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About Howard Kossover

I am the Social Security Public Affairs Specialist for North Dakota and western Minnesota. Based in Grand Forks ND, I work with organizations, government agencies and businesses concerning all aspects of the Social Security programs.

April is Financial Literacy Month

April is Financial Literacy Month, the perfect time to examine your saving habits and ensure that you are on track for a comfortable retirement. Financial planning can put your mind at ease, but getting started can be overwhelming. 

If you have not begun saving for retirement, now is a good time to start, no matter what your age. Whether retirement is near or seems a lifetime away, now is the time to begin savings so that time and compound interest works to your advantage.

Get a good estimate of your future SSA retirement amount with the Social Security online Retirement Estimator, one part of the SSA retirement planner. The estimator connects to your actual work record to provide a personal estimate. You can change the default estimates for those more in tune with your actual plans. 

For those years from retirement, create a my Social Security account and use it to view your Social Security Statement. The Statement contains your earnings from your Social Security record but, more to the point of financial planning, has estimated personal and family benefits should you become disabled or die. This information helps you arrange other parts of your financial planning.

Social Security personnel cannot assist with financial planning. Select your own helpers for this. Two websites to help you get started are www.mymoney.gov,the official U.S. government website dedicated to teaching Americans the basics of finances, and the Ballpark Estimator at www.choosetosave.org/ballpark, part of the American Savings Education Council program, which includes the Social Security Administration.

These sites, and others like them, are not just about savings for retirement. There are reasons to save for every stage of life. 

April is Financial Literacy Month. Now is a good time to review your existing plan, or start one.

 

Annual retirement test background

How much can I earn and still receive Social Security” has always been a popular topic for questions. The retirement earnings test, also called the annual earnings test, describes how your own employment earnings from gross wages or net self-employment income can reduce Social Security payments to you during the year.

Details about the retirement test for 2014 are in the Social Security retirement planner section and are only indirectly today’s topic.

Today, retirement test restrictions end with the month a person reaches full retirement age (FRA). Starting with the month you reach full retirement age, you can get your benefits with no limit on your earnings. This is a relatively recent change, only taking place in 2000. The retirement test still applies to beneficiaries not yet FRA.

The final version of the Social Security Act of 1935 contained retirement test language, stating that “Whenever the Board finds that any qualified individual has received wages with respect to regular employment after he attained the age of sixty-five, the old-age benefit payable to such individual shall be reduced, for each calendar month in any part of which such regular employment occurred, by an amount equal to one month’s benefit.” Recall that at this time, age 65 was the Social Security retirement age since reduced benefits did not yet exist.

Starting with the 1950 Amendments, the retirement earnings test ended at age 75. From that point on, it was established that the retirement test need not always apply. 

Over years, additional changes were made to the retirement test ending age as well as allowing partial payment depending on how much one earned. Until the 1960 Amendments, earnings over exempt amounts stopped benefits completely with the full benefit withheld when limits were exceeded.

When I started with Social Security, the retirement test applied until age 72. Several years later it eventually went to age 70 as part of the 1977 Amendments. You can read the legislative history of the retirement earnings test here.

So, when did the retirement earnings test end for people at full retirement age?

In his 1999 State of the Union Address, President Bill Clinton stated that the Social Security retirement test should be eliminated. Legislation to do this received unanimous support in both houses of Congress and, on April 7, 2000, “The Senior Citizens’ Freedom to Work Act of 2000″ was signed into law, eliminating the retirement earnings test for beneficiaries at or above full retirement age (FRA) (also called normal retirement age). It still applies to beneficiaries not yet FRA. Remarks of President Clinton during the signing statement are here. In those remarks, President Clinton also introduced the Social Security online retirement planner.

Retirees are used to it now, but ending the annual retirement test at FRA was a historic change in the Social Security retirement program. As noted earlier, from the beginning of Social Security in 1935, retirement benefits had been conditional on the requirement that the beneficiary be substantially retired. For those who have reached full retirement age, “The Senior Citizens’ Freedom to Work Act of 2000″ effectively repealed this requirement.

Retirement test information for 2014 is here.

Requesting Social Security publications

Through these posts, I often link to Social Security publications. 

Combining many Social Security topics and formats, online publications are available for you on the agency website, www.socialsecurity.gov. Specific publications vary, but many are available as an online audio download, a PDF file or in different languages.

Paper copies of publications are also available at no charge, including multiple copies of a publication.

Selected publications are available in alternative media of Braille, audio cassette, audio CD or enlarged print.

You can easily request SSA publications without contacting a local office. Here is how:

1. Go to www.socialsecurity.gov  and scroll down to Items of Interest. There you will see a Publications box. Click on it.

 2. Contents at the publications page can be sorted in several ways including publication number or topic. Available electronic formats are shown for each publication. Click and choose as desired.

3. If you want paper copies of selected publications, continue scrolling down the publication page until reaching the How to Order section. Click on the Print copies link and follow instructions. Note that instructions for ordering alternative media are also in the How to Order section.  

 

 

Are SSI amounts the same all across the country?

Q: Are SSI amounts the same all across the country?

A: Supplemental Security Income (SSI) is very different from Social Security even though both programs are administered by the Social Security Administration.

Signed into law by President Nixon in 1972 (Public Law 92-603), SSI is need based and can provide payments to people with limited income or financial resources. SSI payments can be for people age 65 or older, plus disabled or blind children and adults.

As a Federal income supplement program funded by general tax revenues, not Social Security taxes, the basic maximum amounts are the same all across the country. Effective January 2014, the maximum monthly Federal benefit rates are $721 for an individual and $1,082 for a couple. Other income can reduce these amounts.

Individual States can choose to supplement the national amounts by adding to the Federal amount. If done, any additional amounts are based on State rules related the person’s income, living arrangements or other factors. There is wide variance across the country for this. Some States do not pay any supplemental amount, some do with funds included in the Federal payment, and some administer their own supplement arrangement.

Basic Supplemental Security Income information is at http://www.socialsecurity.gov/pgm/ssi.htm.

Not all income or resources count towards the SSI limits. To learn more or apply, contact Social Security by calling the national number, 1-800-772-1213 / TTY 1-800-325-0778, or your local office. 

Who receives benefits for a child? The representative payee.

Q: To receive benefits, must children be living in the same household when a parent receives Social Security disability?

A: No. For Social Security retirement, disability and survivors benefits, the parent-to-child relationship is important in determining if a child is eligible for payment.

This means that otherwise eligible children born in an existing marriage, without marriage, or in an ended marriage can receive Social Security if a parent receives retirement or disability, or survivors benefits if the parent is deceased. Child benefits are payable to eligible adopted or stepchildren. For stepchildren, the parent-to-parent relationship is important because it defines the parent-to-child relationship.

For a minor, or perhaps a disabled child, a separate question is what person receives those Social Security benefits on behalf of the child. Actual custody or other legal responsibility helps determine the person or agency to receive SSA payments on behalf of a child. Usually the custodial parent will be the person selected to receive these if the parents do not live together.

For a commonplace example, assume Parent A is receiving Social Security benefits and has a biological minor child living in another town with Parent B. If all other requirements are met, the child can receive Social Security benefits through the record of Parent A. Since Parent B has custody, those SSA benefits for the child would be paid to Parent B.

Representative payee is the term Social Security uses for a person receiving benefits on behalf of another person. In the above example, Parent B is representative payee for the child. 

Not just for children, representative payees are appointed to provide financial management for the Social Security and Supplemental Security Income (SSI) payments of people who are incapable of managing their own payments.

To become a representative payee, a person or agency must file an application and then provide ongoing accounting of how funds are used. Payees are appointed only for Social Security and SSI purposes and are completely different from guardianship or power of attorney. FAQ’s for representative payees are here.

Note that the Treasury Department does not recognize power of attorney for the purposes of negotiating federal payments, including Social Security or SSI checks.

 

Medicare and pre-existing health conditions

Q: I enrolled in Medicare Part A (Hospital) at age 65, but not Part B (Medical) because I was still working and had good health insurance through my employer. Now age 67, I will soon be retiring, in part due to some health problems. Can those health problems prevent me from getting Medicare Part B coverage?

A: Existing health problems will not prevent your enrollment in Medicare.

Many people think of Medicare as beginning only at age 65, but certain people younger than age 65 can qualify for Medicare, including those who have disabilities, permanent kidney failure or amyotrophic lateral sclerosis (Lou Gehrig’s disease). People receiving Social Security benefits based on their own disability become eligible for Medicare after two years. These people all have existing health problems.

Having employer medical coverage from current employment is the usual reason for not enrolling in Part B immediately at age 65. Since you did not enroll in Medicare Part B because of existing employer coverage, upon retirement you can enroll anytime during the year without premium penalty. Enroll at least two to three months before retiring. This allows time for your local Social Security office to work with your existing health insurance to have the Medicare Part B effective upon your retirement.

More information about Medicare enrollment is in the Medicare area of the Social Security website, www.socialsecurity.gov  and in the publication Medicare.

See the Medicare website, www.medicare.gov, for coverage details.

February 2014 statistical snapshot

The monthly statistical snapshot for February 2014 for Social Security and Supplemental Security Income (SSI) is available. Monthly snapshots provide a quick view about benefits paid during the month.

Here you can learn national totals, by beneficiary count and percentage, of the different benefits paid and average amounts of each type of benefit.

For example, during February 2014, retirement related benefits accounted for 70.6 percent of all Social Security benefits paid, including benefits to retired workers, spouses of retired workers and children of retired workers. Each of these categories is shown separately with its own percentage of the total and other information.

In February 2014, across the nation 58,201 thousand people of all ages received a Social Security payment. Noted above, most of this was retirement related. Survivor benefits accounted for 10.6 percent and disability benefits, including family members, accounted for 18.9 percent.

A detailed February benefit picture for the separate Supplemental Security Income (SSI) program is linked at the bottom of the snapshot page.

 You can subscribe to receive an email alert when these monthly updates are released. To do so, follow the “Subscribe to Updates” link

SSA disability decision expedited for vets with 100% VA compensation

Requirements for Social Security and VA disability programs are very different. Eligibility for one does not mean eligibility for the other.

With that reminder, on March 17, the Social Security Administration began expediting disability claims for veterans who have a disability compensation rating of 100 percent permanent and total (P&T) by the Department of Veterans Affairs (VA).

Carolyn W. Colvin, Acting Commissioner of Social Security, designated expediting disability claims for these veterans as one of the agency’s priorities. This is an interagency collaboration between the VA and Social Security to help veterans gain timely access to the benefits they may be eligible for and deserve.

This differs from the “Wounded Warrior” expedited claims process, which is designed only for military service members who became disabled while on active duty on or after October 1, 2001 no matter where the disability occurred. The new expedited claims process is designed for all veterans, regardless of when they served as long as they have a VA compensation rating of 100 percent P&T.

In order to receive the expedited service, veterans must tell Social Security they have a VA disability compensation rating of 100% P&T and show proof of their disability rating with their VA Notification Letter.

The VA rating only expedites Social Security disability claims processing and does not guarantee an approval for Social Security disability benefits. These veterans must still meet the strict eligibility requirements for a disability allowance.

More about this new expedited claims process is on the Social Security website, www.socialsecurity.gov, at www.socialsecurity.gov/pgm/disability-pt.htm.

Learn about Social Security disability benefits at http://www.socialsecurity.gov/pgm/disability.htm.

When self-employed, who gets the credit? / Surviving divorced spouse benefits

When a couple works together in self-employment, who gets the Social Security work credit? Is this important? Based on a recent question, these topics are part of today’s post.

Q: Divorced and unmarried for over a decade, I had been married for over 20 years. We farmed, but when I checked my Social Security Statement work record (www.socialsecurity.gov/myaccount/), no farm self-employment earnings were there even though my ex-husband and I worked together. Only my non-farm wages were shown. Why would this be? Do I get any Social Security credit for that work? My ex-husband has since died.

A: It is likely that all of the self-employment income was posted to your ex-husbands work record rather than split between the two of you. If so, this does not imply that a mistake was made. Assigning self-employment income is done on the tax return and would have been a decision made by you two and your tax preparer at the time.

During the time you farmed, and even now, self-employment earnings were often credited to one person, usually the husband, even when both spouses worked together. Positives and negatives exist to doing this. A positive is that the person credited will have a larger amount for future retirement or other SSA benefit. This can increase benefits to family members if any are eligible on the record. A negative is that the person not credited, such as you, will have a smaller retirement benefit, or perhaps not be insured at all unless also working at another job.

If working together in a self-employment business, this is an important topic for a couple to discuss. Being insured for Social Security is not just about retirement. It involves possible benefits if the person not credited becomes disabled or dies, especially if family benefits to minor or disabled adult children could be involved.

At age 60 you are potentially eligible for surviving divorced spousal benefits on your ex-husbands record. Indirectly this could provide you a Social Security benefit related to your farm work because a survivor benefit would be higher with all the self-employment credited to his record rather than split between the two of you.

Contact Social Security for an estimate on your ex-husbands account. A survivors benefit estimate cannot be obtained online. To obtain one, call the national SSA toll-free number, 1-800-772-1213 / TTY 1-800-325-0778 (7:00am – 7:00pm business days) or your local office. Learn about SSA survivors benefits, including for a surviving divorced spouse at www.socialsecurity.gov/pgm/survivors.htm.

 

Question about delayed retirement credits

Recently I received a question about delayed retired credits, the topic of my January 8, 2014, post.

Delayed retirement credits (DRC’s) are increases to a Social Security retirement benefit when you delay starting them past full retirement age. DRC increases stop when you reach age 70 even if you continue to delay receiving benefits. There is no additional advantage to putting off Social Security benefits once you reach age 70. 

The question and answer follow:

Q: What is the value of the delayed retirement credits for ages 62-66?

A: Delayed retirement credits do not exist for ages younger than someone’s full retirement age because the person is electing reduced benefits. They are a benefit increase paid when the start of Social Security retirement benefits are delayed past full retirement age, up to age 70.

Social Security retirement benefits started before full retirement age are reduced by the number of months involved. Reduction percentages were discussed last week.

Lots of SSA retirement planning information is on the Social Security website, www.socialsecurity.gov, in the Retirement Benefits section and especially in the Retirement Planner area at http://www.socialsecurity.gov/retire2/.  Different calculators to help your planning are also there.  With the Retirement Estimator, the compute the effect of early or delayed retirement (early or delayed means before or after FRA) calculator is useful for comparing different start month amounts.