We have heard a lot about inflation this year, and we are living it when we make purchases. For the most part, there is nothing good to say about higher prices, but there is a silver lining for seniors. As elder law attorneys, we focus on matters of interest to older folks, so we will explain what we mean in this post.
2023 Social Security Cost-of-Living Adjustment
Each year, there can be increases to Social Security payouts to account for the cost of living. We say that there “can be” because there have been years with no increases at all. In others, the bump up has been very minimal.
Things have changed over the last couple of years. The increase from 2021 to 2022 was 5.7 percent, which was the largest increase since 1982 when it was 7.4 percent.
The Social Security Administration has recently announced the cost-of-living adjustment for 2023, and the news is good for older Americans. Monthly payouts will be taking a significant 8.7 percent leap upward.
To put this into perspective, the average Social Security benefit this year is $1,681 per month. When this change goes into effect, that figure will rise by $146 a month to $1,827. This is consistent with estimates that were floated prior to the announcement.
Reduction in Medicare Part B Premiums
Seniors that qualify for Social Security can also get their health insurance through the Medicare program. It is broken up into four distinct parts, and Part B is the portion of the program that pays for physician treatments, outpatient care, and some other types of medical expenses.
You have to pay a monthly premium for this coverage. The premiums tend to go up because of the inflation factor. However, in 2023, there is going to be a reduction due to lower than anticipated spending. This year, the standard premium is $170.10, and it will go down to $164.90.
Gap in Medicare Coverage
While we are looking at these programs for seniors, we should touch upon an important fact that some people overlook. Medicare does not pay for a stay in a nursing home, and it will not cover in-home care that is delivered by a paid provider.
You can expect to pay over $165,000 annually for nursing home care in the Hartford, Connecticut area. For a professional home health aide that provides in-home care, are looking at about $60,000 a year. More than half the people that receive paid living assistance accumulate bills for over a year, and 13 percent receive care for more than 5 years.
If you are thinking that you probably won’t need help with your activities of daily living, you should understand the facts. The United States Department of Health and Human Services tells us that 52 percent of seniors will need some type of paid living assistance. One out of three seniors will spend time in nursing homes, so long-term care costs should be on your radar.
Nursing Home Asset Protection
How do you protect your assets for the benefit of your loved ones in light of potential nursing home costs? Medicaid will cover long-term care, but you cannot qualify if you have significant assets in your name.
As a response, you could establish an irrevocable, income only trust to accomplish this goal. After you fund the trust, you would not have access to the principal, but you would accept distributions of the earnings. If you fund the trust at least five years before you apply for Medicaid, the principal will not count
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When you work with our firm to develop your estate plan, we can help you implement a nursing home asset protection strategy. Going forward, you will be able to maintain your lifestyle secure in the knowledge that your legacy will be protected.
If you are ready to get started, you can schedule a consultation at our Glastonbury or Westport, CT estate planning offices if you call us at 860-548-1000. There is also a contact form on this site you can use if you would rather send us a message.
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