Ask Larry: Should I Collect Early To Be Held Harmless?

Social Security may be one of your largest assets. What and when you collect will make a huge difference to your lifetime benefits.

Today's Ask Larry column explores whether whether being held harmless regarding Medicare premiums is worth it, the availability of different benefits and effects of the new law among other questions.

You can submit a question by clicking on the link on our homepage at Maximize My Social Security.

Should I Collect Early To Be Held Harmless?

Larry, I'm now 69 and did the file and suspend with my wife getting her SS as a non-working spouse when she turned 66 in 2013. I pay my Medicare every 3 months by credit card. This year 2016, my Medicare went up because I send in the payments due to the file and suspend, as I await 70. The medicare payment went up for me and not my wife since hers is deducted for her SS payment. As I see now the CPI appears to be low for 2016 and if I wait till my April 2017 birthday (70). I would most likely get another increase on Medicare Payments. Am I ahead or should I file in Nov. to lock in the (hold harmless) amount for Medicare? I thought that I read some where that people will have to repay the difference in this years Medicare amounts. Should I go for my 70 amount or is Medicare payments a mute point? Thanks, Lloyd

Hi Lloyd, I think a good answer may (emphasis on may) be to start your retirement benefit as of this November. I believe that will permit you to be held harmless for next year with respect to the Medicare Part B premium increase. This will come at a permanently lower retirement benefit and you'll have wait a year to collect this year's DRCs (because you are taking your retirement benefit before you actually hit 70). I'm presuming you won't be 70 until after November. If you do reach 70 before November, you don't have to worry about this. I recommend running expert software to see what you'll lose in lifetime Social Security benefits and then thinking through what I believe will just be temporary gains from being held harmless. I.e., my understanding is that those that are held harmless will see smaller Social Security COLAs down the road until they are paying the same Part B premium as those not held harmless. Best, Larry

Did I Make The Right Choice?

Hi, I received divorced spousal benefits at 66 (the age I thought I was eligible) - could I have gotten those benefits earlier (though a moot point now)? I have now taken my own benefit (turning 70) and took the option 1 (six month back payout and a little bit less each month than if waited till 70th birthday). Finally, Medicare was paid twice for those six months - (was deducted from the payout) - how to I get that reimbursed? Thanks, Lucia

Hi Lucia, you had to wait until full retirement age, or 66, to file just for divorced spousal benefits without also being deemed to have applied on your own. So, that was the right thing to do. You probably would have been better off in the long run to have waited until age 70 to start drawing on your own record, instead of choosing the 6 month back pay in return for a 4% lower monthly benefit amount. The duplicate Medicare withholding should be automatically refunded to you within a few months. If it isn't, you will need to follow up with Social Security. Best, Jerry

Can I Draw Benefits On My Husband's Record?

Hi, I retired at age 60 from a job earning about $46,000 a year. Since I worked for a school district I am collecting on my PERS (Public Employees Retirement System). My husband retired from the certificated sector of education so he is collecting on his STRS (State Teachers Retirement System). I am planning on waiting until the age of 70 to begin collecting on my Social Security. Is this the best I can do? Also, what about any Social Security taxes my husband has contributed over his lifetime? Can I collect on that even though he is not allowed? Thanks, Paula

Hi Paula, if you and your husband each have at least 40 quarters of coverage under Social Security, you can receive benefits on your own records, even though they'll likely be reduced due to the WEP provision - see here for more on the WEP. Waiting until age 70 to start your Social Security will yield the highest possible monthly benefit amount. Note that WEP only affects benefits payable on a person's own record.

It sounds unlikely that you would be able to receive any benefits from your husband's record. This is due to the GPO provision - see here for more on the GPO. Under this provision, an amount equal to 2/3rds of the spouse's non-covered government pension is deducted from the amount of any Social Security spousal or widow(er)'s benefits for which they may qualify. This often causes the amount payable to be reduced to zero. Best, Jerry

What Happens To Child In Care Benefits If The Spouse Has Earnings?

Hi, one spouse is fully retired and receiving benefits. The partner's working spouse and dependent child (age 4) are receiving benefits. If the spouse's increasing income begins to exceed the income limits, what happens to (a) the spouse's benefits and (b) the child's benefits? Can the child still be eligible? Thanks, Clyde

Hi Clyde, I assume you mean that a working spouse and child are drawing auxiliary benefits on the account of the fully retired individual. If that's the case, the child's benefits would not be reduced regardless of how much the working spouse earns. In fact, if some or all of the spouse's benefits are withheld due to the earnings test - see here for more on the earnings test - the child's benefits may even increase if their benefit rate is being reduced due to the family maximum. Best, Jerry

Can I Stay On Child In Care Benefits Until Age 70?

Hi, our son is a disabled adult now collecting a Disabled Adult Child (DAC) benefit based on my wife's earnings history. She was born in June 1950 and started her Social Security retirement benefit early just after she turned 62. I was born in April 1954 and I am collecting a child-in-care spousal benefit based on my wife's benefit which I began collecting when she filed for her retirement benefit, even though I was under age 62. My PIA will be about twice as high as my wife's benefit and our plan before the law changes was for me to defer my retirement benefit until age 70 since I would be able to continue getting my child-in care spousal benefit until then without triggering deeming.

Does this strategy still work after the recent law changes or will I be deemed to have selected my retirement benefit when I reached age 62 in April 2016? I have not heard anything from the SSA nor have I read anything that leads me to believe that the deeming rules changed in our situation. Am I correct? Since my wife started her benefit just after 62, I figure that my deferring to age 70 makes sense if I can continue collecting my child-in-care spousal benefit until then. Does this make sense? Thanks, Charles.

Hi Charles, that's a good question, and one that I can't answer with certainty until SSA updates their operations manual to incorporate the new law. However, based on the 'NOTE' at the end of section B of the emergency instructions issued to SSA employees in February of this year, I believe that you will be deemed to have filed for retirement benefits on your own account when you reach full retirement age (FRA) at 66.

Under the old rules, conversion from child in care to regular spousal benefits at FRA would not have triggered deeming, but since you turned age 62 after January 1 2016, I believe you will fall under the new rules on deeming. This seems particularly unfair for a person such as yourself, who filed prior to passage of the new law, so perhaps SSA will add some type of exception when the new law is finally incorporated into their operating instructions.

Your original strategy of waiting until age 70 made perfect sense, and perhaps it will still be permitted when everything is sorted out. If not, and if you are deemed to have applied for your own benefits when you reach age 66, your son should file for disabled adult child's benefits on your record at that time.

Best, Jerry

Can I Work Part-Time And Still Receive Reduced Social Security Benefits?

Hi, I was getting ready to file an application for early Social Security benefits. I am 61 and 9 months. My husband is 53 and collects disability due to blindness, if we really needed the money badly. Because of family health issues and taking care of family I have not worked for the last six years. I just got an offer for a job part-time at a local store, and since my father died in January I have decided to take the part time job. Is it okay that I go ahead forward with my application for Social Security and go ahead and work at the same time? Or is it best to go ahead and work part-time and not file for my early Social Security at this time? We really need more money to live on, what is best for us at this point? I'm so confused. Thanks, Ellen

Hi Ellen, I'm sorry for your loss. The answer to whether or not you are able to receive reduced benefits and still work part-time depends on how much you earn. If you earn less than $15720 per year, it's not a problem. If you earn more than that, you may still be able to receive some benefits. Social Security will withhold $1 of your reduced benefits for each $2 that you earn in excess of $15720 - see here for more on the earnings test.

Whether it's best for you to apply for reduced benefits is a personal decision that depends largely on your life expectancy and financial situation. In return for taking early benefits, you will be opting for a lower monthly benefit rate, which will continue for at least as long as both you and your husband are living. You may wish to consider running expert software available in order to get a better understanding of your filing options, and their long term effects. Best, Jerry

To learn more about your Social Security options, visit Maximize My Social Security.