As elder law attorneys, we advise clients that are looking ahead toward their senior years. For the vast majority of people, Social Security and Medi-Cal will be key pieces to the retirement puzzle.
Though these programs are quite helpful, there are limitations and gaps. It is important to understand all the facts when you are putting a plan for aging in place. In this post, we will explain some of the intricacies of Social Security and Medi-Cal.
Social Security Eligibility Age
The age of eligibility for Social Security is a subject that is more complicated than it may appear to be on the surface. People born between 1943 and 1954 become eligible to receive a full Social Security benefit when they are 66. Those that were born in 1955 become eligible two months after their 66th birthday, and if you were born in 1956, you become eligible when you are 66 and four months old.
This two-month per year increase in the eligibility age comes to a halt in 1960. People born during that year and after become eligible to receive a full Social Security benefit when they are 67 years of age.
Your Social Security benefit amount will be calculated based on the 35 years during which you paid the most taxes for Social Security purposes. At the time of this writing in 2019, the average full Social Security benefit is $1461 per month. You can find out exactly what you can expect to receive if you register your account on the Social Security Administration website.
It is also possible to accept an early Social Security benefit when you are as young as 62, but your benefit amount would be significantly reduced. The exact amount of the reduction would depend upon the year of your birth, but it would be somewhere between 25% and 30%.
You can also go in the opposite direction and delay the submission of your application for your benefit beyond the age of full eligibility. If you do this, your benefit will rise by 8% for every year that you delay, but the accrual of delayed retirement credits will end when you are 70.
The age of eligibility for Medi-Cal is not convoluted at all. As long as you have worked and paid FICA or self-employment taxes for at least 10 years, you qualify when you reach the age of 65. Even if you have not met the work requirement, if your spouse has done so, you would be eligible for Medi-Cal coverage.
There are four parts to the Medi-Cal program: Part A, Part B, Part C, and Part D. The first portion pays for inpatient hospitalization, and you don’t have to pay a monthly premium for the coverage. However, there is a co-payment per benefit period, and there is co-insurance for particularly long hospital stays.
Part B pays for visits to doctors and outpatient treatments, but it only covers 80% of covered costs. You have to take care of the rest, and there is a monthly premium of $135.50 in 2019 along with a modest annual deductible of $185 this year.
Part C allows you to apply your benefit to the purchase of private insurance that fills in some of the gaps. The final portion is the prescription drug coverage, and there are co-payments, deductibles, and premiums that you have to pay out-of-pocket.
As you can see, there are some reasonably significant personal expenses when you have Medi-Cal. This being stated, there is a huge gap in the coverage that can have an enormous financial impact.
The majority of seniors will need long-term care eventually, and many will ultimately reside in nursing homes. Medi-Cal does not pay for nursing home care, and this is a very big deal, because nursing homes are extremely expensive.
According to Genworth Financial, the median annual charge for a private room in a nursing home in the Los Angeles area was $109,500 in 2018. They expect the costs to rise by 2% per year over the next five years. Since these numbers are continually increasing, if you need long-term care in a couple of decades, you will pay considerably more than you would today.
We Are Here to Help!
Fortunately, there is a solution to the Medi-Cal situation as it applies to nursing home care. Medicaid does pay for custodial care, but it takes careful planning to divest yourself of assets intelligently so that you can gain eligibility without losing anything in the process.
If you would like to discuss nursing home asset protection with a Los Angeles/Long Beach Medi-Cal planning attorney from our firm, we are here to help. You can give us a call at 310-337-7696 or 562-346-3209 to schedule a consultation, and you can alternately send us a message through our contact page.