Spring 2012 Newsletter

In an election year, we hear a lot of talk. Some good, some bad. One of the hot-button issues in every election is the cost of “entitlements.” When a politician is speaking of “entitlements,” to what, exactly, is he referring? Certainly, public assistance, food stamps, shelter allowances and Medicaid come to mind. Some would argue that Medicare and Social Security might fit under that umbrella. In past Newsletters we have addressed issues with respect to Medicaid and Medicare, but we have presented no discussion of Social Security and its basic sub-divisions. That is the focus of this Newsletter.

Social Security Retirement

Social Security has four basic subdivisions: its retirement pension system, disability, family and survivor’s programs. With respect to its retirement program, many people rely on Social Security payments as their major source of income after retirement; it is the largest provider of pensions in the country.

In order to qualify for Social Security, one is credited for wages or self-employment income during her lifetime of labor. For those born after 1928, a total of 40 credits (10 years of work) are required to obtain retirement benefits. One need not accumulate those credits continuously. During one’s working-life, Social Security distributes an annual statement notifying you of your earnings record and estimated retirement benefits. The higher your lifetime earnings, the higher your benefits will be.

When one retires and applies for benefits, then Social Security provides you with your actual benefit amount. Said payments will then continue for the duration of one’s life. Below is a chart taken from the Social Security website which shows when a retiree may expect to receive full benefits:

Supplemental Security Income (SSI)

Unlike disability insurance, or SSD, which is discussed below, SSI is federal welfare; the program pays monthly benefits to the disabled (also to the blind and aged.) Someone is “disabled” when he is unable to engage in substantial gainful activity because of a physical or mental medical condition which is anticipated to last for at least twelve months or until death. Establishing disability may be contingent upon the results of an applicant’s medical examinations and/or medical tests. One must sign a release to allow Social Security to contact one’s doctor. Once the investigation is completed, then a local agency reviews the reports and results with all the supporting information, and renders a decision.

In addition, eligibility is based upon economic need. In determining SSI eligibility, SSI investigates an applicant’s income and resources, much like Medicaid, but with a lower threshold for resources and, in some cases, a lower threshold for income than Medicaid allows. If one is receiving SSI, then he would automatically receive Medicaid for 24 months, on the 25th he would then receive Medicare. The caveat is that he must be an SSI recipient for continued Medicare coverage. That means he can have no resource in excess of $2,000, but a home, and its contents, and car would be exempted.

Income would be limited as follows: an exemption for the first $20 per month, and then it would depend upon whether the income was earned or unearned. The threshold for earned is higher than for unearned income. Frequently, resource and income levels become an issue when an SSI recipient receives the proceeds from a lawsuit. Compensatory damage awards from a lawsuit are considered exempted income in the month that they are received. (Punitive damages are not.) However, if, for example, an SSI recipient receives the proceeds from a lawsuit this month, April, and if she did not spend those proceeds within 60 days, they would then be considered a countable resource in June making her ineligible for SSI the following month, or July.

Social Security Disability Insurance (SSD)

SSD is paid to disabled individuals who are fully insured and cannot work. Like SSI, for SSD someone is considered “disabled” when he is unable to engage in substantial gainful activity because of a physical or mental medical condition which is anticipated to last for at least twelve months or until death. Establishing disability may be contingent upon the results of an applicant’s medical examinations and/or medical tests. One must sign a release to allow Social Security to contact one’s doctor. Once the investigation is completed, then a local agency reviews the reports and results with all the supporting information, and renders a decision.

Eligibility is not contingent upon economic need. Income is a factor, however. With SSD, benefits would be affected by income that exceeds $300 per month. An individual who receives SSD benefits for 24 months would be eligible for Medicare on the 25th month, regardless of age. Once all of the eligibility requirements are satisfied, no benefits are paid until a period of five months has elapsed since the onset of the disability, with a 12 month retroactive period of coverage.

For more information on the above and for information on additional programs, see the Social Security website atwww.ssa.gov. The website is comprehensive and easy to navigate; one can apply for any of the above programs on-line.

The above list is for general information purposes only. It is not intended to constitute individual legal advice or a specific recommendation to any particular client.

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