Chapter 10: Key Terms

Question 1

AIME (Average Indexed Monthly Earnings)

Answer 1

A worker’s highest 35 years of earnings adjusted for inflation and averaged on a monthly basis. AIME is used as the basis for the PIA calculation

Question 2

Benefit Periods

Answer 2

Begins on the first day an individual receives services as a patient in a hospital or skilled nursing facility and ends after 60 consecutive days without further skilled care

Question 3

Cost-of-Living Adjustment (COLA)

Answer 3

The cost-of-living adjustment applied to Social Security benefits

Question 4

Currently Insured Workers

Answer 4

A worker who has earned at least six quarters of coverage out of the previous 13 quarters for Social Security

Question 5

Disability Benefit

Answer 5

A Social Security benefit available to recipients who have a severe physical or mental impairment that is expected to prevent them from performing “substantial” work for at least a year or result in death. To qualify for these benefits, the recipient must have sufficient amount of Social Security credits

Question 6

Disability Insurance (DI) Trust Fund

Answer 6

The trust fund that pays benefits to workers with disabilities and their families. It is funded by 0.90% of an individual’s taxable earnings up to $128l (2018)

Question 7

Family Benefit

Answer 7

A Social Security benefit available to certain family members of workers eligible for retirement or disability benefits

Question 8

FICA (Federal Insurance Contributions Act)

Answer 8

A law allowing Social Security taxes, including Medicare taxes, to be deducted from employee’s paychecks

Question 9

Fully Insured

Answer 9

A worker who has earned 40 quarters of coverage under the Social Security system

Question 10

Hospital Insurance (HI) Trust Fund

Answer 10

The trust fund that pays for services covered under the hospital insurance provisions of Medicare (Part A). It is funded by 1.45% of an individual’s taxable earnings (no limitations)

Question 11

Maximum Family Benefit

Answer 11

The limit on the amount of monthly Social Security benefits that may be paid to a family

Question 12

Medicaid

Answer 12

Provides medical assistance for persons with low income and resources

Question 13

Medicare

Answer 13

A federal health insurance plan for those who have attained full retirement age or have been disabled whether retired or still working

Question 14

Modified Adjusted Gross Income (MAGI)

Answer 14

The sum of an individual’s adjusted gross income plus tax exempt interest, including interest earned on savings bonds used for higher education. Amounts excluded from the taxpayer’s income for employer provided adoption assistance, amounts deducted for interest paid for educational loan. Amounts deducted as qualified tuition expense, and income earned in a foreign country, a U.S. possession, or Puerto Rico that is excluded from income

Question 15

Old Age, Survivor, and Disability Insurance (OASDI)

Answer 15

An inclusive title given to the Social Security benefits system

Question 16

Old Age and Survivor Insurance (OASI)

Answer 16

The trust fund that pays retirement and survivors benefits funded by 5.3% of an individuals taxable earnings up to $128,400 (2018)

Question 17

Primary Insurance Amount (PIA)

Answer 17

The amount on which a worker’s retirement benefits is based. The PIA determines the amount the applicant will receive at his full retirement age based on the year in which the retiree turns 62. The PIA is indexed to the Consumer Price Index (CPI) annually

Question 18

Retirement Benefit

Answer 18

The most familiar Social Security benefits, full retirement benefits are payable at normal retirement age and reduced benefits as early as age 62 to anyone who has obtained at least a minimum (40 quarters) amount of Social Security credits

Question 19

Retirement Earnings Limitations Test

Answer 19

A test that may reduce the Social Security benefit paid to an individual based on their other income

Question 20

Supplemental Security Income (SSI)

Answer 20

A program administered by the Social Security Administration and funded by the general Treasury that is available to those at full retirement age or the disabled who have a low income and few assets

Question 21

Supplemental Medical Insurance (SMI) Trust Fund

Answer 21

The trust fund that pays for services covered under the medical insurance provisions of Medicare, known as Part B. The coverage is a funded by general federal tax revenues and monthly medicare premiums paid by enrollees

Question 22

Survivors’ Benefit

Answer 22

Social Security benefit available to surviving family members of a deceased, eligible worker