Presentation on theme: "Social Security Frank Van Nostrand Public Affairs Specialist"— Presentation transcript:
1Social Security Frank Van Nostrand Public Affairs Specialist Our logo became effective 3/31/95 when SSA became an Independent Agency.The following proposed talking points are provided for your review. You may find them useful as a resource for you or for your fellow employees. In no way are they intended to be all-inclusive. Virtually all of the information contained within the talking points was derived directly from our Intranet Website. We hope they will be useful in supplementing your presentation.HELPFUL HINT:To view talkers in PowerPoint, go to “View” on toolbar and select “Note Pages.” To print talkers, go to “File”, then “Print” and under “Print What”, select “Note Pages.”NOTE: Colors are designed for PowerPoint viewing andare much darker on paper than on the screen.Frank Van NostrandPublic Affairs Specialist
3Supplemental Security Income 19721965MedicareOther Programs
4Retirement Income Social Security Pension Savings This is a graphic representation of the traditional three-legged stool concept and is offered to you as a more simple alternative to the above slide.Savings
5Social Security Cost-of-Living Adjustments Effective Date Amount Effective Date AmountJune % Dec %June % Dec %June % Dec %June % Dec %June % Dec %June % Dec %June % Dec %June % Dec %June % Dec %June % Dec %June % Dec %Dec % Dec % Dec % Dec %Dec % Dec %Dec % Dec %Dec % Dec %Dec % Dec %Another economic factor that can affect Social Security is the rate of inflation. Social Security will probably be the only source of your retirement income that is tied directly to the Consumer Price Index. This is important information for your pre-retirement planning.This chart also reflects that during the early 1980s, when unemployment was very high, the inflation rate was very high. This represented a period when the trust funds were strained. Fewer workers were paying in, while the amount being paid out was increasing. Fortunately, as you can see in recent years the inflation rate has been low and relatively stable.Some are suggesting that the CPI/COLA formula be changed for Social Security beneficiaries.
6Social Security Retirement Insurance Benefits Worker &2007 Earnings Worker (65/10mo) Spouse (65/10mo)Lower $18, $ $1,294Average $40, $1, $2,131Maximum $97, $2, $3,277These benefit amounts are provided so that the audience can get a better sense of “What’s in it for me?”The benefit amounts assume that the worker had steady wages since age 22 and the worker retired at age 65 in January 2001.
7Credits Needed For Retirement: How Credits Are Earned2009:--1 credit for each $1,090 in covered employment--maximum of 4 credits/yr ($4,360)40Credits Needed For Retirement:
8Who Can Get Retirement Benefits WorkerReduced benefits at 62 (must be insured; 40 credits/10 yrs)Full benefits at age 65 (age 67, if born after 1960)A wife or husband can only receive a spouse’s benefit if the worker is receiving a benefit, assuming the benefit on their own work record is not higher.If a spouse is caring for a child under age 16, of the worker, the spouse could qualify regardless of their age. When the youngest child turns 16, the spouse’s benefit will stop, even though the child’s benefit will continue.A divorced spouse could receive a benefit as long as they were married at least 10 years. It is possible that more than one spouse could receive a benefit, without penalty or reduction, as if they were the only spouse.
9Full Retirement Age Year of Birth Full Retirement Age 1937 65 & 2 months& 4 months& 6 months& 8 months& 10 months& 2 months& 4 months& 6 months& 8 months& 10 months1960 & later 67The increase in full retirement age was the result of the 1983 Amendments. Full retirement age increases apply to all Retirement Benefits and to Survivors Benefits. Although, we at SSA have always used the term “full” retirement age, you may encounter some that now refer to “full retirement age” as “Normal Retirement Age”.The Medicare eligibility age of 65 has not changed.Regardless of your full retirement age, benefits can still be paid at age 62.
10Who Can Get Retirement Benefits WorkerReduced benefits at 62 (must be insured; 40 credits/10 yrs)Full benefits at age 65 (age 67, if born after 1960)Increased benefits for retirement after full retirement ageWife or HusbandAt age 62At any age if caring for child under 16 or disabledDivorced spouses may qualifyChildUnmarried under 18 (under 19 if still in high school)Unmarried if disabled before age 22A wife or husband can only receive a spouse’s benefit if the worker is receiving a benefit, assuming the benefit on their own work record is not higher.If a spouse is caring for a child under age 16, of the worker, the spouse could qualify regardless of their age. When the youngest child turns 16, the spouse’s benefit will stop, even though the child’s benefit will continue.A divorced spouse could receive a benefit as long as they were married at least 10 years. It is possible that more than one spouse could receive a benefit, without penalty or reduction, as if they were the only spouse.
11How Social Security Retirement Benefits Are Figured Social Security benefits are based on earnings:Step 1 - Adjust wages for inflationStep 2 - Average over most of your working lifetime--(Your highest 35 years)Step 3 - Result is “average indexed monthly earnings”This graph provides an overview of the first step that we use in computing a benefit. We are looking for the highest 35 years during a worker's lifetime of earnings, regardless of when earned. Workers that stop working before age 62 are not penalized for so doing, they simply may not have the opportunity to replace lower year wages with the current higher amounts.This formula also underscores how a worker could qualify for a retirement benefit with just 10 years of work. However, since we are looking for their highest 35 years, in this example, we would be adding in 25 zero years. Needless to say, this worker will be receiving a low benefit. There is no such thing as a minimum benefit.
12Retirement Benefit Computation - 2009 90% of first $74432% of the next $3, 73915% of remainderover $4,483
13Example: AIME = $4700 90% X 744 = 669.60 32% X 3739 = 1196.48 Primary Insurance Amount
14Replacement Rates Low Income Worker: 55% Average Income Worker: 40% Upper Income Worker: 25%
15Retirement Income Social Security Pension Savings This is a graphic representation of the traditional three-legged stool concept and is offered to you as a more simple alternative to the above slide.Savings
16Total Retirement Income Social Security Represents: Lower 1/3Middle 1/3Higher 1/3
17Early Retirement Benefits (earliest - age 62) First Three years5/9 of 1% per month6.66% per year20% for first three yearsEach additional year5/12 of 1% per month5% per yearReduction is permanentThe reduction factor for the first 36 months continues to be a 20% reduction. In other words, a 36-month reduction would net the worker 80% of what they could have received at full retirement age.A 48-month reduction would net the worker with 75% of what they could have received at full retirement age.A full 60-month reduction would net the worker 70% of what they could have received at full retirement age.A spouse at full retirement age would be eligible for 50% of the workers full retirement age benefit.The reduction factor for the first 36 months continues to be a 25% reduction. In other words, a 36-month reduction would net the spouse 75% of what they could have received at full retirement age.A 48-month reduction would net the spouse 70% of what they could have received at full retirement age.A full 60-month reduction would net the spouse 65% of what they could have received at full retirement age.Many people may have the option of retiring or leaving the workforce prior to age 62. Knowing that their benefit will be permanently reduced for drawing their benefit prior to full retirement age they are left with the decision of waiting for their full retirement age or drawing their benefit at age 62. If they decide to wait until their full retirement age, even though they were otherwise eligible at age 62, they would be foregoing all of the benefits they could have received prior to their full retirement age. Examples:Full Retirement Age Payments Foregone Ahead until Ageand 9 months
18The Cost of Early Retirement % of BenefitsYou will turn Received atYear of Birth age 62 in: Age Full Retirement Ageand before 80%/6% & 2 months/3% & 4 months/2% & 6 months/3% & 8 months/6% & 10 months%/6% & 2 months/3% & 4 months/2% & 6 months/3% & 8 months/6% & 10 months1960 & later & later %
19Your widow inherits the reduction! If you elect reducedBenefits and die...Your widowinheritsthe reduction!
20Your benefits may be taxed! Good news: only 30% have to pay taxesBad news: you’re probably in that 30%If your 1040 adjusted gross income (INCLUDING ½ of your Social Security) is over $25,000 for individual or $32,000 for a couple, you’ll pay taxes.
21Delayed Retirement Credits Yearly Rate of Year of Birth Increase (%)1943 or later 8.0Although annual amounts are shown, DRCs are credited on a monthly basis. Therefore, the annual amounts would be prorated by months.There have been no changes in the proposed DRCs in recent years. However, because of the increase in Full Retirement Age, the number of DRCs payable will be reduced. (e.g., age 65, full retirement age, could earn 5 years of DRCs; age 67, full retirement age, could earn 3 years of DRCs).
22How Work Affects Social Security Benefits - 2009 Withheld/Age Earnings Limit Above Full Retirement Age (FRA) & Above No LimitUnder FRA $14,160 ($1180/mo.) $1 for every $2Year attaining FRA $37,680 ($3,140/mo.) $1 for every $3
23Who Can Get Survivors Benefits Widows/WidowersReduced benefits at age 60As early as age 50 if disabledAt any age if caring for a child of worker under 16 or disabledDivorced widows/widowers qualifyChildUnmarried child under 18, or under 19 if still in high schoolUnmarried child disabled before age 22 who continues to be disabledYou may wish to explain how a widow or widower can receive a survivors benefit at age 60 and then switch to a benefit on their own work record at age 62. Or, how a widow or widower could receive a reduced survivors benefit at age 60 and then file for an unreduced benefit on their own work record at their full retirement age.
24Who Can Get Survivors Benefits ParentsAge 62 and was receiving at least one-half support from deceased workerLump Sum Death Payment($255)Living with orentitled spouseEntitled childAlthough parents’ benefits are included, the number of parent beneficiaries is negligible.The description of eligibility for the LSDP is rather direct. This could be used as an opportunity to address the misleading advertising used by some insurance companies that imply that the only benefit payable is the LSDP, without regard to the monthly widow’s(er’s) benefits.
25Survivors Benefits Percentage Full Retirement Age 100.0 Age 60 71.5 Age 50 (Disabled)Young Widow(er) 75.0ChildThis graph offers the opportunity to explain the increased full retirement age (normal retirement age) for widows. Full retirement age has been increased exactly the same for widows(ers) as for workers. The major difference is in the reduction for early benefits. At full retirement age, a widow(er) continues to be eligible for 100% of what the worker would have received. At age 60, a widow continues to receive 71.5% of her full retirement age benefit. In other words, there are now 13 different reduction tables for widows(ers).
26Who Can Get Disability Benefits WorkerMust be insured (20/40)Any ageSpouseAge 62 or olderAny age if caring for a child of worker under age 16Divorced spouses qualifyThe discussion of factors of entitlement is rather direct. Again, the definition of disability in and of itself explains why it is not "easy" to qualify for a Social Security Disability Benefit. SSA's disability definition is that based on your medical condition you are not expected to be able to do any work for at least 12 months or your condition is terminal. This determination is based on your age, education and work experience.For people that pay into Medicare only (e.g., CSRS employees), and not Social Security, it is important to remember that they should file for a Social Security disability decision, since they could become eligible for Medicare 25 months after we otherwise could have paid them a cash benefit.After becoming eligible for a disability benefit, the law requires us to review the continuing disability (CDRs) generally every 3 to 7 years depending on the severity of the disability.
27Who Can Get Disability Benefits ChildUnmarried child under 18, or under 19 if still in high schoolUnmarried child disabled before age 22 who continues to be disabledThe children’s category is offered here as in the Retirement and Survivors Benefits Sections.
28Medicare Coverage Receiving Social Security 65 and olderReceiving Social SecurityDisability benefits at least24 months (Except ALS)Permanent kidney failureYou may wish to remind your audience that although the full retirement age has been increased above age 65, Medicare eligibility is still at age 65.
29Hospital Insurance In Patient Hospital Coverage Hospital Deductible: $1068Coinsurance: Day 61-90: $267 per dayLifetime Guarantee days (60): $534 per daySkilled Nursing FacilitiesDay : $ per dayHome Health CareHospice CarePremium - $443$244 with at least 30 QCs
30Medical Insurance Doctors and other Providers Hospital Outpatient ServicesHome Health ServicesX-ray and Laboratory ServicesDurable Medical EquipmentAmbulance
32Wealthier Seniors will Pay More for their Part B in 2009 Beneficiaries who file anindividual tax return withincome:Beneficiaries who file aJoint tax return withIncome RelatedMonthlyAdjustmentamountTotalPremiumLess than or equal to$85,000Less than or equal to $170,000$0.00$96.40Greater than $85,000 andless than or equal to$107,000Greater than $170,000 and less than or equal to $214,000$38.50$134.90Greater than $107,000 and$160,000Greater than $214,000 and less than or equal to $320,000$96.30$192.70Greater than $160,000 and$213,000Greater than $320,000 and less than or equal to $426,000$154.10$250.50Greater than $213,000Greater than $426,000$211.90$308.30
33What Does It Cost You? Monthly Premium: $96.40 Yearly Deductible: $135 Medicare pays 80% of Approved ChargeYou pay 20% of Approved ChargeBy law, Physician cannot charge more than 15% on top of Approved charge
34Medicare Enrollment Periods IEPGEPSEPInitialGeneralSpecialThe Initial Enrollment Period starts 3 months before the month that you turn age 65 and extends 3 months past the month that you turn 65. If you are not receiving benefits, you should inquire about filing for Medicare 3 months prior to turning age 65 so that your coverage can start the month you turn 65. If you are receiving benefits, you will receive your Medicare card generally about a month before turning age 65, reflecting your Part A and Part B coverage (by far, most people want Part B, even though it's optional).The Special Enrollment Period is for people (and their spouses) that continue to work past age 65. Since Medicare pays second after their employer group health plan pays first, they are not required to file for Part B. Since Medicare pays second there may be no need for Part B coverage. It is extremely important for workers to check with their employer group health plan for specific guidance. For this reason, they are offered a special period in which to file for Medicare. As a general rule, we can recommend that people file for Part A 3 months prior to turning age 65, and then on the day they stop working call SSA to file for Part B.The General Enrollment Period is for those people that missed their Initial or Special Enrollment Periods. The window to file is January to March with coverage not beginning until July. If one files in the General Enrollment Period, they will be assessed a 10% penalty for each year after their Initial period.
35What is the MediGap? Part A Deductibles and Coinsurance Hospital Care after day 150Part B Deductible and CoinsuranceNon-covered Services
36How Do I Close the “Gap” Self Insure MediCal Medicare Supplement Medicare Advantage
37And Now There’s Part D! You may NOT need it! When you become eligible for Medicare, you can purchase Part D Prescription Drug PlansYou want to sign up when first eligible, or you will pay moreProgram is voluntary