As elder law attorneys, we keep a finger on the pulse of news that is of interest to senior citizens. Clearly, anything that is related to Medicare costs will be of interest.
On September 27, an announcement was released by the Centers for Medicare and Medicaid Services (CMS). It breaks down the out-of-pocket costs for Medicare Part B next year. We will look at the figures, but first, we will share a broader overview to provide context.
You become eligible for Medicare through the accumulation of retirement credits. This year, you get one credit for every $1510 that you earn in taxable income. The maximum annual accrual is four credits. After you have a minimum of 40 credits, you will be eligible for Medicare and Social Security.
The age of eligibility for Medicare is 65. We should point out the fact that a married person can qualify for Medicare on their spouse’s work record.
There are four distinct parts to the Medicare program, and they are designated by the first four letters of the alphabet. Part A is the hospitalization coverage, and there is no monthly premium. There is a deductible, and this year it is $1556 per benefit period.
There are no co-payments for the first 60 days of a hospital stay. However, there is a $389 per day co-payment for days 61 through 90. It goes up to $778 a day for days 91 through 150.
Part B covers services that are provided by physicians, outpatient hospital visits, some home health services, and various other medical related expenses that are not covered under Part A.
Part C gives you the opportunity to participate in a Medicare Advantage Plan that will streamline your overall coverage. Part D is the prescription drug portion, and most Medicare Advantage Plans include this coverage.
Part B Changes for 2023
The various costs associated with Medicare change from year to year, and as we have touched upon, they will be indexed for inflation in most cases. This means that they go up, but things are different this year when it comes to the Part B premiums and deductible.
In 2023, the monthly premium will be $164.90. This is a reduction of $5.20 over the current premium. The annual deductible is $233 this year, and it will go down to $226 next year.
Huge Medicare Gap
Most people that are working within a sound retirement plan will find the out-of-pocket costs to be manageable. However, there is an enormous gap in the coverage that is no trifling matter.
Medicare does not pay for a stay in a nursing home, and it does not cover in-home custodial care. Both types of care are quite expensive, and the majority of senior citizens will need professional long-term care eventually.
When you have been retired for many years, six-figure annual bills may significantly impact your legacy. Fortunately, you can implement a nursing home asset protection plan if you act in advance with our assistance.
Medicaid will pay for a stay in a nursing home, and the Medicaid Home and Community-Based Services Waiver covers in-home care. Of course, since Medicaid is a need-based program, there is a low $1600 asset limit.
This is not an insurmountable obstacle, because you could convey resources into an irrevocable income-only trust. While you are living independently, you can accept distributions of the income, but you would surrender access to the principal.
As long as you fund the trust at least five years before you apply for Medicaid, the principal would not count. There are other key details, but we will not go into them in detail here.
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If you are going through life without a plan for aging culminated in the effective passing of your legacy, action is required. You can set up a consultation at our Westport or Glastonbury, CT estate planning offices if you call us at 860-548-1000, and you can fill out our contact form to send us a message.