By: Maureen Wilkin, Federal Benefits Specialist, NITP
Published: November 2019
Medicare and Social Security become topics of conversation for most people as they begin to plan for retirement. That conversation often reveals how overwhelmed people are by the amount of program information available. The good news is that it’s really not that complicated. Each program has some key points to know and follow. Let’s go through each program to help you gain a basic understanding.
Your own earned benefit:
- Earliest eligibility at age 62-benefit reduced for age; see https://www.ssa.gov/planners/retire/agereduction.html
- Must have 40 credits; see https://www.ssa.gov/planners/credits.html
- Full benefit at Full Retirement Age (FRA); see https://www.ssa.gov/planners/retire/retirechart.html
- More than full benefit if claiming from FRA until age 70 (delayed credits); see https://www.ssa.gov/planners/retire/delayret.html
- Married to a Social Security covered worker
- The worker must file for his/her earned benefit
- The spouse must be at least 62 years of age
- See https://www.ssa.gov/oact/quickcalc/spouse.html
Former Spouse Benefit:
- Married for 10 years to a worker who is eligible for OR receiving a benefit
- You have not remarried
- You are at least 62 years of age
- See https://www.ssa.gov/planners/retire/divspouse.html
Survivor Spouse Benefits:
- The worker must have worked long enough under Social Security
- See https://www.ssa.gov/planners/survivors/ifyou.html#h2
Surviving Divorced Spouse:
- Marriage must have lasted at least 10 years
- See https://www.ssa.gov/planners/survivors/ifyou.html#h3
When to Claim:
- It’s very personal! There is no “best-time”
- Things to consider:
- Do you need income?
- Are you still working?
- Family situation
- Life expectancy?
Other Important Facts:
- Working while receiving a benefit can reduce your benefit; see https://www.ssa.gov/plannersion/retire/whileworking.html
- If you receive a CSRS annuity:
- The Windfall Elimination provision might reduce your earned worker benefit
- The Government Pension Offset provision might reduce or eliminate any possible spousal benefit
- See https://www.ssa.gov/planners/retire/gpo-wep.html
- Benefits are likely to be federally taxed
- See https://www.ssa.gov/planners/taxes.html
- At age 65
Three opportunities to enroll:
- Initial opportunity: 7-month window
- Special opportunity: 8 month period starting when INSURANCE becomes retirement based AND you are 65
- General enrollment:
- Jan-March each year
- Effective in July (payment starts)
- A possible late penalty for each 12-month delay in Part B enrollment
- This is a PERMANENT PENALTY!!
- See https://www.medicare.gov/sign-up-change-plans/how-do-i-get-parts-a-b/part-a-part-b-sign-up-periods
- Covers hospital expenses
- Covers doctor and outpatient expenses
- See https://www.medicare.gov/what-medicare-covers
- Medicare Advantage Plans
- Private plans that operate like A + B
- Not available everywhere
- Prescription drug plans
- See https://www.medicare.gov/index.php/drug-coverage-part-d/what-medicare-part-d-drug-plans-cover
- Free – if you have sufficient years paying Medicare taxes while employed
- Truly free when you are no longer working and paying Medicare taxes
- Premium based on previous year’s tax return adjusted gross income – see link
- Premium determined EVERY year
- If married and filing jointly, TOTAL income is used for EACH enrollee
- Premium is Part B + possibly more if the plan offers additional coverage
- Premium depends upon the plan
- See https://www.medicare.gov/your-medicare-costs/medicare-costs-at-a-glance
The decision to Enroll:
- It’s a “no-brainer”
- Covers hospital expenses and when coordinated with other insurance can save enrollee $$$$
- Cost vs benefit decision
- Do you need the coverage?
- What is your health status now @ 65? What will it be @ 85?
- Medicare Advantage Plans
- Available in your location?
- Doctors & facilities you use/like?
- Prescription Drug Plans
- Do you need one?
- If enrolled in the FEHB program, ALL plans have equivalent or better coverage
- See https://www.medicare.gov/drug-coverage-part-d/how-part-d-works-with-other-insurance
Those are the basics. You should learn more before you start down the path to enrollment in either program. There are extensive resources available at Medicare.gov and at ssa.gov for you to review. There is definitely a great deal to consider, but always remember to keep it simple.
Ms. Wilkin is a retired Federal employee who was a Benefits Specialist for 38 years and was involved with Federal employee training for over 20 years. Since then, she has been a seminar presenter for NITP.