There is a rapid aging of the population underway at the present time. The baby boomer generation is comprised of people that were born between 1946 and 1964 immediately after World War II. All of these individuals are becoming senior citizens at the present time, and as a result, the Social Security Administration is excepting about 10,000 applications every day. This volume is expected to persist into the foreseeable future.
Elder law attorneys are particularly relevant during our current era given this reality. A lot of questions are being asked by people who are nearing their senior years. Let’s look at some of these questions.
When will I become eligible for Social Security?
This seems like a simple, straightforward question, but it is actually more complicated than it sounds. When it comes to your full benefit, it all depends on the year of your birth. For people born in 1954 or earlier, the age of eligibility is 66 under currently existing laws. It then goes up by two months per year, so if you were born in 1955, you become eligible two months after your 66th birthday. This arrangement stops in 1960; people that were born during this year and after become eligible when they are 67 years of age.
The above being stated, you do not have to wait until you are eligible for your full benefit to apply for Social Security. When you are as young as 62, you can accept a reduced benefit. The exact amount of the reduction will depend on the year of your birth as well, but it is typically about 25 percent.
You can go in the other direction and choose to delay your application for Social Security eligibility beyond the full eligibility age. If you go this route, your benefit will increase by eight percent for every year that you delay. However, this ends when you reach the age of 70.
Will I be able to retire when I start receiving my full Social Security benefit?
The answer is no if you do not have any other source of income, and the level of expenses that most people have to address. Right now, the average Social Security benefit for an individual is $1404 per month. This equates to $16,848 per year, which is certainly not enough to maintain any type of reasonable lifestyle in the United States.
What about Medicare eligibility?
If you work and pay taxes for at least 10 years, you will become eligible for Social Security and Medicare when you become old enough to receive your benefit. At the time of this writing in 2018, the age of eligibility for Medicare is 65, and this applies to everyone, regardless of the year of your birth.
Will Medicare pay for all of my medical expenses after I enroll in the program?
Unfortunately, Medicare will not pay for everything in full. There are a number of different out-of-pocket expenses that must be paid by the benefit recipient. These would include copayments, deductibles, and monthly premiums. Plus, there is a huge gap in the Medicare program, and it is one of the most important elder law issues of our day.
According to the United States Department of Health and Human Services, most people that are fortunate enough to reach the age of 65 will someday need living assistance. Many will reside in nursing homes and assisted living communities. These facilities are very expensive, and Medicare will not pay for long-term care.
Is there a solution?
For many people, the solution is Medicaid. This jointly administered federal/state government health insurance program will pick up the tab for long-term care costs if you can qualify. However, it takes careful, informed planning to obtain Medicaid eligibility without losing anything in the process, because there is a $2000 limit on countable assets.
The good news is that many things that you own do not count. Your home is not a countable asset, but there is an equity limit that changes slightly year-by-year. Suffice to say that it is over $500,000. One vehicle that is used as a primary source of transportation is not counted, and personal effects, wedding and engagement rings, and household items are not countable assets.
When it comes the things that are countable, you could give gifts to your loved ones or transfer assets into an irrevocable trust to obtain eligibility. This being stated, you must act in advance, because you are penalized and your eligibility is delayed if you give away assets within five years of applying for Medicaid coverage.
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If you would like to learn more about important elder law matters and take steps to prepare yourself for the inevitabilities of aging, we are here to help. You can request a consultation right now if you give us a call at 586-493-7661.