GBA 2 | Assignment 10

To whom does the Social Security program's Old Age, Survivors and Disability Insurance (OASDI) coverage apply?

1. Applies somewhat more than 90% of the total workforce in the U.S. 2. Covers employed and self-employed persons 3. Covers members of the armed forces and civilian employees hired after 1983. 4. Covers lay employees of churches (with minor exceptions), EEs of nonprofit charitable and educational institutions and EEs of state and local governments that don't have retirement systems and to Americans who worked abroad for American corporations. 5. Americans employed in the U.S. by a foreign government or international organization are covered on a self-employed basis.

Provide a brief summary of the history of the OASDI program.

1. Developed in 1934-35 -- and confined entirely to retirement benefits 2. 1939 -- auxiliary and survivor benefits were added. 3. 1956 -- disability benefits were made available 4. Originally just for workers in industry and commerce, but now is available to almost every category of worker. 5. Early retirement is allowed at 62 however benefits are lessened when claimed early and increased when claimed or delayed pas the national retirement age (NRA)

How is the earnings test applied to OASDI disability benefits?

1. Earnings of spouse or dependent do not affect. 2. Does not apply to disabled worker beneficiaries b/c any earnings are considered in connection with whether recovery has occurred.

In recent decades, the exhaustion of benefits rate has been above 30%, even during periods of economic expansion. What factors have contributed to a high percentage of UI recipients exhausting their regular unemployment benefits?

1. Easier administration and application has reduced the inconvenience of collecting benefits. 2. Less urgency in finding another job soon, especially in two-earner families where the unemployed is the second earner. 3. Age structure of the U.S. labor force has changed, the baby boomers are now between the ages of 46 and 64. It's harder for those workers to find another good job after they lose one, therefore they exhaust their benefits. 4. During economic contractions, the UI rate increases and job seekers experience more difficult finding suitable employment.

How are regular state unemployment compensation programs financed?

1. FUTA tax and state unemployment tax systems provide the funds for paying for unemployment compensation. 2. Only ERs pay FUTA, with the exception of three states. This is also true for state unemployment taxes. 3. SSA and FUTA established the funding arrangements. The FUTA tax is 6.2% of the first $7,000 of earnings per employee per calendar year. 4. Unemployment tax contributions are deposited into a Federal Unemployment Trust Fund. Each state has a separate account, which benefits are paid out from.

Which benefits are provided and which indidivudals eligible under the HI program for Part A of Medicare.

1. Hospital Services -- principal benefit 2. Skilled nursing facility care, home health care and hospice care -- other benefits 3. Include insured workers, spouses, disabled children, and survivors (such as widows and dependent parents)

To be eligible for OASDI disability benefits..

1. Individuals must be fully insured and disability insured 2. Latter status ^^ requires a certain number of credits to have been earned in the period ending with the quarter in which the disability occurred. 3. Special rules apply to younger workers and blind workers to make it easier for them to qualify. 4. Dependents of the disabled worker may also qualify 5. Disabled worker receives a benefit equal to 100% of the PiA and the dependents each receive 50% of the PIA -- subject to a family max.

List the beneficiary categories and the corresponding benefits under OASDI.

1. Insured workers -- may receive un-reduced retirement benefits in the amount of the primary insurance amount (PIA) beginning at the NRA, or reduced benefits beginning at earlier ages, down to the age of 62. 2. Spouse of retired workers -- May receive benefits at the rate of 50% of the PIA if the claim is first made at the NRA or over, and at a reduced rate if claimed at ages down to the age of 62. 3. Spouses with dependent children under the age of 16 (or a child age 16 or older who was disabled before the age of 22): The spouse receive benefits regardless of age in an un-reduced amount (50% of the PIA) 4. Divorced spouses when the marriage has lasted at least ten years: The benefits amount is the same as that of un-divorced spouses. 5. Children, under the age of 18 (Children over 18 or over disabled before the age of 22 or children aged 18 attending Elementary or High school fulltime): eligible for a supplementary payment at a rate of 50% of the PIA. 6. Grandchildren and Great-Grandchildren can qualify as "children" if they are dependent on the grandparent (retired worker) and if both parents of the child are disabled or deceased. **An overall maximum on total family benefits is applicable. Also, if a person is eligible for more than one benefit, the largest is payable.

How is an earnings test applied to OASDI benefits?

1. Only applies to those below the NRA, which ranges form 65-67. (depending on date of birth) 2. Generally, retirement benefits should be paid only to persons who are substantially retired. 3. Earnings must be less than an exempt amount (14,160 in 2011 and increases annually). 4. Different exempt amounts depending on whether you are above the NRA or below the NRA.

To which type of employers does the UI program apply?

1. Originally -- only to private sector ERs with 8 or more workers in industry and commerce. 2. Now -- almost all private and public sector employment, most significant not-for-profit organizations and many agricultural and domestic service workers. 3. Private sector covered by FUTA -- one or more EEs on one day in each of 20 weeks in the current or preceding year, or if they pay $1500 or more. 4. EEs of state and local government must be covered regardless of ER size, according to federal law. 5. Notable exclusion -- railroad industry is covered by a separate program, Railroad Unemployment Insurance Act of 1938

What additional benefits does the federal government provide during periods of high unemployment?

1. Permanent Federal-State Extended Benefits (EB) program exist that pay additional weekly benefits to unemployed workers in states with high unemployment. 2. Provides an additional 12 weeks of benefits for those who've exhausted their 26 weeks of regular benefits on a state-by-state basis. 3. During periods of recession and slow economic growth, Congress has frequently enacted special temporary legislation that provides additional benefits to workers who have exhausted all benefits.

Which benefits are provided by and which individuals are eligible under the SMI program or Part B of Medicare?

1. Principal SMI benefit -- partial reimbursement for 4 basic benefits: 1. Doctors' services 2. Out patient hospital services 3. Home health care 4. Other Medical services (ambulance, prosthetic devices) 2. Individuals aged 65 or over can elect SMI on an individual basis regardless of whether they have OASDI insured status.

What is the OASDI definition of disability?

1. Relatively strict 2. So severe, that individual is unable to engage in any substantial gainful activity, and the impairment must be a medically determinable physical or mental condition that is expected to continue for at least 12 months or to result in prior death. 3. For persons with alcoholism or drug abuse problems -- disability benefits are not payable unless they have another disabling condition, which by itself, would be qualifying

Describe the appeal process of the UI program.

1. SSA mandates that each approved state program have a procedure that allows claimants whom are denied benefits to have a fair hearing. 2. All state programs also allow ERs to challenge decisions. 3. All states have a 2 step review process. Maybe be initiated by the claimant or the ER responding to a communication from the state agency that a claim has bee filed. 3a. First step is a semi-formal hearing with a referee, hearing office or administrative law judge. (few get above this step) 3b. Second step is in front of a more formal board or commission. 4. Since UI benefits are usually for short periods of time, the time for filing appeals is rather short.

What are the eligibility requirements to qualify for unemployment benefits?

1. States have considerable discretion on setting eligibility requirements, however there are some common: 2. Workers unemployed through no fault of their own, who are ready, willing and able to work and actively seeking work are entitled. 3. Can't deny solely b/c of pregnancy or term of pregnancy. Those not qualified. 4. Job losers -- those who lost job involuntarily and through no fault of their own 5. Job Leavers -- benefits are not available to those who quit their job without good cause, or have been terminated b/c of misconduct. 6. New entrants and re-entrants 7. May not be paid to professional athletes during off seasons or educators between terms.

List the survivors of insured workers who can receive OASDI monthly benefits

1. Surviving spouse aged 60 or over 2. Dependent parents aged 62 or over 3. Children under the age of 18 (any age if disabled before the age of 22), children aged 18 who are FT students in elementary or high school. 4. Widowed parent of an eligible child under the age of 16 or disabled before the age of 22 5. Disabled widow(widower) or surviving divorced spouse who is aged 50 or older is eligible for benefits under certain conditions.

Describe the financing of the OASDI program

1. This SS program is financed through 4 separate trust funds: 1.The Federal Old Age and Survivors Insurance (OASI) Trust Fund, 2. The Federal Disability Insurance (DI) Trust Fund, 3. The Federal Hosptial Insurance (HI) Trust Fund of Medicare --The three above are paid out by payroll taxes. 4. The Federal Supplementary Medical Insurance (SMI) Trust Fund of Medicare. --The SMI is financed by monthly premiums charged to beneficiaries and by payments from general revenues. 2. The OASI and DI programs were completely financed by payroll taxes (and interest earned on trust funds) until 1983, when two instances of general revenue financing occurred. Primarily, this doesn't happen. 3. The Treasury does pass proceeds of federal income tax on the part of the monthly benefits for upper and high income persons. 4. Federal government doesn't guarantee payment of benefits. If a trust fund were to be depleted, it could not obtain grants or even loans from the General Fund of the Treasury.

Provide a brief history of Unemployment Insurance.

1. U. S. UI program was created by the Social Security Act of 1935. (SSA) and the FUTA (Federal Unemployment Tax Act) of 1939. 2. SSA authorizes federal grants to the states for administration of their unemployment programs, and establishes the unemployment trust fund. 3. Also gave loans and advances to insolvent state programs. 4. Basically unchanged since 5. UI is administered by the 53 states with some federal oversight and assistance during periods of high unemployment. (D.C, Puerto Rico and the Virgin Islands)

Describe the administration of the Unemployment Insurance Program

1. UI was created by federal statue -- however most of it is run under each states unemployment laws. 2. Considerable variation state to state. 3. Federal government -- establishes parameters in regards to coverage, funding and fairness and it administers the trust funds, pays state admin expenses and funds extended benefits during periods of high unemployment. 4. Federal -- Office of Unemployment Insurance, Employment and Training Administration, U.S. Department of Labor. 5. The Unemployment Trust Fund is administered by the Treasury Department.

Under normal economic conditions, how many weeks of UI is provided and how are weekly benefits determined?

1. Up to 26 weeks in majority of states 2. Most are entitled to less b/c of insufficient covered employment or earnings in the base period. 3. Weekly Benefit Amount (WBA) -- is a function of the amount of the recipient's covered employment and earnings during the base period. Usually, 50% of claimants weekly earnings. (Calculations vary across states -- No Federal standard) 4. Differences by state are mostly due to cost of living, industry and occupational mix.

During the recession of 2008 and it's aftermath of long-term unemployment the funds provided proved inadequate. What happened?

Federal assistance had to be increased to 100% general fund financing for several extensions of unemployment benefits allowing the state programs to continue to pay needed benefits.

Taxes on unmemploymement benefits

subject to federal and often state income taxation, but not payroll taxes.