As an elder law and estate planning firm, we help people prepare for the eventualities of aging. If you start to develop a retirement plan at the right time with full knowledge of all relevant factors, you can enjoy your golden years with security and comfort.
Let’s look at the most important things you should take into consideration when you are looking ahead toward the future.
What should I know about Medicare coverage?
When you remit payroll or self-employment taxes, you earn retirement credits that lead to eligibility for Medicare and Social Security. A minimum of 40 credits is required. In 2023, you receive one credit for each $1640 in earnings, and the figure has always been quite modest.
You can earn up to four credits each year, so you would get the same four credits if you earn $7000 or $700,000 in a given year. Once you have accumulated at least 40 credits, under currently existing laws, you become eligible for Medicare when you reach the age of 65. However, it is worthwhile to note that there have been discussions about raising the Medicare eligibility age in an effort to cut costs.
Does Medicare pay for everything once I become eligible?
The answer to this question is a resounding no. Medicare is broken up into four sections: Part A, Part B, Part C, and Part D. The first portion pays for hospitalization, and there is no monthly premium for Part A if you are fully vested in the program.
The bad news is that there is a deductible per benefit period, and there are significant copayments for long hospital stays.
Part B pays for outpatient treatments and visits to doctors. There is a monthly premium for this coverage, and in 2023, most people pay $164.90. There is a $226 deductible, and after the deductible has been paid, Medicare will pay for 80 percent of the approved visits, and you would be required to pay the other 20 percent.
Part C allows you to couple your Medicare benefit with a private insurance plan that has added features. Medicare Part D is the prescription drug portion of the program, and there are deductibles, copayments, and premiums that must be paid out-of-pocket when you carry this coverage.
Aside from these copayments, deductibles, and premiums, there is a huge gap in Medicare coverage. Many senior citizens will require help with their day-to-day activities at some point in time. In fact, the figure is 70 percent according to the United States Department of Health and Human Services.
Nursing homes and assisted living communities are very expensive, so this is a situation that you should definitely prepare for in advance. Medicaid is a government program that will pay for long-term care, and we help clients position their financial assets with future Medicaid eligibility in mind.
Is the Social Security eligibility age the same as Medicare?
No, the age of Social Security eligibility depends on the year of your birth. For people born between the years 1943 and 1954, the Social Security eligibility age is 66. It then goes up by two months per year, so if you were born in 1955, you will become eligible for your full Social Security benefit two years after your 66th birthday.
This two-month per year graduation ends in 1960. People that were born in 1960 and after become eligible to receive their full Social Security benefit at the age of 67.
The above parameters are applicable to the full Social Security benefit that an individual is entitled to. However, there is another option available. You can choose to receive an early Social Security benefit when you are as young as 62 years of age. This can sound appealing, but the benefit would be reduced by 25 percent to 30 percent depending on the exact year of your birth.
In addition to the early retirement option, there is a possibility on the other end of the spectrum. You can choose to delay your application for Social Security benefits until you are as old as 70. If you do this, you will receive an increased benefit. It will go up by eight percent for every year that you delay.
Develop a plan for aging!
If you would like to work with a Hilton Head, SC elder law attorney to develop a plan for aging, our doors are open. You can send us a message to request a consultation appointment, and we can be reached by phone at 843-815-8580.
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