Retire Abroad: Receiving Social Security Outside the US, Medicare Limits Overseas, Feie Myths

Moving overseas can stretch your dollars and enrich your life—but U.S. benefits and tax rules don’t automatically follow you the way your suitcase does.

Below is a practical, 2025-ready guide to keeping Social Security flowing, avoiding Medicare pitfalls, and using the FEIE correctly—plus country snapshots, a pre-move checklist, and myth-busting FAQs.

Receiving Social Security Benefits Outside the U.S.

Good news: If you’re a U.S. citizen, you can generally keep receiving Social Security retirement, survivor, or disability payments while living abroad.

The exact rules depend on the country where you reside and your citizenship. Use SSA’s official Payments Abroad Screening Tool to preview your situation before you move.

Where payments can (and can’t) go

• Most countries: Payable without interruption. You can direct deposit into a U.S. bank or, in many places, set up International Direct Deposit (IDD) to a local bank in local currency. Check the IDD country list to confirm availability.
• Restricted countries: SSA cannot send payments to certain countries (for example, Cuba and North Korea) due to U.S. restrictions. If you move to a restricted country, SSA will withhold payments until you reside in a country where payments are permitted. Always run your country through the SSA tool first.
• U.S. territories or military bases abroad: Generally treated as U.S. for payment purposes.

Direct deposit & address rules

• Keep a U.S. bank? Many expats do, then pull funds abroad as needed. IDD is also widely available and can reduce transfer friction.
• Stay in touch: SSA periodically sends a “proof-of-life” questionnaire when you live overseas; if you don’t respond, benefits may stop. Keep your foreign address current to avoid suspensions.

Big 2025 update: WEP/GPO repeal

If you earned a foreign government pension, you used to risk a U.S. benefit haircut under WEP (and spouses could be hit by GPO). In 2025, the Social Security Fairness Act eliminated WEP and GPO. That means foreign pensions no longer reduce Social Security benefits under those provisions. (Confirm how SSA phases this in for your case.)

SSI is different

Supplemental Security Income (SSI) generally can’t be paid while you’re outside the U.S. That’s separate from Social Security retirement/survivor/disability benefits.

Medicare Coverage Outside the U.S.

Original Medicare (Parts A & B) rarely pays outside the U.S., with a few narrow exceptions (e.g., you’re in the U.S. but a foreign hospital is closer; emergency during direct travel through Canada between Alaska and another state; or you live near a border and the closest hospital is abroad). Even then, coverage is specific and limited.

What your options really look like

Coverage	Pays Abroad?	What to know
Original Medicare (A & B)	Generally no	Only limited exceptions (border/Canada cruise/closest hospital). Drugs bought abroad aren’t covered.
Medicare Advantage (Part C)	Sometimes	Plans must follow Medicare rules, but some include worldwide emergency/urgent care—check your plan before travel.
Medigap (Supplements)	Often for emergencies	Most Medigap Plans C, D, F, G, M, N cover foreign travel emergency care at 80% after a $250 deductible, up to $50,000 lifetime, if care begins within the first 60 days of the trip. (C & F closed to most new enrollees, but existing holders keep benefits.)
Private international health insurance	Yes (policy-dependent)	Common for full-time expats; compare exclusions, evacuation, pre-existing limits. (No single official source—shop carefully.)
Local public systems (by country)	Varies	Many destinations let legal residents join public care (see country snapshots below).

Part B premiums and penalties: If you drop Part B abroad and later return, you may face a lifetime late-enrollment penalty (10% for each full 12-month period without Part B when you could have had it), unless you qualify for a Special Enrollment Period (SEP) based on current employment coverage (foreign national health systems sometimes count when it’s tied to current employment—ask SSA/CMS about your facts).

Part D (drug) penalties also exist if you go 63+ days without creditable drug coverage.

Practical takeaway: Many permanent expats either (a) keep Part A (usually $0 premium) and weigh the cost/benefit of keeping Part B, or (b) drop Part B only if they’re confident about SEP eligibility and timing when returning. If you’ll be out for years, price out private/international coverage vs. continuing Part B.

FEIE (Foreign Earned Income Exclusion): What Retirees Need to Know

FEIE applies only to “earned” income (wages/self-employment) you earn while your tax home is abroad. It does not cover Social Security, pensions/annuities, or investment income. To claim it, you must pass either the Bona Fide Residence Test (full tax year abroad with strong ties) or the Physical Presence Test (330 full days outside the U.S. in a 12-month span).

• The FEIE amount is inflation-adjusted annually (for reference, $126,500 for 2024; the IRS updates limits for 2025). You can also consider the Foreign Housing Exclusion/Deduction for qualified housing costs.
• Income not eligible for FEIE (e.g., Social Security, pensions, interest/dividends) may be offset using the Foreign Tax Credit instead, if you’re taxed on it abroad.

Bottom line: Don’t assume “living abroad = no U.S. tax.” You still file a U.S. return each year, and the right tool—FEIE or Form 1116 Foreign Tax Credit—depends on the kind and source of your income.

Tax Treaties, Totalization & Other Gotchas

• Tax treaties: Some countries reduce or eliminate double taxation on U.S. Social Security benefits or pensions. For instance, the U.S.–Canada treaty generally taxes U.S. Social Security benefits only in the country of residence (Canada), with special inclusions. Treaties vary widely—always look up your destination’s treaty.
• Totalization agreements: If you worked abroad, SSA agreements with many countries can help you combine coverage credits to qualify for a benefit.
• Foreign accounts reporting: If your foreign financial accounts exceed $10,000 (aggregate) at any time during the year, file the FBAR (FinCEN Form 114). FATCA (Form 8938) may also apply at higher thresholds for those living abroad. These are in addition to your tax return.

Country Snapshots (Healthcare & Residency at a Glance)

Requirements change and can vary by consulate—treat numbers as typical 2025 ranges; always confirm locally.

Portugal

• Residency paths: Popular D7 “passive income” (pensions, dividends, rents) for retirees; monthly minimums are tied to Portuguese benchmarks and documentation of stable passive income.
• Healthcare: Legal residents can get an SNS (National Health Service) number for access to public care (co-pays apply).

Mexico

• Residency: Temporary Resident visas typically require income (around 680 UMA/day equivalent per month) or savings balances; thresholds vary by consulate and exchange rates (e.g., ~$4,100–$4,300 monthly income or ~$70,000+ in savings as common examples in 2025).
• Healthcare: Legal residents can voluntarily enroll in IMSS (public system) for coverage inside Mexico.

Costa Rica

• Residency: Pensionado program generally requires $1,000/month lifetime pension (e.g., Social Security). Renewable.
• Healthcare: Residents typically join Caja (public system) alongside or instead of private insurance. (Confirm current enrollment steps during residency processing.)

Practical Tips for Retiring Abroad

Set up your money flows

• Keep a U.S. bank for simplicity and consider IDD to a local bank if available. Review ATM fees, transfer costs, and exchange-rate margins.

Lock in your benefit logistics

• Run your country through SSA’s Payments Abroad Tool and bookmark your nearest Federal Benefits Unit (FBU). Update your foreign address promptly and return SSA questionnaires on time.

Health coverage plan

• Price international health insurance vs. keeping Part B. If dropping Part B, understand penalties and your path back (SEP vs. General Enrollment Period). If you keep Part B but travel, verify your Medigap or MA plan’s foreign emergency rules.

Stay tax-compliant

• Choose FEIE vs. Foreign Tax Credit by income type. File FBAR/FATCA when required. Consider a tax pro versed in your destination and treaty.

Documents and backups

• Keep digital copies of SSA letters, Medicare cards, insurance policies, passports/visas, and bank info. Consider a U.S. mailing address solution and a trusted contact with limited power of attorney.

Pros and Cons Refresher

Factor	Pros	Cons
Social Security	Payable in most countries; IDD/local deposits available	Not payable in restricted countries; paperwork lapses can pause checks
Healthcare	Lower private premiums; access to public systems as a resident	Original Medicare limited abroad; careful with Part B penalties/return plans
Taxes	Potential treaty benefits; FEIE/FTC tools	FEIE does not shelter SS/pensions; annual filing + FBAR/FATCA
Lifestyle	Lower costs, cultural immersion	Distance from family/U.S. services; admin and language hurdles

Common Myths (Corrected)

• “FEIE covers my Social Security.” False. FEIE applies to earned income, not Social Security or pensions. Use treaty or Foreign Tax Credit strategies instead.
• “Medicare will cover emergencies overseas.” Mostly false. Only narrow exceptions apply; consider Medigap foreign emergency benefits or international coverage.
• “My foreign pension will cut my Social Security.” No longer under WEP/GPO (repealed in 2025).

Quick Pre-Move Checklist

1. Run SSA’s Payments Abroad Tool and confirm IDD availability.
2. Decide on Medicare: Keep Part B or rely on international/local coverage? Model penalties and return scenarios.
3. Pick your tax path: FEIE vs. Foreign Tax Credit; map treaty effects.
4. Set banking rails: U.S. account + transfer plan; consider local account for IDD.
5. Residency & healthcare on arrival: Confirm visa income thresholds and public system enrollment steps (Portugal SNS, Mexico IMSS, etc.).
6. Compliance: FBAR/FATCA calendars, document vault, and a U.S. mailing plan.

Retiring abroad is doable and rewarding with the right prep: verify Social Security payability and set up deposits, choose a Medicare/insurance strategy that actually works overseas, and get your tax approach (FEIE vs. FTC) aligned with your income mix.

If you’re weighing specific countries, we can tailor a plan to your target city, consulate requirements, and medical needs.

FAQs