Employers – remember SSA Business Services Online

Employers: You can still register for Social Security Business Services Online (BSO) and transmit your 2014 W-2 information electronically.  

Once registered, you can also immediately verify the Social Security number (SSN) of new and existing employees online or overnight, without seeing the paper SSN card, preventing future reporting problems due to having a wrong SSN or name. If an employee name and SSN do not correctly verify, have the employee contact Social Security. 

Firms providing payroll services register once to use BSO for all their clients.

There is no charge to use Social Security Business Services Online.

 Business Service Online details are at www.socialsecurity.gov/thirdparty/business.html. Registration instructions, tutorials and support contacts are in the Employer section. 

No open season needed for Medicare Part D Extra Help

The annual open enrollment period for Medicare prescription drug coverage (Part D) ended on December 7 and I hope those of you with existing plans reviewed your options for 2015. People becoming eligible for Medicare in the coming months will have opportunity to purchase Part D coverage.  

Medicare Part A (Hospital) or Part B (Medical) provides the same coverage all across the country. Part D coverage is sold through private insurers so shop for a plan that suits you best. Having a Medicare drug plan is voluntary and you pay an additional premium for coverage. Everyone enrolled in Medicare can purchase a Part D plan. The Medicare website, www.medicare.gov, has detailed Part D information 

This post is not about choosing a Part D policy or coverage. It is to tell you about Extra Help, a low-income subsidy for some expenses related to Medicare prescription drug coverage. It does not pay for all expenses but can help pay for part of monthly premiums, deductibles, and co-payments. 

People with Medicare prescription drug coverage can apply for this Extra Help at any time of year. There is not a special time to enroll or open season. 

Social Security administers the Extra Help portion of Part D for people with limited income and resources.   

Income and resource levels for 2015 are not available yet but 2014 levels follow:  

Your resources must be limited to $13,440 for an individual or $26,860 for a married couple living together. Resources include your combined savings, investments, and real estate and such things as bank accounts, stocks and bonds but not all resources are counted. 

Do NOT count your home, vehicles, personal possessions, life insurance, burial plots, irrevocable burial contracts or back payments from Social Security or Supplemental Security Income (SSI).

 Your annual income must be limited to $17,505 for an individual or $23,595 for a married couple living together. Even if your annual income is higher, you still may be able to get some help. Some examples where your income may be higher are if you or your spouse support other family members who live with you or if you have earnings from work.                          

If you have Medicare and Supplemental Security Income (SSI) or Medicare and Medicaid, you automatically will get the Extra Help and do not need to apply.   

Extra Help details and an application are at www.socialsecurity.gov/medicare/prescriptionhelp/. You can also call the SSA national toll-free number, 1-800-772-1213 (TTY 1-800-325-0778), or your local office.  

Applying for Extra Help does not enroll you in a drug plan.

What is the maximum 2015 Social Security retirement amount?

For the last several years, I have published the maximum monthly Social Security retirement amount payable during the coming year. This generates a lot of interest so today I am providing the 2015 amount.  

To be clear, this will be the maximum amount payable to a person retiring exactly at full retirement age (FRA) in 2015. Full retirement age is 66 for people born in 1943 – 1954. It does not include reductions for early retirement or increases for delaying retirement past past full retirement age. Learn about these increases, called delayed retirement credits, here. 

The maximum monthly Social Security retirement amount changes each year. The 2015 maximum is more than the 2014 maximum, but will be less than the 2016 amount. Several reasons are responsible for this with a major one being that another year of potentially higher earnings becomes available for use in computing retirement amounts. Not only might actual earnings be higher but, depending on the maximum taxable earnings base for that year, more of the earnings could be credited for use in the Social Security computation.

An early step in determining a retirement amount is to compute the person’s amount at full retirement age, without reductions or increases. To do this, Social Security uses the person’s best 35 years of earnings, weighted for inflation. Then, to compute the amount for the person’s actual retirement date, Social Security adjusts the full retirement age amount by the number of months that the person is away from FRA. The FRA amount is reduced or increased if the person is younger or older than FRA. 

So, what is the maximum 2015 Social Security retirement amount? If starting Social Security retirement in 2015 exactly when full retirement age is reached, and if the person earned at least the maximum SSA taxable earnings (the taxable base) in each of the 35 years used in the calculation, then the highest 2015 Social Security retirement amount is $2,663 per month. For comparison, the highest 2014 Social Security retirement amount is $2,642 per month. The estimated average SSA retirement amount as of January 2015 is $1,328 per month.

Knowing the highest 2015 Social Security retirement amount is interesting. Estimating your own retirement amount is more useful. Do so with the calculators included in the SSA Retirement Planner 

The Retirement Estimator is very good because it uses your actual Social Security earnings record. Automatic estimates are shown for age 62, your full retirement age, and age 70. You can adjust these for different ages or different future earnings.  

To adjust your estimate by the number of months that you are away from FRA use the “Compute the effect of early or delayed retirement” calculator. There, primary insurance amount is the same as amount at full retirement age, and normal retirement age is the same as FRA.   

Want to see the earnings on your Social Security record? Create a personal my Social Security account and view your online Social Security Statement. The Statement provides your earnings record, plus family estimates for SSA retirement, survivors and disability benefits. 

Ready to file for your Social Security retirement? Go online.


Savings will not prevent Social Security disability benefits

Sometimes a topic suddenly starts to generate questions. The following question came up three separate times while I was teaching recently. Perhaps it will interest you too.  

Q: How much money can I have in savings before my Social Security disability stops?  

A: Your savings will not stop Social Security disability benefits. Whether rich or poor, your financial value does not matter for Social Security retirement, survivors or disability benefits.  

Work is at the base of all Social Security benefits, not financial need. Requirements vary with type of benefit but the person whose Social Security number record is involved needs enough work to be insured or benefits are not payable. Learn more about Social Security benefits at www.socialsecurity.gov 

If you receive Social Security through your own record, then your work record was used. If you receive benefits through another person’s record, such as a child eligible through a parent, then that person had to have enough work. 

What can confuse people on this topic is that the Social Security Administration is responsible for more than Social Security retirement, survivors and disability benefits.  

Eligibility for the low-income Supplemental Security Income (SSI) program does include income and resource requirements. SSI can provide benefits to those over age 65 as well as blind or disabled children or adults. SSI is very different from Social Security, but both programs are administered by the Social Security Administration. 

People receiving SSI must stay below certain income and resource levels to remain eligible. Resources include savings and other items of financial value that you own and can turn into cash but not everything you own is counted toward the resource limit. For an eligible individual the total level of counted resources is $2,000. For an eligible couple, this amount is $3,000. These resource levels will continue for 2015. If exceeded, the person is no longer eligible.

Some types of resources that do not count toward these totals are the house you live in and household goods, usually one vehicle, some insurance policies and some burial funds. This is not a complete list. An overview of Supplemental Security Income resources is here 

Since Social Security and SSI are completely different programs, one person can receive both of them if the separate requirements are met.

In summary, if a person receives both Social Security and Supplemental Security Income (SSI), his or her savings or other resources will not stop Social Security benefits but they can end SSI benefits.





Annual SSA disability report released

The Annual Statistical Report on the Social Security Disability Insurance Program, 2013 was released this week.

This annual report provides program and demographic information about the people who receive Social Security disability benefits—disabled workers, disabled widow(er)s, and disabled adult children. Topics covered include beneficiaries in current payment status; benefits awarded, withheld, and terminated; geographic distributions; Social Security beneficiaries who receive Supplemental Security Income; and the income of disabled beneficiaries.

Following is from the Highlights section of the report:

Size and Scope of the Social Security Disability Program

Disability benefits were paid to just over 10.2 million people.

Awards to disabled workers (868,965) accounted for over 90 percent of awards to all disabled beneficiaries (965,190).

In December, payments to disabled beneficiaries totaled about $11.2 billion.

Benefits were terminated for 769,171 disabled workers.

Supplemental Security Income payments were another source of income for about one out of seven disabled beneficiaries.  (Note: not everyone receives Social Security through his or her own work.  For example, family benefits to disabled children or disabled widows or widowers are possible. 

Profile of Disabled-Worker Beneficiaries

Workers accounted for the largest share of disabled beneficiaries (87.4 percent).

Average age was 53.

Men represented under 52 percent.

Mental disorders was the diagnosis for about a third.

Average monthly benefit received was $1,146.42.

Supplemental Security Income (SSI) payments were another source of income for about one out of eight.  

2015 SSA taxes and taxable earnings base

Q: How much does a person have to earn in 2015 before withholding for Social Security taxes end? 

A: In 2015, the maximum amount of earnings subject to Social Security tax is $118,500. In 2014, this amount was $117,000. People earning above the annual maximum taxable level stop paying SSA payroll tax once that amount is reached.   

Of the estimated 168 million workers who will pay Social Security taxes in 2015, about 10 million will pay higher taxes because of the increase in the taxable maximum. Medicare payroll tax continues on all earnings.  

The taxable earnings level can change annually based on changes in the national average wage index. To reflect the general rise in the standard of living over a working lifetime, changes to this average wage index are used when future SSA benefits are computed.   

From 1937 to 2015, changes to the amount of earnings subject to Social Security earnings tax are here. 

The 2015 Social Security tax is set by statute at 6.2 percent for employees and employers, each. An individual with wages equal to or larger than $118,500 will pay $7,347.00 towards the SSA retirement, survivors and disability programs in 2015, and his or her employer would contribute the same amount. The tax rate for self-employment income in 2015 is 12.4 percent. 

People earning less than the 2014 maximum tax base will not pay more in 2015 because SSA and Medicare tax rates are not changing. They have not changed since 1990. 

The Medicare tax rate is an additional 1.45 percent on all earnings so the total employee and employer tax rate is 7.65 percent. For the self-employed, it is 15.30 percent. 

Historical Social Security and Medicare tax rates are here.

Winter weather – Is your Social Security office open today?

Areas of the country have already experienced cold temperatures and snowfalls that are earlier than expected for this time of year.  

At one time or another severe weather or some unanticipated event can force a local Social Security office to unexpectedly close temporarily. Before traveling, consider going online to check the Office Closings page on the Social Security website, www.socialsecurity.gov  

The Office Closings link is in the Items of Interest section at lower left of the homepage. Information is updated hourly so check for the latest update before leaving home. 

Even if your office is open, you can probably handle your business without travelling. Most Social Security business can be done by telephone or online. The SSA national toll-free number, 1-800-772-1213 (TTY 1-800-325-0778) has representatives available from 7:00am – 7:00pm local time and automated services at other times. 

Online services are available in Spanish, with information in other languages offered too. A list of online services is here. 

More online services are available if you have created your personal my Social Security account. With this, you can download a letter verifying your benefit amount or make changes to your record, such as changing your address. 

Although most Social Security services do not require a personal local office visit, if you prefer visiting in person know that most local Social Security offices are open 9 am to 3 pm on Monday, Tuesday, Thursday, and Friday and 9 am to Noon on Wednesday. A few small offices have different hours.View local office hours online at the Contact Us link, also in the Items of Interest section of www.socialsecurity.gov 

Travel safe.


Social Security benefits and citizenship

Q: I am a legal resident alien, working full-time and paying Social Security taxes on my earnings. Will I be able to receive Social Security benefits at retirement? 

A: Yes, assuming you work long enough and meet all usual requirements. United States citizenship is not required to receive Social Security benefits. Your future retirement, or payment of any Social Security benefits through your work record, will be based largely on your work history, not citizenship. You will need to prove legal admittance into the country when applying for benefits. 

Visitors to the United States can usually obtain a Social Security number (SSN) only if authorized to work by the Department of Homeland Security. Work authorization is routinely verified when a person applies for an original, name change correction or replacement card.  

If you become a citizen in the future, contact Social Security to update your citizenship on your Social Security number record. This will make a future application for retirement benefits easier, especially if you use the online application because, since your record would show United States citizenship, legal admittance would not have to be established.  

Learn the documents needed and print the Social Security number application at www.socialsecurity.gov/ssnumber/. Documents submitted must be originals certified by the issuing agency, such as Homeland Security, and are immediately returned. Self-made photocopies or notarized copies are not accepted.

To protect your personal information, SSN applications cannot be submitted electronically. No fees are involved for any SSN action. Protect yourself by going to the official Social Security website, www.socialsecurity.gov for SSN information.


Spousal benefits – file and suspend

Q: My wife’s Social Security retirement will be much more than mine. If I start my own Social Security retirement before she starts hers, can I apply later as a husband on her record once she retires and applies for benefits?  

A: Yes, a husband or wife can start their own SSA retirement first and then look into spousal benefits when their wife or husband retires.  

Social Security benefits to a husband or wife are based on a comparison of the couples individual full retirement age (FRA) amounts, not their monthly retirement amounts. To learn about benefits to a husband or wife, including to a divorced spouse, go to the Retirement Planner section of the SSA website at www.socialsecurity.gov/retire2/, and then to “how members of your family may qualify for benefits.”  

Age when starting Social Security is important. If younger than full retirement age (FRA) when filing for retirement, a person is considered to also be applying as wife or husband at the same time, assuming both members of the couple will then be receiving benefits. Her or his own retirement amount, reduced for age, is received first. If spousal benefits are payable they, also reduced for age, are added to equal the higher total amount.  

A different opportunity for spousal benefits exists if either husband or wife has reached full retirement age (FRA), especially if that person plans to continue working full-time past FRA. Generally, members of a person’s family can receive benefits on his or her record only when that person does. For an exception, see “If you or your spouse are full retirement age” in the spousal benefit section. If a person is at least FRA, and does not want to start Social Security retirement yet, an exception called “file and suspend” allows payment of spousal benefits on their record while the person delays the start his or her own Social Security retirement. Past FRA, delaying the start of your own retirement benefit lets the amount increase up to age 70 due to delayed retirement credits 

If this “file and suspend” idea is of interest, remember that the annual earnings test ends with the month you reach FRA so another option could be to file for your Social Security retirement while continuing to work. You would not gain delayed retirement credits but you would receive all your retirement and, if eligible as a spouse, your husband or wife would also receive through your record. Each of these ideas has advantages or disadvantages based on your personal situation.


Working? Retiring? Options if reaching full retirement age in 2015.

Do you reach your full retirement age (FRA) in 2015? Still working? Thinking about starting Social Security in 2015?

What are some options to consider?  

When to start Social Security benefits is always a popular topic during retirement seminars. In fact, there is no one overall best time that fits everyone. It is an individual decision. 

Last week I posted annual retirement earnings test information for 2015. Noted there, earnings test amounts vary based on whether you are younger than full retirement age (FRA) for the entire calendar year, reach FRA during the year, or are at least FRA. 

Today I am reviewing some options to consider for a person planning to work during 2015 and reaching full retirement age of 66 during 2015. FRA varies with year of birth. It is age 66 for those born from 1943 – 1954. 

If you reach full retirement age in 2015, receive Social Security and are still working, Social Security deducts $1.00 in benefits for every $3.00 you earn above $41,880. Earnings for the retirement test include only your own gross wages and net-income from self-employment. Beginning with the month you reach FRA, earnings no longer reduce your benefits.  

Assume our person, Happy Camper, expects to earn $41,000 in 2015, below the annual earnings test level for a person reaching full retirement age in 2015. Happy reaches FRA in May. 

One option: Since Happy will earn below his retirement test level, he can start Social Security retirement effective with January 2015 and receive benefits for all months of the year even though he continues working. On the plus side, this gets him more monthly benefits. On the negative, this results in a retirement benefit permanently reduced by 4 months with a reduction of 2.22 percent of his full retirement age amount. He gets 97.78 percent of his FRA amount.

Note: To learn percentages for this example, I used the “compute the effect of early or late retirement” calculator, one of the SSA Retirement Planner tools. This calculator uses the terms “normal retirement age” for FRA and “primary insurance amount” for the FRA amount. 

If Happy expects to earn more than the earnings test level of $41,880, this could still be a useful option for him. He would have to compare what he loses due to earnings (the $1.00 for every $3.00 noted above) to what he gains in payable benefits. 

Another option: Since Happy Camper is still working, he could start Social Security effective with May, when he reaches full retirement age. The earnings test ends at FRA so Happy could continue working and receive unreduced Social Security retirement from then on. On the plus side, he does not have any reduction in benefits. On the negative, he gives up the benefits payable in the above option. 

Yet another option:  If Happy Camper plans to work for some months (or longer) past FRA and then retire, he can defer his Social Security until he actually retires. On the plus side, each month of delay gains a small increase from delayed retirement credits. On the negative, Happy again gives up payable benefits.

On a monthly basis, delayed retirement credits increase benefits by 2/3 of 1 percent of the full retirement age amount, or 8 percent annually, up to age 70. Use the previously mentioned “compute the effect of early or late retirement” calculator to compute this.  

The retirement earnings test applies to the full calendar year with a special, one time, monthly earnings test available. The monthly test can apply when a person retires during the year, after already earning over applicable retirement earnings test amounts. It was not considered in the above options since Happy continued working through at least FRA. 

These examples are only to discuss some options involving the earnings test. For simplicity, factors such as the potential for family benefits through Happy Camper’s record were not added in. Social Security benefits are just one thing to consider in your retirement planning. For examples, Happy Camper’s taxable income varies with these options and his life expectancy could influence his decision.

What is best for you?