You qualify for Medicare and Social Security through the accrual of retirement credits. This year, you get one credit for every $1470 that you earn, so everyone that works consistently will get four credits each year.
After you have accumulated a total of 40 credits, you will qualify for these programs when you reach the eligibility age. For Medicare, this age is 65, and you can accept an early Social Security benefit when you are 62 if you choose to do so.
The eligibility age for a full Social Security benefit depends on the year of your birth, but it will be between 66 and 67 years of age. You can check out this Social Security Retirement Benefit brochure to get more specific details.
Out of Pocket Expenses
Medicare will provide a strong health insurance underpinning, but there are some out-of-pocket expenses that you have to cover on your own.
There is a $148.50 monthly deductible for Part B, which is the portion of the program pays for treatments that are administered by doctors and other health care professionals. The deductible for this coverage is $203, and you have to pay 20 percent of the costs out of your own pocket.
Part A covers hospitalization, and you do not have to pay a monthly premium for this coverage, but there is a $1484 deductible this year. A coinsurance payment is required for stays that exceed 60 days in duration.
The prescription drug coverage can be purchased from a variety of providers. There are different coinsurance, premium, and deductible arrangements depending on the specific plan that you decide to use.
These expenses can be manageable if you plan ahead for retirement effectively, but there is one looming expense that is not easily handled. Medicare does not cover a stay in a nursing home, and it does not pay for in-home care that is provided by a paid caregiver.
Long-Term Care Costs
This is a situation that you should take seriously, because 70 percent of seniors will need living assistance, and over a third of them will reside in nursing homes. The median cost for a year in a private room in a Hartford, Connecticut area nursing home was just under $168,000 last year.
One year is the average length of stay, and 13 percent of people that need paid long-term care receive the assistance for five years or longer. If you are married, you and your spouse may be inundated with two different sets of nursing home bills.
Medicaid Eligibility
Medicaid is a jointly administered federal/state government health insurance program for financially needy individuals. There is a $1600 limit on countable assets in Connecticut, but your home is not counted with a $906,000 equity limit in 2021.
The fact that your home does not count is great on the one hand, but there is a Medicaid estate recovery mandate. If you qualify for the program as a homeowner, they can place a lien on the property after your death if it is in your direct personal possession.
To protect your home and other countable assets, you could establish and fund an irrevocable Medicaid trust. The principal would not count if you apply for Medicaid because you would no longer have access to it.
However, you would be able to accept distributions of the trust’s earnings, and this can give you the ability to live comfortably even if you divest yourself of the assets. Advance planning is important, because the trust must be funded at least five years before you apply for Medicaid.
Schedule a Nursing Home Asset Protection Consultation!
All this can sound a bit disconcerting, but if you work with an attorney from our firm to develop a comprehensive plan for aging, you can cover all your bases. Ultimately, your legacy will be protected, and it will be passed along to your loved ones in the optimal manner.
If you are ready to get started, you can schedule a consultation at our elder law office in Glastonbury or Westport if you give us a call at 860-548-1000. There is also a contact form on this site you can use if you would rather send us a message.
Mr. Nirenstein is licensed to practice before the courts of the State of Connecticut and the United States District Court. He is a member of the Connecticut and Hartford County Bar Associations, and the Estate and Probate, Elder Law, Business Law and Real Estate Sections of the Connecticut Bar Association.
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