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.
Marilyn – Georgia: Why do they take Medicare out of my payroll check and out of my Social Security check as well? It’s like I’m being charged twice!
Phil Moeller: The money taken from your payroll check is used to fund Part A of Medicare, which covers hospital and nursing home expenses. People who have worked long enough to qualify for Social Security benefits are entitled to Part A without having to pay a premium.
Once a person is on Medicare, the premiums for Part B of Medicare are deducted from their Social Security payments for people who already have claimed Social Security.
It may appear as if you’re paying twice for the same thing, but you’re really not. And while the Part B premiums may seem expensive, they actually cover only a fourth of Part B expenses. The rest come out of general federal revenues every year, to the tune of about $400 billion.
Sherry – Georgia: I am widowed and not married. I lost my job at age 60. I worked for a company 14 years that does not offer unemployment benefits or pensions. I only had two weeks to find a job before my house payment was due. I had planned to work until I was 70 or at the least 66. The loss of my job was an unexpected event and although I updated my resume and went on interviews, I was unable to get a job in time.
I understand now that starting benefits at age 60 has severely affected the rest of my income-earning years. I am drawing $1,579 a month ($18,948 a year), which is $700 a month less than I would have received at age 66 had I been able to find work and defer filing. That $700 amounts to $8,400 a year forfeited because of my unfortunate set of circumstances. I also have discovered that Social Security rules will prevent me from making more than $25,000 a year for the rest of my life!
If I had been able to find work and continue to wait till age 66 or 70, I would have been okay financially. Now, I will have to continue to work even into my 80s or until I die. I am currently doing odd jobs. The work is not dependable, and I never know how much money I am going to have. I am in good health, but I have a foot that was damaged and cannot stand on my feet for more than three to four hours straight at a time.
I feel hopeless to be able to have a life where I do not struggle every month. My parents and husband died, I have no children, no brothers, sisters or relatives alive to help me. I need to be working and saving money for when I can’t work any longer, but the restrictions are overwhelming. Any help would be appreciated.
Phil Moeller: Sherry, I know that nothing I say can take away what must be a crushing sense that everything is stacked against you. But I can say that things may not be as bad as you think.
Normal retirement benefits cannot be started before the age of 62, whereas survivor benefits can begin at age 60. The fact that your benefits began at age 60 leads me to think that you are receiving a survivor benefit and that you can later switch to your own retirement benefit. You can contact Social Security to confirm this.
If you started taking a widow’s benefit at age 60, you should still be able to switch to your higher retirement benefit at age 70. Under Social Security rules, a person who takes a survivor (widow) benefit can defer their own retirement benefit, allowing it to grow until the age of 70, when it reaches its maximum value.
I don’t know if your retirement benefit would be higher than your survivor benefit. But you can find out by opening a My Social Security account online. This will let you see your formal Social Security earnings record, including projections of your benefits at different claiming ages.
As far as limits on your earnings are concerned, someone gave you bad information. It is true that your Social Security benefits may be reduced because of outside wage earnings. But any reductions caused by what’s known as Social Security’s earnings test will disappear when you reach your full retirement age. At that time, there will be no reduction in your Social Security benefits due to income from work.
Best of luck! Please let me know how things turn out.
James – Maryland: I have been retired for nearly three years and enrolled in Social Security and Medicare when I turned 65. With Medicare, I opted in to Parts A and B. I did not get a Part D drug plan because I was able to stay on the prescription drug plan offered through my former employer. Upon receiving my first benefit statement from Social Security, I noticed a deduction for prescription drugs that representing a high-income surcharge. Together with what I am paying through my former employer program, my monthly cost for prescription drugs has nearly doubled!
I understand the rationale for high-income Medicare surcharges and am more than willing to pay my fair share. What I don’t understand is why I am making such payments for something I don’t have and from which I am deriving no benefit? I also can’t understand why no one informed me of these surcharges in the first place. Could you help me understand all this?
Phil Moeller: If you have credible drug coverage from an employer retiree plan, your former employer should be able to provide you a statement to that effect. Credibility means that the retiree plan is comparable to a typical Medicare Part D plan.
Armed with this statement — which employers are legally required to provide you upon request — you should appeal to Social Security to stop deducting Part D payments. In a truly fair world, you’d be able to get refunds of past payments, and I certainly would request this. However, I wouldn’t hold my breath.
Here is Social Security’s general appeals page. There also is a separate page for appeals of Medicare’s high-income surcharges. I have never seen an online form that allows people to challenge Part D payment withdrawals or Part D IRMAA charges. Given that your withdrawal results in you receiving a smaller Social Security benefit than you deserve, perhaps you can use this as the basis for an appeal.
As for the lack of notice about surcharges, this is just one more area where Medicare and Social Security fail miserably in transparency and outreach communications.
Trying to get Social Security to do the right thing can be time-consuming and exhausting, but I urge you not to give up and to please let me know how things turn out.
Doug – Texas: My mother is 89 and, due to an injury, will not be going home, but into an assisted-living facility. We want to give her home to her oldest son but hear that she would lose her Medicare for 60 months. This makes no sense to me. The home is likely only worth $50,000 to $70,000. Why can she not gift or sell cheaply her home without Uncle Sam kicking her?
Phil Moeller: Your note says she would lose her Medicare, but I think what’s at stake here is whether she would lose her eligibility for Medicaid. Medicare does not cover assisted living, but Medicaid does. States pay a substantial share of Medicaid expenses and require income and assets tests to qualify. The rules in Texas are stringent. You should be able to get help from the State Health Insurance Assistance Program (SHIP). It provides free counseling and should have someone in a Texas office who can help you understand local Medicaid rules.
Phil: I was wondering if it is possible to collect a six-month lump sum Social Security benefit at age 70 and six months plus, during this time frame, continue to collect a spousal benefit from age 70 to age 70 and one half?
Phil Moeller: Yes, you can do this, but there would be no net gain to you, because you can’t collect the full value of both benefits. One of the experts I consult for these kinds of detailed benefit scenarios provided this explanation:
For example, say a guy is drawing a monthly spousal benefit of $1,000. His own age 70 benefit would be $3,000, but he doesn’t file until 6 months after his 70th birthday. He would continue drawing the $1,000 spousal benefit until SSA processes his claim for his retirement benefits, but SSA would then deduct what he’d already been paid in spousal benefits from his retroactive retirement benefits.
In other words, he’d be paid a total of $18,000 for those 6 months regardless of whether he gets $1,000 for 6 months plus a net of $12,000 in back pay ($18,000 minus $6,000), or if he just files at 70. in which case he’d get no spousal benefits and $3,000 per month in retirement benefits.