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Determining Your Work Credits Requirement: A Key to Social Security Eligibility

Last updated: December 23, 2023

Work credits, also known as quarters of coverage, are the building blocks of the Social Security system in the United States. They are used to determine if an individual has earned enough to be eligible for Social Security benefits, including retirement, disability, and survivor benefits.

In this article, we will delve into the process of calculating work credits, including quarterly and annual earnings, self-employment work credits, and strategies for tracking and monitoring your work credits throughout your career.

Quarterly Earnings and Work Credits

Work credits are calculated using quarterly earnings, with each quarter representing a three-month period. In order to earn one work credit, an individual must have a certain amount of earnings within a quarter. The amount required for one work credit is adjusted each year based on changes in the national average wage index.

For example, in 2020, one work credit was earned when an individual made $1,410 in earnings within a quarter. An individual can earn a maximum of four work credits per year, equating to $5,640 in earnings for 2020. It's important to note that this amount does not represent total earnings for the year, but rather earnings specifically within each quarter. If an individual earns more than the required amount for a single work credit in one quarter, the excess earnings do not carry over to subsequent quarters.

Annual Earnings and Work Credits

While work credits are calculated using quarterly earnings, it is possible to approximate your annual work credits by examining your total income for the year. To determine your work credits for a given year, simply divide your total earnings for that year by the required amount for one work credit. Keep in mind that the result will be limited to the maximum of four work credits per year.

For instance, if you earned $7,000 in a year when the required earnings for one work credit was $1,410, you would have accumulated five work credits. However, as the maximum number of work credits that can be earned in one year is four, you would be credited with only four work credits for that year.

Self-Employment Work Credits

For individuals who are self-employed, work credits are calculated in a slightly different manner. Instead of using quarterly earnings, self-employed individuals must use their net earnings from self-employment (NESE) to calculate work credits. The NESE is used to determine both Social Security and Medicare taxes owed and work credit eligibility.

To calculate the number of work credits earned for a given year, a self-employed individual must divide their NESE for the year by the required amount for one work credit. As with W-2 employees, self-employed individuals can earn a maximum of four work credits per year.

Tracking and Monitoring Your Work Credits

Keeping track of your work credits is essential for determining your eligibility for Social Security benefits. You can monitor your work credits by regularly reviewing your Social Security Statement. This statement, which is available through the Social Security Administration's "My Social Security" online portal, outlines your earnings history, accrued work credits, and estimated benefits.

It is crucial to review your Social Security Statement regularly and report any errors to the Social Security Administration so that your work credits and benefit eligibility are accurate. Inaccuracies can lead to lower benefits or denial of benefits when you need them, so keeping up-to-date on your work credits can have a significant impact on your financial security in retirement or during a period of disability.

In summary, understanding how work credits are calculated, whether through quarterly earnings or self-employment, is vital for planning for your future. Ensuring you have accrued enough work credits to qualify for Social Security benefits can provide financial stability in the years to come. Regularly monitoring your work credits and addressing any errors in your earnings history can help you achieve that stability and peace of mind.

Work Credits and Medicare

Work Credits Requirements for Medicare Eligibility

Work credits are a key factor in determining a person's eligibility for Medicare benefits. In general, you need to accrue at least 40 work credits over your lifetime to qualify for Medicare Part A (hospital insurance) without having to pay a premium. These credits are earned by working and paying Medicare taxes, which are part of the Federal Insurance Contributions Act (FICA) tax deducted from your paycheck.

Work credits are based on your total yearly earnings and are accumulated over the years. In 2021, you earn one work credit for every $1,470 in earned income, up to a maximum of four work credits per year. Therefore, to earn the required 40 work credits for Medicare eligibility, you would need to work at least 10 years with earnings above the threshold for each of those years.

It is important to note that work credits are only used to determine eligibility for Medicare Part A. Eligibility for Medicare Part B (medical insurance) and Part D (prescription drug coverage) is based solely on age, with most individuals becoming eligible at age 65, regardless of work history.

Impact of Work Credits on Medicare Premiums

The number of work credits you have can directly impact the cost of your Medicare premiums. Individuals with 40 or more work credits are eligible to receive Medicare Part A without having to pay a premium. However, if you have between 30 and 39 work credits, you will need to pay a reduced premium for Part A coverage, which was $259/month in 2021.

If you have fewer than 30 work credits, the 2021 premium for Part A is $471 per month. Keep in mind that these premium amounts may be adjusted each year to account for changes in the cost of health care.

It is important to note that work credits have no impact on the premiums for Medicare Part B or Part D. The standard Part B premium is determined by the federal government and may vary based on your income, while Part D premiums are set by the individual insurance companies offering the plans.

Options for Gaining Medicare Coverage without Work Credits

If you do not have the required work credits for premium-free Medicare Part A, there are still options for getting coverage. One such option is to enroll in a Medicare Advantage plan, which combines Parts A, B, and often D, into a single plan offered by private insurance companies approved by Medicare.

You can also choose to pay the premium for Part A coverage in order to receive the benefits. As mentioned earlier, the premium amount varies depending on the number of work credits you have accrued.

In certain circumstances, you may be eligible for Medicare due to a disability or specific health condition, regardless of work credits. For example, individuals with end-stage renal disease (ESRD) or amyotrophic lateral sclerosis (ALS) may qualify for Medicare coverage.

Special Circumstances Affecting Work Credits

Work Credits for Immigrants and Noncitizens

In order to qualify for Medicare, noncitizens must meet certain requirements, including having a valid Social Security number, being a lawful permanent resident (green card holder) for at least five years, and having earned the requisite work credits. Noncitizens who do not meet these requirements may be able to purchase Medicare coverage if they are at least 65 years old, reside in the United States, and have a green card.

Transfer of Work Credits between Countries

The United States has agreements with certain countries, known as totalization agreements, which allow work credits earned in a foreign country to be counted toward qualifying for U.S. Social Security and Medicare benefits, and vice versa. This can be beneficial for individuals who have worked in multiple countries but do not individually have enough credits in each country to qualify for benefits.

Work Credits and Divorce

Divorced individuals may be eligible for Medicare benefits based on their ex-spouse's work credits in certain situations. To qualify, the marriage must have lasted at least 10 years, the individual seeking Medicare must not be currently remarried, and the ex-spouse must be at least 62 years old and eligible for Social Security benefits.

Retirement and Work Credits

Work credits play an important role in determining eligibility for Social Security retirement benefits, as well as Medicare. As mentioned earlier, you need a minimum of 40 work credits to qualify for Medicare Part A without a premium.

For Social Security retirement benefits, the number of work credits required depends on your age at retirement, with most individuals needing at least 40 credits to qualify for benefits. Therefore, earning enough work credits for Medicare Part A typically translates into eligibility for Social Security retirement benefits as well.

Frequently Asked Questions

1. What are work credits in relation to Social Security benefits?

Work credits quantify an individual's contributions to the Social Security system, determining eligibility for benefits like SSDI and retirement.

2. How can I calculate my work credits?

Work credits are calculated annually based on earnings. Four credits can be earned yearly—one for each quarter of work.

3. What's the significance of the work credits requirement?

Meeting the work credits requirement is vital to unlocking your Social Security benefits, ensuring your financial security.

4. Does the earning threshold for work credits change?

Yes, the Social Security Administration adjusts the earning threshold for work credits each year considering average wage changes.

5. Can work credits expire?

No, work credits do not expire, but the number required for certain benefits can depend on factors like age and benefit type.


Understanding your work credits requirement is pivotal to maximizing your Social Security benefits. These credits, gained through employment or self-employment earnings, serve as a measure of your eligibility for various benefits. By comprehending their calculation, you can better navigate your financial future.

Furthermore, veterans should be aware that their military service may entitle them to additional benefits, complementing their understanding of work credits and contributing to an optimized Social Security and Veterans Benefits strategy.

Find out how you can report self-employment income to gain disability benefits from our blogs at Disability Help today.

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Victor Traylor
An expert to the field of Social Justice, Victor formed Disability Help to connect ideas and expertise from the US with rising global cultural leadership, building networks, fostering collaboration, long-term results, mutual benefit, and more extensive international perception.
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