Find out how these programs work together and how that might affect your enrollment decision.
Age 65 is a big milestone in the context of retirement planning, because that’s when seniors are eligible to sign up for Medicare. In fact, you can enroll in Medicare three months before the month of your 65th birthday to get the ball rolling.
You may be thinking of signing up for Medicare in conjunction with Social Security. That’s something you’re absolutely allowed to do. But whether it’s a good idea depends on your situation. With that in mind, here are a couple of important things to know about Social Security and Medicare if you’re signing up for both simultaneously.
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1. You can hold off on both enrollments past age 65
Even though Medicare eligibility begins at 65, you don’t automatically have to sign up for health coverage through it at 65. And if you have group health coverage through an employer’s plan, it could actually pay to wait.
It may be that the coverage you have through your job is better and more cost-effective than Medicare. So as long as that coverage is available to you, why take on the expense of Medicare premiums?
However, if you’ll be waiting past age 65 to sign up for Medicare, you should make sure your group health plan qualifies you for a special enrollment period later on so you don’t risk late enrollment penalties. Usually, this is the case if your plan has 20 employees or more.
Meanwhile, there’s absolutely no obligation to sign up for Social Security at age 65. Even though seniors are allowed to claim benefits beginning at age 62, you shouldn’t feel pressured to file just because your 65th birthday has arrived.
2. You’ll reduce your monthly Social Security benefits if you sign up with Medicare at 65
You may want to sign up for Medicare as soon as you’re allowed to. You can sign up for Social Security at the same time, but you may not want to for one big reason — filing for benefits at 65 could lead to a permanent reduction in those monthly payments.
You’re not entitled to your complete monthly Social Security benefit until full retirement age arrives. That age hinges on your year of birth, but it’s no earlier than 66. And for anyone born in 1960 or later, it’s 67.
Of course, if you need Social Security at age 65, then signing up isn’t necessarily a bad choice. But if you’re still working and prefer Medicare to your employer’s coverage, consider just signing up for Medicare and waiting on Social Security so your monthly benefits are able to continue growing.
The only “issue” with signing up for Medicare before Social Security is that you’ll need to make your premium payments yourself. When you’re on Social Security, your Medicare Part B premiums are deducted from your monthly benefits automatically. But you can easily set up automatic payments from a bank account so you don’t fall behind.
It’s important to understand how Social Security and Medicare work together. Keep these key points in mind if you’re thinking of enrolling in both programs at the same time.
