Social Security Administration
Who Should Read This Booklet?
You should!
Whether you're young or old, male or female, single or
with a family--this booklet is for you and about you. That's
because Social Security has programs that affect everybody.
Chances are you're either paying Social Security taxes or
getting Social Security benefits--or you're related to somebody
who is.
Whatever your situation, this booklet has information you
will find helpful and useful.
It was prepared by the Social Security Administration and
tells you what you need to know about Social Security while
you're still working and what you need to know when it's your
turn to collect benefits.
Please Note: This booklet provides a general overview of
the Social Security program. The information it contains is not
intended to cover all provisions of the law. For specific
information about your case, contact a Social Security office.
What's Inside
Part 1--Social Security's Future And Yours!
Is There Social Security In Your Future?
When Will You Need Social Security?
How To Reach Us When You Need Us
Your Future... And This Booklet
Part 2--What You Need To Know About Social Security While
You're Still Working
How Social Security Works--The General Idea
Your Social Security Number
The Taxes You Pay
You Become Eligible For Social Security By Earning "Credits"
How Much Will You Get From Social Security?
How Your Benefit Is Figured
If You Didn't Earn Enough Credits To Get Social Security
Part 3--What You Need To Know When You Become Eligible For
Social Security
How And When To Sign Up For Social Security
What Records Will You Need?
Direct Deposit
Retirement Benefits
Disability Benefits
Benefits For Your Family
Survivors Benefits
Supplemental Security Income
Medicare
Part 4--What You Need To Know After You
Sign Up For Social Security
What You Need To Report To Us
If You Disagree With A Decision We Make
How Your Earnings Affect Your Benefits
Your Benefits May Be Taxable
When Somebody Needs Help Managing Benefits
Other Booklets Available
Examples of Benefits
Index
Social Security's Toll-Free Number 1-800-772-1213
Call between 7 a.m. and 7 p.m. any business day.
Part 1--Social Security's Future... And Yours!
Is There Social Security In Your Future?
Before we get started explaining the program, we think
it's important to answer the first question many people have
about Social Security. Perhaps you've asked it yourself. That
question is: "Will Social Security be there when I need it?"
The simple and logical answer is, "Yes it will." But that
answer deserves an explanation.
If you're concerned about the future of Social Security,
it's probably because you've heard misleading stories about
Social Security money being used for other purposes (which are
partially true) and reports that the system's trust funds
contain only "worthless IOU's" (which are false). Here are the
facts. Out of every dollar you pay in Social Security taxes:
* 73 cents goes to a trust fund that pays monthly benefits
to about 29 million retirees and their families and to
about 8 million widows, widowers, and children of workers
who have died;
* 19 cents goes to a trust fund that pays for the health
* 8 cents goes to a trust fund that pays benefits to about 5
million people with disabilities and their families.
Money not needed to pay these benefits is invested in U.S.
government bonds-generally considered the safest of all
investments. And the government uses the money it has borrowed
from Social Security, just as it uses the money that you may
have invested in treasury bonds, to pay for all the services
and projects it provides for our citizens. But, just as the
government pays you back with interest when you redeem your
bonds, it has always made good on its obligations to Social
Security. There's no reason to believe it won't continue to do
so. If you own treasury bonds, it's a safe bet you don't
consider them to be "worthless IOU's." We don't either. Our
investments will be honored and we, in turn, will honor your
investment in Social Security. It will be there when you need
it!
When Will You Need Social Security?
Now that we've answered your first question and told you
that Social Security will be there when you need it, the next
question you may ask yourself is this: "When will I need it?"
If you're like most people, you tend to think of Social
Security as a retirement program. Although it's true that most
of our beneficiaries (about 60 percent) receive retirement
benefits, many others get Social Security because:
* they are disabled;
* they are a dependent of someone who gets Social Security;
or
* they are a widow, widower, or child of someone who has
died.
So, depending on your circumstances, you may be eligible
for Social Security at any age. In fact, Social Security pays
more benefits to children than any other government program.
Today, 45 million people, almost one out of every six
Americans, collect some kind of Social Security benefit.
How To Reach Us When You Need Us
The Social Security Administration has about 1,300 offices
in cities and towns across America. Of course, you're always
welcome to visit the office nearest you.
But the easiest way to reach us is to call our toll-free
number: 1-800-772-1213. You can get information 24 hours a day.
You can speak to a service representative between 7 a.m. and 7
p.m. on business days.
If you have a push-button (tone) phone, recorded
information and services are available after 7 p.m. weekdays
and all day on weekends and holidays.
If you want to speak to a representative the best times to
call are early in the morning and early in the evening. And if
you can, it's best to call later in the week and later in the
month. When you call, have your Social Security number
handy.
Hearing-impaired callers using "TDD" equipment can reach
Social Security between 7 a.m. and 7 p.m. on business days by
calling 1-800-325-0778.
The Social Security Administration treats all calls
confidentially--whether they're made to our toll-free numbers
or to one of our local offices. We also want to ensure that you
receive accurate and courteous service. That's why we have a
second Social Security representative monitor some incoming and
outgoing telephone calls.
Your Future ... And This Booklet
Here's one final message about Social Security's future,
your future, and this booklet: Social Security will be
there--whenever you may need it.
But even though Social Security will be ready for you,
will you be ready for Social Security?
This booklet will help you with the kinds of plans and
decisions you need to make now in order to ensure a brighter
and more secure financial future for you and your family.
Part 2--What You Need To Know About Social Security While
You're Still Working
How Social Security Works--The General Idea
The basic idea behind Social Security is a simple one. You
pay taxes into the system during your working years, and you
and members of your family receive monthly benefits when you
retire or become disabled. Or, your survivors collect benefits
when you die.
Here's An Important Point: Social Security is not intended
to be your only source of income. Instead, it is meant to be
used to supplement the pensions, insurance, savings, and other
investments you will accumulate during your working
years.
Your Social Security Number
What's your Social Security number? You probably know it
as well as you know your own phone number.
We use your Social Security number to track your earnings
while you're working and to track your benefits once you're
getting Social Security.
Almost everybody reading this booklet already has a Social
Security number. Today, even most young children have a number
because the Internal Revenue Service requires that a Social
Security number be shown on tax returns for all dependents age
one and older.
In fact, most parents apply for a Social Security number
for their newborn child when they provide information for the
child's birth certificate. That's because most states make
applying for a Social Security number part of the birth
registration process. This is taken care of before the mother
and child leave the hospital.
In addition to its "official" uses, banks, insurance
companies, and many other businesses and government agencies
use the Social Security number for record-keeping purposes.
Although we can't prevent others from asking for your number,
you should know that if you give it to them they can not use it
to get your Social Security records. We will not give out your
records, without your written consent, unless the law requires
or permits it.
The Social Security Administration is aware of concerns
about the increasing uses of the Social Security number for
identification and record-keeping purposes. That concern
centers on the issue of your right to privacy and the
increasing possibility that it could be invaded if all your
records are kept under one number. If a business or other
enterprise asks for your Social Security number, you can refuse
to give it to them. However, that may mean doing without the
purchase or service for which your number was requested. Our
primary message is this: be careful with your Social Security
number and protect its privacy whenever possible.
If you need a Social Security number, if you lost your
card and need another one, or if you need to change your name
on your current card, just call or visit a Social Security
office. We'll ask you to fill out a simple one-page application
form. And we'll ask to see certain documents depending on your
situation. (We need to see originals or certified copies.)
Some typical examples are:
* A birth certificate and some form of identification for a
new card;
* Some form of identification for a replacement card;
* A marriage certificate or divorce papers for a name
change.
The Taxes You Pay
Social Security taxes are used to pay for all Social
Security benefits. In addition, a portion of your taxes is used
to pay for part of your Medicare coverage. General tax
revenues, not Social Security taxes, are used to finance the
Supplemental Security Income (SSI) program.
If You Work For Someone Else
You and your employer pay taxes for Social Security and
Medicare. In 1994, you and your employer each pay 7.65 percent
of your gross salary, up to $60,600. The deduction might be
labelled "FICA" on your pay slip. That stands for Federal
Insurance Contributions Act, the law that authorized Social
Security's payroll tax.
If You Work For Yourself
If you're self-employed, you pay 15.3 percent of your
taxable income into Social Security, up to $60,600. However,
there are special deductions you can take when you file your
tax return that are intended to offset your tax rate.
For More Information: If you would like to learn more
about self-employment tax rates, call or visit Social Security
to ask for a free copy of the factsheet, If You're
Self-Employed (Publication No. 05-10022).
Extra Taxes For Medicare
If you make more than $60,600 in 1994, you continue to pay
the Medicare portion of the Social Security tax on the rest of
your earnings. The Medicare portion of the tax is 1.45 percent
for employers and employees each, and 2.9 percent for
self-employed people.
You Become Eligible For Social Security By Earning "Credits"
You must work and pay taxes into Social Security in order
to get something out of it. (Of course, some people get
benefits as a dependent or survivor on another person's Social
Security record.)
As you work and pay taxes, you earn Social Security
"credits." In 1994 you earn one credit for each $620 in
earnings you have--up to a maximum of four credits per year.
(The amount of money needed to earn one credit goes up every
year.)
Most people need 40 credits (10 years of work) to qualify
for benefits. Younger people need fewer credits to be eligible
for disability benefits or for their family members to be
eligible for survivors benefits if they should die.
During your working lifetime, you probably will earn many
more credits than you need to be eligible for Social Security.
The fact that you earn these extra credits does not increase
your eventual Social Security benefit. However, the income you
earn while working will increase your benefit, as you will
learn in the next two sections.
For More Information: If you want to learn more about the
number of credits you would need to qualify for benefits, just
call or visit Social Security to ask for a Personal Earnings
and Benefit Estimate Statement (see the next section), or ask
for a free copy of one of the following booklets: Retirement,
(Publication No. 05-10035), Survivors (Publication No.
05-10084), or Disability (Publication No. 05-10029).
How Much Will You Get From Social Security?
The amount of your Social Security benefit is based on
factors such as your date of birth, the type of benefit you are
applying for, and most important, your earnings.
This booklet will explain in a general way how a Social
Security benefit is figured. In the back of this booklet, you
will find tables that give examples of Social Security
benefits. But if you would like a detailed, personal estimate
of your Social Security retirement, disability, and survivors
benefits, all you have to do is call or visit Social Security
and ask for it. We will send you a form you can use to get a
Personal Earnings and Benefit Estimate Statement.
How Your Benefit Is Figured
In general, a Social Security benefit is based on your
earnings averaged over your working lifetime. This is different
from many private pension plans that are usually based on a
relatively small number of years of earnings.
In its simplest terms, here's how your Social Security
benefit is figured:
Step 1--We determine the number of years of earnings to
use as a base.
Retirement benefits: For everybody born after 1928 and
retiring in 1991 or later, which includes most people
reading this booklet, that number is 35 years. Fewer years
are used for people born in 1928 or earlier.
Disability and survivors benefits: We use most of the
years of earnings posted to your record.
Step 2--We adjust these earnings for inflation.
Step 3--We determine your average adjusted monthly
earnings based on the number of years figured in step 1.
Step 4--We multiply your average adjusted earnings by
percentages in a formula that is specified by law.
That formula results in benefits that replace about 42
percent of a person's earnings. This applies to people who
had average earnings during their working years. The
percentage is lower for people in the upper income
brackets and higher for people with low incomes. (That's
because the Social Security benefit formula is weighted in
favor of low-income workers who have less opportunity to
save and invest during their working years.)
If You Didn't Earn Enough Credits To Get Social Security
If you haven't worked long enough to get Social Security,
or if you get only a small amount, you may be eligible for
Supplemental Security Income, or SSI. For more information see
page 22.
Part 3--What You Need To Know When You Become Eligible For
Social Security
How And When To Sign Up For Social Security
You can apply for benefits at any Social Security office.
The easiest way to file a claim is to call our toll-free number
ahead of time for an appointment. That number is:
1-800-772-1213.
For disability, survivors, and SSI benefits, you should
apply as soon as you're eligible. (The rest of this chapter
will help you decide if and when you are.) When signing up for
retirement, we ask that you talk to a Social Security
representative in the year before the year you plan to retire.
That's because the rules are complicated, and it may be to your
advantage to start your retirement benefits before you actually
stop working.
What Records Will You Need?
To show that you are eligible for Social Security and to
help us decide how much your benefits should be, there are
certain documents we may ask you to provide. The ones you'll
need depend on the circumstances of your claim. Here is a list
of some of the documents you may need when you sign up for
Social Security:
* Your Social Security card (or a record of your number);
* Your birth certificate;
* Children's birth certificates (if they are applying);
* Marriage certificate (if signing up on a spouse's record);
* Your most recent W-2 form, or your tax return if you're
self-employed.
This is just a partial list to help you get prepared. When
you actually sign up for Social Security, we'll let you know if
other documents are needed.
Here's An Important Point: If you don't have all the
documents you need, don't delay signing up for Social Security.
We'll help you get the information you need.
Direct Deposit
You have a choice of how you receive your Social Security
or SSI payments. Your benefit can either be deposited directly
into your bank account or come to you in the mail. Most people
have their benefits deposited in their bank account because it
is safer and more convenient than receiving checks. It is also
more efficient and saves money for the government.
If you choose direct deposit, have your checkbook or any
papers that show your bank account number with you when you
sign up for Social Security.
Retirement Benefits
This section of the booklet provides a brief overview of
Social Security retirement benefits. If you want to learn more
about the program, call or visit Social Security to ask for a
free copy of the booklet, Retirement (Publication No.
05-10035).
Full Retirement
If you were born before 1938, you will be eligible for
your full Social Security benefit at the age of 65.
However, beginning in the year 2000, the age at which full
benefits are payable will increase in gradual steps from 65 to
67. This affects people born in 1938 and later. For example, if
you were born in 1940, your full retirement age is 65 and 6
months. If you were born in 1950, your full retirement age is
66. Anybody born in 1960 or later will be eligible for full
retirement benefits at 67.
Reduced Benefits As Early As 62
No matter what your "full" retirement age is, you may
start receiving benefits as early as 62. However, if you start
your benefits early, they are reduced five-ninths of one
percent for each month before your "full" retirement age. For
example, if your full retirement age is 65 and you sign up for
Social Security when you're 64, you will receive 93 1/3 percent
of your full benefit. At 62, you would get 80 percent. (Note:
The reduction will be greater in future years as the full
retirement age increases.)
Here's An Important Point: There are disadvantages and
advantages to taking your benefit before your full retirement
age. The disadvantage is that your benefit is permanently
reduced. The advantage is that you collect benefits for a
longer period of time. Each person's situation is different, so
make sure you check with Social Security before you decide to
retire.
What About Late Retirement?
Some people continue to work full time beyond their full
retirement age--and they do not sign up for Social Security
until later. This delay in retirement can increase your
Social Security benefit in two ways:
* Your extra income usually will increase your "average"
earnings, and the higher your average earnings, the higher
your Social Security benefit will be.
* In addition, a special credit is given to people who delay
retirement. This credit, which is a percentage added to
your Social Security benefit, varies depending on your
date of birth. For people turning 65 in 1994, the rate is
4.5 percent per year. That rate gradually increases in
future years, until it reaches 8 percent per year for
people turning 65 in 2008 or later.
How Much Will You Get?
On Page 11, we explained how you can get a personalized
estimate of the benefits you are due. In addition, there is a
chart on Page 34 that gives examples of retirement benefit
rates.
Disability Benefits
This section of the booklet provides a brief overview of
Social Security's disability program. It concentrates primarily
on benefits for people who have worked and earned enough Social
Security "credit" to qualify for disability on their own work
record.
However, it is important to note that other kinds of
disability benefits are available from Social Security,
depending on your circumstances. These include:
* Widows and widowers with disabilities who are eligible for
benefits on the record of a spouse;
* People with disabilities who have low income and few
assets who might be eligible for SSI benefits;
* Children over age 18 with disabilities who might be
eligible for Social Security benefits on the record of a
parent, or children of any age with disabilities who might
be eligible for SSI benefits on their own.
For More Information: Because disability is one of the
most complicated of all Social Security programs, we recommend
that you call or visit Social Security to ask for a free copy
of the booklet, Disability (Publication No. 05-10029), for more
in-depth information.
For information about benefits available to children with
disabilities, see page 24 of this booklet, or call or visit
Social Security and ask for a free copy of the publication,
Social Security and SSI Benefits For Children With Disabilities
(Publication No. 05-10026).
What Do We Mean By "Disability"?
What is a "disability"? The dictionary defines it as "a
physical or mental condition that prevents a person from
leading a normal life." But Social Security's definition of
disability is more specific and is generally related to your
ability to work.
To qualify for disability from Social Security, you must
have a physical or mental impairment that is expected to keep
you from doing any "substantial" work for at least a year.
Generally, monthly earnings of $500 or more are considered
substantial. Or you must have a condition that is expected to
result in your death.
This is a strict definition of disability. Unlike many
private pension plans or even other government disability
programs, Social Security is not intended for a temporary
condition. In other words, there is no such thing as a
"partial" disability payment from Social Security.
What You Should Do If You Become Disabled
If you become disabled, you should file for disability
benefits as soon as possible. You can do this by calling or
visiting any Social Security office.
You can shorten the time it takes to process your claim if
you have the following medical and vocational information when
you apply:
* The names, addresses, and phone numbers of your doctors,
and of hospitals, clinics, etc., where you have been
treated; and
* A summary of where you worked in the last 15 years and the
kind of work you did.
Here's An Important Point: Social Security's disability
rules are different from those of other private plans or
government agencies. So the fact that you qualify for
disability from somebody else does not mean you will be
eligible for Social Security. Further, the fact that you have a
statement from your doctor indicating you are disabled does not
mean you will be automatically eligible for Social Security
disability payments.
When Do Your Disability Benefits Start?
If we decide you are disabled, in most cases your monthly
benefits will begin with the sixth full month of your
disability. Here's a simple example of how this works:
John has a severe heart attack on March 15. He files for
disability on March 29, and his claim is approved on May
30. September is the sixth full month that he is disabled,
so his benefits begin that month. Social Security checks
are usually paid on the third of the following month, so
John's first check (the September check) will arrive
October 3.
Here's An Important Point: Do not delay signing up for
Social Security because of this "waiting period." By filing
early, all the paperwork will be processed before your first
check is due. There is no waiting period for disabled
children's benefits or for SSI disability payments.
How Much Will You Get?
On Page 11, we told you how you can get a personalized
estimate of any benefits you are due. There is a chart on
Page 35 that gives examples of disability benefit rates.
Workers' Compensation
If you get workers' compensation or certain other
government disability benefits, your Social Security disability
benefit may be reduced. Or, your Social Security benefits may
reduce your other disability payments. The sum of all
disability payments to you and your family cannot exceed 80
percent of your earnings averaged over a period of time shortly
before you became disabled.
How Long Will Your Disability Benefits Continue?
You will continue to get disability benefits unless your
condition improves or you return to "substantial" work (see
Page 16). We check your claim periodically to determine if this
is the case. To help us decide, you may be asked to undergo a
special test or examination that we will pay for.
Incentives To Return To Work
There are special rules that help people who would like to
return to work but are concerned about the effect this might
have on their disability benefits. These rules offer special
incentives that permit people to try working without the risk
of a sudden loss of their monthly benefits and their Medicare
coverage.
For More Information: If you would like to learn more
about these special work incentives, call or visit Social
Security to ask for a free copy of the booklet, Working While
Disabled... How Social Security Can Help (Publication No.
05-10095).
Benefits For Your Family
This section of the booklet provides a brief overview of
benefits payable to members of your family when you are
eligible for retirement or disability benefits.
Who Can Get Benefits?
When you start collecting Social Security retirement or
disability benefits, other members of your family might also be
eligible for payments. For example, benefits can be paid to:
* Your husband or wife if he or she is 62 or older (unless
he or she collects a higher Social Security benefit on his
or her own record);
* Your husband or wife at any age if he or she is caring for
your child (the child must be under 16 or disabled and
receiving Social Security benefits);
* Your children, if they are unmarried and:
--Under 18; or
--Under 19 but in elementary or secondary school as a
full-time student; or
--18 or older and severely disabled (the disability must
have started before age 22).
How Much Can Family Members Get?
Usually, each family member will be eligible for a monthly
benefit that is up to 50 percent of your retirement or
disability rate. However, there is a limit to the amount of
money that can be paid to a family on your Social Security
record. The limit varies, but is generally equal to about 150
to 180 percent of your retirement benefit. (It may be less for
disability benefits.) If the sum of the benefits payable on
your account is greater than this family limit, then the
benefits to the family members will be reduced proportionally.
Your benefit will not be affected.
Benefits For Divorced People
If you are divorced (even if you have remarried), your
ex-spouse can be eligible for benefits on your record. In some
situations, he or she could get benefits even if you're not
receiving them. In order to qualify, your ex-spouse must:
* Have been married to you for at least 10 years;
* Be at least 62 years old;
* Be unmarried;
* 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.
Here's An Important Point: If your ex-spouse receives
benefits on your account, it does not affect the amount of any
benefits payable to you or your other family members.
Survivors Benefits
This section of the booklet provides a brief overview of
the benefits payable when a family breadwinner dies. For more
information, call or visit Social Security to ask for a free
copy of the booklet, Survivors (Publication No.
05-10084).
Who Can Receive Survivors Benefits?
When you die, certain members of your family may be
eligible for benefits on your Social Security record if you had
earned enough credits while you were working.
The family members who can collect benefits include:
* A widow or widower who is 60 or older;
* A widow or widower who is 50 or older and disabled;
* A widow or widower at any age if she or he is caring for a
child under 16 or a disabled child who is receiving Social
Security benefits;
* Children if they are unmarried and:
--Under 18; or
--Under 19 but in an elementary or secondary school as a
full-time student; or
--18 or older and severely disabled (the disability must
have started before age 22);
* Your parents, if they were dependent on you for at least
half of their support.
Special One-Time Death Benefit
If you had enough credits, a special one-time payment of
$255 also will be made after your death. This benefit is paid
only to your widow(er) or minor children.
Benefits To Divorced Widows And Widowers
If you are divorced (even if you have remarried), your
ex-spouse will be eligible for benefits on your record when you
die. In order to qualify, your ex-spouse must:
* Be at least 60 years old (or 50 if disabled) and have been
married to you for at least 10 years;
* Be any age if caring for a child who is eligible for
benefits on your record;
* Not be eligible for an equal or higher benefit on his or
her own record;
* Not be currently married, unless the remarriage occurred
after 60--or 50 for disabled widows. (In cases of
remarriage after the age of 60, your ex-spouse will be
eligible for a widow's benefit on your record or a
dependent's benefit on the record of his or her new
spouse, whichever is higher.)
Here's An Important Point: If your ex-spouse receives
benefits on your account, it does not affect the amount of any
benefits payable to other survivors on your record.
How Much Will Your Survivors Get?
The amount payable to your survivors is a percentage of
your basic Social Security benefit--usually in a range from 75
percent to 100 percent each. However, there is a limit to the
amount of money that can be paid each month to a family. The
limit varies, but is generally equal to about 150 to 180
percent of your benefit rate. If the sum of the benefits
payable to your surviving family members is greater than this
limit, then the benefits to your family will be reduced
proportionately.
The Personal Earnings and Benefit Estimate Statement,
explained on Page 11, will provide you with a more accurate
measurement of potential survivors benefits payable on your
record. In addition, there is a chart on Page 36 that gives
examples of survivors benefit rates.
Retirement Benefits For Widow(er)s
If you are receiving widows or widowers (including
divorced widows or widowers) benefits, you should remember that
you can switch to your own retirement benefits (assuming you're
eligible and your retirement rate is higher than your widow's
rate) as early as age 62. In many cases, a widow(er) can begin
receiving one benefit at a reduced rate and then switch to the
other benefit at an unreduced rate at age 65. The rules are
complicated and vary depending on your situation, so you should
talk to a Social Security representative about the options
available to you.
Supplemental Security Income
This section of the booklet provides a brief overview of
the Supplemental Security Income (SSI) program. For more
information, call or visit Social Security to ask for a free
copy of the booklet, SSI (Publication No. 05-11000).
What Is Supplemental Security Income?
Supplemental Security Income is usually called "SSI" for
short. Although this program is run by Social Security, the
money to pay for SSI benefits does not come from Social
Security taxes or Social Security trust funds. SSI payments are
financed by the general revenue funds of the U.S. Treasury.
SSI makes monthly payments to people who have low incomes
and few assets. In addition, to get SSI you must:
* Be living in the U.S. or the Northern Mariana Islands;
* Be a U.S. citizen or be living in the U.S. legally;
And you must be:
* 65 or older; or
* Blind; or
* Disabled.
Here's An Important Point: Children as well as adults can
get SSI benefits because of blindness or disability. See Page
24 for more information.
Income And Asset Limits For SSI
To get SSI, your income and the value of the things you
own must be below certain limit.
By the term income, we mean the money you have coming in
such as earnings, Social Security, or other government checks,
pensions, etc. But we also mean "non-cash" items you receive
such as the value of free food and shelter.
How much income you can have and still get SSI depends on
whether you work or not--and in which state you live. Although
there is a basic national SSI payment rate, some states add
money to the national payment, so they have higher SSI rates
and higher income limits than others. Check with your local
Social Security office to find what the SSI rates and income
limits are in your state.
Assets are the things you own such as property, cash, and
bank accounts. But we don't count everything you own when we
decide if you can get SSI. For example, we don't count your
home and many of your personal belongings, and we usually don't
count your car.
You may be able to get SSI if the things you own that we
count are worth no more than:
* $2,000 for one person; or
* $3,000 for a couple.
Unlike the income category, these limits do not change
from state to state.
How Much Can You Get From SSI?
How much you will get from SSI depends on your other
income and where you live. The basic monthly SSI check is the
same in all states--$446 for one person and $669 for a couple.
But some states add money to the basic rate, so you may get
more if you live in one of these states. You will get less if
you have other income or if someone helps pay for your food and
shelter.
For more information about SSI rates in your state,
contact your local Social Security office.
SSI For People With Disabilities--Including Children
People with disabilities including children, can get SSI
if their income and assets are below the limits discussed in
the previous sections.
Most of the rules used to decide if a person has a
condition severe enough to qualify for Social Security
disability benefits also apply to SSI.
And as with Social Security, the SSI program has special
plans designed to help people who want to try going back to
work without the risk of suddenly losing their benefits or
Medicaid coverage. To learn more about these special plans, ask
for a copy of the booklet, Working While Disabled... How Social
Security Can Help (Publication No. 05-10095).
Social Security has special guidelines for evaluating
disability in children filing for SSI benefits. If you have a
child with a disability, contact your local Social Security
office to apply for SSI disability benefits.
For special information about benefits for children with
disabilities, ask for a copy of the publication, Social
Security and SSI Benefits For Children With Disabilities
(Publication No. 05-10026).
Other Help You Can Get
Most people who get SSI can also get food stamps and
"Medicaid" assistance. Medicaid, which is a different program
than Medicare, helps pay doctor and hospital bills. For more
information about food stamps, ask Social Security for a copy
of the factsheet Food Stamp Facts Publication No. 05-10101).
For more information about Medicaid, contact your local social
services office.
Medicare
Medicare is our country's basic health insurance program
for people 65 or older and many people with disabilities.
You should not confuse Medicare and Medicaid. Medicaid is
a health insurance program for people with low income and
limited assets. It is usually run by state welfare or social
service agencies. Some people qualify for one or the other;
some qualify for both Medicare and Medicaid.
This booklet provides only a brief overview of the
Medicare program. If you would like to learn more about
Medicare, call or visit Social Security to ask for a free copy
of the booklet, Medicare (Publication No. 05-10043).
Medicare Has Two Parts
There are two parts to Medicare:
* Hospital insurance (sometimes called "Part A") -- This
helps pay for inpatient hospital care and certain followup
services; and
* Medical insurance (sometimes called "Part B") -- This
helps pay for doctors' services, outpatient hospital care,
and other medical services.
Who Is Eligible For Hospital Insurance (Part A)?
Most people get hospital insurance when they turn 65. You
qualify for it automatically if you are eligible for Social
Security or Railroad Retirement benefits. Or you may qualify on
a spouse's (including divorced spouse's) record. Others qualify
because they are government employees not covered by Social
Security who paid the Medicare part of the Social Security tax.
In addition, if you have been getting Social Security
disability benefits for 24 months, you will qualify for
hospital insurance.
Also, people who have permanent kidney failure that
requires maintenance dialysis or a kidney replacement qualify
for hospital insurance if they are insured or if they are the
spouse or child of an insured worker.
Almost everybody qualities for hospital insurance through
one of the above methods. But if you don't and if you're 65 or
older, you can buy hospital insurance just like you can buy
other health insurance policies.
Who Can Get Medical Insurance (Part B)?
Almost anyone who is eligible for hospital insurance can
sign up for medical insurance. Unlike Part A, which was paid
for by your taxes while you worked and is free when you're
eligible for it, Part B is an optional program that generally
costs $41.10 per month. Almost everybody signs up for this part
of Medicare.
How Do You Get Medicare?
If you are already getting Social Security benefits when
you turn 65, you will be automatically enrolled in Medicare
(although you have the opportunity to turn down "Part B").
If you are disabled, you will be automatically enrolled in
Medicare after you have been getting disability benefits for 24
months. (And you can turn down "Part B" if you want.)
If you turn 65 but plan to keep working and do not plan to
sign up for Social Security at that time, you should call or
visit a Social Security office so we can help you decide if you
should sign up for Medicare only.
There are many other rules associated with Medicare
enrollment including penalties for not enrolling in Part B when
you're first eligible. Please contact your Social Security
office for more details.
What Does Medicare Pay For?
Medicare hospital insurance helps pay for:
* Inpatient hospital care;
* Skilled nursing facility care;
* Home health care;
* Hospice care.
Medicare medical insurance helps pay for:
* Doctors' services;
* Outpatient hospital services;
* Home health visits;
* Diagnostic X-ray, laboratory, and other tests;
* Necessary ambulance services; and
* Other medical services and supplies.
What Medicare Does Not Pay For
Not all health services are covered by Medicare. For
example, Medicare does not pay for:
* Custodial care;
* Dentures and routine dental care;
* Eyeglasses, hearing aids, and examinations to prescribe
and fit them;
* Nursing home care (except skilled nursing care);
* Prescription drugs; and
* Routine physical checkups and related tests.
Help For Low-Income Medicare Beneficiaries
If you get Medicare and have low income and few resources,
your state may pay your Medicare premiums and, in some cases,
other "out-of-pocket" Medicare expenses such as deductibles and
coinsurance. Only your state can decide if you qualify. To find
out if you do, contact your state or local welfare office or
Medicaid agency. For more general information about the
program, contact Social Security and ask for a copy of the
leaflet, Medicare Savings For Qualified Beneficiaries (HCFA
Publication No. 02184).
Part 4--What You Need To Know After You Sign Up For Social
Security
After you've signed up for retirement, disability,
survivors, Medicare, or SSI benefits, your involvement with
Social Security is just beginning. This section of the booklet
provides a brief overview of a few things you need to know
about your benefits and how they work.
When you start getting Social Security, we send you a
booklet that explains your rights and responsibilities. In
addition, we produce a variety of publications that explain
other facts you need to know about Social Security and SSI. If
you need more information, call or visit Social Security to
tell us your situation. There is probably a pamphlet or
factsheet we can send you that will answer your questions.
What You Need To Report To Us
People who get Social Security should let us know when
something happens that might affect their benefits. Here are
some examples:
* If they move;
* If they get married or divorced;
* If their name changes;
* If their income or earnings change;
* If a child is born or adopted;
* If a beneficiary is imprisoned;
* If they leave the United States;
* If a beneficiary dies.
If You Disagree With A Decision We Make
Whenever we make a decision that affects your eligibility
for Social Security or SSI benefits, we send you a letter that
explains our decision. If you disagree with our decision, you
have the right to appeal it. In other words, you can ask us to
review your case. If our decision was wrong, we will change it.
For More Information: To learn more about the appeals
process, call or visit any Social Security office to ask for a
copy of the factsheet called The Appeals Process (Publication
No. 05-10041). In addition, you have the right to be represented
by a qualified person of your choice when dealing with Social
Security. For more information, ask us for a copy of the
factsheet, Social Security And Your Right To Representation
(Publication No. 05-10075).
How Your Earnings Affect Your Benefits
There is a provision in the law that limits the amount of
money you can earn and still collect all your Social Security
benefits. This provision affects people under the age of 70 who
collect Social Security retirement, dependents, or survivors
benefits. (Earnings in or after the month you reach age 70
won't affect your Social Security benefits.) People who work
and collect disability or SSI benefits have different earnings
requirements and should report all their income to Social
Security.
If you are under age 65, you can earn up to $8,040 in 1994
and still collect all your Social Security benefits.
However, for every $2 you earn over $8,040, $1 will be
withheld from your Social Security benefits.
If you are age 65 through 69, you can earn up to $11,160
in 1994 and still collect all your Social Security benefits.
However, for every $3 you earn over $11,160, $1 will be
withheld from your Social Security benefits.
We count only the earnings you make from a job or your net
profit if you're self-employed. This includes compensation such
as bonuses, commissions, and vacation pay. It does not include
such items as pensions, annuities, investment income, interest,
Social Security, veterans, or other government benefits.
For More Information: If you would like to learn more
about the Social Security earnings limits and how they affect
you, call or visit any Social Security office to ask for a free
copy of How Work Affects Your Social Security Benefits
(Publication No. 05-10069).
Your Benefits May Be Taxable
Some people who get Social Security will have to pay taxes
on their benefits. You will be affected only if you have
substantial income in addition to your Social Security
benefits.
If you file a Federal tax return as an "individual," and
your combined income* is between $25,000 and $34,000, you may
have to pay taxes on 50 percent of your Social Security
benefits. If your combined income* is above $34,000, 85 percent
of your Social Security benefits is subject to income tax.
If you file a joint return, you may have to pay taxes on
50 percent of your benefits if you and your spouse have a
combined income* that is between $32,000 and $44,000. If your
combined income* is more than $44,000, 85 percent of your
Social Security benefits is subject to income tax.
If you are a member of a couple and file a separate
return, you probably will pay taxes on your benefits.
* "Combined income" means your and your spouse's adjusted
gross income (as reported on your Form 1040) plus
nontaxable interest plus one-haft or your Social Security
benefits.
For More Information: If you would like more information
about the taxation of your Social Security benefits, there are
some IRS publications that will help you. Call or visit IRS to
ask for a copy of Publication 554, Tax Information for Older
Americans, and Publication 915, Social Security Benefits And
Equivalent Railroad Retirement Benefits.
When Somebody Needs Help Managing Benefits
Sometimes, people who receive Social Security or SSI are
not able to handle their own financial affairs. In those cases,
and after a careful investigation, we appoint a relative, a
friend, or another interested party to handle their Social
Security matters. We call that person a "representative payee."
All Social Security or SSI benefits due are made payable in the
representative payee's name on behalf of the beneficiary.
Here's An Important Point: If you have "power of attorney"
for someone, that does not automatically qualify you to be his
or her representative payee.
If you are a representative payee, you have important
responsibilities.
* You must use the Social Security or SSI benefits for the
personal care and well-being of the beneficiary. Any
excess funds must be saved on the beneficiary's behalf.
* You must keep Social Security informed of any events that
might affect the beneficiary's eligibility for benefits.
For example, you should tell us if the beneficiary moves
or gets a job. And, of course, you should tell us when the
beneficiary dies.
* You must file a periodic accounting report with Social
Security that shows how you spent or saved the benefits
you were paid.
For More Information: If you would like to learn more about
receiving benefits on behalf of another individual call or visit
any Social Security office to ask for a copy of the brochure, A
Guide For Representative Payees (Publication No. 05-10076).
Other Booklets Available
We said right up front that this booklet was intended to
provide a general overview of Social Security programs and how
they might affect you. Throughout this booklet, we referred you
to other publications whenever the situation required more
information or a more detailed explanation.
The Social Security Administration and the Health Care
Financing Administration (the Medicare people) produce many
publications and factsheets designed to help explain these
programs to you. Here is a list of some you may find helpful.
* Retirement (Publication No. 05-10035)--A guide to Social
Security retirement benefits
* Disability (Publication No. 05-10029)--A guide to Social
Security disability benefits
* Survivors (Publication No. 05-10084)--A guide to Social
Security survivors benefits
* Medicare (Publication No. 05-10043)--A guide to the
Medicare program
* SSI (Publication No. 05-11000)--A guide to the
Supplemental Security Income program
* Social Security And SSI Benefits For Children With
Disabilities (Publication No. 05-10026)--An overview of
benefits available to children
* A Guide To Social Security And SSI Disability Benefits For
People With HIV Infection (Publication No. 05-10020)--An
explanation of benefits for people with the AIDS virus
* Financing Social Security (Publication No. 05-10094)--A
factsheet that provides an overview of Social Security's
trust fund operations
These and other publications can be obtained free of
charge at any Social Security office or by calling our
toll-free number: 1-800-772-1213.
Fingertip Facts
Here's a summary of important Social Security information
1994 Social Security and Medicare Taxes
--You and your employer each pay 7.65 percent up to $60,600
--If you're self-employed, you pay 15.3 percent up to
$60,600
Extra Taxes For Medicare In 1994
--You and your employer each pay 1.45 percent on all wages
above $60,000
--If you're self-employed, you pay 2.9 percent on all net
earnings above $60,600
Work Credits In 1994
--For each $620 you earn, you receive one Social Security
"credit" up to four per year
--Most people need 40 credits to be eligible for retirement
benefits
--Younger people need fewer credits to qualify for
disability and survivors benefits
Average 1994 Social Security Benefits
--retired individual: $674
--retired couple: $1,140
--disabled individual: $641
--disabled individual with a spouse and child: $1,092
--widow(er): $631
--young widow(er) with 2 children: $1,316
1994 Earnings Limits
--If you're under 65, you can earn up to $8,040 with no
reduction in benefits; for every $2 you earn over $8,040,
$1 is withheld from benefits
--If you're 65-69, you can earn up to $11,160 with no
reduction in benefits; for every $3 you earn over $11,160,
$1 is withheld from benefits
--If you' re 70 or older, there is no limit on your earnings
1994 SSI Payment Rates
(does not include state supplement, if any)
--$446 for an individual
--$669 for a couple
Index
Subject
appeals
benefits
--estimate of
--figuring amount of
--kinds of
children (benefits for)
credits
direct deposit
disability benefits
divorced people (benefits for)
early retirement
earnings limits
estimate of benefits
family benefits
FICA (Federal Insurance Contributions Act)
financing of Social Security
hospital insurance
incentives to work
late retirement
Medicaid coverage
medical insurance
Medicare coverage
--help for low-income Medicare beneficiaries
parents (benefits for)
quarters of coverage (see credits)
reporting requirements
representative payee
retirement benefits
self-employment taxes
Social Security numbers
Supplemental Security Income (SSI)
survivors benefits
taxation (of Social Security benefits)
taxes (Social Security)
telephone numbers (toll-free)
trust funds
waiting period
widows and widowers
workers' compensation
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