Posted on Friday, 3rd May 2013 by

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Norma, a federal employee that elected to collect Social Security while still working, commented on my last article on this subject.

She stated that while it is true you don’t decrease social security benefits if you are still working at age 66 or older you may be subject to taxes on some of the social security money you receive.

She states, “People will have to pay Federal taxes on their Social Security benefits if you file a Federal tax return as an individual and your total income is more than $25,000.  If you file a joint return, you will have to pay taxes if you and your spouse have a total income of more than $32,000. So I, for instance, have to pay taxes on anything I make over $32,000. The good news for getting around this is to max out your TSP with whatever you are getting for social security. If you are already maxed out you will end up paying additional taxes.”

It’s been costing Norma $5,000 to $7,000 in taxes a year because she initially didn’t put extra into her TSP account. However, this year she will owe nothing for social security when she does her federal taxes because she increased her TSP contributions for 2013.

The other good news is that each year you work while collecting you get an increase in your social security (Norma is getting about $45) as they drop her earliest years she worked and add the latest year.  This is in addition to the cola.  So by the time she reaches 70 Norma basically gained the 8 percent or so she would have received had she not started collecting.

Medicare Discussion (Part A and B)

Norma also provided insight into Medicare B (Medical Insurance). Norma had health expenses three years ago and signed up for Medicare B while still working. Now she has to pay the Medicare B plus her Blue Cross FEHB premiums.  She wasn’t sure how Medicare B affected her FEHB plan.  Since she is still working Blue Cross is her primary insurance and she is paying for Medicare (which also has a deductable) however only Blue Cross pays for her insurance.  She stated that, “Medicare to date has paid about $30.00 dollars over three years and until I retire and it becomes my primary I am wasting money paying the monthly premium.”

Many federal employees and retirees approaching age 65 are confused about Medicare; especially Medicare B and if it is worth paying the additional cost for Medicare B coverage when you have FEHB coverage.  If you are still working at age 65 and beyond your FEHB coverage is primary. When you retire at age 65 or older Medicare becomes your primary provider if you signed up for it and your FEHB plan becomes your supplemental coverage.

Note:  You don’t have to take Part B coverage if you don’t want it, and your FEHB plan can’t require you to take it. But, there are some advantages to enrolling in Part B. For example, you have the advantage of coordination of benefits between Medicare and your FEHB plan, reducing your out-of-pocket costs; your FEHB plan may waive its copayments, coinsurance, and deductibles for services and covered by Part B and some services covered by Part B might not be covered or are only partially covered by your plan, such as orthopedic and prosthetic devices, durable medical equipment, home health care, and medical supplies (check your plan brochure for details).

The FEHB health plan brochures explain how they coordinate benefits with Medicare, depending on the type of Medicare managed care plan you have. If you are eligible for Medicare coverage read this information carefully, as it will have a real bearing on your benefits.

The decision to enroll in Medicare is yours. OPM encourages you to apply for Medicare benefits 3 months before you turn age 65. It’s easy.  Just call the Social Security Administration number 1-800-772-1213 to set up an appointment to apply. If you do not apply for one or more Parts of Medicare, you can still be covered under the FEHB Program. Visit their website for forms and additional information.

If you can get premium-free Part A coverage, OPM advises you to enroll in it. Most Federal employees and annuitants are entitled to Medicare Part A at age 65 without cost. When you don’t have to pay premiums for Medicare Part A (Hospital Insurance), it makes sense to obtain coverage. It can reduce your out-of-pocket expenses as well as costs to FEHB, which can help keep FEHB premiums down.

Generally, plans under the FEHB Program help pay for the same kind of expenses as Medicare. FEHB plans also provide coverage for emergency care outside of the United States which Medicare doesn’t provide. Some FEHB plans also provide coverage for dental and vision care.

For more information about your Medicare options review the resources and articles on our Medicare pages. You will find them very informative and helpful, especially links to OPM’s FEGLI and Medicare Booklet and Tammy Flanagan’s 3 part series on this subject.

Retiree Job Opportunities

Many companies and state government departments recently posted jobs on our site to attract federal retirees. You will find jobs ranging from ADT Security Services, Bank teller and client services, FLSA Classifier, research, sales and everything in between. Most are part time and you can tailor you hours to your routine.  Many other opportunities exist for those looking to supplement their retirement income or to start a second career.  We provide this free job listing service to companies that are seeking to hire experienced retired federal workers.

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The information provided may not cover all aspect of unique or special circumstances, federal regulations, and financial information is subject to change. To ensure the accuracy of this information, contact your benefits coordinator and ask them to review your official personnel file and circumstances concerning this issue. Retirees can contact the OPM retirement center. Our article is not intended nor should it be considered investment advice and our articles and replies are time sensitive. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

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