When you pay FICA or self-employment taxes while you are working, it can seem like you are throwing money into a black hole for no particular reason. In fact, when you make these contributions, you earn retirement credits. During the current calendar year, you get one credit for every $1360 that you earn.
The maximum accrual in a given year is four retirement credits. Once you have at least 40 credits “in the bank” so to speak, you will qualify for Medicare when you reach the age of 65 under currently existing laws. In this post, we will look at three important facts about the Medicare program.
Eligibility Through Spouse’s Work Record
You do not have to individually meet the retirement credit accrual threshold that we looked at above if you are married. Even if you do not have these 40 credits under your belt, if your spouse will be eligible at the age of 65, you will be able to qualify for Medicare at that age as well.
There Are Out of Pocket Expenses
Medicare will provide a very solid foundation as a source of health insurance when you are a senior citizen if you are eligible. This being stated, it is very important to understand the fact that it does not pay for everything in full by any stretch of the imagination.
The program is broken into four different distinct parts. Medicare Part A is the hospitalization piece, and there is no monthly premium to pay for this coverage. However, there is a per benefit period deductible. In 2019, this deductible stands at $1364, and this is a figure that is subject to change annually to account for inflation.
There is no coinsurance for hospital stays that do not exceed 60 days in duration, but things change considerably if you stay longer. There is a $341 coinsurance that must be paid daily for days 61 through 90 receiving hospital care. If you stay longer than that, you are looking at $682 a day, with a maximum of 60 days at this rate during your lifetime.
Part B pays for visits to doctors and outpatient treatment. There is a monthly premium, and most people pay $135.50 this year. Individuals that are in upper income brackets pay somewhat more. The deductible is $185 a year, and this can sound like a great deal. On the downside, once it has been satisfied, you have to pay 20% of all expenses that are covered under Medicare Part B.
Medicare Part D is the prescription drug portion of the program. There are premiums, deductibles, and coinsurance that go along with this coverage. Part C or Medicare Advantage can be used to help with the purchase of insurance from a private company that fills in some of these gaps.
Nursing Home Care
Speaking of gaps, there is one hole in the Medicare coverage that is actually the most important elder law matter that we handle here at our firm. Seven out of 10 seniors will need some type of living assistance eventually. About 35% of all elders will ultimately spend time in nursing homes per se, and the average length of stay is one year.
Here in Los Angeles County, you are looking at an annual charge of more than $100,000, and costs have been rising year by year. Once again, the one-year figure is an average, so some people stay longer, and married couples must brace themselves for two separate rounds of nursing home expenses.
Explore Nursing Home Asset Protection Solutions!
If all of the above has gotten your attention, we have some good news for you. Medi-Cal will pay for a stay in a nursing home, but you are probably aware of the fact that it is a need-based program, so you can’t qualify if you have significant assets in your own name.
With the proper planning, you can divest yourself of resources by giving gifts to loved ones that would otherwise be inheriting them. However, it takes careful planning because of the intricacies of the program, including a penalty that is imposed if you give gifts within 30 months of the application submission date.
We are here to help if you would like to discuss the matter with a licensed elder law attorney. You can send us a message to set up a consultation appointment, and we can be reached by phone at 310-337-7696.