Chapter 7: Social Security, Medicare, and Other Government Programs

Question 1

Workers covered by social security and Medicare.

Answer 1

95% of workers are covered by social security and 98% are covered by Medicare.

Question 2

Medicare part B

Answer 2

Part B recipients pay a monthly premium.

Question 3

Fully insured

Answer 3

must have 40 credits to be fully insured (10 years).

Question 4

Currently insured

Answer 4

must have 6 credits during the most 13 quarter period.

Question 5

Disability insured

Answer 5

(1) Must be fully insured and

(2) Must have a minimum amount of work under Social Security within a recent time period.

Question 6

Social Security benefits

Answer 6

Age 62 minimum age.

Approximate 8% increase between 62 and 70.

Question 7

Primary insurance Amount

Answer 7

Monthly amount a worker will receive under social security if he or she retires at full retirement age or becomes disabled. The amount on which all social security income benefits are based.

Question 8

OASDHI

Answer 8

old-age, survivors, disability, and health insurance (OASDHI) program

Question 9

Categories of social insurance programs

Answer 9

categories:
• Social Security
• Medicare
• unemployment insurance
• temporary disability insurance
• workers’ compensation insurance

Question 10

Social Security Tax

Answer 10

Employees pay 6.2 percent of the first $118,500 (2015) of earnings. Employers pay the same. Self-employed persons pay 12.4 percent of first $118,500 (2015) of self-employment income.

Question 11

Medicare Part A

Answer 11

Employees pay 1.45 percent of all earnings. Employers pay the same. Self-employed persons pay 2.9 percent of all self-employment income.

Question 12

Medicare Part B

Answer 12

Covered persons pay at least a $104.90 (2015) monthly premium. General revenues of the federal government cover the remainder (about 75 percent)
of the program’s cost.

Question 13

Social Security Credits

Answer 13

A worker receives one credit (also referred to as a quarter of coverage) for each $1,220 in annual earnings on which Social Security taxes were paid. However, no more than four credits may be earned in any one calendar year.
Must have 40 credits to be fully insured. 10 years.

Question 14

Social Security FRA age dates

Answer 14

1937 and before = 65 years
1938 = 65 years, 2 months
1939 = 65 years, 4 months
1940 = 65 years, 6 months
1941 = 65 years, 8 months
1942 = 65 years, 10 months
1943–54 = 66 years
1955 = 66 years, 2 months
1956 = 66 years, 4 months
1957 = 66 years, 6 months
1958 = 66 years, 8 months
1959 = 66 years, 10 months
1960 and later = 67 years

Question 15

PIA

Answer 15

The primary insurance amount (PIA) is the monthly amount a worker receives if he or she retires at full retirement age or becomes disabled, and it is the amount on which benefits for family members are based.

Question 16

Delaying Social Security

Answer 16

For persons born in 1943, for example, the increase is 2/3 of 1 percent per month, which equals 8 percent for delaying application for benefits for one full year. up to age 70.

Question 17

Earnings Test

Answer 17

Does not apply after FRA.
They are allowed annual earnings of up to $15,720 in 2015, and this figure is subject to annual indexing for later years. If a beneficiary earns more than this amount, his or her Social Security benefit is reduced by $1 for each $2 of excess earnings.

Question 18

The current Medicare program consists of four parts:

Answer 18

• Part A—Hospital Insurance
• Part B—Medical Expense Insurance
• Part C—Medicare Advantage
• Part D—Prescription Drug Coverage

Question 19

Medicare Part A

Answer 19

• No cost to fully insured candidates.
• Provides benefits for expenses incurred in hospitals, skilled-nursing
facilities, and hospices.
• Part A pays for inpatient hospital services for up to 90 days in a benefit period. A new benefit period begins after 60 days out of the hospital.
• Covers first 60 days with small deductible, next 30 days has a daily co-pay of 25% off the original deductible.
• 60 additional days reserve benefit at 50% of deductible copay.

Question 20

Medicare Part B

Answer 20

• Monthly premium, premium increases if your MAGI is above a certain amount and continues to increase as your income increases.
• Provides benefits for health expenses not covered under part A.

Question 21

Part C - Medicare Advantage

There are 5 types of Medicare Advantage Plans

Answer 21

1) HMOs - Health Maintenance Organizations
2) PPO’s - Preferred-Provider Organizations
3) PFFS - Private Fee-for-Service
4) MMSA - Medicare Medical Savings Account
5) SNP - Special Needs Plans

Question 22

HMOs - Health Maintenance Organizations

Answer 22

As with health maintenance organizations for persons who are not eligible for Medicare, beneficiaries typically must select a primary care physician
from the plan’s network. This physician must usually make referrals for specialty care. Some Medicare Advantage HMOs have a point-of-service option, under
which a beneficiary can elect to go outside the plan’s network, but the beneficiary will pay a portion of the cost of these services.

Question 23

PPO’s - preferred-provider organizations

Answer 23

Beneficiaries can elect out-of-network

care if they are willing to pay the additional cost for such care, which can be substantial.

Question 24

PFFS - private fee-for-service

Answer 24

Beneficiaries can go to any provider who agrees to accept the payment rates determined by the plan, but they may be required to pay a portion of these rates in the form of cost sharing. If a provider does not accept the PFFS plan rates, the beneficiary is responsible for the entire balance above what the plan pays. PFFS plans, which are similar to traditional major medical plans, were not widely purchased until recently. They are becoming increasingly popular with consumers, and more insurers are marketing such products.
However, federal legislation will decrease payments to these plans, starting in 2009, and this may affect their growth.

Question 25

MMSA’s - Medicare Medical Savings Account

Answer 25

These are similar to health savings accounts (HSAs). A beneficiary has a high-deductible policy, with the size
of the deductible varying from plan to plan. Medicare then puts an annual amount into a medical savings account that can be used for unreimbursed medical costs. MMSA plans are not yet widely purchased and are offered by only a small number of insurers in limited parts of the country.

Question 26

SNPs - Special Need’s Plan

Answer 26

SNPs are designed primarily to meet the needs
of beneficiaries who are eligible for both Medicare and Medicaid (or who have certain chronic conditions) and who live in institutions such as nursing homes, or
continue to live at home but need the level of care provided by such institutions. These plans help manage and coordinate the many services and providers needed by such beneficiaries. These plans are available only in limited geographic regions.

Question 27

Medicare Part D

Answer 27

Part D consists of voluntary prescription drug plans available to all Medicare beneficiaries enrolled in either Part A and/or Part B or enrolled in any of the various Medicare Advantage plans. Each enrollee must pay a monthly premium. No one can be denied coverage because of income level or for health reasons. Hereafter, Part D benefits are referred to as
Medicare prescription drug plans. Medicare prescription drug plans are private plans offered by insurance companies

Question 28

State Health Insurance Assistance Plan (SHIP)

Answer 28

Each state also has a State Health Insurance Assistance Plan (SHIP). These are state programs that get money from the federal government to give free health insurance counseling and assistance to people with Medicare.

Question 29

Deductibility of SS premiums/contributions

Answer 29

Employer contributions to the Social Security and Medicare program are tax deductible for
federal income tax purposes. Any employee contributions are paid with after-tax dollars.
Self-employed persons are able to deduct one-half of their Social Security and Medicare taxes as business expenses. In addition, Medicare premiums are treated the same as other medical expense premiums for individual insurance and may be deductible.

Question 30

Medicare Part D - deductible

Answer 30

If a beneficiary joins a Medicare prescription drug plan, he or she must pay the deductible—the first $320 of drug costs. Deductibles vary by plan but cannot exceed $320 in 2015. Most plans offer broader coverage.

Question 31

Medicare Part B Exclusions

Answer 31

• eyeglasses, hearing aids, or orthopedic shoes
• custodial care
• dental care unless it involves jaw or facial bone surgery or setting fractures
•

Question 32

Medicare beneficiaries may switch prescription drug plans when?

Answer 32

Unless a beneficiary is eligible for a special enrollment period, he or she may switch plans during an election period that runs from November 15 to December 31 of each year. The new plan takes effect on the following January 1.

Question 33

Social Security and Medicare Funding is referred to as?

Answer 33

Social Security and Medicare are based on a system of funding that the Social Security Administration refers to as partial advance funding.

Question 34

Medicare Taxation

Answer 34

Medicare benefits are received tax free.