Category Archives: Disability

Enrolling in Medicare? Go online.

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Three separate questions were received this week about how and when to enroll in Medicare when the person is not yet ready to start Social Security benefits. Even though Social Security full retirement ages (FRA) vary based on year of birth, it is important to remember that the age to begin receiving Medicare has not changed.  It is still 65.

Even if waiting until after age 65 to apply for Social Security retirement benefits, most people start getting Medicare coverage at age 65. While people often think of Medicare at age 65, certain people younger than age 65 can qualify for Medicare, too, including those who have disabilities and those who have permanent kidney failure. As with other insurance coverage, Medicare has deductions and co-pays. It helps with the cost of health care, but does not cover all medical expenses or the cost of most long-term care

People who started receiving Social Security retirement or disability benefits before age 65 do not need to apply for Medicare. They are automatically enrolled in Medicare.

If not already receiving Social Security benefits, you are not automatically enrolled in Medicare. You need to take action to enroll. To begin your Medicare coverage when you first become eligible, apply within three months of reaching age 65, but definitely before the month you turn age 65, to avoid any delays in coverage. 

The process is easy and can be completed either online or through a Social Security office. File your Medicare application online in as little as 10 minutes at www.socialsecurity.gov/medicareonly.

Traditional Medicare includes Part A (Hospital) and Part B (Medical). There is no monthly premium for Medicare hospital insurance (Part A) because you already paid for it by working and paying Medicare tax. However, there is a monthly premium for medical insurance (Part B) and an option of turning it down. The standard 2013 Medicare Part B premium is $104.90 per month. Some people pay a higher premium based on income.  

If not retiring at age 65, and already having employment related health insurance when you become eligible for Medicare, consider whether you need Medicare Medical insurance (Part B). This is important if you are covered under a group health plan, either from your own or your spouse’s current employment. If this applies, you can delay Part B enrollment without penalty. Your employers human resources department and insurance carrier can discuss this with you. For more, see the section Special enrollment period for people covered under an employer group health plan in the publication Medicare.

Related  information for you:

Medicare section of the Social Security website: http://www.socialsecurity.gov/pgm/medicare.htm

Applying online for just Medicare: http://www.socialsecurity.gov/medicareonly/.  See also the publication Apply Online for Medicare-Even if You Are Not
Ready To Retire  

 Social Security retirement planner section: http://www.socialsecurity.gov/retire2/

 Medicare website: www.medicare.gov

Specific Medicare coverage in 2013: http://www.medicare.gov/pubs/pdf/10050.pdf

 

Sources of Social Security income

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Last week’s 2013 Social Security Board of Trustees report press release stated, “Income including interest to the combined OASDI Trust Funds amounted to $840 billion in 2012. ($590 billion in net contributions, $27 billion from taxation of benefits, $109 billion in interest, and $114 billion in reimbursements from the General Fund of the Treasury—almost exclusively resulting from the 2012 payroll tax legislation).”

Usually there are three main income streams into Social Security: payroll taxes, income from the Federal income taxes that some people pay on their Social Security benefits, and interest earned on government bonds held by the Social Security trust funds.

Why were General Funds a large part of 2012 income to Social Security?

Economic stimulus legislation (H.R. 4853, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010) provided for a temporary reduction in the Social Security payroll tax rate in 2011 and 2012 and reduced payroll tax revenues to the Social Security funds by an estimated $222 billion in total.

That same legislation provided for transfers from the General Fund to the trust funds in order to “replicate to the extent possible” payments that would have occurred if the payroll tax reduction had not been enacted. Those General Fund reimbursements amounted to about 15 percent of the program’s non-interest income in 2011 and 2012. The temporary payroll tax reduction expired at the end of 2012.

2013 annual report of Social Security Board of Trustees

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Last Friday, May 31, the Social Security Board of Trustees released its annual report on the long-term financial status of the Social Security Trust Funds. The complete press release about it follows. 

You can read the actual 2013 Trustees report at http://www.socialsecurity.gov/OACT/TR/2013/.   A summary is also available there.

Social Security Board of Trustees: No Change in Projected Year of Trust Fund Reserve Depletion

The Social Security Board of Trustees today released its annual report on the long-term financial status of the Social Security Trust Funds. The combined assets of the Old-Age and Survivors Insurance, and Disability Insurance (OASDI) Trust Funds are projected to become depleted in 2033, unchanged from last year, with 77 percent of benefits still payable at that time. The DI Trust Fund will become depleted in 2016, also unchanged from last year’s estimate, with 80 percent of benefits still payable.

 In the 2013 Annual Report to Congress, the Trustees announced:

 • The combined trust fund reserves are still growing and will continue to do so through 2020. Beginning with 2021, the cost of the program is projected to exceed income.

 • The projected point at which the combined trust fund reserves will become depleted, if Congress does not act before then, comes in 2033 – the same as projected last year. At that time, there will be sufficient income coming in to pay 77 percent of scheduled benefits.

 • The projected actuarial deficit over the 75-year long-range period is 2.72 percent of taxable payroll — 0.05 percentage point larger than in last year’s report.

 “The Social Security Trust Funds’ projected depletion dates have not changed, and three-fourths of benefits would still be payable after depletion. But the fact remains that Congress needs to act to ensure the long-term solvency of this vital program,” said Carolyn W. Colvin, Acting Commissioner of Social Security. “The projected year for Disability Insurance Trust Fund depletion remains 2016, and legislative action is needed as soon as possible to address this financial imbalance.”

Other highlights of the Trustees Report include:

 • Income including interest to the combined OASDI Trust Funds amounted to $840 billion in 2012. ($590 billion in net contributions, $27 billion from taxation of benefits, $109 billion in interest, and $114 billion in reimbursements from the General Fund of the Treasury—almost exclusively resulting from the 2012 payroll tax legislation)

 • Total expenditures from the combined OASDI Trust Funds amounted to $786 billion in 2012.

• Non-interest income fell below program costs in 2010 for the first time since 1983. Program costs are projected to exceed non-interest income throughout the remainder of the 75-year period.

• The asset reserves of the combined OASDI Trust Funds increased by $54 billion in 2012 to a total of $2.73 trillion.

• During 2012, an estimated 161 million people had earnings covered by Social Security and paid payroll taxes.

 • Social Security paid benefits of $775 billion in calendar year 2012. There were about 57 million beneficiaries at the end of the calendar year.

 • The cost of $6.3 billion to administer the program in 2012 was a very low 0.8 percent of total expenditures.

 • The combined Trust Fund asset reserves earned interest at an effective annual rate of 4.1 percent in 2012.

The Board of Trustees is comprised of six members. Four serve by virtue of their positions with the federal government: Jacob J. Lew, Secretary of the Treasury and Managing Trustee; Carolyn W. Colvin, Acting Commissioner of Social Security; Kathleen Sebelius, Secretary of Health and Human Services; and Seth D. Harris, Acting Secretary of Labor. The two public trustees are Charles P. Blahous, III and Robert D. Reischauer.

The 2013 Trustees Report is posted at www.socialsecurity.gov/OACT/TR/2013/.

Are taxes withheld from Social Security benefits?

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An interesting question about taxation of Social Security benefits was asked last week during a retirement seminar. The person knew that his overall income after retirement would be high enough for a portion of his Social Security retirement to be taxable and asked if those taxes would be withheld from his monthly retirement benefits.

They would not be unless he requested it.Taxes are not routinely withheld from Social Security benefits. 

Based on overall income, about one-third of people receiving Social Security have to pay federal income taxes on a portion of those benefits. Of these people, some pay tax on up to 50 percent of benefits and some on up to 85 percent of benefits. No one pays federal income tax on more than 85 percent of his or her Social Security benefits.

Based on Internal Revenue Service (IRS) rules, if you file a federal tax return as an “individual” and your combined income is between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits. With income more than $34,000, up to 85 percent of your benefits may be taxable. If you file a joint return, and you and your spouse have a combined income that is between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits. With income more than $44,000, up to 85 percent of your benefits may be taxable. If married and filing a separate tax return, you probably will pay taxes on your benefits. See http://www.socialsecurity.gov/planners/taxes.htm. SSA personnel cannot provide tax advice.

 Although taxes are not routinely withheld from Social Security benefits, you can request voluntary Federal tax withholding from them.To do this, complete Internal Revenue Service (IRS) form W-4V (Voluntary Withholding Request) (http://www.irs.gov/pub/irs-pdf/fw4v.pdf ) and return it to your local Social Security office. When completing the W-4V you select a percentage of benefits for tax withholding, not a flat dollar amount. Options are to have 7 percent, 10 percent, 15 percent or 25 percent of your monthly benefit withheld. Voluntary withholding is only for Federal taxes, not state or local taxes.

Updated – How many people receive Social Security in your state?

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Updated to December 2012, the newest release of Social Security Congressional Statistics just became available online at http://www.ssa.gov/policy/docs/factsheets/cong_stats/2012/index.html.  

These annual fact sheets present data on the Social Security and Supplemental Security Income programs, including the number of people receiving benefits and the amount of total monthly payments made in the United States, in each state, and in each congressional district within the state. Information is also provided for the District of Columbia, American Samoa, Guam, the Northern Mariana Islands, Puerto Rico and the U.S. Virgin Islands.

For all locations, information is available in html, pdf and Excel formats.

North Dakota information is at http://www.ssa.gov/policy/docs/factsheets/cong_stats/2012/nd.pdf

Minnesota information is at http://www.ssa.gov/policy/docs/factsheets/cong_stats/2012/mn.pdf

South Dakota information is at http://www.ssa.gov/policy/docs/factsheets/cong_stats/2012/sd.pdf.

Current through December 2011, Social Security beneficiary information by state and individual county is at http://www.ssa.gov/policy/docs/statcomps/oasdi_sc/index.html. Note that OASDI stands for the three Social Security programs, Old-Age, Survivors, and Disability Insurance.

Also through December 2011, Supplemental Security Income (SSI) recipient information by state and county is at http://www.ssa.gov/policy/docs/statcomps/ssi_sc/2011/index.html.

Social Security & your smartphone

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Social Security Announces New Mobile Site for
Smartphone Users

Agency Leverages Technology to Meet Customer Service Expectations

Carolyn W. Colvin, Acting Commissioner of Social Security, today announced the agency is offering a new mobile optimized website, specifically aimed at smartphone users across the country. People visiting the agency’s website, www.socialsecurity.gov, via smartphone (Android, Blackberry, iPhone, and Windows devices) will be redirected to the agency’s new mobile-friendly site. Once there, visitors can access a mobile version of Social Security’s Frequently Asked Questions, an interactive Social Security number (SSN) decision tree to help people identify documents needed for a new/replacement SSN card, and mobile publications which they can listen to in both English and Spanish right on their phone.

“We are committed to meeting the changing needs of the American people and the launch of our new mobile site helps reinforce our online presence and adaptability to advances in technology,” Acting Commissioner Colvin said. “I encourage all smartphone users looking for Social Security information to take advantage of our new mobile site.”

In addition, visitors to the new mobile site can learn how to create a personal my Social Security account to get an online Social Security Statement, learn more about Social Security’s award-winning online services, and connect with Social Security on Facebook, Twitter, YouTube, and Pinterest. For people unable to complete their Social Security business online or over the telephone, the agency also unveiled a new mobile field office locator. The new mobile office locator has the capability to provide turn-by-turn directions to the nearest Social Security office based on information entered by the person.

“With significant budget cuts of nearly a billion dollars each year over the last few years, we must continue to leverage technology and find more innovative ways to meet the evolving needs of the American public without compromising service,” said Acting Commissioner Colvin.

Each year, more than 35 million Social Security web page views come via smartphones. 

For more information, please go to www.socialsecurity.gov.

You can own a home and receive SSI

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Q:  Can a person who owns a house and car receive Supplemental Security Income?

A:  Yes, depending on the details.

Supplemental Security Income (SSI) is a low-income program for people at least age 65, and disabled or blind adults or children. Resource limits exist for SSI, with resources defined as items you own or can convert to cash including bank accounts, property and vehicles. There are income limits also. SSI is a very different program from Social Security, although people apply for it at Social Security.

Not everything you own counts as a resource. If you live in it, your home including the land it is on, generally is not counted toward resource levels. If you own the home but do not live in it, both home and land will probably count as resources. One vehicle usually does not count as a resource either. 

Maximum SSI monthly amounts in 2013 are $710 for an eligible individual and $1,066 for an eligible couple, reduced by other income including Social Security benefits. Resource maximums are $2,000 for an individual and $3,000 for a couple. Subject to the SSI income limits, people can receive both SSI and Social Security benefits because they are two different programs. 

As with a home or vehicle, other resources might not count towards SSI resource levels. Most household goods, some insurance and some burial funds usually are not included.

Not all income counts for SSI either. For example, portions of wage and self-employment income, pensions, and State or local assistance based on need are not counted. 

SSI information is at http://www.socialsecurity.gov/pgm/ssi.htm and in SSA publication 05-11000, Supplemental Security Income.

To apply for SSI or ask questions, contact Social Security. Call the national toll-free number, 1-800-772-1213 (TTY 1-800-325-0778) or contact your local SSA office.

ID questions when creating your “my Social Security” account

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Q: Some of the security questions when I created a my Social Security account took me by surprise. While I expected the often seen birthdate type of question, my Social Security questions involved more details than I expected Social Security to have about me. Where do the questions come from?

A: This question was asked during one of my retirement seminars. Before answering it, I think it is important to mention that the Social Security Administration has less personal information then many people think. If not receiving monthly benefits, the bulk of personal information held by Social Security about you is from your Social Security number (SSN) application as updated, and your work history. If receiving benefits, the agency has information that you provided and needed to pay those benefits, including your address and direct deposit bank account information. 

Maintaining the security of your personal information on Social Security records is very important to the agency, which brings us back to the  question.  

Anyone at least age 18 and having an email address can create their own online my Social Security account. To create an account, you must provide some personal information about yourself and give us answers to some questions that only you are likely to know. Next, you create a username and password that you will use to access your online account. This process protects you and keeps your personal Social Security information private.

Some of the personal information requested is your name, Social Security number and birthdate. For other questions, an external authentication service provider, Experian, helps Social Security verify your identity by using information from your Experian credit report. This can result in what is known as a “soft inquiry” on your Experian credit report but does not affect credit scores and is not reported to lenders. It does provide the ability to protect your personal information by asking questions that only you should be able to answer.   

Please note that you cannot create a my Social Security account online if you have a security freeze, fraud alert, or both on your Experian credit report. You first must ask Experian to remove the freeze or alert. 

A link to my Social Security is on the homepage of www.socialsecurity.gov or you can go directly to http://www.socialsecurity.gov/myaccount/.  Linked from that page are details explaining how your identity is verified and protected. 

 

Pensions and Social Security, Part 3 – GPO

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For the relatively few people involved, today completes the series about pensions that might affect Social Security benefits. 

The general rule is that your company pension will not affect your Social Security benefits because most employment is covered by Social Security.  

The usual exception to this are pensions from government employment not covered by Social Security. A government pension from work covered by Social Security will not affect SSA benefits.

Not covered by Social Security means you did not pay Social Security payroll tax on those earnings, you did not earn coverage for SSA benefits and those earnings do not appear on your SSA work record. Any government level can be involved, not just Federal or state. Local government employment, including school districts, may or may not be covered by Social Security. 

Last week I discussed the Windfall Elimination Provision (WEP), when the person receives Social Security retirement on his or her own record through other work, separate from the non-covered government employment.

Today’s topic is the Government Pension Offset (GPO), involved when the Social Security benefits are through someone else’s record rather than your own work. The GPO affects SSA benefits as a spouse, widow or widower and is a direct offset by the government pension against Social Security benefits.

The Government Pension Offset reduces the amount of your Social Security spouse’s, widow’s or widower’s benefits by two-thirds of the amount of your government pension. The GPO can offset the total Social Security benefit.

Estimating the GPO amount is not hard. Do the math yourself or use the online GPO calculator. For example, if you receive a monthly civil service pension of $600, two-thirds of that, or $400, must be used to offset your Social Security spouse’s, widow’s or widower’s benefits. If you are eligible for a $500 spouse’s benefit, you will receive $100 per month from Social Security ($500 – $400 = $100).

Exemptions exist to the Government Pension Offset (GPO). More about the GPO is in SSA publication 05-10007, Government Pension Offset.

 Other factors that may affect Social Security benefits are part of the SSA online retirement planner at www.socialsecurity.gov.

 

 

 

Pensions and Social Security, Part 2 – WEP

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Continuing the topic of how a pension might affect Social Security benefits, the general rule is that your company pension will not affect your Social Security benefits because most employment is covered by Social Security.

So what pensions can affect Social Security? The main pension involved is from government employment, not covered by Social Security. Key is that this government employment was not covered by Social Security, meaning you did not pay Social Security payroll tax on those earnings, you did not earn coverage for SSA benefits and those earnings do not appear on your SSA work record.

Relatively few people are in this situation, but it is important to those that are. Any government level can be involved, not just Federal or state. Local government employment, including school districts, may or may not be covered by Social Security. 

Since their government employment was not covered by Social Security, for those involved any eligibility to a Social Security monthly benefit would have been earned either from other work that the person had on their own or through someone else’s record, such as through a spouse. The government pension not covered by Social Security affects benefits differently depending on this.

Called the Windfall Elimination Provision (WEP), today’s topic is when the SSA benefit is from the person’s own work. SSA benefits through someone else’s record will be covered later.

Enacted in the Social Security Amendments of 1983, the Windfall Elimination Provision provides a different formula for calculating SSA amounts. While not a direct offset or reduction of the government pension against the persons own Social Security benefit, the formula used results in a lower Social Security ­amount than otherwise would be received.

Why is this? Social Security benefits replace a percentage of a worker’s pre-retirement earnings. By design, lower-paid workers get a larger percentage of pre-retirement earnings than higher paid workers. Work not covered by Social Security does not appear on the person’s SSA record. This incorrectly makes the person’s average earnings appear lower, leading to a larger percentage of pre-retirement earnings paid. The Windfall Elimination Provision formula adjusts for this. 

The WEP formula takes into account how many years of work you have under Social Security covered employment. Overall, the reduction in the Social Security benefit cannot be more than one-half of the amount of the pension from work not covered by Social Security taxes.

The Windfall Elimination Provision does not affect most people. More about it is in SSA publication 05-10045 – Windfall Elimination Provision.

Use the special WEP Online Calculator if the WEP involves you. The usual website calculators, including the Retirement Estimator and your Social Security Statement, will not provide an accurate estimate when the WEP is a factor.