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.

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.

Reduction percentages for early retirement

Q: By what percentage would my SSA retirement be reduced if started at age 63?

A: Retirement benefits are reduced by the number of months started before a person’s full retirement age (FRA), also called normal retirement age.  Determined by year of birth, FRA is scheduled to reach age 67 for people born in 1960 or later.  

Social Security retirement benefits can be started anytime during the year if you are at least age 62.  There is no need to wait for your birthday.  As a percentage, retirement benefits are reduced 5/9 of one percent for each month before FRA, up to 36 months.  If the number of months exceeds 36, then the benefit is further reduced 5/12 of one percent per month.  

For example, if the number of reduction months is 60, the maximum number for retirement at 62 when FRA is 67, then the benefit is reduced by 30 percent.  This maximum reduction is calculated as 36 months times 5/9 of 1 percent plus 24 months times 5/12 of 1 percent. 

Total percentages of reduction vary with full retirement age because the numbers of reduction months are different from full retirement age to age 62.  

For comparison, FRA is age 66 for people born between 1943 and 1954.  For them, starting benefits at age 62 will provide 75 percent (25 percent reduction) of the full retirement age amount because an additional 48 months are involved.

However, FRA is age 66 and 6 months for people born in 1957. For them, starting benefits at age 62 will provide 72.5 percent (27.5 percent reduction) of the full retirement age amount because an additional 54 months are involved.

Monthly retirement percentages are readily available on the Social Security website.  Go to “find your retirement age” in the retirement planner section at www.socialsecurity.gov/retire2/. Click on your year of birth for monthly percentages. 

Note that Social Security survivor benefits, when based on age, are also reduced by the number of months before full retirement age involved but FRA for survivors benefits is different from FRA for retirement.

 

Special payments after retirement

Q: I retired in 2013 but expect income in 2014 from work done before I retired. Will this lower my 2014 Social Security benefits?

A: For people younger than full retirement age, the Social Security annual earnings test, also called the retirement test, concerns how much can be earned from wages or self-employment in a calendar year without reducing benefits during that year.

Termed a special payment, money received for work done before retirement is not normally included for the earnings test. Income received after retirement is a special payment if the last thing done to earn it was completed before stopping work. Examples could include accumulated vacation or sick pay, bonuses and sales commissions. If self-employed, net income received after the first year you retire is a special payment if you performed the services to earn the payment before becoming entitled to receive Social Security. 

For example, say a person retired at the end of 2013 and started receiving Social Security retirement as of January 2014. In January, the person receives payment from the former employer for unused vacation time. Since this vacation pay was earned before retirement, it is considered a special payment and not counted towards the 2014 annual earnings limit.

Two local occupations often receiving special payments for SSA retirement purposes are insurance salespeople and farmers. Insurance commissions for policies sold before retirement but received after the year of retirement are usually special payments. If a farmer fully harvested and stored a crop before or in the month of entitlement to SSA benefits, and then carried it over for sale in the next year, the income will not affect benefits for the year of sale. Keep documentation related to this.

As always, this is general information.  To learn more, read the SSA publication, Special Payments After Retirement, at www.socialsecurity.gov/pubs/10063.html or contact Social Security.  Annual earnings test information is at www.socialsecurity.gov/retire2/whileworking.htm.

Do you need to update your 2014 earnings estimate?

A question received in the office relates directly to my January 28 post about annual earnings reports and earnings estimates.

The caller, age 64, said that a letter from Social Security stated she would not receive her Social Security retirement benefit for January and part of February due to her estimated 2014 gross wages of about $20,000.

Where, she asked, did that information come from? She retired in 2013 and only expected minimal part-time earnings in 2014.

The estimated earnings amount came directly from her 2013 retirement application. The application asks for a current year and following year estimate from wages and self-employment.

At age 64, she will be younger than her full retirement age (FRA) for all of 2014. Since her estimated earnings for 2014 was above the 2014 annual earnings test amount for her age, Social Security adjusted her benefits payable during 2014 to account for the excess and then resumed monthly payment.

All she needed to do was report her actual earnings for 2013 and provide an accurate estimate of her 2014 gross wages. This was easily completed and, with her new estimate below earnings test limits, benefits could be paid for all months of 2014.

If you received SSA retirement or survivors benefits and were younger than full retirement age (FRA) for at least part of last year, report your 2013 employment earnings if your estimated or actual earnings were more than 2013 earnings test amounts for your age. Amounts for 2013 are in the January 28 post. At the same time, be sure your estimated 2014 earnings are correct based on your current work plans.

Before potentially reducing SSA benefits for 2014 a person younger than their full retirement age (FRA) the entire year could earn $15,480. A person reaching FRA during 2014 could earn $41,400 before reducing their retirement benefits. There is no earnings limit starting with the month you reach full retirement age. Examples of how the annual earnings test is applied are here.

 A special rule exists for people who retire during the year after already earning over annual limits. This one-time rule lets Social Security pay retirement benefits for any whole month that you are considered retired, even when having high earnings prior to retirement.

You can change your 2014 earnings estimate as needed during the year by calling the SSA national toll-free phone number 1-800-772-1213 / TTY 1-800-325-0778 or contacting your local office. Earnings for the annual earnings test include only your own gross wages from employment and net-income from self-employment.

The earnings test does not apply if you receive benefits because you have a disability. In this case, report starting or ending work to Social Security at the time. The earnings test does apply to family members receiving benefits through someone receiving Social Security disability.

Social Security disability and workers’ compensation

Q:  Can a person receive Social Security disability and workers’ compensation benefits at the same time?  

A: Yes, but workers’ compensation and other public disability benefits may reduce Social Security benefits.

If you receive workers’ compensation or other public disability benefits and SSA disability benefits for the same period, the total amount of these cannot exceed 80 percent of your average current earnings before you became disabled. 

When someone is eligible for both workers’ compensation and Social Security disability, sometimes the State offsets the workers compensation benefits while sometimes Social Security offsets the disability benefits.

Variations exist in types of state workers’ compensation benefits so this general answer will not apply in the same manner for all states.

Reporting receipt of workers’ compensation is one of your responsibilities when receiving disability.

Read the Social Security pamphlet How Worker’s Compensation and Other Disability Payments May Affect Your Benefits for more information.

Reporting responsibilities and additional information for people receiving Social Security disability benefits is in the booklet What You Need to Know When You Get Social Security Disability Benefits..

Do you need to report your 2013 employment earnings?

Q: I receive Social Security while working part-time. Last year I worked fewer hours and earned less than originally planned. Do I need to tell Social Security that my earnings were less than expected?

A: Perhaps, depending in part on your age and amount of earnings. If you received SSA retirement or survivors benefits and were younger than full retirement age (FRA) for at least part of last year, report your 2013 employment earnings if your estimated or actual earnings were more than 2013 earnings test amounts for your age.  

Before potentially reducing SSA benefits for 2013, a person younger than their full retirement age (FRA) the entire year could earn $15,120. A person reaching FRA during 2013 could earn $40,080 before reducing their retirement benefits. There is no earnings limit starting with the month you reach full retirement age.

A special rule exists for people who retired during the year after already earning over annual limits. This one-time rule lets Social Security pay retirement benefits for any whole month that you are considered retired, even when having high earnings prior to retirement.

Earnings for the annual earnings test include only your own gross wages from employment and net-income from self-employment.

Your estimated earnings amount was used to pay benefits during the year. 

If your 2013 estimate was high, perhaps you are due more from Social Security. If your estimate was low, perhaps you need to return funds.  If needed, report your actual 2013 earnings when you receive your W-2 form or compute your self-employment income. Report by calling the SSA national toll-free number, 1-800-772-1213 (TTY 1-800-325-0778) or your local office.

Are you working in 2014 while receiving Social Security retirement or survivors benefits?Earnings test amounts for 2014 are at http://www.socialsecurity.gov/retire2/whileworking.htm. Examples of how the annual earnings test is applied are there.

Provide an estimated earnings amount to Social Security you are receiving SSA retirement or survivors benefits and expect to earn more than the 2014 amounts for your age. Estimates can be changed during the year as needed.

The earnings test does not apply if you receive benefits because you have a disability. In this case, report starting or ending work to Social Security at the time.