Braille Monitor December 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 is over and another beginning. This preordained 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. Beginning January 2007, upper income Americans will face greater Medicare Part B premiums than the majority of us. Below are the updated facts for 2007.
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 2006 the ceiling on taxable earnings for contributions to the OASDI Trust Fund was $94,200. The maximum amount of taxable earnings rises to $97,500 for 2007. 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 2006 a Social Security quarter of coverage was credited for earnings of $970 in any calendar quarter. Anyone who earned $3,880 for 2006 (regardless of when the earnings occurred during the year) was given four quarters of coverage. In 2007 a Social Security quarter of coverage will be credited for earnings of $1,000 during a calendar quarter. Four quarters can be earned with annual earnings of $4,000.
Trial Work Period limit: The amount of earnings required to use a trial work month is subject to annual increases. In 2006 the amount was $620, and in 2007 it rises to $640. 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 $1,450 of gross earned income during 2006. In 2007 earnings of $1,500 or more per month, before taxes, for a blind SSDI beneficiary will indicate substantial gainful activity once any unearned (or subsidy) income is subtracted and all deductions for impairment-related work expenses are applied.
Social Security Benefit Amounts: All Social Security benefits are increased by a cost of living adjustment (COLA) of 3.3 percent beginning with checks received in January 2007. The precise increase will vary based upon the amount each individual now receives.
Supplemental Security Income
Standard SSI Benefit Increase: Beginning January 2007, the federal payment amounts for SSI individuals and couples are as follows: individuals, $623 per month; couples, $934 per month. These amounts are increased over the 2006 level of $603 per month for individuals and $904 per month for couples.
Student Earned Income Exclusion: the Student Earned Income Exclusion is adjusted each year. In 2006 the monthly amount was $1,460, and the maximum yearly amount was $5,910. For 2007 these amounts increase to $1,510 per month, and $6,100 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 $952 during 2006 and is increased to $992 during 2007. From the sixty-first day through the ninetieth day the daily coinsurance amount of $248 per day is up from $238 in 2006. 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 2007 is $496, up from $476 in 2006.
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 will be $124 per day, up from $119 per day in 2006.
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 2007 is $410 per month. This is reduced to $226 for individuals who have earned between thirty and thirty-nine quarters of coverage under Social-Security-covered employment.
In 2007 the Medicare Part B (medical insurance) deductible rises to $131. The 2006 deductible amount was $124, and for 2005 it was $110. This is an annual deductible amount. The Medicare Part B monthly premium rate charged to each beneficiary for the year 2007 will increase by $5 to $93.50 from the $88.50 amount for 2006. This premium payment is deducted from Social Security benefit checks, so, while 2007 Social Security benefits will rise, a portion of the increase will go toward the higher Medicare Part B premiums, though the increase is less than for recent years. I should note that the law does not permit Medicare premiums 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 must pay the Part B premium directly on a quarterly basis--one payment every three months.
For the first time Americans with higher incomes will pay higher Part B premium amounts based on their income in 2007. For individuals, the income threshold for higher premium amounts is income that exceeds $80,000, and for couples filing jointly, the threshold is $160,000, and it is estimated that 4 percent of Americans will be affected by these higher premium amounts mandated by the Medicare Modernization Act. If you believe you may be affected, you should contact the Centers for Medicare and Medicaid Services.
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 ($93.50 in 2007). 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 early in 2006. New guidelines will be issued in February or March of 2007. 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 $837 per month for an individual and $1,120 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 $1,041 per month for an individual and $1,395 per month for a couple. In Hawaii income must be less than $960 per month for an individual and $1,285 per month for a couple.
For the SLMB program income cannot exceed $1,000 per month for an individual or $1,340 for a couple in forty-eight of the fifty states and the District of Columbia. In Alaska the income amount is $1,245 for an individual and $1,670 for couples. An individual in Hawaii qualifies if income is less than $1,147 per month; for couples the amount is $1,538.
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:
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 $93.50 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.