Social Security and Medicare
Because of the close relationship between Medicare and Social Security, people often get them confused. Although there are connections, they are actually two separate government programs.
How Social Security Impacts Medicare
Let’s start with the basics.
- Social Security offers retirement, disability, and survivor benefits. It is a government pension for people over the age of 62 and those with chronic disabilities. It provides a source of income when you retire or cannot work due to certain conditions or situations.
- Medicare provides hospital and medical insurance to help cover health care costs for people 65 or older, those with certain chronic disabilities, or End Stage Renal Disease.
When am I eligible for Social Security?
Eligibility for the Social Security Retirement benefit is based on work. Most employers take Social Security taxes out of your paycheck so you can get a monthly benefit in retirement. Some jobs, like state and government positions, don’t pay Social Security taxes and therefore don’t contribute to your eligibility.
You can begin drawing Social Security benefits any time between age 62 and 70 if you have paid Social Security taxes and worked for 10 years or more. The amount you receive will be higher the longer you wait to apply, up until age 70. Individuals who have not worked for at least 10 years may still be eligible for a monthly benefit based on a current or former spouse’s work history. Social Security survivors benefits are paid to widows, widowers, and dependents of eligible workers. Check your Social Security eligibility.
When am I eligible for Medicare?
To be eligible for Medicare, you must be a U.S. citizen or permanent legal resident for at least five consecutive years and meet at least one of the following: age 65 or older and eligible for Social Security, permanently disabled and have received disability benefits for at least two years, or have End-Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS or Lou Gehrig’s disease).
How are Medicare and Social Security related?
Eligibility: You can begin receiving Social Security benefits as early as age 62 but are not eligible for Medicare until age 65. Many recipients of Medicare are also eligible to receive Social Security benefits and vice versa. A person can have Social Security benefits without having Medicare. And a person can have Medicare without having Social Security. Learn more in this video.
Enrollment: Both programs require initial enrollment to be processed through the Social Security Administration. When you first enroll in Medicare or if you need to defer your Medicare coverage (for example, to go back on an employer plan), you would do so through the Social Security Administration.
If a person is collecting Social Security when they turn 65, they will automatically be enrolled in Original Medicare Part A (hospital insurance) and Part B (medical insurance). Additionally, if an individual collects Social Security Disability Insurance (SSDI) for more than 24 months, they become eligible for Medicare and will automatically be enrolled in Medicare. In both cases, Medicare Part A is mandatory and Medicare Part B is voluntary. Whether you keep your Part B or defer it will depend on your individual situation.
Premiums: Social Security pension amounts are factored into annual Medicare premium increases. Once an individual becomes eligible for both Social Security and Medicare, they have the option to have their Medicare Part B premium automatically deducted from their monthly Social Security benefit. This streamlines the payment process and ensures uninterrupted Medicare coverage.
Additional Assistance: For Medicare beneficiaries with limited income and resources, Social Security plays a crucial role in determining eligibility for programs like Extra Help. This program assists with prescription drug costs under Medicare Part D, providing financial relief for those who need it most.
Funding: Both Social Security and Medicare are funded through dedicated payroll taxes collected from working individuals and their employers. Most employers take Social Security taxes out of your paycheck so you can get a monthly benefit in your 60s. Some jobs, like state and town government positions, don’t pay Social Security taxes and therefore don’t contribute to your eligibility.
How much Social Security will you get?
The amount of Social Security income you may receive will depend on:
- Your earnings over your lifetime
- The age at which you will begin receiving benefits
- Whether you will be eligible to receive a spouse’s benefit instead of your own
- Whether you will be eligible for additional pension benefits through a state retirement fund, such as State Teachers (STRS), Public Employees (PERS), and School Employees (SERS)
Use Social Security retirement calculators to estimate your benefits.
When should you start receiving Social Security benefits?
You can apply for monthly Social Security retirement benefits any time between age 62 and 70. The Social Security Administration calculates your payment by looking at how much you’ve earned throughout your life. While you can begin receiving Social Security benefits when you turn 62, you permanently lose a percentage of your benefits for every six months that you enroll prior to your full retirement age, also called normal retirement age. This is when you become eligible for unreduced Social Security retirement benefits. Your monthly benefit will be higher the longer you wait to apply, up until age 70.
The time to start your Social Security benefits is up to you and should be based on your own personal needs. There are advantages and disadvantages to taking your benefit before your full retirement age. The advantage is that you collect benefits for a longer period of time. The disadvantage is that your benefit will be reduced.
The year and month you reach full retirement age depends on the year you were born. See the chart below.
Social Security Full Retirement Age
Can I get Social Security without enrolling in Medicare?
It depends. You can access Social Security benefits without enrolling in Medicare. Similarly, you are not required to start collecting Social Security payments when you enroll in Medicare. If eligible for Medicare, you will be required to enroll in Medicare Part A.
Deducting Medicare Premiums From Social Security
Certain Medicare premiums can be deducted from your monthly Social Security benefits, which simplifies payment for Medicare coverage. If you are enrolled in both Medicare and Social Security, your Part B premium will automatically be deducted from your monthly Social Security benefit payment. If you are enrolled in Medicare but are not yet drawing your Social Security benefits, you will be billed for your Part B premium quarterly by Medicare.
Medicare Part D standalone drug plans charge a monthly premium that varies based on the specific plan. This premium is separate from the Part B premium. Insurance companies bill you directly for the Part D monthly premium, but you can contact your insurance company to have your payment deducted from your Social Security benefits.
Still have questions?
Working with Medicare daily gives us perspective on the relationship between Social Security and Medicare. Medicare isn’t overwhelming when you have a partner who listens and guides you every step of the way. Our advisors provide clarity and help you find the right plan for your unique needs, budget, and lifestyle.
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