When you are working throughout your life, you pay FICA taxes if you are on a payroll, and if you are self-employed, you pay self-employment taxes. You earn retirement credits when you pay these taxes.
It is possible to earn up to four retirement credits in a calendar year. Most people who work for any length of time during the year will earn these four credits, because the requirements are modest. During the current calendar year, you get one credit for every $1220 that you earn.
Once you have accumulated a minimum of 40 retirement credits, you will qualify for Medicare coverage when you reach the age of eligibility. At the present time, the age of eligibility is 65, but this is something that is subject to change via legislative mandate.
There have been those who have suggested increases in the eligibility age, so you should keep an eye on the issue as it unfolds so that you know what to expect.
Let’s look at three things that you should understand about Medicare, because people sometimes overestimate the coverage.
Four Distinct Parts
The Medicare program is divided into four distinct parts. Medicare Part A is the hospitalization piece. Part B is the portion of the program that covers outpatient care and visits to doctors. Medicare Part D is the prescription drug program.
Part C allows you to combine your Medicare coverage with private health insurance.
Out of Pocket Expenses
Medicare does not pay for everything in full. There is a deductible per benefit period for Part A, and there can be co-payments for extended hospital stays.
You have to pay a monthly premium for Part B coverage. The exact amount that you pay is based on your income level, but most people are paying just under $105 per month at the present time.
There is also a monthly premium for Medicare Part D, and there are co-payments as well.
There is a very informative website that is maintained by the United States Department of Health and Human Services called LongTermCare.gov. One profound statistic greets you as soon as you visit the site: Seven out of every 10 seniors will someday need long-term care.
Nursing homes are extremely expensive. Here in the greater New York City area, the average annual charge for a room in a nursing home is well in excess of $100,000.
Medicare does not pay for long-term care, so you have to brace yourself for these expenses when you are creating a retirement budget.
Nursing Home Asset Protection
If you are concerned about potential long-term care costs, you are not alone. Fortunately, there are steps that you can take to protect your assets from devastating nursing home costs.
To explore your options, send us a message through this page to set up a no obligation consultation: Smithtown NY Elder Law Attorneys.