Some of the most common client and employee questions we receive during open enrollment meetings relate to Social Security and Medicare. Understanding how Social Security benefits work is crucial for making informed decisions about your future. By grasping the intricacies of these benefits, you can tailor your financial strategy to align with your unique needs. Sharing this information with your employees will enhance their understanding as well.
Welcome to our 3 part series where we'll explore the key components of Social Security:
- Wage-Related Benefits - calculated based on your lifetime earnings and include the following:
- Retirement benefits: Available to workers 62 or older with enough work credits (typically 40 credits).
- Social Security Disability Insurance (SSDI): For adults 18 or older and unable to work due to long-term disability.
- Supplemental Security Income (SSI): Needs-based program for people with limited income and resources who are over age 64, blind, or disabled.
- Survivors Benefits: For family members of deceased workers who qualified for Social Security
- Medicare Coverage - A federal health insurance program managed by the Centers for Medicare & Medicaid Services (CMS). Most people become eligible for Medicare at age 65, but some younger individuals with specific disabilities may qualify earlier. Medicare helps with the cost of healthcare, but it may not cover all medical expenses and does not cover the cost of long-term care.
- Part A - Hospital Insurance; helps cover
- Inpatient care in hospitals
- Skilled nursing facility care
- Hospice care
- Home health care
- Part B - Medical Insurance; helps cover
- Services from doctors and other health care providers
- Outpatient care
- Home health care
- Durable medical equipment (like wheelchairs, walkers, hospital beds, and other equipment)
- Many preventive services (like screenings, shots or vaccines, and yearly "Wellness" visits)
- Part D - Drug coverage
- Helps cover the cost of prescription drugs (including many recommended shots or vaccines)
- Plans that offer Medicare drug coverage (Part D) are run by private insurance companies that follow rules set by Medicare
Be sure to look for Parts 2 and 3 of our series:
Part 2: Social Security Wage-Related Benefits
- will review eligibility requirements, benefit calculations, and strategies for optimizing your wage-related benefits
Part 3: Medicare Coverage
- will explore Medicare Parts A, B, and D, Medigap, and Medicare Advantage (Part C), when to apply, cost (if any), and coordinating with a group insurance plan when choosing to work past age 65
Understanding these benefits is essential for maximizing Social Security. By understanding how Social Security retirement benefits work and planning accordingly, you and your employees can make informed decisions for a more secure and comfortable retirement.
Retirement Ready? Know Your Social Security Benefits
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