Braille Monitor December 2004
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Social Security, SSI, and Medicare Facts for 2005
by James McCarthy
the Editor: Jim McCarthy is director of governmental affairs for the National
Federation of the Blind. Here is his annual Social Security summary: One
more year is nearly behind us, with another poised to take its place. This inevitable
passage of time brings annual adjustments to the Social Security Disability
Insurance (SSDI), Supplemental Security Income (SSI), and Medicare programs.
The changes include new tax rates, higher exempt earnings amounts, SSDI and
SSI cost-of-living increases, and alterations to deductible and coinsurance
requirements under Medicare. What follows are the new facts for 2005:
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 2004 the ceiling on taxable earnings for contributions to the OASDI Trust Fund was $87,900. This ceiling rises to $90,000 for 2005. All earnings are taxed for the HI Trust Fund.
Social Security Disability Insurance
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 2004 a Social Security quarter of coverage was credited for earnings of $900 in any calendar quarter. Anyone who earned $3,600 for the year (regardless of when the earnings occurred during the year) was given four quarters of coverage. In 2005 a Social Security quarter of coverage will be credited for earnings of $920 during a calendar quarter. Four quarters can be earned with annual earnings of $3,680.
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 2004 the amount was $580, and in 2005 it rises to $590. 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 $1,350 of gross earned income during 2004. In 2005 earnings of $1,380 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 2.7 percent beginning with the checks received in January 2005. The exact dollar increase for any individual will depend upon the amount being paid.
Supplemental Security Income
Standard SSI Benefit Increase: Beginning January 2005, the federal payment amounts for SSI individuals and couples are as follows: individuals, $579 per month; couples, $869 per month. These amounts are increased from the 2004 level of $564 per month for individuals and $846 per month for couples.
Student Earned Income Exclusion: the Student Earned Income Exclusion is adjusted each year. In 2004 the monthly amount was $1,370, and the maximum yearly amount was $5,520. For 2005 these amounts increase to $1,410 per month and $5,670 per year. The SSI program applies strict asset (resource) limits of $2,000 for individuals and $3,000 for couples that cannot be adjusted except through legislation.
Medicare Deductibles and Coinsurance: Medicare Part A coverage provides hospital insurance to most Social Security beneficiaries. The coinsurance 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 coinsurance amount.
The Part A coinsurance amount charged for hospital services within a benefit period of not longer than sixty days was $876 during 2004 and is increased to $912 during 2005. From the sixty-first day through the ninetieth day there is a daily coinsurance amount of $228 per day, up from $219 in 2004. 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 coinsurance amount to be paid during each reserve day used in 2005 is $456, up from $438 in 2004.
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 coinsurance amount for services received in a skilled nursing facility is $114 per day, up from $109.50 per day in 2004.
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 2005 is $375 per month. This is reduced to $206 for individuals who have earned at least thirty quarters of coverage under Social Security-covered employment.
In 2005 the Medicare Part B (medical insurance) deductible will rise for the first time in many years. The 2005 deductible will be $110, up from $100 in 2004. This is an annual deductible amount. The Medicare Part B monthly premium rate charged to each beneficiary for the year 2005 has increased significantly to $78.20. (The 2004 premium rate was $66.60.) This premium payment is deducted from Social Security benefit checks, so while 2005 Social Security benefits will increase, much of the increase may be eroded by the rise in Medicare Part B premiums. However, the Medicare premiums are not permitted to decrease a person's monthly Social Security Benefit amount. Individuals who remain eligible for Medicare, but because of working are not receiving Social Security benefits 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 ($78.20 in 2005). 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 February, 2004. New guidelines will be issued in February or March of 2005. 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 $796 per month for an individual and $1,061 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 $990 per month for an individual and $1,321 per month for couples. In Hawaii income must be less than $912 per month for an individual and less than $1,217 per month for couples.
For the SLMB program the income of an individual cannot exceed $951 per month or $1,269 for a couple in forty-eight of the fifty states and the District of Columbia. In Alaska the income amount is $1,183 for an individual and $1,581 for couples. An individual in Hawaii qualifies if his or her income is less than $1,090 per month; for couples the amount is $1,456.
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 $912 per benefit period in 2005;
The daily coinsurance charges for extended hospital and skilled nursing facility stays;
The Medicare Medical Insurance (Part B) premium, which is $78.20 per month in 2005;
The $110 annual Part B deductible;
The 20 percent coinsurance 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 be responsible for the payment of all of the items listed above except for the $78.20 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 at 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 programs. So, if you are elderly or disabled, have low income and very limited assets, and are a Medicare beneficiary, contact your state or local Medicaid office (referred to in some states as the Public Aid Office or the Public Assistance Office) to apply. For more information about either program, call CMS's toll‑free telephone number, (800) 633-4227.
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