SOCIAL SECURITY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP89-00066R000900110002-2
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 28
• Document Creation Date: December 22, 2016
• Document Release Date: January 11, 2011
• Sequence Number: 2
• Publication Date: December 31, 1984
• Content Type: MISC

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MEMORANDUM FOR:
Joe,
-,01 -- / ' 107
and I briefed D/Pers and DD/Pers on
the Social Security issue and the taxing of these
benefits. D/Pers is onboard and likes the solution
better than the previous one. Presume OGC will send
us a copy of what goes forward.
Date t
IOUS
5-75 IOl EDITIONS
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SOCIAL SECURITY
INCORPORATING CHANGES TO DECEMBER 31, 1984
Summary of Old-Age, Survivors and Disability Insurance Benefits
- Explanation of How to Compute Benefits
- Maximum Old-Age, Death and Disability Benefits
- Examples of Future Replacement Ratios
Summary of Medicare Benefits Providing Health Insurance
for the Aged and the Disabled
HAY/HUGGINS
MEMBER OF THE HAY GROUP
229 South 18th Street
Philadelphia, PA 19103
EMPLOYEE BENEFITS* ACTUARIAL SERVICES
EMPLOYEE COMMUNICATIONS
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SOCIAL SECURITY
INCORPORATING CHANGES TO DECEMBER 31, 1984
Table of Contents
Old-Age, Survivors, and Disability Insurance
Summary of Benefits and Eligibility Requirements .......................... 2
Adjustments to Benefits ................................................ 3
Federal Taxability of Benefits ........................................... 4
Special Provisions for Self-Employed ..................................... 4
Covered Workers ..................................................... 5
Covered Wages and Self-Employment Income .............................. 5
Requirements for Insured Status .......................................... 6
Quarters of Coverage Needed for Fully Insured Status ....................... 7
Computation of Primary Insurance Amount (PIA) and
Family Maximum Benefit (FMB) .................................... 8
Worksheet for Computing Primary Insurance Amount ........................ 10
Definitions .......................................................... 12
Covered Compensation ................................................ 13
Primary Insurance Amounts and Family Maximum Benefits
for Each Average Monthly Wage (for PIA Method and
Transitional Guarantee Method) ................................... 14
Representative Projected Retirement Benefits .............................. 16
Representative Projected Death Benefits .................................. 17
Representative Projected Disability Benefits ............................... 17
Examples of Replacement Ratios ........................................ 18
Medicare
Scope of Coverage, and Excluded Services ................................ 19
Part A -Basic Plan of Hospital Insurance ................................ 19
Part B - Voluntary Supplementary Medical Insurance Plan ................... 20
Financing
Financing of Social Insurance Programs .................................. 22
Taxes
History of Taxes and Scheduled Taxes in Future Years ....................... 24
? Copyright 1984 by
Hay/Huggins Company, Inc., 229 South 18th Street, Philadelphia, PA 19103
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SUMMARY OF BENEFITS AND ELIGIBILITY REQUIREMENTS
FOR OLD-AGE SURVIVORS, AND DISABILITY INSURANCE
Worker's Full Retirement Age
Recipient's Age Insured (See Adjustments
Type of Benefit Requirement Status for Age)
For Insured
Workers
Fully and 100%
Disability
For Dependents of Spouse; and/or eligible divorced Age 62 or older
Retired or spouse, not married when
Disabled Workers applying for benefit
Spouse caring for unmarried None
child, under age 16, or disabled
before age 22 while unmarried
Each eligible child Unmarried and either Fully 50%
under age 18 or full-time
high school student
under age 19, or
disabled before age 22
while unmarried
For Survivors of Widow and widower; and/or
Insured Active or eligible surviving divorced
Retired Workers spouse, not married when
applying for benefit
Full Retirement
Age
eligible surviving divorced
spouse caring for unmarried
child, under age 16, or disabled
before age 22 while unmarried
Age 60 or older, or Fully
disabled and at least
age 50
Each eligible child Unmarried and either Fully or 75%
under age 18 or full-time Currently
high school student
under age 19, or
disabled before age 22
while unmarried
Lump-sum to spouse None
(or if none, shared by
eligible children)
821/2%
(150% maximum
for two)
Fully or $255
Currently (dollar amount)
Year of Birth
Age for Unreduced
Benefits
Age for Unreduced
Benefits
1937 and earlier
65 years
1955
66 years,
2 months
1938
65 years,
2 months
1956
66 years,
4 months
1939
65 years,
4 months
1957
66 years,
6 months
1940
65 years,
6 months
1958
66 years,
8 months
1941
65 years,
8 months
1959
66 years,
10 months
1942
65 years,
10 months
1960 and later
67 years
1943-1954
66 years
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ADJUSTMENTS TO BENEFITS
ADJUSTMENTS FOR AGE
(a) Reduction if Benefit Is Claimed Earlier Than Full Retirement Age
Type of Benefit Reduction Per Maximum Reduction
Month Early
Worker's Old Age 5/9% for each of first 36
months; 5/12% per month in
excess of 36
Spouse/Divorced Spouse of 25/36% for each of first 36
Retired or Disabled Worker months; 5/12% per month in
excess of 36
Surviving Spouse/Divorced Uniform reduction of 19/40%t
Spouse of Insured Active or per month up to 60 months
Retired Worker
tPercent will be reduced as full retirement age rises, to maintain maximum reduction at 28.5%.
(b) Increase if Benefit Is Claimed Later Than Full Retirement Age (Up to Age 70)
Through
Ultimate
1999
(2022 and on)
20%
30%
25%
35%
28.5%
28.5%
Worker's Year
Increase per
Worker's Year
Increase per
Of Birth
Month Later
Of Birth
Month Later
1916 and earlier
1/12%
1933-1934
11/24%
1917-1924
1/4%
1935-1936
1/2%
1925-1926
7/24%
1937-1938
13/24%
1927-1928
1/3%
1939-1940
7/12%
1929-1930
9/24%
1941-1942
15/24%
1931-1932
5/12%
1943 and later
2/3%
(a) Family Maximum Benefit
If total monthly benefits to workers and dependents or to survivors, calculated on the basis of the earnings record
of one insured worker, are greater than the Family Maximum Benefit (FMB), such total is reduced to FMB. The
insured worker's benefit is paid in full; all other monthly benefits are reduced proportionally. Benefits paid to a
divorced spouse do not count toward FMB. (Computation of FMB is shown with PIA computation on page 8.)
(b) Earnings Test
A beneficiary age 70 or older can earn any amount in covered or non-covered employment without loss of
benefits. A beneficiary between the ages of 65 and 70 can earn up to $7,320 in 1985 in any employment, covered
or noncovered, without loss of benefits. A beneficiary under age 65 can earn $5,400 in 1985 without loss of
benefits. The annual exempt amount will be automatically adjusted in proportion to any increase in the average
total wages of all workers (see page 10)-from the third to the second preceding year-rounded to the nearest
$120. For each $2 of covered or noncovered earnings in excess of the allowable amount in a year, $1 of benefit
is withheld. Exception: during the initial year of entitlement (the year in which the worker first received a
monthly benefit which was not reduced because of the earnings test), no benefits will be withheld for any month
in which the worker does not receive wages in excess of /, of the annual exempt amount or render substantial
services in self-employment. As to workers at or above the full retirement age, beginning in 1990, the reduction
is liberalized to a $1-for-$3 basis.
(c) Adjustment in Widow, Widower or Surviving Divorced Spouse Benefit
In the case of a deceased retired worker who received benefits before age 65, the widow, widower or surviving
divorced spouse benefit cannot exceed the larger of the deceased retired worker's benefit or 821/2% of his PIA.
(d) Disability Benefit Limitation
Social Security disability benefit (including benefits for dependents) combined with workers compensation and
certain governmental disability benefits cannot exceed 80% of the highest of AMW (see page 12), high-5-year
average earnings, or highest year's earnings in the last 6 years of covered employment.
(e) Remarriage
Dependent and survivor benefits terminate on remarriage with the following exceptions. Widows, widowers or
surviving divorced spouses age 60 or over, or at least 50 and disabled, may remarry without affecting their
benefits. Termination is also waived if the person whom the beneficiary is marrying is a recipient of divorced
spouse's, widow's or widower's, parent's, or disabled child's benefits. A beneficiary with an eligible child may
remarry a retired or disabled worker without loss of benefits.
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AUTOMATIC BENEFIT ESCALATOR
All benefits are increased each December by the amount of increase in the Consumer Price Index, subject to the
limitations described on page 12.
OFFSETS FOR BENEFITS RECEIVED FROM NONCOVERED EMPLOYMENT
(a) Retired Workers
The following reduction in the PIA formula will apply to persons who receive Social Security based on less than
30 years of coverage and who also receive pensions from noncovered employment.
Years of Covered Employment or Year of Initial
Eligibility for Old-Age or Disability Benefits
(Whichever is More Favorable)
Year of Initial Eligibility for
PIA Formula
Years of Covered
Old-Age or Disability
For Lowest Band
Employment
Benefits
of AIME
30
1985
90%
29
?1986
80%
28
1987
70%
27
1988
60%
26
1989
50%
25 or less
1990 or later
40%
In no case will the resulting PIA be any less than the regular PIA minus 50% of the pension from noncovered
employment after 1956.
Exceptions for Certain Nonprofit Employees and Top Federal Officeholders: This special computation procedure
does not apply to employees who were brought under coverage on January 1, 1984, provided that the employer
did not participate in Social Security at any time in the past (see "Covered Workers," next page).
(b) Dependents and Survivors
Benefits of spouses and surviving spouses (with or without eligible children) are reduced by 2/3 of the amount
of any public (federal, state, or local government) retirement benefit payable to the spouse based on the spouse's
own work in noncovered public employment. This provision applies to all spouse-beneficiaries who become
eligible for a public pension after June 1983, without regard to financial dependency on the primary Social
Security beneficiary. Previously, the Social Security benefit was offset by the full amount of public pension, but
no offset applied under the following circumstances: (I) the spouse was entitled to OASDI benefits before
December 1977; (2) a wife/divorced wife (or financially dependent husband/divorced husband) was first eligible
for a public pension prior to December 1982; or (3) a financially dependent spouse of either sex was first eligible
for a public pension from December 1982 through June 1983.
FEDERAL TAXABILITY OF BENEFITS
Benefits are subject to federal income tax if the combined total of one-half of Social Security plus modified adjusted
gross income (see page 12) exceeds $25,000 for an individual and $32,000 for a married couple. The taxable amount
is the lesser of (a) one-half of the Social Security benefit, or (b) half of the excess above $25,000 or $32,000, whichever
applies.
SPECIAL PROVISIONS FOR SELF-EMPLOYED
Self-employed individuals are permitted a credit against the Social Security tax equal to 2.7% of net self-employment
income in 1984; 2.3% in 1985; and 2% in 1986-89. After 1989, the self-employed may (a) reduce net earnings from
self-employment by half of the Social Security tax which would apply without this provision and figure their SECA
liability based on this reduced amount, and (b) deduct half of the tax against income as a business expense.
---err- r--~ 77 T ' -
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COVERED WORKERS
GENERAL With the 1983 changes in the Social Security law, coverage of employees of United States
employers is almost "universal." The primary changes in the law leading to this universal
coverage are inclusion of federal employees hired after December 31. 1983, mandatory coverage
of employees of nonprofit organizations, and removal of the right of state and local governments
to drop out of Social Security once they have joined.
EXTENT All employment, except when specifically excluded, in the 50 states, the District of Columbia,
OF American Samoa, Guam. Puerto Rico and the Virgin Islands is covered regardless of citizenship.
COVERAGE Work performed elsewhere by American residents employed by an American employer is also
covered. Also, coverage is extended under certain conditions to employment on American ships
and aircraft outside the United States.
EMPLOYEES (1) State and local government employees covered by a retirement system unless the employees
EXCLUDED have elected to be covered and the state has entered into a noncancellable agreement with
FROM the federal government. Employees (except policemen in some states and individuals in
COVERAGE certain limited employment statuses) elect to be covered by a referendum in which a majority
of the eligibles vote in favor of participation.
(2) Federal civilian employees hired before January I, 1984 who are covered by a retirement
system established by a law of the United States, except as follows: members of a few such
systems (e.g., Tennessee Valley Authority employees); the President, Vice President, mem-
bers of the Congress, political appointees, and judges, even if they assumed office before
January I, 1984.
(3) Certain students performing domestic service, relatives working for members of family,
student nurses and newsboys under 18.
(4) Workers who make less than the minimal amounts listed under "Covered Wages."
(5) Employees covered by the Railroad Retirement Act are technically not covered by Social
Security. However, the operations of the financial interchange arrangements between Social
Security and the Railroad Retirement Act result in defacto coverage for railroad employees.
(6) Ministers and members of religious orders are covered as self-employed unless they opt out
on the grounds of conscience or religious principle.
COVERED WAGES AND SELF-EMPLOYMENT INCOME
COVERED All earnings of covered workers are taxed up to the maximum taxable wage base of $39,600 in
WAGES 1985 (see definition on page 12 and complete history on page 24). All remuneration for employ-
ment is subject to tax (including the cash value thereof when not paid in cash), including:
(I) Sick pay during the first six months of disability.
(2) Stand-by pay when it is expected that services will be rendered at some later time.
(3) Salary reduction contributions under Sections 401(k), 403(b), 414(h), and 457 of the Internal
Revenue Code; and income deferred under a nonqualified deferred compensation agreement,
when there is no longer a substantial risk of forfeiture.
(4) Cash tips of at least $20 a calendar month taxed to employee (no employer taxes are payable
thereon, except tips deemed to be wages under the Fair Labor Standards Act).
(5) Basic pay for active military duty taxed as wages since 1957; military personnel also receive
a tax-free wage credit of up to $1200 per year to reflect other forms of remuneration. (Prior
to 1957, military pay was not taxed, but members received a wage credit of $160 for each
month of active duty from September 16, 1940 through December 31, 1956.)
SELF- Income from self-employment is treated the same as other covered income for benefit purposes,
EMPLOYMENT but the tax paid by self-employed individuals equals the combined employee-employer tax on
INCOME wages (before any tax credit). "Self-employment income" is broadly defined as the net earnings
derived by operating an unincorporated trade or business, as reported in the income tax return.
After counting income from other sources as an employee, self-employment income is taxed at
the rate shown on page 24, up to a total combined income of the maximum taxable wage base.
The following income is not taxed:
(I) Rentals from real estate (unless part of a business).
(2) Dividends on stock and interest on bonds (unless part of a business).
(3) Capital gains or losses.
(4) Distributive share of income (or loss) from a partnership received by a limited partner.
EXCLUSION
OF INCIDENTAL
WAGES OR
SELF-
EMPLOYMENT
INCOME
The following incidental wages or self-employment income are excluded from tax:
(I) Less than $150 per year to farm employees.
(2) Less than $50 per quarter to non-farm domestic employees.
(3) Less than $100 per year for other casual work.
(4) Net earnings of less than $400 per year from self-employment (optional methods of calcu-
lating net earnings available to maintain coverage in years with low income or net losses).
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FULLY
INSURED
At least I quarter of coverage for each calendar year elapsing after 1950 or after age 21, whichever
is later, but before the earliest of age 62, death or disability, with a minimum of 6 quarters of
coverage. If a year includes a period of disability, it is not counted as an elapsed year. (See page 7
for table showing quarters of coverage needed.)
CURRENTLY At least 6 quarters of coverage during the 13-quarter period ending with quarter of death, entitlement
INSURED to old-age insurance benefits or most recent onset of disability, not counting as part of such 13-
quarter period any quarter any part of which was included in a period of disability unless such
quarter was a quarter of coverage.
DISABILITY (1) Fully insured and (2) at least 20 quarters of coverage in the last 40 quarters through the quarter
INSURED of disability occurrence. Reduced requirements for disabilities before age 31; also for workers
disabled before 31 who subsequently recover and become disabled again at 31 or after. Requirement
(2) is eliminated for blind workers.
QUARTER OF Before 1978, as follows:
COVERAGE
(a) Quarter of a year in which worker received at least $50 in covered wages (other than farm
wages). Worker receiving $100 or more in covered farm wages in a year credited with I quarter
for each $100 up to 4 quarters for $400 or more. Self-employed individual credited with l
quarter for each calendar quarter in which he earned at least $100, provided that his net earnings
from self-employment were at least $400 for the year.
(b) If (a) is not satisfied, credit will nonetheless be given for 4 quarters in any calendar year in
which combined wages and/or self-employment income are equal to the maximum taxable wage
base (see page 24).
1978 and after:
Calendar
Year
Wages or Self-Employment Income
Constituting I Quarter of Coverage
(to Maximum of 4 Quarters)
1978
$250
1979
260
1980
290
1981
310
1982
340
1983
370
1984
390
1985
410
Thereafter Equals $250 multiplied by ratio of (a) average
total wages of all workers two years earlier to (b)
$9226.48; rounded to nearest multiple of $10.
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Quarters
needed
for fully
insured status
Born Before Jan. 2,1929**
Quarters
needed
for fully
Year of death insured
or disability status
Born Jan. 2, 1929 or Later
Quarters
Age on birthday needed
in year for fully
of death Insured
or disability status
Jan. 2, 1913 to Jan. 1, 1914
1984
33
28 or younger
6
Jan. 2, 1914 to Jan. 1, 1915
1985
34
29
7
Jan. 2, 1915 to Jan. 1, 1916
1986
35
30
8
Jan. 2, 1916 to Jan. 1, 1917
1987
36
31
9
Jan. 2, 1917 to Jan. 1, 1918
1988
37
32
10
Jan. 2, 1918 to Jan. 1, 1919
1989
38
33
11
Jan. 2, 1919 to Jan. 1, 1920
1990
39
34
12
Jan. 2, 1920 to Jan. 1, 1921
1991 or later
40
35
13
Jan. 2, 1921 to Jan. 1, 1922
36
14
Jan. 2, 1922 to Jan. 1, 1923
37
15
Jan. 2, 1923 to Jan. 1, 1924
38
16
Jan. 2, 1924 to Jan. 1, 1925
39
17
Jan. 2, 1925 to Jan. 1, 1926
40
18
Jan. 2, 1926 to Jan. 1, 1927
41
19
Jan. 2, 1927 to Jan. 1, 1928
42
20
Jan. 2, 1928 to Jan. 1, 1929
43
21
Jan. 2, 1929 or later
44
22
45
23
Special provision for employees of nonprofit
46
24
organizations***
47
25
Quarters needed for
48
26
Date of birth fully insured status
49
27
Jan. 1, 1924 or earlier
50
28
Jan. 2, 1924 to Jan. 1, 1925
51
29
Jan. 2, 1925 to Jan. 1, 1926
52
30
Jan. 2, 1926 to Jan. 1, 1927
53
31
Jan. 2, 1927 to Jan. 1, 1929
54
32
Jan. 2, 1929 or later
55
33
56
34
57
35
58
36
59
37
60
38
61
39
62 or older
40
'For periods of established disability, reduce quarters needed by one for each year which partly or fully falls within a period of
disability.
**If a worker is age 62 or older, use the lesser of quarters needed for Retirement and quarters needed for Death or Disability.
"`Applies to older employees of nonprofit organizations who were brought into Social Security by the 1983 Amendments;
liberalized requirement must be fully satisfied by employment after December 31, 1983.
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COMPUTATION OF PRIMARY INSURANCE AMOUNT (PIA)
AND FAMILY MAXIMUM BENEFIT (FMB)
The Primary Insurance Amount (PIA) is determined by the method indicated below, unless the Minimum, Special
Minimum, or Old Start Method produces a higher PIA. The method used to determine the PIA also states how
the Family Maximum Benefit (FMB) is determined.
Selection of Benefit Computation Method
Year of Attainment
of Age 62 or Year of
Death or Disability if
Earlier
Before 1979 ......................
1979 through 1983 ................
PIA Table Method
Transitional Guarantee Method
Disability or
After 1983 .......................
Before 1979 ......................
Decoupled Formula Method
PIA Table Method
Survivor
After 1978 .......................
Decoupled Formula Method
PIA Table Method
An Average Monthly Wage (AMW) is calculated and the corresponding PIA and FMB are found in the December
1978 PIA table on pages 14 and 15. The initial PIA and FMB are increased by all general benefit increases after
1978.
Decoupled Formula Method
An Average Indexed Monthly Earnings (AIME) is calculated and a benefit formula is applied to the AIME to
produce the initial PIA. The formula used depends on the year of eligibility (see page 12). For workers becoming
eligible in 1985, the PIA formula is:
90% of the first $280 of AIME, plus
32% of AIME between $280 and $1691, plus
15% of AIME in excess of $1691.
The Family Maximum Benefit (FMB) is calculated using a benefit formula applied to the initial PIA. Again, the
formula used depends on the year of eligibility. The FMB formula for workers becoming eligible in 1985 is:
150% of the first $358 of PIA, plus
272% of PIA between $358 and $517, plus
134% of PIA between $517 and $675, plus
175% of PIA in excess of $675.
NOTE: The initial PIA and FMB are increased by applying in sequence all general benefit increases in the year
of eligibility and thereafter.
The FMB of a worker who becomes entitled to a disability benefit after June 1980 will be the smaller of (a)
85% of his AIME (or 100% of PIA, if larger) and (b) 150% of his PIA.
History of Decoupled Formula Bend Points
Year of
PIA Bend Points
FMB Bend Points
Eligibility
Lower
Upper
Lower Mid Upper
1979
$180
$1085
$230
$332
$433
1980
194
1171
248
358
467
1981
211
1274
270
390
508
1982
230
1388
294
425
554
1983
254
1528
324
468
610
1984
267
1612
342
493
643
1985
280
1691
358
517
675
Future Adjustments to Decoupled Formula Bend Points
The PIA formula bend points and the FMB formula bend points are adjusted each January 1 by comparing the
average total wages of all workers for the second preceding year with the comparable figure for 1977, and applying
the resulting ratio to the 1979 bend points. The updated bend points are rounded to the nearest whole dollar.
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Transitional Guarantee Method
The PIA is the higher of (a) the benefit derived under the Decoupled Formula Method and (b) the benefit derived
under the PIA Table Method, except that under the PIA Table Method: (1) no earnings in the year of attainment
of age 62 or later are used to compute the AMW, (2) the PIA is found in the December 1978 PIA table on pages
14 and 15, and (3) all general benefit increases after the later of December 31, 1978 and year of attainment of
age 61 are applied.
The FMB is computed under the Decoupled Formula Method.
Minimum Benefit
Regardless of other considerations, a worker who attained age 62, died, or became disabled before January 1,
1982, is eligible for a minimum PIA of $122 and a minimum FMB of $183. These figures are adjusted for all
general increases after the earlier of (a) year of entitlement, and (b) year of attainment of age 65. Exception:
Members of a religious order who have taken a vow of poverty can become eligible for the minimum benefit
through 1991, provided they were covered by Social Security before December 29, 1981.
Special Minimum
The Special Minimum PIA equals $11.50 per month times the number of years of coverage in excess of 10, with
maximum of 20 such excess years used. The resulting amount is subject to all general benefit increases after
May 1979. A "year of coverage" is a year in which the worker has covered earnings of at least one-quarter of
the old-law maximum taxable wage base (see table on page 13).
The FMB for the Special Minimum PIA is the amount in effect on January 1, 1979 adjusted for all general benefit
increases after May 1979. The FMB must be no less than 150% of the PIA.
Years of
Special Minimum PIA
(including
Special Minimum FMB
(including
Coverage
December 1984 increase)
December 1984 increase)
II
S 18.70
$ 28.10
12
37.00
55.60
13
55.50
83.50
14
74.00
111.10
15
92.40
138.70
16
111.00
166.60
17
129.40
194.10
18
148.00
222.00
19
166.40
249.60
20
184.70
277.20
21
203.30
305.20
22
221.80
332.80
23
240.40
360.80
24
258.80
388.30
25
277.20
415.90
26
295.90
444.00
27
314.30
471.60
28
332.70
499.20
29
351.10
526.90
30 or more
369.50
554.50
Old Start Method
The old-start formula uses earnings before 1951 to compute an old-start AMW. Its use is extremely rare.
Rounding to Multiple of $.10
If the year of eligibility is before 1982: the initial PIA calculation and all pre-1982 increases are rounded up to a
multiple of $.10; and increases for 1982 and later are rounded down to a multiple of $.10. If the year of eligibility
is 1982 or later, the initial PIA calculation and all general benefit increases are rounded down to a multiple of
$10. This rounding procedure is also followed for any calculations which depend upon the PIA-for instance,
early retirement or dependents' benefits.
Final Rounding to Lower Dollar
The Medicare Part B premium, if any, is subtracted from the total benefit check, and the resulting amount is
reduced to a multiple of $1, if not already a multiple of $1.
Initial Recomputation of Benefits
Earnings related to the year of retirement or disability are not recognized in the initial determination of benefits;
however, a recomputation recognizing these earnings is made in the following year retroactive to January 1.
Frequently, earnings in the year immediately preceding year of entitlement are not taken into account in the initial
social security calculation; however, a recomputation recognizing those earnings is made later in the year of
entitlement, retroactive to date benefits commenced.
DEFINITIONS
See Page 12.
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WORKSHEET FOR COMPUTING
(Reflecting General Benefit Increases through December 1984
(c) Number of years included in calculation:
for retirement, greater of 5, or ((b) - 5);
for death, greater of 2, or ((b) - 5);
for disability, greater of 2. or ((b) - dropout years*) ...................................... (c)
(d) Months in averaging period equals 12 X (c) ................................................. (d)
(e) Year(a) - 2 .......................................................................... (e)
(f) Figure in Column (4) of table below for year (e) (Omit for PIA Table Method) ..................... (f)
(g) Complete following table: (Column (5) of table should not be completed if using PIA Table Method)
Enter Covered Enter Average Total Earnings
Calendar Wages Maximum Taxable Smaller of Wages of All [(f) x (3)
Year for Year Wage Base (1) and (2) Workers** (4)]tt
1951 $ $ 3,600 $
1952 3,600
1953 3,600
1954 3,600
1955 4,200
1956 4,200
1957 4,200
1958 4,200
1959 4,800
1960 4,800
1961 4,800
1962 4,800
1963 4,800
1964 4,800
1965 4,800
1966 6,600
1967 6,600
1968 7,800
1969 7,800
1970 7,800
1971 7,800
1972 9,000
1973 10,800
1974 13,200
1975 14,100
1976 15,300
1977 16,500
1978 17,700
1979 22,900
1980 25,900
1981 29,700
1982 32,400
1983 35,700
1984 37,800
1985 39,600
$ 2,799.16 $
2,973.32
3,139.44
3,155.64
3,301.44
3,532.36
3,641.72
3,673.80
3,855.80
4,007.12
4,086.76
4,291.40
4,396.64
4,576.32
4,658.72
4,938.36
5,213.44
5,571.76
5,893.76
6,186.24
6,497.08
7,133.80
7,580.16
8,030.76
8,630.92
9,226.48
9,779.44
10,556.03
11,479.46
12,513.46
13,773.10
14,531.34
15,239.24
* Dropout years for disability depend on age, as follows:
Age at disability 47 and over 42-46 37-41 32-36 27-31 Under 27
Dropout years 5 4 3 2 I 0
For disability benefits starting or continuing after June 1981, additional dropout years may be counted. These
are years when the worker had no earnings and lived with a child under age 3. Inclusion of such additions may
not cause dropout years to exceed 3.
** This column applies only through year (e). Thereafter, use same figure as shown for year (e).
tt Rounding to nearest cent.
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PRIMARY INSURANCE AMOUNT
and General Wage Increases through 1983)
PIA TABLE METHOD
(Complete if (a) is 1978 or earlier)
(h) Total of highest entries in Column (3), counting only that number of entries stated in (c) ............. (h)
(i) Average Monthly Wage (AMW) = (h) _ (d), dropping cents ................................... (i)
(j) Initial PIA equals December 1978 amount shown on pages 14 and 15, based on AMW in (i) .......... (j)
*Enter this figure on first line of column (w) below.
DECOUPLED FORMULA METHOD
(Complete if (a) is 1979 or later)
(k) Total of highest entries in Column (5), counting only that number of entries stated in (c) ............. (k)
(m) Average Indexed Monthly Earnings (AIME) equals (k) - (d), dropping cents ...................... (m)
(n) Lower PIA bend point for year (a) ......... .............. (n)
.............................. . . . .
If year(a)is 1979 1980 1981 1982 1983 1984 1985
Lower PIA bend point is $180 $194 $211 $230 $254 $267 $280
(p) Upper PIA bend point for year (a) ...... .
If year(a)is 1979 1980 1981 1982 1983 1984 1985
Upper PIA bend point is $1085 $1171 $1274 $1388 $1528 $1612 $1691
(q) Amount by which (p) exceeds (n): (p) - (n) ................................................. (q)
(r) PIA under new formula:
.9 x lesser of (n) and (m) ................................................... (r) (1)
.32 x lesser of (q) and [(m) - (n)I, but not less than zero .......................... (r) (2)
.15 x I(m) - (P)), but not less than zero ........................................ (r) (3)
Initial PIA equals (r) (1) + (r) (2) + (r) (3), rounded down to multiple of $.10 if year (a)
is 1982 or later; rounded up to a multiple of $. 10 if year (a) is earlier than 1982 ............. (r) Total **
**Enter this figure on line of column (w) below which corresponds to year (a),
or else proceed with Transitional Guarantee Method, if applicable.
TRANSITIONAL GUARANTEE METHOD
(Complete for old-age calculations if (a) is 1979 through 1983, or if death occurs at or after age 62
for those attaining age 62 in 1979-83)
(s) Total of highest entries in Column (3) before year (a) (through year (a) for survivor cases),
counting only that number of entries stated in (c) ............................................. (s)
(t) Average Monthly Wage (AMW) equals (s) - (d), dropping cents ................................ (t)
(u) December 1978 PIA taken from pages 14 and 15, based on AMW in (t) ........................... (u)
(v) Resulting PIA equals greater of (r) Total and (u) .............................................. (v) ***
***Enter this figure on line of column (w) below which corresponds to year (a).
CALCULATION OF CURRENT PIA
(With Adjustment for General Benefit Increases)
PIA before Increase Increase PIA after Increase Roundedp
(w) (x)
1979 or earlier 1.099
1980 1.143
1981 1.112
1982 1.074
1983 1.035
1984 1.0351
i Multiply figure in (w) by increase in (x) and enter result in (y).
up
up
up
down
down
down
ii Enter result into (w) of next line and repeat step i; repeat process until answer is contained in box. See page 9 for further rounding of
all benefits to a multiple of $1, and for Minimum and Special Minimum rules.
V To multiple of $. 10.
t Effective with benefit check for December 1984 (payable in January 1985). Use 1.000 for months before December.
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DEFINITIONS
Average Monthly Wage (AMW): the average monthly wage is the quotient of (a) the number of months in the benefit
computation years divided into (b) the highest total of covered earnings during a like number of years chosen out of the
computation base years. Any fractions of $1 are ignored.
Average Indexed Monthly Earnings (AIME): the average indexed monthly earnings is the quotient of (a) the number of
months in the benefit computation years divided into (b) the highest total of covered indexed earnings during a like number
of years chosen out of the computation base years. Any fractions of $1 are ignored.
Average Total Wages of All Workers: number published by the Social Security Administration before each November 1 for
the preceding calendar year. Average total wages of workers shown for calendar years 1951 through 1983 on page 10,
column (4).
Benefit Computation Years: the years with highest earnings which are actually used in calculating the primary insurance
benefit. In most cases, the number of benefit computation years equals the computation base years minus five, with a
minimum of two years (five for a retirement benefit). Special dropout rules apply if the benefit is for disability before age
47 (see footnote on page 10).
Computation Base Years: the computation base years are the calendar years after 1950 (or attainment of age 21, if later)
and prior to the year in which the individual became entitled to old-age or disability benefits or through the year of death.
Computation base years may not include any calendar year all of which was included in a period of disability.
Employee: an individual who performs services for another under the usual common law rules defining employer-employee
relationships. For Social Security tax purposes, the term also includes public officeholders, agent- or commission-drivers,
full-time life insurance sales people, industrial home workers, and full-time wholesale sales people. (Not all employees are
covered workers: see page 4.)
Disability: inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or has lasted or can be expected to last for a continuous period of
not less than 12 months. For blind workers, inability to engage in the usual occupation. For surviving spouse, inability to
engage in any gainful activity.
First Month of Eligibility: the first month throughout all of which the individual is 62. For Social Security purposes, age 62 is
attained on the day before the actual birthday; therefore, only those born on the first or second day of a month are eligible
for benefits for the birthday month. This provision also applies to dependents' benefits.
General Benefit Increases: a general benefit increase applies for December of any year after Consumer Price Index (CPI-
W) has increased at least 3% from (a) the third quarter of a year in which benefit was last automatically increased to (b)
the third quarter of year under consideration, except that an automatic increase would be superseded by any raises in
benefits enacted by Congress. The general benefit increase is equal to the percent increase in average CPI for the
quarters in question, rounded to the nearest 0.1%.
General Benefit Increases Since 1978
June 1979- 9.9% June 1982- 7.4%
June 1980-14.3% December 1983- 3.5%
June 1981-11.2% December 1984- 3.5%
Special rules apply if the Social Security OASDI trust fund ratio (the ratio of the fund balance at the beginning of the year
to estimated benefits payable that year) falls below a specified level. The general benefit increase is then based on the
lower of the CPI increase and the increase in average wages from the previous calendar year over the second preceding
year. The fund ratio level that triggers this change is 15% through 1988, and 20% thereafter. If the fund ratio later rises
above 32%, any loss in the general benefit increase is restored prospectively, but only to the extent that the fund ratio
remains at 32% or more.
Indexed Earnings: a worker's covered wages multiplied by the ratio of average total wages of all workers in the second year
before the year of eligibility to the average total wages of all workers in the year being updated. Example: If a worker
earned $4500 in 1959 and retired at age 62 in 1981, the $4500 is multipled by the ratio of average total wages in 1979
($11479.46) to average total wages in 1959 ($3855.80) as follows:
$4500 x $11479.46 $ 3855.80 = $13,397.37 = Indexed earnings. The answer is rounded to the nearest cent.
Maximum Taxable Wage Base: the amount subject to Social Security tax in any given year. Established at $3000 annually
for 1937, the maximum taxable wage base has grown to $39,600 for 1985. (See complete history on page 24.) Future
increases are determined by an automatic escalator, which becomes effective for the year following a general benefit
increase. The maximum taxable wage base is then computed by multiplying the maximum taxable wage base for the
previous year by the ratio of (1) the average total wages of all workers (see page 10) for the second preceding year to (2)
the corresponding amount for the third preceding year, with the result rounded to the nearest multiple of $300.
Modified Adjusted Gross Income: adjusted gross income plus tax-exempt interest, with the following deductions and
exclusions added back - deduction for two-earner married couple; exclusion for foreign earned income; exclusion for
Puerto Rican income (for residents of Puerto Rico).
Period of Disability: a continuous period of at least 5 full calendar months of disability, as defined above.
Year of Eligibility: the year of attainment of age 62 or the year of death or disability, if earlier.
Year of Entitlement: the year a worker meets the age and insured status requirements and files a claim (including retroactive
claims). See also "First Month of Eligibility," above.
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COVERED COMPENSATION
Pension plans integrated with Social Security by the excess or step-rate methods may use covered compensation as the
integration level. An individual's covered compensation is the average of the maximum taxable wage bases for each year after
1958 (or year of attainment of age 30, if later) and through the year he reaches age 64. Covered compensation may be the
exact amount of average Social Security wages (Table II), or an approximation, rounded to the nearest $600 (Table I).
CALENDAR
YEAR OF
65th BIRTHDAY
TABLE I
TABLE 11
1985
$13
800
1986
,
15
000
$13,808
1987
,
14,763
15,600
15,650
1988
16,200
16,476
1989
17,400
17
247
1990
18,000
,
17,968
1991
18,600
18,644
1992
19,200
19,279
1993
19,800
19,876
1994
20,400
20,440
1995
21,600
21,434
1996
22,200
22,429
1997
23,400
23,423
1998
24,600
24,417
1999
25,200
25,411
2000
26,400
26,406
2001
27,600
27,400
2002
28,200
28,343
2003
29,400
29
286
2004
30
000
,
2005
,
30,194
31,200
31
103
2006
31
800
,
2007
,
32,011
33,000
32,920
2008
33,600
33
794
2009
34
800
,
2010
,
35
400
34,617
2011
,
35,371
36,000
36,100
2012
36,600
36
794
2013
37
200
,
2014
,
37,454
37,800
38,080
2015
38,400
38,557
2016
39,000
38
949
2017
39
000
,
2018
,
39
600
39,231
2019
,
39
600
39,437
2020
,
39,549
39,600
39
600
2021
39,600
,
39,600
MAXIMUM TAXABLE WAGE BASE COMPARISON
The old-law maximum taxable wage base is the wage base as it would have been without regard to the legislated increases in
the 1977 Social Security Amendments. It is used to determine eligibility for the Special Minimum benefit (see page 9), and to
make cost-of-living adjustments to the maximum guaranteed benefit under ERISA Section 4022(b)(3)(B). (The adjusted
maximum guaranteed benefit equals $750 times the ratio of the old-law maximum to $13,200.)
YEAR
ACTUAL MAXIMUM
1979
$22
900
1980
,
25
900
$18,900
1981
,
2
20,400
29,700
22
200
1982
32
400
,
1983
,
24,300
35,700
26
700
1984
37
800
,
1985
,
28,200
39,600
29,700
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DECEMBER 1978 PIA TABLE
PRIMARY INSURANCE AMOUNTS AND FAMILY MAXIMUM BENEFITS
FOR EACH AVERAGE MONTHLY WAGE
Average
Primary
Family
Average
Primary
Family
Average
Monthl
Primary
Insurance
Family
Maximum
Monthly
Insurance
Maximum
Monthly
Insurance
Maximum
y
e
Wa
Amount
Benefit
Wage
Amount
Benefit
Wage
Amount
Benefit
g
Up to $76
S250-253
$251.80
254
30
$384.90
392
50
S483-487
488-492
$380.70
383.10
$ 701.60
705.40
77-78
$123.70
$185.60
254-258
.
.
50
385
40
708
79-80
126.60
189.90
259-263
256.50
400.00
493-496
.
20
388
.
10
712
81-81
128.90
193.50
264-267
259.60
406.00
497-501
.
50
0
.
715
80
82-83
131.20
196.80
268-272
262.10
413.70
502-506
39
.
.
84-85
134.00
201.00
273-277
264.90
421.20
507-510
392.90
30
395
719.00
80
722
86-87
136.50
204.80
278-281
267.40
427.20
511-515
.
398
00
.
726
70
88-89
138.60
207.90
282-286
270.00
434.90
516-520
.
400
30
.
729
50
90-90
141.40
212.10
287-291
272.90
442.60
521-524
.
402
70
.
40
733
91-92
143.80
215.70
292-295
275.10
448.50
525-529
.
.
93-94
146.20
219.30
296-300
278.10
456.10
530-534
405.60
70
407
737.10
740
20
95-96
148.50
222.80
301-305
280.70
463.80
535-538
.
410
20
.
10
744
97-97
151.30
227.00
306-309
283.10
469.80
539-543
.
80
412
.
747
80
98-99
153.70
230.60
310-314
286.00
477.40
544-548
.
30
415
.
751
60
100-101
156.70
235.10
315-319
288.30
485.10
549-553
.
.
102-102
158.90
238.50
320-323
291.00
491.10
554-556
417.60
60
753.90
90
756
103-104
161.60
242.40
324-328
293.80
498.70
557-560
419.
421
90
.
30
759
105-106
164.60
246.90
329-333
296.20
506.20
561-563
.
10
424
.
762
30
107-107
167.30
251.00
334-337
299.30
512.50
564-567
.
50
426
.
764
50
108-109
169.80
254.80
338-342
301.40
519.90
568-570
.
.
110-113
172.50
258.80
343-347
304.20
527.50
571-574
428.50
70
430
767.50
90
769
114-118
174.90
262.40
348-351
307.10
533.60
575-577
.
70
432
.
80
772
119-122
177.60
266.50
352-356
309.40
541.20
578-581
.
00
435
.
775
20
123-127
180.40
270.60
357-361
312.40
548.80
582-584
.
90
436
.
20
778
128-132
183.00
274.60
362-365
314.90
554.90
585-588
.
.
133-136
185.50
278.30
366-370
317.30
562.50
589-591
439.50
441
60
780.50
783
50
137-141
188.00
282.10
371-375
320.20
569.90
592-595
.
443
80
.
60
785
142-146
190.80
286.20
376-379
322.90
576.30
596-598
.
00
446
.
788
90
147-150
193.60
290.40
380-384
325.00
583.90
599-602
.
10
448
.
10
791
151-155
195.90
293.90
385-389
328.00
591.30
603-605
.
.
156-160
198.70
298.10
390-393
330.50
597.40
606-609
450.30
60
452
794.00
50
796
161-164
201.30
302.00
394-398
333.40
605.10
610-612
.
454
70
.
50
799
165-169
203.90
305.90
399-403
336.00
612.70
613-616
.
456
80
.
802
50
170-174
206.70
310.10
404-407
338.90
618.60
617-620
.
10
459
.
80
804
175-178
209.10
313.70
408-412
341.10
626.30
621-623
.
.
179-183
211.90
318.00
413-417
343.50
633.80
624-627
461.20
40
4
3
807.90
810
70
184-188
214.40
321.70
418-421
346.00
639.90
628-630
.
6
5
60
.
814
70
189-193
217.20
326.00
422-426
348.70
647.50
631-634
46
.
7
80
.
50
818
194-197
219.90
329.90
427-431
351.10
655.10
635-637
.
46
7
10
.
40
822
198-202
222.40
333.60
432-436
353.20
662.70
638-641
4
0.
.
10
203-207
225.30
338.00
437-440
356.20
665.70
642-644
472.10
40
474
826.
10
830
208-211
228.00
342.00
441-445
358.40
669.70
645-648
52
.
50
476
.
70
833
212-216
230.10
345.20
446-450
360.80
673.40
649-6
6
.
477
80
.
10
836
217-221
233.00
349.50
451-454
363.50
676.30
653-65
.
20
479
.
40
838
222-225
235.60
353.40
455-459
365.90
680.10
657-660
.
.
1
0
226-230
238.50
357.80
460-464
368.30
683.80
661-665
70
480.90
482
60
.5
84
844
50
231-235
241.10
361.70
465-468
370.60
687.10
666-6
75
.
484
40
.
847
40
236-239
244.00
366.10
469-473
373.50
690.80
671-6
76
680
.
10
486
.
50
850
240-244
246.30
371.10
474-478
375.60
694.60
6
-
1
85
.
487
80
.
50
853
245-249
248.70
378.80
479-482
378.00
697.70
-6
68
.
.
Underlying Approximate Formula 155.38% of first $110 of AMW, plus 56.51% of next $290 thereof, plus 52.80% of next $150 thereof,
For Primary Insurance Amount plus 62.09% of next $100 thereof, plus 34.53% of next $100 thereof, plus 28.78% of next $250 thereof,
based on Average Monthly Wage. plus 25.92% of next $175 thereof, plus 24.01% of next $100 thereof, plus 22.56% of next $100 thereof,
plus 21.3% of next $100 thereof, plus 20% of next $433 thereof.
If the Average Monthly Wage is under $77, the PIA and FMB can be approximated by multiplying $123.70
and $185.60, respectively, by the ratio of the Average Monthly Wage to $77.50.
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 Sanitized Copy Approved for Release 2011/01/11: CIA-RDP89-00066R000900110002-2
DECEMBER 1978 PIA TABLE
PRIMARY INSURANCE AMOUNTS AND FAMILY MAXIMUM BENEFITS
FOR EACH AVERAGE MONTHLY WAGE
Average
Monthly
Wage
Primary
insurance
Amount
Family
Maximum
Benefit
Average
Monthly
Wage
Primary
Insurance
Amount
Family
maximum
Benefit
Average
Monthly
Wage
Primary
Insurance
Amount
Family
Maximum
Benefit
$686-690
$489.70
$ 856.40
$ 951-955
$ 569.30
$ 996.10
$1216-1220
$ 638.30
$1117.00
691-695
491.20
859.60
956-960
570.80
998.60
1221-1225
639.50
1119.00
696-700
492.90
862.60
961-965
572.30
1001.00
1226-1230
640.80
1121.20
701-705
494.70
865.60
966-970
573.40
1003.60
1231-1235
641.90
1123.20
706-710
496.40
868.60
971-975
574.90
1006.20
1236-1240
643.10
1125.40
711-715
498.20
871.50
976-980
576.40
1008.50
1241-1245
644.40
1127.50
716-720
500.00
874.60
981-985
577.90
1011.10
1246-1250
645.50
1129.60
721-725
501.70
877.60
986-990
579.20
1013.60
1251-1255
646.70
1131.60
726-730
503.40
880.70
991-995
580.70
1016.20
1256-1260
647.90
1133.80
731-735
505.10
883.80
996-1000
582.20
1018.60
1261-1265
649.20
1135.90
736-740
506.90
886.70
1001-1005
583.50
1020.70
1266-1270
650.30
1138.00
741-745
508.50
889.90
1006-1010
584.60
1023.20
1271-1275
651.50
1140.00
746-750
510.10
892.70
1011-1015
586.00
1025.30
1276-1280
652.70
1142.20
751-755
511.70
895.40
1016-1020
587.40
1027.80
1281-1285
653.70
1144.10
756-760
513.20
897.80
1021-1025
588.60
1029.90
1286-1290
654.90
1146.10
761-765
514.70
900.40
1026-1030
589.80
1032.20
1291-1295
656.10
1148.00
766-770
516.00
903.00
1031-1035
591.20
1034.50
1296-1300
657.20
1150.00
771-775
517.40
905.40
1036-1040
592.40
1036.70
1301-1305
658.30
1152.00
766480
518.90
907.90
1041-1045
593.80
1039.10
1306-1310
659.40
1154.00
781-785
520.40
910.40
1046-1050
595.20
1041.30
1311-1315
660.60
1155.90
786-790
521.70
912.90
1051-1055
596.20
1043.40
1316-1320
661.70
1157.90
791-795
523.10
915.40
1056-1060
597.60
1045.90
1321-1325
662.80
1159.80
796-800
524.60
918.00
1061-1065
599.00
1048.00
1326-1330
664.00
1161.90
801-805
526.20
920.50
1066-1070
600.30
1050.50
1331-1335
665.00
1163.80
806-810
527.50
923.00
1071-1075
601.60
1052.60
1336-1340
666.20
1165.80
811-815
529.00
925.60
1076-1080
602.80
1054.90
1341-1345
667.40
1167.70
816-820
530.40
928.00
1081-1085
604.20
1057.10
1346-1350
668.40
1169.70
821-825
531.90
930.60
1086-1090
605.40
1059.40
1351-1355
669.60
1171.70
826-830
533.30
933.10
1091-1095
606.80
1061.70
1356-1360
670.70
1173.70
831-835
534.70
935.70
1096-1100
608.20
1064.00
1361-1365
671.90
1175.60
836-840
536.10
938.10
1101-1105
609.20
1066.10
1366-1370
672.90
1177.70
841-845
537.60
940.80
1106-1110
610.60
1068.50
1371-1375
674.10
1179.60
846-850
538.90
943.00
1111-1115
612.00
1070.70
1376-1380
675.20
1181'.60
851-855
540.50
945.70
1116-1120
613.20
1073.10
1381-1385
676.20
1183.40
856-860
541.90
948.10
1121-1125
614.60
1075.30
1386-1390
677.30
1185.30
861-865
543.40
950.70
1126-1130
615.80
1077.60
1391-1395
678.30
1187.10
866-870
544.80
953.20
1131-1135
617.10
1079.70
1396-1400
679.40
1189.00
871-875
546.30
955.70
1136-1140
618.40
1082.20
1401-1405
680.50
1190.80
876-880
547.60
958.20
1141-1145
619.80
1084.40
1406-1410
681.50
1192.70
881-885
549.10
960.80
1146-1150
621.10
1086.70
1411-1415
682.60
1194.60
886-890
550.40
963.20
1151-1155
622.20
1088.80
1416-1420
683.70
1196.50
891-895
551.90
966.00
1156-1160
623.60
1091.10
1421-1425
684.70
1198.30
896-900
553.40
968.30
1161-1165
624.90
1093.40
1426-1430
685.80
1200.20
901-905
554.90
970.90
1166-1170
626.20
1095.80
1431-1435
686.90
1202.00
906-910
556.30
973.50
1171-1175
627.50
1098.00
1436-1440
687.90
1203.90
911-915
557.80
976.00
1176-1180
628.70
1100.20
1441-1445
689.00
1205.70
916-920
559.30
978.30
1181-1185
629.90
1102.20
1446-1450
690.10
1207.70
921-925
560.60
981.00
1186-1190
631.20
1104.30
1451-1455
691.10
1209.50
926-930
561.90
983.40
1191-1195
632.30
1106.50
1456-1460
692.20
1211.40
931-935
563.40
985.90
1196-1200
633.50
1108.60
1461-1465
693.30
1213.30
936-940
564.90
988.50
1201-1205
634.70
1110.60
1466-1470
694.30
1215.10
941-945
566.30
991.00
1206-1210
636.00
1112.90
1471-1475
695.40
1216.90
946-950
567.70
993.50
1211-1215
637.10
1114.90
Underlying Approximate Formula 155.38% of first $110 of AMW, plus 56.51% of next $290 thereof, plus 52.80% of next $150 thereof,
For Primary Insurance Amount plus 62.09% of next $100 thereof, plus 34.53% of next $100 thereof, plus 28.78% of next $250 thereof,
based on Average Monthly Wage. plus 25.92% of next $175 thereof, plus 24.01% of next $100 thereof, plus 22.56% of next $100 thereof,
plus 21.3% of next $100 thereof, plus 20% of next $433 thereof.
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REPRESENTATIVE PROJECTED RETIREMENT BENEFITS IN 1984 DOLLARS
For Maximum Covered Wages
Retired Worker
Retired Worker and Spouse
Year of
Birth
Full Retirement
Age
Both Full
Retirement Age
Both 62
1919
$704
$1056
1920
693
1040
1921
713
1070
1922
730
$559
1095
$ 821
1923
745
571
1118
839
1924
748
574
1122
843
1925
753
580
1130
852
1926
764
588
1146
864
1927
779
601
1169
883
1928
794
614
1191
902
1930
829
641
1244
941
1940
1,017
765
1525
1123
1950
1,215
890
1823
1306
One-Half Maximum Taxable Wage Base
Retired Worker
Retired Worker and Spouse
Year of
Birth
Full Retirement
Age
Both Full
Retirement Age
Both 62
1919
$455
$683
1920
449
674
1921
463
695
1922
476
$354
714
$520
1923
488
364
732
535
1924
492
368
738
541
1925
497
373
746
548
1926
505
380
758
558
1927
517
390
776
573
1928
528
399
792
586
1930
555
420
833
617
1940
709
524
1063
770
1950
871
630
1307
925
ASSUMPTIONS: Worker earns the maximum taxable wage base or half of the maximum taxable wage base, as stated, in
each year from age 22 through the year preceding the year of retirement (no wages in the year of retirement). Projected
benefits are based on estimates of future wage levels and general benefit increases in the 1984 Report of the Board of
Trustees of the Social Security Funds. Resulting amounts have been restated in 1984 dollars, using estimated rates of
future inflation from the same source.
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REPRESENTATIVE PROJECTED DEATH BENEFITS IN 1984 DOLLARS
FOR SPOUSE OF COVERED WORKER
For Maximum Covered Wages
Year of Death
Year of Birth
1985
1986
1990
1995
2000
*
1929
$714
$718
$767
-
1930
716
720
769
$829
-
1940
750
755
807
897
$ 996
1950
817
821
870
957
1054
1960
878
877
911
985
1077
For One-Half Maximum Covered Wages
Year of Death
Year of Birth
1929*
1930
1940
1950
1960
1985
1986
1990
1995
2000
$455
$460
$499
-
-
457
461
501
$555
-
493
499
542
609
$ 682
565
570
609
673
743
630
630
653
703
768
REPRESENTATIVE PROJECTED DISABILITY BENEFITS IN 1984 DOLLARS
FOR COVERED WORKER ONLY
For Maximum Covered Wages
Year of Disability
Year of Birth
1985
1986
1990
1995
2000
*
1929
$714
$718
$767
-
-
1930
716
720
769
$829
-
1940
745
750
807
897
$ 996
1950
795
800
857
951
1054
1960
867
865
904
984
1077
For One-Half Maximum Covered Wages
Year of Disability
1985
1986
1990
1995
2000
$455
$460
$499
-
-
457
461
501
555
-
488
493
542
609
$ 682
542
547
594
666
743
618
618
645
701
768
*
1929 figures apply to everyone born before January 2, 1930 if death or disability occurs before age 62.
ASSUMPTIONS: Worker earns the maximum taxable wage base or half of the maximum taxable wage base, as stated, in
each year from age 22 through the year preceding the year of death or disability (death or disability occurs at the beginning
of the year). Projected benefits are based on estimates of future wage levels and general benefit increases in the 1984
Report of the Board of Trustees of the Social Security Funds. Resulting amounts have been restated in 1984 dollars,
using estimated rates of future inflation from the same source.
Year of Birth
1929*
1930
1940
1950
1960
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REPLACEMENT RATIOS
(Annual Primary Insurance Amount expressed as a percentage of
wages in the year immediately preceding retirement)
A measure of Social Security's effectiveness in providing for retirement needs is the "replacement ratio." It equals the annual primary
Social Security benefit for retirement at the beginning of the year divided by wages in the year immediately preceding retirement (including,
where applicable, wages above the maximum taxable wage base).
The following table illustrates how future increases in maximum taxable wage base, covered wages and CPI will affect replacement ratios
under present law.
Illustrations of Replacement Ratios
for Future Retirements at Full Retirement Age
Based on the Following Assumed Future Annual Increases:
Covered Wages 7%; Maximum Taxable Wage Base 7%; CPI 5%
1985 Wages*
YEAR OF
RETIREMENT
$10,000
$15,000
$20,000
$25,000
$30,000
$39,600
1985t
.49
.43
.40
.35
.30
.23
1990
.49
.43
.40
.35
.30
.24
1995
.49
.43
.39
.35
.30
.24
2000
.49
.43
.39
.35
.31
.25
2005
.49
.43
.39
.35
.31
.26
2010
.49
.43
.39
.36
.32
.27
2015
.49
.42
.39
.36
.32
.27
2020
.49
.42
.39
.35
.32
.27
2025
.49
.42
.39
.35
.32
.27
Based on the Following Assumed Future Annual Increases:
Covered Wages 0%; Maximum Taxable Wage Base 0%; CPI 0%
1985 Wages*
YEAR OF
RETIREMENT
$10,000
$15,000
$20,000
$25,000
$30,000
$39,600
1985t
.49
.43
.40
.35
.30
.23
1990
.50
.45
.41
.35
.30
.24
1995
.51
.45
.41
.35
.31
.24
2000
.51
.45
.42
.36
.31
.26
2005
.51
.45
.42
.36
.32
.27
2010
.51
.45
.42
.37
.33
.28
2015
.51
.45
.42
.37
.33
.28
2020
.51
.45
.42
.37
.33
.29
2025
.51
.45
.42
.37
.33
.29
Based on Assumed Future Annual Increases in Covered Wages,
Maximum Taxable Wage Base, and CPI contained in Table 10, Alternative II-B
of 1984 Report of the Board of Trustees of the Social Security Funds.
1985 Wages*
YEAR OF
RETIREMENT
$10,000
$15,000
$20,000
$25,000
$30,000
$39,600
1985t
.49
.43
.40
.35
.30
.23
1990
.49
.42
.39
.34
.30
.24
1995
.49
.42
.39
.35
.30
.24
2000
.49
.42
.39
.35
.31
.25
2005
.49
.42
.39
.35
.31
.26
2010
.49
.42
.39
.35
.32
.27
2015
.49
.43
.39
.36
.32
.27
2020
.49
.43
.39
.36
.32
.28
2025
.49
.43
.39
.36
.32
.28
Wages prior to 1985 were assumed to decrease by the same percentage as the average total wages of all workers.
Benefit under Transitional Guarantee Method.
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MEDICARE
Scope of Coverage
Title XVIII of the Social Security Act provides two health insurance programs for eligible persons:
A-A basic plan (Part A) providing benefits to cover the cost of hospital and related care (see below).
B-A voluntary supplementary plan (Part B) providing benefits to cover the cost of physicians' services and certain other
medical and health services not covered by the basic plan (see pages 20-21).
Excluded Health and Medical Services
Regardless of other considerations, there are certain health and medical services which are not covered under the basic
hospital insurance plan (Part A) or the voluntary supplementary medical insurance plan (Part B) as follows:
I . Health services that are not reasonable and necessary for the treatment or diagnosis of illness or injury. An example
is a private room in a hospital unless required for medical reasons, or a private duty nurse
2. Items and services furnished to a worker, if the worker does not have a legal obligation to pay for or provide the
services. An example would be charges made by a doctor who is a member of the patient's family
3. Items and services paid for by a governmental entity (such as the Veterans Administration)
4. Items and services provided outside the United States (except for certain emergency hospital services in Canada,
hospital insurance benefits for railroad retirement beneficiaries in Canada and cases where the foreign hospital is closer
to the U.S. residence of a U.S. citizen than the nearest suitable U.S. hospital)
5. Ordinary dental services and dentures
6. Service required as a result of war occurring after the effective date of a worker's coverage
7. Expenses for routine physical examinations
8. Eyeglasses, hearing aids, orthopedic shoes or the expenses incurred in connection with their fitting or purchase
9. Immunizations
10. Cosmetic surgery, except where required immediately as a result of accidental injury
I I . Custodial care
12. Items and services to the extent they are covered under Workers Compensation laws
13. Certain routine foot care and orthopedic shoes
14. Personal comfort items such as TV, telephone charges, etc.
15. Out-of-hospital drugs
PART A-BASIC PLAN OF HOSPITAL INSURANCE
ELIGIBILITY I. All persons who would be entitled to either Social Security benefits or Railroad Retirement
annuities are covered if they are age 65 or older, even though they may not in fact have retired.
Medicare is the secondary payer (after the employer's health plan, if any) for active workers
age 65-69 and the spouse age 65-69 of a worker under age 70, unless they elect otherwise.
Medicare is also the secondary payer when medical care costs are payable under a liability
policy.
2. Disability beneficiaries are covered after entitlement to disability benefits for not less than 24
consecutive months. Those covered include disabled workers at any age; disabled widows and
widowers between ages 50 and 65; disabled beneficiaries age 18 or older who were disabled
prior to age 22; and disabled qualified railroad retirement annuitants.
3. Persons under age 65 (whether fully or currently insured, a monthly beneficiary, or a spouse or
dependent child of an insured person or monthly beneficiary) with chronic renal disease, requir-
ing dialysis or renal transplant, are covered under Part A beginning with the third month after
the month in which course of treatment began and ending with the twelfth month after the month
of transplant or after dialysis terminates. Medicare is the secondary payer (after private insur-
ance) during the first 12 months.
4. Persons age 65 and over not eligible for Part A coverage can enroll voluntarily by paying a
premium which approximates the full cost; however, enrollment in Part B is required as a
condition for such coverage under Part A.
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 i I III II Y I I I
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BENEFITS I . Inpatient Hospital Care for up to 90 days of care in a hospital for a single spell of illness ("spell
PROVIDED of illness" means a period beginning with the first day of hospitalization and ending after the
patient has been out of a hospital and a skilled nursing facility for 60 consecutive days) but with
a deductible payable by the patient of $400 for the first 60 days plus $100 for each day between
the 60th and 90th. Each beneficiary is also provided with a lifetime reserve of 60 days of added
coverage after the 90 days have been exhausted. This reserve is subject to coinsurance of $200
per day. Hospital benefits include room and board in rooms containing from 2 to 4 beds, ordinary
nursing services of medical and dental interns and residents serving the hospitals under an
approved teaching program, drugs, supplies, and equipment normally furnished for treatment
and the cost of blood or equivalent quantities of packed red blood cells in excess of the first 3
pints furnished to a patient in a spell of illness. These hospital services exclude private duty
nursing and hospital services of physicians or other medical specialists employed by or working
through the hospital. The law defines hospitals for purposes of the Part A coverage and includes
Christian Science sanatoriums, TB hospitals and psychiatric hospitals. Under certain conditions
coverage will be provided for emergency treatment in non-participating hospitals. The coverage
in a psychiatric hospital is limited to a maximum of 190 days during the lifetime of the patient.
2. Posthospital Skilled Nursing Services are provided in a skilled nursing home or special wing or
ward of a hospital. To be eligible the patient must be transferred from a hospital, after a stay of
at least 3 days. and within a period of 30 days of hospital discharge for continued care of the
same illness, although an interval exceeding 30 days is authorized for a patient whose condition
does not permit immediate provision of skilled services. In addition, an extension of not more
than 2 weeks beyond the 30 days is authorized where appropriate bed space is not immediately
available in the geographic area. Benefits are provided for up to 100 days for the same illness
with coinsurance of $50 per day after.the first 20 days of posthospital care. The extended care
services covered are similar to those provided under the inpatient hospital program described
above and also include physical. occupational, and speech therapy ordinarily furnished by the
nursing home or hospital for its inpatients.
3. Posthospital Home Health Services by a participating home health agency (as defined in the
law) for unlimited visits in the year at the patient's home. Such services are essentially for
homebound persons and include visiting nurse services and various types of therapy treatment,
including outpatient hospital services when equipment cannot be brought to the home.
4. Hospice Care Services for terminally ill beneficiaries with a life expectancy of six months or
less. A beneficiary may elect hospice care for two periods of 90 days each, plus one additional
period of 30 days. During this time, he or she must give up the right to other Medicare services
related to the treatment of his condition, except services by an attending physician who is not
employed by the hospice program. Coinsurance is required on outpatient prescription drugs
equal to the lesser of $5 or 5%. In addition, there is 5% coinsurance on inpatient "respite" care:
however, the total amount for a period (plus 14 days) cannot exceed the inpatient hospital
deductible for the year in which the period began.
DEDUCTIBLES Deductibles and coinsurance quoted apply to days of care beginning in 1985. They are increased
AND each January I by a formula which depends on the trend of hospital costs since 1966. The applicable
COINSURANCE amounts are those in effect for the current year. not the year in which the spell of illness began.
PART B-VOLUNTARY SUPPLEMENTARY MEDICAL INSURANCE PLAN
ELIGIBILITY Persons eligible for the basic hospitalization plan described in Part A above will be automatically
enrolled in the voluntary supplementary medical insurance plan (Part B) except for residents of
Puerto Rico and foreign countries. In addition, such residents and all other persons age 65 and over
who are resident U.S. citizens or alien residents who had resided in the U.S. continuously for at
least five years are eligible to enroll. Persons eligible for automatic enrollment must be given an
opportunity to decline the Part B coverage. Medicare is the secondary payer (after the employer's
health plan, if any) for active workers age 65-69 and the spouse age 65-69 of a worker under age
70, unless they elect otherwise. Medicare is also the secondary payer when medical care costs are
paid under a liability policy.
ENROLLMENT I. The initial enrollment period for each person is the 7-month period beginning with the 1st day
OF ELIGIBLE of the 3rd month before the month in which he attains age 65 or, for the disabled, the first month
PERSONS of eligibility for Part A coverage.
2. For those who miss their initial enrollment period, or who terminate their enrollment and wish
to re-enroll, there is a general enrollment period in January through March each year. Coverage
becomes effective the following July.
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ENROLLMENT 3. For workers and/or their spouses who receive primary health coverage under an employer group
(Continued) health plan, a special enrollment period applies starting November I, 1984: (a) the 7-month
period beginning with the Ist day of the 3rd month before the month in which the individual
attains age 70, or (b) the 7-month period beginning with the 1st day of the month in which the
individual is no longer covered by an employer health plan, whichever period results in earlier
coverage. (If an individual would have had a special enrollment period that began before
November 1, 1984, then the special enrollment period is deemed to begin on November 1,
1984.) Coverage becomes effective depending on when the individual enrolls.
4. There is a provision requiring an increase in monthly premiums for late enrollments or re-
enrollments. The increase is 10% for each full 12 months intervening between the end of the
period when the person was first eligible for enrollment and the end of the period in which he
enrolls (and for re-enrollments, counting the months when he was dis-enrolled).
TERMINATION An enrollee may terminate coverage under the voluntary plan by filing notice at any time (effective
PROVISIONS at the end of the next quarter) or the government may terminate coverage for non-payment of
premiums for those whose premiums are not deducted from benefits. Unlimited re-enrollment is
now permitted, with increased premiums as described above.
BENEFIT The benefit provisions of the supplementary medical insurance plan are similar to major medical
PROVISIONS coverage with an annual deductible of $75 in a calendar year and coinsurance of 20% of the
recognized charge for physician and miscellaneous services, and 20% of the reasonable cost for
institutional service (including service of hospital-based physician). This means that the enrollee
pays the first $75 of covered expenses in each year and 20% of the remaining covered expenses,
plus all non-covered expenses. Exception: Home health services are subject to neither the deductible
nor the coinsurance. All outpatient diagnostic lab tests are covered without any cost-sharing, except
when performed by a physician who does not accept assignment. The expenses incurred during any
year for the first 3 pints of whole blood or equivalent quantities of red blood cells, to the extent that
these are not replaced, are subject to an additional deductible. Reimbursement is not made for
charges that are considered not recognized (based on customary and prevailing charges as adjusted
by an economic index).
SERVICES I. Services of physicians and surgeons whether furnished in a hospital, clinic, office, home or
COVERED elsewhere, of a dentist performing certain oral or dental surgery, of licensed chiropractors in
the treatment of the spine, and certain services of podiatrists and chiropodists. These include
services of physicians in the specialized fields of anesthesiology, pathology, psychiatry and
radiology.
2. Services and supplies incidental to physicians' services furnished in hospital outpatient depart-
ment or in physicians' offices. This term includes outpatient hospital diagnostic services which
are ordinarily furnished by a hospital to its outpatients and also includes outpatient physical
therapy services provided to an outpatient or inpatient and physical therapy provided in the
therapist's office subject to certain limits and conditions.
3. Other medical services, when provided under prescribed conditions, including:
(a) Diagnostic X-ray and laboratory tests as well as diagnostic tests such as electrocardiograms,
basal metabolism reading, etc.
(b) X-ray, radium and radioactive isotope therapy
(c) Surgical dressing, splints, casts, etc.
(d) Rental of durable medical equipment such as iron lungs, oxygen tents, hospital beds and
wheel chairs (or purchase, if more economical)
(e) Prosthetic devices (other than dental) which replace all or part of an internal body organ
(f) Braces and artifical legs, arms, eyes, etc.
(g) Ambulance service if patient's condition is such as to require it
(h) Cost of supplies directly related to the care of a colostomy
4. Unlimited home health service visits during a calendar year. Such services are essentially for
homebound persons and include visiting nurse services and various types of therapy treatment,
including outpatient hospital services when equipment cannot be brought to the home.
5. Benefits for psychiatric treatment outside of a hospital are limited under the supplementary plan
to $250 per year because only 62'/z% of the first $500 of such expenses are eligible for
reimbursement and the 20% co-insurance factor must then be applied. (If the $75 deductible has
not been satisfied, the balance of the $75 must also be deducted from eligible expenses making
the maximum benefit $212.50 a year for a person whose only expenses are psychiatric.)
6. Services of independent physical therapists up to a maximum of $500 per calendar year.
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FINANCING OF SOCIAL INSURANCE PROGRAMS
There are four funds within the federal budget which receive contributions from employers and employees and pay benefits
or reimburse expenditures to entitled beneficiaries under the Social Security and Medicare laws. These are:
? Old-Age and Survivors Insurance Trust Fund (OASI)
? Disability Insurance Trust Fund (DI)
? Hospital Insurance Trust Fund (HI)
? Supplementary Medical Insurance Trust Fund (SMI)
Contributions are distributed to the funds according to tax schedules or procedures set by law. Page 24 shows a history of
allocations to the OASI, DI and HI funds since Social Security began in 1937, as well as a schedule for the future. The
table on page 23 shows a history of adequate actuarial rates and standard monthly premiums for SMI coverage.
OLD AGE,
SURVIVORS, AND
DISABILITY
INSURANCE
The Social Security Amendments of 1983 lent stability to the OASI and DI programs. It must be
recognized, however, that the two funds are still in delicate financial balance, and that adverse
economic conditions could necessitate an additional infusion of revenues. With this in mind, the
Amendments made provision for emergency short-term financing to cover potential intermediate
deficits.
Throughout 2020, the situation of OASDI is projected to be sound. During this time, the ratio of
employees to retirees is considered favorable, and it is expected that the funds will actually grow.
The danger then will not be insufficiency of funds, but that the apparent oversufficiency might lead
to pressure for benefit increases that cannot be maintained.
After 2020, according to current actuarial projections, the ratio of employees to beneficiaries will
drop and OASDI will need all of the accumulated funds in addition to the scheduled contributions
to avoid a long-term deficiency. Thus, the Old Age and Disability programs are believed to be
adequately financed, both in the short and the long term, although without margin for adversity.
HOSPITAL The Hospital Insurance (Medicare Part A) program is projected to have financial problems in the
INSURANCE 1990s. In the short term, the HI fund should be sufficient to pay benefits; however, if medical costs
continue to rise as they have, the designated contributions will become inadequate and interfund
loans will have to be repaid and spent for benefits, and eventually the HI fund will disappear. In
the very long term expenditures could well be two to three times scheduled income without
corrective legislation. Thus, pressure for a significant increase in the hospital insurance tax rate, or
reductions in benefits, is projected by the mid-1990s.
Almost all people are automatically covered under Medicare Part A through their participation in
Social Security. Those who are not covered may enroll on a voluntary basis and pay a separate
monthly premium (voluntary enrollees must also sign up for Part B). A history of premiums for
voluntary coverage is shown below.
July 1973-June 1974 $ 33.00
July 1974-June 1975 36.00
July 1975-June 1976 40.00
July 1976-June 1977 45.00
July 1977-June 1978 54.00
July 1978-June 1979 63.00
July 1979-June 1980 69.00
July 1980-June 1981 78.00
July 1981-June 1982 89.00
July 1982-December 1983 113.00
January-December 1984 155.00
January-December 1985 174.00
SUPPLEMENTARY Unlike the other social insurance programs, SMI (Medicare Part B) is voluntary, and is financed
MEDICAL directly by participants and the government in much the same way as private health insurance. At
INSURANCE one time, participants and the government each paid half of the cost of coverage. However, a
provision enacted in 1973 stated that the participant share would rise no faster than Social Security
benefits. Since medical costs have been going up faster than Social Security, participants are paying
less and less of the cost and the government more and more. As shown in the table on page 23, the
government is now financing 75 percent of the cost for the aged and 85% of the cost for the
disabled.
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SUPPLEMENTARY
MEDICAL
INSURANCE
(Continued)
Since the law requires government and participant contributions to match current expenditures,
there is no financing crisis as such, but with ever-increasing general revenues being allocated to
SMI, the taxpayers may some day demand that benefits be trimmed to keep the costs down.
Each year the government determines the cost of SMI coverage for the aged and disabled populations
separately, taking into account the estimated cost of benefits and administration. The "adequate
actuarial rate" is defined by law as one-half of the cost in each category. The standard monthly
premium for the government is two times the adequate actuarial rate, less the participant's standard
monthly premium.
The table below shows, according to the period for which they are applicable, the adequate actuarial
rates and the standard monthly premiums paid by the participants and the government.
HISTORY OF ADEQUATE ACTUARIAL RATES AND
STANDARD MONTHLY PREMIUMS
Period
Aged
Disabled
Parti-
cipant
Aged
Disabled
July 1966-March 1968
$ 3.00
-
$ 3.00
$ 3.00
-
April 1968-June 1970
4.00
-
4.00
4.00
-
July 1970-June 1971
5.30
-
5.30
5.30
-
July 1971-June 1972
5.60
-
5.60
5.60
-
July 1972-June 1973
5.80
-
5.80
5.80
-
July 1973
6.30
$14.50
5.80*
6.80
$23.20
August 1973
6.30
14.50
6.10*
6.50
22.90
September 1973-June 1974
6.30
14.50
6.30
6.30
22.70
July 1974-June 1975
6.70
18.00
6.70
6.70
29.30
July 1975-June 1976
7.50
18.50
6.70**
8.30
30.30
July 1976-June 1977
10.70
19.00
7.20
14.20
30.80
July 1977-June 1978
12.30
25.00
7.70
16.90
42.30
July 1978-June 1979
13.40
25.00
8.20
18.60
41.80
July 1979-June 1980
13.40
25.00
8.70
18.10
41.30
July 1980-June 1981
16.30
25.50
9.60
23.00
41.40
July 1981-June 1982
22.60
36.60
11.00
34.20
62.20
July 1982-December 1983
24.60
42.10
12.20
37.00
72.00
January-December 1984
29.20
54.30
14.60
43.80
94.00
January-December 1985
31.00
52.70
15.50
46.50
89.90
'Reflects freeze under Economic Stabilization Program.
**As a result of a technical flaw in the law, the participant's standard monthly premium was continued
at $6.70 per month for 12 months from July 1975.
The 1983 Amendments changed the premium period to a calendar year basis, to coincide with the
change in timing of the general benefit increase, so the $12.20 rate for July 1982 to June 1983
remained in effect through December 1983. In 1984 and 1985, premiums were set by law at one-
half the adequate actuarial rate; this was continued for the 1986 and 1987 rates, but thereafter, any
increase will be limited to no more than the percentage of the general benefit increase from the first
to the second preceding year.
The premiums are deducted from the monthly benefits of persons receiving Social Security, Railroad
Retirement, or federal civil service retirement benefits. Other covered persons receive a premium
notice, with payment to be sent to the proper servicing center.
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HISTORY OF TAXES AND SCHEDULED TAXES IN FUTURE YEARS
Employee and Employer (Each)
Total Tax
Maximum
Taxable
OASI121
DI (3) HI (4) Total
Employer- Self-
Wage
Self-
Employee Employed
Base
Employee
Employed
HISTORY OF TAXES FROM 1937 THROUGH 1982
1937-1949
1.00%
-
-
1.00%
2.00%
-
$ 3,000
$ 30.00
-151
1950
1.50
-
-
1.50
3.00
-
3,000
45.00
-151
1951-1953
1.50
-
-
1.50
3.00
2.25%
3,600
54.00
$ 81.00
1954
2.00
-
-
2.00
4.00
3.00
3,600
72.00
108.00
1955-1956
2.00
-
-
2.00
4.00
3.00
4,200
84.00
126.00
1957-1958
2.00
0.25%
-
2.25
4.50
3.371/2
4,200
94.50
141.75
1959
2.25
0.25
-
2.50
5.00
3.75
4,800
120.00
180.00
1960-1961
2.75
0.25
-
3.00
6.00
4.50
4,800
144.00
216.00
1962
2.871/2
0.25
-
3.121/2
6.25
4.70
4,800
150.00
225.60
1963-1965
3.371/2
0.25
-
3.621/2
7.25
5.40
4,800
174.00
259.20
1966
3.50
0.35
0.35%
4.20
8.40
6.15
6,600
277.20
405.90
1967
3.55
0.35
0.50
4.40
8.80
6.40
6,600
290.40
422.40
1968
3.321/2
0.471/2
0.60
4.40
8.80
6.40
7,800
343.20
499.20
1969
3.721/2
0.471/2
0.60
4.80
9.60
6.90
7,800
374.40
538.20
1970
3.65
0.55
0.60
4.80
9.60
6.90
7,800
374.40
538.20
1971
4.05
0.55
0.60
5.20
10.40
7.50
7,800
405.60
585.00
1972
4.05
0.55
0.60
5.20
10.40
7.50
9,000
468.00
675.00
1973
4.30
0.55
1.00
5.85
11.70
8.00
10,800
631.80
864.00
1974
4.371/2
0.571/2
0.90
5.85
11.70
7.90
13,200
772.20
1,042.80
1975
4.371/2
0.571/2
0.90
5.85
11.70
7.90
14,100
824.85
1,113.90
1976
4.371/2
0.571/2
0.90
5.85
11.70
7.90
15,300
895.05
1,208.70
1977
4.371/2
0.571/2
0.90
5.85
11.70
7.90
16,500
965.25
1,303.50
1978
4.271/2
0.771/2
1.00
6.05
12.10
8.10
17,700
1,070.85
1,433.70
1979
4.33
0.75
1.05
6.13
12.26
8.10
22,900
1,403.77
1,854.90
1980
4.52
0.56
1.05
6.13
12.26
8.10
25,900
1,587.67
2,097.90
1981
4.70
0.65
1.30
6.65
13.30
9.30
29,700
1,975.05
2,762.10
1982
4.571/2
0.821/2
1.30
6.70
13.40
9.35
32,400
2,170.80
3,029.40
1983
4.775
0.625
1.30
6.70
13.40
9.35
35,700
2,391.90
3,337.95
1984
5.20
0.50
1.30
7.00
14.00
14.00
37,800
2,646.00
5,292.00
1985
5.20
0.50
1.35
7.05
14.10
14.10
39,600
2,791.80
5,583.60
Total for 20 years (1966-1985)
.......................................................
22,660.19
34,588.35
Total for 25 years (1961-1985)
.......................................................
23,476.19
35,807.55
Total for 35 years (1951-1985)
.......................................................
24,331.19
37,090.05
Total for 49 years (1937-1985)
.......................................................
24,766.19
37,090.05
SCHEDULED TAXES IN FUTURE YEARS
1986-87
5.20
0.50
1.45
7.15
14.30
14.30
39,600161
2,831.4016'
5,662.8016)
1988-89
5.53
0.53
1.45
7.51
15.02
15.02
39,60016'
2,793.96'6'
5,947.92(61
1990-99
5.60
0.60
1.45
7.65
15.30
15.30
39,60016'
3,029.4016'
6,058.80161
After 1999
5.49
0.71
1.45
7.65
15.30
15.30
39,600161
3,029.4016'
6,058.8016)
(')Does not reflect tax credits (see page 4).
12'OASI Old-Age and Survivors Insurance
131D1 = Disability Insurance
(4)HI = Hospital Insurance (Part A of Medicare)
1s1Self-employment tax began in 1951.
')Does not reflect possible increases in maximum taxable wage base effective after 1985.
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 Sanitized Copy Approved for Release 2011/01/11: CIA-RDP89-00066R000900110002-2
THE HAY GROUP
Providing comprehensive human resource services from 94 offices in 27 countries throughout the world-
job analysis and evaluation ? salary planning and administration
? executive compensation ? sales incentives ? employee benefits
? actuarial services ? compensation surveys ? seminars ? computer
services ? communications ? management assessment, development,
training ? management research ? organizational design ? market
research and audits* strategic planning ? organizational performance,
assurance and measurement ? selection and recruitment ? employee
climate surveys ? management climate analyses ? career continuation
World Headquarters
229 S. 18 St. Rittenhouse Square, Philadelphia, PA 19103 [phone]
893-0270
Other U.S. Locations
Atlanta-
57 Executive Park South, N.E., Atlanta, GA 30329
(404)
321-4996
Boston-
5 Faneuil Hall Marketplace, Boston, MA 02109
(617)
367-7100
Charlotte-
212 South Tryon Street, Suite 450, Charlotte, NC 28281
(704)
333-1591
Chicago-
One East Wacker Drive, Chicago, IL 60601
(312)
644-5700
Cincinnati
The First National Bank Center, 425 Walnut Street,
Cincinnati, OH 45202
(513)
579-1180
Dallas-
12700 Park Central Place, Suite 1411, Dallas TX 75251
(214)
233-9767
Houston-
1100 Louisiana, Suite 1050, Houston, TX 77002
(713)
658-9032
Kansas City-
Crown Center Suite 200, 2460 Pershing Road,
Kansas City, MO 64108
(816)
842-5656
Los Angeles-
Broadway Plaza Suite 2300, 700 Flower Street,
Los Angeles, CA 90017
(213)
629-3921
Minneapolis-
Suite 1318 TCF Tower, 121 South 8th Street, Minneapolis,
MN 55402
(612)
339-0555
New York-
One Dag Hammarskjold Plaza, New York, NY 10017
(212)
486-6300
Pittsburgh-
One Gateway Center, Pittsburgh, PA 15222
(412)
263-2640
St. Louis-
San Francisco-
Clayton Mercantile Center, 8000 Maryland Avenue, Suite 1100
St. Louis, MO 63105
One Market Plaza, Suite 1018,
San Francisco, CA 94105
(415)
543-3455
San Jose-
2099 Gateway Place, Suite 110, San Jose, CA 95110
(408)
280-0333
Seattle-
110 1 10th Avenue, Suite 312, Bellevue, WA 98004
(206)
455-4979
Stamford-
One Landmark Square, Stamford, CT 06901
(203)
324-4800
Walnut Creek-
925 Ygnacio Valley Road, Suite 100, Walnut Creek, CA 94596
(415)
945-8220
Washington, D.C.- 1110 Vermont Avenue, N.W., Suite 710, Washington, D.C. 20005
(202)
833-9250
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