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Social Security Benefits
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Social Security Rates Changing
12-31-05 For FERS employees, the Social Security maximum wage base is rising from $90,000 to $94,200. That is the portion of their salaries on which they pay the 6.2 percent "FICA" tax – there is no limit on the 1.45 percent Medicare tax paid by both FERS and CSRS employees. Also, for those retired under FERS, the earnings test applying to Social Security beneficiaries aged 62-through "full retirement age" – for 2006 it is 65 and eight months – is increasing from $12,000 to $12.480. Those beneficiaries lose $1 in Social Security benefits for every $2 in earnings through employment or self-employment above the limit.
A separate earnings test applies only to earnings for months in the year an individual reaches full retirement age prior to the individual attaining that age. One dollar benefits will be withheld for every $3 in earnings above $33,240. There is no limit on earnings beginning the month an individual attains full retirement age. In addition, the amount of Social Security earnings needed for such earnings to be "substantial" for purposes of the windfall elimination provision will be $17,475. [FedNews Weekly Newsletter, Dec 28]
Medicare Costs Rise
12-31-05 The monthly premium paid by those receiving Medicare Part B (primarily physicians' services) benefits are rising from $78.20 to $88.50. The Part B annual deductible will rise to $124, the Part A (hospital insurance) deductible is rising to $952 for the first 50 days per benefit period and the coinsurance requirements is increasing to $238 a day for the 61st-90th day per benefit period and to $476 a day above 90 days. Those new figures represent increases of several dollars each. [FedNews Weekly Newsletter, Dec 28]
Medicare and TRICARE Info for Retirees
Retirees are reminded that their TRICARE Standard coverage stops when the retiree reaches age 65. This coverage reimburses 75% of civilian health care costs and retirees should keep in mind the increased use of Korean hospitals for health care that is beyond the capabilities of the military treatment facilities (MTF). By enrolling in Medicare Part B, you automatically continue your TRICARE coverage with TRICARE for Life. Even though you must pay for Korean civilian health care out of pocket, with TRICARE for Life you'll be able to get back 75% of that money after meeting the annual deductible. If you have serious medical problems and return to the U.S. for treatment, the combination of Medicare and TRICARE for Life will cover virtually all your medical expenses.
Starting with people born in 1938, the eligibility age for 100% Social Security retirement benefits will gradually increase. This delay does not change the need to sign up for Medicare Part B at age 65. The signup period starts three months before your birth month and continues to three months following your birth month. If you don't sign up during this period, you cannot enroll until the next open enrollment period, Jan 1-Mar 31 with benefits starting the following July. Each year of delay adds a 10% penalty to the monthly premium. The form to sign up for Medicare Part B is located in Applying for ..., at the left.
Eventually, the full retirement age will be 67 (for those born in 1960 and later). But, even if you don't start receiving Social Security benefits starting at age 65, you will need to arrange a payment plan when you sign up for Medicare Part B prior to receiving Social Security benefits. As a reminder, the 2003 monthly premium for Part B is $58.70.
Social Security Benefits for Widows
8-08-02 The May issue of The Retired Officer Magazine contained an article on page 58 regarding Social Security and the Survivor Benefit Plan. The article described widow's Social Security benefits that contained an error. The Social Security Administration Baltimore office provided the correct information to the MRAO as follows:
Widow's Age |
Benefits* |
|
60 |
71.5% |
|
61 |
77.2% |
|
62 |
82.9% |
|
63 |
88.6% |
|
64 |
94.3% |
|
65 |
100% |
* The magazine article implies that the widow will receive these percentages of the worker's full benefit. The Baltimore office clarified that the worker's full benefit to the widow only applies if the worker was receiving full Social Security benefits or did not receive benefits at all. Otherwise, the widow's benefits may be reduced based on the actual amount of reduced Social Security benefits the worker was receiving.
Social Security for Korean Non-resident Aliens
6-02-02 The U.S.-Korea Totalization Agreement of Apr 1, 2001 on Social Security removed the requirement for non-resident alien Korean citizens to have lived in the U.S. for five years. Korean citizen spouses of U.S. military retirees are now eligible to claim Social Security benefits at age 62, as long as the person who earned the work credits is also eligible to receive benefits. What this means is that if you are 60 and your wife is 62, she cannot file for benefits on your work record until you reach age 62, i.e., when she is 64. You do not have to actually be receiving Social Security, you just have to be eligible. This change also affects those widows who, up to now, have been ineligible to receive Social Security if they had not met the five-year residency requirement. Widows are eligible for Social Security at age 60. Keep in mind that the earlier you file, the lower the benefits.
The Totalization Agreement also allows U.S. workers who contributed to the Korean Pension System to count that work towards their U.S. Social Security eligibility requirement of 40 quarters of work. Korean citizens can similarly use work for which they contributed to the U.S. Social Security toward their eligibility in the Korean Pension System.
