Skip to main content

Elizabeth O’Brien

Medicare is complicated, so it’s no surprise that nearly 75% of adults over age 50 say they wish they understood the coverage better, according to a recent survey by Nationwide Retirement Institute. What you don’t know can cost you.

For example, 53% of older adults don’t know that there’s a cost associated with Medicare Part B, according to the survey of 1007 adults over age 50 with household incomes of at least $150,000. In fact, beneficiaries pay a monthly premium for Part B, which pays for outpatient services like doctors’ visits. The standard Part B premium is $134 a month; those enrolling in Medicare for the first time in 2018 will pay this amount if their income is $85,000 or less for an individual and $170,000 or less for a couple. Those with incomes above this threshold will pay more. The annual Part B deductible is $183. (Part A, by contrast, is free on a monthly basis to most beneficiaries but does come with deductibles.)

Medicare beneficiaries who are on Social Security get their Part B premium deducted from their monthly benefit check. So before you retire, when you get the estimate of your monthly Social Security benefit from the Social Security Administration, it’s important to mentally subtract your Part B premium from the total to understand what will really hit your account each month.

Another potentially costly mistake is believing that Medicare will cover your long-term care costs. Medicare covers nursing home care only for rehabilitation and other limited circumstances. It doesn’t cover the kind of long-term care that most elderly Americans need, which is help with activities of daily living like bathing, dressing, and eating.

Medicaid does cover long-term care costs, but only for people who have spent down their money and meet strict asset and income criteria that vary by state. Some 42% of affluent older adults with children say they’d give away all their money to their kids so they can go on Medicaid, according to the Nationwide survey.

There are a couple of problems with this strategy. For starters, Medicaid has a five-year “look-back” period, where the government can scrutinize all of your financial transactions for 60 months leading up to your Medicaid application, and certain transactions can jeopardize your eligibility. Generally, the government will be paying particular attention to gifts made to anyone other than your spouse, including outright gifts and also sales of items for less than fair market value.

Secondly, you don’t have the final say over your care when you go on Medicaid, and most retirees report a desire to maintain control over their circumstances. Giving away your assets is “the last thing you’d want,” says John L. Carter, president of Nationwide Retirement Plans.

Bottom line? Understanding Medicare costs can help you make a more realistic retirement budget. Learn more about Medicare in the government’s official handbook. The Medicare office is also on YouTube if you prefer to get your information that way.

This article was written by Elizabeth O’Brien from MONEY and was legally licensed by AdvisorStream through the NewsCred publisher network.

Important Disclosure Information

Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Dechtman Wealth Management, LLC [“DWM”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from DWM. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. DWM is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the DWM’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.dechtmanwealth.com.

Please Note: DWM does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to DWM’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

Please Remember: If you are a DWM client, please contact DWM, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services.  Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently.

Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

Join our newsletter

"*" indicates required fields

Name*