As an elder law and estate planning firm, we help people prepare for the eventualities of aging. If you develop a retirement plan, you can enjoy your golden years in comfort. You can also prepare for the twilight years that will inevitably follow.
It all starts with a foundational knowledge of the relevant factors, and we will provide an overview in this post.
When you pay payroll or self-employment taxes, you earn retirement credits that lead to eligibility for Medicare and Social Security. A minimum of 40 credits is required.
In 2022, you receive one credit for each $1510 in earnings, and the figure has always been quite modest. You can earn up to four credits each year, so you will get the same four credits if you earn $7000 or $700,000 in a given year.
Once you have accumulated at least 40 credits, you will become eligible for Medicare when you reach the age of 65. If you do not have the necessary credits, you can potentially qualify on your spouse’s record if you are married.
Medicare Out-of-Pocket Costs
Medicare is broken up into four sections: Part A, Part B, Part C, and Part D. The first portion pays for hospitalization, and there is no monthly premium for Part A if you are fully vested in the program. The bad news is that there is a deductible per benefit period, and there are significant copayments for long hospital stays.
Part B pays for outpatient treatments and visits to doctors. There is a monthly premium for this coverage, and in 2022, most people pay $170.10. There is a $233 deductible, and after the deductible has been met, Medicare will pay for 80 percent of the approved visits.
Part C allows you to use your Medicare benefit to purchase a private insurance plan that has added features. Medicare Part D is the prescription drug portion of the program, and there are deductibles, copayments, and premiums that must be paid out-of-pocket when you carry this coverage.
Aside from these costs, there is a huge gap in the coverage, and this is the most relevant elder law issue. Medicare does not cover long-term care, and most seniors will incur assisted living expenses eventually.
Nursing homes and assisted living communities are very expensive, so this is a situation that you should definitely prepare for in advance. Medicaid will pay for long-term care, and we help clients position their financial assets with future Medicaid eligibility in mind.
Social Security Eligibility
The age of Social Security eligibility depends on the year of your birth. For people born between the years 1943 and 1954, the Social Security eligibility age is 66. It then goes up by two months per year.
To explain, if you were born in 1955, you will become eligible for your full Social Security benefit two years after your 66th birthday. This two-month per year graduation ends in 1960. People that were born in 1960 and after will become eligible for a full benefit at the age of 67.
You can choose to receive an early Social Security benefit when you are as young as 62 years of age. This can sound appealing, but the benefit would be reduced by 25 percent to 30 percent depending on the exact year of your birth.
In addition to the early retirement option, there is a possibility on the other end of the spectrum. You can choose to delay your application for Social Security benefits until you are as old as 70. If you do this, you will receive an increased benefit. It will go up by eight percent for every year that you delay.
Schedule Consultation With a Loveland, OH Elder Law Attorney!
If you are ready to develop a plan for aging, we would be glad to provide the necessary assistance. You can call us at 513-721-1513 to set up a consultation appointment, and you can use our contact form to send us a message.