When a new year approaches, the parameters of the government benefit programs for senior citizens are adjusted for the following year. We have recently shared information about the Social Security cost of living increase, and we will look at Medicare in this post.
Part A Deductibles and Coinsurance
Hospitalizations are covered through Medicare Part A. There is no monthly premium if you are eligible for Medicare, but there is a deductible. It is going from $1484 to $1556 in 2022.
Medicare will pay the entirety of the hospital expenses for the first 60 days after you have reached your deductible. If you have to stay in the hospital for more than 60 days, there is coinsurance, and the rate will be $389 in 2022.
This level applies to days 61 through 90, and the coinsurance for subsequent days is going up to $778. These are called “lifetime reserve days,” and you are entitled to 60 of them.
Part B will pay doctor’s bills and cover treatments that are administered by other types of health care professionals. You have to pay a monthly premium for this coverage, and the 2022 premium for single filers that do claim not more than $91,000 will be $170.10.
The premiums go up if you earn more than this amount, and the maximum premium will be $578.30 for individuals that claim more than $500,000.
There is a deductible as well, but it will be a very modest $233, which is a $30 increase. After you meet the deductible, you pay 20 percent of the covered expenses, and Medicare will take care of the rest.
Medicare Part D is the prescription drug coverage, and you can choose from many different plans that are offered by private insurers.
Medicare Advantage Plans
You can use your coverage to opt into a Medicare Advantage Plan, and this is also referred to as Part C. More than 3800 different private insurers offer these plans that provide all the different components under one umbrella. The out-of-pocket costs will depend on the plan that you choose.
Long-Term Care Costs
As you may have noticed, we did not provide an explanation of the long-term care coverage that you get as a Medicare beneficiary. This is not a mistake because Medicare does not pay for nursing home care, and it will not cover in-home custodial care.
In our area, the median annual cost for a private room in a nursing home was over $180,000 last year. Just over half of the people that receive paid living assistance incur the bills for more than a year, and 13 percent receive long-term care for more than five years.
Medicaid covers long-term custodial care, but there is a $1600 asset limit in Connecticut. You can divest yourself of assets to gain eligibility, but it is not as simple as it sounds.
If you transfer assets out of your own name today, you would be ineligible for the next 60 months. Clearly, advance planning is key, but many people rely on income that they receive from their investments.
You can maintain your standard of living and protect your legacy from nursing home costs if you convey income-producing assets into an irrevocable trust. While you are living independently, you could accept distributions of the trust’s earnings.
After 60 months, the principal would not be counted if you apply for Medicaid to pay for a stay in a nursing home.
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We can gain an understanding of your financial position and help you devise a nursing home asset protection plan that will preserve your legacy. You can schedule a consultation at our estate planning offices in Westport or Glastonbury, CT if you call us at 860-548-1000.
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