Ch. 8 Social Security

Death Benefits:

upon the death of an eligible worker, Social Security provides death benefits to a surviving spouse, dependent children, and dependent parents. More commonly called survivor benefits.

FICA Taxes (Federal Insurance Contributions Act):

used to fund the Social Security program. If a person hasn't contributed through their payroll program, they are not eligible for benefits.

Retirement Benefits:

when Social Security retirement benefits are only available to covered workers who are fully insured upon retirement. Benefits are paid monthly. If a covered worker retires at the normal retirement age, he or she will receive 100% of the PIA. However, if a covered worker retires early at the age of 62, the maximum Social Security benefits is 80% through retirement.

Disability Benefit Qualifications:

when Social Security uses both medical disability criteria and non-medical criteria to determine whether you qualify for Social Security disability (SSDI, the program based on work credits) or Supplemental Security Income (SSI, the low-income program). First, you must be able to prove you are medically disabled.

Fully Insured:

A status of complete eligibility for the full range of Social Security benefits: death benefits, retirement benefits, disability benefits, and Medicare benefits. A person must have contributed for 40 quarters of employment to be fully insured.

Parents' Benefit:

Beginning at age 62, each parent of a deceased fully insured worker is eligible to receive a monthly benefit if the parent was at least one-half supported by the worker at the time death. When two parents are eligible, each receives 75% of the worker's PIA. If only one parent is eligible, that parent receives 82.5% of the worker's PIA.

Social Security Act of 1935:

Created to provide for the general welfare of United States citizens who are 65 years of age and older. The Act was enacted by the Senate and House of Representatives of the U.S. to enable individual states to make more adequate provisions to furnish financial assistance to the aged, blind, dependent and crippled children, maternal and child welfare, public health, and to establish more adequate provisions for the administration of their unemployment laws. Social Security is an entitlement program, not a welfare program. It is based on a "pay now in exchange for benefits later" system.

Which of the following does Social Security NOT provide benefits for? -Survivorship -Dismemberment -Disability -Retirement

Dismemberment

Worker's Retirement Benefit:

Fully insured workers are eligible for full retirement income benefits at their full retirement age (FRA)(age 65 for those born before 1938). The FRA for people receiving Social Security benefits will gradually increase from age 65, to age 67 for individuals born after 1959.

OASDI:

Old-Age, Survivors, and Disability Insurance, more commonly referred to as Social Security. To pay for these programs, the federal government imposes a tax on earned income that must be withheld by your employer.

Blackout Period:

Period following the death of a family breadwinner during which no Social Security benefits are available to the surviving spouse.

What determines the full amount of Social Security retirement benefits a qualified individual is entitled to?

Primary Insurance Amount (PIA)

Taxation of Social Security Benefits:

Social Security benefits are subject to federal income tax if the beneficiary files an individual tax return and his annual income is greater than $25,000. Joint filers will pay federal income tax on their Social Security benefits if their income is greater than $32,000.

Maximum Survivor Benefits:

Social Security has placed limits on the total amount of survivor benefits that any one family may receive. The limit is known as the maximum family benefit, and it varies according to the PIA. if the sum of the individual benefits paid to members of one family exceeds this maximum limit, benefits will be reduced proportionately to bring the total within the limit.

Lump-Sum Death Benefit:

Social Security provides a one-time lump-sum death benefit to a deceased worker's surviving spouse or children. The amount of this benefit is equal to three times the worker's PIA, up to a maximum of $255.

Which of the following factors affects the amount of monthly disability benefits payable under Social Security? -The cause of the disability -The amount of the benefits available from other sources -The number of children dependent on the recipient -The state in which the recipient lives

The amount of the benefits available from other sources.

Spouse's Benefit:

The spouse of any worker eligible for retirement benefits is entitled to an old age income at the spouse's FRA or a reduced benefit at age 62. At FRA, the spouse's benefit is 50% of the retired worker's PIA. At age 62, a spouse may receive permanently reduced benefits. If there is a dependent child under age 16 or disabled before age 22, the spouse is eligible to receive the 50% spousal benefit, regardless of the spouse's age.

Currently Insured:

Under Social Security, a status of limited eligibility that provides only death benefits.

Quarter of Coverage:

a basic unit for determining whether a worker is insured under the Social Security program.

Child's Benefit:

a child under age 18 (or disabled before age 22) whose parent is a deceased worker may receive a benefit equal to 75% of the worker's PIA until the child turns 18 (19 if still in high school). If the child marries before age 18, the benefit terminates.

What is Disability?

an employee who is unable to engage in any occupation. A person may first become eligible for disability benefits under Social Security after having been disabled for 5 months.

Primary Insurance Amount (PIA)

the benefit amount (before rounding down to next lower whole dollar) that an individual receives when he or she chooses to begin receiving retirement benefits at his or her normal retirement age. At this age, the benefit is neither reduced for early retirement nor increased for delayed retirement.

Credits:

the determining factor between being classified as fully insured or currently insured. Once a person becomes fully insured, death benefits are extended to his (or her) family; the family becomes eligible for survivorship benefits. 4 credits is the maximum any one person can earn in a given year; therefore, for the 40-quarter rule to apply, an individual must have been employed and have paid FICA taxes for 10 years at least.

Surviving Spouse's Benefit:

the eligible surviving spouse of a fully insured deceased worker is entitled, at age 65, to a montlhly life income equal to the worker's PIA at death. Or, if the worker wishes to receive these benefits early, the surviving spouse can elect reduced benefits, starting as early as age 60.