Ask Rusty – About Medicare and Social Security
Dear Rusty: I know that when a person turns 65 he or she must enroll in Medicare. I have been informed that the charge for this would be deducted from the Social Security benefit, if it has been claimed. Otherwise, this will be another payment for my medical care, in addition to my existing coverage. Please explain the relationship between the two programs and considerations in timing the claim for the SSA benefit.
— Frugal Senior
Dear Frugal Senior: If you are already collecting Social Security benefits you will be automatically enrolled in Medicare about 3 months prior to your 65th birthday but, if not, enrollment can be done by contacting Social Security directly.
You must enroll in Medicare at age 65, unless you have other “creditable” healthcare coverage (such as from an employer) or you will be subject to a late enrollment penalty for enrolling after expiration of your initial enrollment period (your “IEP”).
Your “IEP” is a seven-month window that starts 3 months before the month you turn 65 and ends 3 months after the month you turn 65. You should check with your employer to make sure your existing coverage is “creditable” and, if it is, you can delay enrolling in Medicare until such time as that other coverage ends and thus avoid a late enrollment penalty for not enrolling in Medicare Part B during your IEP.
When your employer coverage ends, you’ll enter a “special enrollment period” during which you can enroll in Medicare Part B (and Part D, which is prescription drug coverage) without incurring a late enrollment penalty.
Medicare Part A (hospitalization coverage) is free if you are also eligible for Social Security benefits (you don’t have to be collecting SS, only eligible).
Medicare Part B provides coverage for doctors and outpatient services and there is a premium associated with it ($135.50 for 2019). If you have other creditable coverage, you can avoid paying the Part B premium by not enrolling during your IEP. If your existing plan also provides creditable prescription drug coverage, you can also defer enrolling in a Medicare Part D plan until your employer coverage ends, at which time you will have 63 days to take a Part D plan without incurring a late enrollment penalty.
FYI, you must be enrolled in Medicare Part A to collect SS benefits after you are 65 years old, and since Part A is free for anyone eligible for Social Security, there is little reason to not enroll in Part A at age 65 (unless you have a Health Savings Account (HSA), in which case there are special rules to consider.
Although you enroll in Medicare via Social Security, they are two very separate and distinct programs. Normally, if you are collecting Social Security benefits your Medicare Part B premium is automatically deducted from your Social Security benefit. But if you wish to delay collecting Social Security and want to enroll in Medicare Part B, you can do so and request alternate Medicare Part B premium payment arrangements, for which there are several options.
As for the timing of your claim for Social Security benefits, you should evaluate your need for the money, your current health and your expected longevity.
If you don’t need the money now and expect to live to at least average life expectancy (about 87 for women and 84 for men) then delaying your claim for SS as long as possible will yield you the highest monthly benefit amount as well as the most in lifetime SS benefits.
For each year you delay claiming Social Security beyond your full retirement age you’ll get an additional 8 percent on your monthly benefit, and you could get as much as 32 percent more (depending on your FRA) at age 70. Age 70 is when your benefit would reach maximum so you shouldn’t wait beyond age 70 to claim Social Security.