Social Security Scenerios

[Sunset]

Quote:

Originally Posted by Bogie I've got a question about the medicare "hold-harmless" provision which I think means that medicare can't go up more than the cola you get for social security. If you delay social security until say 70 is the medicare increase limited by cola increases or do you actually have to be taking social security to limit the medicare yearly increases? If it doesn't then the break-even analysis for delayed social security is flawed.

A very good point, perhaps in the "old" days Medicare was not rising as fast as now compared to the normal inflation.
And this extra cost of Medicare would be forever charged, so it's equivalent to a permanent reduction in delayed SS.

[SecondCor521]

Quote:

Originally Posted by Sunset A very good point, perhaps in the "old" days Medicare was not rising as fast as now compared to the normal inflation. And this extra cost of Medicare would be forever charged, so it's equivalent to a permanent reduction in delayed SS.

It's even worse. Because the SSA is required to fund Medicare to certain percentage levels and the hold-harmless protects those who are taking SS, the shortfall is disproportionately made up by those not taking SS. So there can be something akin to a "Medicare squeeze" on some people.

[mathjak107]

Quote:

Originally Posted by Independent I went through your post and deleted everything except the part that applies to the couple in the OP. They are not grandfathered into anything, they are operating with the new law. So, they are just left with this paragraph. Maybe I missed something that is relevant to them. If so, please add it. This is an earlier post that bothered me: In the OP case, the husband is six years younger than the wife, and has an fra of 67. I don't see how he can wait till age 67 to start a spousal benefit. She will have to start when she is 70 and he is 64. At that time, he will be "deemed" to be applying for both benefits. If any spousal is available, he will have to start then. Maybe you can explain otherwise. ------- I think we should also look at the numbers for this case. It seems to me that his PIA is more than half her PIA. So, in their case, spousal is off the table regardless of ages. Do you agree with that? All this discussion of spousal benefits assumes that his PIA is lower than the OP states - you used $1,000 in post #11. I've been going with to try to sort this out in general.

to funny , i did use 1k in my example and now working on my desktop i see it was 1500 . on my nook it looked like 1000 to my eyes at first glance and i didn't realize it .

so in this case the base adder would be 1365 minus 1500 , in which case there will never be spousal so you were correct about that part .

but just for the education lets assume it was the 1k i thought it was .

so the scenario would shake out that assuming his was 1k and not 1500 , the spousal base amount would be 1365-minus 1000 which leaves a spousal benefit of 365 left . but that 365 will be reduced if he takes it earlier than fra .

the earliest he could file would be 62 which makes her 68 . at 62 if he filed first he would get only his benefit at first . there is no 2nd componenant until she files .

so actually she could wait 2 years until he is 64 to file and the 365 will not be reduced as much as at 62 .

so the closest he could get to fra is 64 and her 70 .

so he would become eligible for spousal at 64 but it is not an automatic process . he has to fill out an application to start getting spousal or he does not get a thing additional . .

the ss office told us that once i file my wife has to complete the process by filing a spousal application or no change will happen to her amount even though she is eligible . . it would be silly though not to grab it as soon as you are eligible .

so in this hypothetical example the wife would get her 70 benefit . he would get his early 64 benefit as one component , the adder of 365 is reduced 25/36 of one percent for each month before 67, up to 36 months. If the number of months exceeds 36, then the benefit is further reduced 5/12 of one percent per month.

if it was a more typical closer age situation and he was able to hit fra before taking spousal the calculation is much more simple .

it is just 1/2 the primary amount less the primary amount of the lower spouse . any difference is added to his own benefit .

what makes deciding when to co-ordinate the filing is there are two moving targets .

while me filing gets my wife her spousal adder faster , the fact i get reduced more taking it sooner can offset the spousal gain .

so we will balance it out with me taking ss at 65 . i am concerned about medicare increasing a lot more for me if i don't file .

we could get the biggest bang for the buck with me filing restricted application and waiting until 70 but since we are pretty good financially i see no point running until 70 before taking mine and her getting spousal .

i intentionally picked 65 because i still like doing consulting work 1 day a week and occasionally helping out on some big projects . the year before you are fra special rules apply and you can earn like 2x what you can in earlier years if collecting before having to give back money

[MBSC]

Quote:

Originally Posted by Sunset And this extra cost of Medicare would be forever charged, so it's equivalent to a permanent reduction in delayed SS.

Not forever but until inflation is high enough to reset everyone at the standard Part B premium, excluding IRMAA.

Quote:

In 2010 and 2011, with no Social Security COLA, the hold‐harmless provision prevented the majority of Medicare beneficiaries from paying any increase in Part B premiums. Thus, in both 2010 and 2011, the majority of Medicare beneficiaries paid monthly premiums of $96.40, which was the standard Part B premium amount in 2009. Roughly one‐quarter of all Part B enrollees were not held harmless in 2010 and 2011, including new Medicare enrollees (3 percent); higher‐income beneficiaries (5 percent); and Medicare beneficiaries who do not have their Part B premium deducted from their Social Security benefit payment (19 percent) – this group consists mainly of beneficiaries dually eligible for Medicare and Medicaid, for whom Medicaid pays the monthly Part B premium (17 percent). These beneficiaries were subject to a higher Part B premium than those who were protected by the hold‐harmless provision to ensure that Part B enrollee premium contributions continued to cover 25 percent of program costs. The standard monthly premium for these beneficiaries was $110.50 in 2010 and $115.40 in 2011. With a 3.6 percent increase in the Social Security COLA scheduled for 2012, fewer beneficiaries will be affected by the hold-harmless provision, and the beneficiary portion of annual Part B expenditures will be spread across a greater share of Part B enrollees than in 2010 and 2011. This results in a monthly Part B premium of $99.90 in 2012 – an increase for the majority of beneficiaries who have been protected by the hold‐harmless provision in 2010 and 2011 who were paying $96.40, and a decrease for all others who were paying the standard amount in both years. The monthly Medicare Part B premium for those who have been paying the 2011 standard Part B premium (i.e., not protected by the hold‐harmless provision this year) will decrease by $15.50 per month, from $115.40 to $99.90 (a 13.4 percent decrease). For those who have been paying the 2010 standard Part B premium (e.g., beneficiaries who enrolled in Medicare in 2010), the monthly Part B premium will decrease by $10.60 per month, from $110.50 to $99.90 (a 9.6 percent decrease). Reference: https://kaiserfamilyfoundation.files...b-premiums.pdf

[Independent]

Quote:

Originally Posted by mathjak107 so in this case the base adder would be 1365 minus 1500 , in which case there will never be spousal .

Thanks.

I wanted to highlight this part of your post because there's a (very slim) chance that the original poster has had the patience to read all the way to this point.

If so, the correct answer to the original question is:

"Your husband will not qualify for a spousal benefit because his PIA is more than 50% of your PIA. So, don't waste time trying to understand spousal benefit rules."

I think we agree on that.

[mathjak107]

yep , now that i got their numbers correct we agree

[Independent]

Quote:

Originally Posted by mathjak107 but just for the education lets assume it was the 1k i thought it was . so the scenario would shake out that assuming his was 1k and not 1500 , the spousal base amount would be 1365-minus 1000 which leaves a spousal benefit of 365 left . but that 365 will be reduced if he takes it earlier than fra . the earliest he could file would be 62 which makes her 68 . at 62 if he filed first he would get only his benefit at first . there is no 2nd componenant until she files . so actually she could wait 2 years until he is 64 to file and the 365 will not be reduced as much as at 62 . so the closest he could get to fra is 64 and her 70 .

And, I agree with this. He cannot postpone to fra because of the six year age difference.

In general, it seems that with the new rules, the choices for spousal benefit are very restricted.

I'll use "he" to represent the lower earning spouse and "she" to represent the higher earning spouse.

Either:
- she starts first, and he has to start spousal benefits as soon as he starts his own benefits, or
- he starts first, and he has to start spousal benefits as soon as she starts her benefits.

Those statements are true regardless of the relative ages, though the relative ages will determine how much choice the couple has on start-benefit dates.

Is that the way you see it?

[mathjak107]

i think that if you are eligible for spousal once your spouse files that it would be in your best interest to take it asap as it will be higher than your own early benefit .

don't forget you always get your early benefit anyway if pre fra so any reduction on the spousal adder is on additional money you are not getting yet .

[Independent]

Quote:

Originally Posted by mathjak107 i think that if you are eligible for spousal once your spouse files that it would be in your best interest to take it asap as it will be higher than your own early benefit . don't forget you always get your early benefit anyway if pre fra so any reduction on the spousal adder is on additional money you are not getting yet .

I won't try to sort out the trade offs between getting a spousal benefit earlier at a lower monthly rate or later at a higher monthly rate.

I just think that with the new deeming rules, people don't have the choice.

[mathjak107]

me neither but i don't see how taking spousal early would be lower unless it was a very very small amount .. the biggest difference would be that your spouse has to file so if they file early so you can get spousal earlier they are taking a 6-8% hit per year in their own benefit .

remember you already are keeping your early benefit with or without spousal and the further reduction is on the spousal portion for the most part .

but i have no desire to start doing the math since most are taking spousal based on when the higher earner decides to file anyway since they don't have a choice at that point . .