Social Security: 10024

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Understanding The Benefts

2008



Contact Social Security

Visit our website

Our website, www.socialsecurity.gov , is a valuableresource or inormation about all o Social Security’sprograms. At our website you also can:

Apply or certain kind o benefts;•

Get the address o your local Social Security ofce;•

Request a• Social Security Statement or a replace-ment Medicare card; and

Find copies o our publications.•

Call our toll-ree numberIn addition to using our website, you also can

call us toll-ree at 1-800-772-1213. We can answerspecifc questions rom 7 a.m. to 7 p.m., Mondaythrough Friday. We can provide inormation by

automated phone service 24 hours a day. I youare dea or hard o hearing, you may call our TTYnumber, 1-800-325-0778.

We treat all calls confdentially. We also wantto make sure you receive accurate and courteousservice. That is why we have a second Social Securityrepresentative monitor some telephone calls.

http://www.socialsecurity.gov/

http://www.socialsecurity.gov/



What’s inside

Social Security: a simple concept 4

What you need to know aboutSocial Security while you are working 6

What you need to know about benefts 8

Benefts or your amily 14

When you are ready to apply or benefts 16

Supplemental Security Income(SSI) program 18

Right to appeal 18

Medicare 19

Some acts about Social Security 22



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Social Security: a simple concept

Social Security reaches almost every amily, andat some point will touch the lives o nearly all

Americans.Social Security helps not only older Americans, butalso workers who become disabled and amilies inwhich a spouse or parent dies. Today, more than 163million people work and pay Social Security taxes andmore than 50 million people receive monthly SocialSecurity benefts.

Most o our benefciaries are retirees and theiramilies—about 34 million people.

But Social Security was never meant to be the onlysource o income or people when they retire. SocialSecurity replaces about 40 percent o an average wageearner’s income ater retiring, and most fnancialadvisors say retirees will need about 70–80 percent o

their work income to live comortably in retirement.To have a comortable retirement, Americans needmuch more than just Social Security. They also needprivate pensions, savings and investments.

The Social Security Administration wants you tounderstand what Social Security can mean to youand your amily’s fnancial uture. This publication,

Understanding The Benefts, explains the basics o theSocial Security retirement, disability and survivorsinsurance programs.

The current Social Security system works like this:when you work, you pay taxes into Social Security.The tax money is used to pay benefts to:

People who already have retired;•

People who are disabled;•

Survivors o workers who have died; and•

Dependents o benefciaries.•



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The money you pay in taxes is not held in a personalaccount or you to use when you get benefts. Yourtaxes are being used right now to pay people who noware getting benefts. Any unused money goes to the

Social Security trust unds, not a personal account withyour name on it.

Social Security is more than retirementMany people think o Social Security as just a

retirement program. Although it is true that mosto the people receiving Social Security receive

retirement benefts, many others get Social Securitybecause they are:

Disabled; or•

A spouse or child o someone who gets Social•

Security; or

A spouse or child o a worker who died; or•

A dependent parent o a worker who died.•

Depending on your circumstances, you may beeligible or Social Security at any age. In act, SocialSecurity pays more benefts to children than any othergovernment program.

Your Social Security taxesThe Social Security taxes you and other workers

pay into the system are used to pay or Social Securitybenefts.

You pay Social Security taxes on your earnings upto a certain amount. That amount increases eachyear to keep pace with wages. In 2008, that amountis $102,000.

Medicare taxesYou pay Medicare taxes on all o your wages or net

earnings rom sel-employment. These taxes are usedor Medicare coverage.



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I you work orsomeone else

Social Security tax Medicare tax

You pay 6.2% 1.45%

Your employer pays 6.2% 1.45%

I you are sel-employed

You pay 12.4% 2.9%

Where your Social Security tax dollars goWhen you work, 85 cents o every Social Security tax

dollar you pay goes to a trust und that pays monthlybenefts to current retirees and their amilies and tosurviving spouses and children o workers who havedied. The other 15 cents goes to a trust und that paysbenefts to people with disabilities and their amilies.

From these trust unds, Social Security also paysthe costs o managing the Social Security programs.

The Social Security Administration is one o themost efcient agencies in the ederal government, andwe are working to make it better every day. O eachSocial Security tax dollar you pay, we spend less thanone penny to manage the program.

The entire amount o taxes you pay or Medicaregoes to a trust und that pays or some o the costs o

hospital and related care o all Medicare benefciaries.Medicare is managed by the Centers or Medicare &Medicaid Services, not Social Security.

What you need to know about SocialSecurity while you are working

Your Social Security numberYour link with Social Security

is your Social Security number.You will need it to get a job and to



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pay taxes. We use your Social Security number to trackyour earnings while you are working and to track yourbenefts ater you are getting Social Security.

Do not carry your Social Security card unless you

need to show it to your employer. You should becareul about giving someone your Social Securitynumber. Identity thet is one o the astest growingcrimes today. Most o the time identity thieves useyour Social Security number and your good credit toapply or more credit in your name. Then they use thecredit cards to buy things or themselves, and they do

not pay the bills.Your Social Security number and our records are

confdential. I someone else asks us or inormationwe have about you, we will not give any inormationwithout your written consent, unless the law requiresor permits it.

Contact us i you need a Social Security number,

i you lose your card and need another one or i youneed to change your name on your current card. Wewill ask you to fll out a simple one-page orm and askto see certain documents. We need to see originalsor copies certifed by the issuing ofce. We cannotaccept photocopies or notarized copies o documents.

To get a Social Security number or a replacement

card, you must prove your U.S. citizenship orimmigration status, age and identity. For a replacementcard, proo o your U.S. citizenship and age are notrequired i they are already in our records. Onlycertain documents can be accepted as proo o U.S.citizenship. These include your U.S. birth certifcate,U.S. passport, U.S. consular report o birth, Certifcate

o Naturalization or Certifcate o Citizenship. I youare not a U.S. citizen, dierent rules apply or provingyour immigration status. Acceptable proos o identitywould include current documents showing yourname, identiying inormation and, preerably, a recent



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photograph, such as a driver’s license, a state-issuednondriver identifcation card or a U.S. passport.

To apply or a change o name on your Social Securitycard, you must show a recently issued document that

proves your name has been legally changed.Be sure to saeguard your Social Security card. You

are limited to three replacement cards in a year and10 during your lietime. Legal name changes andother exceptions do not count toward these limits. Forexample, changes in noncitizen status that require cardupdates may not count toward these limits. Also, you

may not be aected by these limits i you can proveyou need the card to prevent a signifcant hardship.

For more inormation, ask or Your Social Security Number And Card (Publication No. 05-10002). I youare not a citizen, you also can ask or Social Security Numbers For Noncitizens (Publication No. 05-10096).

All o our services are ree. Social Security never

charges or the services we provide.

How you become eligible or Social SecurityAs you work and pay taxes, you earn Social Security

“credits.” In 2008, you earn one credit or each $1,050in earnings—up to a maximum o our credits peryear. (The amount o money needed to earn one credit

goes up every year.)Most people need 40 credits (10 years o work) to

qualiy or benefts. Younger people need ewer creditsto be eligible or disability benefts or or amilymembers to be eligible or survivors benefts when theworker dies.

What you need to know about beneftsSocial Security benefts replace a percentage o your

earnings when you retire, become disabled or die. Eachyear, we will send you a Social Security Statement

http://www.socialsecurity.gov/pubs/10002.html












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showing your earnings history and an estimate o theretirement, disability and survivors benefts you andyour amily may receive based on those earnings.

When you receive your Statement, check your

earnings history careully. Make sure all o yourearnings are accurate. Be sure to report any errors tous. That is important because your benefts will bebased on your lietime earnings. Your Statement alsois useul in helping you plan your fnancial uture.

Retirement benefts

Choosing when to retire is one o the mostimportant decisions you will make in your lietime.I you choose to retire when you reach ull retirementage (see below and page 10), you will receive your ullbeneft amount. But i you retire beore reaching ullretirement age, you will receive reduced benefts orthe rest o your lie.

Full retirement ageI you were born beore 1938, you were eligible

or your ull Social Security beneft on your 65thbirthday. In 2003, the age at which ull benefts arepayable began to increase gradually. The ollowingchart will guide you in determining your ull

retirement age:Year o birth Full retirement age

1937 or earlier 65

1938 65 and 2 months


1940 65 and 6 months1941 65 and 8 months




10

Year o birth Full retirement age

1943-1954 66






1960 or later 67

NOTE: Although the ull retirement age is rising, you should still apply or Medicare benefts withinthree months o your 65th birthday. I you wait

longer, your Medicare medical insurance (Part B)and prescription drug coverage (Part D) may cost

you more money.

Delayed retirementI you choose to delay receiving benefts beyond

your ull retirement age, your beneft will be increasedby a certain percentage, depending on the year youwere born. The increase will be added in automati-cally rom the time you reach ull retirement age untilyou start taking benefts or reach age 70, whichevercomes frst. I, or example, you were born in 1940,your beneft would increase 7 percent or each year,between your ull retirement age and age 70, that you

do not get retirement benefts.



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Early retirementYou may start receiving benefts as early as age 62.

However, i you start your benefts early, your beneftsare reduced permanently. Your beneft is reducedabout one-hal o 1 percent or each month you startyour Social Security beore your ull retirement age.For example, i your ull retirement age is 66 andyou sign up or Social Security when you are 62, youwould only get 75 percent o your ull beneft.

NOTE: The reduction will be greater in uture years

as the ull retirement age increases.

I you work and get beneftsYou can continue to work and still receive retire-

ment benefts. Your earnings in (or ater) the monthyou reach ull retirement age will not reduce yourSocial Security benefts. In act, working beyond ull

retirement age can increase your benefts. However,your benefts will be reduced i your earnings exceedcertain limits or the months beore you reach yourull retirement age.

I you work but start receiving benefts beore ullretirement age, $1 in benefts will be deducted oreach $2 in earnings you have above the annual limit.

In 2008, the limit is $13,560.In the year you reach your ull retirement age, your

benefts will be reduced $1 or every $3 you earn overa dierent annual limit ($36,120 in 2008) until themonth you reach ull retirement age.

Once you reach ull retirement age, you can keepworking, and your Social Security beneft will not be

reduced no matter how much you earn.For more inormation about how work aects your

benefts, ask or How Work Aects Your Benefts(Publication No. 05-10069).







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NOTE: People who work and receive disability orSupplemental Security Income payments have dierentearnings rules. They immediately must report all o their earnings to Social Security no matter how much

they earn.

Retirement benefts or widows and widowersI you are receiving widow’s or widower’s benefts,

you can switch to your own retirement benefts as earlyas age 62, assuming your retirement beneft is morethan the amount you receive on your deceased spouse’s

earnings. In many cases, you can begin receiving onebeneft at a reduced rate and then switch to the otherbeneft at the ull rate when you reach ull retirementage. The rules are complicated and vary dependingon your situation, so talk to a Social Securityrepresentative about the options available to you.

For more inormation about retirement benefts, ask

or Retirement Benefts (Publication No. 05-10035).

Disability beneftsI you cannot work because o a physical or mental

condition that is expected to last at least one year orresult in death, you may be eligible or Social Securitydisability benefts.

Our disability rules are dierent rom those oprivate plans or other government agencies. The actthat you qualiy or disability rom another agencyor program does not mean you will be eligible ordisability benefts rom us. And having a statementrom your doctor indicating you are disabled does notmean you will automatically be eligible or Social

Security disability benefts. For more inormationabout Social Security disability benefts, ask orDisability Benefts (Publication No. 05-10029). Youcan apply or Social Security disability benefts on ourwebsite at www.socialsecurity.gov/applyordisability .

http://www.socialsecurity.gov/pub/10035.html




http://www.socialsecurity.gov/applyfordisability

http://www.socialsecurity.gov/applyfordisability





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People with disabilities, including children, whohave little income and ew resources, also may beeligible or disability payments through theSupplemental Security Income (SSI) program. For

more inormation about SSI, ask or SupplementalSecurity Income (SSI) (Publication No. 05-11000).

I you become disabled, you should fle or disabilitybenefts as soon as possible, because it usually takesseveral months to process a disability claim. We maybe able to process your claim more quickly i you havethe ollowing when you apply:

Medical records and treatment dates rom your•

doctors, therapists, hospitals, clinics and caseworkers;

Your laboratory and other test results;•

The names, addresses, phone and ax numbers o•

your doctors, clinics and hospitals;

The names o all medications you are taking; and•

The names o your employers and job duties or the•

last 15 years.

Your benefts may be taxableSome people who get Social Security will have to

pay taxes on their benefts. Less than one-third o ourcurrent benefciaries pay taxes on their benefts.

You will have to pay taxes on your benefts i youfle a ederal tax return as an “individual” and yourtotal income is more than $25,000. I you fle a jointreturn, you will have to pay taxes i you and yourspouse have a total income that is more than $32,000.For more inormation call the Internal RevenueService’s toll-ree number, 1-800-829-3676.








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Benefts or your amily

When you start receiving Social Security retirementor disability benefts, other amily members also may

be eligible or payments. For example, benefts can bepaid to your husband or wie:

I he or she is age 62 or older; or•

At any age i he or she is caring or your child (the•

child must be younger than 16 or disabled andentitled to Social Security benefts on your record).

Benefts also can be paid to your unmarried children

i they are:Younger than 18;•

Between 18 and 19 years old, but in elementary or•

secondary school as ull-time students; or

Age 18 or older and severely disabled (the disability•

must have started beore age 22).

I you become the parent o a child (including anadopted child) ater you begin receiving benefts, let usknow about the child, so we can decide i the child iseligible or benefts.

How much can amily members get?Each amily member may be eligible or a monthly

beneft that is up to hal o your retirement or

disability beneft amount. However, there is a limitto the total amount o money that can be paid to youand your amily. The limit varies, but is generallyequal to about 150 to 180 percent o your retirementor disability beneft.

I you are divorced

I you are divorced, your ex-spouse may qualiyor benefts on your earnings. In some situations, heor she may get benefts even i you are not receivingthem. To qualiy, a divorced spouse must:



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Have been married to you or at least 10 years;•

Have been divorced at least two years;•

Be at least 62 years old;•

Be unmarried; and•

Not be eligible or an equal or higher beneft based•

on his or her own work or someone else’s work.

Survivors beneftsWhen you die, your amily may be eligible or

benefts based on your work.

Family members who can collect benefts include awidow or widower who is:

60 or older; or•

50 or older and disabled; or•

Any age i he or she is caring or your child who is•

younger than 16 or disabled and entitled to SocialSecurity benefts on your record.

Your children can receive benefts, too, i they areunmarried and:

Younger than 18 years old; or•

Between 18 and 19 years old, but in an elementary•

or secondary school as ull-time students; or

Age 18 or older and severely disabled (the disability•

must have started beore age 22).

Additionally, your parents can receive benefts onyour earnings i they were dependent on you or atleast hal o their support.

Payment ater deathI you have enough credits, a one-time payment o

$255 also will be made ater your death. This beneftmay be paid to your spouse or minor children i theymeet certain requirements.



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I you are divorcedI you are divorced, your ex-spouse may be eligible

or survivors benefts based on your earnings whenyou die. He or she must:

Be at least age 60 years old (or 50 i disabled) and•

have been married to you or at least 10 years; or

Be any age i he or she is caring or a child who•

is eligible or benefts based on your earnings; and

Not be eligible or an equal or higher beneft based•

on his or her own work; and

Not be currently married, unless the remarriage•

occurred ater age 60 or ater age 50 i disabled.

NOTE: I you are deceased and your ex-spouse remarries ater age 60, he or she may be eligible orSocial Security benefts based both on your work andthe new spouse’s work, whichever is higher.

How much will your survivors get?Your survivors receive a percentage o your basic

Social Security beneft—usually in a range rom 75to 100 percent each. However, there is a limit to theamount o money that can be paid each month toa amily. The limit varies, but is generally equal toabout 150 to 180 percent o your beneft rate.

When you are ready to apply or benefts

You should apply or benefts about three monthsbeore the date you want your benefts to start. Iyou are not quite ready to retire, but are thinkingabout doing so in the near uture, you may want

to visit Social Security’s website to use ourconvenient and inormative retirement planner atwww.socialsecurity.gov/retire2. To fle or disabilityor survivors benefts, you should apply as soon asyou are eligible.

http://www.socialsecurity.gov/retire2

http://www.socialsecurity.gov/retire2



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You also can apply or benefts on our websiteat www.socialsecurity.gov/applyorbenefts. You also can calculate your beneft amount atwww.socialsecurity.gov/planners.

What you will need to applyWhen you apply or benefts, we will ask you to

provide certain documents. The documents we willask or depend on the type o benefts you are flingor. Providing these documents to us quickly will helpus pay your benefts aster. You must submit original

documents or copies certifed by the issuing ofce—we cannot accept photocopies.

Do not delay fling an application just because youdo not have all o the documents you need. We willhelp you get them.

Here is a list o some documents you may needwhen you sign up or Social Security:

Your Social Security card (or a record o your number);•

Your birth certifcate;•

Your children’s birth certifcates and Social Security•

numbers (i you are applying or them);

Proo o U.S. citizenship or lawul immigration status•

i you (or a child) were not born in the United States;

Your spouse’s birth certifcate and Social Security•

number i he or she is applying or benefts basedon your earnings;

Marriage certifcate (i signing up on a spouse’s•

earnings or i your spouse is signing up on yourearnings);

Your military discharge papers i you had military•

service; andYour most recent W-2 orm, or your tax return, i•

you are sel-employed.

We will let you know i other documents are neededwhen you apply.

http://www.socialsecurity.gov/applyforbenefits

http://www.socialsecurity.gov/planners

http://www.socialsecurity.gov/planners

http://www.socialsecurity.gov/applyforbenefits



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How benefts are paidSocial Security benefts generally are paid by

direct deposit. Direct deposit is a simple, sae andsecure way to receive your benefts. Be sure to haveyour checkbook or account statement with you whenyou apply. We will need that inormation to makesure your monthly beneft is correctly deposited intoyour account.

I you do not want direct deposit, we will makeother arrangements to pay your monthly benefts.

Supplemental Security Income (SSI) programI you get Social Security benefts, but have limited

income and resources (things you own), SSI may beable to help. SSI is fnanced rom general revenues, notSocial Security taxes.

SSI makes monthly payments to people who are

age 65 or older or who are blind or disabled. We donot count some o your income and some o yourresources when we decide whether you are eligible orSSI. Your house and your car, or example, usually arenot counted as resources.

Call us or more inormation or to apply or SSI.

Right to appealI you disagree with a decision made on your claim,

you can appeal it. For an explanation o the steps youcan take, ask or The Appeals Process (PublicationNo. 05-10041).

You have the right to be represented by an attorneyor other qualifed person o your choice. For more

inormation, ask or Your Right To Representation(Publication No. 05-10075).












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Medicare

Medicare is our country’s basic health insuranceprogram or people age 65 or older and many people

with disabilities.You should not conuse Medicare and Medicaid.Medicaid is a health care program or people with lowincome and limited resources. It is usually run bystate welare or social services agencies. Some peoplequaliy or one or the other, while some people qualiyor both Medicare and Medicaid.

Medicare has our partsHospital insurance (Part A) helps pay or inpatient•

hospital care and certain ollow-up services.

Medical insurance (Part B) helps pay or doctors’•

services, outpatient hospital care and othermedical services.

Medicare Advantage plans (Part C) are available in•

many areas. People with Medicare Parts A and B canchoose to receive all o their health care servicesthrough a provider organization under Part C.

Prescription drug coverage (Part D) helps pay•

or medications doctors prescribe or medicaltreatment.

Who is eligible or hospital insurance (Part A)?Most people get hospital insurance when they turn

65. You qualiy or it automatically i you are eligibleor Social Security or Railroad Retirement benefts.Or you may qualiy based on a spouse’s (includinga divorced spouse’s) work. Others qualiy because

they are government employees not covered by SocialSecurity who paid the Medicare tax.

I you get Social Security disability benefts or24 months, you will qualiy or hospital insurance.



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I you get Social Security disability benefts becauseyou have amyotrophic lateral sclerosis (Lou Gehrig’sdisease), you do not have to wait 24 months to qualiy.

Also, people who have permanent kidney ailure

that requires maintenance dialysis or a kidneyreplacement qualiy or hospital insurance i theyhave worked long enough or i they are the spouseor child o a worker who qualifes.

Who can get medical insurance (Part B)?Almost anyone who is eligible or hospital

insurance can sign up or medical insurance. PartB is an optional program. It is not ree. In 2008, thestandard monthly premium is $96.40. Some peoplewith higher incomes pay higher premiums.

Who can get Medicare Advantage plans (Part C)?Anyone who has Medicare hospital insurance (Part

A) and medical insurance (Part B) can join a MedicareAdvantage plan. Medicare Advantage plans include:

Medicare managed care plans;•

Medicare preerred provider organization (PPO) plans;•

Medicare private ee-or-service plans; and•

Medicare specialty plans.•

You might have to pay a monthly premium becauseo the extra benefts the Medicare Advantage plan oers.

Who can get Medicare prescription drugcoverage (Part D)?

Anyone who has Medicare hospital insurance(Part A) or medical insurance (Part B) or a Medicare

Advantage plan (Part C) is eligible or prescriptiondrug coverage (Part D). Prescription insurance isoptional, and you pay an additional monthly premiumor the coverage.



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For more inormation, ask or Medicare (PublicationNo. 05-10043).

Help with Medicare expenses

or people with low incomeI you have a low income and ew resources, your

state may pay your Medicare premiums and, in somecases, other “out-o-pocket” medical expenses, such asdeductibles and coinsurance.

Only your state can decide whether you qualiy orhelp under this program. I you think you qualiy, con-

tact your state or local medical assistance (Medicaid)agency, social services or welare ofce.

You can go online to get more inormation about thisprogram rom the Centers or Medicare & MedicaidServices (CMS) website. Visit www.medicare.gov and request I you need help paying Medicare costs,there are programs that can help you save money

(Publication No. CMS-10126).

“Extra help” with Medicare prescription costsI you have limited income and resources, you may

qualiy or extra help to pay or your prescriptiondrugs under Medicare Part D. Social Security’s roleis to help you understand how you may qualiy and

to process your application or extra help. To see iyou qualiy or to apply, call Social Security’s toll-reenumber or visit our website.




http://www.medicare.gov/

http://www.medicare.gov/





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Some acts about Social Security

2008 Social Security taxes

You and your employer each pay 6.2 percent•

I you are sel-employed, you pay 12.4 percent•

You do not pay Social Security taxes on any•

earnings above $102,000

2008 Medicare taxesYou and your employer each pay 1.45 percent•

I you are sel-employed, you pay 2.9 percent•

Medicare taxes are paid on all o your earnings;•

there is no limit

Work credits in 2008For each $1,050 you earn, you receive one Social•

Security “credit,” up to our per year

Most people need 40 credits to be eligible or•

retirement benefts

Younger people need ewer credits to qualiy or•

disability and survivors benefts

Average 2008 monthly Social Security beneftsRetired worker: $1,079•

Retired couple: $1,761•

Disabled worker: $1,004•

Disabled worker with a spouse and child: $1,690•

Widow or widower: $1,041•

Young widow or widower with two children: $2,243•

2008 monthly SSI payment rates(does not include state supplement, i any)

$637 or an individual•

$956 or a couple•



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Notes



Social Security AdministrationSSA Publication No. 05-10024ICN 454930Unit o Issue - Package o 25January 2008 (Destroy prior editions)

Documents

Social Security: 10024