<p>I had lunch w/ a friend who turned 65 earlier this year. She retired (started collecting SS at age 62.5) and began getting Medicare this year. </p>
<p>What are the advantages and disadvantages of retiring (collecting SS) at 62.5 versus 65 versus 67?</p>
<p>My friends Medicare premiums are deducted from her SS check. If I decide to wait to retire sometime after turning 65 how do I pay for my Medicare premiums (not receiving SS thus can’t be deducted from monthly SS check)?</p>
<p>Unless something changes H (62) probably wont retire until he is 67+. Since he is self-employed we pay for our own health insurance. If he can get Medicare when he turns 65 w/o being on SS that would be a big savings. </p>
<p>According to my friend Medicare premiums are based on your previous 2 years income. We file a joint tax return - Hs income is from Schedule C and mine from W-2s. Since H will turn 65 two years before me, will his Medicare premiums be based just on his income or our joint income? Is there a big difference in how much Medicare cost for someone who averaged 50K/year versus 250K/year? </p>
<p>I appreciate all suggestions and opinions. TIA :)</p>
<p>Medicare has flat fees so income doesn’t matter. Advantages of taking SS before 67, you get more money from your SS funds, usually. You do need to run the numbers but if you collect $40K/year from SS for 5 years ($200,000), is that more than what you would receive if you waited for 67 and took the full pay then? I would sit down with a financial advisor that is well versed in this and have them run through the numbers with you to see what makes the most sense financially for you.</p>
<p>If your DH is still working at 65 usually what people do is sign up for Part A (free if you have 40 quarters of work history) and then wait until they go off their company group plan for the other parts.</p>
<p>Compare the “revenue” of collecting early, vs. the increase later. Let’s say you will collect $12,000 the first year, but by waiting, you increase your payment by $2,000 per year. That is like buying a $2,000/yr lifetime annuity for $12,000. Is that a good deal? It depends on how long you are going to live (are you in good health, is there a history of long lives in your family), and how risk adverse you are.</p>
<p>Also, SS benefits are taxable if you have other income. That reduces the benefit of starting to draw early.</p>
<p>Medicare is one of the most confusing “programs” that I have ever seen. I’ve been attempting to get a handle on it before it becomes necessary. It might help for you to sit down with a legal pad and layout the various parts of medicare in a chart-type presentation. That will help you some, but its will take you at least eight or ten hours of study to begin to understand what your options are, how they work, and what course is best for you. Take what others tell you with a grain of salt. I have a family member who works in the health care profession and she doesn’t really understand any of this from the consumer’s side. </p>
<p>Part A is free if you are eligible for social security payments.
It covers Hospital bills, Skilled Nursing, and Home hospice care. </p>
<p>Part B costs $99 per month for those with incomes below 85K, and up to $320/mo if your income is higher, with several steps in between (all for the same services, of course).
This covers Doctor bills and other items</p>
<p>Part C is a supplement that is optional called Medicare Advantage. It costs additional. I don’t yet understand what the difference is between this and Medigap Insurance, which is something else that is additional, but different. </p>
<p>Part D is the drug benefit.</p>
<p>Good luck figuring this out. I have two degrees and find this to be mind-numbingly complicated.</p>
<p>I am not at all expert but I do think it is important to know that income is a significant factor in Medicare fees, both for Part B and for Part D. We pay a lot more than the minimum for CMS (the actual Medicare insurance) and a lot for Medigap coverage too–it will work out to be slightly cheaper than being covered through work, but not much. There will presumably be some noticeable cost benefit in terms of fewer out of pocket costs when we get medical care but we have just the Medicare age group so I haven’t yet experienced the financial benefits.</p>
<p>Just to clarify an above post Part C or Medicare Advantage Plans take the place of original Medicare. Those companies contract with Medicare to provide both your A and B coverage. If you are enrolled in one of those plans the only thing billed through original Medicare that I know of are clinical trial charges.</p>
<p>Many companies offer those plans and I’m sure you’ve seen the commercials–Humana, Aetna, BCBS etc. They can also provide the Part D or drug coverage as well. Premiums vary based on the level of coverage you choose. They can be HMO’s PPO’s, PFFS.</p>
<p>Medigap or Supplemental insurance is used to supplement original Medicare. They typically cover the 20% coinsurance and sometimes the deductible that isn’t covered by Medicare. What is or isn’t covered is specific to those policies. On the right side of the below website under additional tools there is a Medigap finder that will help you determine policies available in your area.</p>
<p>Here is a website that allows you to compare original Medicare against the Medicare Advantage Plans in your area. You can input any Rx drugs you are taking to help determine what might be best for you. If you prefer to keep original Medicare it will allow you to see the Part D plans in your area.</p>
<p>Something that is almost never accounted for in the earlier v. later Social Security question is that if you go with later, not only are you not collecting, but you are also paying in for all those additional years.</p>
<p>You may change to a different Medicare Advantage Plan or back to or from original Medicare once a year during open enrollment. Open enrollment usually begins the middle of October and runs through the beginning of December. The change takes effect on Jan. 1st.</p>
<p>It is important to sign up for Medicare A and B when you become eligible to avoid any penalties. The Medicare.gov website has a lot of valuable information.</p>
<p>My knowledge is limited but I believe many doctors no longer accept medicare patients, even established patients. You must instead have a Medicare Advantage plan. In my mom’s case, she receives medical treatment from a large clinic, a major provider in her area, and they have a list of ‘approved’ Medicare Advantage plans. Mom had to change plans but for her the change was an improvement in benefits and cost.</p>
<p>I work in insurance… if you have specific questions feel free to PM me. Medicare premiums do vary depending on income. Part A of medicare is free, so most people tend to take that at 65 even if they are still working or covered by a spouse who is still working. As long as the other coverage is credible you can delay the part B. If you don’t take part B premiums from a SS check they can bill you for it - I believe they send a quarterly bill.</p>
<p>You can definitely look into medicare supplement plans, which help pay your medicare deductibles and co-insurance, or you could also look into a medicare advantage plan which takes over your medicare - these are typically more of like a hmo/ppo style plan with copays and deductibles.</p>
<p>As a provider, I would recommend avoiding the Medicare replacement (Advantage, HMO) plans. Supplemental plans are good, Medicare replacement has, for most patients, not been. Many switch back to traditional Medicare when the enrollment allows.</p>
<p>As for whether or not to take social security early, I’ve had this conversation with DH , who has convinced me that since it is a guaranteed income (and yes, it will be there), we are better off deferring it for as long as possible. Isnt there also some estimated rule of 18, meaning that you could estimate the break even point at 18 years after beginning to take medicare, such that if you take it earlier and live more than 18 yrs, you’d have been better off waiting. Not sure thats right. Can someone explain better?</p>
<p>That’s theoretically true (though for me it works out to 16 years), though it doesn’t include potential investment returns that result if you save the Social Security money, nor what you pay in for the extra years. When I added those two things in, and noting that our tax bracket wouldn’t change much at retirement, I break even almost immediately - there is no time when I net more from waiting than I do by taking it at 62, lowering our current tax burden, no longer pay into Social Security (or my pension), and investing the Social Security funds.</p>
<p>dadx I spent several days looking at the SS and Medicare web-sites and I am more confused now than before.
fendergirl, At some point when H is 64 should he go to the SS office and sign up for Medicare Part A and B or will he automatically receive the forms in the mail?</p>
<p>My friend who started collecting SS at age 62.5 mentioned if she has earned income above 14K/year there is a 50% tax on the amount above 14K which is why her H is waiting until he is 67 before collecting SS benefits. She thinks if you wait until age 67 to retire the 14K limit no longer applies.</p>
<p>taxi, They normally send the forms out in the mail however he may want to go into the local office if he wants to review things or has any questions. We have people who call us at work sometimes years in advance to try to ‘get their ducks in a row.’ I talked to someone once who was 42 calling to prepare for 65. I told her we can review it but that she better call back in 14 years because things will probably change!! </p>
<p>I’m honestly not too familiar with the tax amounts for salaries.</p>
<p>Correct. As I saw it, the choice was to retire and collect, retire and not collect, or continue working. But even if you are not working, there is still the question of what you would be doing with the money - spending it on current expenses, or investing it.</p>
<p>And in your case, mini, having had, and lived through, such a traumatice medical incident, it may make sense to start collecting and enjoy every penny.</p>