As elder law attorneys, we keep a finger on the pulse of matters that are important to senior citizens. Clearly, Medicare is an important piece to the puzzle, and when you are planning for retirement, you should be fully cognizant of the out-of-pocket costs.
Each year, there are updates to the relevant figures. The changes for 2021 are now available, and will share them in this post.
Retirement Credits to Qualify for Medicare
Some people assume that you automatically qualify for Medicare when you reach the age of eligibility, which is 65 at the present time. In fact, eligibility is not an absolute entitlement.
When you pay payroll or self-employment taxes, a portion of your payments help to fund the Social Security program, so you have to pay taxes to qualify. You can earn up to four credits per year when you pay these taxes, and you gain eligibility when you have 40 credits.
The requirements are quite modest, so the vast majority of people do qualify for Medicare. Plus, a married person can become eligible on their spouse’s work record even if they have not gained eligibility on their own.
How modest are the requirements? In 2021, you get one credit for every $1470 that you earn. So if you make at least $5880 during the year, you will get the maximum four credits. Last year, the figure was $1410.
Medicare Part B Premiums
There are four different parts to the Medicare program that carry the designations Part A through Part D. The first portion is the hospitalization coverage, and Part B pays 80 percent of approved treatments that are provided by doctors and other health care professionals.
You have to pay a monthly premium for Part B, and it is adjusted upward each year as inflation takes a toll. In 2021, the premium for individual beneficiaries that claim $88,000 a year or less on their tax returns will be $148.50 per month. The premium has been $144.60 a month this year.
This increase would have been higher, but it was limited to 25 percent of what it would have been otherwise by the Continuing Appropriations Act, 2021 and Other Extensions Act (H.R. 8337).
The premiums go up for people that are in higher income brackets. Filers that claim over $88,000 but less than $111,001 will pay $207.90 per month in 2021.
We are not going to look at every bracket here, but you can visit this page on the Centers for Medicare & Medicaid Services website to drill down deeper.
Part A Inpatient Deductible and Coinsurance
There are no monthly premiums for Medicare Part A coverage, but there is a per benefit period deductible for hospitalizations. The deductible is $1408 this year, and it is going up to $1484 when the new year rolls around.
Medicare covers up to 60 days of hospitalization without any coinsurance requirement, but beneficiaries have to pay coinsurance for longer stays. For days 61 through 90, the coinsurance will be $371 next year.
The Medicare benefits include 60 lifetime reserve days for stays that exceed 90 days. In 2021, the coinsurance for these days will be $742 a day, which is a $38 per day increase.
Attend a Free Seminar
We are conducting a number of seminars over the coming weeks, and this is a great way to build on your knowledge in a low-key, pleasant environment. There is no charge to attend the sessions, but we ask that you register in advance so we can reserve your spot.
You can see the dates if you head over to our seminar page. When you identify the session that you would like to attend, follow the simple instructions to register so we can reserve your spot.
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If you have decided that you are ready to put an estate plan in place, we are here to help. You can schedule a consultation appointment if you call us at 860-548-1000, and you can fill out our contact form if you would prefer to send us a message.