As an elder law and estate planning firm, we help people prepare for the eventualities of aging. In this post, we will provide some practical information to provide a foundation.
When will I become eligible for Medicare coverage?
When you pay payroll or self-employment taxes, you earn retirement credits that lead to eligibility for Medicare. In 2023, you receive one credit for each $1,640 in earnings, and the maximum annual accrual is four credits.
You will qualify for Medicare when you are 65 if you have at least 40 credits. If you are married and you do not have the 40 credits, you could qualify on your spouse’s work record.
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. 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. In addition, 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. After the deductible has been paid, Medicare will pay for 80 percent of the approved charges.
Part C allows you to use your Medicare benefit to purchase a private insurance plan that streamlines the coverage. Medicare Part D is the prescription drug portion of the program. There are deductibles, copayments, and premiums that must be paid out-of-pocket.
Aside from these costs, 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, assisted living communities, and in-home caregivers are very expensive. Therefore, this is a situation that you should prepare for in advance. Medicaid 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?
First, we should point out the fact that retirement credits also lead to Social Security eligibility. The full eligibility age depends on the year of your birth. For people born between the years 1943 and 1954, the age is 66. It then goes up by two months per year.
If you were born in 1955, you became eligible for your full Social Security benefit two years after your 66th birthday. This two-month-per-year graduation ends in 1960. People who were born in 1960 and after will become eligible to receive their full Social Security benefits at the age of 67.
The above parameters are applicable to the full Social Security benefit. 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 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.
There is another way that delayed retirement can increase your benefit. The amount of your monthly payout is based on the 35 years during which you paid taxes on the most amount of money. You may be making considerably more when you are between 66 and 70 than you did early in your working career. These higher earning years would supplant the leaner years.
Schedule a Consultation Today!
We can help you prepare for the eventualities of aging so you can face the future with clear eyes. When you take the right steps, you can age gracefully and put yourself in a position to pass along a suitable legacy to your loved ones.
If you are ready to get started, you can schedule a consultation in our Oklahoma City estate planning office if you call us at 405-843-6100, and you can use our contact form to send us a message.
Our firm has another office that serves the Tulsa community, and the number there is 918-615-2700.
After helping his own family deal with a lengthy probate and the IRS following his father’s untimely death in a farm accident, Larry Parman made a decision to help families create effective estate plans designed to reduce taxes, minimize legal interference with the transfer of assets to one’s heirs, and protect his clients’ assets from predators and creditors.