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the confusion comes from the fact that there are regular changes to the situation, and the internet contains a lot of outdated information.
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the questions stem from the fact that there are offsets of similar benefits, or there were offsets that have now been repealed.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.
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.