OK, Baby Boomers, we are now at day five of our deep dive into the Social Security System and its benefit programs.
Does everything seem relatively clear to you so far?
If you need a refresher, just follow this link to the START so you can be ready for today's breakdown of benefits available to you beyond just those offered after you retire.
Today, I will try to unravel and uncover the inner secrets of:
- Disability Benefits
- Survivor's Benefits
- Disability Benefits
- Medicare Benefits
- Supplemental Security Income
These are all part and parcel programs, like your retirement benefits, run through the Social Security Administration.
Hang on, here we go...................................
Becoming disabled is something most people do not like to think about.
Unfortunately, the odds you will become disabled are greater than you realize.
Government studies have show that a 20-year-old worker has a 25% chance of incurring a disability before reaching full retirement age.
The SSA pays disability benefits through 2 programs: the Social Security disability insurance program and the Supplemental Security Income (SSI) program which we will talk about later.
These benefits are available to people who cannot work due to a medical condition expected to last at least 1 year or result in death.
While some government programs offer assistance to people with partial or short term disabilities, the SSA does not.
Family members of disabled workers can also receive assistance.
So how do you meet the earnings requirement for disability benefits?
In general, you must meet two different "earnings" tests:
1. A "recent work" test based on your age at the time you became disabled
2. A "duration of work" test to show that you worked long enough.
The following table from the SSA shows the rules for the "recent work" test based on your age when your disability occurred.
These rules are based on the calendar quarter in which you turned or will turn a certain age.
The next table shows examples of how long you need to work to meet the "duration of work test" by your age at the time of disability.
For the "duration of work" test, your work does not have to fall within a certain period of time.
Putting 2 and 2 together to see if you qualify for these benefits can seem a little daunting but its not as hard as it seems.
Let's look at a quick example:
Say you are disabled due to an accident at the age of 50.
You would qualify for benefits if:
A. You worked a total of at least 7 years (table B) in your past
B. You worked at least 5 years out of the 10 years (table A) leading up to the quarter your disability began.
The loss of the primary family wage earner can be devastating, both emotionally and financially.
Social Security Insurance can help by providing income for the family members of workers who die.
In fact, 98 of every 100 children could get benefits if a working parent dies.
Social Security pays more benefits to children than any other federal program.
Many people think of Social Security only as a retirement or disability program.
But some of the FICA taxes you pay provide "survivors" insurance for workers and their families.
In fact, the value of this insurance is probably more than the value of your personal life insurance.
Those who may be eligible for survivors benefits include widows, widowers (and divorced widows and widowers), children and dependent parents.
Question? So, how do I earn survivors insurance?
The number of years you need to work for your family to be eligible for these benefits depends on your age when you die.
The younger you are, the fewer years you needed to work.
If you remember our initial talk about SSI, 10 years of work is all you need to be eligible for some benefits.
OK, so who can get survivors benefits based on your work?
1. Your widow or widower may be eligible to receive full benefits at full retirement age.
The full retirement age for survivors is age 66 for people born in 1945-1956 and will gradually increase to age 67 for people born in 1962 or later.
Reduced widow or widower benefits can be received as early as age 60.
If your surviving spouse is disabled, benefits can begin as early as age 50.
2. Your widow or widower can receive benefits at any age if they take care of your child who is receiving SSI benefits and younger than 16 or disabled.
3. Your unmarried children who are younger than age 18 (19 if they are attending elementary / secondary school full time) can also receive benefits.
Your children can get benefits at any age if they were disabled before age 22 and remain disabled.
Under certain circumstances, benefits also can be paid to your stepchildren, grandchildren, step grandchildren or adopted children.
Under a special rule, if you have worked for only one and one-half years in the three years just before your death, benefits can be paid to your children and your spouse who is caring for the children.
4. Your dependent parents can receive benefits if they are age 62 or older.
For your parents to qualify as dependents they would have had to provide at least one half of their support.
5. Your surviving divorced spouses may also be eligible for benefits
There is also a "One-time death payment" of $255 available to your spouse or child if you have worked long enough and they meet certain requirements.
Survivors must apply for this payment within two years of the date of death.
So, now we know that the FICA taxes you have been paying all of these years have established for you a certain level of financial security in case you retire, become disabled or pass away.
Let's talk a little about medical insurance.
Medicare is the government health insurance program for citizens age 65 or older.
People younger than age 65 with certain disabilities like permanent kidney failure can also qualify for Medicare.
The program helps with the cost of health care, but it does not cover all medical expenses or the cost of most long-term care.
You may buy a Medicare supplement policy (called Medigap) from a private insurance company to cover some of the costs that Medicare does not.
Medicare is not only financed by payment of your FICA taxes but is also in part by monthly premiums deducted from Social Security checks.
Even though you apply and qualify for Medicare through Social Security, The Centers for Medicare & Medicaid Services is the agency in charge of the program.
Medicare has four parts:
Hospital insurance (Part A): Helps pay for inpatient hospital or skilled nursing facility care (following a hospital stay), some home health care and hospice care.
Medical insurance (Part B): Helps pay for services from doctors, health care providers, outpatient care, home health care, durable medical equipment and some preventive services.
Medicare Advantage plans (Part C): Independent plans that citizens with Medicare Parts A and B can choose instead of standard Part A and B health care services.
Medicare Prescription drug coverage (Part D): Helps pay for the costs of prescription drugs.
Our final benefit program through the Social Security Administration is an added benefit for citizens with low income status and few financial resources.
The basic SSI amount is the same nationwide.
However, many states have programs that add money to the basic benefit.
SUPPLEMENTAL SECURITY INCOME (SSI)
SSI offers additional monthly payments to citizens that meet strict financial guidelines:
- Age 65 or older
- Blind or Disabled
- Individual resources are no more than2,000. Couples must have resources less than3,000.
If you qualify for SSI, you may also be able to get additional help from your state or county.
For example, you may be able to get Medicaid, food or other social services at discounted or no additional costs.
You just survived 5 straight days with me trying to untangle and demystify the dry and often confusing inner workings of the Social Security System.
We now know that the FICA taxes we have paid in all of these years fund some complicated, yet important benefit programs for us and our families as we face the unknown costs of retirement.
Remember, we paid for these benefits through our hard work and you are entitled to every last penny the system has to offer.
Start preparing today so that you won't short change yourself when its most critical.
Make sure to visit the website at:
as many times as you need to become completely versed in your available benefits and how to maximize your chances of getting all of the financial support you need.
You will find your benefit program updates there as well as some very easy to read pamphlets and easy to use retirement and benefit calculators.