Social Security (Life Insurance)

Child's benefit: (Survivor)

A deceased worker's dependent child under age 18 (19 if still in high school) is eligible to receive survivor benefits equal to 75 percent of the deceased worker's PIA, continuing until the child's age 18 (19 if still in high school). At age 18 (or 19), these benefits cease unless the child is disabled, in which case they continue indefinitely.

Child's benefit: (Disability)

A single dependent child of a disabled worker under age 18 (19 if still in high school) is eligible to receive monthly benefits of up to 50 percent of the worker's PIA.

Maximum family disability benefits: (Disability)

As is the case with retirement and survivor benefits, Social Security imposes a family maximum benefit limitation on the amount that any one family can receive in disability benefits. If that maximum amount is exceeded because of benefits to multiple dependent children and to the surviving spouse, then each person's benefit is reduced proportionately.

Child's benefit: (Retirement)

Children of a retired (or disabled) worker are eligible to receive a monthly benefit. This benefit can be up to 50 percent of the worker's PIA. To be eligible for benefits, the child must be unmarried, and 17 years old or younger; or 19 years old or younger and a full-time student; or any age and disabled from a disability that started before age 22.

Fred, age 65, never married and has been working for more than 40 years. He provided more than 80 percent of his elderly mother's financial support. He died a year after he began caring for her. Which of the following statements is correct?

His mother is eligible to receive monthly benefits equal to 82.5 percent of Fred's primary insurance amount (PIA).

Spouse's benefit: (Disability)

If he or she has a dependent child under the age of 16, the spouse of a disabled worker is entitled to a monthly benefit of up to 50 percent of the disabled worker's PIA, regardless of the spouse's age. This coverage terminates when the child reaches age 16 and resumes when the spouse reaches his or her full retirement age. (A reduced benefit may be taken as early as age 62.)

Parents' benefit: (Survivor)

If they are age 62 or older, parents of a deceased worker are eligible to receive monthly survivor benefits if the deceased worker had been responsible for at least one-half of their financial support. When two parents are eligible, each receives 75 percent of the worker's PIA; if only one parent is eligible, he or she receives 82.5 percent of the worker's PIA.

Old Age, Survivors, and Disability Insurance (OASDI) Program

Provides monthly benefits to qualified retired and disabled workers and their dependents and to survivors of insured workers. Eligibility and benefit amounts are determined by the workers contributions to Social secuirty eligible workers and their families are entitled to: monthly retirement benefits upon reaching a certain age; monthly income payments if a covered worker dies; and monthly income payments if a covered worker becomes disabled.

For Social Security purposes, Brian is considered currently insured while Samantha is fully insured. Which of the following statements is correct?

Samantha is eligible for more Social Security benefits than Brian.

John, age 62, retired early and is receiving Social Security retirement benefits. He has one child, Sara, age 15. What will happen if Sara is in a car accident and becomes disabled?

Sara will be eligible to receive a monthly Social Security benefit indefinitely.

Maximum family survivor benefits: (Survivor)

Social Security imposes a "family maximum benefit" limitation on the amount that any one family can receive in survivor benefits. If that maximum amount is exceeded because of benefits to multiple dependent children and to the surviving spouse, then each person's benefit is reduced proportionately.

Maximum family benefit: (Retirement)

Social Security limits the amount of Social Security benefits any one family can receive based on the earnings of a single worker. The total varies, but generally the maximum amount a family may receive on behalf of a worker is 150 to 180 percent of the worker's full retirement benefit. If the total benefits payable to a spouse and children exceed this limit, then their benefits are reduced proportionately.

average indexed monthly earnings (AIME)

The amount of social secuirty OASDI benefits that any one covered worker is entitled to is a function of the persons average indexed monthly earnings. These earnings are the average of a workers lifetime earnings on which FICA taxes were imposed.

Spouse's benefit: (Retirement)

The spouse of a worker eligible for retirement benefits is entitled to benefits as well. At the spouse's FRA, the benefit equals 50 percent of the worker's PIA. The spouse can choose early (reduced) benefits as early as age 62, A working spouse may claim either a spouse's benefit or a worker's benefit, but not both. If the spouse is also a worker, he or she will receive the higher of the two benefits.

A Social Security recipient's modified adjusted gross income exceeds the threshold level for his or her filing status. What will happen to his or her benefits?

Up to 85 percent of his or her Social Security benefits will be subject to tax.

Spousal benefit: (Survivor)

Upon the death of a Social Security recipient, surviving spouses are entitled to benefits as early as age 60. If the surviving spouse suffers from a disability, survivor benefits are available as early as age 50. The benefits are equal to a percentage of the deceased worker's PIA and can range from 71 percent at age 60 to 100 percent if the surviving spouse is his or her full retirement age or older.

Medicare

a federal health insurance program designed specifically for people age 65 and over and for certain disabled persons. funded by payroll taxes.

full retirement age (FRA)

age at which full social security retirement benefits are payable.

PIA

amount of the retirement benefit the worker will receive when he or she reaches FRA. It is the basis for benefits payable to the workers family and dependents.

Retirement Benefit Earnings Test

an earnings limit that is imposed if a person elects to receive social security benefits before he or she reaches FRA and at the same time continues to work and earn money. Social security benefits are reduced for amounts earned over this limit.

fully insured status

an insured status under Social security that entitles a worker to full OASDI benefits. Workers born after 1928 must have 40 quarters of coverage to be considered fully insured.

currently insured

an insured status under social security that entitles the worker to certain survivor benefits. Survivor benefits are those that are payable to the workers family if he or she dies. to be considered currently insured, a worker must have six quarters of coverage in the 13-quarter period before death

Fully insured workers are eligible for:

disability benefits (after meeting additional requirements) retirement benefits survivor benefits at the worker's death Medicare Part A benefits without paying a premium

Jenny was born in 1940 and is now eligible for full death, retirement, and disability benefits under Social Security. What is her Social Security worker status?

fully insured

modified adjusted gross income

income calculated to determine if a recipients social security benefits are subject to income tax. Includes: earnings pension benefits dividends taxable investment earnings interest on tax-exempt bonds

To be considered currently insured, a worker must have earned how many quarters of coverage in the 13-quarter period before he or she dies?

six

A currently insured worker is eligible for which of the following Social Security benefits?

survivor death benefits only

taxable wage base

the amount of ones wages that is subject to OASDI tax.

quarters of coverage

the basic units fir determining whether a worker is covered under Social Security. A worker receives one quarter of coverage for a certain dollar amount of wages earned.

death benefits

the death benefit in a life insurance contract is generally used to provide income for beneficiaries when the insured dies. In this way the death benefit replaces the deceased insureds future lost income.