Social Security Essentials for Ohio Public Employees
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Transcript of Social Security Essentials for Ohio Public Employees
Social Security Social Security Essentials Essentials
for Ohio for Ohio
Public EmployeesPublic Employees
Earning CreditsEarning Credits
40 Credits for retirement40 Credits for retirement
Maximum 4 credits in 1 yearMaximum 4 credits in 1 year
$1,120 earnings = 1 credit in 2011 ($4,480) $1,120 earnings = 1 credit in 2011 ($4,480)
WorkerWorker
Reduced benefits as early as age 62 Reduced benefits as early as age 62
Full benefits at age 65-67Full benefits at age 65-67
Increased benefits after full retirement age (FRA)Increased benefits after full retirement age (FRA)
Wife or HusbandWife or Husband
As early as age 62As early as age 62
At any age if caring for child under age 16 or disabledAt any age if caring for child under age 16 or disabled
Divorced spouses may qualify if married at least 10 yearsDivorced spouses may qualify if married at least 10 years
ChildChild
Unmarried and up to age 18 or 19 if still in high schoolUnmarried and up to age 18 or 19 if still in high school
Any age if disabled before age 22Any age if disabled before age 22
Retirement BenefitsRetirement Benefits
Full Retirement Age &Full Retirement Age &
Age 62 ReductionAge 62 Reduction
Year of BirthYear of Birth Full Retirement AgeFull Retirement Age % at Age 62% at Age 62
1943-1954 1943-1954 66 66 75 %75 % 19551955 66 & 2 months 66 & 2 months 74.2 %74.2 % 19561956 66 & 4 months 66 & 4 months 73.3 %73.3 % 1957 1957 66 & 6 months 66 & 6 months 72.5 %72.5 % 19581958 66 & 8 months 66 & 8 months 71.7 %71.7 % 1959 1959 66 & 10 months 66 & 10 months 70.8 %70.8 % 1960 & later 1960 & later 67 67 70 %70 %
Reduction is Permanent! Reduction is Permanent!
Benefits for Dependent SpousesBenefits for Dependent Spouses
Spouse may receive up to 50% of a worker’s Spouse may receive up to 50% of a worker’s fullfull Social Security benefit—Social Security benefit—howeverhowever,,
A spouse benefit is reduced by amount equal A spouse benefit is reduced by amount equal toto fullfull retirement benefit the spouse earned retirement benefit the spouse earned on his/her own work recordon his/her own work record
Reduced if started early (before FRA) Reduced if started early (before FRA)
Survivor BenefitsSurvivor Benefits
Widow(er)Widow(er)Reduced benefits as early as age 60 or, if disabled, Reduced benefits as early as age 60 or, if disabled, age 50 age 50
At any age if caring for child of worker under age 16 At any age if caring for child of worker under age 16 or disabled before age 22or disabled before age 22
Divorced widow(er) may qualify if married at least Divorced widow(er) may qualify if married at least 10 years 10 years
Remarriage @ age 60 or later does not end benefitRemarriage @ age 60 or later does not end benefit
Benefit at full retirement age is Benefit at full retirement age is usuallyusually the same as the same as what worker was receiving at his death or would what worker was receiving at his death or would have received at full retirement age have received at full retirement age
Survivor Benefits Survivor Benefits (cont)(cont)
ChildChild
Under age 18 or 19 if still in high schoolUnder age 18 or 19 if still in high school
Any age if disabled before age 22Any age if disabled before age 22
UnmarriedUnmarried****
$255 Lump Sum Death Benefit$255 Lump Sum Death Benefit
Surviving spouse or minor/disabled children onlySurviving spouse or minor/disabled children only
Social Security Benefits While WorkingSocial Security Benefits While Working
What is work?What is work?
Wages from PERS, FICA, anywhereWages from PERS, FICA, anywhere
May be self employmentMay be self employment
Work is Work is NOTNOT income from private pensions, income from private pensions, rental properties, investments, 401k or deferred rental properties, investments, 401k or deferred comp, etc.comp, etc.
Work Before Full Retirement AgeWork Before Full Retirement Age
Work Work beforebefore full retirement age often reduces or full retirement age often reduces or eliminates Social Security cash benefitseliminates Social Security cash benefits
Earnings from work may affect both retirement Earnings from work may affect both retirement and dependent/survivor benefitsand dependent/survivor benefits
Online Retirement Earnings Test Calculator at Online Retirement Earnings Test Calculator at www.ssa.gov/planners/morecalculators.htm www.ssa.gov/planners/morecalculators.htm computes how work may affect benefitscomputes how work may affect benefits
How Work Affects Your Benefit How Work Affects Your Benefit pamphletpamphlet
OPERS and Social SecurityOPERS and Social Security
When your pension is from work not covered When your pension is from work not covered by Social Security, two laws may affect your by Social Security, two laws may affect your Social Security benefit:Social Security benefit:
Government Pension Offset (GPO)Government Pension Offset (GPO)
Windfall Elimination Provision (WEP)Windfall Elimination Provision (WEP)
OPERS and Social SecurityOPERS and Social Security
Government Pension Offset (GPO)Government Pension Offset (GPO)
Only applies to Social Security Only applies to Social Security spouse/widow(er) benefitsspouse/widow(er) benefits
Reduces your Social Security Reduces your Social Security spouse/widow(er) benefit by 2/3 of your spouse/widow(er) benefit by 2/3 of your OPERS pensionOPERS pension
Does Does not not apply to OPERS survivor pensionsapply to OPERS survivor pensions
Spouse Benefit ComputationSpouse Benefit Computation
Fred and Alice both paid FICA. Fred receives Fred and Alice both paid FICA. Fred receives $2,366/month Social Security benefit at Full $2,366/month Social Security benefit at Full Retirement AgeRetirement Age
Alice receives $1,400 Alice receives $1,400 Social Security benefitSocial Security benefit at at Full Retirement AgeFull Retirement Age
Spouse 50% rate = $1,183Spouse 50% rate = $1,183
Alice cannot get spouse benefits because her own Alice cannot get spouse benefits because her own Social Security benefit is greaterSocial Security benefit is greater
Alice’s own benefit offsets spouse benefit!Alice’s own benefit offsets spouse benefit!
GPO Example: Spouse GPO Example: Spouse
Tom’s Social Security benefit at Full Retirement Tom’s Social Security benefit at Full Retirement Age is $2,366/monthAge is $2,366/month
Ann’s spouse benefit from Tom at her Full Ann’s spouse benefit from Tom at her Full Retirement Age Retirement Age = $1,183= $1,183
2/3 of Ann’s $2,100 OPERS = $1,4002/3 of Ann’s $2,100 OPERS = $1,400
Ann’s Social Security spouse benefit = $ 0Ann’s Social Security spouse benefit = $ 0
Ann’s OPERS benefit offsets the spouse benefitAnn’s OPERS benefit offsets the spouse benefitjust as her own Social Security benefit would just as her own Social Security benefit would
offset the spouse benefit. offset the spouse benefit.
GPO Example: Widow(er)GPO Example: Widow(er)
Tom diesTom dies
Ann’s widow benefit Ann’s widow benefit = $2,366 = $2,366
2/3 of Ann’s $2,100 OPERS 2/3 of Ann’s $2,100 OPERS = $1,400 = $1,400
Ann’s Social Security widow benefit = $ 966Ann’s Social Security widow benefit = $ 966
If OPERS pension is $4,685 or more, 2/3 isIf OPERS pension is $4,685 or more, 2/3 is
more than highest possible spouse/widow benefit more than highest possible spouse/widow benefit
OPERS and Social SecurityOPERS and Social Security
If you have 40 credits, you If you have 40 credits, you willwill receive a receive a monthly Social Security benefitmonthly Social Security benefit
Social Security benefit Social Security benefit will likelywill likely be be computed using a modified formula due to computed using a modified formula due to OPERS pensionOPERS pension
WindfallWindfall Elimination Provision (WEP)
Calculating BenefitsCalculating Benefits
LifetimeLifetime Social Security earnings adjusted for Social Security earnings adjusted for wage inflation wage inflation
Add together highest 35 years Add together highest 35 years
Divide total by 420 months (35 years x 12) to Divide total by 420 months (35 years x 12) to calculate monthly average calculate monthly average
Benefit reflects a percentage of lifetime average Benefit reflects a percentage of lifetime average monthly earnings figure monthly earnings figure
The higher your average lifetime Social The higher your average lifetime Social Security earnings, the higher your benefitSecurity earnings, the higher your benefit
Lower-paid workers receive larger Lower-paid workers receive larger benefits in relation to their earnings than benefits in relation to their earnings than higher-paid workershigher-paid workers
Calculating BenefitsCalculating Benefits
Replacement Rates Replacement Rates (Approximate)(Approximate)
Low Income Worker Low Income Worker
$20,800annual avg. $20,800annual avg. ($10/hr)($10/hr)
$989/month benefit at full age$989/month benefit at full age
Middle Income WorkerMiddle Income Worker
$41,600 annual avg. $41,600 annual avg. ($20.00/hr)($20.00/hr)
$1,543/month benefit at full age$1,543/month benefit at full age
Higher Income WorkerHigher Income Worker
$84,032annual avg.$84,032annual avg. ($40.00/hr)($40.00/hr)
$2,241/month benefit at full age$2,241/month benefit at full age
% o
f ea
rnin
gs%
of
earn
ings
57%
44.5%
32%
Why Windfall Provision?Why Windfall Provision?
Years with 0 earnings under Social Security Years with 0 earnings under Social Security reduce average lifetime earnings figurereduce average lifetime earnings figure
The result: Your average FICA earnings are The result: Your average FICA earnings are low and you look like a low-income worker low and you look like a low-income worker even if your PERS earnings are high(er)even if your PERS earnings are high(er)
Windfall reduces the higher replacement % Windfall reduces the higher replacement % intended for low income workersintended for low income workers
Windfall RulesWindfall Rules
Recognizes the more years a worker has Recognizes the more years a worker has paid Social Security taxes on substantial paid Social Security taxes on substantial earnings, the closer that person should be to earnings, the closer that person should be to the standard benefit formula.the standard benefit formula.
30+ years 30+ years = WEP doesn = WEP doesn’’t applyt apply
21-29 years21-29 years = modified WEP = modified WEP
20 or fewer years 20 or fewer years = full WEP = full WEP
WEP & Your Benefit EstimateWEP & Your Benefit Estimate
Your Your Social Security StatementSocial Security Statement estimates don estimates don’’t t figure WEPfigure WEP
If your full benefit estimate in 2011 is If your full benefit estimate in 2011 is
- $750/month or more, subtract $374- $750/month or more, subtract $374- $749/month or less, multiply by .445- $749/month or less, multiply by .445
Online WEP Calculator and chart atOnline WEP Calculator and chart at www.socialsecurity.gov/gpo-wepwww.socialsecurity.gov/gpo-wep
Social Security Benefits & Income Tax
Are Social Security benefits taxable? Are Social Security benefits taxable? MaybeMaybe
If the sum of other income and Social Security If the sum of other income and Social Security benefits exceeds:benefits exceeds:
- $25,000 for an individual- $25,000 for an individual- $32,000 for a married couple- $32,000 for a married couple
Then you may have to pay income tax on part of Then you may have to pay income tax on part of your Social Security benefits.your Social Security benefits.
For more information, call 1-800-829-3676 or visit www.irs.gov IRS Pub. 915
MedicareMedicare
65 and older
Receiving Social Security Disability benefits at least 24 months (exception: Lou Gehrig’s disease)
Permanent kidney failure
Medicare Part AMedicare Part A
Part A (Hospital Insurance)Part A (Hospital Insurance)
Covers most inpatient hospital expenses Covers most inpatient hospital expenses
No premium (with 40 credits)No premium (with 40 credits)
2011 deductible = $1,1322011 deductible = $1,132
Medicare CoverageMedicare Coverage
Part B ( Supplemental Medical Insurance)Part B ( Supplemental Medical Insurance)
Covers 80% doctor bills and outpatient Covers 80% doctor bills and outpatient medical expenses after $162 calendar year medical expenses after $162 calendar year deductibledeductible
2011 Monthly Premium = $115.402011 Monthly Premium = $115.40****
Defined Enrollment Periods (Defined Enrollment Periods (or penalties!)or penalties!)
Filing for MedicareFiling for Medicare
Automatic if you are getting Social Security Automatic if you are getting Social Security benefits at 65benefits at 65
Contact SSA at age 65 if you are not getting Contact SSA at age 65 if you are not getting benefitsbenefits
May apply on own Social Security record May apply on own Social Security record (many OPERS employees pay Medicare tax) (many OPERS employees pay Medicare tax) or the record of a spouse -living, deceased, or the record of a spouse -living, deceased, disabled, or divorceddisabled, or divorced
May file even if deferring cash paymentsMay file even if deferring cash payments
Paying the Part B PremiumPaying the Part B Premium
Deducted from SS benefits - Deducted from SS benefits - alwaysalways
Monthly/Quarterly billing if not entitled to Monthly/Quarterly billing if not entitled to benefits or benefits less than premiumbenefits or benefits less than premium
- Pay by check or credit card- Pay by check or credit card
- Medicare - Medicare EasyEasy PayPay Monthly Direct DebitMonthly Direct Debit
- Request by calling 1 800 Medicare- Request by calling 1 800 Medicare
Medicare ResourcesMedicare Resources
1-800-Medicare 1-800-Medicare
www.medicare.govwww.medicare.gov
Ohio Senior Health Insurance Ohio Senior Health Insurance Information Program (OSHIIP) Information Program (OSHIIP)
1-800-686-1578 1-800-686-1578
www.insurance.ohio.govwww.insurance.ohio.gov
How to FileHow to FileVia the Internet at Via the Internet at www.socialsecurity.govwww.socialsecurity.gov
In the office or over the telephoneIn the office or over the telephone
For an appointment, call 1-800-772-1213For an appointment, call 1-800-772-1213
When to Contact Social SecurityWhen to Contact Social SecurityUp to 3 months before you retire or attain age 62Up to 3 months before you retire or attain age 62
If over age 62, review your work plans before If over age 62, review your work plans before Feb. 1 to determine when benefits could startFeb. 1 to determine when benefits could start
Filing for BenefitsFiling for Benefits
Online Services for BeneficiariesOnline Services for Beneficiaries
Change Address and Telephone* Change Address and Telephone*
Request Replacement Medicare CardRequest Replacement Medicare Card
Request Benefit Verification LetterRequest Benefit Verification Letter
Request new 1099 for taxesRequest new 1099 for taxes
Request Direct Deposit*Request Direct Deposit*
*Request Password*Request Password