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

Question 1

Social Insurance Programs

Answer 1

Social Security
Medicare
Unemployment Insurance
Temporary Disability Insurance
Workers Compensation Insurance

Question 2

OASDHI

Answer 2

Social Security & Medicare

*Financed by payroll & self-employment taxes and monthly premiums

Question 3

Funding for SS & Medicare

Answer 3

SS: employees pay 6.2%, employers 6.2%; self-employed 12.4%
Medicare Part A: employees pay 1.45%, employers 1.45%; self-employed 2.9%
Medicare Part B: Covered persons pay at least $104.90 monthly premium, government pays remainder

Question 4

Credit for Eligibility for Social Security

Answer 4

One credit earned per quarter for each $1,220 in annual earnings

Question 5

Fully Insured

Answer 5

Test 1: 40 credits of coverage
Test 2: minimum of 6 credits and has at least as many credits as there are years elapsing after 1950 and before the year in which he or she dies.

Question 6

Currently Insured

Answer 6

Earned 6 credits during the 13 calendar quarter ending with the quarter in which his or her death occurs

Question 7

Disability Insured

Answer 7

1. Be fully insured, and

2. have a minimum amount of work under SS within a recent time period

Question 8

Full Retirement Age

Answer 8

Age at which nonreduced retirement benefits are paid (65 for workers born in 1937 or before and then gradually increases

Question 9

Primary Insurance Amount (PIA)

Answer 9

Monthly amount a worker receives if he retires at full retirement age or becomes disabled

Question 10

Earnings Test

Answer 10

Process for determining whether income benefits of SS beneficiaries under full retirement age should be reduced because earned income exceeds a specified amount

Question 11

Filing for Benefits

Answer 11

Apply at least 3 months prior to desired start of benefits

or, as soon as possible after onset of disability or death

Question 12

Medicare

Answer 12

Part A is no cost to people aged 65 or older as long as person is entitled to monthly retirement benefits under Social Security

Question 13

Medicare Part A: Hospital Benefits

Answer 13

Provides expenses incurred in hospitals, nursing facilities and hospices

Question 14

Medicare Part C: Medicare Advantage

Answer 14

May elect to join:

1. HMOs
2. PPOs
3. Private Fee for Service
4. Medicare medical savings account
5. Special Needs Plans

Question 15

Medicare Part D: Prescriptions Drug Coverage

Answer 15

For a monthly premium, access to prescription drug programs
Formulary: list of approved drugs the plan will cover
Reduced Deductibles:
Tiered Copayments

Question 16

Coverage Gap (donut hole)

Answer 16

Total out of pocket cost reaches $4700 inclusive of deductible, copayment and coinsurance.

Question 17

Creditable Prescription Drug Coverage

Answer 17

Optional employer or union plans that must be as good as Medicare prescription plan or penalty is incurred.

Question 18

State Health Insurance Assistance Plan (SHIP)

Answer 18

State programs funded by federal government that give free health insurance counseling and assistance to people with Medicare.

Question 19

Partial Advance Funding

Answer 19

Taxes are ore than sufficient to pay current benefits and thus provide some accumulation of assets for the payment of future benefits. (How SS and Medicare are funded)

Question 20

Deductibility of Premiums

Answer 20

Employer contributions are tax deductible. Employee contributions are after tax. Self-employed can deduct one half of contributions as business expenses.

Question 21

Unemployment Insurance

Answer 21

Payroll tax employers pay for fund programs run by states.

Question 22

Temporary Disability Laws

Answer 22

Employees can collect disability income benefits, regardless of whether their disability begins while they are employed or unemployed.

Question 23

Workers Compensation Laws

Answer 23

Employers provide benefits to employees for losses resulting from work-related accidents or diseases.