GBA 2 - Assignment 10
List the beneficiary categories and the corresponding benefits under OASDI
(a) Insured workers - they can receive unreduced retirement benefits in the amount of the primary insurance amount(PIA) , beginning at the NRA, or actuarially reduced benefits beginning at earlier ages, down to the age of 62 (b) Spouse of retired workers - they can receive benefits at the rate of 50% of the PIA if the claim is made at the NRA or over, and at a reduced rate if claimed at ages down to the age of 62 (c) Spouses with dependent children under the age of 16 (or a child aged 16 or over who was disabled before the age of 22) - the spouse receives benefits regardless of age, in an unreduced amount (50%of the PIA)
List the survivors of insured workers who can receive OASDI monthly benefits.
(a) surviving spouse aged 60 or over (b) dependent parents aged 62 or over (c) Children under the age of 18 (or at any age if disabled before the age of 22), children aged 18 who are full-time students in elementary or high school (d) Widowed parent of an eligible child under the age of 16 or disabled before the age of 22 (e) Disabled widow or surviving divorced spouse who is aged 50 or older is eligible for benefits under certain conditions
List the beneficiary categories and the corresponding benefits under OASDI
(d) Divorced spouses when the marriage has lasted at least ten years - the benefits amount is the same as that of undivorced spouses (e) Children under the age of 18 (and children aged 18 or over and disabled before the age of 22, plus children attending elementary or high school full-time at the age of 18) - they are eligible for a supplementary payment at a rate of 50% of the PIA (f) 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 decreased
What additional benefits does the federal government provide during periods of high unemployment?
A permanent federal-state extended benefits program is in existence that pays additional weekly benefits to unemployed workers in states with high unemployment. It provides an additional 13 weeks of benefits for those who have exhausted their 26 weeks of regular benefit eligibility on a state-by-state basis. The federal government pays one-half of the cost of the program. 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.
Describe the appeal process of the UI program.
All stats have a two-step review process. The procedure may be initiated by the claimant or by the employer responding to a communication from the state agency that a claim has been filed or that its reserve account is being charged. 1. typically a semiformal hearing with a referee, hearing office or administrative law judge. The parties do not usually have legal representation, although the administrative law judge is usually a lawyer. 2. before a more formal board or commission. Given the usually short duration of benefits, all states impose rather short time limits for filing appeals. Appeal from the second step of review is to the state courts. Given the routine nature of most claims and that the employer's exposure is limited to a maximum of 26 weeks of benefits, relatively few appeals rise above the first step.
What factors have contributed to a high percentage of UI recipients exhausting their regular unemployment benefits?
Generous benefits and easing of program requirements, such as applying for benefits and providing information on job search activities by phone or email, have reduced the inconvenience of collecting benefits. In two-income families, if one spouse, especially if the secondary earner, is collecting unemployment benefits, there is often less urgency in finding another job soon. also, the age structure of the U.S. labor force has changed. The baby boomers are now between the ages of 46 and 64. When older workers lose their jobs, it is often difficult to find another and consequently more likely that they exhaust their benefits. Also, during economic contractions, the unemployment rate increases and job seekers experience more difficulty finding suitable employment. This translates into even longer durations of unemployment and even higher exhaustion rates.
To whom does the Social Security program's Old Age, Survivors, and Disability Insurance (OASDI) coverage apply?
OASDI applies to somewhat more than 90% of the total workforce in the United States. The vast majority of persons covered under OASDI are so affected on a mandatory or compulsory basis although there are several categories that have optional or semioptional coverage. OASDI coverage applies not only to employees, both salaried and wage earner, but also to self-employed persons. Members of the armed forces are covered compulsorily, as are federal civilian employees hired after 1983. Compulsory coverage also applies to lay employees of churches, to employees of nonprofit charitable and educational institutions, to employees of state and local governments that do not have retirement systems and to American residents who work abroad for American corporations.
How is the earnings test applied to OASDI disability benefits?
OASDI benefits are coordinated with disability benefits payable under other governmental programs, except for needs-tested ones, benefits payable by the department of verterans affairs and government employee plans coordinated with OASDI. The most important of such coordination is with workers' compensation programs , whose benefits are taken into account in determining the amount of the OASDI disability benefit. The total OASDI disability and the other disability benefit recognized cannot exceed 80% of average current earnings
How are regular state unemployment compensation programs financed?
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 ($434 per employee). The states must adopt a wage base of at least $7,000 for their programs to be approved. If the states have an approved program, and all states do, 5.4% of their employers' FUTA tax may be offset and paid to the state. In general, employers pay an effective federal tax of .8%, or a maximum $56 per covered employee per year.
Describe the financing of the OASDI program
The SS is financed through 4 separate trust funds: The Federal Old Age and Survivors Insurance (OASI), the Federal Disability Insurance (DI), the Federal Hospital Insurance (HI), the Federal Supplementary Medical Insurance (SMI). The OASI and DI programs have been financed entirely y payroll taxes with minor exceptions. Thus, on a permanent ongoing basis, no payments from general revenues are available to the OASDI system. The General Fund of the Treasury does pass on to the trust funds (OASI and DI) the proceeds of the federal income tax on part of the monthly OASDI benefits for upper-middle-income and high-income persons. The federal government does not guarantee the payments 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 the U.S. unemployment insurance (UI) program.
The U.S. UI program was created by the Social Security Act of 1935 and the FUTA of 1939. SSA authorizes federal grants to the states for the administration of their unemployment programs, and it established the Unemployment Trust Fund (UTF). The act also provides for loans and advances to insolvent state programs. The program has been amended many times; however, with the exception of extended benefit durations during recessions, its basics have remained intact. Created by federal law, UI is administered by the 53 "states" with some federal oversight and assistance during periods of high unemployment.
What is the OASDI definition of disability?
The disability must be so severe that the 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. 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.
Eligible for OASDI disability benefits
The disabled worker receives a benefit equal to 100% of the PIA and the dependents each receive 50% of the PIA, subject to the maximum family benefit. Because of the so-called disability freeze provision, periods of disability are blanked out for purposes of determining insured status and benefit amounts for subsequent retirement, disability and survivor benefits.
How is the earnings test applied to OASDI disability benefits?
The earnings or retirement test applies to the auxiliary beneficiaries of disabled workers, but not to the disabled worker beneficiary. However, the earnings of one beneficiary do not affect the benefits of the other beneficiaries in the family. The test does not apply to disabled worker beneficiaries, because any earnings are considered in connection with whether recovery has occurred, except those during trial work periods.
How is an earnings test applied to OASDI benefits?
The general underlying principle of the earnings test is that retirement benefits should be paid only to persons who are substantially retired. The basic feature of the earnings test is that an annual exempt amount applies, so full benefits are paid if earnings, including those from both covered and noncovered employment, are not in excess thereof. There is one exempt amount for the earlier months in the year of attaining the NRA and another exempt amount applicable in the years before attaining the NRA. These exempt amounts both generally automatically increase annually.
Which benefits are provided by and which individuals are eligible under the HI program for Part A of Medicare?
The principal benefit provided by the HI program is for hospital services. Other basic benefits it provides include skilled nursing facility care, home health care and hospice care. All individuals aged 65 and over who are eligible for monthly benefits under OASDI are eligible for HI benefits. HI eligible include not only insured workers, but also spouses, disabled children, and survivors, such as widowed spouses and dependent parents. In addition, HI eligibility is available for disabled beneficiaries who have been on the benefit roll for at least two years. Further, persons under the age of 65 with end-stage renal disease who require dialysis or renal transplant are eligible for HI benefits if they meet one of a number of requirements.
Under "normal" economic conditions, how many weeks of UI is provided and how are weekly benefits determined?
The regular UI program provides up t 26 weeks of unemployment compensation in the majority of states. Many recipients are entitled to less because of insufficient covered employment or earnings in the base period. As for how benefits are determined, the weekly benefit amount is a function of the amount of the recipient's covered employment and earnings during the base period. Benefits are typically set at about 50% of the claimant's weekly earnings within certain minimums and maximums. The period of past wages used and the formulas for computing the benefits from these past wages vary greatly across the states since there are no federal standards for the benefits amounts. The variation is, in part, because of differences in cost of living, industry, and occupational mix and what might be called state philosophy or tradition.
Eligible for OASDI disability benefits
To be eligible for OASDI disability benefits, individuals must be fully insured and disability insured. The latter status requires a certain number of QCs or credits to have been earned in the period ending with the quarter in which the disability occurs. Special rules apply to younger workers and blind workers to make it easier for them to qualify for OASDI disability benefits. In addition to the disabled worker, dependents in the same categories that apply to old-age retirement benefits can receive monthly benefits.
To which types of employers does the UI program apply?
UI covers almost all private and public sector employment, most significant not-for-profit organizations and many agricultural and domestic service workers. In the private sector, employers are covered by FUTA if they have one or more employees on one day in each of 20 weeks in the current or preceding year, or if they pay $1,500 or more in any calendar quarter in the current or preceding year. Given that the $1,500 payroll threshold is not indexed and that nominal wages have increased substantially over the years, the extent of coverage has increased greatly. Moreover, many states have adopted more encompassing standards.
Describe the administration process of the UI program.
UI was created by federal statute; however, most of the program operated under the 53 state unemployment laws. There is considerable variation from state to state. The federal government establishes parameters in regard to coverage, funding and fairness; and it administers the trust funds, pays state administrative expenses and funds extended benefits during periods of high unemployment. Federal administration of UI is done largely by the Office of Unemployment Insurance, Employment and Training Administration, U.S. Department of Labor. The Unemployment Trust Fund (UTF) is managed and invested by the Treasury Department. State administrative agencies have various names and positions within the state government.
Unemployment benefits
Unemployment benefits are subject to federal, and often state, income taxation, but not payroll taxes.
Provide a brief summary of the history of the OASDI program.
When the program was first developed in 1934-35, it was confined entirely to retirement benefits. It was not until 1939 that auxiliary and survivor benefits were added and bot until 1956 that disability benefits were made available. The normal retirement age, was originally established as 65. The original program applied only to workers in commerce and industry. It was not until the 1950s that coverage extended to additional categories of workers. Now, almost all categories of workers are covered, including self employed.
What are eligibility requirements to qualify for unemployment benefits?
Workers unemployed through no fault of their own, who are ready, willing and able to work and are actively seeking work are entitled to unemployment benefits. In addition, benefits are limited to "job losers" who lost their job involuntary and through no fault of their own. Benefits are not available to "job leavers" who quit their job without good cause, nor are they available to those terminated for gross misconduct on the job. Benefits also are not available to new entrants and reentrants because they do not have significant recent attachment to the labor force.
Eligibility for OASDI
Eligibility for OASDI retirement benefits-termed fully insured status-depends on having a certain number of quarters of coverage, sometimes referred to as credits, varying with the year of birth or, expressed in another manner, depending on the year of an individual's attainment of the age of 62.
How are regular state unemployment compensation programs financed?
FUTA tax together with state unemployment tax systems provides the funds for paying unemployment compensation to workers who have lost their jobs. Only employers pay FUTA taxes, and with the exception of three states, that is true also for state unemployment taxes; that is, UI is financed almost exclusively by employer payroll taxes based on the covered wages of the employees. Workers in Alaska, New Jersey and Pennsylvania pay state unemployment taxes.
Which benefits are provided by and which individuals are eligible under the SMI program or Part B of Medicare?
The principal SMI benefit is partial reimbursement for four basic benefits: doctors' services, outpatient hospital services, home health care and other medical and health services. There are limits on SMI coverage in workers' compensation cases, medical care under liability policies, private group health insurance applicable to ESRD and employer-sponsored group health insurance for employees and their spouses. Individuals aged 65 or over can elect SMI on an individual basis regardless of whether they have OASDI insured status. In addition, disabled OASDI beneficiaries eligible for HI and persons with ESRD eligibility under HI can select SMI coverage.
