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Medicare vs. Social Security: A Complete Guide for Beginners

Are you retiring soon and struggling to learn the differences between Medicare and Social Security? How do they work? Are they connected? What are the eligibility requirements for each?

Medicare and Social Security serve older and disabled Americans but have different purposes, funding, eligibility requirements, and administration.

This article defines Medicare and Social Security and explores their differences and similarities to offer insights on the programs that can impact your finances in retirement. 

What is Medicare?

Medicare is a health insurance program funded by the federal government to subsidize healthcare services. The program covers people aged 65 and above and younger individuals with kidney failure or disabilities who meet specific eligibility criteria.

Eligibility for Medicare Coverage

Before you enroll in Medicare, you need to meet the following conditions:

  • You qualify for Medicare at age 65 if you or your spouse have paid payroll taxes for at least 10 years
  • Younger Americans with disabilities and permanent kidney failure
  • Must be a United States citizen or a permanent legal resident 

Types of Medicare Coverage

Medicare features four parts that cover specific services. Parts A and B, also known as the original Medicare, and parts C and D, the newer options, provide additional coverage.

  • Medicare Part A (Hospital Insurance): Covers services like hospice care, home health care, and in-patient care in a skilled nursing facility or hospital.
  • Medicare Part B (Medical Insurance): Provides coverage for medical supplies, preventive care, and doctors’ visits.
  • Medicare Part C: Also known as Medicare Advantage, it’s a voluntary plan sold by private insurance companies under contract from Medicare. The Medicare Advantage plans provide coverage of the original Medicare and offer additional benefits like vision, dental, and prescription drugs. The plans are provided regionally, so benefits and coverage can vary based on location.
  • Medicare Part D: Covers prescription drug costs and is provided by private insurers through payments of monthly premiums.
  • Medicare Supplement (Medigap) Plans: Provides coverage for the “gaps” in Part A and Part B coverage for an additional monthly premium.

When to Claim Medicare Benefits

If you’re soon turning 65 years old and not collecting social security, you can enroll for Medicare coverage up to three months before your 65th birthday. To avoid permanent penalties, make sure to finish the process by the 3rd month after your birthday. That gives you a seven month window for initial enrollment at age 65.

How to Enroll in Medicare

If you’re not already enrolled in Medicare coverage Parts A and B, you can sign up in the following periods:

  • Initial Enrollment Period: The enrollment period runs three months before your birthday, your birthday month, and three months after your birthday.
  • General Enrollment Period: If you miss your initial enrollment window, use the general enrollment period that runs from 1st January to 31st March.

What is Social Security?

Social Security is a program that pays retirement benefits to retired American citizens or people with disabilities. The Social Security Administration (SSA) manages the program and deducts funds to pay Social Security from your paycheck while working.

You receive social security retirement benefits once you attain the qualifying age and stop working or when you can’t work due to disability. The amount you receive depends on how much you earn when working.

Eligibility for Social Security?

Developing a financial retirement plan.
Developing a financial retirement plan.

Social security offers different retirement benefits that can make up a third of your monthly income.

Here are ways you can qualify for Social Security retirement benefits:

  • You must be at least 62 years old or have a chronic disability
  • Must have worked at least for 10 years and earned the requisite 40 credits with withheld Social Security taxes
  • If your spouse or ex-spouse has worked for 10 or more years and holds a good record

Social Security benefits are available for spouses, former spouses, people with disabilities, and children. If a loved one passes on, you may qualify for survivor benefits. To learn more, consult your financial consultant or tax professional.

When to Claim Social Security Benefits?

The right time to claim your social security depends entirely on you. You can file your Social Security claim at 62 years. However, that will result in lower total benefits you or the surviving spouse will receive over a lifetime. It’s a factor to consider since women earn less and live longer than men.

Here are the different types of claims you can make:

Early Claiming: You collect your Social Security retirement benefit at 62 years, but the benefits can be reduced by as much as 25-30%, depending on the birth year.

Full Retirement Age: Defines the age at which you can claim your full retirement benefits and varies depending on the year of birth. It’s 66 years for people born between 1943-1954 and 67 years for people born in 1960 and later.

Delayed Claiming: You file for your retirement benefits after attaining your full retirement age. Delayed claims can increase your monthly benefits by 24-32%, depending on your full retirement age until the age of 70. After attaining 70 years, there is no increase in benefits.

Differences Between Medicare and Social Security

Here are the differences between Medicare and Social Security:

Whom they serve: Medicare covers health care costs while Social Security provides financial assistance to cover the cost-of-living expenses for people with disabilities and retirees.

Eligibility: Social Security and Medicare have different eligibility requirements though some are linked. Understand the requirements before you sign up. You can apply by telephone or online or request an in-person visit with the Social Security Administration. 

Administration: The Medicaid Services and Centers for Medicare handle Medicare Services, while Social Security Administration manages the Social Services.

Similarities Between Medicare and Social Security

Social Security and Medicare have many things in common, for they are federally funded insurance programs offering assistance to similar groups or people. Most people on Medicare are also beneficiaries of Social Security benefits.

One unique cross-over between Social Security and Medicare is that you have to enroll in Medicare through Social Security Administration. It misleads people to believe they are the same. Another area where these two programs intersect is that your Medicare Part B, Part C, and Part D premiums can be automatically deducted from your Social Security check.

Are you facing challenges while applying for Medicare? Do you need a tried and tested partner to educate and guide you on the process at your own pace? Schedule a call, book an appointment or download a cheat sheet today. We offer our services in all 50 states at no cost to you.

Contact us today. We have been helping seniors understand Medicare for over 40 years.

Sylvia Gordon, aka Medicare Mama, is an expert on all things Medicare and Social Security. She is the 2nd Generation here at The Medicare Family as well as a member of the Forbes Finance Council. Sylvia has served on the advisory boards of major insurance companies like United Healthcare, Cigna, Anthem, Globe Life, and Aetna Senior Supplemental Benefits. 

In her free time, she can be found taking care of her many animals (dogs, goats, peacocks, chickens) and reading a good book. Follow her on TikTok and YouTube.

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