable to the individual.” IRC Sec. 5000A(f)(4)(A).

HUH???  Or this….

“The term “tax home” means, with respect to any individual, such individual’s home for purposes of section 162 (a)(2) (relating to traveling expenses while away from home). An individual shall not be treated as having a tax home in a foreign country for any period for which his abode is within the United States.”

So, for expats, like us, I have written an idiot’s guide ( mainly for me..a dummy when it comes to legal terms) for expats and Obamacare. Of course, it’s all based on my interpretation of the law, which really’s a jungle of legal jargon in section 911 open to anyone’s interpretation.

Who has to buy the mandated insurance?

In the new Internal Revenue Service (IRS) tax code, expats are treated as if they have health insurance regardless of whether they do or not. So, it looks like expats don’t have to buy insurance or pay a penalty for not purchasing insurance.  But there’s a catch…there’s always a catch.

What is the IRS foreign earned income exclusion?

How does the IRS decide if USA expats (I refuse to use the word “American’ because everyone living in North or South America is an American) are exempt from the insurance mandate? Enter the IRS’ definition for foreign earned income exclusion.

In order for USA expats to be exempt from the insurance mandate, they must already be eligible for the IRS’ foreign earned income exclusion. Now, I know why we were asked 4 questions on our income tax return about how long we have lived abroad ( I’ll come back to this later, because it is a touchy subject for some expats).

In order to meet the criteria for the exclusion that allows U.S. expats to avoid paying U.S. taxes on their first U.S. $91,500 worth of income, the expatriate must have a tax home (the general area of your main place of business or employment where you happen to be permanently or indefinitely engaged) in a foreign country, as well as be either a legitimate resident in that country, or spend at least 330 days a year outside the United States.

Since we are legal residents of Nicaragua and spend at least 330 days a year outside of the USA, we are eligible for the IRS’ foreign earned income exclusion. If we are asked to prove it, we can simply scan a copy of our residency ID cards and send the IRS a fax.

What is a tax home?

When it comes to the tax penalty for not having health insurance, the legislation borrowed the test from the Section 911 Earned Income Exclusion: tax home overseas, plus either 330 out of 365 days overseas presence or legal foreign residency. Thus, if one qualifies for the earned income exclusion one doesn’t have to worry about having U.S. health insurance.  “Tax home” is a concept that applies awkwardly to retirees, since it’s a requirement intended for those who are working and earning income.

Because we are retired, we may have to use our Nicaraguan address on our income tax forms. That should be a good for a couple of laughs: 300 meters south of Puesta del Sol, on the beach in La Paloma, across from where the giant Ceiba tree fell down 3 years ago, but is no longer visible, 2 kilometers from the port town of Moyogalpa, on the island of Ometepe, in Nicaragua.

What about Medicare? Does that count for insurance?

For USA expats 65 and over, Medicare qualifies as required insurance coverage. Although, medicare coverage can ONLY be used within the U.S. boundaries. It cannot be used abroad.   Retired U.S. Military have TRICARE which qualifies as the required insurance coverage. Other retired expats may have insurance plans included in their retirement plans that qualify. They are insured. The law goes after the uninsured residing in the USA.

Problems expats may encounter

1. What if I don’t want the U.S. government to know I’m living abroad?
From my understanding of the law and in filing an income tax return, you will be faced with a difficult decision. Either you tell the IRS you are living abroad for at least 330 days,  pay the $95 penalty (which will increase every year), or don’t file an income tax return.
I’m not aware of any other choices.

2. What if I live abroad less than 330 days?
This is a problem, and I’m not sure what the IRS will do about this. If you split your time abroad and in the states, you will either have to buy health insurance or pay the penalty. The problem is that health insurers will continue to offer insurance only to residents of a particular state, since rates will vary geographically. If you’re not a resident of a U.S. state within the meaning of an insurance policy, you’re not going to be able to get insurance. And if you do claim residency on a questionable basis, the insurer can deny your claims. There is no meshing between the tax penalty and the insurance policy requirements. It’s impossible to get health insurance for a 2 or 3 month visit back to the states.

If there’s any message in the health care act — and in the legislative process that produced the act — it’s that the insurance companies are in control.

Now more than ever.

Other resources:

1. Nancy’s blog post that started me on my quest. Obamacare and the Expat

2. U.S. Tax Code, section 911 document

3. Obamacare and Americans Living Abroad





Health Care for Expats in Nicaragua

Update December 2019:
We left Nicaragua mid July 2018 because of a Civic Rebellion that continues to this day. My eye doctor from Vivian Pellas fled the country because the doctors who treated the protestors were ordered to stop treating them or be fired. Most of the ethical doctors left the country…and I don”t blame them. They treated horrendous injuries of protestors who were shot in the eye, or burned,  or tortured, raped, and mutilated for simply speaking out or marching for their human rights or fighting back with stones against armed paramilitary. Nicaragua is no longer a county I choose for retirement. It continues to be full of suffering and sadness.


One of the biggest challenges of living abroad is health care. When we opted for early retirement, we could have continued our group health insurance, but the cost of the insurance would have reduced our pension checks by half. Plus, when we retired, our health insurance was not accepted in Nicaragua. We are too young for Social Security and Medicare. Medicare is not accepted in Nicaragua either. At the time, our only option was to take a risk, self-diagnose, and live cautiously on our tropical island.

Fortunately, Hospital Metropolitano Vivian Pellas in Managua is committed to providing healthcare with international excellence. So, we made an appointment with Arlen Peres, the Medical Tourism Manager, called our faithful taxi driver, and visited the hospital to explore our insurance options.

Arlen Peres, Medical Tourism Manager

Arlen met us in the lobby of the hospital and attended to us like newborn babies. She took us on a tour of the immaculately clean and modern hospital, answered all of our questions with the honesty and professionalism of a Supreme Court Judge, and spoke fluent English. Impressive!

She explained the two insurance plans for the hospital: the Silver Plan and the Gold Plan. When we were trying to decide which plan would be the best for us, she recommended the Silver Plan because it cost less and it would meet our needs until we are 65 years old.

The Silver Plan

We filled out the health insurance application for the Silver Plan. It was three pages of general health questions..all in Spanish, which Arlen patiently translated for us. Ron’s Silver Plan is $21 a month. Mine is $18 a month. We could pay monthly or annually. We chose to pay annually and we charged $468 on our credit card for a year of health insurance for both of us!

The Silver Plan offers discounts for emergency room services, medical and physical rehabilitation, laboratory diagnosis and tests, annual preventive health check-ups, intensive care, and operations. The discounts increase after 24 hours, 90 days, and 180 days of insurance coverage. The discounts range from 15% to 70% depending on how long one has had insurance coverage.

Next, we had to have blood tests and urine samples tested for health insurance coverage. Arlen sent us to the lobby where we waited for about 10 minutes while she set up the appointments.

Ron and one of our friends

The reception desk in the lobby

Arlen returned and took us directly to the admittance booth, where we paid $25 each for all the laboratory tests. Then, she took us to the laboratory for our tests…no waiting! Top notch service! We went to the emergency room for general physicals: weight, height, blood pressure. While we were in the emergency room, Arlen toured us through the offices and operating rooms. They have a kidney dialysis room, where we heard soft music and the TV behind the closed-door. She said the kidney dialysis room is open 24 hours a day and is always busy. I don’t know why so many people in Nicaragua have kidney problems, but it is prevalent.

We met with the doctor for a few more questions and prodding and poking. Then, on to the cafeteria where we had lunch while we were waiting for the results of our lab tests. Thirty minutes later, after we had delicious cappuccinos and chicken burritos, we met Arlen in the lobby with our test results. The best news was that the test results indicated that we had no parasites. Ron had just completed a round of parasite pills because he had a bad bout with parasites the week before. I know the parasites were the result of him eating mangoes that dropped to the ground!

We were finished for the day! Our lab tests and physicals would be reviewed by the insurance director and we would be notified of our acceptance within a week. I have never encountered such personalized attention. Where in the states could one have a personal attendant, who tends to every health need? Not to mention immediate test results hand delivered the same day. Before we left, we asked Arlen how much each operation or procedure cost. She said, “Email me with the specific procedures and operations you may need and I’ll send you a list of the all-inclusive costs.” Can you believe that? No hidden costs? A list of all the costs of the procedures and operations? I’m amazed! Why can’t they do that in the states?

My expat friends from Granada went to Vivian Pellas hospital two weeks ago for their annual check-ups. While they were doing the stress test, they discovered that J had a serious heart blockage. They operated on him that evening and placed 2 stents in his heart. He did not have the hospital insurance, and he had to pay upfront for the operation. He charged $16,500 on his credit card for the total bill. His wife had the same operation seven years ago in the states. She only had 1 stent placed in her heart. Total cost for her? $50,000. What is wrong with the health care system in the states? I won’t rant here, but something is terribly wrong when the same operation costs 3 times as much in the states.

Vivian Pellas Hospital has a website, but when we checked for information, the website was outdated. I talked with Arlen about the website and she told me that someone had hacked into the website. They had to put up the old website until October when the new website will be completed. Here’s a link to the old website: Vivian Pellas

If you are an expat living in Nicaragua, or a potential expat, please feel free to contact me for more information about Vivian Pellas Hospital. Nicaragua is advancing daily in health care for expats. It is reassuring to know that excellent, affordable health care is available in Nicaragua.