Social Security www.socialsecurity.gov

Overview Retirement Insurance Survivors Insurance Disability Insurance Taxation of Benefits Medicare Online Services

History of Social Security Programs 1935 – Retirement Insurance 1939 – Survivors Insurance 1956 – Disability Insurance 1965 – Medicare Program 1972 – Supplemental Security Income 2003 – Medicare Part D Prescription Drug Coverage Social Security legislation was passed in 1935. At that time, the program was solely a retirement program. The basic tenets of this social insurance program have been to provide: Individual Equity – You earn the benefits you receive. The more you earn, the higher your benefit will be. Social Adequacy – Social Security provides a financial foundation which protects all workers. In 1939, a year before Social Security began paying monthly retirement benefits, the social safety net expanded with the Survivors Insurance program. Again during difficult economic times, the vulnerability of widows and children became even more apparent. In 1956, the Social Security Disability Insurance Program became law. Then, as now, for most workers in America, Social Security is the only comprehensive disability insurance policy they have. In 1965, Medicare legislation was passed. This program is the medical coverage you get when you turn 65 or become disabled. In 1972, the Supplemental Security Income program (also known as SSI) was created. SSI is a program based on need for those who are 65 or older, blind or disabled. Although SSI is administered by Social Security, the SSI benefit payments and administrative costs of running the program come from general tax revenue and not Social Security taxes. In 2003, Medicare Part D legislation was passed, In 2006 Medicare Part D went into effect, helping to meet drug costs for millions of Medicare beneficiaries.

Who Gets Benefits from Social Security? 58 million people This graph is an overview of the number of beneficiaries we pay. Currently, about one in every six people in America is receiving a Social Security benefit. The majority of our beneficiaries are retired. But Social Security is more than retirement...it is a family protection plan (almost 1/3 of the beneficiaries are disabled, dependants of disabled, or survivors).

Retirement Insurance

A Foundation for Planning Your Future Social Security provides a foundation on which to build retirement security.

How Do You Qualify for Retirement Benefits? You need to work to earn Social Security “credits” Each $1,220 in earnings gives you one credit You can earn a maximum of 4 credits per year Example: To earn 4 credits in 2014, you must earn at least $4,880. Earning 40 credits (10 years of work) throughout your working life will qualify you for a retirement benefit. Wages are reported to Social Security on an annual basis via the W-2 form. It doesn’t matter when in the year the wages were earned. In 2010, when a worker earns $4,480 or more, he or she has earned their 4 credits for the year ($1,120/credit). Since a worker only needs 40 credits throughout his or her working career, it is relatively easy to become insured (vested) for a Social Security Retirement Benefit. In the year 2010, the Maximum Earnings Taxable is $106,800.

Your Age at the Time You Elect Retirement Benefits Affects the Amount If You’re a Worker and Retire At age 62, you get a lower monthly payment At your full retirement age, you get your full benefit You get an even higher monthly payment if you work past your full retirement age

Your Age At The Time You Elect Retirement Benefits Affects the Amount For example, if you were born from 1943 through 1954: Age 62 75% of benefit Age 66 100% of benefit Age 70 132% of benefit The reduction for early retirement is: 20% if you were born before 1938 25% if you were born between 1943 and 1954 30% if you were born 1960 or later

Full Retirement Age Year of Birth Full Retirement Age 1937 or earlier 65 1938 65 & 2 months 1939 65 & 4 months 1940 65 & 6 months 1941 65 & 8 months 1942 65 & 10 months 1943 – 1954 66 1955 66 & 2 months 1956 66 & 4 months 1957 66 & 6 months 1958 66 & 8 months 1959 66 & 10 months 1960 or later 67 The 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 Social Security have always used the term “full” retirement age, you may find that some people now refer to “full retirement age” as “Normal Retirement Age”. Regardless of your full retirement age, reduced benefits can still be paid as early as age 62. In addition, the Medicare eligibility age of 65 has not changed. You should apply for Medicare 3 months before your 65th birthday, even when you plan to apply for your retirement or spouse’s benefits later.

What You Can Expect at Full Retirement Age 56% 41% 34% An underlying principle is that Social Security provides a weighted benefit formula that is consistent with the basic tenet of social adequacy. You can find more information on earnings replacement from the 2009 Trustees Report.

What is the Best Age to Start Receiving Retirement Benefits? The choice should be based on individual circumstances. The decision is a personal one and depends on many factors such as; current cash needs, health and family longevity, plans of working in retirement, other retirement income sources, anticipated future financial needs and obligations, and the amount of future Social Security benefits. Monthly payments differ based on when benefits start: Lower monthly payments for a longer period of time; Higher monthly payments for a shorter period of time. Some of the variables that individuals should consider are: *Financial needs now vs. later *Life expectancy, *Health insurance needs *Future work plans, *Benefits for a spouse and children, *Effect of Retirement Insurance Benefit Limitation (RIB/LIM) and Delayed Retirement Credits (DRCs) on widow(er)’s benefits, and *Personal savings and other income sources. The decision is a personal one. Would it be better to begin receiving benefits early with a smaller monthly amount or wait for a larger monthly payment later that you may not receive as long? Monthly payments differ substantially based on when an individual starts receiving benefits, but, if the individual lives to the average life expectancy, they will receive about the same amount in lifetime benefits no matter whether they choose to start receiving benefits at age 62, full retirement age, age 70 or any age in between. Basically, they can get lower monthly payments for a longer period of time or higher monthly payments over a shorter period of time.

Life Expectancy for Those Age 65 Today U.S. Population 82 85 Men Women U.S. Population 82 85 White 82 85 African American 79 83 Hispanic 85 89 Asian 85 88 American Indian 84 88 This slide provides a comparative chart of life expectancy.

How Social Security Determines Your Benefit Social Security benefits are based on earnings Step 1 -Your wages are adjusted for changes in wage levels over time Step 2 -Find the monthly average of your 35 highest earnings years Step 3 -Result is “average indexed monthly earnings” This slide 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. This formula also makes clear how a worker who qualifies for a retirement benefit with just 10 years of work would have a low benefit payment. Since we are looking for his or her highest 35 years, in this example, we would be adding in 25 zero years. Needless to say, this worker would be receiving a lower benefit. There is, however, no such thing as a minimum benefit.

2015 Retirement Benefit Computation Example If your average monthly earnings are = $5,200 Then your monthly benefit would be = $2,096 Average Monthly Earnings $5,200 90% of First $826 = $734.40 32% of Earnings over $826 through $4,980 $4,154 = $1329.28 ($4,980 -$826 = $4,154) 15% of Earnings over $4,980 $220 = $33.00 $5,200 $2,096.68

my Social Security www.socialsecurity.gov/myaccount/ You can get your Social Security Statement online by visiting www.socialsecurity.gov. If you are unable to create an online account, you will have the option to request that a paper Statement be mailed to you.

Who Can Create a my Social Security Account? You must be at least 18 years old and have: A valid E-mail address; A Social Security number; and A U.S. mailing address. Almost anyone can get an online account. You must be at least 18 years of age, have a valid e-mail address, a Social Security number, and a U.S. mailing address (includes military addresses, APO/FPO/DPO AE, AP or AA). Users can only create an account for themselves. They cannot set up an account for another person, even if they have his or her written consent. This also applies to an appointed representative or someone who has business with that person. Users may be unable to create an online account if they: •     Blocked electronic access to their personal information with us; •     Recently moved or changed your name; or •     Placed a freeze on their credit report.

my Social Security Services If you don’t get benefits, you can— View, save, and print your online Social Security Statement.  If you do get benefits you can— Get your benefit verification letter; Check your benefit and payment information and your earnings record; Change your address and phone number; and Start or change your direct deposit. (Read from slide.) Note: Services are available (and presented) to registered users based on the type of benefits they receive. If the user does not receive benefits: Access online Social Security Statement If the user only receives Social Security benefits: Get benefit verification letter Change address and telephone number Start or change direct deposit If the user only receives SSI benefits: If the user receives both Social Security and SSI benefits: If the user only receives Medicare:

Use the Retirement Estimator Convenient, secure, and quick financial planning tool Immediate and accurate benefit estimates Lets you create “What if” scenarios based on different ages and earnings You can get estimates of your future Social Security retirement benefits using our online Retirement Estimator. You must enter certain ID information about yourself to use, such as your name, date of birth, Social Security number, place of birth and mother’s maiden name. This service is drawing high favorability ratings from users. www.socialsecurity.gov/estimator

You Can Work & Still Receive Benefits You Can If You Make More, If You Are Make Up To Some Benefits Will Be Withheld Under Full Retirement Age $15,720/yr. ($1,310/mo.) $1 for every $2 The Year Full Retirement Age is Reached $41,880/yr. ($3,490/mo.) $1 for every $3 Month of Full Retirement Age and Above No Limit No Limit In the year you reach full retirement age, you are subject to a different annual earnings test. In that year, for the months prior to attaining full retirement age, you can earn up to $37,680/year ($3,140/mo.) without affecting your benefits. For every $3 in earnings above the limit, one dollar in benefits will be withheld. At full retirement age, there is no limit on the amount you can earn without affecting your benefit payments. The annual retirement earnings test exempt amounts are increased annually by the average increase in wages in the U.S. Note: If some of your retirement benefits are withheld because of your earnings, your benefits will be increased starting at your full retirement age to take into account those months in which benefits were withheld.

What Income Counts Income that Counts as Earnings Gross wages from employment and/or net earnings from self-employment Income that Does NOT Count as Earnings Inheritance Payments Pensions Income from Investments Interest and Dividends Capital Gains Other Sources

Retirement Earnings Test Calculator

Retirement Earnings Test Calculator

In Addition to the Retiree, Who Else Can Get Benefits? Your Child Not married under 18 (under 19 if still in high school) Not married and disabled before age 22 Your Spouse Age 62 or older At any age, if caring for a child under age 16 or disabled The worker and his or her spouse must be married for one year (continuously) immediately before the day on which the application is filed. (Note: The one-year requirement can be waived if the spouse is the natural mother or father of the worker’s biological child or if the spouse was entitled or potentially entitled to certain auxiliary or survivor’s benefits in the month before the month of marriage to the worker.) If a spouse is caring for a child under age 16 of the worker, the spouse could qualify regardless of age. When the youngest child turns 16, the spouse’s benefit will stop, even though the child’s benefit will continue. However, if the child is disabled, the spouse’s benefits will continue as long as the child is under his or her care.

In Addition to the Retiree, Who Else Can Get Benefits? Your Ex-Spouse Marriage lasted at least 10 years Ex-spouse 62 or older and unmarried (you can be married) Divorced at least two years and you and your ex-spouse are at least 62, he or she can get benefits even if you are not retired Ex-spouse’s benefit amount has no effect on the amount you or your current spouse can get Your divorced spouse can get benefits on your Social Security record if the marriage lasted at least 10 years. Your divorced spouse must be 62 or older and unmarried. Also, if you and your ex-spouse have been divorced for at least two years and you and your ex-spouse are at least 62, he or she can get benefits even if you are not retired. Your current spouse cannot receive spouse’s benefits until you file for retirement benefits. The amount of benefits your divorced spouse gets has no effect on the amount of benefits you or your current spouse can get.

Spouse’s Benefit Computation Benefit is 50% of worker’s unreduced benefit Reduction for early retirement Does not reduce payment to worker

How Do I Apply for Retirement Benefits? Apply online at www.socialsecurity.gov It is the most convenient way to apply; Call Social Security to schedule an appointment 1-800-772-1213 (TTY 1-800-325-0778); or Apply at your local Social Security office.

Applying for Retirement Benefits You can apply online for Retirement Benefits by visiting www.socialsecurity.gov and then clicking on “Benefits”

What Will You Need When Applying for Your Social Security Benefits? Social Security number for each applicant Proof of age (if allegation doesn't match Social Security records) Latest W-2 or self-employment tax return Earnings estimate Bank information for direct deposit Information about marriages/divorces Information about military or railroad service We need to see the appropriate proofs when you file your claim.

Survivors Insurance

Who Can Get Survivors Benefits? Your Child if: Not married under age 18 (under 19 if still in high school) Not married and disabled before age 22 Widow or Widower: Full benefits at full retirement age Reduced benefits at age 60 If disabled as early as age 50 At any age if caring for child under 16 or disabled Remarriage after age 60 (50 if disabled) Divorced widows/widowers may qualify The length of marriage requirement for a widow or widower is 9 months, and for a surviving divorced wife it is 10 years immediately before the date of divorce. Please note, there are exceptions to the duration of marriage requirements. Generally, you cannot get widow’s or widower’s benefits if you remarry before age 60. But remarriage after age 60 (or age 50 if you are disabled) will not prevent you from getting benefit payments based on your former spouse’s work. And at age 62 or older, you may get benefits based on your new spouse’s work, if those benefits would be higher.

Widow or Widower Benefit Computation At full retirement age, 100% of deceased worker’s unreduced benefit At age 60, 71.5% of deceased worker’s unreduced benefit Reduced benefits on one record at age 60, reduced or unreduced benefit on other record at age 62 or older Full benefits to both widow or widower and divorced widow or widower Regardless of the change in full retirement age, a widow or widower can still receive 71-1/2% of the worker’s benefit at age 60. A widow or widower can receive a survivors benefit at age 60 and then switch to a benefit on his or her own work record at age 62. Or, a widow or widower could receive a reduced survivors benefit at age 60 and then file for an unreduced benefit on his or her own work record at full retirement age. Benefits paid to a surviving divorced spouse who is 60 or older (age 50 if disabled) will not affect the benefit rates for other survivors receiving benefits.

Other Survivors Benefits Parents Age 62 and was receiving at least one-half support from deceased worker Lump Sum Death Payment ($255) Most spouses Some children Although parents’ benefits are included, the number of parent beneficiaries is negligible. Misleading advertising is sometimes used by some insurance companies that imply that the only benefit payable is the LSDP, without regard to the monthly widow or widower’s benefits.

Disability Insurance

Social Security’s Disability Definition: A medical condition or combination of impairments preventing substantial work for at least 12 months, or expected to result in death. The determination also considers age, education & work experience. The actual disability definition makes the clear distinction between Social Security’s disability requirements compared to other disability programs, such as Veterans and Workman’s Compensation. Social Security’s disability definition is based on your medical condition and the fact that you are not expected to be able to do any work for at least 12 months or your condition is terminal. This work determination is based on your age, education and work experience. 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.

Who Can Get Disability Benefits? Worker Must have paid into Social Security five out of last 10 years For younger workers, under age 31 less work is required Spouse At age 62 At any age if caring for child under 16 or disabled Divorced spouses may qualify Under age 31 - Must have paid Social Security taxes for half the time elapsed since turning age 21 Age Social Security Taxes EXAMPLE: 24 1-1/2 years 29 4 years

Who Can Get Disability Benefits? Child Not married under age 18 (under 19 if still in high school) Not married and disabled before age 22 (Note to speaker: The children’s category is offered here as in the Retirement and Survivors Benefits Sections.)

Applying Online for Disability Benefits Social Security offers an online application for adults to apply for disability benefits. It’s the most convenient way to apply.

Applying for Disability Benefits You can apply online for Disability Benefits by visiting www.socialsecurity.gov and then clicking on “Benefits”

Taxation of Benefits

Your Benefits Can Be Taxable Individual Tax Return $25,000 - $34,000 - 50% of Social Security benefits are taxable Over $34,000 – 85% of Social Security benefits are taxable Married filing a Joint Tax return $32,000 - $44,000 – 50% of Social Security benefits are taxable Over $44,000 – 85% of Social Security benefits are taxable Adjusted Gross Income + Nontaxable Interest + ½ of your Social Security benefits Combined Income

Your Benefits Can Be Taxable About 1/3 of people who get Social Security pay income taxes on their benefits. At the end of each year, you’ll receive a Social Security Benefit Statement (Form SSA-1099). Use this statement to complete your Federal income tax return to find out if you have to pay taxes on your benefit.

Medicare

Who Can Get Medicare ? 65 & older -or- 24 months after entitlement to Social Security disability benefits Amyotrophic Lateral Sclerosis Permanent kidney failure and receive maintenance dialysis or a kidney transplant Exposure to Environmental Health Hazards (New Legislation) Who Can Get Medicare ?

Medicare Coverage Part A - Hospital Insurance Covers most inpatient hospital expenses 2015 Deductible $1,260 Part B - Medical Insurance Covers 80% doctor bills & other outpatient medical expenses after 1st $147 in approved charges 2015 Standard Monthly Premium $104.90 Part D - Medicare Prescription Drug Plan Covers a major portion of prescription drug costs for Medicare beneficiaries Enroll With Medicare prescription drug provider not SSA Annual enrollment period is October 15 through December 7 There is no monthly premium for Part A if you are insured for retirement benefits. After you retire, your health insurance may only pay after Medicare pays. Many supplemental plans require you to file for Medicare Part B. The Medicare premium beneficiaries pay represents 1/4 of the actual cost; the federal government covers the balance of the cost. Medicare Part D Prescription Drug Plan covers a major portion of prescription drug costs for Medicare beneficiaries.

When Can I Sign Up for Medicare Part B? Medicare Enrollment Periods: Initial – at age 65 Special – if still working General – January-March The Initial Enrollment Period starts 3 months before the month you turn age 65 and extends 3 months past the month 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 already are receiving Social Security benefits, you'll automatically be enrolled in Medicare Part A (hospital insurance) and B (medical insurance). (Note: Residents of Puerto Rico or foreign countries will not receive Part B automatically. They must elect this benefit.) However, because you must pay a premium for Part B coverage, you have the option of turning it down. Most people choose Part B even though it’s optional. You will be contacted by mail a few months before you become eligible and given all the information you need. The Special Enrollment Period is for people (and their spouses) who 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 recommend that people file for Part A 3 months prior to turning age 65, and then on the day they stop working call Social Security to file for Part B. The General Enrollment Period is for those people who missed their Initial or Special Enrollment Periods. The window to file is January to March with coverage beginning in July. Anyone filing in the General Enrollment Period will be assessed a 10% penalty for each year after the Initial or Special Enrollment Period.

For More Medicare Information (1-800-633-4227) TTY 1-877-486-2048 www.medicare.gov

Social Security’s Online Services Online Services for before or after you receive benefits Retirement Estimator Retirement & Disability Applications Medicare Online Apply for Extra Help With Medicare Drug Plan Costs Retirement/Survivors/Disability Planner My Social Security Medicare Card Replacements ( Note to speaker: depending on your audience, you may wish to briefly describe the quick calculator, online calculator and the detailed estimate.) What You Can Do Online @ www.socialsecurity.gov Apply for Social Security retirement/spouse’s benefits www.socialsecurity.gov/applyforbenefits Apply for Social Security disability benefits www.socialsecurity.gov/applyfordisability Apply for extra help with your Medicare prescription drug costs www.socialsecurity.gov/i1020 Check the status of your online application www.socialsecurity.gov/applyforbenefits Find out what benefits you can apply for www.socialsecurity.gov/best Find out if you can get extra help with your Medicare prescription drug costs www.socialsecurity.gov/prescriptionhelp Use our benefit planners to calculate your retirement, disability and survivors benefits www.socialsecurity.gov/planners Request a Social Security Statement www.socialsecurity.gov/statement Change your address or telephone number www.socialsecurity.gov/coa Get a replacement Medicare card www.socialsecurity.gov/medicarecard Request a Proof of Income letter www.socialsecurity.gov/beve Get a Form 1099/1042S—Social Security Benefit Statement www.socialsecurity.gov/1099 Get a password www.socialsecurity.gov/password Check your information and benefits www.socialsecurity.gov/pcyb Start or change direct deposit www.socialsecurity.gov/pdd www.socialsecurity.gov

Questions? Phylis Dills Public Affairs Specialist www.socialsecurity.gov Remember to a great extent, SSA’s customers rely on you to provide them with the assistance, guidance and resources necessary to take full advantage of the online services available to them. By helping them, we are also helping ourselves accomplish SSA’s mission. Thank you for your time. I appreciate your attention and invite you to go online and see what is available for yourself. Have a great day.