James Gashel[

James Gashel, NFB Director of Governmental Affairs

Social Security, SSI, and Medicare Facts for 1998

by James Gashel

The beginning of each year brings with it 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 1998:

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 1997, the ceiling on taxable earnings for contributions to the OASDI trust fund was $65,400. The taxable income ceiling for contributions to the OASDI trust fund during 1998 will be $68,400. All earnings are subject to the HI trust fund tax contribution of 1.45 percent for employees or 2.9 percent for self-employed persons. 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 1997 a Social Security quarter of coverage was credited for earnings of $670 in any calendar quarter. Anyone who earned $2,680 for the year (regardless of when the earnings occurred during the year) was given four quarters of coverage. In 1998 a Social Security quarter of coverage will be credited for earnings of $700 during a calendar quarter. Four quarters can be earned with annual earnings of $2,800.

Exempt Earnings: The monthly earnings exemption for blind people who receive disability insurance benefits was $1000 of gross earned income during 1997. During 1998 the monthly exempt amount is $1,050. Technically this exemption is referred to as an amount of monthly gross earnings which does not show "substantial gainful activity." Earnings of $1,050 or more per month before taxes for a blind SSDI beneficiary in 1998 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 for 1998: All Social Security benefits, including retirement, survivors, disability, and dependents' benefits are increased by 2.1 percent beginning with the checks received in January, 1998. The exact dollar increase for any individual will depend upon the amount being paid.

Standard SSI Benefit Increase: Beginning January, 1998, the federal payment amounts for SSI individuals and couples are as follows: individuals, $494 per month; couples, $741 per month. These amounts are increased from individuals, $484 per month; couples, $726 per month.

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 $760 during 1997 and is increased to $764 during 1998. Beginning with the sixty-first day and through the ninetieth day, there is a daily co-insurance amount of $191 per day, up from $190 in 1997.

Each Medicare beneficiary has sixty "reserve days" for hospital services provided within a benefit period longer than ninety days. The co-insurance amount to be paid during each reserve day is $382, up from $380 in 1997.

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 within a benefit period, the Part A co-insurance amount for services received in a skilled nursing facility is $95.50 per day, up from $95.00 per day in 1997.

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 thirty-nine months following the end of a trial work period. After that time the individual may purchase Part A coverage. The premium rate for this coverage during 1998 is $309 per month. During 1998 this premium rate is $170 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 1998. This is an annual deductible amount. The Medicare Part B basic monthly premium rate will not increase from the $43.80 charged to each beneficiary and withheld from Social Security checks during 1997. Medicare Part B coverage may be continued for persons who complete a trial work period and become ineligible to receive Social Security Disability Insurance cash benefits. This monthly premium rate is $43.80, the same amount paid by Social Security beneficiaries through withholding from their monthly Social Security checks.

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 co-insurance 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 ($43.80 in 1998). Eligibility for the SLMB program may be retroactive for up to three calendar months.

Both programs are administered by the Health Care Financing Administration (HCFA) in conjunction with the states. In order to qualify in any state, the income of an individual or couple must be less than the threshold amount which is announced for each year. The threshold amount is revised annually to reflect changes in national poverty level guidelines. The rules vary from state to state; but in general: A person may qualify for the QMB program if his or her income is approximately $678 per month for an individual and $905 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 approximately $843 per month for an individual and $1,126 per month for couples. In Hawaii income must be less than approximately $776 per month for an individual and $1,037 per month for couples.

For the SLMB program, the income of an individual cannot exceed $809 per month or $1,081 for a couple in forty-eight of the fifty states and the District of Columbia. In Alaska the income amount is $1,007 for an individual and $1,347 for couples.

An individual in Hawaii can qualify if his or her income is approximately $927 per month; for couples the amount is $1,240.

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, which is $100 per benefit period in 1998; the daily co-insurance charges for extended hospital and skilled nursing facility stays; the Medicare Medical Insurance (Part B) premium, which is $43.80 per month in 1998; the $100 annual Part B deductible; or 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 $43.80 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're eligible for help from the QMB or SLMB program. So, if you're 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 HCFA's toll-free telephone number, (800) 638-6833.