From The Mailbag: Social Security and Retirement Pay

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There can be a lot of confusion about the relationship between military retirement pay and other benefits and federal benefits such as social security and Medicare.  Part of the confusion comes from the fact that there are regular changes to the situation, and the internet contains a lot of outdated information.

Retirement Pay

A relatively simple question from a reader illustrates the confusion:

“Just wondering if my military retired pay will be affected when I start receiving Social Security benefits or Medicare? I am 55 and retired from the Air Force. I plan on waiting for my full retirement age (67) to start receiving SS benefits.”

In general, social security benefits are not reduced due to military retirement pay.  Some military retirement benefits, such as Tricare, are impacted by the receipt of federal benefits like Medicare.

Many of the questions stem from the fact that there are offsets of similar benefits, or there were offsets that have now been repealed.  For example, there is an offset for certain federal, state, and local government pensions that are based upon work for which social security taxes were not paid, and there used to be an offset for Survivor Benefit Plan annuity payment.  It doesn’t take much searching to find lots of seemingly accurate information about offsets that no longer exist, and that is just confusing for everyone.

Tricare

When Tricare beneficiaries become eligible for Medicare, typically at age 65, there is a change to their Tricare coverage.  After enrolling in Medicare, approximately two months before turning 65, beneficiaries must enroll in Medicare Part B and pay the associated premium.  When enrolled in Medicare, and eligible Tricare beneficiaries will then have Tricare for Life as a second (or third) payer.  Eligible family members who have not become eligible for Medicare will continue to have their regular Tricare coverage.

In summary, military retired pay and Survivor Benefit Plan (SBP) premiums do not impact the receipt of Social Security benefits, but changes to medical coverage occur when a Tricare beneficiary becomes eligible for Medicare.

 

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.
  • Donnell

    Thank you! Keep up the good work.

  • RIpete

    Plain and simple – retirees are kicked off any Tricare they may be subscribed to and are thrust into Medicare Part A (No Charge), if you decide to take Medicare Part B you will have to pay the $104 (current) charge out of your own pocket until you start drawing Social Security at which time you can authorize the deduction for Medicare Part B out of you social security payment. Remember you have to pay for the medical coverage that CONGRESS and your branch of service promised FREE for life.

    • Kate

      Rlpete, you do know that you are eligible for Tricare for Life, right? My grandfather has Medicare pay first, and Tricare for Life pays second, and he has pretty much no out-of-pockets costs for any of his heathcare (except the Medicare Part B premium).

    • USFSPA Killer

      RIpete – You really need to call Social Security – 1-800-772-1213 – and let them explain how payment for Part B is accomplished. In the mean time, stop blowing smoke on this blog until you get factually credible info from a trusted source !

  • Spokane Al

    The amount of your Social Security that is subject to income taxes will definitely be affected by your military retirement pay. The maximum amount of Social Security income that can be taxed at the federal level is 85% and for most of us military retirees, our retirement pay pushes that Social Security income taxable amount to the 85% maximum.

    • USFSPA Killer

      “Spokane Al” – Read and re-read and re-re-read my post above – Here it is again in case you can’t find it – Although military retired pay is reported on IRS Form 1099-R AS IF IT WERE A “PENSION” – but we KNOW it is NOT a pension – it should be reported on IRS FORM W-2 because it is reduced current income. It isn’t included on IRS Form 1040, line 7 because it isn’t reported as current income. Therefore it has NO effect on being included as current income which can and will affect your Social Security taxability status. You jailhouse lawyers need to read the law !

      • Kate

        USFSPA Killer, please stop being impolite to the other readers of this blog. You often have useful things to say, but there is no call for the tone that you use. A civil debate is welcome, rudeness and name-calling is not.

        • USFSPA Killer

          Kate – I appreciate your kind but succinct request – I’ll tone down my own vitriol as I am interested in correcting the emotional baloney about the USFSPA out there. Thanks.

  • USFSPA Killer

    Although military retired pay is reported on IRS Form 1099-R AS IF IT WERE A “PENSION” – but we KNOW it is NOT a pension – it should be reported on IRS FORM W-2 because it is reduced current income. It isn’t included on IRS Form 1040, line 7 because it isn’t reported as current income. Therefore it has NO effect on being included as current income which can and will affect your Social Security taxability status. You jailhouse lawyers need to read the law !

  • USN Boats

    Reserve Retiring at age 60 soon I have SSI disability Medicare B, how will Tricare reserve retired change
    change after 60?

    • USFSPA Killer

      If you are currently paying for Medicare Part “B”, you have already lost your eligibility for TRICARE reserve retired because you are now already on Medicare with TRICARE FOR LIFE as a backup to Medicare. You don’t need to “sign up” for TRICARE For Life because Medicare will automatically send any unpaid amounts to TFL for TFL payment, which TFL usually pays the full Medicare leftover balances. Your PRIMARY health insurance is now and has been Medicare with TFL as a fall-back for any Medicare unpaid co-pays and or deductibles.