10th edition Social Security, Medicare & Government Pensions By Joseph L. Matthews with Dorothy Matthews Berman TENTH EDITION JANUARY 2005 EDITOR ILONA BRAY COVER DESIGN TONI IHARA BOOK DESIGN JACKIE MANCUSO PRODUCTION SARAH HINMAN INDEX BAYSIDE INDEXING SERVICE PROOFREADER ROBERT WELLS PRINTING DELTA PRINTING SOLUTIONS, INC. Matthews, J. L., 1946- Social security, medicare & government pensions / by Joseph L. Matthews with Dorothy Matthews Berman.— 10th ed. p. cm. Includes index. ISBN 1-4133-0154-1 (alk. paper) 1. Social security—Law and legislation—United States—Popular works. 2. Medicare—Popular works. 3. Pensions—Law and legislation—United States—Popular works. I. Title: Social security, medicare, and government pensions. II. Berman, Dorothy Matthews. III. Title. KF3650.M37 2005 344.7302'3—dc22 2004065446 ALL RIGHTS RESERVED. Printed in the U.S.A. Copyright © 1986, 1988, 1990, 1991, 1993, 1994, 1996, 1999, 2000, 2002, 2004, and 2005 by Joseph L. Matthews No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without the prior written permission of the publisher and the authors. For information on bulk purchases or corporate premium sales, please contact the Special Sales department. For academic sales or textbook adoptions, ask for Academic Sales, 800-955-4775, Nolo, 950 Parker Street, Berkeley, CA 94710. Acknowledgments Many thanks to Barbara Kate Repa for her considerable and thoughtful input to the content and structure of this book, and for her thorough editorial work on various drafts of the manuscript. Later editions owe a large measure of thanks to Spencer Sherman, whose ideas for improvements to the book were extremely helpful, and to Ilona Bray, who has guided the latest incarnations into existence with clarity and graciousness. Special thanks go to the National Council of Senior Citizens in Washington, DC, for many helpful suggestions on the original edition of the book, and to Bruce Campbell, Karen Fuller, and Sue Schwab of the Health Care Financing Administration office in San Francisco for their assistance in sorting out the many state variations in Medicaid. Special thanks also to the Health Insurance Counseling and Advocacy Program and Legal Assistance for Seniors office in Oakland, California, as much for their example in tirelessly serving the interests of low-income seniors as for their suggestions for improving this book. Contents Introduction 1 Social Security: The Basics A. History of Social Security 1/3 B. Social Security Defined 1/5 C. Eligibility for Benefits 1/6 D. Earning Work Credits 1/11 E. Determining Your Benefit Amount 1/13 F. Your Social Security Earnings Record 1/15 G. Reading Your Social Security Statement 1/17 H. Correcting Your Record 1/21 I. U.S. Citizens’ Rights to Receive Benefits While Living Abroad 1/23 J. Receiving Benefits as a Noncitizen 1/23 2 Social Security Retirement Benefits A. Work Credits Required 2/2 B. Timing Your Retirement 2/4 C. The Amount of Your Retirement Check 2/11 D. Working After Claiming Retirement Benefits 2/14 3 Social Security Disability Benefits A. Who Is Eligible 3/3 B. What Is a Disability 3/6 C. Amount of Disability Benefit Payments 3/11 D. Collecting Additional Benefits 3/13 E. Review of Your Eligibility 3/15 F. Returning to Work 3/16 4 Social Security Dependents Benefits A. Who Is Eligible 4/2 B. Calculating Dependents Benefits 4/4 C. Eligibility for More Than One Benefit 4/5 D. Working While Receiving Benefits 4/6 E. Public Employee Pension Offset 4/6 5 Social Security Survivors Benefits A. Who Is Eligible 5/2 B. Whether the Deceased Had Enough Work Credits 5/3 C. Amount of Survivors Benefits 5/5 D. Eligibility for More Than One Benefit 5/7 E. Working While Receiving Benefits 5/8 F. Offset for Public Employment Pension 5/9 6 Supplemental Security Income A. Who Is Eligible 6/2 B. Benefit Amounts 6/7 C. Reductions to Benefits 6/9 7 Applying for Benefits A. Retirement, Dependents, and Survivors Benefits 7/2 B. Disability Benefits 7/8 C. Supplemental Security Income (SSI) 7/12 D. Finding Out What Happens to Your Claim 7/13 8 Appealing a Social Security Decision A. Reconsideration of Decision 8/3 B. Administrative Hearing 8/8 C. Appeal to the National Appeals Council 8/13 D. Lawsuit in Federal Court 8/14 E. Lawyers and Other Assistance 8/16 9 Federal Civil Service Retirement Benefits A. Two Retirement Systems: CSRS and FERS 9/3 B. Retirement Benefits 9/3 C. Disability Benefits to Federal Workers 9/14 D. Payments to Surviving Family Members 9/16 E. Applying for CSRS or FERS Benefits 9/18 10 Veterans Benefits A. Types of Military Service Required 10/2 B. Compensation for Service-Connected Disability 10/3 C. Pension Benefits for Financially Needy Disabled Veterans 10/6 D. Survivors Benefits 10/6 E. Medical Treatment 10/7 F. Getting Information and Applying for Benefits 10/9 11 Medicare A. The Medicare Maze 11/4 B. Medicare: The Basics 11/5 C. Part A Hospital Insurance 11/9 D. How Much Medicare Part A Pays 11/18 E. Part B Medical Insurance 11/23 F. How Much Medicare Part B Pays 11/32 G. Help With Prescription Drug Costs 11/38 12 Medicare Procedures: Enrollment, Claims, and Appeals A. Enrolling in Part A Hospital Insurance 12/2 B. Enrolling in Part B Medical Insurance 12/5 C. Medicare’s Payment of Your Medical Bills 12/6 D. Paying Your Share of the Bill 12/10 E. How to Read a Medicare Summary Notice 12/11 F. Appealing the Denial of a Claim 12/15 G. State Health Insurance Assistance Programs (SHIP) 12/29 13 Medigap Insurance A. Gaps in Medicare 13/3 B. Standard Medigap Benefit Plans 13/4 C. Terms and Conditions of Medigap Policies 13/13 D. Finding the Best Medicare Supplement 13/17 14 Medicare Managed Care Plans A. The Structure of Managed Care 14/3 B. Choosing a Medicare Managed Care Plan 14/6 C. Comparing Medigap and Managed Care Plans 14/13 D. Your Rights When Joining, Leaving, or Losing Managed Care Coverage 14/16 15 Medicaid and State Supplements to Medicare A. Medicaid Defined 15/3 B. Who Is Eligible 15/3 C. Medical Costs Covered by Medicaid 15/7 D. Requirements for Coverage 15/8 E. Cost of Medicaid Coverage 15/9 F. Other State Assistance 15/11 G. Applying for Medicaid, QMB, SLMB, or QI 15/12 H. What to Do If You Are Denied Coverage 15/14 Index H o w t o U s e T h i s B o o k INTRO / 1 INTRODUCTION How to Use This Book A re you approaching retirement, or are you disabled? Do you help support someone who is? If so, you may be facing a series of problems for which you are unprepared: getting the most retirement and pension income and obtaining the broadest medical coverage you can afford. People in their retirement years may have access to a wide variety of programs to help with finan- cial support and medical care. But many people are unaware of the extent of such programs, or are unable to wade through the programs’ rules and regulations, and so do not receive all the benefits they could. For people who are or soon will be on fixed incomes, the unnecessary loss of benefits and protection can cause critical problems. This book is intended to help you get all the benefits to which you are entitled: Social Security (both retirement and disability based), Supplemental Security Income, veterans benefits, and civil service benefits. Most people are particularly concerned with getting the broadest possible medical coverage they can afford—knowing well that a serious medical problem can cost a fortune. Almost everyone is aware that Medicare is available, but few people understand how it works and what it does and does not cover. This book carefully, completely, and in plain language explains Medicare rules and regulations. It also explains how the holes in Medicare can be filled by medigap private insurance, managed care health plans, Medicaid, and veterans benefits. Locating Chapters That Fit Your Needs Each chapter in this book explains a different benefit program or set of laws designed to pro- tect the rights of older Americans. It explains how each particular program works, and how it may relate to the other programs discussed in the book. Not all of these benefits will apply to INTRO / 2 S o c i a l S e c u r i t y , M e d i c a r e a n d G o v e r n m e n t P e n s i o n s If You Are Age 55 or Older and Not Yet Retired • Find out how soon (at what age) you will become eligible for Social Security retirement benefits. (See Chapter 2, Section B.) • Learn how much your Social Security retire- ment benefits will be reduced if you retire early or increased if you retire later. (See Chapter 2, Sections B and C.) • Find out how much income you can earn without affecting your Social Security ben- efits. (See Chapter 2, Section D.) • See whether you can claim civil service retire- ment benefits if you have ever worked for the federal, state, or local government or any public agency or institution—school system, library, public health facility. (See Chapter 9, Sections A and B.) • Check the rules of your private pension plan—if you worked for any private com- pany that had a pension plan, or if you be- longed to any union—including whether your pension will be affected by your Social Security benefits. (Private pension plans are outside the scope of this book.) If You Are Within Six Months of Your 65th Birthday • Obtain a current estimate of what you’ll re- ceive in retirement and dependents benefits from Social Security, your civil service retire- ment system, and the private pension plan of any company where you’ve worked for at least three years, and from the Department of Veterans Affairs if you are a veteran. (See Chapter 1, Sections A and G; and Chapters 9 and 10.) you. However, even if you don’t think you are eligible for a particular benefit, take a look at the general requirements discussed in that chapter. You may be surprised to find that a program, or some part of it, applies to you in ways you had not previously realized. Pay special attention to explanations of how your income, or your par- ticipation in one benefit program, might affect your rights in another program. You have earned these benefits. A key word in this book is “entitled.” Almost all of the benefits discussed here are paid to you because you worked for them, paying contributions into the system throughout your working life. If you are an older American facing retirement and a fixed income, you need all the financial support these programs are supposed to provide. And you are entitled to it. Depending on your age and stage of life, there are a number of major issues you should consider as you first scan through the book. Private pensions and 401(k) deferred benefit plans are far more complex than can be covered in a book of this breadth. We recommend that you consult IRAs, 401(k)s & Other Retirement Plans: Taking Your Money Out, by Twila Slesnick and John C. Suttle (Nolo). [...]... Social Security, Medicare and Government Pensions 2 Coverage for Specific Workers There are special Social Security rules for coverage of some workers in certain sorts of employment c State and Local Government Workers Many state and local government workers are not covered by Social Security State government employees are usually covered by their own pension or retirement systems, and local government. .. Are Age 60 or Older and Are Considering Getting Married • Find out what effect marriage would have on your right and your intended spouse’s right to collect Social Security retirement, survi- INTRO / 4 Social Security, Medicare and Government Pensions vors, and dependents or disability benefits, and on the amount of those benefits (See Chapter 2, Section C; Chapter 4, Sections A and E; Chapter 5, Section... Depression of the 1930s Many millions of people were displaced—not only from job, home, and family, but from any hope for a place in the economy 1 / 4 Social Security, Medicare and Government Pensions 1 The Beginning of Social Security Faced with this crisis and with the possibility of massive social upheaval, Franklin Roosevelt and Congress decided to act Roosevelt pushed through a number of programs of national... the worker or worker’s family later seeks Social Security benefits, they may have trouble qualify- 1 / 10 Social Security, Medicare and Government Pensions ing and, if qualified, will have lower benefit amounts If you want your earnings from household work reported to Social Security, you have several options If you work for a number of different employers and make less than $1,000 per year from any... one more than a year ago and want a more recent estimate—you 1 / 16 Social Security, Medicare and Government Pensions may request one by filling out a simple form, SSA 7004, called a Request for Social Security Statement This form is available in English and Spanish There are several ways to get the request form It is available at the end of this chapter and at your local Social Security office, often... September, and October through December You had to earn a specific minimum amount of income to gain a work credit for that quarter • Between 1936 and 1978, you received one credit for each quarter in which you were paid $50 or more in wages in covered employment 1 / 12 Social Security, Medicare and Government Pensions • Between 1951 and 1978, you received one credit for each quarter in which you earned and. .. state and local government employees are covered by Social Security instead of—or in addition to—a state or PARS pension system This is because some state and local governments chose Social Security coverage for their workers instead of depending entirely on a system of their own If so, they and their workers pay at least some Social Security taxes And workers under these plans are entitled to Social. .. purposes People who earned more than the maximum taxable income since 1994 will have paid more into the Medicare system than into the regular Social Security system 1 / 20 Social Security, Medicare and Government Pensions Social Security: The Basics 1 / 21 their earnings reported under both unmarried and married names Regularly review your records Your benefits estimate is based on the average of your... Record and Estimated Benefits To help you keep track of your earnings record and estimate of benefits, the Social Security Administration mails out copies of individual Social Security records on what is called a Social Security Statement A Social Security Statement is supposed to be mailed to everyone age 40 and older who is not currently receiving Social Security benefits If you have not received a Social. .. file and pay these taxes, the employer will need the name of the employee as it appears on his or her Social Security card, the employee’s Social Security number, and the amount of wages paid Social Security: The Basics g Farmworkers Since 1954, farm and ranch work has been included in the Social Security system If you do crop or animal farmwork, your employer must report your earnings, and pay Social . security—Law and legislation—United States—Popular works. 2. Medicare Popular works. 3. Pensions Law and legislation—United States—Popular works. I. Title: Social security, medicare, and government pensions. . L., 1946- Social security, medicare & government pensions / by Joseph L. Matthews with Dorothy Matthews Berman.— 10th ed. p. cm. Includes index. ISBN 1-4133-0154-1 (alk. paper) 1. Social security—Law. aware that Medicare is available, but few people understand how it works and what it does and does not cover. This book carefully, completely, and in plain language explains Medicare rules and regulations.