Retirement planning involves careful long-term calculations. You do not have a crystal ball, so there is no way that you can anticipate every expense that may come your way during your senior years. At the same time, you can gain a thorough understanding of the benefits that you will have, and you can make projections.
When it comes to health care, you will qualify for Medicare coverage when you reach the age of 65 if you have paid into the program sufficiently throughout your life. Just about everyone who has worked for at least 10 years will qualify for Medicare coverage.
To explain the formula, you get one retirement credit for every $1220 that you earn in 2015. The maximum annual accrual is four credits, and you earn Medicare eligibility after you have accumulated at least 40 credits.
Medicare is a solid safety net, but there are out-of-pocket expenses that you should be aware of when you are creating a retirement budget. You have to pay a premium for Medicare Part B, which is the portion of the program that pays for outpatient care and visits to doctors.
The amount of this premium is based on your income level; in 2015, most people pay just under $105 per month. There is also a very modest deductible of $147 per year.
Part A is the hospitalization segment. Most people do not have to pay a premium for this coverage, but there is a deductible of $1260 for each benefit period. Plus, there can be very significant co-payments required for hospital stays that exceed 60 days.
Medicare Part C gives you the option of combining your benefit with private insurance to fill gaps in the coverage. Part D is the prescription drug portion, and you have to pay monthly premiums for this coverage.
All of these out-of-pocket expenses can add up considerably, and you should certainly keep them in mind when you are engaged in your retirement planning efforts. However, there is an enormous gap in the coverage that is even more significant.
Medicare does not pay for custodial care. This is the type of care that you would receive in a nursing home or assisted living community. We practice in the state of New York, and a year in a nursing home here could cost you well in excess of $100,000. People often spend multiple years receiving care, so this is an attention-getting reality.
The Medicaid program will pay for long-term care, but it is only available to people who can prove that they have financial need. Retirement planning attorneys can help clients who want to aim toward Medicaid eligibility while they keep assets in the family.
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