The Braille Monitor December 2005
Social Security, SSI, and Medicare Facts for 2006
by James McCarthy
From 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 recedes into the past 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. In addition there is the prescription drug benefit under Medicare that this article will not address. What follows are the new facts for 2006.
FICA and Self-Employment Tax Rates: The FICA tax rate for employees and their employers remains at 7.65%. This rate includes payments to the Old Age, Survivors, and Disability Insurance (OASDI) Trust Fund of 6.2% and an additional 1.45% 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%, which includes 12.4% paid to the OASDI Trust Fund and 2.9% paid to the HI Trust Fund.
Ceiling on Earnings Subject
to Tax: During 2005 the ceiling on taxable earnings for contributions to the
OASDI Trust Fund was $90,000. This ceiling rises to $94,200 for 2006. 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 2005 a Social Security quarter of coverage was credited for earnings of $920 in any calendar quarter. Anyone who earned $3,680 for 2005 (regardless of when the earnings occurred during the year) was given four quarters of coverage. In 2006 a Social Security quarter of coverage will be credited for earnings of $970 during a calendar quarter. Four quarters can be earned with annual earnings of $3,880.
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 2005, the amount was $590, and in 2006, it rises to $620. 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 unless expressly adjusted.
Exempt Earnings: The monthly earnings exemption for blind people who receive disability insurance benefits was $1,380 of gross earned income during 2005. In 2006 earnings of $1,450 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.
Benefit Amounts: All Social Security benefits are increased by a cost-of-living
adjustment (COLA) of 4.1% beginning with checks received in January 2006. The
exact dollar increase for any individual will depend upon the amount being paid.
Supplemental Security Income Standard SSI Benefit Increase: Beginning January 2006, the federal payment amounts for SSI individuals and couples are as follows: individuals, $603 per month; couples, $904 per month. These amounts are increased from the 2005 level of $579 per month for individuals and $869 per month for couples.
Income Exclusion: The
Student Earned Income Exclusion is adjusted each year. In 2005, the monthly
amount was $1,410, and the maximum yearly amount was $5,670. For 2006, these
amounts increase to $1,460 per month, and $5,910 per year. The SSI program applies
strict asset (resource) limits of $2,000 for individuals and $3,000 for couples
that can only be adjusted 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 $912 during 2005 and is increased to $952 during 2006. From the sixty-first day through the ninetieth day there is a daily coinsurance amount of $238 per day, up from $228 in 2005. 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 2006 is $476, up from $465 in 2005.
Part A of Medicare pays all covered charges for services in a skilled nursing facility for the first twenty days within a benefit period that follows a three-day in hospital stay. 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 $119 per day, up from $114 per day in 2005.
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 2006 is $393 per month. This is reduced to $216 for individuals who have earned between thirty to thirty-nine quarters of coverage under Social Security-covered employment.
In 2006 the Medicare Part B (medical insurance) deductible rises again. The 2006 deductible will be $124, up from $110 in 2005 and $100 in 2004. This is an annual deductible amount. The Medicare Part B monthly premium rate charged to each beneficiary for the year 2006 has increased by $10.30 to $88.50. (The 2005 premium rate was $78.20.) This premium payment is deducted from Social Security benefit checks, so while 2006 Social Security benefits will increase, some 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 are not receiving Social Security benefits because of working, will 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 ($88.50 in 2006). 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 2006.
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 $818 per month for an individual and $1,090 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 $1,016 per month for an individual and $1,356 per month for couples. In Hawaii income must be less than $938 per month for an individual and $1,250 per month for couples.
For the SLMB program the income of an individual cannot exceed $977 per month or $1,303 for a couple in forty-eight of the fifty states and the District of Columbia. In Alaska the income amount is $1,215 for an individual and $1,623 for couples. An individual in Hawaii qualifies if his or her income is less than $1,121 per month; for couples the amount is $1,496.
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 $952 per benefit period in 2006;
• The daily coinsurance charges for extended hospital and skilled nursing facility stays;
• The Medicare Medical Insurance (Part B) premium, which is $88.50 per month in 2006;
The $124 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 $88.50 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 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.