My grandma used to keep a gallon jar in her kitchen and toss her spare change in it at the end of each day. When it got full, she’d take it to the bank, exchange the coins for bills and buy herself a new pair of shoes.
Think of Social Security (SS) and Medicare as two separate jars that you put a portion of your taxes into. Then, once you become eligible for one or both programs, you can reap the benefits. And because each program offers unique benefits, it’s important to know the differences between the two. SS and Medicare are similar, but not the same.
Here’s what they have in common:
- Individually funded by payroll taxes
- Provide benefits to people who are eligible
- Help people with certain disabilities
More importantly, here’s how the two differ:
And finally, here’s where the two overlap:
The SSA determines who’s eligible for Medicare and handles some of Medicare’s administrative duties, like enrollment. That’s why people enroll in Medicare by contacting the SSA.
While my grandma saved up for new shoes, you’re investing in a much better pay-off. (Although, I do love a new pair of shoes.) Share this article with friends and family who’d like to know what they’re saving up for.