Ch. 8 Flashcards
Social Security Act of 1935
established the Social Security program in the U.S., providing old-age pensions for retirees, unemployment insurance, aid to dependent children, and disability benefits. It aimed to offer financial support and a safety net during the Great Depression
Blackout period
the period following the death of a family breadwinner, during which no Social Security benefits are available to the surviving spouse
Credits
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 are 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 ten years, at least
Currently insured
refers to an individual’s eligibility for certain Social Security benefits based on their work history and the number of credits they have earned
Disability benefit qualifications
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). However, you must be able to prove that you are medically disabled first
FICA taxes (Federal Insurance Contributions Act)
are used to fund the Social Security program. If a person has not contributed through their payroll program, they are not eligible for benefits
Fully insured
a status of complete eligibility for the full range of Social Security benefits: death benefits, retirement benefits, disability benefits, and Medicare benefits
How long do you have to contribute FICA taxes to be fully insured under social security?
40 quarters of employment
Fully & permanently insured
an individual has paid FICA contributions for at least 40 quarters (which are not required to be consecutive)
Old age, survivor, and disability insurance (OASDI)
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
the benefit (before rounding down to the 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
Quarter of Coverage
a basic unit for determining whether a worker is insured under the Social Security program
Retirement benefits
are only available to covered workers who are fully insured upon retirement, and these 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 benefit 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
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
Earnings test
a Social Security rule that reduces benefits for individuals who claim benefits before reaching full retirement age and continue to earn income above a certain threshold
