Questions about government agencies?
You are not alone!
Trying to make sense of the different government programs available to retirees can be challenging. In this article we look at what each one covers and the requirements to qualify.
SSA or the Social Security Administration is a U.S. government agency that provides income to retirees, survivors, and the disabled. Each division provides a particular service and has different eligibility requirements.
Social Security is funded mainly by payroll tax. You contribute 6.2% of your earnings, and your employer matches that, for a total of 12.4% paid on your behalf. Once collected the tax is divided between two Social Security Funds—the OASI and DI.
OASI, Old Age and Survivor’s Insurance, is the retirement and survivor portion of Social Security. It currently receives 3.83% of the payroll tax collected.
DI, Disability Insurance, also known as SSD and SSDI, may cover qualified workers and their families in the event one becomes disabled.
Not all disabled individuals are eligible for DI. You must meet basic Social Security eligibility requirements and specific medical criteria. DI receives 2.37% of the payroll tax.
To be eligible for Social Security or Disability:
- You must have earned 40 credits. You receive one credit for every $1,260 earned with a maximum of four credits per year. You must have earned four credits per year for at least ten years to receive benefits.
- For OASI you must be at least 62 years of age. For survivor benefits you must be at least 60 years old (widow or widower). There is no age requirement for DI.
Social Security payment amounts are based on earned income. The higher your earnings, the higher your monthly payment will be until the maximum which is $2,663 at Full Retirement Age.
If you are collecting DI, once you reach your Full Retirement Age, you will be switched from disability to retirement benefits. The payment amount will stay the same as the two are calculated with the same formula.
As a worker if you have not contributed enough to Social Security, you will not qualify for either retirement or disability benefits.
SSI or Supplemental Security Income is public assistance or welfare for the elderly and disabled. It is available to those that don’t qualify for or receive a small benefit from Social Security. To collect SSI, you must be at least 65 years old or be disabled. You must be a U.S. citizen or national and live in the United States.
Financing for SSI comes from the Federal General Fund, not from the Social Security Trust Funds. The two agencies are separate entities each with a different purpose, structure, and financial source.
SSI is a means-tested benefit. Eligibility is based on current need, not past earnings. You must provide evidence of your income and assets on a regular basis to continue to receive benefits. There is a maximum to how much you can earn and a cap on the value of your assets. Any changes to your financial status must be reported and may affect your payment amount.
If your Social Security retirement benefit is low, you may qualify for SSI as well.
The SSA manages the SSI program, which might add to the confusion, but it streamlines the process. Much of the information needed to apply for one agency is also required for the other. This avoids having to duplicate efforts.
I often hear people say they are on Social Security when in fact they are receiving SSI. The same happens with Disability and SSI, even though the two programs are completely separate and different. SSA is based on an individual’s earnings over the course of their lifetime. They have paid into the system. SSI is public assistance. The recipients are generally at or near poverty level. SSI is in place to provide the basic necessities to those who live in this country legally and are in need.
The information above should clarify some common misunderstandings about these government programs:
- SSA-Social Security Administration administers our social insurance system, which includes retirement, survivor and disability insurance.
- OASI-Old Age and Survivor Insurance-Pays benefits to retirees and survivors from SSA.
- DI-Disability Insurance-Pays benefits to qualified workers with disabilities from SSA.
- SSI-Supplemental Security Income-provides public assistance to the disabled and retirees at or below poverty level. The funds come from the Federal General Fund. It is a separate agency but is administered by SSA.