by Terry Rogers
On Monday, July 16, Senator Gary Simpson sponsored a Social Security and Medicare Benefit Workshop at the Milford Senior Center. The workshop was designed to provide attendees with information about the benefits they are eligible to receive upon retirement.
“As I enter retirement this year, I realized that I know less than I should about Social Security,” Senator Simpson said. “I realized that if I don’t know enough about the process, a lot of other people are probably in the same boat, so I decided a workshop that explained the process would help a lot of people.”
Matt Baxter, the Public Affairs Specialist for Region II, Area II of the Social Security Administration, provided those in attendance with a general overview of benefits as well as a history of Social Security.
“Social Security is a product of the Great Depression,” Baxter explained. “Up until 1940, people relied on family, friends and charity to take care of them when they grew older. When the stock market crashed in the 1930s, that safety net was gone. FDR and Congress decided that the government should step to provide assistance to the elderly and the Social Security Act was passed in 1935 with benefits beginning in 1940.”
Baxter explained that Social Security initially only covered retired workers with no benefits for family members or the disabled. An amendment in 1939 provided for spousal and dependent children benefits, while disability income was added in 1954. In 1965, Medicare was introduced as the primary health insurance for people over the age of 65. Supplemental Security Income (SSI) was introduced in 1972 and is used to provide income for the poor. It is important to note that SSI is not funded through Social Security taxes but through federal taxes.
“Social Security was never intended to be used to entirely fund retirement,” Baxter said. “It was designed to compliment other retirement like pensions, savings, investments and other income. Initially, you could begin collecting Social Security at age 62, but that was changed in the 1980s. Now, if you were born between 1943 and 1954, you can begin collecting full Social Security at 66 and that increases by two months each birth year after that up to 1960.” Baxter explained that you are eligible to begin collecting Social Security at 62, but benefit amounts are reduced by between 25 and 30 percent, depending on your birth year.
In addition to reductions to the monthly benefit you may receive if you choose to collect Social Security before full retirement age, there are limits on the income you can earn in addition to Social Security without losing additional benefits.
“If you are under full retirement age, you can make up to $17,040 per year. If you make more than that, your benefits can be reduced $1 for every $2 you make,” Baxter said. “The year you will reach your full retirement age, you can earn up to $45,360 per year. If you make more than that, your benefits are reduced $1 for every $3 you earn. The month you reach full retirement age and from then on, you can earn as much as you want each year with no reduction in benefit. If your benefits are reduced because of your earnings, they will be increased at full retirement age to account for the reduction, so you will receive those benefits again, just not until you reach full retirement age.”
Social Security also offers benefits for minor children and spouses. To receive children’s benefits, the child must be unmarried, younger than 18 or between 18 and 19 years old but still in school. If a student, the child must not be attending a school higher than Grade 12. A child over the age of 18 and not in school must be disabled to receive benefits. Spousal benefits are 50 percent of the deceased spouses unreduced benefit and there is a reduction for early retirement.
“Divorced spouses are also eligible to receive benefits based on their former spouse’s Social Security,” Baxter said. “You must be unmarried, age 62 or older and your ex-spouse must be entitled to Social Security or disability benefits. You also must have been married at least ten full years.”
Two benefits that are often missed include parents’ benefits and the lump sum death benefit. If your parent receives at least one-half of their financial support from a son or daughter who died and they are at least 62, they may qualify for benefits. The lump sum benefit is a $255 payment to a surviving spouse or child if they meet certain requirements.
“One big misconception is that Social Security is going broke,” Baxter said. “You have probably heard that the Trust Fund will be out of money by 2034. If no action is taken by Congress, it is true that the fund will be exhausted by 2034, but even if that happens, you will still get up to 79 percent of your benefits. The fact is, Social Security has been in much worse shape before. At one time, we were within two years of depleting the fund. In order to address the problem, Congress raised the retirement age from 62. They also eliminated payment to surviving children who were attending college, ending their benefits once they turned 18.”
Lakia Turner, Director of Meicare Assistance Bureau, gave a brief overview of Medicare, explaining the various parts of Medicare coverage. Medicare Part A has no premium and covers some hospitalization costs, but not all of them. Medicare Part B covers the majority of healthcare costs but does not include prescription cost. Part D coverage covers prescriptions. Medicare Part C are Advantage plans that replace Plan B coverage.
“Advantage plans offer additional coverage, like vision, hearing and dental,” Turner said. “However, many of them are HMOs and PPOs so you are limited to using doctors and hospitals on their plan. If you have six doctors, you have to call all of them to be sure they are on the plan. Often, the ads you see on television are Medicare Advantage plans. We cannot advise you what plan to choose, so we encourage you to research before making any decision about Medicare.”
Once someone turns 65, they must sign up for Medicare. Anyone who has another health insurance plan, such as through an employer, may refuse Part B with no penalty. Failure to enroll in Part B during the enrollment period when you do not have health insurance will result in a penalty that is permanent.
Anyone with questions about Medicare can call the Delaware Medicare Assistance Bureau at 800-336-9500. For questions about Social Security, contact 877-651-7130. In addition, there are staff members at the Milford Senior Center who are available to assist anyone who has questions about Social Security or Medicare.
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