Social Security • November 7th, 2020

How Do Social Security and Medicare Work Together?

Stephanie Faris

Key Takeaways
  • Although Social Security and Medicare are separate programs with separate purposes, eligibility and benefits for both are determined by the Social Security Administration.
  • If you’re already receiving Social Security benefits four months before your 65th birthday, you’ll be automatically enrolled in Medicare, as long as you’re eligible.
  • Another connection between the two is that Social Security premium payments for Medicare are taken out of your Social Security income.

Social Security and Medicare are terms that are often used in the same sentence. There’s a good reason for that. When you retire, both of these programs will help you pay expenses.

The two programs serve completely different purposes, though. Social Security provides a monthly payment to retirees, based on their earnings history and the number of years they were in the workforce. Medicare, on the other hand, covers medical care, including hospitalization and medical visits. They each have separate eligibility requirements.

But Social Security and Medicare work together in a few key ways. Understanding this connection can help you navigate the signup process, as well as plan for how your Medicare premiums will be paid.

How Social Security Manages Medicare Enrollment

One key difference between Social Security and Medicare is the eligibility age. Social Security gives you a fixed age for full retirement--67 for most people--with the option to receive benefits earlier at a reduced amount. You can begin collecting reduced payments starting at the age of 62.

That isn’t the case with Medicare, though. Unlike Social Security, Medicare has a minimum eligibility age of 65. Unless you’re collecting Social Security due to disability, you’ll have to wait until 65 for Medicare coverage.

But although there are Social Security vs Medicare differences, the two programs are connected. Both Social Security and Medicare eligibility are determined by the Social Security Administration, even though Medicare is managed by the U.S. Centers for Medicare & Medicaid Services.

Is medicare part of Social Security? No, but the enrollment process is linked. You first become eligible to enroll in Medicare three months before your 65th birthday. At that time, if you’re already receiving Social Security, you’ll be automatically enrolled in Medicare. If you aren’t receiving Social Security benefits at least four months before turning 65, you’ll need to apply online at the SSA.gov website.

How Social Security Determines Medicare Premiums

Another factor in the Social Security Administration (SSA) and Medicare connection is how your premiums are handled. The SSA uses the most recent tax return the IRS provides for you to decide your Medicare premiums.

It’s important to note that with Medicare, most people won’t have to pay premiums for Part A. Part A covers hospitalization, and as long as you or a spouse paid into the system by working for at least 10 years, you likely will owe nothing.

But if you want your medical visits covered, you’ll need Medicare Part B, which comes with a premium, and those premiums are decided by the SSA. As with Social Security, Medicare premiums are based on the most recent tax return provided to SSA by the IRS. As long as that tax return shows that your adjusted gross income was $87,000 or less, or $174,000 for married couples, your premiums will be set at the lowest rate. In 2020, that monthly premium is $144.60.

The Medicare deduction from Social Security payments is the most well-known connection between the two programs, though. You’ll see your Medicare premiums taken out of each Social Security payment. If you aren’t receiving Social Security, you’ll receive a bill that you’ll have to pay to receive Medicare benefits.

Plan for a better future

Are you uncertain on how to navigate Social Security and Medicare together?

Final Thoughts

Although Social Security and Medicare are separate programs, they work together. Not only are Medicare premiums deducted from Social Security payments, but SSA also determines how much Social Security income you’ll receive and what your Medicare payments will be. If you’re planning your retirement, a Certified Financial Planner® can help you look at what your payments and premiums will be to come up with an accurate picture of how much income you’ll receive each month.

Author

Stephanie Faris

Stephanie Faris has written about finance for entrepreneurs and marketing firms since 2013. She spent nearly a year as a writer for a credit card processing service and has written about finance for numerous marketing firms and entrepreneurs. Her work has appeared on Money Under 30, The Motley Fool, MoneyGeek, E-commerce Insiders, and GoBankingRates.