Social Security (L4) Flashcards
1
Q
TAXES
= FICA (Federal Insurance Contributions Act)
= SECA (Self-Employed Contributions Act)
A
- 6.2% on wages (up to the wage based of $147,000 in 2022)
- 1.45% on all wages
- EE ONLY: 0.9% Medicare surtax on wages and self-employment income over the thresholds below:
○ MFJ = $250,000
○ MFS = $125,000
○ Single = $200,000
○ Head of Household = $200,000
○Qualifying Widow(er) with dependent child =
$200,000 - Taxes DO NOT accumulate per individual, but in the general receipts of the US government
- Often Referred to as OASDI (Old Age, Survivor, and Disability Insurance)
2
Q
Those Covered by OASDI
A
- Covered
○ Federal EEs hired since 1984
○ US Armed Forces
○ Self-Employed persons
○ EEs of nonprofit organizations
○ Hospital interns
○ Domestic workers
○ Farmer/agricultural workers - NOT Covered
○ Federal EEs hired PRIOR to 1984
○ Railroad EEs
○ Family employment**
○ Ministers
○ Member of religious orders
○ Student nurses
○ Newspaper delivery persons under age 18
○ Students working for college or club
**Family Employment Rules Disallow
○ a child under 18 hired by a parent (not
corporation)
○ A child 18-24 employed by work that is not in the
parents trade or business (cleaning the office)
○ A spouse employed for work that is not in the
spouses trade or business
○ A parent employed for work that is not in the child
trade or business
3
Q
Categories of Social Security Benefits
A
- Retirement benefits
- Disability benefits
- Death Benefits
- Survivors benefits
- Medicare
4
Q
Retirement Benefits
A
Current or Full Retirement Age (FRA)
○ Born BEFORE 1938
§ 65
○ Born BETWEEN 1938-1942
§ Add two months per year
○ Born BETWEEN 1043-1954
§ 66
○ Born Between 1955-1959
§ Add 2 months per year
○ Born in 1960 or Later
§ 67
5
Q
Reduced Benefit for Early Retirement at AGE 62
A
- If FRA is 65, then age 62 is 80% of full retirement benefits
- If FRA is 66, then age 62 is 75% of full retirement benefits
- If FRA is 67, then age 62 is 70% of full retirement benefits
- Benefits are REDUCED by 5/9 of 1% for each month, for the first 3 years that a worker retires early
- Benefits are then REDUCED by 5/12 of 1% for each month beyond the first 3 years
6
Q
Retirement Eligibility
A
- To qualify for retirement benefits a worker must be “fully insured”
- Fully Insured = worker must earn 40 quarters of coverage
- A quarter of coverage is based on the dollar amount of earnings
- One quarter of coverage (2022)
○ = $1,510 in wages subject to SS
7
Q
Increase in Retirement Benefits
A
○ Depending on the birth year, retirees gain an additional increase in monthly benefits by delaying the receipt of SS each month after reaching their FRA until age 70.
○ The annual and monthly increases are listed below
§ 1933-1934 □ Yearly increase = 5.5% □ Monthly rate of increase = 11/24 of 1% § 1935-1936 □ Yearly increase = 6% □ Monthly rate of increase = 1/2 of 1% § 1937-1938 □ Yearly increase = 6.5% □ Monthly rate of increase = 13/24 of 1% § 1939-1940 □ Yearly increase = 7% □ Monthly rate of increase = 7/12 of 1% § 1941-19342 □ Yearly increase = 7.5% □ Monthly rate of increase = 5/8 of 1% § 1943 or later □ Yearly increase = 8% □ Monthly rate of increase = 2/3 of 1%
8
Q
Important Social Security Beneficiaries
A
- Disabled insured workers under age 65
- Retired insured worker under age 62
- A spouse of retired or disabled worker who is at least 62 OR is caring for a child under 16 or disabled child
- A divorced spouse or a retired or disabled worker, if the ex-spouse is age 62 and was married to the worker for at least 10 years and did not remarry by age 60
9
Q
Reduction of Benefits
A
- Retire to EARLY and Benefits are PERMANENTLY REDUCED
○ Reduced by 5/9 of 1% each month for the first 3
years that a worker retires early
○ REDUCED by 5/12 of 1% for each month beyond
the first 3 years that the worker retires early - Benefits can be TEMPORARILY REDUCED if you can earn too much (2022)
○ Early Retirement
* Benefit is reduced $1 for every $2 above the
earnings threshold for persons BELOW FRA
* Threshold = $19,560 (annual limit, monthly
test)○ FRA
* In the year in which you reach the age of
retirement benefit is reduced $1 for every $3
above the earnings threshold
* Threshold = $51,960 (annual limit, monthly
test)○ Taxation of SS Benefit
* Up to 85% of benefit may be taxed
* Threshold are based upon combined Income
* Combined Income:
□ AGI
□ Nontaxable interest
□ Foreign earned income
□ 1/2 of retirement benefit* HURDLES: □ MFJ ® 1st Hurdle = $32,000 ® 2nd Hurdle = $44,000 □ Single ® 1st Hurdle = $25,000 ®2nd Hurdler = $34,000
10
Q
Disability Benefit
A
- Social Security Definition○ There is severe physical or mental impairment for 5 months that is expected to prevent the worker from performing substantial work for at least one year or result in death○ Benefit would begin in the 6th month following the 5-month waiting period○ How much of a benefit is paid depends on credits earned and the age of the worker when disabled
11
Q
Disability Eligibility
A
- A worker is covered for disability if:○ Age 31 or greater; the worker is fully insured (40 quarters) and earned 20 quarters in the last 40 quarters○ Between age 24-40; a worker has earned 1/2 of Quarters available since age 21 to disability.○ If ages 21-24; a worker has earned 6 quarters in the last 12 quarters
12
Q
Survivorship Eligibility
A
- A worker must be either fully insured (40 quarters) OR “currently insured”
○ Currently Insured = at least 6 quarters of coverage
in the last 13 quarters - A child under age 18, under 19 if in high school (aka secondary school), or disabled prior to age 22
○ Entitled to survivorship benefits whether a worker
is currently insured or full insured - A spouse with a child under age 16 is entitled to survivorship benefits for the care of the child, whether the worker is currently or fully insured
- NO COVERAGE for spouse of a currently insured worker
- There is spousal coverage, if worker was fully insured.
○ Survivor benefits would start when the surviving
spouse has reached age 60
13
Q
Medicare Benefits
A
- Federal health insurance for people 65 and older
- Spouses can qualify at 65 based on the other spouse’s work record
- Three Parts:
○ Medicare A
○ Medicare B
○ Medicare D - Eligible persons are automatically enrolled if at least receiving retirement benefits, OR any age if receiving social security disability for at least 2 years.
14
Q
Medicare Part A (2022)
A
- Hospital Insurance (Cover Places):
○ Places include hospital care and home health care
○ Semi-Private room, meals, operating and recovery
room, lab tests, x-rays
○ Hospice care
○ Skilled nursing care facility FOLLOWING a covered
hospital stay - Benefit Periods
○ Determine the amount paid by the insured
○ Benefit Period BEGINS on the 1st day the insured
is in the hospital and ends after 60 days of no
further skilled care
○ The deductible is $1,556 per benefit period
§ The first 60 days is just the deductible
○ Beyond the 60th day, the following coinsurance
amounts will apply:
§ $389 for fays 61-90, per day
§ $778 for days 91-150 for each lifetime reserve
day. There are only a total of 60 lifetime reserve
days
§ $194.50 per day for skilled nursing care days
21-100. The first 20 days following a hospital
stay are covered 100%
§ Custodial care services are NOT provided,
including nursing care facilities that provide
assistance with ADLs
15
Q
Medicare Part B (2022)
A
- Provides coverage for:
○ Doctor visits
○ Ambulance
○ Lab tests
○ Outpatient therapy
○ Clinical research
○ Durable medical equipment (wheelchairs, hospital
beds, walker, oxygen)
○ Mental health (inpatient, outpatient, partial
hospitalization)
○ Getting a second opinion before surgery
○ Home health care
○ An initial preventative visit and annual wellness
visit - DOES NOT COVER
○ Dental care, denture
○ Cosmetic surgery
○ Hearing aids
○ Eye exams - The insured is automatically enrolled in Part B, UNLESS an individual opts out
- The standard premium is $170.10 per month and premiums are deducted from Social Security (higher premiums for individuals with income over $91,000 (single) OR $182,000(MFJ)).
- The deductible is $233 per year
- After Satisfying the deductible then Part B covers 80%. THERE IS NOT STOP LOSS LIMIT
