October 27, 2016

How Social Security and Medicare Works






One of my brothers is fast approaching decision time about Social Security and Medicare. While visiting him during our just-concluded RV trip, he asked if I would give him an overview of what his choices are. Not only was I glad to do so, but his questions seemed like an excellent topic for this blog. The questions are paraphrases of his concerns:


Question 1: " I want to wait until I am 70 to start receiving monthly Social Security checks. Do I have to notify anyone when I reach my full retirement age?" 

Answer: You are allowed to sign up for Social Security three months before  you want to start your benefits. Your first check (actually a direct deposit to your bank account) will not arrive until the fourth month, but that is how the system works. This timing applies whether you want to start at the earliest age of 62, full retirement age (66 for most of us), or any time after that. The size of your monthly check depends not only on earning credits built up during your working years, but when you start receiving those checks. Do know that after 70 years old, the amount you receive will not increase, so there is no reason to wait past that point.


Question 2: "How do I start Medicare coverage at 65 without also taking Social Security?"


Answer: Go to ssa.gov. As you move through the application process you will be given the opportunity to sign up just for Medicare. Be aware that if you don't sign up for Medicare when you are eligible (in the period of 3 moths before and 3 months after your 65th birthday), there will be a delay in your coverage and the likelihood of higher premiums for the rest of your life. So, sign up during the 6 month enrollment period. You will pay a monthly premium until you start Social Security. At that time, the Medicare premium will be deducted directly from your monthly payment.


Question 3: "What is best, traditional Medicare, Medicare Advantage, or just buying my own health insurance?"


Answer: Unless you are still employed and covered by your employer's policy, you are not allowed to buy private health insurance after you turn 65. Any policy you do own will terminate on your 65th birthday. So, then you are faced with the choice between traditional Medicare or the insurance sold by private companies, in conjunction with the government, known as Medicare Advantage. The choice is really one of personal preference. 

Traditional Medicare covers what most people require, but pays only 80% of most charges. As of today, virtually all doctors and hospitals accept Medicare patients. Medical Advantage insurance  is usually cheaper than traditional Medicare because the government pays the insurance company some money to take care of you. Some Advantage policies have a very low monthly premium and often have additional coverages that regular Medicare does not, like dental or vision. Those coverages may be free or have an additional monthly fee.

Because The Advantage policy is sold by a private company, there are restrictions on what doctors and hospitals you may use. The premiums are likely to rise every year and the company may decide to stop offering the policy you own in succeeding years, though the Advantage marketplace has been stable over the last several years, with more companies entering the field. Traditional Medicare monthly premiums are relatively stable, but can increase particularly for more wealthy retirees.


Question 4: " Do I need to buy anything else? How do I get drug coverage? "


Answer: If you choose the traditional version, it is wise to consider adding a supplemental policy. It covers the 20% that Medicare does not, as well as any additional charges for most hospital and doctor visits. There are several levels of supplemental coverage (also known as Medigap), designated by letters of the alphabet. The higher the letter, the more coverage, and monthly cost. These policies are sold by private companies. 

Drug coverage is known as Part D in Medcare. Traditional Medicare covers very few prescription expenses. Most folks decide to buy a separate policy from a private company to cover drug expenses. The monthly premiums are usually low. However, there is a often a $360 yearly deductible before full coverage kicks in. In the meantime you do benefit from a lower price for any prescriptions, but you will pay more until the deductible is satisfied.








Those are the basics of Social Security and Medicare. The web site, ssa.gov, is quite easy to navigate and should answer any additional questions. Welcome to the wonderful world for affordable and quite complete medical coverage, as well as those very nice monthly deposits to your checking account!


Disclaimer: I am not an expert and make no claims as to the infallibility of this post in all areas of Social Security and Medicare. Please consult the government web page and/or those trained to understand the legal ins and outs of the system. 

26 comments:

  1. Excellent information, Bob! I would like to add that if you are starting Medicare before taking Social Security, you will be billed quarterly, not monthly, or at least that's what happened to me. I started the coverage in September. Glenda

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    1. Thanks for the clarification, Glenda. That makes sense and makes things easier.

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  2. After some more thought, I realized I might be billed quarterly because I didn't choose direct withdrawal from my banking account. Sorry for the confusion! Glenda

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    1. OK....so I guess my brother will find out when he signs up in a few months! You are probably right: direct withdrawal could easily be accomplished every month.

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  3. Thank you for answering a few of my questions! I wondered how to do the forms with me not taking SS for a few extra years.
    I might add that more and more family MD doctors are retiring. My mom's did. We called twenty different offices and none would take a New Medicare patient. We finally got her an DO with a MD in the same office. If you have a doctor before you retire, try to stay with them as long as you can is the lesson we learned.

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    1. Every time you turn around there is another crack in our healthcare system. Medicare reimbursement rates turn off many doctors and medical groups.

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  4. When I managed our chiropractic office I helped a lot of Medicare folks navigate the "system!" Here in Arizona, seniors actually get a great deal with the Medicare Advantage plans.It's what Ken and I will choose when we are eligible. You get more coverage and actually, a pretty large base of doctors and hospitals to choose from, and sometimes,drug coverage. No extra payment for supplemental! In Arizona, a LOT of Doctors no longer accept new medicare patients! Medicare itself is an insurance filing nightmare for physicians! And the payments are pretty sad. Yes, some Seniors signed up for an Advantage plan that left town after a couple of years, but it was easy to go BACK ONTO regular Medicare.. you can go back and forth, a pain, but possible. Or, you can just switch to a different Advantage plan. The entire health insurance issue is complicated,not simple.When I worked,I did enjoy helping Seniors navigate the system and get the best coverage. It's hard to find someone to do that!! But it is worth investigating all the options.Depends on your STATE, too,I think.Az. has always had more Advantage plans with bigger networks due to our senior/retiree population.

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    1. Thanks for the insider information, Madeline. Which path to choose is something each person must decide.

      I have been very happy with my combination of traditional Medicare, Medigap, and Part D plans. Honestly, I had been burned by private insurers during my lifetime so I probably refused to give Advantage programs a fair shake. But, with two hospital bills totaling close to $50,000, and my expenses being only a few hundred dollars, I am happy and will leave well enough alone for now.

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  5. Just to add to your question #2 above, Bob, if one has started SS early they will automatically be enrolled in Medicare starting at age 65. They will not have to do anything special. One "advantage", if you will, for starting early. I realize that does not apply to your brother, who might wait until 70 to start SS, but since so many start early it will.

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    1. Good point, Chuck. Yes, he wants to wait until 70 to maximize the monthly payment.

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  6. Just a quick tip. If you have frozen your credit (as everyone should) ssa.gov may not let you log in to the online system. You will have to "thaw" your credit, which may cost you 10 dollars for each of the credit companies. I decided to make an appointment at the local office (several months in advance). In the face-to-face meeting I was able to ask a number of questions which was helpful and informative. The process was very smooth and painless!

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    1. Thanks for the info. When I signed up I did it on-line, but did go into the office at one point to make sure a direct deposit change had been done correctly. It was less painful than the DMV.

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  7. Very timely. Recently got my Medicare card and just signed up today for a supplement plan. 65 in January!

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    1. Welcome to the jungle! People who have Medicare don't understand the rest of society's objection to a similar system for everyone. It works well and with younger people involved, the reimbursement to doctors could be increased.

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    2. I agree! I've lived in countries with single payer government healthcare and was very impressed! It can work!

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  8. As a person with a chronic illness, actually several, I would like to add some thoughts on the Medicare Advantage versus Medicare plus Medigap choice. Because of that illness, I consulted my rheumatologist, the doctor from whom I obtained my most frequent and most expensive care. I wanted to know which types of plans and which specific providers his business office had found to be the best performers for his patients. Points he made included the fact that you are only guaranteed acceptance into a Medigap insurance policy when you first sign up for Medicare. While you might be able to change from Medicare Advantage to Medicare plus Medigap later, there are no guarantees. For someone like me, there WAS a guarantee, though, he said: I was never going to be accepted into a Medigap insurance plan if I didn't sign up for one when such acceptance was guaranteed. He told me that Medicare Advantage had some advantages for healthy people, in that it tended to be cheaper, but . . . there were but's. For someone receiving the kind of care needed for chronic illnesses, additional costs quickly mounted, he thought. With Medigap coverage, you can choose a range of plans, from HMO types to PPO types. A Plan F plan is a sort of middle-of-the-range PPO plan, and that's what both my husband and I chose. Since then, I was diagnosed with another chronic and truly horrendous problem, trigeminal neuralgia. I am vegan, have exercised vigorously from my mid-30's, and was a single-track mountain-bike rider, a several-mile-a-day jogger, and a happy person engaged in my community before these illnesses hit, so there are NEVER any guarantees of good health. I had brain surgery in late May to relieve the worst of the symptoms from trigeminal neuralgia, although this may not be a long-term cure. I have not received a single bill! However, one needs a drug plan with the Medicare plus Medigap choice. So, my advice is, even if you're healthy now, consider your family history. Talk to the doctor (or her business office) with whom you interact the most frequently and ask her opinion. And then make your best choice, accepting the fact that you cannot know your whole health history in advance.

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    1. All good advice, Linda. I was unaware of the restriction you cited. To sign up for Medicare and not add a supplemental program would be a dangerous choice in any case. The uncovered amounts can add up quickly.

      Like you I have F level Medigap coverage which has worked well.

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  9. Linda is correct, when starting medicare, acceptance is guaranteed. People with chronic health issues should consider Plan F, which has no deductible or co payments. Plan F stops accepting new folks in 2020.

    Medicare premiums are billed quarterly if one is not collecting social security.

    Medicare premiums went up for anyone not collecting ss benefits this year, people receiving benefits were "held harmless" they saw no increase in premiums. 2017 will bring larger increases again for anyone not drawing ss. Something to consider when calculating delaying benefits.

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  10. As a retired health care provider I am not sure why someone would think that if you have a chronic condition you could not see your primary doctor under a medicare advantage plan and get the care you need without a supplement? I am sure it is a very individual issue. But as a Nurse Practitioner I saw patients for chronic problems who came in on a regular basis and their care was covered by the Advantage plan. I sure wish the whole system were easier for all of us to figure out! We do have to do a lot of "guessing!" In Arizona, I have seen good care for Seniors on these plans.I don't know how they work elsewhere,though. Of course in a couple of years when I turn 65 I will be researching all this from the bottom up again.. things change!! But I don't want to have to pay around $300 a month for myself and spouse Medicare premium (rates go up for us) AND pay a supplement every month on top of it! Great post and great replies..I always learn something!

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    1. I think it is an individual choice. Personally, I feel better about not turning all my care over to a private company, even if it is under a relationship with the government. I know I can change my choice every year, but my dislike of private health care companies runs deep.

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    2. I love working with nurse practitioners for my general health care needs. In one case, I saw only the nurse practitioner for years, and purposely scheduled my appointments that way. However, my PCP cannot administer the infusions I need every eight weeks, nor weigh the various pros and cons of one medication against another in the management of my complex illnesses when he does not have the number of patients that my rheumatologist sees. How long ahead of time did I need to taper off my immune-suppressing medications before I underwent brain surgery in May? Which side effects do I endure (such as chronic sinusitis from my immuno-suppressant drugs) to manage that attacks that my chronic illness is causing on my cardiovascular system and thyroid? (The answer after consultation with my rheumatologist and some decision-making after thinking about the discussion would be yes.) I could go on and on. Some of these questions I face are now life-changing if not life-threatening, and I want a health care professional who deals with these issues day in and day out rather than once a month or once every several years. For many years, my PCP and other generalists did not recognize the symptoms of the problems that necessitated the neurosurgery, even though I was experiencing classic symptoms of this not rare but certainly not common disorder, either, so that more damage was done than should have been before I finally took myself off to a neurologist and was quickly diagnosed. In the case of my neurosurgery, I also didn't want any neurosurgeon: I wanted one who specialized in the type of neurosurgery I needed. I do like dealing with nurse practitioners as well as my hometown PCP, but when warranted, I want a specialist.

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  11. One caution is that those quarterly Medicare premiums for those who are not yet collecting SS are based on the income reported in your most recent income tax return. For those who are newly retired, that can be a much higher income that your current retirement income (in my case, my highest earning years). There is an appeal process that you can do on paper, but I found that the best way to handle this is to go into the local office and meet with someone. I was glad that I did because it turned out that I can get a small SS monthly payment on my ex-husband's account because we were married for more than 10 years. I am getting that payment until I switch over to my own SS at age 70. If your brother is married or has been married, he may also be eligible to collect some SS now as a spouse. -Jean

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    1. OK...that is something for him to check on. Thanks, Jean.

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  12. I am also getting half of my ex-spouse since we were married for over 20 years and will take my own at age 70. In regard to your "aches"...I have arthritis running on both sides of my family...one grandmother was in a wheel chair and another used a walker. I have found taking apple cider vinegar every evening (I am up to 3 capfuls per day not) has really helped me with my arthritic fingers. I used to plunge my hands into hot water upon waking every morning to get started. After I began using the apple cider vinegar I would forget to take it sometimes because I felt better. Now, I won't miss a dose because it can take me days to get the aches to stop. I mix it with some iced tea to help it go down, but I have also used apple juice or grape juice.

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    1. I read about that treatment just a few days ago but had talked to no one who had actually tried it. Thank you for your experience.

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