Ch 10 Social Security Flashcards
Quarter of Coverage
Quarter of Coverage is a basic unit for determining whether a worker is insured under the Social Security program.
Social Security Act of 1935
The Social Security Act of 1935 was created to provide for the general welfare of United States citizens who are 65 years of age and older. The Act was enacted by the Senate and House of Representatives of the United States to enable individual states to make more adequate provisions to furnish financial assistance to the aged, blind, dependent and crippled children, maternal and child welfare, public health, and to establish more adequate provisions for the administration of their unemployment compensation laws; to establish a Social Security Board; to raise revenue; and to provide a basic floor of protection to all working Americans against the financial problems brought on by death, disability, and aging. In 1939 the law was changed to add survivors’ benefits and benefits for
the retiree’s spouse and children. In 1956 disability benefits were added. Social Security is an entitlement program, not a welfare program. It is based on a “pay now in exchange for benefits later”
system.
FICA taxes (Federal Insurance Contributions Act)
FICA taxes (Federal Insurance Contributions Act) are used to fund the Social Security program if a person hasn’t contributed through their payroll program, they are not eligible for benefits.
Credits
Credits are the determining factor between being classified as fully insured or currently insured. Once a person becomes fully insured, death benefits are extended to his (or her) family. In other words, the
family becomes eligible for survivorship benefits. Four credits is the maximum any one person can earn in a given year; therefore, for the 40-quarter rule to apply, an individual must have been employed and have paid FICA taxes for 10 years at least.
Fully Insured
Fully Insured is a status of complete eligibility for the full range of Social Security benefits: death benefits, retirement benefits, disability benefits, and Medicare benefits. A person must have contributed for 40 quarters of employment to be fully insured.
Currently Insured
Currently Insured is under Social Security, a status of limited eligibility that provides only death benefits.
OASDI
OASDI stands for old age, survivor and disability insurance, which is more commonly referred to as Social Security. To pay for these programs, the federal government imposes a tax on earned income
that must be withheld by your employer. The OASDI deduction on your paycheck shows how much was withheld.
Primary Insurance Amount (PIA)
The Primary Insurance Amount (PIA) is the benefit (before rounding down to next lower whole dollar) a person would receive if he/she elects to begin receiving retirement benefits at his/her normal
retirement age. At this age, the benefit is neither reduced for early retirement nor increased for delayed retirement.
Blackout period
Blackout period is a period following the death of a family breadwinner during which no Social
Security benefits are available to the surviving spouse.
Disability Benefit Qualifications
Disability Benefit Qualifications is when Social Security uses both medical disability criteria and non- medical criteria to determine whether you qualify for Social Security disability (SSDI, the program
based on work credits) or Supplemental Security Income (SSI, the low-income program). First, you must be able to prove that you are medically disabled.
Retirement Benefits
Retirement Benefits is when Social Security retirement benefits are only available to covered workers who are fully insured upon retirement. Benefits are paid monthly. If a covered worker retires at the normal retirement age, he or she will receive 100% of the PIA. However, if a covered worker retires early at the age of 62, the maximum Social Security benefits is 80% of the PIA. This reduction remains all through retirement. Retirement benefits pay covered retired workers, their spouses, and other eligible dependents a monthly retirement income.
Taxation of Social Security Benefits
Taxation of Social Security Benefits states that Social Security benefits are subject to federal income tax if the beneficiary files an individual tax return and his or her annual income is greater than $25,000. Joint filers will pay federal income tax on their Social Security benefits if their income is greater than $32,000
