9- Social Security

In determining Social Security retirement benefits, which of the following statements is CORRECT? Average monthly wages (AMW) are adjusted for inflation. The Primary Insurance Amount (PIA) determines the worker's average indexed monthly earnings (AIME). The PIA is a determination of the amount equal to the worker's full retirement benefit at the worker's full retirement age. Workers retiring past age 59 can receive 100% of their PIA.

The PIA is a determination of the amount equal to the worker's full retirement benefit at the worker's full retirement age. (The Primary Insurance Amount (PIA) is the amount equal to the worker's full retirement benefit at age 65. )

Larry died in an automobile accident. His survivors are eligible for limited Social Security benefits. Larry's insured status was Partially insured Insured Conditionally insured Half insured

Partially insured (To be considered partially insured, a worker must have earned 6 credits during the 13-quarter period ending with the quarter in which the worker died.)

How long does the elimination period last for a Social Security Disability claimant? 12 months 5 months 0 months 6 months

5 months (Social Security Disability benefits are subject to rigid requirements. Disability benefits begin after the worker has satisfied a waiting period of 5 consecutive months, during which the worker must be disabled. The disability must be expected to last a minimum of 12 months.)

Which one of the following is NOT covered by Social Security Self-employed worker Business owner Railroad worker Insurance salesman

Railroad worker

Rudy is eligible for full death, retirement, and disability benefits under Social Security. His worker status is completely insured currently insured fully insured partially insured

fully insured

Under Social Security, in order to be considered fully insured, the worker must have worked how many years and received how many quarters? 40 years and 10 full quarters 10 years and 40 full quarters (Workers are fully insured if they have accumulated the required number of credits based on their age. For most people, the required number of credits is 40 (representing approximately 10 years of work).) 20 years or less and 40 full quarters 40 years or less than 10 quarters

10 years and 40 full quarters (Workers are fully insured if they have accumulated the required number of credits based on their age. For most people, the required number of credits is 40 (representing approximately 10 years of work).)

How long must an individual be unable to engage in any gainful activity due to physical or mental disability in order to qualify for Social Security Total Disability? 3 months 6 months 12 months 18 months

12 months

Which of the following examples pertaining to Social Security benefits is CORRECT? -Simon was a fully employed worker at the time of his death. His surviving spouse will receive a lump-sum death benefit of $2,250. -Lola, age 30, has a daughter, age 10. Her husband, who is covered under Social Security, died unexpectedly last month following surgery. Both Lola and her daughter are entitled to receive monthly survivor benefits until her daughter reaches age 18. -Mason, who is married with one son, age 16, is a fully insured retired worker receiving Social Security benefits. In addition, his spouse is eligible for benefits at age 62 and his son is eligible for benefits until he is 18 years old. -Arlene, the 20-year-old daughter of a fully insured retired worker, becomes totally and permanently disabled from injuries received in a car accident. Because her disability occurred after age 16, Arlene is not eligible for her father's Social Security benefits.

Mason, who is married with one son, age 16, is a fully insured retired worker receiving Social Security benefits. In addition, his spouse is eligible for benefits at age 62 and his son is eligible for benefits until he is 18 years old. (The spouse of any worker eligible for retirement benefits is entitled to an old age income at a reduced amount starting at age 62. An unmarried child of a worker on retirement income is generally eligible to receive a monthly benefit until the child turns 18.)

Individuals covered by Social Security include all of the following EXCEPT Small business owners State workers who are not covered by state pension plans Federal employees (after 1984) Railroad workers

Railroad workers (Railroad workers are covered under a separate federal program, the Railroad Retirement System.)

Social Security is funded by a payroll tax imposed on a limit of an employee's income. What is this limitation called? Taxable wage base Maximum wage limit Average monthly wage (AMW) Average indexed monthly earnings (AIME)

Taxable wage base (This payroll, or FICA tax, is applied to employees' incomes up to a certain limit, called the taxable wage base.)

Social Security benefits include all of the following, EXCEPT Unemployment benefits Disability benefits Retirement benefits Medicare benefits

Unemployment benefits

FICA tax is applied to an employee's income up to a certain income amount. This amount is called average monthly wage taxable wage base average indexed monthly earnings primary insurance amount

taxable wage base

Delores just received her first Social Security Disability payment. What can we correctly assume about her? Her disability is expected to last at least 12 months She is at least 65 years old She has applied for Medicare She became disabled 12 months ago

Her disability is expected to last at least 12 months (The qualification for Social Security Disability benefits is subject to rigid requirements. One of these requirements states the disability must be the result of a physical or mental impairment expected to last at least 12 months.)

Under Social Security disability requirements, a worker is fully insured on a permanent basis after having worked in a covered occupation for: 10 quarters 20 quarters 30 quarters 40 quarters

40 quarters (To obtain fully insured status, a covered worker must accrue a total of 40 quarters of credit, which is about 10 years of work.)

If Martha would like to receive Social Security retirement benefits prior to age 65, at what age can she do this? 60 62 She cannot receive benefits prior to age 65 Whenever she has accumulated the required work credits

62

What is the formal name for Social Security? Qualifed Age Survivors Disability Insurance Advanced Age Survivors Disability Insurance Retirement Age Survivors Disability Insurance Old Age Survivors Disability Insurance

Old Age Survivors Disability Insurance (The Social Security program, enacted in 1935 and administered at the federal level by the Social Security Administration, is more formally called OASDI. This acronym aptly identifies the types of protection provided under the program: "Old Age" (retirement), "Survivors" (death benefits), and "Disability Insurance".)

How is Social Security (OASDI) funded? Federal grants Sales taxes Treasury Bonds Payroll taxes

Payroll taxes (OASDI is supported by a payroll tax, paid by employees, employers, and self-employed individuals.)

The primary insurance amount (PIA) is equal to 1/2 worker's retirement benefit at 62 1/2 worker's retirement benefit at 65 Full worker's retirement benefit at 62 Full worker's retirement benefit at 65

Full worker's retirement benefit at 65 (The PIA is actually the amount equal to the worker's full retirement benefit at age 65 (benefits are reduced for early retirement) or benefits to a disabled worker. Benefits payable to workers and their spouses and dependents are usually expressed as a percentage of the worker's PIA. For example, a person who elects to retire at age 62 with Social Security retirement benefits will receive benefits equal to 80% of his or her PIA.)

How does one qualify as a fully-insured individual under Social Security disability coverage? Individual has been credited with the appropriate number of quarters of coverage Individual is currently covered under Medicaid Individual is expected to be disabled for 5 months Individual is currently employed

Individual has been credited with the appropriate number of quarters of coverage

All of the following statements correctly describe the purpose of Social Security EXCEPT It provides a source of income for a meaningful standard of living during retirement It provides basic protection against financial problems accompanying death, disability, and retirement It augments a sound personal insurance plan It provides retirement and survivor benefits to a worker and the worker's family

It provides a source of income for a meaningful standard of living during retirement

Jessica, a widow, stopped receiving survivor Social Security benefits when her son turned 16. At what age will she be eligible to start receiving benefits again? 65 59 1/2 60 62

60

Jan, a single, working mother, dies at age 40. Dave, her only son, would receive a one-time lump-sum benefit of $255 $500 $1,000 $2,555

$255 (The maximum lump-sum death benefit to a deceased worker's surviving spouse or children is $255.)

What is the interval spanning between the day when the youngest child of a family turns 16 and before the surviving spouse turns age 60 called? Accumulation period Nonpayment period Blackout interval Blackout period

Blackout period (The blackout period begins when the youngest child turns 16 and continues until the spouse reaches age 60, at the earliest. If there are no eligible children with the surviving spouse when the breadwinner dies, the blackout period starts immediately.)

Which of the following does the FICA tax fund Social Security(OASDI) and Unemployment benefits Medicare and Railroad Retirement System benefits Unemployment and Medicaid benefits Social Security(OASDI) and Medicare benefits

Social Security (OASDI) and Medicare benefits (A majority of FICA tax is used to fund Social Security benefits. The remaining portion funds Medicare benefits.)

The period in which there are no Social Security benefits for the surviving spouse is called the blackout period elimination period ineligible period dependency period

blackout period (The blackout period begins when the youngest child turns 16 and continues until the spouse reaches age 60, at the earliest. If there are no eligible children with the surviving spouse when the breadwinner dies, the blackout period starts immediately.)

An insured's status under Social Security can be described as partially insured actively insured fully insured completely insured

fully insured (There are two types of insured statuses that qualify individuals for Social Security benefits: fully insured and currently insured. Most Social Security benefits are paid to fully insured individuals.)