Medicare without Social Security
Medicare and Social Security benefits are no longer linked. In the past, both benefits were automatic at age 65. This is no longer the case.
Today, most people are eligible for their Medicare benefits at age 65. Some people qualify earlier than age 65 due to their Social Security Disability Insurance (SSDI) status.
Social Security is no longer automatic at age 65. You can retire as early as age 62 or as late as age 70.
To be eligible for retirement benefits, you must have earned an average of one work credit for each calendar year between age 21 and the year in which you reach age 62, up to a maximum of 40 credits.
Medicare Benefits If You Retire Early
If you make the decision to take your Social Security benefits before your full retirement age, you will not be eligible for Medicare until you reach age 65. The converse is also true.
If you wait until age 70 to retire and begin taking Social Security retirement benefits, your Medicare benefits will not be delayed. You still qualify for Medicare at age 65.
When to Sign Up for Medicare
You can sign up for Medicare Parts A, B, and D as early as three months before you turn age 65 or as late as three months after your 65th birthday. This is your Initial Enrollment Period (IEP). For instance, if your 65th birthday is July 4, 2023, your IEP is open from April 1 until October 31.
Your Initial Enrollment Period is Important
It’s important to sign up on time. If you don’t enroll during your 7-month IEP, you risk having Medicare put a penalty on your Medicare Part B and Medicare Part D monthly premiums.
Part A is premium-free if you qualify for Social Security. This is true even if you have not applied for benefits.
In 2023, the standard Part B premium is $164.90 a month. Beneficiaries with incomes above $97,000 (single) are required to pay an additional surcharge. The base limit for married couples filing jointly is $194,000.
If you have not started your Social Security benefits, you will pay your Medicare Part B premiums directly through your MyMedicare account. Once you start Social Security, the SSA will take your Part B premiums from your monthly benefit payment.
Your Initial Enrollment Period and Medigap
Medicare Part A (hospital coverage) and Medicare Part B (medical coverage) do not cover all costs. On average, Medicare pays only 80% of all Medicare-approved costs. Beneficiaries are responsible for the remaining 20%.
How you pay your 20% share depends on your personal situation. Options include:
- Out-of-pocket
- Through employer retirement benefits
- Medicaid / Medicare Savings Programs (if you qualify)
- Medicare Advantage
- Medigap
Paying out-of-pocket is a risky proposition, even if you are healthy. Just imagine receiving a bill for your 20% share of a $100,000 hospital bill. And, there’s no limit on the amount you can be billed.
That’s where a Medigap policy comes in.
Medigap, as the name implies, helps cover the 20% gap in your Medicare coverage. The are 10 different plans, so you can get the level of coverage that’s right for you.
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It’s important to note that you have a limited time to get a Medigap policy with guaranteed issue rights. Your Medigap protections begin the month you are enrolled in both Medicare Part A and Part B and end 6 months later.
When your protections end, carriers can ask you health questions and deny your application. However, when you join when first eligible, you can’t be turned down and you can’t be canceled (unless you fail to pay your premiums).
Your Initial Enrollment Period and Medicare
If you decide that Original Medicare coverage isn’t for you, you have a private health plan option through Medicare Advantage. Unlike Original Medicare, all Medicare Advantage plans have an annual out-of-pocket maximum.
Once you reach the annual maximum on your Medicare Advantage plan’s Part A and Part B services (which do not include your prescriptions), you pay no additional copayments for the remainder of the year.
Just Remember…
Medicare eligibility no longer coincides with Social Security’s full retirement age (FRA). Your FRA is when you qualify for the full Social Security benefit calculated from your lifetime earnings.
For decades, FRA was set at age 65 but it’s gradually going up.FRA is 66 years and 4 months for people born in 1956, and two months later for those born in 1957. For those born in 1960 or later it is age 67.