Social Security Insurance Offices
In the US, the Federal government manages and runs an insurance program called Social Security which effectively provides benefits to the citizens in the form pension to old people, the survivors and the disabled people along with a few other benefactors who fall under different categories. The common name for Social Security has been Old-Age, Survivors, and Disability Insurance (OASDI) program. This program came into existence in 1935 when Franklin Roosevelt who was the President at that time, signed Social Security Act. At present, it includes numerous social insurance and welfare programs.
Source of Funds for Social Security
The primary sources of fund for Social Security are the payroll taxes known as the Federal Insurance Contributions Act tax or FICA and the Self Employed Contributions Act Tax/SECA. Whatever the taxes are accumulated, the IRS collects them and entrusts them to Federal Old-Age and Survivors Insurance Trust Fund along with the Federal Disability Insurance Trust Fund, the two major Social Security Trust Funds. All people who work and receive a salary, leaving out a few, are entitled to contribute to Social Security tax. There is a ceiling of the amount till which this tax has to be paid and the income over that amount isn’t taxed; it was recorded that in 2017 $127,200 was the maximum taxed amount of the earnings that were eligible for taxation.
At present, nearly all the “legal residents” who work in the US have given their personal Social Security Numbers which enables them to apply for and enjoy the benefits of Social Security Insurance when and if they are in need of it. This scheme is so beneficial that it is estimated that the income which has been procured from Social Security has cut down the rate of poverty from nearly 40 percent to less than 10 percent for the Americans of the age 65 and above.
People Receiving Social Security Insurance Benefits
According to a report presented in 2011, in 2010 alone, around 54 million benefited from Social Security Insurance and 157 million people contributed to the fund (via the payroll taxes). Among the recipient of benefits in 2010, 44 million people received it under the retirement benefits, 10 million received the disability benefits. That same year, the SSA accrued above $781 billion in funds out of which nearly $712.5 billion was spent.
Interlink between Social Security Insurance and Saving
The people who invest in Social Security Insurance pretty early in their careers usually benefit from it in multiple ways. Besides providing financial assistance during the adverse times, investing in Social Security Insurance also inspires people to save more, thus moulding their saving behaviour.
Basic Objectives of Social Security Act
When Social Security Act came into existence in 1935, it was aimed at providing financial stability and support to the American citizens going through a rough financial phase. Till then more than 80 years have passed and Social Security Insurance has widened its premises and benefits to include as many people as possible and take care of their financial needs in many forms. Some of the major objectives of Social Security Insurance with regards to providing services and benefits to the people of America are –
- Providing finance and funds people to support their and their family’s material needs
- Providing protection to the old and disabled people and give them financial support to make them able to afford the expenses of illnesses, and safeguarding their savings
- To maintain the bond of family by keeping the members together
- To provide healthy and safe environment to children so that they may grow and live a holistic life
Programs under Social Security Act
The major programs and insurance plans under Social Security Act and the laws related to it are –
· Retirement insurance –
The Retirement Insurance Benefits (RIB) or the old-age insurance benefits are paid by Social Security Administration upon the attainment of 62 of age or older. The amount is paid to the eligible individuals either on the 3rd of every month or the 2nd, 3rd, 4th Wednesday of the month. To be eligible for the insurance, a person must fulfil certain fixed requirements under the RIB. These requirements are primarily based on the factors related to age and the amount of payment made through the payroll taxes to Social Security System.
· Survivors insurance –
This insurance is directed at benefiting the family members of the deceased workers and this program is funded from the Social Security’s OASDI (Old-Age, Survivors, and Disability Insurance Trust Fund). In the year 2015 alone, as many as 6.1 million individuals received the benefits survivor insurance benefits. This programs enables the family members of the individual to carry on with their lives and remain financially stable even after the person dies.
· Disability insurance –
Social Security Disability Insurance, also known as SSD or SSDI, gets its fund from the payroll tax and is managed by Social Security Administration (SSA). This insurance is targeted towards providing the financial support or supplement income to the physically disables/restricted people who are incapable of getting employed due to their disability, usually a physical one. The SSD can be given on temporary as well as the permanent basis, depending on the nature of the disability. SSD is not based on the income generated by the disabled individual, a disabled person with any income level can receive the SSD benefits.
Unemployment insurance –
This program is useful in providing financial support to the workers who lose their job and become unemployed due to the factors not caused by them, hence, no fault of their own. To apply for the Unemployment insurance, you will be either required to fill the application form online or call the toll-free numbers. The benefits that you get under the Unemployment Insurance are taxable.
· Hospital and Medical Insurance –
For elderly, disabled, and other people with the end-stage renal disease
· Prescription drug benefit
· Help with Medicare Prescription Drug Costs
· Supplemental security income
· Special veteran benefits
Additionally, there are also public assistance and welfare services which include –
· Temporary assistance for the needy
· Medical assistance
· Maternal and child health services
· Child support enforcement
· Family and child welfare services
· Food stamps; and
· Energy assistance