Medicare and Social Security Surprises

8

January 18, 2015 by Jean

I consider myself more knowledgeable about Social Security and Medicare than the average American citizen. For decades, I taught students about the history and development of these policies in the United States and how they compared with welfare state policies in other industrialized countries. Now that I have become a user of these programs, however, I’m realizing that my knowledge was more about the broad sweep of these policies than about their details. The specifics have presented me with some surprises.

The first surprise was the way that Medicare determines premiums for Part B, which I have just signed up for. I knew that Medicare costs per retiree are generally more than that retiree has paid into Medicare over their working lifetime, and I was vaguely aware that Medicare has tried to balance the books by using a sliding scale that charges higher premiums to higher-income retirees. What I didn’t understand was how Medicare determines your income for these purposes – by using the adjusted gross income from your most recent income tax return (in my case, the tax return filed in 2014 for my 2013 income). 2013 and 2014 were my highest-earning years, and my adjusted gross income put me over the threshold ($85,000 for a single person, $170,000 for a couple) to pay a premium higher than the standard Part B premium (currently $104.90 per month). I experienced a bit of sticker shock when I learned that my Part B premium would actually be closer to $150 per month and a bigger shock when I got a bill for almost $600 to pay the first 4 months up front. (The billing was because I am not yet drawing on Social Security for a monthly income, which means my Part B premium can not be withheld from my monthly check.) Fortunately, I mentioned all of this to my brother and he told me that I should call the Social Security Administration because having stopped work in the past year is one of a number of life events that qualifies a person to appeal their higher Part B premium.

My phone call to Social Security was followed by a visit to the local office and an interview with a “technical expert” so that I could provide supporting documents proving that I had retired and that my premium should be based on my 2015 retiree income rather than my 2013 professional income. This was an easy process, and poof! my extra premium disappeared.

My interview at the Social Security office brought a second surprise when the very nice civil servant who was interviewing me asked me if I had ever been married. When I replied that I had, when I was in my twenties, she asked me a few more questions, looked up my ex-husband’s Social Security record online and discovered that I’m eligible to collect spousal benefits on his account until I switch over to collect under my own account. (I knew that divorced women who had been married for at least ten years were eligible for coverage under their ex-husband’s accounts, but I didn’t expect this would apply to me because I was already divorced before this rule was adopted.) In my case, the coverage under my ex-husband’s account is not very much because he spent most of his working life in government service and it is one of the great ironies of these very popular government programs that government workers do not participate in them. Nevertheless, my ex-husband had enough quarters of non-government work early and late in his working life to qualify for minimum coverage, and the “spousal benefit” will not only cover my monthly Part B premium (no more quarterly bills) but also yield a little bit left over that will be deposited into my checking account each month. This was a very pleasant surprise indeed.

Another pleasant surprise was the attitude of the Social Security representatives I dealt with. As I was being interviewed, I was looking at a poster on the wall in the Social Security office that showed two laughing people on a roller coaster ride with the motto “Someday, I will sit in the front row.” The accompanying text made it clear that the front row was retirement, that this should be an exciting and enjoyable time of life, and that one made it to the front row through years of working hard, retirement planning, and contributing to Social Security. And this was the attitude that pervaded my interactions at Social Security; I was congratulated on my retirement and given to understand that I was entitled to benefits that I had worked for.

So the unpleasant surprise of my Medicare Part B premium and a dread of dealing with a difficult government bureaucracy turned into a pleasant surprise and a pleasant experience. I think I’ve made it to the front row!