As a senior, you’re entitled to a number of key retirement benefits upon reaching a certain age. Once you turn 65, you’re eligible to start getting health coverage under Medicare. Meanwhile, you’re allowed to start collecting Social Security benefits as early as age 62. Therefore, if you’re gearing up to enroll in Medicare, or have recently enrolled, you might be wondering whether it makes sense to file for Social Security simultaneously. And the answer is: It depends.
Wait on Social Security, not on Medicare
Once you’re eligible to enroll in Medicare, it pays to sign up immediately unless you happen to be working for an employer at the time who offers a health plan (or you’re married to someone whose employer offers a health plan). Your initial Medicare enrollment window actually begins three months before the month of your 65th birthday, and it ends three months after the month you turn 65. But if you want your coverage to kick in as soon as you reach 65, then you’ll want to sign up in advance.
In fact, you don’t want to wait too long to sign up for Medicare, because delaying can cost you. While Medicare Part A, which covers hospital stays, is free for most seniors, Part B, which covers doctor visits and preventive care, costs money. Right now, the standard monthly premium for Part B is $134, but that number has the potential to climb over time. It can also go up based on your income. And if you fail to sign up for Medicare during your initial enrollment period, you’ll risk getting hit with a 10% increase in your Part B premiums for every yearlong period you were eligible for coverage but didn’t enroll.
Clearly, it makes sense to sign up for Medicare on or around your 65th birthday, because in waiting, you not only take the risk that your premiums will increase, but also that something will happen and you won’t have health insurance to cover it. (Again, this assumes you aren’t covered by a health plan at work; if you are, you’ll get a special Medicare enrollment period that gives you more time to sign up without penalty.) But Social Security works the opposite way: It will actually reward you for waiting to enroll.
As mentioned earlier, you can begin collecting Social Security as early as 62, but you’re better off waiting until your full retirement age or beyond to file. Your full retirement age is based on your year of birth, as follows:
Year of Birth
Full Retirement Age
66 and 2 months
66 and 4 months
66 and 6 months
66 and 8 months
66 and 10 months
If you wait until your full retirement age to collect Social Security, you’ll get the full monthly benefit your earnings history entitles you to. But any time you file before full retirement age, you’ll slash those benefits automatically, which means you stand to receive a smaller sum each month for as long as you collect Social Security. On the other hand, if you hold off on taking benefits past full retirement age, you’ll increase your monthly payments by 8% a year up until age 70, at which point that incentive runs out.
So let’s imagine you’re nearing 65 and want to sign up for Medicare. Doing so right away will ensure that you have the coverage you need for medical services (or at least those covered by Medicare) and that you don’t get hit with a premium surcharge. But if you’re not yet collecting Social Security at that point and don’t need the money immediately, it certainly makes sense to hold off until full retirement age or beyond.
Now, you may have heard that Medicare Part B premiums are typically deducted from Social Security benefits, and that’s true. But if you’re not yet collecting Social Security and get onto Medicare, you’ll simply be billed for those premiums directly, just as you would for any other service you receive. The only downside is that you’ll need to pay attention to when those premiums are due, as opposed to having them paid automatically through Social Security. But you can enroll in Medicare Easy Pay and have those premiums deducted automatically from a checking or savings account instead.
If that doesn’t work for you, you’ll need to make those payments manually. But it’s a worthwhile inconvenience if it means getting more money out of Social Security for the rest of your life.