How Medicare Works for Pastors Who Opt Out of Social Security

Medicare, Social Security

Pastors and ministers who have opted-out of paying into the Social Security system should realize that they may not be able to draw from those benefits at 62 like most people; instead, they will be relying on their own investments and savings throughout retirement. While this is concept of retirement pension is clear cut, there is less clarity regarding the topic of how Medicare works for these same pastors who have opted out of Social Security.

Explanations of how individuals qualify to partake in the Medicare health insurance system, as well as various costs and nuances associated are detailed out below.

Medicare Eligibility

Anyone over the age of 65 who is a US citizen or legal resident and has lived in the US continuously for at least 5 years is eligible for original Medicare. Original Medicare consists of several parts:

  • Part A: Also known as hospital insurance.
  • Part B: Covers the medical portion such as doctor visits, outpatient surgery, etc.

The other parts that make a comprehensive medicare plan include: medicare supplement, medicare advantage, and prescription drug plans. If you’re not familiar with how all of these work, we have various standalone articles and videos explaining these topics.

So What’s Different For Pastors

So, if you meet the criteria above, then you qualify to participate in Medicare. But now the only difference for pastors is going to be the cost. Pastors whom have had a W2 paying job before they became a pastor, one that withheld FICA taxes… this is where that job may benefit you in retirement.

Part A for most people is $0/month. That’s right, if you have had a W2 job where FICA had been withheld for more than 40 quarters (10 years), medicare Part A is free. While if you have worked less than 40 quarters use this table to find where you expect to be:

Part A Monthly Premium
$0 If you or your spouse worked for 40 quarters (10 years) or more
$240 If you or your spouse worked between 30 and 39 quarters (7.5 and 10 years)
$437 If you or your spouse worked fewer than 30 quarters (7.5 years)
If your income is low, you may be eligible for Medicare Extra Help, which pays for your Medicare Part A and B premiums and other Medicare costs.
 

Conclusion

If you’ve been a pastor all of your life and intend to retire in the next 10 years, it may behoove you to get a part-time job and earn a minimum of $1,360 every quarter (in 2019) to earn a credit to count toward those Social Security quarters listed above.

Otherwise, be prepared to shell out some bills for participating in the Medicare program.

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