Social Security -r How lt Works

By Ben Gimpelson, Field Representotive Social Security Administration, Los Angeles

Why an article on Social Security? We've had the program for twelve years and its provisions are common kno'ivledge-ask anyone about the program. Yes, and you'd probably get a different answer from every person. The Social Security Act was made into federal law in 1935, amended in 1939 and 1946. Its major provisions cover social insurance, public assistance to the needy, and health and welfare services. The social insurance part of the act is divided into unemployment insurance and old-age and survivors insurance. Of the entire act the Federal Government operates only the old-age and survivors insurance program. The remainder of the act is operated by the States, rn'ith the Federal Government cooperating and contributing funds.

Because of the complexity and lack of uniformity among the state-operated parts of the Social Security Act, this article r,r,ill restrict itself to that portion of the act operated by the Federal Government. In common parlance "social security" refers only to old-age and survivors insurance, recognizable by the familiar social security card.

Old-age and survivors insurance is a program providing regular monthly benefits for insured wage earners when they reach 65 years of age or older and are not working, or to their families when the insured u'orker dies at whatever age. An insured wage earner is a person who rvorks in private industry or business on r,vhat are known as "covered" jobs. Practically any job in a shop, mine, mill, factory, bank, ofifrce or any other place of employment is a "covered" job. Hor'vever, self-employed, agricultural, city, county, state and federal rvorkers, and domestic workers are not coverecl by social security insurance. If there is a doubt regarcling eligibility for social security coverage' information can be obtained lty contacting the local Social Security office.

Benefits for this program are paid out of a trust fund kept by the United States Government and contributed to by the employer and the employee through the means of a one per cent tax on the employee's salary up to $3,@0 per year and an equi'ralent tax on the employer's pay roll. The amount above $3,000 per year is tax free and is not taken into account when benefits accruing the employee are computed.

The amount of benefits accruing the employee after he reaches 65 years of age is determined by his average monthly earnings up to $250 per month ($3,000 per year) during his employment career.

After his rvife reaches 65 she may be entitled to further benefits in addition to those her husband receives if she has been employed on a "covered" job. If at any time there is a difference between the amount she would receive on the basis of her own employment record and as a survivor or dependent wife, she is entitled to receive the larger amount. I{owever, in order to receive the full amount of these life benefits or practically all survivors benefits, an employee must be "fully" insured. This means that the employee must have worked at least half the time on a "covered" job since the program lvas inaugurated on January 1, 1937, or half the time since tl-re 'rvorker became 21 years old, rvhichever is the later date'

Stated in terms of the law, the year is divided into calendar quarters of three months each' The employee must have receivecl at least $50 per quarter in "covered" jobs for half the quarters between the date of the inauguration of the act, or his 21st birthday, whichever is later' and the date of eligibility. Once an employee has acquired 40 quarters of coverage he is "fully" insured {or life' However, tl-re benefits accruing him do not cease at this time, but continue to increase during his employment on a "covered" job. Also eligibility for full coverage cannot be reached until the employee has rvorked at least six quarters in a "covered" job.

Monthly benefits go to survivors of fully insured persons, at no matter rvhat age death occurs. Hou'ever, if a rvidow

(Continued on Page 35)