General Social Security & Medicare Information
Social Security and Medicare are often misunderstood. Social Security is a federal program, funded by employers’ and employee’s taxes. Social Security’s pooled pension system provides income to beneficiaries and their families. Most American’s rely on at least one of the benefits offered under Social Security. Social Security Pension (SS), Social Security Disability (SSDI), Survivors Insurance (SI) and Social Security Income (SSI) were designed as, government-sponsored income protection.
Today, Social Security is the basis for building an investment portfolio. Some of us do not have pensions, but if you do: add annuities, IRA’s, work, savings and other assets to the portfolio. Subtract insurance costs for healthcare, catastrophic life issues, and simple living expenditures. Your income and assets may dwindle. Some individuals and families may find a difficult time navigating outreach programs to support their care. It is never too early to build a foundation of financial security fit for you and your family.
When is a good time to retire?
Deciding when is the best time to retire is a personal choice. We all differ in gene composition and so does our financial Social Security choice(s). For an example: Federal or State employees and spouses have provisions, that are specific to their work history, also known as Government Pension Offset. It is most important to visit with social security professionals who can guide you on eligible, potential benefits. You can also use the online retirement estimator to get an idea of future retirement options. Do not hesitate to talk with specialist(s) in this area and, who offer non-biased help.
Lastly, keep in mind, you can apply for social security at age 62 or, qualify at any age if you are deemed disabled by federal guidelines. Applying means that you will need to earn up to 4 credits a year for a total of 40 credits over 10 years. Fewer credits are applicable if eligible for a disability or survivor’s benefits. Your local Social Security Office is often helpful, though do your own research or talk with a social security specialist. If you opt for Social Security at age 62, your Medicare coverage will not begin until age 65. Medicare for someone deemed disabled and under age 65; after 12 consecutive months for a total of 24 months, will automatically be enrolled into Medicare Part A and B. Your decision to take Part B due to the premium and affordability should be discussed with a professional. You may qualify for a state program to pay for your Part B. Eligibility rules are applicable and you would have to qualify. Part D formulary search is recommended and again, there are federal and state programs that pay for your premium, you must meet the eligibility rules if you qualify.
A brief history of Medicare. In 1965, Medicare, was created as a federal program through the Centers for Medicare and Medicaid Services, and is funded by FICA taxes and beneficiary premiums. It was meant to serve as the backbone of health care in the United States. Today, Medicare provides coverage to millions of beneficiaries and it is still growing. See the forecast for the next 10 years: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/ForecastSummary.pdf
When can you sign up for Medicare?
Medicare is available to anyone age 65; or with a federally qualified disability lasting 12 consecutive months for a total of 24 consecutive months; or ERSD (End Stage Renal Disease); or ALS (Amyotrophic Lateral Sclerosis).
Important Enrollment Periods:
INITIAL ENROLLMENT PERIOD can be confusing because of how it is worded or interpreted. For instance: Turning 65, and not actively working, when should you sign up for Social Security and Medicare? You can make an appointment with the local Social Security office and/or apply for Social Security online. Do this three months before you 65th, birthday. Waiting the month of or three-months after, will delay your Medicare Part B coverage. This is where many people get caught in the cross-fire of mis-communication. Yes, you will qualify for Medicare but, there will be a delay when Medicare Part B begins.
Waiting to sign-up over the 7 month period, a penalty will apply. 10% penalty for every 12 months you did not register. Signing up for Medicare should not be a gamble; therefore a BENES Act (s.1909, H.R575) was set forth as a solution to costly Medicare enrollment mistakes when turning 65. See https://www.medicarerights.org/pdf/benes-act-onepager-hr2575-s1909-january-2018.pdf
Do your homework prior to Medicare enrollment periods
Sign up for Medicare Part A, B and D during the INITIAL ENROLLMENT PERIOD, if not actively employed. You can also choose a Plan C which offers a beneficiary the choice of a Medicare Advantage Plan such as an HMO or PPO
You sign-up three months before your 65 birthday, your effective date will depend on your birthdate.
If your birthday is not the first of the month and you enroll in Medicare three months prior to your birth month; then your coverage will start on the first, of your birthday month.
If your birthday is on the first day of the month and you enroll in Medicare three months prior to your birth month, your benefits start on the first day prior to your birth month.
If you enroll in the month you turn 65, coverage will begin the following month. Yes, you have three months after your 65th birthday, but, your eligibility will be delayed two months and three months. Avoid the 10% penalty for every 12 months missed and sign up during the Initial Enrollment Period.
Not all situations warrant the same outcome, so it is important to do your homework especially if you continue to work beyond 65 (“active” employment is the key word)
What happens if you did not sign up during the Initial Enrollment Period?
You miss the INITIAL PERIOD, what options do you have? You can sign up for Medicare during the GENERAL ENROLLMENT PERIOD (January 1 – March 31), your coverage will not be effective until July 1. A 10% penalty for every 12 months you did not sign-up is applicable.
SPECIAL ENROLLMENT PERIODS allow an age eligible person, who is enrolled in an employer sponsored group plan, to apply for Medicare Part B and D (if needed); eight months from the end date of employer sponsored medical coverage ends. This is one example of special circumstances. This only applies to medical and not dental. Medicare does not cover dental benefits though, there are options available.
Note: there are times when the 10% penalty can is erased from the slate:
Delaying Part B or D while you are SSDI eligible and under age 65; and you later sign-up, that 10% penalty for every 12 months will no longer apply when you turn 65. At that point the clock is reset, and Medicare coverage begins anew.
If you qualify for a state-funded Medicare Savings Plan, your penalty for Part B delay will be paid by the state to the federal. You must qualify for that state program too
A few facts to remember:
The choices available to a Medicare eligible beneficiary is not “one-size all fits all”
Choosing a plan should fit your budget, current needs and lifestyle
You can take Medicare when eligible (at age 65 or under 65/federal disability approval and delay your Social Security income
If you apply for Social Security at age 62, without a disability, you will need to wait to sign up for Medicare at age 65. Your medical will come from another source either through a federal or state- sponsored HealthCare Exchange or Medicaid program (if eligible).
When you turn 65, and if you were on Social Security Disability, you benefit converts to a Social Security Pension.