Chapter 10: Social Security

Supplemental Security Income (SSI)

(funded by general tax revenues and not by Social Security taxes) is another benefit that provides monthly payments to those disabled or at full retirement age who have a low income and few assets.

OASDI (Old Age, Survivors, and Disability Insurance)

-For the year 2018, an employer and employee each pay 6.2 percent of the employee's gross salary up to a limit of $128,400. -The salary limit rises annually based on annual increases in average wages. -Self-employed workers pay 12.4 percent (6.2 percent x 2) of their taxable income up to the same salary limit. -The Medicare portion of the Social Security tax is 1.45 percent for both employers and employees and is 2.9 percent for self-employed workers with no limit on the amount of compensation taxed.

retirement earnings limitations test

-a reduction of benefits based on earnings

survivors' benefits

-apply to certain members of the deceased worker's family if the worker earned sufficient Social Security credits. -Family members entitled to survivors' benefits include those listed for family benefits and may also include the worker's dependent parents if the worker was their primary means of support. -A special one-time payment of $255 may be made to the spouse or minor children upon the death of a Social Security covered worker.

benefit periods

-begins on the first day a patient receives services in a hospital or skilled nursing facility and ends after 60 consecutive days without further skilled care. -There is no limit to the number of benefit periods a beneficiary may have.

primary insurance amount (PIA)

-formula applied by the Social Security administration to worker's earnings to arrive at a basic benefit -The Social Security retirement benefit is based on the worker's ___. -determines the amount the applicant will receive at his full retirement age, but the dollar amount of the benefit depends on the year in which the worker retires. -is indexed to the consumer price index (CPI) annually

disability benefit

-is payable at any age to workers who have sufficient credits under the Social Security system to qualify for disability benefits. -Recipients must have a severe physical or mental impairment that is expected to prevent them from performing "substantial" work for at least a year or to result in their death. -Monthly earnings of $1,180 for 2018 (if the individual is blind, then the amount is increased to $1,970 per month for 2018) or more is considered substantial. -The disability insurance program has built-in incentives to smooth the transition back to the workforce including continuation of benefits and health care coverage.

family benefit

-is provided to certain family members of workers eligible for retirement or disability benefits. Such family members include spouses age 62 or older, spouses under age 62 but caring for a child under age 16, unmarried children under 18, unmarried children under age 19 and full-time students, and unmarried children of any age who were disabled before age 22.

Federal Insurance Contributions Act (FICA)

-is the law allowing Social Security taxes, including Medicare taxes, to be deducted from paychecks. -A portion of these ____ taxes pays part of the Medicare coverage. Both employers and employees pay the taxes for Social Security and Medicare.

retirement benefit

-is the most well-known benefit from Social Security. -Full ____ _____ are payable at "full retirement age" (reduced benefits are available as early as age 62) to anyone who has obtained a minimum amount (40 quarters) of Social Security credits. -Based on the Social Security law in 1983, the age when full retirement benefits are paid began to rise from age 65 in the year 2000, and increases to age 67 by the year 2027. -Workers who delay retirement beyond the full retirement age receive a special scheduled increase in benefits for each delayed year extending until age 70.

Hospital Insurance ("HI") Trust Fund

-one of the federal Medicare trust fund -which pays for services covered under the hospital insurance provisions of Medicare (Part A)

Supplementary Medical Insurance ("SMI") Trust Fund

-one of the federal Medicare trust fund -which pays for services covered under the medical insurance provisions of Medicare, known as Part B and the new prescription drug provisions known as Part D. -is partially funded by the general fund of the Treasury with the remaining funding coming from monthly premiums paid by the individuals enrolled in Part B.

Disability Insurance (DI) Trust Fund

-pays benefits to workers with disabilities and their families. -receives 0.90% of the FICA tax

Old Age and Survivors Insurance (OASI) Trust Fund

-pays retirement and survivors' benefits. -receives 5.30% of the FICA tax.

cost-of-living adjustment (COLA)

applied to reflect changes in the cost of living

Medicaid

generally those who qualify for SSI also qualify for ____, food stamps, and other governmental assistance.

Medicare

provides hospital and medical insurance. Those who have attained age 65 or those who receive disability benefits for at least two years automatically qualify for Medicare. Others must file an application to become qualified.

average indexed monthly earnings ("AIME")

the 35 years in which the applicant earned the most