Medicare vs. Social Security: Clearing Up the Confusion

Professional Confusion

Just last week, a client informed me he was warned by a “professional” at the local Social Security office that he could not receive Medicare benefits without first drawing social security. My immediate response was shock—that someone working in the Social Security administration did not understand Medicare any better than that, and, worse, would dispense patently false information to people depending on his “expertise.” But that illustrates the type of confusion that exists regarding the relationship between Medicare and Social Security. Well, it’s time to eliminate the misunderstanding.

Medicare and Social Security are two of the most significant social insurance programs in the United States, designed to assist elderly and disabled individuals. Both are funded by payroll taxes and serve vital, yet distinct, roles in providing financial security and healthcare benefits. Here’s a breakdown of how each program works:

Medicare

  • Purpose: Medicare is a federal health insurance program primarily for people who are 65 or older, although younger individuals with certain disabilities or permanent kidney failure may also qualify.
  • Funding: It is funded through two trust funds held by the U.S. Treasury: the Hospital Insurance Trust Fund (funded by a part of the payroll taxes collected from workers and their employers) and the Supplementary Medical Insurance Trust Fund (funded by Congress, premiums from people enrolled in Medicare, and other sources).
  • Benefits: Medicare covers hospital care (Part A), medical services like doctor’s visits and outpatient care (Part B), prescription drugs (Part D), and offers an option to receive these benefits from a Medicare Advantage Plan (Part C), which is an alternative provided by private insurance companies approved by Medicare.
  • Costs: While Part A is usually premium-free for individuals who have paid Medicare taxes for a certain length of time, Parts B and D require participants to pay premiums. The costs can vary based on income, and there are deductibles and co-pays for services.

Social Security

  • Purpose: Social Security provides retirement, disability, and survivor benefits. It aims to replace a percentage of a worker’s pre-retirement income based on their lifetime earnings.
  • Funding: The program is funded through payroll taxes collected under the Federal Insurance Contributions Act (FICA) or the Self Employment Contributions Act (SECA).
  • Benefits: The benefits are calculated using a formula that considers a person’s 35 highest-earning years, adjusting for inflation. The retirement benefits are available from age 62, with full retirement age varying depending on the year of birth (currently between 66 and 67 for most people). Benefits increase if retirement is delayed up to age 70.
  • Costs: There are no direct costs to receive Social Security benefits, but they are considered taxable income under certain circumstances, depending on the beneficiary’s total income and filing status.

Key Differences

  • Benefit Type: Medicare provides health insurance to cover hospital stays, medical care, and prescription drugs, whereas Social Security offers financial support to replace income lost due to retirement, disability, or death.
  • Eligibility Age: Generally, Medicare is available at age 65, while Social Security retirement benefits can start between ages 62 and 70, with varying full retirement ages.
  • Funding Sources and Costs: Both are funded by payroll taxes, but Medicare also requires premiums for certain parts, and Social Security benefits may be taxable.

Together, Medicare and Social Security form the backbone of the U.S. social safety net for older adults and disabled individuals, helping them to manage healthcare costs and maintain a degree of financial security in their later years.

The Connection between Medicare & Social Security

So, what is the relationship between the two? The correlation concerns whether one qualifies for getting Medicare Part A for a zero premium or has to pay a premium to get it.

An individual becomes eligible for Part A at no cost if he or she is entitled to receive Social Security benefits or railroad retirement benefits, or if that person’s spouse (living or deceased, including divorced spouses) is eligible to receive Social Security or railroad retirement benefits (or if the individual is the dependent parent of a fully insured [under the Social Security program] deceased child). To simplify, if one works ten years (or 40 quarters) in jobs that deduct Social Security taxes, he or she qualifies for premium-free Medicare Part A.

Can I Get Medicare Part A?

But what if you have not met that qualification; can you still get Medicare Part A? The answer is yes. You may qualify for premium-free Part A based on the work record of your spouse. (In that case, your spouse—either your current, deceased, or even divorced spouse—needs to have met the 40-quarter qualification and needs to be at least 62 years of age.)

Otherwise, if you’re 65 or older, you can buy into Medicare by paying monthly premiums for Part A hospital insurance. This premium can cost up to $411 per month, depending on the amount of qualified quarters you worked. (By acquiring Part A, you can also get Part B by paying the same premiums as other people.)

Don’t Fall for the Wrong Information

Now we return to the government worker’s false statement: You can’t get Medicare without, first, drawing Social Security. Many of our clients get Medicare at age 65 but delay their Social Security benefits until 66 or later. (A very small minority of them wait until 70.) So, yes, you can benefit from Medicare coverage long before drawing Social Security. The key here is: If you qualify to receive Social Security benefits—no matter when you choose to draw Social Security—you will also qualify to receive Medicare Part A at a zero premium. If you are in that category, congratulations! But don’t fall for someone telling you that you have to draw your Social Security before you can get on Medicare; that simply is not true.


Margie FisherMargie Fisher
22:38 13 Feb 24
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Judy CraftonJudy Crafton
20:54 07 Feb 24
Mr. Claesy, was a pleasure to work with on just a short time table, my not paying attention to dates for Medicare changes! We really appreciated his response and meeting personally with us. We highly recommend him for your insurance needs. Thanks again for doing a wonderful service.
Dannie SkipperDannie Skipper
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KevinKevin
14:47 24 Jan 24
John is a very knowledgeable subject matter expert and is thorough in his approach. He takes time breaking down and explaining what can be a somewhat complex subject and helps makes it easier to understand! John always has the best interests of his clients guiding his recommendations. We have found John's advice to be extremely helpful and would recommend him to anyone seeking health insurance.
Laura BogenschutzLaura Bogenschutz
18:06 21 Jan 24
John Claeys is the best! He has helped my husband and I tremendously with our Medicare and supplement coverage! He breaks it down to where you can understand it! We would be so confused without John!! Thank you John for being there for us!!
Thompson FamilyThompson Family
15:46 18 Jan 24
John Claeys is one of the most knowledgeable individuals on Medicare and supplemental insurance plans you can ever find. Not only is he very personable he also stays involved from year to year to ensure you have the best policies for your current needs.
Ingrid FauskeeIngrid Fauskee
23:21 17 Jan 24
I just got a Medicare plan through John Claeys. I was getting a lot of mail about Medicare and was so confused. Some friends told me about John so I emailed him and he contacted me right away.. He was amazing! He went through everything with me, he explained every detail and was so patient with all my questions . So grateful to him for all he did. Thank you John.😁
John Claeys helped me understand the in's and out's of Medicare. He found the best insurance and prescription plan to best suit my needs at an affordable price.Thank you John!Laurie Boriskie
Marsha AllenMarsha Allen
16:55 24 Oct 23
My experience with John was definitely 5 Star! He explained everything thoroughly, and simply. He answered all my questions regarding Medicare completely. I would absolutely recommend John, without reservation.
Linda WilliamsLinda Williams
10:08 12 Jul 23
I had a 5 star experience and would recommend him. Always returning my calls promptly, very helpful and informative, listened to what my needs was regarding my Medicare. I truly felt comfortable with John's help to navigate through the maze of Medicare
Cindy KulakCindy Kulak
14:51 18 Jun 23
John is very knowledgable, honest and ethical in helping clients evaluate Medicare options and get enrolled. He made the process extremely easy for myself and my husband.
Dale SimsDale Sims
16:28 11 May 23
John did a great job of explaining Medicare and supplemental insurance. He was thorough and patient. He answered all of my questions. I greatly appreciated his help.
Leeann MoosLeeann Moos
17:26 06 Apr 23
When I became eligible for Medicare, my phone was constantly under attack from Medicare options sales folk. Since I needed help understanding my options and life is too short to do business with annoying people a little research was in order. Thats how I found John. His other customers seem very pleased with his service and I decided to give him a try. I was NOT disappointed! He did an excellent job for me, is extremely personable and I could not be happier. Thank you John
Rose WrightRose Wright
16:07 05 Apr 23
I am so thankful for the help that Mr. John was able to assist me with medicare information. After being bombarded with letters and phone calls you just need someone who can walk you through the confusion. And after getting all the info and the best plan and benefits for what i needed. I am glad that He was there for me.Thank you so very much,Rose Wright
Steve HenselSteve Hensel
21:08 04 Apr 23
Claeys Group is great to work with. John is truly professional, knowledgeable and makes the entire process flow so much more smoothly than I expected. I would highly recommend him.
Deborah RounsavallDeborah Rounsavall
14:25 07 Mar 23
I changed from my person finance planning group to John for help. Others led me astray. John is very responsive and follows up promptly. Even helped me on the weekend at the end of year to get all my documents in on time so I didn't lose insurance coverage. Explains all the options in a manner that us rookies can understand it. I highly recommend John.
Setella ParksSetella Parks
13:12 07 Mar 23
John's knowledge is invaluable when it comes to navigating the murky water of Medicare plans. He answered all our questions in a manner we could understand and helped us compare benefits between plans, services, and providers readily available in our area. I am so happy we called on him to assist us! He handled EVERYTHING professionally and patiently and has followed up to make sure we are good. Highly recommend his 5 star service!
Sherry JonesSherry Jones
21:01 23 Feb 23
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T/D HT/D H
19:40 20 Feb 23
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Joyce SandvikJoyce Sandvik
20:32 30 Aug 22
John Claeys came to our house to talk about all aspects of Medicare. He wrote out some information on a notepad as he talked and answered our questions. He gave us the handwritten notes along with printouts of more information specific to my needs. My husband and I took o a few days to discuss the options. John took a list of my medications and researched all the available prescription insurance policies for me. He narrowed it down to the best policy (best prescription prices) for me. It was so easy and I felt confident I was getting exactly what I need when I turn 65. Every September, he will research prescription policies from my updated list of medications to find the best policy for my needs. Thanks to John Claeys for making this transition extremely easy and effortless.
Marilyn ScottMarilyn Scott
09:35 23 Jul 22
John enrolled my husband into Medicare 4 years ago. I knew then I wanted him to help me with my Medicare when it was my time to enroll. John helped me recently. He is very knowledgeable, humble and so patient. He made sure I had the best plan for me. He genuinely cares about his clients. He is the best insurance consultant! I highly recommend John for your Medicare needs!!
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