Social Security Is A Government Handout And Medicare Is Not Free

Social Security Is A Government Handout And Medicare Is Not Free

If you wander how a nationalized government health program would work, take a look at the information below.

Medicare is already a government program and it is not free to you. Besides, the benefits provided are minimal. Try to get into a private insurance plan after you reach the age of 65. You can’t. If you can the cost is bound to be prohibitive.

Everybody is required to pay into Social Security and Medicare. It is mandated and it is based on your income. These are not considered taxes collected by the government and you can’t opt out. If you are self-employed, you must pay for Social Security and Medicare even if your business is losing money.

If you hope that the government will deliver free healthcare to everybody, think again. Here is a simple case of how the government manages Social Security and Medicare benefits.

When I was making ten thousand dollars per month, I would get statements from Social Security Administration stating my SS benefit at retirements. It was $1,400, and then $1,500, and son on. I already knew, there was no way anybody can survive on Social Security. It could not even pay the rent.

This is a true story about my friend Joe (not his real name).

The year was 2001, September 11, at the age of 61 Joe was semi-retired looking for a job. In his spare time, Joe was trading stocks and options. The 9/11 attack, forced the stock exchange to close for a whole week. When it opened, Joe’s options were worthless. He took a sizable loss. It wiped out his trading account. It forced him to pull money from his IRA account while looking for a job, any job. He was desperate enough to get any job, telemarketing, selling cars, etc., while looking for a job in his old profession.

Joe was only one year away for qualifying to collect social security, at the age of 62. Had he waited to be 65, his social security benefit would have been $1,650 per month. Early collection at the age of 62 amounted to $1,400.

Joe applied for Social Security and started collecting his SS checks after he reached the age of 62 ½.

At his age Joe couldn’t find a job in his profession. After spending months, doing telemarketing and other odd jobs that didn’t last, Joe had to take an entry retail job to make ends meet. This job paid $8.50 per hour.

At the age of 65, Joe was automatically enrolled in the Medicare program by the Social Security Administration. Medicare withheld $94.00 per month from Joe’s Social Security check. By now, his monthly check from Social Security was $1,300.

What Joe did not know, was that the Social Security penalizes you if earn more than $11,000 per year while collecting social security. The penalty is 50% of the amount above $11,000, if you are 65 ½ or less. In his retail job Joe earned 16,600 for the year when he was 64. His tax return showed $5,600 above the $11,000 threshold. Fifty percent of that amount equals $2,800.

Shortly after filing his taxes, Joe was notified by Social Security Administration that he was overpaid in the previous year by the amount of $5,600 and owed the US Government $2,800. He either had to pay it back, or two social security checks would be withheld.

Joe tried to mitigate the payment by forfeiting his Medicare premium since he was covered by an insurance program provided by his employer. He found out that Medicare premium is mandatory and had to be paid every month for as long as he was collecting social security. In fact, even if Joe could have afforded to live without the social security checks for two months, he still would have had to pay the $94 premium for the Medicare.

Joe managed to work a payment plan of $150 per month, withheld from his SS monthly check. By now, Joe’s Social Security check amounted to $1,150, until the penalty is paid in full (about 19 months).

Keep in mind, on Joe’s meager job of $16,600 a year, he already paid about $1,500 in taxes, social security and medicare withholdings. The penalty above applies to wages before taxes.

I can vouch for Joe. We worked together for many years. Some years back I sold him my condo. His credit rating was 850. Last time I talked to him, he filed for personal bankruptcy. He is still paying back the penalty. He had to change his retail job because California garnished his wages. He owed slightly over $1,000 in state taxes due to early withdraws from his IRA account.

Learning from Joe’s experience, you can conclude that the Social Security program is anything but “Security”. If you are financially secure and start collecting your benefits at the age of 65 ½, it is a nice addition (some pocket change). The government is not providing for your financial security. You are. The capital gains from investments, even if they are not under IRA, are taxed, but not penalized (50%).

If you run into financial difficulties and are forced to elect early distribution of your benefits, the government immediately reduces your monthly benefit drastically (about 15%). To add insult to the injury, the government only allows you to earn $11,000 (taxable), after which it will apply a penalty of 50% on everything above the $11,000 threshold.

You have contributed to you Social Security all your working life. It is not yours to own. The government changes the rules and there is nothing you can do about it.

Medicare is not free. At the age of 65, Social Security Program enrolls you automatically in the Medicare Program. Medicare requires all social security beneficiaries to pay an insurance premium. It lowers the monthly social security benefit by $100. You can’t opt out from Medicare.

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Computer Security

As a computer/internet user you already know how important the security of your computer is. I am a retired computer designer, had computers in my house for more than 25 years. For most part, I didn’t have to worry much about the safety of my computer, except in the last few years. Presently, I am evaluating and changing my computer security program every six months.

Here is the latest: Netcom3 Internet Security.

Better feel safe than sorry.