The Medicare program is the source of health insurance that most senior citizens in the United States rely upon, but eligibility is not automatic. You earn retirement credits when you pay taxes, and these credits lead to future eligibility for Medicare and Social Security.
In 2021, you get one credit for every $1470 that you earn, and the maximum annual accrual is four credits. After you have worked long enough to bank 40 credits, you will be eligible for these benefits when you are old enough to receive them.
At the present time, the eligibility age for Medicare is 65, and for Social Security, it depends on your birth year. It will be between the ages of 66 and 67, and you can take a look at the retirement benefits guide on the Social Security Administration website to get the details.
Medicare Costs and Coverage Gap
There are some out-of-pocket costs that enter the picture after you qualify for Medicare coverage. Part A is the portion of the program that covers hospitalization, and you do not have to pay a monthly premium for it, but there is a $1484 deductible each benefit period.
If you have to spend more than 60 consecutive days in the hospital, there is a coinsurance payment of $371 a day for the first 30 days. It goes up to $742 for stays that exceed 90 days in duration.
There is a $148.50 monthly premium for Part B, which is the portion of the program that covers treatments that are administered by doctors and other health care professionals. It will only pay for 80 percent of the covered costs, and the rest comes out of your pocket.
The prescription drug coverage is delivered via Part D, and you choose from many different plans that have varying deductibles, copayments, and premiums.
These costs are manageable for most people that retire with some resources, but there is one gaping hole in the coverage that is not easy to overcome. Medicare does not pay for a stay in a nursing home, and it does not cover in-home custodial care.
Long-Term Care Likelihood and Costs
The United States Department of Health and Human Services has stated that 70 percent of American elders will need long-term care eventually. Just over half of them will need paid assistance, and 35 percent will reside in nursing homes.
These are some compelling numbers, so you should definitely take assisted living costs seriously.
In the Smithtown, New York area, the median monthly charge for a private room in a nursing home was $15,208 last year. The average length of stay is 60 months, and 34 percent of the folks that need paid care receive the assistance for more than two years.
Medicaid is an alternate government run health insurance program that will pay for long-term custodial care. Since it is a need-based benefit, there is a $15,900 asset limit in New York in 2021.
Your home is not a countable asset, but you do not want to qualify as a homeowner if you can help it. Medicaid is required to seek reimbursement from the estates of beneficiaries after they pass away, so they can place a lien on the home if it is in your possession at the time of your passing.
An irrevocable Medicaid trust can be established and funded to get assets out of your name so you can qualify for coverage. You would no longer have access to the principal, but you could receive distributions of the trust’s earnings while you are living independently.
If you fund the trust at least 60 months before you apply for Medicaid, the assets would not count. Your home could be one of the assets in the trust, so it would be protected during the Medicaid recovery phase.
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Nursing home asset protection is the key to the preservation of your legacy, and we can help you implement a custom crafted plan that will cover all your bases.
You can schedule a consultation at our Smithtown, NY elder care planning office if you call us at 631-265-0599, and you can use our contact form if you would rather send us a message.