18 Dec Should I take Social Security to help pay for health insurance?

Q. I’m 63 and I was putting off taking Social Security. But now I was just laid off. I will have to worry about paying for health insurance until I’m 65, and I’m really nervous about having such a large monthly expense, and I don’t imagine anyone will hire me. How can I price a policy, and without income, should I just start taking Social Security to pay the premiums?
— Needing more money

A. We are sorry that you were laid off.

The first thing you should do is file for unemployment benefits.

It will help to give you some income while you consider filing for Social Security, said Claudia Mott, a certified financial planner with Epona Financial Solutions in Basking Ridge.

“Hopefully, do all that you can to find a new job before making this decision,” she said. “The amount you might be able to earn when fully employed will very likely be more than your Social Security benefit and there is the possibility you will be able to get employer-sponsored medical insurance as well.”

Filing for Social Security early will reduce the amount of benefit that you will receive, Mott said.

“For someone whose full retirement age is 67, the maximum reduction would be 30% if they started at age 62, the earliest filing date,” she said. “At age 63, you’d likely receive about 25% less than you would at full retirement age.”

While the loss of benefit is not optimal, if it’s the only source of income you anticipate receiving, you may wish to consider it, Mott said.

To start pricing health insurance policies, Mott directed you to the Affordable Care Act website for health insurance in New Jersey at nj.gov/getcoverednj.

“There you will be able to review a variety of plan options from a number of different providers,” she said. “Depending on your new income situation, you may also qualify for financial help in the form of a tax credit, cost-sharing premium reduction or a state subsidy.”

She said the website also offers resources that can help you navigate the application process. The toll-free number is (833) 677-1010.

“NJ Family Care is a state-funded health insurance program that provides benefits for those whose income falls below 138% of the Federal Poverty Level,” she said. “The current earnings limit is $1,732/month for a single person and $2,351/month for a couple.”

You can learn more about this resource at njfamilycare.dhs.state.nj.us and the toll-free number is (800) 701-0710.

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This story was originally published in December 2024.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.