Editor's Note: Journalist Philip Moeller is here to provide the answers you need on aging and retirement. His weekly column, "Ask Phil," aims to help older Americans and their families by answering their health care and financial questions. Phil is the author of the new book, "Get What's Yours for Medicare," and co-author of "Get What's Yours: The Revised Secrets to Maxing Out Your Social Security." Send your questions to Phil; and he will answer as many as he can.
Lucy – Fla.: I'm 63 and have been disabled and dealing with ALS (amyotrophic lateral sclerosis) for five years. Unfortunately, in the summer of 2016, I was run over by a transportation van, and suffered severe damage to my legs, broken ribs and respiratory issues. I have had a tracheotomy and am on a ventilator in a rehabilitation center. Recently, my lawyer notified me that a settlement for $100,000 net to me will be paid in about two months. I'm uncertain if I should stay in the rehab center or go home and be under my brother's and family care for a while. I don't have other monetary sources and money can run out soon.
My question for you is whether I can reapply for Medicare and Medicaid after these funds run out? When my Social Security disability income (SSDI) is suspended and my money runs out, how would I get medical and rehab care again? I have worked over 40 years. I'm very confused and unable to speak at length due to breathing issues.
Phil Moeller: I am so sorry to hear about your struggles with ALS and the accident you mentioned. On top of having ALS, I can't imagine having to deal with the additional trauma and stress of the accident.
First off, I am not sure that you should suspend Medicare. The money from the settlement may make you ineligible for Medicaid support, but you could still pay for Medicare and it would help pay for some of the home therapy that you will undoubtedly need. I also don't see why you think your SSDI payments would be suspended. If you've worked more than 40 years, these payments certainly should be enough to cover any Medicare premiums.
Receiving a $100,000 settlement should not have an adverse impact on your SSDI payments. These payments are not linked to your other income but are your earned benefit based on your work record. Some SSDI payments are reduced if a person receives a settlement as part of a worker's comp claim. But your settlement does not appear related to your work.
If someone has told you your SSDI payments will be affected, please ask them on what basis they are making that statement. And please let me know.
The issue here is how your coverage — Medicare with Medicaid, or just Medicare — would help pay your health expenses in the future. This includes looking at coverage in an assisted care facility versus getting care at home. These can be very complicated issues.
The State Health Insurance Assistance Program (SHIP) provides free Medicare counseling; I suggest you contact a local office and see if someone there can help you. The Center for Medicare Advocacy has been particularly active in helping people qualify for home-based care that will be covered by Medicare. I would reach out to the Center as well.
Please let me know how things go, and if there are other questions you have for me. One of my dearest friends recently passed away from ALS after nearly 10 years. I know the disease well, which only intensifies how sorry I am that you have to go through all this.
Lynda: I am 65 years old and earn enough to live on by freelancing; I haven't needed to tap my savings or my IRA. My plan has been to delay taking Social Security until I'm 70, and when I'm 66, I plan to apply for my ex-husband's portion (much smaller than mine would be). However, I read one of your articles that said that Social Security may run short of funds during my lifetime. This makes me wonder if I should risk waiting any further to claim my benefit?
Phil Moeller: Many readers have the same concerns as do you. However, the way Social Security benefits are calculated makes it difficult to come out ahead if you file early for your benefits.
If there were no adjustments to Social Security finances, the program would be forced to begin paying only 77 percent of its benefit obligations beginning in 2034.
Taking your own retirement benefit at age 66 would result in a 32 percent reduction in your benefit from what it would be if you waited until age 70.
So, if you waited until 70, and Social Security did run low on funds, your maximum benefit would be reduced by 23 percent. However, this would still be more money that you would have gotten if you filed at age 66 and the program did not run short of funds. And even if it did have problems, you still would have received 11 years of maximum benefits by the time 2034 arrives.
I hope this puts you somewhat at ease. Now, we can concentrate on all the other things that threaten to destroy American democracy as we know it!
Stephan – N.Y.: I will turn 67 this year and my wife is 68. I have retired and have stopped receiving wage income. My wife is still working, and we both plan to wait until age 70 to file for Social Security so we can receive the maximum amount. I have two questions:
- Will my social security benefit decrease substantially if I wait, since I will not have income for the three years prior to turning seventy?
- Is there a limit we can receive as a a married couple if we wait until 70 and take the maximum benefit? I have not been able to get an answer to this question. I understand there is a maximum if one of us passes away and receives spousal benefits but not if we both take our social security separately.
Phil Moeller: Your Social Security benefits can never be reduced, so the fact you expect to have no income for those three years will not reduce your benefits from what they have been projected to be if you wait until 70 to claim them.
You and your wife are each entitled to the maximum amount of your respective retirement benefits, and there would be no reduction because you are married.
When one of you dies, the other spouse would receive the larger of those two benefits, either as their own retirement benefit or as a survivor benefit that equaled the amount by which their late spouse's benefit exceeded their own. The smaller of the two benefits would stop being paid.
Judy: I am helping my sister, who just got a divorce. She is now 79 and started collecting her Social Security when she was 62. Her husband made a lot more money than she did, but she has been told that she cannot get any of his Social Security because she started collecting hers early. I can't find any reference to that on the Social Security website or in any publications.
Phil Moeller: If a person takes their own retirement benefit at an early age, it will reduce the size of a spousal or ex-spousal benefit claimed at a later date. Often, this reduction makes the spousal benefit worth less than the person's own retirement benefit. In such a situation, the person will not qualify for the spousal benefit.
I do not know if this is what happened in your sister's case, but I'm guessing that's what the agency is saying. You would need to be able to calculate all the benefits involved to know if this is accurate or not. You could call the agency to see if someone there would help you do this, but they are so overwhelmed with requests for help that it's tough to get them to do this work. Sorry I don't have a more encouraging response.
Laura – Wisc.: I will turn 65 soon and plan to retire a few months later. When should I sign up for Medicare? I work for a large company and will have medical insurance until I retire.
Phil Moeller: You will have an eight-month special enrollment period that begins when you lose your employer coverage. However, to avoid a break in insurance coverage, I urge you to sign up early during this period, so that your Medicare coverage is in place at the time your employer coverage ends. Medicare enrollment periods are explained here.
Richard – Fla.: My wife is 70 and I am 63. We are lucky to have a high income and so my wife pays a premium for Medicare Part B based upon our joint income. When I turn 65, will we both have to pay the higher premium based upon that same shared income or does one pay the higher cost and the other pay the basic premium? It seems unfair that we would both have to pay the premium for the same income.
Phil Moeller: Medicare's high-income surcharges were further increased in 2018, and often amount to hundreds of extra dollars. I tell folks it's a nice problem to have, but it is a problem nonetheless. These surcharges are based on your tax returns. It is possible for each of you to file individual returns rather than a joint return. This might reduce the payment for one of you. However, there can be other financial benefits to filing a joint return, so I'd check with your accountant on the net impact of doing so.