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Tax Tip of the Week | How to Apply for Social Security Benefits and Medicare – the Ins and Outs November 7, 2018

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How to Apply for Social Security Benefits and Medicare – the Ins and Outs

No matter who you are, we are ALL moving ever closer towards that magical age of drawing your Social Security Benefits and using the Medicare system; unless, of course,  you already are reaping such benefits.  On a regular basis, we receive calls asking how and when to apply for these programs.  The following article very nicely answers these questions.

–    Mark C. Bradstreet, CPA

“Pundits spend a good deal of time advising Americans about the best age to claim Social Security – at age 62, at full retirement age, at age 70 and the like.

But they hardly ever discuss the nuts and bolts of applying for Social Security benefits like they should.

You see, the seemingly simple act of completing an application for your own or your spouse’s retirement or for disability benefits isn’t always as straightforward as you might think. “I had a client once who described this as ‘the most complicated and bureaucratic process known to mankind,’” says Robin Brewton, the chief operations officer for Social Security Solutions.

Here’s what experts say you need to know:

Start three months before you want payments. “It doesn’t take that long to clear a claim—no way,” says Andy Landis, author of Social Security: The Inside Story. “But (starting the process early) allows time to iron out any wrinkles that come up, like finding your military discharge form – DD Form 214, Discharge Papers and Separation Documents – or other documents. Then it’s clear sailing to your first payment.”

Others suggest the same. If you want benefits to start on your 66th birth month go to the Social Security office three months prior to your birth month, says Ted Sarenski, the CEO of Blue Ocean Strategic Capital. “Social Security will only give retroactive benefits six months prior so in no case go to them more than six months past your birth month if you intend to begin benefits on your birth month.”

Most claims are done online these days. You really don’t have to apply for benefits in person anymore. Just go to www.ssa.gov and click on the “retirement” box for retirement, spousal or Medicare claims. “There are great instructions and tips there,” says Landis. “Then it takes maybe 20 minutes to complete the application.”

Other experts agree that online is the best way to apply for Social Security. “I am a firm believer in applying online for benefits,” says Kurt Czarnowski, a principal with Czarnowski Consulting.

Prefer to work with a real live human? You can, of course, still apply in person. But if you choose this route, don’t walk into your local office cold. “You might face a one- or two-hour wait, or worse,” says Landis. Instead, call 1-800-772-1213 to set up an appointment, for either a phone or in-office claim. Of note, the Social Security Administration (SSA) generally doesn’t publish the phone numbers of their local offices. You can find your local office and its business hours at https://secure.ssa.gov/ICON/main.jsp.

Consider this warning from Brewton if you do decide to file in person: “Our experience with our own clients has been that the (SSA) agents have attempted to get them to do something different than the client wanted.”

Word to the wise. The SSA’s phones are staffed from 7 a.m. to 7 p.m. in whatever time zone you’re in. “But they’re swamped mid-day, from about 10 a.m. to 3 p.m.,” says Landis. “Instead, call near either end of the day, like 8 a.m. or 5 p.m. If the recording says it will be a long wait, just hang up and call back at a better time.”

When calling Uncle Sam, Landis recommends always having a magazine or other diversion at hand in case you have to wait.

The two “gotcha” questions. When you file, there are two questions that seem to trip people up, according to Brewton. One: “If you are eligible for both a retirement benefit and a spouse’s benefit, do you want to delay receipt of retirement benefit?” And two: “When do you want benefits to begin?”

So many consumers are confused by the first question, says Brewton. “Some don’t know that they may be eligible for multiple benefits; others just simply don’t understand the question,” she says, noting that the question applies only to those who are still eligible to “restrict the scope of the application to spousal benefits only” or what some refer to as filing a restricted application. This applies only to those who were born on or before Jan. 1, 1954. “Those wanting to receive only spousal benefits must answer ‘yes” to this question,” she says. “If you answer “no,” your own retirement benefits will begin.”

The second question is a “gotcha” because, says Brewton, the field is pre-populated with the earliest possible date for someone to start benefits. “For those who are filling out the application up to four months in advance of when they want benefits to start, they’ll need to change the date in the field,” she says. “If a consumer has carefully crafted a claiming strategy, particularly if it is coordinating retirement and spousal or divorced spouse benefits, the wrong date can cost thousands of dollars and ruin the strategy.”

Use the comment section. Would-be Social Security beneficiaries should always use the comments section near the end of the application to clearly spell out what their intentions are, says Brewton. “If they’re trying to file a restricted application, they should say so,” she says. “If they want to collect divorced spouse benefits at full retirement age and switch to their own later, they should say it in the comments. This is documentation of your intent in the event an error occurs in processing.”

Also, Brewton recommends asking someone to sit with you while you file – a friend, spouse, or family member. “It will help you get a second set of eyes on the questions and your answers,” she says.

Make a mistake? If you discover that you made a mistake during the filing process, the sooner it is addressed, the better. Unfortunately, a correction isn’t easy to pull off and requires substantial documentation, says Brewton. “I recommend that clients who file in person or on the phone get the name of the person who assisted with the filing and have that person read the questions and answers back to the consumer,” she says.

Brewton recommends documenting conversations with dates and times. “I do believe that, given the number of Social Security beneficiaries, actual errors are few,” she says. But they do happen from time to time and they can be significant.

Landis also notes that the SSA will contact you if they have any questions about your application. However, the SSA, just like the IRS, will not email you. “Be aware of scammers trying to get your Social Security number,” says Sarenski.

Ultimately, says Brewton, the best defense against errors is a good offense – a smart claiming strategy that is written down. “If a consumer doesn’t feel heard by the SSA, or if the SSA is trying to convince them that a claiming strategy isn’t possible, the best bet is to walk away and get professional assistance. You can always file later.”

Filing for Social Security disability is the hardest. Those filing for Social Security Disability Insurance tackle it in stages, starting online at www.ssa.gov. “The SSA needs to know all your doctors and hospitals that have information about your medical condition,” says Landis. But here’s a trick of the trade that will save you a ton of work: “If one doctor or hospital has all your records, just list that source and say they have everything,” Landis says. “Then be prepared to wait—it takes months to decide a disability claim. The sooner you start, the sooner it will be done.”

Filing a survivor claim? Most claims can be filed online. Not this one. If you’re filing a survivor claim (widow, widower, or surviving child), you can’t do it online, says Landis. Start by calling 800-772-1213 for a claims appointment.

Don’t be late. Every type of claim has a time limit, especially Medicare, says Landis. “You can file up to three months before you want benefits, he says. “Delaying? Not advised.”

What can you expect after you file? You should be aware of and plan for the fact that Social Security benefits are paid one month in arrears, says Czarnowski. “For example, say someone retires at the end of June and intends to start collecting Social Security benefits effective with the month of July,” he says. “That person won’t receive his/her first payment until August.”

Also note, says Czarnowski, that anyone born between the 1st and the 10th of the month is always paid on the 2nd Wednesday of the month; anyone born between the 11th and the 20th of the month is always paid on the 3rd Wednesday of the month; and anyone born between the 21st and the end of the month is always paid on the 4th Wednesday of the month. “And by ‘paid’ I mean that their payment is ‘direct deposited’ into their bank account on that date,” he says. “This is something that people need to understand and anticipate, and in my experience, many of them don’t.”

Examine your documents. Sarenski suggests examining your “introductory” letter and all other correspondence immediately upon receiving it in the mail from the SSA. “It is best to correct any errors as soon as you know of them,” he says.

More on what you’ll need to complete the process can be found in this downloadable PDF .”

MORE POWELL:
Robert Powell is editor of Retirement Weekly, contributes regularly to USA TODAY, The Wall Street Journal, TheStreet and MarketWatch. Got questions about money? Email Bob at rpowell@allthingsretirement.com.

Thank you for all of your questions, comments and suggestions for future topics. As always, they are much appreciated. We may be reached in our Dayton office at 937-436-3133 or in our Xenia office at 937-372-3504. Or, visit our website.

This Week’s Author – Mark C Bradstreet, CPA

–until next week

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