Learn how Social Security and Medicare work together to cover health care costs and retirement benefits. What's the connection? designed to help Americans and noncitizens working here deal with the challenges of their senior years. Social Security and Medicare are among the largest expenditure categories of the This section describes in detail the important relationship between the trust . The Social Security payroll tax is % and is based on each employee's earnings (including wages, salaries, bonuses, commissions, etc.) up to a specified annual ceiling, limit, or maximum. In the calendar year , the Social Security payroll tax rate of % is applied to each.
The payroll tax for Social Security is 6. The taxes collected are paid out monthly. If there is a surplus of taxes collected, the surplus goes into a separate Trust Fund for each. If there is no surplus then money is drawn from the trust funds.
I see SS essentially as an insurance program for our old age living expenses. That is exactly right. You are supposed to have an employer-based plan, plus your own savings plan. In the event none or few of your employers had a plan, or in the event your own life circumstances were such that you had no savings or personal investments, you had Old Age and Survivor's Insurance Originally Posted by luv4horses You get out according to what you put in, over your working lifetime, with a correction formula that somewhat favors the low-income earners who usually rely on SS the most.
Your monthly benefit is based on your highest monthly earnings over a period of 35 years, not what you paid in. Originally Posted by luv4horses Meanwhile, Medicare seems to be a medical support program with an entirely different set of rules in that your current payments are controlled by your recent 'income', no matter if it comes from a job, investments, sale of real property etc.
Medicare is the result of government interference in the healthcare system.
Policy decisions, rules, regulations and laws enacted by the federal government as well as State governments coerced everyone into employer sponsored group plans. People still had access to healthcare as a result of the Hill-Burton Act of under which hospitals agreed to provide free care to anyone who needed it, in return for government grants and loans.
The final nail in the coffin was the In Re: Inland Steel Supreme Court decision. Several other government policies, including changes to the IRS Tax Code decoupled catastrophic care from group life-insurance policies, creating an entire group of people without access to health insurance.
The package will include information on Medicare Part A hospital insurancePart B medical insurancethe cost of Part B premiums, and Part D, the prescription drug plan.
Social Security and Medicare Retirement Benefits
Come your 65th birthday, you'll be automatically enrolled in A and B, though you'll have the right to opt out of B. Medicare is also publicized on the Social Security website and mentioned in Social Security annual statements. When's the right time to apply for Medicare? Medicare generally advises you to apply for coverage during the three months before you turn 65, to ensure it will start in your birthday month.
How Social Security and Medicare Work Together
But the full Medicare initial enrollment period lasts for seven months: You're free to apply at any time during that period. Medicare Question and Answer Tool If you delay, you may face higher premiums for the rest of your life — 10 percent higher for Part B for every 12 months that you could have had coverage but didn't. But there are important exceptions.
If on turning 65 you or your spouse is working for a company with 20 or more employees that covers you under a group health plan, you don't have to enroll in Medicare at that time. You can wait until you stop working or otherwise lose that insurance, and you won't be charged a late enrollment penalty. So Social Security will collect my Medicare premiums?
If you're receiving Social Security retirement benefits, your Medicare premiums will be deducted from them. Social Security will send you a notice about when the deductions will begin.
If you're not getting retirement benefits, you'll receive monthly bills.