chapter 8 social security Flashcards
was created to provide for United States citizens’ general welfare who are 65 years of age and older. The Act was enacted by the Senate and House of Representatives of the United States to enable individual states to make more adequate provisions for furnishing financial assistance to the aged, blind, dependent and crippled children, maternal and child welfare, public health, and to establish more adequate provisions for the administration of their unemployment compensation laws, to establish a Social Security Board, to raise revenue and to provide a basic floor of protection to all working Americans against the financial problems brought on by death, disability, and aging. In 1939 the law was changed to add survivors’ benefits and benefits for the retiree’s spouse and children. In 1956 disability benefits were added. Social Security is an entitlement program, not a welfare program. It is based on a “pay now in exchange for benefits later” system.
Social Security Act of 1935
in regards to Social Security, is a status of limited eligibility that provides only death benefits.
currently insured
is the period following the death of a family breadwinner, during which no Social Security benefits are available to the surviving spouse.
blackout period
are the 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.
credits
is 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.
Disability benefit qualification
are used to fund the Social Security program. If a person has not contributed through their payroll program, they are not eligible for benefits.
FICA TAXES federal insurance contributions act
is a status of complete eligibility for the full range of Social Security benefits: death benefits, retirement benefits, disability benefits, and Medicare benefits. A person must have contributed to FICA taxes for 40 quarters of employment to be fully insured.
fully insured
means an individual has paid FICA contributions for at least 40 quarters (which are not required to be consecutive).
fully and permanently insured
is 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.
Old Age, Survivor, and Disability Insurance (OASDI)
is 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.
primary insurance amount (PIA)
is a basic unit for determining whether a worker is insured under the Social Security program.
quarter of coverage
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.
retirement benefit
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.
taxation of social security benefits
