TARRANT COUNTY BAR ASSOCIATION PEOPLE’S LAW SCHOOL 2016

SOCIAL SECURITY & MEDICARE JOAN DURKIN

SOCIAL SECURITY BASICS

Social Security Survivors: This program provides a monthly lifetime income to the surviving spouse of a deceased worker once he or she reaches retirement age. The amount that he or she receives depends on both spouses income while they were working. The survivors program also pays benefits to children under the age of 18 and a surviving spouse caring for them. These benefits end (in most cases) when the surviving children reach age 18.

Social Security Disability: Must show that there is no gainful employment that you can do based upon education, employment history and physical abilities * Social Security pays lifetime monthly income to workers who are disabled and sometimes to their spouses and children under the age of 18. These benefits depend on the worker’s earning history. Employers should be aware that threshold for disability on a long term disability plan may be lower than Social Security

DISABILITY ANALYSIS STEPS Step 1. Are You Engaged in Substantial Gainful Activity? Step 2. How Severe Are Your Impairments? Step 3. Do You Meet the Listing of Impairments? Step 4. Can You Do Your Prior Job? Step 5. Can You Do Any Other Job?

COMMON REASONS FOR DENIAL 1.You have not paid in enough to social security – you must have paid in at least 40 quarters 20 of which are in the last 10 years. 2.You earn too much income ($1,130 per month in 2016 for SSDI or $1500 for SSI) 3. Your disability won't last long enough (12 months) 4.Impairment is not severe enough (loss of use, residual capacity, ability to engage in activities of daily living – see impairments.htm) 5.Drug or alcohol abuse is basis of disability 6.Certain crime related issues 7.Failure to follow treatment that could reduce extent of impairment

Social Security Retirement: This program provides a lifetime monthly income for qualified workers once they have reached their full retirement age. Depending on when they were born, that age ranges from 65 to 67. The amount of retirement benefits they get depends on their income while they were working. Workers also have the option of receiving a lower monthly income if they begin collecting at age 62.

Working While on Social Security Working while on Social Security could reduce benefit amount only until full retirement age is reached. For 2016, any income earned above $15,720 is subject to a deduction of $1 deduction of benefit amount for every $2 earned In the year full retirement age is reached, SS deducts $1 in benefits for every $3 earned above a different limit ($41,880 in 2016), but only count earnings before the month full retirement age is reached

Working While on Social Security continued Starting with the month full retirement age is reached, full benefits are paid with no limit on earnings. People should contact SS at the beginning of the year they will reach full retirement age. Even if still working, individuals may be able to receive some or all of their benefits for the months before reaching full retirement age.

Taxes on Social Security About one third of beneficiaries currently pay taxes on their benefits. Taxes must be paid if: Filing as an individual and “combined income” is between $25,000 and $34,000, individual may have to pay income tax on up to 50 percent of their benefits, more than $34,000, up to 85 percent of their benefits may be taxable. Filing a joint return, and individual and spouse have a “combined income” that is between $32,000 and $44,000, individual may have to pay income tax on up to 50 percent of their benefits more than $44,000, up to 85 percent of their benefits may be taxable. Combined Income: Individual’s adjusted gross income + Nontaxable interest + ½ of individual’s Social Security benefits = "combined income"

How much will benefits be? Request a statement from Social Security Use Social Security website for an estimate: Benefits are based on lifetime earnings Based on the 35 years of work in which person earned the most Formula is applied to arrive at Primary Insurance Amount (PIA) –what would be received at full retirement age Cost-of-living increases beginning at age 62

Beneficiary Data The maximum benefit depends on the age you retire. For example, if you retire at full retirement age in 2016, your maximum benefit would be $2,639. However, if you retire at age 62 in 2016, your maximum benefit would be $2,102. If you retire at age 70 in 2016, your maximum benefit would be $3,576. The current average monthly retirement benefit is $1,335

Full Retirement Age (FRA) YEAR OF BIRTH RETIREMENT AGE 1937 or earlier and 2 months and 4 months and 6 months and 8 months and 10 months and 2 months and 4months and 6 months and 8 months and 10 months 1960 or later 67

Social Security Early / Delayed Collecting Early Collecting May start as early as age 62 – benefit reduced by about 25% Benefits are reduced permanently (currently about one-half of one percent for each month started before full retirement age) Delayed Collecting If delayed, benefits will increase by a certain percentage depending on the year of birth (from 5.5% - 8% annually) Only increases until collecting begins or reach age 70, whichever comes first

Applying for Benefits What is needed to apply? Social Security number Birth certificate(s) – individual, possibly dependents Proof of US citizenship or lawful Immigration status Marriage certificate Military discharge papers Most recent W-2 or tax return (if self employed) Possibly other material How? ( automated services available 24 hours, but live staff from 7am to 7pm, M-F ) Local Social Security Office

MEDICARE 101

Why do we have Medicare? Medicare was created in 1965 to provide health insurance protection for the elderly and disabled Medicare began with only Part A and Part B to help defray the costs of medical care after retirement Medicare has expanded over the years to include Part C, gap coverage provided by private vendors, and Part D, most recently added to help cover the ever-growing prescription costs for the aged population

Who is eligible for Medicare? Individuals who have reached age 65- most common Individuals with End Stage Renal Disease (ESRD) Individuals who have been Social Security disabled for more than 24 months

What are the 4 basic parts to Medicare? Part A: Hospital Insurance No cost to individuals who have worked 10 years or more Provided by government Part B: Medical Insurance Monthly cost paid to Medicare based on income Provided by government Part C: Medicare Advantage Plans (OR Supplement Plans) Covers gaps in Medicare Parts A & B coverage Monthly premiums paid to private vendor * Part D: Prescription Drug Coverage Plan designs set by government Monthly premiums paid to private vendor

Medicare Part A: How to Obtain and What is the Cost? Most individuals are eligible for Medicare Part A on their 65th birthday If someone retires prior to age 65, they need to wait until their 65th birthday to obtain Medicare Part A coverage An individual is automatically enrolled in Medicare Part A when they begin collecting Social Security benefits at age 65 or older $0 cost to Medicare eligible individuals with 40 or more quarters (10 years) of Medicare-covered employment; this is why most individuals immediately enroll on their 65th birthday If an individual is not retired by age 65, they can wait until retirement to obtain Medicare Part A coverage as long as primary, creditable group coverage is in place- this is called a Special Enrollment Period (SEP)

What is Medicare Part A? Medicare Part A: Hospital Insurance Hospital Insurance pays for inpatient hospital, skilled nursing and some home health care PART A YOU PAY IN 2016 Inpatient Hospital Days 1-60 $1,288 deductible, 0 coinsurance Inpatient Hospital Days $322 per day Inpatient Hospital Days $644 per day lifetime reserve days

What is Medicare Part B? Medicare Part B: Medical Insurance Medical Insurance covers Medicare eligible physician services, outpatient hospital services, certain home health services, diabetic supplies and durable medical equipment Medicare eligible physician services include doctor visits, labs, X-rays, emergency room, ambulance, physical therapy, speech therapy, and occupational therapy 2016 out-of-pocket costs for Part B: $ monthly premium (for most people – high earners pay more) * $166 deductible per year plus 20% of the Medicare-approved amount for services after $166

Medicare Part B: How does an individual obtain coverage? If an individual retires retired prior to age 65, they need to wait until their 65th birthday to obtain Medicare Part B coverage, unless they qualify for another eligibility trigger If an individual is not retired by age 65, and they can wait until retirement to obtain Medicare Part B coverage, as long as they are covered under a primary active group health plan * Please note COBRA does not count as an active group health plan; if an individual is enrolled in COBRA they have an eight month window to apply for Medicare without penalties Individuals wishing to enroll in Medicare Part B coverage will need to contact their local Social Security office to fill out the proper paperwork up to 3 months prior to their intended effective date of coverage

Medicare Part C: Medicare Advantage plans Private vendors contract with Medicare to provide these plans to individuals Plans are offered on HMO and PPO platforms Advantages include: less expensive monthly premiums, routine care, one insurance card and prescription drug coverage Disadvantages include: small LOCAL networks that limit doctor choice Routine care includes: some dental, hearing and vision coverage; along with routine physician care Emergency worldwide coverage is included Monthly costs for these plans range from $0 to $200 depending on location and coverage levels

What is Medicare Part D? Medicare Part D is the prescription coverage for Medicare eligible individuals; provided through private vendors Plan design is set by the government and includes Initial Coverage, The Donut Hole and Catastrophic Coverage Medicare Advantage plans include the Rx coverage in their premiums and a separate Medicare Part D plan CANNOT be purchased Medicare Supplement plans (i.e. Medex) do not include Rx coverage and require an additional Medicare Part D plan to be purchased Medicare prescription plans range in monthly cost from $15 to $100 depending on the chosen copay and formulary levels Medicare Part D premiums is also subject to an income “penalty”- these penalties are paid directly to Medicare and NOT the carrier so thehigher your income the more you pay. Shop & Compare at

Medigap and Medicare Supplement plans Medigap and Medicare Supplement plans are considered “wrap around” plans for Parts A and B to fill in gaps in coverage; provided through private vendors Accepted NATIONWIDE with any doctor or facility that accepts Medicare Covers most international emergency medical claims Individuals show both Medicare and Medigap policy cards; Medicare pays claims primary and Medigap pays secondary Prescription plans (Part D) must be purchased separately

RESOURCES www. Medicare.gov Nolo.com On the web