Chapter 7: Social Security, Medicare, and Other Government Programs Flashcards
Social Insurance Programs
Social Security Medicare Unemployment Insurance Temporary Disability Insurance Workers Compensation Insurance
OASDHI
Social Security & Medicare
*Financed by payroll & self-employment taxes and monthly premiums
Funding for SS & Medicare
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
Credit for Eligibility for Social Security
One credit earned per quarter for each $1,220 in annual earnings
Fully Insured
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.
Currently Insured
Earned 6 credits during the 13 calendar quarter ending with the quarter in which his or her death occurs
Disability Insured
- Be fully insured, and
2. have a minimum amount of work under SS within a recent time period
Full Retirement Age
Age at which nonreduced retirement benefits are paid (65 for workers born in 1937 or before and then gradually increases
Primary Insurance Amount (PIA)
Monthly amount a worker receives if he retires at full retirement age or becomes disabled
Earnings Test
Process for determining whether income benefits of SS beneficiaries under full retirement age should be reduced because earned income exceeds a specified amount
Filing for Benefits
Apply at least 3 months prior to desired start of benefits
or, as soon as possible after onset of disability or death
Medicare
Part A is no cost to people aged 65 or older as long as person is entitled to monthly retirement benefits under Social Security
Medicare Part A: Hospital Benefits
Provides expenses incurred in hospitals, nursing facilities and hospices
Medicare Part C: Medicare Advantage
May elect to join:
- HMOs
- PPOs
- Private Fee for Service
- Medicare medical savings account
- Special Needs Plans
Medicare Part D: Prescriptions Drug Coverage
For a monthly premium, access to prescription drug programs
Formulary: list of approved drugs the plan will cover
Reduced Deductibles:
Tiered Copayments
Coverage Gap (donut hole)
Total out of pocket cost reaches $4700 inclusive of deductible, copayment and coinsurance.
Creditable Prescription Drug Coverage
Optional employer or union plans that must be as good as Medicare prescription plan or penalty is incurred.
State Health Insurance Assistance Plan (SHIP)
State programs funded by federal government that give free health insurance counseling and assistance to people with Medicare.
Partial Advance Funding
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)
Deductibility of Premiums
Employer contributions are tax deductible. Employee contributions are after tax. Self-employed can deduct one half of contributions as business expenses.
Unemployment Insurance
Payroll tax employers pay for fund programs run by states.
Temporary Disability Laws
Employees can collect disability income benefits, regardless of whether their disability begins while they are employed or unemployed.
Workers Compensation Laws
Employers provide benefits to employees for losses resulting from work-related accidents or diseases.
