Health bill opens doors to Canadians seeking U.S. retirement

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One of the biggest deterrents for Canadians who want to retire in the U.S. has finally been removed, and Barack Obama is to thank for it.

On March 23, the U.S. President signed into law the Affordable Care Act, creating a new program, the Pre-Existing Condition Insurance Plan, which made coverage available to those turned down by private health insurance companies because of an existing medical condition. The changes came into effect on July 1.

Robert Keats, author of The Border Guide, says the change will be a huge advantage for Canadians. As a specialist in cross-border financial planning, he has spent 30 years helping Canadians work around the gaps in the U.S. health insurance system.

"One of the biggest deterrents for Canadians going south is getting medical coverage that's reasonably priced," Mr. Keats said. "Now, with the new health care provisions in the U.S. effective July 1st this year, any Canadian who gets a proper visa to live in the U.S. can get health insurance, regardless of previous conditions. That's an enormous leap because most people, when they get into their 60s, they've got some kind of pre-existing condition."

To qualify for the new insurance program, Canadians must be able to prove they've been turned down for health coverage in the U.S. and must be a citizen or national of the United States or lawfully present there. They must also have been without U.S. health insurance for at least six months.

Mr. Keats, a Saskatchewan native now living in Phoenix, has spoken to many clients who wanted to retire to the U.S. but couldn't get coverage because of pre-existing conditions. "This will simplify it and be much more economical. The premiums are not the cheapest thing in the world, but it's actually fairly decent value in that you're fully covered regardless of the pre-existing condition. And the premiums are tax-deductible in the U.S."

Mr. Keats said he recently helped a 50-year-old man with a heart condition price out health care coverage in Florida at a premium of $500 (U.S.) a month. A healthy person of the same age could expect to pay about $300 a month, he said. More information and a six-page insurance application are available at healthcare.gov.

"It's an excellent opportunity for Canadians to take advantage of, like they've never been able to before," said Mr. Keats, who added that U.S. tax benefits for retirees making $60,000 or more a year can more than offset the cost of health insurance.

"When you move to the U.S., you actually get your Old Age Security; it's not clawed back any more, so that's $6,000 a year or $500 a month. Plus your Canada pension, a portion of that comes tax-free, and then you pay a lower tax on the part that you pay tax on. So between the Canada pension, tax reduction, and the Old Age Security not being clawed back any more, that is usually more than enough to cover health insurance for a Canadian in the U.S.: I used to say for a 'healthy Canadian' - now I can say for somebody with a pre-existing condition."

Mr. Keats offers some tips for Canadians thinking of retiring to the United States:

Start planning early. Right now is an incredible time to buy retirement property in the U.S. Even if you're not ready to retire, it can be a great source of rental income.

Have an immigration strategy. For business owners, your business can help you get a visa. So don't sell it before you decided to move to the U.S. You can sell a business in the U.S. at a much lower tax rate because of the Canada-U.S. Tax Treaty.

Get the best of both health care systems. For snowbirds, having dual health care coverage in both Canada and the U.S. opens up treatment options. Under the Pre-Existing Condition Insurance Plan, you have unlimited access to your choice of hospitals in the state in which you reside.

Try different states. Some people like Hawaii, some like Florida. Try vacationing in different states to see which one suits your lifestyle. If you have arthritis, a hot, dry state like Arizona can do wonders.

Consider the tax savings. For people in retirement, the U.S. offers a lot of options for tax-free investment income and lower taxes for seniors. Social security is not taxed if you income is under $40,000.