Social Security

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Social Security

• A Summary

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History

• Social Security main goal in 1935 was to provide
  a safety net for retired workers.
• In 1939 it was amended to provide benefits for
  spouses of retired workers and for survivors of
  deceased workers.
• In 1956 legislation created the disability
  insurance
• Medicare started in 1966.
• In 1972 legislation was enacted to adjust
  benefits to reflect cost of living.

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• In 1972 legislation created Supplemental Security
  Income. SSI benefits were means-tested.
• Social Security recipients who have low incomes
  may also receive SSI benefits.
• 2000 Senior Citizens Freedom to work act.
  Recipients who have reached full retirement age
  (FRA) may continue to work and receive benefits.
• 2006 Part D prescription drug insurance

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Benefits

• Retirement
• Disability
• Survivors
• Medicare

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Type of Benefits Received

• 62.8 Retirement benefits
• 6.2 Spouses of retired workers
• 1.0 Children of retired workers
• 11.2 Spouses of deceased workers
• 4.1 Children of deceased workers
• 11.1 disabled workers
• .4 Spouses of disabled workers
• 3.2 children of disabled workers

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Who Is Covered?

• Almost everyone (95)
• Family members who work in the family business.
• Agricultural workers who are paid 150 or more in
  a calendar year from one employer.

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Who is not covered?

• Federal employees hired before 1984
• State and local government employees who elect
  not to be covered
• Railroad workers

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Special Provisions

• Not covered
• Household workers with wages less than 1400.
• Workers under 18 and students.
• Workers who hold another job that is the
  principal one.

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Costs?

• Social Security Tax (Federal Insurance
  Contribution Act or FICA)
• 2 parts Employer and employee each pays
• 6.2 of the first 87,900 in income (pays for
  benefits to entitled beneficiaries)
• 1.45(on all income) pays for hospital benefits
  for Medicare beneficiaries

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Cost

• The maximum taxable amount increases each year.
  In 2004 it is on the first 87,900 of earnings.

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Retirement Benefits

• Must have a minimum of 10 years of service.
• FRA 65 for persons born before 1938 and for
  persons born in 1960 or later 67
• Maximum family benefit applies if two or more
  persons receive benefits on the same record.
  (divorced spouse or surviving divorced spouse
  does not apply)

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• Amount of benefits depends upon salary, number
  of years paid into Social Security, and age at
  retirement.
• Age 62 and receive reduced benefits.
• Full Retirement Age full benefits
• Delayed Retirement Credits (DRCs) for Social
  Security recipients after 1943 increase 8 per
  year retirement is postponed.

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• Dependent child may receive up to 50 of workers
  benefits if
• Under age 18
• Up to age 19 and in school or
• Any age, if disabled before he/she reaches age
  22.

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Who can receive benefits when you retire?

• You do (PIA) primary insurance amount
• Spouse at full retirement age 50
• Spouse at age 62 32 to 36
• Spouse at any age with eligible child who is
  under 16 or disabled 50
• Each eligible child 50
• Benefits may be limited by family maximum.

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Who can receive benefits when you become disable?

• You, if you are so severely impaired that you
  cannot perform any substantial gainful work. The
  disability must be expected to last at least 12
  months or result in death.
• If you were born after 1980 you must have at
  least 6 earned credits (11/2 years) in last 3
  years.

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Who receives benefits?

• Spouse at FRA 50
• Spouse at age 62 35 5/12
• Spouse with child who is under age 16 or disabled
  50
• Each eligible child 50
• Benefits may be limited by family maximum.

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Survivors Benefits

• Lump Sum death benefit - 250 to widow(er) living
  with you or children who are immediately eligible
  for benefits.
• Widow(er) at age 65 100
• Widow(er) at age 62 81.3
• Widow(er) at age 60 71.5
• Disabled widow(er) at age 50-59 71.5
• Widow(er) under age 61 with eligible child who is
  under age 16 and disabled 75
• Each eligible child 75
• Benefits may be limited by family maximum.

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Insured

• For survivors to receive monthly benefits or the
  lump sum death payment you must be
• Fully Insured Depends on your age. IF you were
  born before 1942 40 quarters or 10 full years.
  After 1975 at least 6 quarters.
• Currently Insured Must have six quarters ending
  with the calendar quarter of death

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Medicare

• Medicare is a federal health insurance program
  for people age 65 and over, and certain disabled
  persons.
• Consist of two parts
• Part A covers some hospitalization, limited
  nursing home care, and hospice care
• Part B covers doctors fees, most outpatient
  hospital services.

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Long Term Nursing Care

• Is not covered by Medicare

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Who pays for Medicare?

• Part A is paid for by the 1.45 deducted from
  your salary and matched by your employer.
• Part B about 25 is financed by monthly
  premiums and 75 from general federal revenues.
  The rate in 2004 is 66.60 per month.
• Certain deductibles, coinsurance, and co-payments
  may also apply

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Taxes

• Some Social Security payments may be taxable.
• Social Security payments to families with high
  incomes must include up to 85 of their benefits
  as income for federal income tax purposes.