By Pierro, Connor & Strauss Staff
2022 was a tumultuous year. Amid a continuing pandemic, tense midterm elections, and a war in Ukraine, we have grappled with more than our fair share of grim news.
However, with 2023 in motion, there are some silver linings — in particular for seniors.
Here are seven reasons for seniors to reap benefits:
1. Social Security Benefits Are Seeing the Biggest Increase in 40 Years.
Social Security beneficiaries will find that their monthly checks are increasing by nearly 9 percent, come January 2023. This cost-of-living adjustment (COLA) is the largest boost to Social Security benefits in more than four decades.
For more than 65 million individuals currently receiving these benefits, payments will rise by about $140 on average per month.
If you are a Social Security beneficiary, you can get an estimate of how much more you will be receiving in 2023 by using the online My Social Security portal on the Social Security Administration website.
2. New York Medicaid Eligibility Numbers Are Up – Dramatically
Seniors applying for Long-Term Care Benefits in the Medicaid Home Care program are allowed to retain quite a bit more of their income and assets in order to qualify this year.
Monthly income levels are up over $600 to $1583 per month, which can include income from pension, Social Security, retirement account distributions. And in a dramatic shift, applicants can have $11,333 more in “resources” aka “assets” over 2022, up to a total of $28,133.
Increases like these have not been seen in many years, keeping seniors more money in their pockets. Through legal planning with an elder law attorney, there are also opportunities to preserve and protect property and more of their live savings while qualifying for Medicaid.
Medicare Part B Premiums Are Lower.
For the first time in more than 10 years, Medicare Part B enrollees will see some of their costs decline.
The Centers for Medicare and Medicaid (CMS) announced that the following will take effect in 2023:
• The Medicare Part B basic monthly premium is decreasing by $5.20 per month (savings of $62 for the year).
• The Medicare Part B annual deductible is decreasing by $7 per month (savings of $84 for the year).
• Note that beneficiaries with higher incomes pay higher monthly premiums.
3. You Can Contribute More Than Ever to Retirement.
The IRS is allowing record increases in 2023 for contributions to 401(k)s, Roth IRAs, and traditional IRAs.
• If you are working and have a 401(k), 403(b), or 457 plan, you can contribute up to $22,500 to that account in 2023. Working individuals who are 50 years and older can contribute another $7,500.
• If you have a Roth IRA or IRA, you can now contribute $6,500 in 2023 (up from $6,000 in 2022).
4. You Don’t Have to Wait Months for Medicare Part B Coverage to Begin.
A new rule is also setting seniors up with improved access to health care coverage. In the past, if you waited until the last three months of your Initial Enrollment Period (IEP) to enroll in Medicare, you would have to wait another two to three months before your coverage began.
As of January 1, 2023, if you enroll in Medicare during the last three months of your IEP, your Medicare Part B coverage will begin on the first day of the month after you sign up. You will not have to wait several months to receive benefits.
If you sign up for Medicare during the General Enrollment Period, which runs from January 1 to March 31, you used to face a coverage gap. Coverage did not begin until July 1. Starting in 2023, your coverage will start the first day of the month after you enroll.
5. SSI and SSDI Benefits Are Also Seeing a Boost.
If you are a beneficiary of Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI), you will see modest increases in your monthly benefits payouts before the new year. Beginning on December 30, 2022, SSI individual recipients will receive $73 more a month. Couples will receive $110 more in SSI benefits per month.
Meanwhile, SSDI benefits will see a monthly increase of about $119 more on average for those who are not blind.
7. Higher Annual Gift Tax and Estate Tax Exclusions
Although inflation is generally nothing to be pleased about, the IRS made inflation-adjusted changes to the annual gift tax and estate tax exclusions for 2023. If you are considering wealth transfer tax planning, these are welcome increases.
This year, the gift tax annual exclusion increased from $16,000 (2022 number) to $17,000 per recipient. This means you can gift this amount to as many people as you wish in 2023 without using up your lifetime gift and estate tax exemption or paying gift tax. Married couples who gift-split may gift a combined $34,000 per person in 2023 without making a taxable gift.
Another significant change is the combined gift and estate tax exclusion increase. It increased to $12.92 million ($25.84 million for a married couple). The combined gift and estate tax exemption is the total amount of gifts a person may make during their lifetime, including transfers made at death, before being on the hook for gift or estate tax.
How can you take advantage of these changes? Listen to the podcast by Pierro, Connor & Strauss attorneys Louis Pierro and Kristen Peck, who discussed this topic on Life Happens Radio posted at this link. Schedule a consultation to find out if you have reasons to celebrate these changes in your estate and retirement plan.