Don’t Expect Too Much From Medicare
When you pay FICA or self-employment taxes, you get something in return. You earn retirement credits when you pay these taxes, and this year, you get one credit for every $1510 in taxable income. This figure is adjusted to account for inflation, but it has always been relatively low.
The maximum annual accrual is four credits, and you become eligible for Social Security and Medicare when you have at least 40 credits. Even if you have never worked, you can become eligible for these programs on your spouse’s work record.
All eligible Americans receive the Medicare benefit when they are 65 under currently existing laws, but an age reduction has been proposed. This is an unfolding situation that we will monitor as the months and years pass.
For Social Security, the eligibility age depends on your birth year, but it will be between 66 and 67 years of age. You can read the Social Security Administration retirement benefits publication to get all the specifics.
Medicare Gaps
The Medicare program does not pay for all of your health care expenses after you gain eligibility. You have to pay a monthly premium for Part B, which is the portion of the program that will cover doctor bills and treatments that are provided by other health care professionals.
In 2022, most people are paying $170.10 for this coverage, there is a $233 deductible. Part B will cover 80 percent of the covered costs, and you have to pay the rest.
There is no premium for the hospitalization portion, but there is a $1556 deductible, and there is coinsurance for hospital stays exceed 60 days.
You can choose from many different prescription drug plans, and the premiums, copayments, and deductibles vary from plan to plan.
If you require nursing home care or in-home care that is provided by a professional health aide, you have to look elsewhere for support because Medicare does not cover custodial care.
Long-Term Care Costs
This lack of coverage is a very big deal, because 35 percent of seniors will reside in nursing homes, and they are very expensive. According to Genworth Financial, the median annual charge for a private room in an Oklahoma City nursing home last year was $88,695.
The average length of stay is one year, and 13 percent of individuals that receive living assistance incur long-term care bills for more than five years.
Medicaid Eligibility
All of this is a bit disconcerting to say the least, but there is a solution in the form of Medicaid coverage. This program will pay for long-term care if you can qualify, but there is a $2000 asset limit because it is a need-based benefit.
Your home is not a countable asset with an equity limit of $636,000 in Oklahoma this year. Even though you can qualify as a homeowner, you want to avoid this scenario because Medicaid could place a lien on the home after your death.
To prepare yourself for future Medicaid eligibility, you can convey your home, income producing assets, and other resources into an irrevocable trust. You would surrender access to the principal, so it would not count if you were to apply for Medicaid.
After you fund the trust, you could receive distributions of the trust’s earnings without touching the principal, and this can allow you to maintain your standard of living. As long as you fund the trust at least 60 months before you apply for Medicaid, the principal would not count.
Schedule a Consultation Today!
You can call us at 405-843-6100 if you would like to schedule a consultation at our Oklahoma City elder law office. There is also a contact form on this site you can fill out if you would prefer to send us a message.
After helping his own family deal with a lengthy probate and the IRS following his father’s untimely death in a farm accident, Larry Parman made a decision to help families create effective estate plans designed to reduce taxes, minimize legal interference with the transfer of assets to one’s heirs, and protect his clients’ assets from predators and creditors.
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