This is the latest in a series of articles featuring Social Security claiming case studies drawn from the ALM publication "2025 Social Security & Medicare Facts," by Michael Thomas with support from Jim Blair, a former Social Security administrator, and Marc Kiner, a planning expert with extensive experience in public accounting.
The Scenario: Unequal Earnings and Medicare Considerations
Jerry is a high earner. His spouse, Lyn, has no earnings under Social Security and is not eligible for a benefit from her own record.
Jerry, born in April 1963, has a full retirement age of 67. At that time, his monthly workers benefit will be $3,017, and his projected longevity is just more than 85 years. Lyn was born in September 1958, giving her a full retirement age of 66 years and 8 months — although again, she has no earnings record of her own. Her projected longevity is just older than 87.
In this scenario, Lyn must wait for Jerry to file for benefits before she can file for spousal benefits. However, once Jerry turns 62, she will be able to enroll in Medicare Part A hospital insurance premium-free based on Jerry’s work record, whether he claims Social Security right away or not.
What the Numbers Say
Although the framework for accessing Medicare is somewhat complicated in this situation, Jerry and Lyn only have three primary Social Security claiming strategies to consider. The difference in projected lifetime benefits between the “best” and “worst” claiming strategies is about $50,000.
The least effective strategy for wealth maximization would see Jerry file in April 2033 at age 70 for his maximum workers benefit of $3,741. Lyn would file at the same time, at age 74, for her full spousal benefit of $1,508. This generates a lifetime benefit projection of $904,829 — a figure that would naturally increase if Lyn outlived her projected longevity and eventually collected a survivor benefit.
A nearly $32,000 bump in projected lifetime benefits comes from assuming that Jerry files in April 2030 for his full workers benefit of $3,017. This allows Lyn to file for her full spousal benefit of $1,508 at the same time, generating a projected lifetime benefit of $936,685.
Bucking the conventional wisdom that says delaying benefits is generally better, the most effective strategy would see Jerry file at age 62 in May 2025 for a reduced workers benefit of $2,124. This would allow Lyn to file for her full spousal benefit at the same time, generating a projected lifetime benefit for the couple of $957,192.
Medicare Part A
As explained in a Medicare Part A primer published by UnitedHealthcare, if an older non-working spouse is covered by the working spouse’s employer health insurance, they may want to enroll in premium-free Medicare Part A until the working spouse retires or their employer coverage ends.
This free coverage can be used as secondary insurance or for hospital, skilled nursing and hospice expenses that their spouse's policy may not cover.
Part B — along with its premium — can be added later without penalty during a special enrollment period, as long as the employer provides creditable coverage.
According to the health insurer, it’s important to note that the working spouse's age will affect when the non-working spouse qualifies for premium-free Medicare Part A. Generally, the working spouse must be at least 62 years old and eligible for Social Security benefits before their spouse can enroll, because their qualification is based on their spouse’s work record.
If the working spouse is younger than 62, the non-working spouse may still choose to pay the premium for Medicare Part A, if needed, until the premium-free benefit kicks in.
Credit: David Palmer/ALM
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