Medicare with Social Security: How Does It Work?

How do Medicare and Social Security work together?

You’ll get Medicare automatically if you’re already receiving Social Security retirement or SSDI benefits. For example, if you took retirement benefits starting at age 62, you’ll be enrolled in Medicare three months before your 65th birthday. You’ll also be automatically enrolled once you’ve been receiving SSDI for 24 months.

You’ll need to enroll in Medicare if you turn 65 but haven’t taken your Social Security benefits yet. The Social Security Administration (SSA) and Medicare will send you a “Welcome to Medicare” packet when you’re eligible to enroll. The packet will walk you through your Medicare choices and help you enroll.

SSA will also determine the amount you need to pay for Medicare coverage. You won’t pay premiums for Part A unless you don’t meet the coverage rules discussed above, but most people will pay a premium for Part B.

In 2020, the standard premium amount is $144.60. This amount will be higher if you have a large 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 $1,386.40 and your Part B premium will be paid.

Now let’s take a look at Medicare and Social Security to understand what these important benefit programs are, how you qualify, and what they mean for you.

What is Medicare? 

Medicare is a health insurance plan provided by the federal government. The program is managed by the Centers for Medicare & Medicaid Services (CMS), a department of the United States Department of Health and Human Services. Coverage is available to Americans who’ve reached their 65th birthday or who have a chronic disability.

Unlike many traditional healthcare plans, Medicare coverage is available in different parts:

• Medicare Part A (hospital insurance). Part A covers services such as hospital stays, long-term care stays, and hospice care.
• Medicare Part B (medical insurance). Part B coverage includes doctor visits, preventive care, and medical supplies.

Together, Medicare parts A and B are referred to as original Medicare. You can get additional coverage with:

• Medicare Part C. Part C is also known as Medicare Advantage. Part C plans are sold by private insurance companies who contract with Medicare to provide coverage. Generally, Advantage plans offer all the coverage of original Medicare, along with extras such as dental and vision services.
• Medicare Part D. Part D plans offer coverage for prescription drugs.

You can purchase Advantage plans called MAPD plans that include Part D coverage, or you can purchase Part D coverage separately. You can look for plans in your area using the Medicare website plan finder.

Who is eligible for Medicare?

Most people enroll in Medicare when they turn 65. You can enroll as early as three months before your 65th birthday or as late as three months after. You’ll need to be a United States citizen or have been a permanent legal resident for at least five years. In order to get full coverage, you or your spouse need to meet a work requirement. Meeting the work requirement verifies that you’ve paid into the system.

Work credits

To meet the work requirement, you or your spouse need to have earned 40 work credits. Work credits are awarded once you’ve earned $1,410. You can earn a maximum of four work credits a year. This means 10 years of work will normally qualify you for full Medicare benefits.

Keep in mind, you can still be eligible for Medicare even if you don’t have work credits. Having 40 work credits simply allows you to get Part A coverage without a premium.

You can still buy Part A coverage and pay a monthly premium. If you have fewer than 30 work credits, you’ll pay the maximum Part A premium of $458. If you’ve earned between 30 and 39 credits, you’ll pay $252.

Waiting period

You can also qualify for full Medicare coverage if you have a chronic disability. You’ll need to qualify for Social Security disability benefits and have been receiving them for two years.

You’ll be automatically enrolled in Medicare after you’ve received 24 months of benefits. If you have end stage renal disease (ESRD) or amyotrophic lateral sclerosis (ALS), you’ll be enrolled in Medicare without the two-year waiting period.

What is Social Security?

Social Security is a program that pays benefits to Americans who have retired or who have a disability. The program is managed by the Social Security Administration (SSA). You pay into Social Security when you work. Money is deducted from your paycheck each pay period.

You’ll receive benefits from Social Security once you’re no longer able to work due to disability or once you’ve reached a qualifying age and stopped working. You’ll receive your benefits in the form of a monthly check or bank deposit. The amount you’re eligible for will depend on how much you’ve earned while working.

You can apply for Social Security benefits if one of these situations apply to you:

• You’re 62 or older.
• You have a chronic disability.
• Your spouse who was working or receiving Social Security benefits has died.

What are Social Security retirement benefits?

Social Security retirement benefits are designed to replace a portion of the monthly income you earned before you retired.

Who is eligible for Social Security retirement benefits?

As mentioned, you’ll need to meet a few requirements to be eligible for Social Security retirement benefits. Just like with Medicare, you’ll need to be a United States citizen or permanent resident. You might also need to have worked and earned credits. The amount of credits you need depends on your circumstances and the type of benefit you’re applying for.

You’ll need at least 40 credits in order to apply for retirement benefits. Since you can earn up to four credits a year, you’ll earn 40 credits after 10 years of work. This rule applies to anyone born after 1929.

The amount you’ll receive per month will depend on your income throughout your working life. You can use the calculator on the Social Security website to estimate your retirement benefits.

Spouses and Social Security retirement benefits

Your spouse can also claim up to 50 percent of your benefit amount if they don’t have enough work credits, or if you’re the higher earner. This doesn’t take away from your benefit amount. For example, say you have a retirement benefit amount of $1,500 and your spouse has never worked. You can receive your monthly $1,500 and your spouse can receive up to $750. This means your household will get $2,250 each month.

How the age you retire affects your benefits

You can apply for Social Security retirement benefits once you’ve turned 62. However, you’ll receive more money per month if you wait a few years. People who start collecting retirement benefits at 62 will receive 70 percent of their full benefit amount. You can receive 100 percent of your benefit amount if you don’t start collecting until full retirement age.

The full retirement age for people born after 1960 is 67. If you were born before 1960, refer to this chart from Social Security to see when you’ll reach full retirement age.

What is Supplemental Security Income (SSI)?

You can qualify for additional benefits if you have a limited income. Known as Supplemental Security Income (SSI), these benefits are for people with limited income who qualify for Social Security because of age or disability.

Who is eligible for SSI?

You can qualify for SSI if you:

• are over 65
• are legally blind
• have a disability

As with all Social Security benefits, you’ll also need to be a United States citizen or legal resident and have limited income and resources. However, to apply for SSI, you don’t need work credits.

You can receive SSI in addition to SSDI or retirement benefits, but it can also be a standalone payment. The amount you receive in SSI will depend on your income from other sources.

What is Social Security Disability Insurance (SSDI)?

Social Security Disability Insurance is a type of Social Security benefit for those with disabilities or health conditions that prevent them from working.

Who is eligible for SSDI?

The rules are different when you’re applying for SSDI. You’ll need 40 work credits if you’re applying at age 62 or older.

To qualify for SSDI, you must:

• be unable to work because of a medical condition that will last at least 12 months, or is terminal
• not currently have a partial or short-term disability
• meet SSA’s definition of a disability
• be younger than full retirement age

You must be able to prove you meet these criteria, and this process can be difficult. Once you qualify for SSDI, the amount of disability you’ll receive may be based on your age and the amount of time you’ve worked and paid into Social Security.

This table explains what benefits are offered based on your age and number of years worked:

Application age and SSDI benefits

What are Social Security survivor benefits?

You can claim survivor benefits if your deceased spouse earned at least 40 credits. You can also claim benefits if your spouse died young but worked for 1 ½ of the 3 required years before their death.

Who is eligible for survivor benefits?

Surviving spouses are eligible for benefits:

• at any age if they are caring for children under 16 or who have a disability
• at 50 if they have a disability
• at 60 for partial benefits
• at full retirement age for 100 percent of the benefit amount

Benefits can also be paid to:

• ex-spouses
• children up to 19 who are still attending high school
• children with a disability that was diagnosed before 22
• parents
• stepchildren
• grandchildren

Additionally, a surviving spouse and their child can both receive benefits. Combined benefits can equal up to 180 percent of the original benefit amount.

The takeaway

Social Security and Medicare help Americans who are not working due to age or disability. You don’t have to be receiving Social Security benefits to qualify for Medicare.

If you are receiving Social Security benefits, you’ll be automatically enrolled in Medicare once you’re eligible. Your Medicare premiums can be deducted straight from your benefit payment.

Regardless of your age, you can start researching now to see how Social Security and Medicare together can be part of your retirement planning.