Social Security Benefits and Taxes

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Social Security
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-also referred to as *Old Age Survivors Disability Insurance (OASDI)* -enacted in 1935 by federal govt. -in some aspects, it plays a role of Federal life and health insurance -uses the *Quarter of Coverage (QC)* system to determine qualification for benefits
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Quarter of Coverage (QC) System
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-determines qualification for benefits -type and amount of benefits depends on the amount of *credits* or *QCs* a worker has earned -anyone working in jobs covered by SS or operating their own business may earn up to 4 credits for each year of work -*full insured* refers to someone who has earned *40 quarters of coverage* (=10 years of work), and receives SS retirement, Medicare, and survivor benefits -one can attain a *currently insured* status (or partially insured), and by that qualify for certain benefits if he/she has earned *6 credits* during the 13 quarter period *ending with the quarter in which the insured:* 1. dies 2. becomes entitled to disability insurance benefits 3. becomes entitled to old age insurance benefits -number of quarters required to qualify for younger workers differs by age
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Retirement Benefit Info
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-Conditions for Payment => fully insured status and age 66 (or reduced benefits at 62) -Paid to => retired person and eligible dependents -Type of Pmt. => monthly benefit equal to primary insurance amt. (PIA) -Worker’s status => fully insured
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Disability Benefit Info
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-Conditions for Pmt. => total and permanent disability prior to retirement age -Paid to => disabled worker, spouse, and eligible dependents -Type of Pmt. => monthly disability benefit after 5 month waiting period -Worker’s Status => Fully insured
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Survivor Benefit
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-Conditions for Pmt. => Worker’s death -Paid to => surviving spouse and dependent kids -Type of Pmt. => lump sum burial benefit (if fully or currently insured) and monthly income pmts. (if fully insured) -Worker’s Status => Fully or currently insured
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Funding for SS
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-taxes on taxable wage base -employer deducts taxes from employee’s paycheck and contributes an equal amt. -part of the tax funds OASDI (called *FICA), and part of the tax funds Medicare -self-employed employees pay an amount that is equivalent to both the employee and employer’s contribution

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