Q. I'm 64 and getting ready to take my retirement benefits. I've learned a lot about how Social Security works but am confused about how it relates to Medicare. What's the connection?
A. Social Security and Medicare are separate programs, but both are designed to help Americans and noncitizens working here deal with the challenges of their senior years. Social Security provides monthly benefits to retirees, people with disabilities and people who have lost their spouses and breadwinners. Medicare, which is run by the Centers for Medicare and Medicaid Services (CMS), is the nation's health insurance program for people 65 and older and the disabled.
But there's an important tie-in: Social Security works closely with Medicare to inform people about the health insurance program, sign them up in a timely way, process their applications and collect premiums.
Q. How does Social Security promote Medicare enrollment?
A. If you're already receiving benefits from Social Security, it will help Medicare send you an initial enrollment package three months before you turn 65. The package will include information on Medicare Part A (hospital insurance), Part B (medical insurance), the cost of Part B premiums, and Part D, the prescription drug plan. Come your 65th birthday, you'll be automatically enrolled in A and B, though you'll have the right to opt out of B.
Medicare is also publicized on the Social Security website and mentioned in Social Security annual statements.
Q. When's the right time to apply for Medicare?
A. Medicare generally advises you to apply for coverage during the three months before you turn 65, to ensure it will start in your birthday month. But the full Medicare initial enrollment period lasts for seven months: the three months before the month in which your 65th birthday falls, your birthday month, and the three months afterward. You're free to apply at any time during that period.
See also: Medicare Question and Answer Tool
If you delay, you may face higher premiums for the rest of your life — 10 percent higher for Part B for every 12 months that you could have had coverage but didn't. But there are important exceptions. If on turning 65 you or your spouse is working for a company with 20 or more employees that covers you under a group health plan, you don't have to enroll in Medicare at that time. You can wait until you stop working or otherwise lose that insurance, and you won't be charged a late enrollment penalty.
Q. So Social Security will collect my Medicare premiums?
A. Very likely yes. If you're receiving Social Security retirement benefits, your Medicare premiums will be deducted from them. Social Security will send you a notice about when the deductions will begin. If you're not getting retirement benefits, you'll receive monthly bills.
In 2015, most people are paying $104.90 a month for Medicare Part B. However, these rates are "means-tested," which means that higher-income people pay higher rates. Part B has five tiers of income and premiums, which max out at $335.70 a month for people earning above $214,000 as individuals or $428,000 as joint filers. There's a similar five-tier system concerning Part D prescription plans.
Q. How do Social Security and Medicare know how much I've earned?
A. The Internal Revenue Service sends income information to Social Security, based on your annual tax returns. These figures become part of your lifelong work record, which will help determine your Social Security benefits, but they're also used to set your Medicare premiums. However, your numbers may not be up to date: In 2015 the income figures that the IRS gives to Social Security are likely to be from the tax return that you filed for the year 2013.
Inevitably, there are cases where IRS information goes astray or where income circumstances have changed. For example, you may be getting charged higher premiums based on your 2013 tax return even though your income went down to a lower tier the next year. When that happens, you'll need to contact Social Security to settle the dispute or clarify the IRS numbers. Use the form "Medicare Income-Related Monthly Adjustment Amount - Life-Changing Event" to file a formal appeal.
Stan Hinden, a former columnist for the Washington Post, wrote How to Retire Happy: The 12 Most Important Decisions You Must Make Before You Retire. Have a question? Check out the Social Security Mailbox archive. If you don't find your answer there, send an email to the Social Security Mailbox.