Social Security is nothing but a
mechanism adopted by the government system to provide monetary assistance and
benefits to the needy. People with inadequate or no income are at the focus of
this scheme so that they can lead a dignified life. The OASDI (Old Age,
Survivors and Disability Insurance) program is what is known as the Social Security system in the United
States. Social security came into existence in 1935 under the leadership of
President Franklin Roosevelt and at present includes numerous social security
and social insurance programs. The main spheres of life that Social security
aims to help in include old age, poverty, unemployment, various kind of
physical and mental disabilities and difficulties faced by a widow(er)s with or
without children. Social Security is administered by the United States Social
Security Administration (SSA) which is an independent agency of the US
government.
How does Social Security work?
The funding for Social Security comes through the
payroll taxes which are referred to as FICA (Federal Insurance Contributions
Act) tax or SECA (Self Employed Contributions Act) tax. The two Social Security
trust funds are the Federal Disability Insurance Trust Fund and the Federal
Old-Age and Survivors Insurance Trust Fund and it is the IRS (Internal Revenue
Service) that collects the tax deposits. All salaried income up to a level
specified by the authorities is eligible for Social Security Payroll Tax and
the income above that level is exempted from tax. At present this limit is set
at $128400. Almost all the resident of the United States own a Social Security
Number because of its wide requirement in nearly all kinds of businesses. The
poverty rate amongst the Americans aged 65 and above is said to be reduced to
105 from the earlier 40% owing to the funds collected from the Social Security
Scheme. This explains the usefulness and the popularity of this scheme.
The benefits of the pension
program are funded by a 12.4% tax split between both the employee and the
employer. Social Security, on the
whole, is based on a regressive tax policy as the income keeps on increasing
while the tax goes on decreasing.
Programs under the Social security Administration
There are various programs that
are covered under the Social Security
Administration. These are as follows:
- Federal Old-Age (Retirement), Survivors and Disability Insurance (OASDI)
- Temporary Assistance for Needy Families (TANF)
- Health Insurance for Aged and Disabled (Medicare)
- Grants to States for Medical Assistance Programs for low-income citizens (Medicaid)
- States Children’s’ Health Insurance Programs (SCHIP)
- Supplemental Security Income (SSI)
Eligibility required for availing Social Security benefits
For claiming Social Security
benefits you should be between 62 and 70 years of age. A person should be
insured to qualify for the Social
Security benefits. Most of the above-mentioned benefits require a status of
complete insurance that is obtained by gathering a number of credits from
earnings of the covered employee. These credits are also referred to as
quarters of coverage. The number of credits you need depends on your age and
the type of benefit you wish to avail. The credits that can be acquired by
workers also depends on their annual earnings and these earnings are updated
regularly based on annual wages.
Benefits of Social security System
There are numerous benefits that
are offered by this Social Security
scheme of the US government. All these benefits are mentioned below in detail
to help you know more and in depth about them. Read on to get a better picture
of this social welfare scheme.
Retirement Benefits
The workers who have been covered
under the scheme for a sufficient number of years are eligible for the
retirement benefits of Social Security at
the age of 62, disability or death whatever comes first. If a worker has as
many credits as the years between 21 years of age and 62 years of age then he
is fully insured for retirement benefits. A worker who attained 21 years of age
before 1951, one credit is required each year from 1950 until he attains 62
years of age, disability or death whatever comes first. Workers attaining age
62 after 199o need 40 credits to claim retirement benefits. For workers who die
before attaining fully insured status certain survivor benefits are also
available.
Delayed Benefits
If the person delays claiming the
retirement benefits until he reaches full retirement age then there is an
additional benefit offered to him depending on his year of birth. Women tend to
live longer than men which is why they benefit more from this scheme as it
makes use of the average survival rate for calculating benefits. After the age
of 70, there is no more increase in retirement benefits offered by the Social Security.
Widow(er) Benefits
If a worker covered under the Social Security retirement system dies
his or her spouse is eligible to claim the survivors' benefits. At times these
benefits extend even to the divorced spouses. The least age to claim such
benefits by a nondisabled widow(er) is 60. For spouses older than the normal
retirement age the benefits are the same as the worker's Basic retirement
value. If the benefits are started before the retirement age there are certain
reductions made.
Children’s Benefits
Children of a retired or disabled
worker receive benefits under the Social
Security system if they are under the age of 18 or if they are still
attending primary or secondary school or are over 18 years of age and became
disabled before 22 years of age. This ensures that the kids of the deceased
still have the chance to make their career and a living for themselves in the
future.
Disability Benefits
Social security benefits are not
just confined to retirement benefits but also for individuals who have been
working but because of unforeseen conditions cannot continue to work because of
disabilities. The disability benefits under Social Security can be availed after five calendar months of the
disability irrespective of the age. The eligibility criteria requires few
credits earned overall and certain credits earned within 10 years immediately
before the disability. The disability should be long term that could result in
death and the worker should be unable to work anywhere after the disability to
claim the benefits.
Summary
Social security is the United State's largest insurance scheme that
provides retirement, survivor's and disability benefits to the needy to help
them lead a dignified life.
