Social Security De-mystified

Social Security began by the suggestion of President Franklin D. Roosevelt in 1934, and the Social Security Act was signed into law on August 14, 1935. It was created with the intention to pay retired workers, age 65 or older, a continuous income.

Today's Social Security benefits are broken down into two categories: Title II or Retirement Survivors Disability Insurance (RSDI) and Title XVI or Supplemental Security Income (commonly known as SSI).

Dealing with any government agency is enough to make any sane person a crazed lunatic, and imagine being disabled, old, or both. Having worked with Social Security and Medicare over the years, I will make this as painless as possible. Hopefully you will walk away with a better understanding of Social Security's benefits, and quite possibly the ability to help a friend or family member through the process.

The easier of the two benefits is RSDI, so we'll start with this one first. This stands for Retirement Survivors Disability Insurance. This benefit can be received as RETIREMENT, for persons age 62 or older; as SURVIVORS benefits by either a widow/widower or unmarried child under the age of 18; or as DISABILITY, for those persons under the age of 62 who can no longer work a regular job and earn a living.

RSDI, or Title II, is strictly based upon a person's work history. You know those Social Security statements that you get quarterly in the mail? If you retired by such-a-such date, this is how much you would receive? Well, that's true. You have to have worked 5 out of the last 10 years; each person typically earns 4 credits a year (one per quarter) and must have at least 20 credits to be eligible. For example, a woman who's been a housewife for most her life would not qualify for the RSDI benefit, because she has no work credits. You basically have to have recently paid into the system in order to draw benefits from it.

For a Widow/widower and unmarried children to receive RSDI, under the SURVIVORS benefit, he or she would only receive the available amount of benefits under the spouse's or parent's work credits. A widow/widower can receive their spouse's full benefits when they hit 65 years old, or may qualify for reduced benefits when they turn age 60. If the widow/widower themselves are disabled, he or she may qualify for benefits as early as age 50. For children to receive the deceased parent's benefits, they must be unmarried and under the age of 18, or can they be 19years old if they are still attending high school. Sometimes benefits can even be paid to adopted kids, stepchildren or grandchildren. If a child of any age was deemed disabled before his or her 22nd birthday, they are also eligible to receive benefits. And then lastly, dependent parents age 62 or older also can receive benefits.

Now, a person's RETIREMENT benefits under RSDI automatically kick in when the person turns 65. A person can take his or her retirement early, between ages 62 - 64, but the amount will be less than if he or she waited until the full retirement age of 65. However, in the case of a person who is under the age of 62, and unable to work, a medical review of your illness has to be conducted in order to 'prove' your disability and when it began. Once your disability date is established, you can begin receiving monthly payments.

SSI stands for Supplemental Security Income. This one is a little trickier. This is the one people refer to when they say that they're getting a 'disability' check. It includes a monthly check and health insurance. You do NOT have to pay into the system to receive this benefit. You only have to be disabled and below the income level set by SSA. The income limits are fixed and apply nationwide, however, some states with higher costs of living also provided a supplemental amount to the base amount. The amounts listed in the next few paragraphs are for the calendar year 2006. The limits increase yearly, beginning January 1st.

Here's how it works: If you are single, and have been proven disabled through the Social Security process, and have income less than $603 per month, you will receive a monthly stipend of $603 a month, and ALSO the state Medicaid health insurance of the state in which you live. However, if you are eligible for a RSDI benefit amount more than $603 a month, you will not receive SSI due to the income limits.

If you are a couple, your combined monthly income has to be less than $904. If you are disabled and your spouse is currently working, or receiving any type of income or retirement totaling more than $904 a month, you will not be eligible for this SSI benefit. If you have worked and are eligible for a RSDI benefit amount more than $904 a month, you will not receive SSI due to the income limits. If you do quality for the SSI benefit, you will also receive the state Medicaid health insurance of the state in which you live.

Now, let's say you're single, that you DO receive RSDI, but you didn't pay so much into the system and your benefit is less than $603 per month: you would be eligible to receive the SSI benefit (and insurance) up to the amount of $603 per month. The same would apply for a couple who's combined income is less than $904 per month, the individual would be eligible for the SSI benefit (and insurance) up to the amount of $904 per month.

Here is a side note: Any person who has End Stage Renal Disease (ESRD) and is receiving outpatient dialysis, is considered disabled and will qualify for either RSDI, SSI or both.

Both RSDI and SSI require applications through the Social Security Administration. Your personal information, spouse's or parent's information will be required, and in the case of disability determination, medical records from your physicians and hospitals will also be required. You can either apply online at http://www.ssa.gov or walk into your local Social Security office. I really hope this has helped take some of the frustration and mystery out of today's Social Security benefits. There is another benefit under Social Security called Medicare, but that's a monster I'll have to tackle another time!