by James McCarthy
From the Editor: Jim McCarthy is a government programs specialist for the National Federation of the Blind. He concentrates on Social Security issues and provides an annual summary of Social Security changes:
Once again we toast the passing of the old year while awaiting the new one. Along with the inevitable best-of lists and retrospectives, this inevitable passing of time is accompanied by 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, and SSDI and SSI cost of living increases, as well as alterations to deductible and coinsurance requirements under Medicare. In 2007 upper income Americans began facing larger Medicare Part B premiums than the majority of us. Below are the updated facts for 2009.
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 2008 the ceiling on taxable earnings for contributions to the OASDI Trust Fund was $102,000. For 2009 the maximum amount of taxable earnings rises to $106,800. All earnings are taxed for the HI Trust Fund.
Social Security Disability Insurance
Quarters of Coverage: Eligibility for Retirement, Survivors, and Disability Insurance (RSDI) benefits is partially based on the number of quarters of coverage earned by any individual during periods of work. Anyone may earn up to four quarters of coverage in a single year. During 2008 a Social Security quarter of coverage was credited for earnings of $1,050 in any calendar quarter. Anyone who earned $4,200 for 2008 (regardless of when the earnings occurred during the year) received four quarters of coverage. In 2009 a Social Security quarter of coverage will be credited for earnings of $1,090 during a calendar quarter. Four quarters will be earned with annual earnings of $4,360.
Trial Work Period Limit: The amount of earnings required to use a trial work month is subject to annual increases. In 2008 the amount was $670, and in 2009 it rises to $700. In cases of self-employment, a trial work month can also be used if a person works more than eighty hours, and this limitation on hours worked will not change unless expressly adjusted.
Exempt Earnings: The monthly earnings exemption referred to as Substantial Gainful Activity for blind people who receive disability insurance benefits was $1,570 of gross earned income during 2008. In 2009 earnings of $1,640 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 the largest cost of living adjustment (COLA) since 1982—5.8 percent beginning with checks received in January 2009. The precise increase will vary based upon the amount each individual now receives.
Supplemental Security Income
Standard SSI Benefit Increase: Beginning January 2009, the federal payment amounts for SSI individuals and couples are as follows: individuals, $674 per month; SSI couples, $1,011 per month. These amounts are increased over the 2008 level of $637 per month for individuals and $956 per month for SSI couples.
Student Earned Income Exclusion: The Student Earned Income Exclusion is adjusted each year. In 2008 the monthly amount was $1,550, and the maximum yearly amount was $6,240. For 2009 these amounts increase to $1,640 per month and $6,600 per year. The SSI program applies strict asset (resource) limits of $2,000 for individuals and $3,000 for SSI couples, which can be changed only by Congress.
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 $1,024 during 2008, with an increase to $1,068 in 2009. From the sixty-first day through the ninetieth day there is a daily coinsurance amount of $267 per day, up from $256 in 2008. Each Medicare beneficiary has sixty lifetime reserve days that 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 2009 is $534, up from $512 in 2008.
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 $133.50 per day, up from $128 per day in 2008.
Most beneficiaries have no monthly premium charge for Medicare Part A coverage. Those who become ineligible for SSDI cash benefits can continue to receive Medicare Part A coverage premium-free for at least 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 2009 will be $443 per month. This is reduced to $244 for individuals who have earned from thirty to thirty-nine quarters of Social-Security-covered employment.
In 2009 the Medicare Part B (medical insurance) deductible is $135, as it was in 2008. This is an annual deductible amount. The Medicare Part B monthly premium rate charged to each beneficiary for the year 2009 remains at $96.40, making this the first year since 2000 that there has not been an increase. For those receiving Social Security benefits, this premium payment is deducted from your monthly benefit checks. 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. Like the Part A premiums mentioned above, Part B is also available for at least ninety-three months following the Trial Work Period assuming an individual wishes to have it and, when not receiving SSDI, continues to make quarterly premium payments.
Americans with higher incomes now pay higher Part B premium amounts, based on their income. For singles the 2009 income threshold for higher premium amounts is income that exceeds $85,000, and for couples filing jointly the 2009 threshold is $170,000. It is estimated that 5 percent of Americans are 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 (CMS). (The contact information is given below.)
Programs That Help with Medicare Deductibles and Premiums: Low-income Medicare beneficiaries may qualify for help with payments. Assistance is available through two programs—the QMB (Qualified Medicare Beneficiary program) and the SLMB (Specified Low-Income Medicare Beneficiary program). For the QMB program an individual’s income cannot exceed 100 percent of the Federal Poverty Guidelines, also called the Federal Poverty Level. Individuals qualify for the SLMB program when income is greater than 100 percent, but less than 120 percent, of the Federal Poverty Guidelines. The newest guidelines will be announced in February or March of 2009; additionally, Alaska and Hawaii have higher amounts than are applicable to forty-eight of the fifty states and the District of Columbia.
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. Eligibility for the SLMB program may be retroactive for up to three calendar months.
Both the QMB and SLMB programs are administered by the Centers for Medicare and Medicaid Services in conjunction with the states. The rules vary from state to state, but the following can be said:
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 generally one car also doesn't count.
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 $96.40 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 that only your state can decide if you are eligible for help from the QMB or SLMB program and also that the income and resource levels listed here are general guidelines with some states choosing greater amounts. Therefore, 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 the Centers for Medicare and Medicaid Services (CMS) on its toll-free telephone number (800) 633-4227, or go online to <http://www.cms.hhs.gov/ContactCMS>.