Social Security benefits can be tough to uncover

Dec. 27—Social Security has been in existence since the signing of the Social Security Act on Aug. 14, 1935, and the first lump-sum payments were made that same month, with ongoing payments starting in January 1940.

Full retirement age depends on what year a person is born. If born in 1937 or earlier, that age is 65. For those born between 1943-1954, it is 66, and between 1955 and 1959, the full retirement age increases gradually until it reaches age 67, for those born in 1960 or later.

"That is full retirement age, and if a person decides to wait until age 72 [to collect Social Security], it doesn't affect your Social Security [payments] that much. Most people do it just to stay busy," said Jennifer Schnitzer, CPA with Williams and Williams CPAs.

A person can start receiving early Social Security payments after age 62, and that's something to consider, Schnitzer said.

"Depending on health or life expectancy with your family [history], see what you would receive at 62 or if it's better to wait until 65 or 67," Schnitzer said.

For those who have started their own businesses, for example, it might be better to begin receiving it at 62 rather than waiting until 65 or 67, Schnitzer said.

"Once you start receiving it early, that cannot be changed. However, a person should look at the difference in payments to make the decision. It might be just a few hundred dollars difference per month if you wait for three years," Schnitzer said.

At the end of every year, people begin seeing ads for freebies that supposedly come with those who chose the Advantage Plan as their insurance with Medicare.

"We have people who call us and ask us and I tell them, 'If it's too good to be true, it's probably not true," Schnitzer said.

An article in The Oklahoman by Jim Miller Nov. 7, titled "Savvy Senior: Medicare Advantage ads aren't always what they claim to be," addresses the numerous ads seniors see regarding the bennies a person can receive with an Advantage plan.

"But be aware that the federal government has deemed many claims in [Medicare] ads fraudulent and misleading. Some ads imply that the Centers for Medicare and Medicaid Services endorses or prefers a specific plan. Others promise more cost savings than you really get. And if you choose the wrong plan, your doctor may not be a member of that plan's network, or you may end up paying out-of-pocket for medically necessary care," states the article.

The freebies touted as benefits are free vision, hearing and dental benefits.

"For example, a plan that offers free dental coverage may cover only cleanings and X-rays. Extensive procedures such as root canals or caps may not be covered, or the plan may limit the dollar amount it pays. Find out the coverage details so you're not surprised late," states the article.

Look where the information is coming from, Schnitzer said. If it is coming up on a Facebook feed, it probably isn't legit and is likely a way for the ad producer to get personal information.

Schnitzer recommends speaking to an insurance representative to get all of the facts. One detail someone might miss is the need to subscribe to a prescription plan when signing up for Medicare. A penalty can be applied based upon the number of years one does not subscribe to a plan, and that penalty is paid by the Medicare recipient forever — it never goes away.

"When you do research, there is way too much information and sites that proclaim falsehoods such as the ads for [benefits with an Advantage plan]," Schnitzer said.

Income limits apply for those who take early retirement. In 2023, a person can earn $21,240 without paying added tax. For 2024, that amount is $22,320, Schnitzer said.

The amount of Social Security will be lowered $1 for every $2 the recipient is over the limit of income, Schnitzer said.

"They will send a form to your employer and find out how much you are over every month, and it may only be over a couple of those months," Schnitzer said.

Once a person reaches full retirement age, the Social Security amount is not affected, but the income earned is taxable. People who only have Social Security income do not have to file income taxes, Schnitzer said.

Ronnie Hopkins, a retired individual, has been working for years at bringing the issues that face recipients of Social Security to the forefront.

"I call it Social Insecurity," Hopkins said. "I have talked to a lot of folks running for political office, both on the Republican and Democratic side, and none of them want to do anything. Their answer is they want to raise the tax, raise the retirement age, or means-test."

A means test is a determination of whether an individual or family is eligible for government assistance or welfare, based upon whether the person possesses the means to do without that help.

"For example, you start out poor in life, as many of us do, and you invest in a good retirement fund and this company has a good amount of money set aside for you, and you reach retirement age, and [the government] will reduce your benefits on the Social Security side," Ronnie said.

Ronnie posed the question: "Since an individual pays into this program all their working life, why would the government reduce that because they have had the wherewithal to develop a retirement plan that includes something like a 401K?"

What's next

More on the topic of Social Security, including information from the research and work Ronnie Hopkins has done on the subject, will appear in the weekend TDP, Dec. 30-31.

Learn more

Call the local State Health Insurance Assistance Program (SHIP) at ShipHelp.org or call 877-839-2775. These are nonprofit programs that provide unbiased one-on-one Medicare counseling and assistance. Misleading MA claims can be reported to the Senior Medicare Patrol Resource Center at SMPResource.org or by calling 800-447-8477.

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