Can Medicare Take My Retirement Savings?
Many people are confused about Medicare eligibility requirements, benefits, and how receiving Medicare may impact their lives. Questions abound - and one of the most commonly-asked question is "Can Medicare take my retirement savings?"
To answer this important question, we should first take a closer look at Medicare - what it is, how it's subsidized, and what makes up its various components.
Medicare - General Information
Medicare is a social insurance program made available by the U.S government, which provides health insurance coverage to people aged 65 and over (or others who meet special criteria). Former President Harry S. Truman was the first Medicare beneficiary, and the first Medicare card was presented to him by then president Lyndon B. Johnson in 1965.
How Is Medicare Subsidized?
Medicare is financed in part by payroll taxes imposed by FICA (the Federal Insurance Contributions Act) and the Self-Employment Contributions Act of 1954. For employees, this tax is equal to 2.9% (half of which is withheld from the worker, with the other half matched and paid by the employer) of the salaries, wages and other employment-related compensation.
Generally, all persons 65 years old or older who have legally resided in the United States for at least five years are eligible for Medicare. Keep in mind though that if those persons (or their spouses) haven't paid Medicare taxes for at least ten years, then they have to pay a monthly premium in order to enroll in Medicare.
Medicare consists of four separate components: Hospital Insurance, Medical Insurance, Prescriptions Drugs, and supplemental Medicare Advantage plans. Individual Medicare benefits can be awarded and custom-tailored in a variety of combination of these four components.
Medicare, Retirement and You - i.e. Can Medicare Take My Retirement Savings?
The short answer to that central question - can Medicare take my retirement savings? - is no.
Keep in mind that there are other federally-funded health programs (such as Medicaid which is designed to help low-income individuals with health needs), which might impact the the level of aid a recipient might receive based on their retirement savings. In order to qualify for Medicaid, for example, you have to prove that you're unable to pay for any other type of available insurance plan, so if your retirement savings happen to be significant in the government's eyes, your overall Medicaid benefit amount may be reduced or lowered since the government might determine that those assets or savings can be used to pay for health care.
The level of benefits or number of components that a recipient might be eligible to receive under Medicare might be impacted, but under no circumstances would Medicare seize your retirement savings.