Critter Corner: How do Medicare and Social Security Work Together?

Dear Oakley,

My husband will soon be retiring and is curious about Social Security and Medicare and how the two programs work together. Can you help explain this to him?

Thanks for your help!

Tu Gether

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Dear Tu,

Social Security and Medicare are both federal programs designed to assist older Americans and distribute benefits to people with disabilities and their families. Social Security provides financial support in the form of monthly payments, while Medicare provides health insurance.

Eligibility for Social Security and Medicare

Social Security and Medicare are managed by different organizations within the federal government. Social Security is run by the Social Security Administration (SSA), whereas Medicare is run by the Centers for Medicare and Medicaid Service (CMS).

The Social Security Administration determines who is eligible to receive Social Security benefits as well as which individuals qualify for Medicare. To be eligible for Social Security, workers must earn enough credits while they are employed. The minimum number of credits for most workers is 40 credits. The amount of earnings needed for one credit is $1,470 in 2021, and individuals can earn up to four credits per year.

To receive Medicare, individuals usually need to be age 65 or older. Medicare is also available to some younger Americans with disabilities and those with permanent kidney failure which requires dialysis or a transplant. The Medicare program consists of different parts, including Part A for stays in a hospital; Part B for doctor services, outpatient care and medical supplies; and Part D for prescription drugs. Medicare does not provide coverage for certain health expenses, especially long-term care.

How do Medicare and Social Security work together?

Workers who are eligible for Social Security can begin their benefits any time between ages 62 and 70. Seniors who enroll before their full retirement age will receive a reduced amount, whereas those who wait until they reach full retirement age can expect 100% of their benefit. Individuals who apply after their full retirement age will receive an increased benefit, which can be as much as 8% more a year, until age 70.

Medicare for seniors begins when they turn 65.

• Automatic enrollment: If you are already collecting Social Security benefits by the time you turn 65, you will automatically be enrolled in Medicare Parts A and B upon turning 65. Individuals who aren’t receiving Social Security benefits at age 65 will not automatically receive Medicare. Those who haven’t enrolled in Social Security by age 65 will need to contact the SSA to apply for Medicare benefits.

• SSA will determine the amount your husband needs to pay for Medicare coverage. Most people don’t pay premiums for Part A, but most people DO pay a premium for Part B. In 2021, the standard premium amount for Part B is $153.30per month. This amount will be higher if you have a high income. Social Security uses your tax records to determine the rates you need to pay. If you make more than $87,000 a year, SSA will send you an Income-Related Monthly Adjustment Amount (IRMAA). Your IRMAA notification will tell you the amount above the standard premium you need to pay. You’ll also be responsible for an IRMAA if you choose to buy a separate Part D plan and you make over $87,000.

Does Social Security pay for Medicare?

Social Security does not pay for Medicare, but if you receive Social Security payments, your Part B premiums can be deducted from your check. This means that instead of $1,500, for example, you’ll receive $1,346.70 and your Part B premium will be paid. For most people, having their Medicare premiums taken out of their Social Security check is easy and convenient. Individuals who are enrolled in Medicare but are not receiving Social Security will receive monthly or quarterly bills for Medicare premiums.

Hope this is helpful,
Oakley