Social Security and Medicare
Planning Beyond Their Limits
By LEU & PEIRCE ELDER LAW ATTORNEYS
On August 14 , 1935 , on the heels of the Great Depression ,
President Franklin D . Roosevelt signed the Social Security Act into law , creating a “ social insurance ” program to pay workers 65 and older a continuing income after retirement . After almost a century , Social Security remains an integral part of the retirement plan of almost every American worker .
Social Security retirement benefits are individualized : the amount you receive depends on the amount you paid while working and the age you begin receiving benefits . When you work and pay Social Security taxes , you earn credits toward Social Security benefits . Individuals need 40 credits ( 10 years of work ) to qualify for retirement benefits . The amount of the retirement benefit depends on the amount you earned and paid in Social Security taxes while working and is subject to an annual cost-of-living adjustment . In 2022 , retirement benefits increased 5.9 %, which was the largest increase in nearly four decades . Full retirement age was 65 for many years , but began increasing monthly in 2000 , and for anyone born in 1960 or later , full retirement age will be 67 . Individuals who elect to receive their retirement benefits before full retirement age receive reduced monthly benefits .
If you have not worked and earned sufficient Social Security credits to qualify for your own retirement benefits , but are married or were married for at least 10 years to a worker who contributed , you may still qualify for spousal benefits . To qualify for spousal benefits , you must be at least 62 years old ( 60 if widowed ) or caring for a child entitled to receive benefits on your spouse ’ s record ( younger than 16 or disabled ). Your full spousal benefit could be up to one-half the amount your spouse is entitled to receive at full retirement age . Additionally , even if you have enough credits to qualify for retirement benefits on your own work history , you may still apply for spousal benefits if your amount is lower than half of your spouse ’ s benefit .
The Social Security Administration provides a helpful online tool called the Retirement Estimator ( www . ssa . gov / estimator ), which provides personalized retirement benefit estimates and calculations of various scenarios to compare your options .
One aspect of retirement that has changed dramatically over the years is the financial impact of funding long-term care needs as life expectancy has increased . Currently , 70 % of individuals turning 65 will need some form of long-term care in their remaining years . Long-term care costs range from $ 3,000 –$ 16,000 / month in the DFW area . Social Security was simply not designed to provide sufficient income to support such extensive costs .
Medicare was also not designed to pay for long-term care . Signed into law in 1965 by President Lyndon B . Johnson , Medicare was another type of “ social insurance ” designed as a basic health insurance program for all individuals 65 or older who had paid into the system . Traditional Medicare consists of two parts , Part A and Part B . Part A is funded by Medicare taxes and provides coverage for in-patient hospital care , care prescribed by a physician , and hospice . Part B requires a monthly premium and covers medically necessary services and supplies . In 2022 , standard Part B premiums increased from $ 148.50 to $ 170.10 each month . The $ 22 increase in the Medicaid Part B premium is one of the largest increases in Medicare history , approximately half of which is to create a contingency fund for Aduhelm , a new Alzheimer ’ s drug whose benefits have been widely debated .
Contrary to popular belief , no Medicare program covers long-term custodial care . For example , Medicare does not pay for the cost of assisted living or memory care , and only pays for a portion of skilled nursing care following a hospital stay of at least three days . Even then , the maximum paid by Medicare for skilled nursing is a portion of 100 days of care ( Medicaid Advantage plans may pay less ).
As you contemplate retirement , it is important to understand fully the benefits you can expect to receive under Social Security and Medicare . It is even more important to understand the limitations of these two programs , so you can prepare adequately . Unless and until the U . S . takes the next step in providing “ social insurance ,” all individuals approaching retirement age should have a plan in place for funding their own longterm care needs , beyond Social Security and Medicare . For a better understanding of available planning options for funding retirement and long-term care , and to find an Elder Law attorney in your area , go to www . naela . org . Lori A . Leu , Erin W . Peirce , and Lauren E . Olson are Elder Law attorneys with Leu & Peirce , PLLC in Plano , Texas . For more information , call 972-996-2540 or visit www . leulawfirm . com .
DENTON COUNTY • 35