Please enable JavaScript.
Coggle requires JavaScript to display documents.
Chapter 13 Social Insurance SI Program (OASDI Program "Social…
Chapter 13 Social Insurance SI Program
OASDI
Including medicare
WC
UI=unemployment insurance
Characteristics of SI program,
benefits are prescribed by law. Federal ,state
benefit amounts
eligibility standard
beneficiaries have
little control
over benefits paid to them
usually some
compulsory purchase
of ins. or participation in a program**
compulsory (hard mandate)
ER,EE,or both
OASDI
EE,ER share the cost
UI+WC
ER pays the full amount
often gov. is engaged in
risk bearings
(federal, state)
acting as an insurer
OASDI, UI
WC
gov. ins. +private ins.
Benefits are paid as a "matter of right"
no "means testings"
tied to participation in the labor mkt
OASDI Program "Social Security"
1935
poverty rate amount elderly=50%
3 benefits
OA
old age
(retirement)
S
survivor
(life ins.)
DI
disability ins.
Participation
compulsory for both ER/EE
covered occupations
99%
hard mandate
Financing
Payroll taxes on earned income
net income taxes
paid by EEs+ matched by ER
federal law
FICA taxes
Federal income contribution act
7.65$ on first $128,400 in 2018
if >128400
1.45% medicare part A
6.2% OASDI
Social security max taxable wage base(128,400)
beyond 128,400
1.45 up to $200K/250K
after 200k/250k
1 more item...
benefit payment is based on taxes paid over whole? life(W+L cap)
Retirement ages
full retirement age
moving to 67
Early retirement age
62
reduced benefits
Late retirement
:arrow_up: benefits
Actuarial Status
Pay-as-you-go financing
FICA taxes
deposited into one of three
trust funds
OA;DI;HI;
SMI
all benefits are paid from three trust funds
Baby Boomers 1946-1967
current 2.8 workers for every retiree
2020:2.6; 2040: 2.2
Actuarial Status 3terms
cost rate
ratio of the cost of program to OASDI taxable payroll
income rate
ratio of non-interest income to OASDI taxable payroll
Trust Fund Ratios
assets at BOY(begining of the year)
cost projected for that yr
Possible Solutions
Insurance Income
:arrow_up:payroll taxes
6.2%-7.6%
:arrow_up: wage base or remove cap
:arrow_down:expenses
adjust benefit calculation to require more working years to be fully insured
means testing
:arrow_down:benefits for higher income individuals
change the COLA(cost of living adjustment)
inflation?!
Longevity Indexing
full retirement age
depends on life expectacy
monthly benefits
early retirement age