Victor Gersten, EA, CFP®, MS, MPAS™
Medicare generally does not pay for health care you receive outside the United States. That one fact drives the whole decision.
It catches people who assumed coverage would travel with them.
So the question is not whether Medicare covers you abroad. It is whether to keep paying for coverage you cannot use where you live, against the cost of restarting it later.
This article works through that trade. It is general information, not advice about your situation.
Does Medicare cover you outside the US?
With very limited exceptions, no. Medicare pays for care furnished in the United States. The exceptions are narrow enough that nobody should plan around them.
So an American retiring to Spain needs local coverage regardless of what they decide about Medicare. Medicare is not the plan for living abroad. The only question is whether to keep it as an option for coming back.
Part A: generally worth keeping
Most people qualify for premium-free Part A, which covers inpatient hospital care. It is based on your own or a spouse’s work record.
If it costs nothing, there is little reason to give it up.
Disenrolling also has an unpleasant consequence. It generally requires withdrawing from Social Security and repaying benefits you have already received.
So the usual answer on Part A is to keep it. It preserves a landing place if you return, whether by choice or because of a health event. And it costs nothing to hold.
Part B: the real decision
Part B covers outpatient and physician services. It carries a monthly premium.
For 2026 the standard premium is $202.90 a month, with an annual deductible of $283. Higher-income beneficiaries pay more through the income-related adjustment.
That is roughly $2,435 a year for coverage you generally cannot use while living abroad. Over a decade it is a meaningful sum. It is why many long-term expatriates drop Part B.
The cost of that decision appears if you come back.
What the late enrollment penalty costs
This part is worth understanding precisely, because it is permanent.
The Part B penalty adds 10% to your premium for each full 12 month period you could have had Part B and did not. It applies for as long as you have Part B. It is not a limited catch-up period.
Five years without it means a 50% surcharge, for life.
The Part D penalty works differently. It accrues at 1% of the national base beneficiary premium for each month without creditable coverage. It also generally lasts as long as you have Part D.
The exception people miss
There is an important exception. Coverage through your own or a spouse’s current employment generally gives you a Special Enrollment Period, and no penalty.
Coverage from a foreign national health system does not usually count for this. That is exactly the trap for a retiree in Spain who assumes their Spanish coverage protects them.
How the arithmetic usually falls
The honest version is that this depends on one thing above all. How likely are you to return to the United States?
| Your situation | What usually makes sense |
|---|---|
| Permanent move, no intention of returning | Keep premium-free Part A, consider dropping Part B |
| Return is plausible or planned | Keep both, and treat the premium as the cost of the option |
| Splitting the year between two countries | Keep both, since you use US care some of the time |
| Uncertain, and in good health | Model the penalty against the premiums saved before deciding |
The calculation people miss is this. Health, rather than finances, often decides the return. A move back at 78 for medical care is precisely when a 50% surcharge and a coverage gap hurt most.
Healthcare in Spain, for comparison
Spain has both a public and a private system. Americans commonly use one or both.
Public healthcare is available to legal residents through several routes. You can contribute through work or self-employment. In most regions you can also opt in through the convenio especial, a paid scheme for residents who do not contribute. It covers primary care, hospital treatment, emergency care and prescriptions.
Private insurance is widely used alongside it. Premiums are generally low by US standards, particularly at younger ages. Cover varies considerably by policy, and both pre-existing conditions and age at entry matter. So compare properly rather than assume.
I am not going to recommend particular insurers. We are fee-only and receive nothing from any provider. The right policy depends on your age, health and region.
A practical checklist
- Confirm whether your Part A is premium-free. The answer changes the decision entirely.
- Work out your annual Part B cost, including any income-related adjustment.
- Estimate the penalty you would face on a realistic return date. Compare it against the premiums saved.
- Secure local coverage in your destination before dropping anything.
- Do not assume foreign national health coverage creates a Special Enrollment Period. It generally does not.
- Keep every piece of correspondence with Medicare and Social Security.
Frequently Asked Questions
Does Medicare cover me in Spain?
Generally no. Medicare pays for care received in the United States, with very limited exceptions. You will need local or international coverage wherever you live.
Should I cancel Part B if I move abroad?
It depends mainly on whether you might return. Dropping it saves the premium. It also creates a permanent 10% surcharge for each full year you go without it, if you enroll again later.
Should I cancel Part A?
Usually not, if it is premium-free. Disenrolling generally requires withdrawing from Social Security and repaying benefits already received.
Does Spanish health coverage protect me from the penalty?
Generally not. The Special Enrollment Period is tied to coverage through current employment. A foreign national health system does not usually qualify.
Working with a cross-border adviser
This decision sits at the intersection of health, cash flow and where you will end up. That is why it rarely gets decided well in isolation.
Cross Border Wealth Advisors is a fee-only fiduciary firm serving US citizens living in or moving to Spain. We do not sell insurance and receive no compensation from any provider. So this is a planning question here, not a product one.
Everything above is general information, not advice about your coverage, and not a recommendation of any insurance product.
To work through your own numbers, book an introductory conversation at cbwealthadvisors.com or email info@cbwealthadvisors.com.
Sources
- CMS, 2026 Medicare Part B premiums and deductibles
- Medicare.gov, avoiding late enrollment penalties
- Medicare.gov, health care when travelling or living outside the US
- Social Security Administration, international programs
- US Embassy Madrid, medical assistance in Spain
Related reading: The US-Spain Totalization Agreement · Five Financial Mistakes Americans Make Before Moving to Spain
Disclosures
This article is general educational information published by Cross Border Wealth Advisors, a company of Gersten Financial Planning Inc., an investment adviser registered with the State of California (CRD 309890). It is not investment, tax, legal, insurance or immigration advice.
Medicare rules, premiums and penalties change annually. The figures here are stated as of the date above. Cross Border Wealth Advisors is fee-only, sells no products and receives no commissions. Registration does not imply a certain level of skill or training.
Please read the full article disclosures, which apply to everything published here.
