Social Security & Medicare Benefits Flashcards

A married client wants to maximize the surviving spouse's lifetime Social Security income. Which strategy is generally most effective?

Answer: The higher-earning spouse delays to age 70 while the lower earner claims early

Having the higher earner delay to age 70 maximizes the survivor benefit, since the survivor inherits the higher of the two benefits; the lower earner can claim earlier to provide interim income.

What is the 'combined income' threshold above which up to 85% of Social Security benefits become taxable for a single filer?

Answer: $34,000

For single filers, combined income (AGI + nontaxable interest + half of Social Security) above $34,000 subjects up to 85% of benefits to federal income tax.

A divorced client was married for 11 years. Is the client eligible for Social Security spousal benefits based on the ex-spouse's record?

Answer: Yes, because the marriage lasted more than 10 years

Divorced individuals are eligible for spousal benefits on an ex-spouse's record if the marriage lasted at least 10 years and other conditions are met.

Which Medicare supplement (Medigap) policy provision requires insurers to sell a policy to any applicant during the open enrollment period regardless of health status?

Answer: Guaranteed issue right

Guaranteed issue rights ensure that during specified periods—most notably the 6-month Medigap open enrollment window—insurers cannot deny coverage or charge higher premiums based on health status.

Under the Social Security Windfall Elimination Provision (WEP), who is most likely to be affected?

Answer: Workers who also receive a pension from employment not covered by Social Security

WEP reduces Social Security benefits for workers who receive pensions from jobs not covered by Social Security (e.g., some state/local government or foreign employment).

What is the primary purpose of the Government Pension Offset (GPO) rule?

Answer: To reduce spousal or survivor Social Security benefits for those receiving a government pension from non-covered employment

GPO reduces Social Security spousal or survivor benefits by two-thirds of the non-covered government pension amount, often eliminating the benefit entirely.

A retirement adviser is helping a client decide whether to use portfolio assets to bridge income to age 70 so the client can delay Social Security. Which factor most strongly supports this strategy?

Answer: The client has longevity risk and a lower-earning spouse who will rely on survivor benefits

Longevity risk and a surviving spouse's dependency on the survivor benefit make delaying Social Security highly valuable, as the 8% annual credit and larger survivor benefit offset bridge portfolio draws.