Old-Age, Survivors, and Disability Insurance

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Old-Age, Survivors, and Disability Insurance

The federal Old-Age, Survivors, and Disability Insurance (OASDI) system was developed pursuant to the federal Social Security Act of 1935 (42 U.S.C.A. § 301 et seq. [1935]) to provide government benefits to eligible retirees, disabled individuals, and surviving spouses and their dependents.

OASDI benefits are monthly payments made to retired people, families whose wage earner has died, and workers who are unemployed because of sickness or accident. Workers qualify for such protection by having been employed for the mandatory minimum amount of time and by having made contributions to Social Security. There is no financial need requirement. Once a worker qualifies for protection, his or her family is also entitled to protection. The OASDI program is geared toward helping families as a matter of social policy.

The OASDI program is funded by payroll taxes levied on employees, their employers, and the self-employed. The rate of the contributions is based upon the employee's taxable income, up to a maximum taxable amount, with the employer contributing an equal amount. The self-employed person contributes twice the amount levied on an employee. In 1996 a tax rate of 6.2 percent was levied on earned income up to a maximum of $62,887 to fund OASDI.

Old-Age Benefits

Old-age benefits were the cornerstone of the original social security act, which was passed in 1935. More than 25 million Americans receive old-age benefits each month, and those payments amount to almost $20 billion a year. Because of the increasing median age of the adult population, these figures are constantly increasing.

To be eligible for Social Security old-age benefits, a person must have worked a minimum number of calendar quarters, which increases with the worker's age. Forty quarters is the maximum requirement. Once a person earns credit for the required number of calendar quarters, she or he is insured. Workers born before 1950 can retire at age 65 with full benefits based on their average income during working years. For those workers born between 1950 and 1960, the retirement age has increased to age 66. Workers born in 1960 or later will be awarded full benefits for retirement at age 67. A person may retire at age 62 and receive less than full benefits. A worker's spouse who has not contributed to Social Security receives, at age 65, 50 percent of the amount paid to the worker.

Survivors' Benefits

Survivors' benefits are payments made to family members when a worker dies. The payments are intended to help ease the financial strain caused by the loss of the worker's income. Survivors can receive benefits if the deceased worker was employed and contributed to Social Security long enough to be considered insured.

When a wage earner dies, his or her spouse and unmarried minor children are entitled to receive benefits. In addition to monthly checks, the worker's surviving spouse, or if there is none, another eligible person, may receive a lump-sum payment of $255.

Disability Benefits

A person who becomes unable to work and expects to be disabled for at least twelve months or who will probably die from the condition can receive Social Security payments before reaching retirement age. A worker is eligible for disability benefits if she or he has worked enough years under Social Security before the onset of disabilities.

A disability is any physical or mental condition that prevents the worker from doing substantial work. Examples of disabilities that meet the Social Security criteria include brain damage, heart disease, kidney failure, severe arthritis, and serious mental illness.

The social security administration (SSA) determines whether a person's disability is serious enough to justify the awarding of benefits. The SSA determines whether the impairment is so severe that it significantly affects "basic work activity." If the answer is yes, the worker's medical data are compared with a set of guidelines known as the Listing of Impairments. If the claimant is found to suffer from a condition contained in this list, payment of the benefits will be approved. If the condition is less severe, SSA determines whether the impairment prevents the person from doing his or her former work. If not, the application will be denied. If so, a determination is made as to whether the impairment will prevent the applicant from doing other work present in the economy.

At this point SSA uses a series of guidelines that attempt to combine consideration of the applicant's residual functional capacity with the factors of age, education, and experience. The guidelines classify work into three types: sedentary work, light work, and medium work. If the SSA determines that an applicant can perform one of these types of work, it will deny benefits. A claimant may appeal this decision and ask for a hearing in which to present further evidence, including personal testimony. If the recommendation of the administrative law judge conducting the hearing is adverse, the claimant may appeal to the Social Security Administration's Appeals Council. If the claimant loses the appeal, she or he may file civil action in federal district court seeking review of the agency's adverse determination.

Three types of benefits are available to persons who meet the OASDI disability eligibility requirements: monthly cash payments, vocational rehabilitation, and medical insurance. Cash payments begin, provided proper application has been made, with the sixth month of disability. The amount of the monthly payment depends on the amount of earnings on which the employee has paid Social Security taxes and the number of eligible dependents. The maximum for a family usually equals roughly the amount to which the disabled employee is entitled as an individual plus allowances for two dependents.

Vocational rehabilitation services are provided through a joint federal-state program. Persons receiving cash payments for disability may continue to receive them for a limited time after they begin to work or near the end of a program of vocational rehabilitation. This period is referred to as the "trial work period" and may last as long as nine months.

Medical services are available through the Medicare program in which a recipient of OASDI disability benefits begins to participate twenty-five months after the onset of disability.

Further readings

Matheny, Ken. 2003. "Social Security Disability and the Older Worker: A Proposal for Reform." Georgetown Journal on Poverty Law & Policy 10 (winter).Nickles, Don. 1999. "Retiring in America: Why the United States Needs a New Kind of Social Security for the New Millennium." Harvard Journal on Legislation 36 (winter).

Social Security Advisory Board. 2001. Social Security Disability: The Basics. Mechanicsburg: Pennsylvania Bar Institute.

Social Security and SSI Disability. 1999. New York: Practising Law Institute.

Cross-references

Disability Discrimination; Elder Law; Health Insurance; Senior Citizens.

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