Why Did They Make Medicare & Retirement So Darn Complicated?
We know the basics, of course
- Retirement benefits are reduced if you claim them before your full retirement age (between age 66 and 67 depending on the year you were born.)
- Social Security benefits might be reduced even more prior to the full retirement age if you continue to work.
- Medicare benefits, on the other hand, begin the month you turn 65, but can be delayed voluntarily if a more valuable health insurance plan is available via your job or your spouse’s job.
But there is some tricky fine print in the rules:
- You have to have an earning’s history with the Social Security Administration for 40 quarters to be eligible for your own benefits.
- A spouse who has no earnings record of their own can receive benefits based on their spouse’s earnings record.
- You can’t collect your own benefits AND your spousal benefits – it is one or the other.
- Survivor benefits and spousal benefits are not the same.
- There might be benefits available from a former spouse.
- There is no benefit to delaying benefits after age 70.
- The money you pay into Social Security is not kept in a separate account (like a 401(k) or IRA). In fact, the money you paid in is already spent (on the older generation of retirees.) That’s why having more retirees for each worker (as baby boomers retire) is such a challenge to the system.
- The dependent children (under 18) of a current retiree collecting benefits are also eligible for benefits.
- Legal immigrants who would other qualify for benefits are eligible.
As for Medicare, there are pitfalls and surprises here as well:
- If you don’t have a qualifying Prescription Drug plan for more than 63 days once you turn 65, you will pay a Part D Late Enrollment Penalty once you do eventually purchase a Part D plan.
- If you don’t have Part B (or a qualifying substitute like coverage from your job or a spouse’s job) for a period of 12 months or more, you will pay a Part B Late Enrollment Period once you do eventually purchase Part B.
- Part B costs $148.50 per month (in 2021) for most people, but if your income is above $88,000 (single) or $176,000 (joint), the premium is be higher – $207.90 or more per month.
- In addition to Original Medicare, you can enroll in a Medicare Advantage Plan OR a Medicare Supplement (or Medigap Policy).
- However, you can enroll in these types of plans only at certain times. Click here to find out when.
We can help you understand the implication of these rules and help you find the Medicare insurance plan that fits your needs as well.