OASDHI(Old-age, Survivors, Disability, and Hospital Insurance)

Coverage
Old-age, survivors, disability, and hospital insurance covers most U.S. workers, including nearly all workers in private industry and most public employees. It does not cover some state and municipal employees and certain self-employed people. It also does not cover some foreign workers admitted temporarily to the United States. Most workers not covered by Social Security contribute to other retirement and disability funds.

Administration
The OASDHI program consists of old-age, survivors, and disability insurance (OASDI) and Medicare. The U.S. government administers OASDI through an independent agency called the Social Security Administration. Medicare is managed by the Health Care Financing Administration, an agency of the U.S. Department of Health and Human Services.

Workers in jobs covered by Social Security must have a Social Security card. Each card has a number that enables the Social Security Administration to monitor the worker's earnings. Any U.S. resident may apply for a card at a local Social Security office. Applicants must present proof of age and citizenship or alien status.

Old-age, survivors, and disability insurance forms the foundation of the U.S. Social Security system. It protects almost all of the nation's workers.

Eligibility
Workers or their families become eligible for retirement or survivors benefits after the workers earn a specified number of work credits in jobs covered by Social Security. The number of work credits earned depends on the amount of money the person earns per year. But workers may receive only four work credits each year, no matter how much money they earn.

To qualify for benefits, workers must be fully insured or currently insured. Fully insured workers are those who have earned 40 work credits. Workers who reached age 62 before 1991 needed fewer than 40. Fully insured workers are entitled to complete old-age, survivors, disability, and hospital coverage. Currently insured workers are those who have earned at least six work credits during the 39 months before their death or disability. They qualify for limited survivors coverage.

Workers disabled before age 31 may collect disability benefits if they have earned at least six work credits and if they have earned work credit for at least half the time between their 21st birthday and the time they became disabled. Workers disabled after their 31st birthday generally need at least five years of work credit in the 10-year period before they became disabled.

Benefits
To collect benefits, retired or disabled workers or their survivors must file a claim with the Social Security Administration. Benefits are paid monthly, except for lump-sum death payments.

Insured workers may collect full retirement benefits when they reach retirement age. Beginning in 2003, the retirement age began to increase gradually from 65 to 67. It will rise by two months per year to age 66 by 2009 and remain fixed through 2020. It will then increase gradually to age 67 by 2027.

Workers also may collect retirement benefits as early as age 62. But such workers get a permanently reduced benefit. The amount of reduction depends on their age at retirement. Workers who retire at age 62 collect 80 percent of the monthly amount they would have received on retiring at age 65. Workers who retire at age 62 between 2005 and 2016 will collect 75 percent of the full monthly benefit. After that, the benefits received by 62-year-olds who are entering retirement will gradually be reduced until those retiring in 2022 or later will get only 70 percent of the full monthly benefit.

To collect disability benefits, workers must have a severe physical or mental condition. The condition must have lasted at least 12 months or must be expected either to last that long or to result in death.

Social Security also provides benefits to the families of retired or disabled workers. Spouses may collect full benefits at age 65. A spouse's full benefit equals 50 percent of the worker's benefit. Spouses may collect reduced benefits if they apply while age 62 to 64. The age at which spouses may collect full benefits, like that of retired workers, will gradually increase to 67 between 2003 and 2027. Additional benefits are paid to the child of a retired or disabled worker if the child is (1) unmarried and under 18, (2) under 19 and in elementary or high school, or (3) 18 or older and unmarried and disabled since before age 22. A spouse under age 62 may also claim benefits if he or she is caring for a child who is under age 16 or disabled. A divorced wife may collect benefits based on her former husband's work record if the marriage lasted 10 years or more.

When an insured worker dies-either before or after retirement-the worker's dependents may be eligible for a monthly survivors benefit. Payments may be made to a surviving spouse age 60 or older, a surviving unmarried child under age 18, or a surviving, disabled, unmarried child age 18 or older who became disabled before age 22. Monthly survivors benefits also may go to a surviving disabled spouse, a disabled divorced spouse age 50 to 60, dependent parents age 62 or older, or a surviving spouse under 62 years of age who is caring for either a disabled child or a child under 16 who is collecting benefits. Payments are based on the benefits the worker was receiving at the time of death, or would have received at retirement. The spouse also receives a single lump-sum payment after the worker's death.

Total benefits payable on a worker's earnings record may not exceed the maximum family benefit. This amount varies from 150 to 180 percent of the worker's basic monthly benefit. When the total benefits exceed the maximum, each dependent's or survivor's benefit is proportionately reduced.

How Benefits are Figured
The amount workers receive in OASDI benefits depends on their average lifetime earnings, over a maximum of 35 years, in jobs covered by Social Security. A worker who has paid the maximum in Social Security taxes receives a larger benefit than a worker who has paid less. However, workers with low lifetime earnings collect benefits that are greater in proportion to their earnings than are the benefits collected by workers with high lifetime earnings.

When calculating OASDI benefits, the government wage-indexes the worker's covered earnings-that is, it adjusts the earnings record to reflect the rise in wages over a working lifetime. The government also automatically raises benefits to reflect increases in the cost of living. In addition, people who work beyond the normal retirement age without claiming benefits collect a bonus. This bonus provides 4.5 percent more in benefits for each year between ages 65 and 70 that such workers did not claim benefits. It is scheduled to increase gradually until it reaches 8 percent per year of delay in 2008.

Some higher-income individuals and couples must pay federal income tax on their benefits. This tax revenue helps finance the Social Security program.