11. Social Security, Medicare and Medicaid Flashcards
(47 cards)
Major perils covered by Social Security
disability, retirement62+, and survivor protection: premature death, disability, outliving one’s income and medical expenses of the aged
Beneficiaries of benefits:
Disabled,
A spouse, former spouse, or a dependent of someone who is receiving Social Security,
A widow or widower caring for a child (under age 16),
A child under 18 (19 if still in high school),
A widow or widower age 60 or older, or
Dependent parent of someone who has died.
Social Security tax dollars
Employee and employer pay
+ 7.65 (6.2+1.45)% of earnings up to $160,200 to SSA (FICA-Federal Insurance Contributions Act)
+ 1.45% of earnings > $160,200 to Medicare
+ .9% Medicare surcharge over $200k single/ $250k MFJ
For each dollar, $.85=> trust fund for monthly benefits to retirees and their families and to about eight million widows, widowers, and children of workers who have died
$.15=>trust fund that pays benefits to people with disabilities and their families
<$.01administrative
Earned credits
-one credit for $1,640 in earnings 4x/yr
-40 credits required/10yrs to be fully insured/qualify for retirement benefits
Taxes paid (self employed)
-15.3% of net earnings up to $160,200 and 2.9% on everything over, + .9% Medicare surcharge over $200k single/ $250k MFJ
Special deductions can be taken to offset extra Social Security tax paid, allowed 7.65% off gross income
A Social Security number is a mandatory requirement for which of the following?
Getting a job
Filing tax returns
Receiving Social Security benefits
Michael is self-employed and earns $40,000 in a normal year. How much would Michael normally pay in Social Security taxes?
Although Michael must pay the full FICA of 15.3%, he will receive a deduction for the employer portion. This is calculated by multiplying his income $40,000 by .9235 which results in $36,940 which is then multiplied by 15.3% to arrive at the FICA amount of $5,652 (rounded up to the nearest dollar).
Disability benefits
-Widows and widowers with disabilities may be eligible for benefits on the record of a spouse.
-People with disabilities who have low income and few assets might be eligible for SSI benefits.
-Children over age 18 with disabilities might be eligible for Social Security benefits on the record of a parent.
-Children of any age with disabilities might be eligible for SSI benefits on their own.
SS definition of disability
inability to work in any occupation: A condition under which the individual is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to last for a continuous period of not less than 12 months or result in death.
Requirements for disability claim
-medical records from doctors, therapists, hospitals, clinics and caseworkers,
-laboratory and test results,
- names, addresses, phone and fax numbers of the individual’s doctors, clinics and hospitals,
- names of all medications the individual is taking, and
- names of the individual’s employers and job duties for the last 15 years.
When Do Disability Benefits Start?
5 month waiting period, payable in 6th full month of disability. No waiting period for disabled children’s benefits
Other disability payments
If receiving other disability benefits, the SS disability may be reduced if benefits >80% prior average earnings; also SS benefits may reduce other disability payments from employer group plans
Length of disability payments / incentives
depends on periodic medical review. may also receive as incentive to go back to work
Benefit eligibility
- worker’s spouse if +2+ (unless collecting higher SS benefit)
- worker’s spouse at any age if caring for individual’s child <16/disabled and receiving SS benefits
-worker’s children if unmarried and <18/<19 but in school as FT student
-18+ and severely disabled (disability before 22)
Benefit amount for family members
Up to 50% , can be more depending on situation, but limit of 150-180% of person’s retirement benefit. If sum of benefits payable on a worker’s account >family limit, benefits to family members will be reduced proportionately
Benefits for divorced spouses
Ex-spouse must:
-Have been married to the worker for at least 10 years,
-Be at least 62 years old,
-Be unmarried, and
-Not be eligible for an equal or higher benefit on his or her own Social Security record, or on someone else’s Social Security record.
(if the ex-spouse receives benefits on a worker’s account, it does not affect the amount of any benefits payable to the worker or his or her other family members.)
Survivor Benefits
one-time payment of $255 paid to widow/minor children if enough credits, as well as continued monthly payments to:
- widow or widower who is 60 or older,
- widow or widower who is 50 or older and disabled,
- widow or widower- at any age if caring for individual’s child <16/disabled and receiving SS benefits
-worker’s children if unmarried and <18/<19 but in school as FT student
-18+ and severely disabled (disability before 22)
-Parents, if they were dependent on the worker for at least half of their support.
Protection equivalent to $354,000 insurance policy
Disability ins policy worth >$233,000
Benefits to Divorced Widow(er)s
-at least age 60 years old or 50 if disabled and have been married to the worker for at least 10 years,
-any age if caring for a child who is eligible for benefits on the worker’s record,
-Not be eligible for an equal or higher benefit on his or her own record, and
-Not be currently married, unless the remarriage occurred after age 60 or 50 for disabled widows.
-In cases of remarriage after the age of 60, the ex-spouse will be eligible for a widow’s benefit on the worker’s record or a dependent’s benefit on the record of his or her new spouse, whichever is higher.
-even if the ex-spouse receives benefits on a worker’s account, it does not affect the amount of any benefits payable to other survivors on the worker’s record.
Aggregate Survivors’ Benefits
75% to 100% each up to 150-180% worker’s benefit rate
Retirement Benefits
-can retire before reaching full retirement age 65 /67and receive reduced benefits from 62.
-if choose to work beyond full retirement age, can continue working and get full retirement benefits, if delay getting retirement benefits until 70, credits will be earned to increase worker’s benefit amount and a percentage will be added (8% for 2023) up to age 70
Birth year for determining full retirement age
<1938: 65=>1960+ 67years
Reduced benefits
For each month of early retirement, PIA (primary insurance amount) reduced by 5/9 of 1%, up to 36 months (20%), further reduction of 5/12 of 1% per month up to an additional 24 months (5% for 4th year)
Benefit calculation when working
-If<FRA, $1 benefit withheld for every $2 over annual limit of $21,240
-In year FRA, benefits will reduce by $1 for every $3 >limit of $56,620 until month when FRA is reached
Earnings from job / net profit of self-employed is reported, including bonuses, commissions and vacation pay
Tax on SS benefits
-If combined income between $25-34k, may have to pay taxes on up to 50% of SS benefits; if >$34,000, then up to 85% of SS benefits are subject to income tax
-Joint return: $32-44k, taxes on up to 50%; >$44k, then 85%
Combined income=AGI+50% SS benefits+tax exempt interest, foreign earned income, US possessions, income from Puerto Rico by Puerto Rico residents and amounts from employer’s adoption assistance
Form W-4V to have federal taxes withheld/changed/stopped
Medicare benefits
basic health insurance program for people 65 or older and many people with disabilities
Those getting SS benefits when 65 will automatically be enrolled in Medicare Part A and have the option to turn down part B.
-initial deductible of $1,600 which covers the first 60 days in the hospital
- daily coinsurance amount of $400 must be paid by the patient for days 61 - 90
-no coverage beyond 90 days.
-lifetime reserve days require a coinsurance payment of $778 per day.
-benefit period ends after the patient has been out of the hospital for 60 days
-eligible for a new 90-day period beginning with the $1,600 deductible. A new benefit period requires a new deductible.
Those disabled will be auto enrolled in Medicare Part A after receiving disability benefits for 24 months and have the option to turn down part B.
Those who turn 65 and plan to keep working but do not plan to sign up for Social Security retirement benefits at that time must call or visit a Social Security office, which can help them decide whether they should sign up for Medicare only as there are penalties for not signing up for Part B when eligible
Part B: standard premium of $170.10+. If a person opts out they can enroll later during the enrollment period which is the first three months of the year. However, if enrollment is delayed the premium will increase by 10% for each 12-month period that the person was eligible for but did not enroll. The exceptions are for those that had continuous group coverage from age 65 until their actual retirement date. They then have 8 months after their group coverage ends to enroll and not be subject to premium increases.
