Editor’s Note: Journalist Philip Moeller is here to provide the answers you need on aging and retirement. His weekly column, “Ask Phil,” aims to help older Americans and their families by answering their health care and financial questions. Phil is the author of the new book, “Get What’s Yours for Medicare,” and co-author of “Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security.” Send your questions to Phil.
Melanie: I’m trying to understand Social Security widow’s benefits, and Social Security has not been very helpful in my understanding. I’ve been told I can take widow’s benefits; that I can take widow’s benefits if I make less than $15,000 a year; and that I can’t take widow’s benefits. As I said, not very helpful! My husband died at age 52 while still employed. I am now 63 and am employed full time. I have not remarried. I earn over the earnings test of $16,920 or $44,880 (lower and higher amounts). I am not planning on retiring until at least age 66. Am I able to work and collect my late husband’s benefits as his widow?
If you file for benefits between now and the year before your turn 66, the agency will withhold $1 in benefits for every $2 of earnings in excess of the lower exempt amount. During the year in which you turn 66, but before your birthday, it will withhold $1 in benefits for every $3 of earnings in excess of the higher exempt amount. Earnings in or after the month you turn 66 do not count toward the earnings test.
If you apply for a widow’s survivor benefit before reaching your full retirement age, the earnings test will be in effect. Its exact impact on your benefits depends on how much wage income you earn and on how big your benefit would be. Keep in mind that your benefit also is subject to reduction, because you would be filing for it before your full retirement age.
Here’s a tool from Social Security that will let you plug in your variables and see how the earnings test would affect your benefits.
Unfortunately, this is not the end of your work!
There are lots of strange things about Social Security, and among them is the fact that earnings test reductions are described as temporary. By this I mean that while the test can reduce your benefits, these reductions will be restored to you in the form of higher lifetime benefits that begin when you reach full retirement age. So, the reductions aren’t really reductions!
Are we done yet? No!
The restoration of benefits lost to the earnings test is associated with the specific benefit you’re filing for. In your case, it’s a survivor’s benefit. So, any future restorations will be to your survivor’s benefit.
Your note says you are still working and don’t plan to retire for at least a few years. This makes me wonder whether your own retirement benefits eventually will be higher than your survivor benefits. If so, you would be in effect switching to your retirement benefit at a later date. Doing so would mean that restoration of your survivor benefits would not occur, because you no longer would be claiming that benefit.
Are we all totally confused yet?
The bottom line is that you have some math to do here, and then you can make an informed decision about how to proceed.
One possibility I’d suggest you consider is to wait until you turn 66 (your full retirement age) to file for the survivor benefit. This will avoid the earnings test and provide you your maximum survivor benefit. If you can afford it, delay filing for your own retirement until age 70. This will provide you four years of maximum survivor benefits and allow your retirement benefit to grow by 32 percent between age 66 and 70 (8 percent a year).
I understand if you can’t afford to pursue this strategy, but if your retirement benefit is going to represent your largest Social Security payment, maximizing it for the rest of your life makes a lot of sense.
Sarah: I was married for 25 years and divorced. I remarried in 1999 at the age of 49 and am still married to my second husband. My first husband died three years ago. I was told I could not get a spousal benefit on his record, because I was remarried. That makes sense. I just want to double check that this is true. Can I get a spousal benefit on my first husband’s record now that he is passed away? Secondly, would my grown daughters (married with children) have any right to a benefit from their deceased father’s record?
Phil Moeller: You remarried at too young an age to qualify for a widow’s benefit on your ex-spouse. And because he passed away, a widow’s benefit is the benefit in question, not an ex-spousal benefit. Child benefits are only available to children aged 19 or younger, unless they are disabled. If your daughters are older than this and not disabled, they would not be eligible for benefits.
Melissa – California: I am a financial planner and have a divorced female client who has never worked long enough to qualify for Social Security benefits. Because of this, I’m concerned that she also won’t be eligible for Medicare. If she did sign up, wouldn’t Medicare ask her to pay something like $400 a month?
Phil Moeller: That $400 figure is not for all of Medicare but just for the cost of Part A hospital insurance premiums. Part A charges no premiums for people who qualify for Social Security. While your client does not qualify for premium-free Part A on her own earnings record, she would qualify on her ex-husband’s record if she also qualifies for Social Security divorce benefits. This means they were married for at least 10 years, she is at least 62, and she is unmarried. Her ex-husband does not have had to actually file for benefits to establish her eligibility for premium-free Part A, but he must be at least 62.
Harold – New Hampshire: I am 70 years old, retired from the U.S. Army and still work full time. I have Medicare and Tricare for Life for medical insurance. My employer’s medical plan carrier is telling me that Medicare does not suffice as a proof of other coverage when trying to waive their insurance, which I do not need, because I am covered by Medicare and Tricare for Life. They have enrolled me in their plan by default, because they would not except my Medicare or retired military ID as proof of medical coverage. Can I cancel my employer medical plan? Is what the plan is telling me an acceptable practice, and do you know if it’s legal?
Phil Moeller: I have not encountered this situation before, but I have never heard of an employer requiring an employee to buy the employer’s health insurance as a condition of employment. Usually, it’s the employees who really want the coverage!
I’d suggest you get in touch with Tricare and see if they will issue you some kind of proof of coverage. Lots of Tricare members have other jobs, and I bet they encounter similar redundancy issues all the time.
Also, is this requirement coming from the insurer or your employer? If it’s the insurer, I’d be curious as to what your employer benefits office has to say about it. In terms of legality, this is most likely an issue of state law. I’d call the New Hampshire state insurance department and see if you can find out anything about this insurer’s position.
Anonymous: I will be 65 and a half this month. My employer is forcing me to go on Medicare even though I am still working for him. He has fewer than 20 employees on the payroll and he wants to save money on his insurance premium. Can he legally do this to me? I do not plan on retiring until 66 or 67. I fear he will terminate me if I refuse to agree to go on Medicare.
Phil Moeller: Not only can he do this, but he’s not necessarily a bad guy for making you take Medicare.
Medicare rules say that small employers with fewer than 20 employees can require their employees at age 65 to get Medicare. At that time, the employer’s insurance becomes the secondary payer of claims and Medicare becomes the primary payer.
The logic here is that such health plans can save money for smaller employers, who otherwise would have trouble offering decent benefits to their employees. Whether you buy this logic or not is up to you, of course. And there is nothing in the law that would prevent an employer from offering continued primary insurance. However, it likely would cost a bundle.
Ken – Colorado: I am 69 years old and am collecting Social Security benefits. Can I still get a lump-sum payout on my Social Security?
Phil Moeller: Unfortunately, this is not the way lump sum benefits work. They are not available for future benefits. They are only available to people who are entitled to benefits but have not filed for them yet. Under some circumstances, for example, people could file retroactively and get a lump sum of up to six months or even a year of benefits to which they earlier were entitled, but had not yet claimed. Sorry!
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