by James McCarthy
From the Editor: Jim McCarthy is Assistant Director of Governmental Affairs for the National Federation of the Blind. Here is his annual Social Security summary:
With another new year come annual adjustments in Social Security programs. The changes include new tax rates, higher exempt earnings amounts, Social Security and SSI cost‑of‑living increases, and changes in deductible and co‑insurance requirements under Medicare. Here are the new facts for 2002:
FICA and Self-Employment Tax Rates: The FICA tax rate for employees and their employers remains at 7.65 percent. This rate includes payments to the Old Age, Survivors, and Disability Insurance (OASDI) Trust Fund of 6.2 percent and an additional 1.45 percent payment to the Hospital Insurance (HI) Trust Fund from which payments under Medicare are made. Self‑employed persons continue to pay a Social Security tax of 15.3 percent, which includes 12.4 percent paid to the OASDI trust fund and 2.9 percent paid to the HI trust fund.
Ceiling on Earnings Subject to Tax: During 2001 the ceiling on taxable earnings for contributions to the OASDI trust fund was $80,400. This ceiling is raised to $84,900 for 2002. All earnings are taxed for the HI trust fund.
Quarters of Coverage: Eligibility for retirement, survivors, and disability insurance benefits is based in large part on the number of quarters of coverage earned by any individual during periods of work. Anyone may earn up to four quarters of coverage during a single year. During 2001 a Social Security quarter of coverage was credited for earnings of $830 in any calendar quarter. Anyone who earned $3,120 for the year (regardless of when the earnings occurred during the year) was given four quarters of coverage. In 2002 a Social Security quarter of coverage will be credited for earnings of $870 during a calendar quarter. Four quarters can be earned with annual earnings of $3,480.
Trial Work Period limit: Beginning in 2001, the SSA established a rule that changes the amount of earnings required to use a trial work month. This change is announced with the cost of living adjustments each year. In 2001 the amount was $530, and in 2002 it rises to $560. In cases of self-employment, a trial work month can also be used if a person works more than eighty hours, and this limit remains the same each year.
Exempt Earnings: The monthly earnings exemption for blind people who receive disability insurance benefits was $1,240 of gross earned income during 2001. In 2002 earnings of $1,300 or more per month, before taxes, for a blind SSDI beneficiary will show substantial gainful activity after subtracting any unearned (or subsidy) income and applying any deductions for impairment‑related work expenses.
Social Security Benefit Amounts: All Social Security benefits are increased by 2.6 percent beginning with the checks received in January, 2002. The exact dollar increase for any individual will depend upon the amount being paid.
Standard SSI Benefit Increase: Beginning January, 2002, the federal payment amounts for SSI individuals and couples are as follows: individuals, $545 per month; couples, $817 per month. These amounts are increased from individuals, $530 per month; couples, $796 per month.
Student Earned Income Exclusion: Like the Trial Work Period amount discussed above, the Student Earned Income Exclusion changes each year. Last year the monthly amount was $1,290, and the maximum yearly amount was $5,200. In 2002 these amounts rise to $1,320 per month and $5,340 per year.
Medicare Deductibles and Co‑insurance: Medicare Part A coverage provides hospital insurance to most Social Security beneficiaries. The co‑insurance payment is the charge that the hospital makes to a Medicare beneficiary for any hospital stay. Medicare then pays the hospital charges above the beneficiary's co‑insurance amount.
The Part A co‑insurance amount charged for hospital services within a benefit period of not longer than sixty days was $792 during 2001 and is increased to $812 during 2002. From the sixty-first day through the ninetieth day there is a daily co-insurance amount of $203 per day, up from $198 in 2001. Each Medicare beneficiary has sixty lifetime reserve days which may be used after a ninety-day benefit period has ended. Once used, after any benefit period these reserve days are no longer available. The co‑insurance amount to be paid during each reserve day used in 2002 is $406, up from $396 in 2001.
Part A of Medicare pays all covered charges for services in a skilled nursing facility for the first twenty days within a benefit period. From the twenty-first day through the one-hundredth day in a benefit period the Part A co-insurance amount for services received in a skilled nursing facility is $101.50 per day, up from $99 per day in 2001.
For most beneficiaries there is no monthly premium charge for Medicare Part A coverage. Those who become ineligible for Social Security Disability Insurance cash benefits can continue to receive Medicare Part A coverage premium-free for ninety-three months after the end of a trial work period. After that time the individual may purchase Part A coverage. The premium rate for this coverage during 2002 is $319 per month. This is reduced to $175 for individuals who have earned at least thirty quarters of coverage under Social Security covered employment.
The Medicare Part B (medical insurance) deductible remains at $100 in 2002. This is an annual deductible amount. The Medicare Part B basic monthly premium rate charged to each beneficiary for the year 2002 is $54. (The 2001 premium rate was $50.) This premium payment is deducted from Social Security benefit checks. Individuals who remain eligible for Medicare but are not receiving Social Security benefits because of working pay this premium directly.
Programs Which Help with Medicare Deductibles and Premiums: Low-income Medicare beneficiaries may qualify for help with payments. Assistance is available through two programs—QMB (Qualified Medicare Beneficiary program) and SLMB (Specified Low-Income Medicare Beneficiary program).
Under the QMB program states are required to pay the Medicare Part A (Hospital Insurance) and Part B (Medical Insurance) premiums, deductibles, and coinsurance expenses for Medicare beneficiaries who meet the program's income and resource requirements. Under the SLMB program states pay only the full Medicare Part B monthly premium ($54 in 2002). Eligibility for the SLMB program may be retroactive for up to three calendar months.
Both programs are administered by the Centers for Medicare and Medicaid Services (CMS) in conjunction with the states. In order to qualify, the income of an individual or couple must be less than the poverty guidelines currently in effect. The guidelines are revised annually and were last announced in the spring of 2001. New guidelines will be issued in the spring of 2002. The rules vary from state to state; but in general the following can be said:
A person may qualify for the QMB program if his or her income is less than $736 per month for an individual and $988 per month for a couple. These amounts apply for residents of forty-eight of the fifty states and the District of Columbia. In Alaska the income threshold used to define poverty is less than $915 per month for an individual and $1,230 per month for couples. In Hawaii income must be less than $845 per month for an individual and $1,134 per month for couples.
For the SLMB program the income of an individual cannot exceed $879 per month or $1,181 for a couple in forty-eight of the fifty states and the District of Columbia. In Alaska the income amount is $1,093 for an individual and $1,471 for couples. An individual in Hawaii can qualify if his or her income is less than $1,009 per month; for couples the amount is $1,356.
Resources—such as bank accounts or stocks—may not exceed $4,000 for one person or $6,000 for a family of two. (Resources generally are things you own. However, not everything is counted. The house you live in, for example, doesn't count, and in some circumstances your car may not count either.)
If you qualify for assistance under the QMB program, you will not have to pay:
* Medicare's hospital deductible amount, which is $812 per benefit period in 2002;
*The daily co-insurance charges for extended hospital and skilled nursing facility stays;
*The Medicare Medical Insurance (Part B) premium, which is $54 per month in 2002;
*The $100 annual Part B deductible;
*The 20 percent co-insurance for services covered by Medicare Part B, depending on which doctor you go to.
If you qualify for assistance under the SLMB program, you will not have to pay the $54 monthly Part B premium.
If you think you qualify but you have not filed for Medicare Part A, contact Social Security to find out if you need to file an application. Further information about filing for Medicare is available from your local Social Security office or Social Security's toll‑free number, (800) 772‑1213.
Remember, only your state can decide if you are eligible for help from the QMB or SLMB program. So, if you are elderly or disabled, have low income and very limited assets, and are a Medicare beneficiary, contact your state or local welfare or social service agency to apply. For more information about either program, call CMS's toll‑free telephone number, (800) 633-4227.