Ch.7 Government-Mandated Social Security Programs Exam Prep

Chapter 07

Government-Mandated Social Security Programs

  True / False Questions

1. The Social Security Act was amended in 1965 to create the Medicare program. (Medicare)

2. The national federal-state unemployment insurance program provides weekly income to individuals who become unemployed for any reason. (Unemployment Insurance)

3. The Medicare tax is subject to a taxable wage base. (Financing OASDI and Medicare Programs)

4. Medigap insurance supplements Medicare Parts A & B and is available from private insurance companies. (Medigap Insurance)

5. The largest share of the FICA tax funds OASDI programs. (Financing OASDI and Medicare Programs)

6. The Unemployment Compensation Act of 2008 expanded the EUC benefits to 20 weeks nationwide. (Unemployment Insurance Benefit Amounts)

7. In 2015, more than 64 million Americans received Social Security benefits. (Employers Required to Participate in Social Security Programs)

8. Social Security disability benefits are available to disabled workers who are unable to work as a result of a serious medical impairment that lasts at least 12 months. (Disability Benefits)

9. Based on the 2015 report on the status of Medicare, the projected date of the Medicare trust fund exhaustion is 2050. (Financing OASDI and Medicare Programs)

10. The Social Security Administration increases retirement benefits by a designated percentage for each month worked beyond full retirement until age 70. (Old-Age Benefits)

11. In general, an employee must earn at least 30 credits to be eligible to receive retirement benefits. (Qualifying for OASDI Benefits)

12. Social Security pays only for total disability. (Disability Benefits)

13. Part A coverage automatically qualifies an individual to enroll in Part B coverage for a monthly premium. (Eligibility Criteria for Medicare Benefits)

14. The Social Security Administration pays monthly survivor benefits at a level ranging from 71.5% to 100% of the primary insurance amount. (Survivor Benefits)

15. Medicare Part A only covers outpatient hospital care and services. (Medicare Part A Coverage)

16. Self-employed individuals must pay a FICA rate that is twice as much as a factory worker has to pay. (Financing OASDI and Medicare Programs)

17. Most states impose a waiting period, usually two weeks following submission of a claim, prior to paying unemployment benefits. (Eligibility Criteria for Unemployment Insurance Benefits)

18. An employee's average indexed monthly earnings determines the initial primary insurance amount for OASDI benefits. (Determining Benefit Amounts)

19. Physicians' fees and custodial care in a nursing home are covered by Medicare Part A. (Medicare Part A Coverage)

20. Medicare Part D was first offered in 2004. (Medicare Prescription Drug Benefit)

21. In 2016, 6.2% of employer and employee contributions were set aside from FICA to fund OASDI programs. (OASDI Programs)

22. Social Security retirement funds are expected to remain sustainable in the coming decades. (Financing OASDI and Medicare Programs)

23. Medicare Part B covers the services not included under Medicare Past A. (Medicare Part B Coverage)

24. Medicare Part D was established by the Medicare Prescription Drug Improvement and Modernization Act of 2003. (Medicare Prescription Drug Benefit)

25. The Social Security Administration is the only federal agency overseeing Social Security programs. (Administration of Social Security Programs)

26. Medicare Select plans are Medigap policies that present higher premiums. (Medigap Insurance)

27. The original Medicare plan is a fee-for-service plan managed by the federal government. (Medicare)

28. Social Security programs were geared toward promoting the social good, which refers to a booming economy, low levels of unemployment, progressive wages and benefits, and safe and healthful working condition. (Government-Mandated Social Security Programs)

29. OASDI is the abbreviation for the term Old-Age, Survivor, and Disability Income. (Introduction to the Social Security Programs)

30. Coverage rules are the same across OASDI, Medicare, and the unemployment insurance programs. (Employers Required to Participate in Social Security Programs)

31. The state share of unemployment taxes may be used only for benefit costs. (Administration of Social Security Programs)

32. The Social Security Administration only issues Social Security numbers to U.S. citizens. (Social Security Numbers)

33. Employees forfeit Social Security credits when they change jobs or become unemployed. (Qualifying for OASDI Benefits)

34. Automatic cost-of-living adjustments are applied to OASDI benefits to guard against inflation. (Determining Benefit Amounts)

35. The age for collecting full Social Security retirement benefits is gradually increasing from 65 to 67 over a 22-year period ending in 2022. (Old-Age Benefits)

36, Analysis suggests that, based on an average life expectancy, taking a lower monthly benefit sooner would lead to earning about the same total benefit over one’s lifetime as an individual who put off retirement to claim a higher monthly benefit. (Old-Age Benefits)

37. In general, a worker needs to have accumulated at least 50 credits to qualify family members for survivor benefits. (Survivor Benefits)

38. Stepchildren, grandchildren, or adopted children are not considered as eligible for survivor benefits. (Survivor Benefits)

39. The Social Security Administration defines disability as an inability to engage in any substantial gainful activity because of a medically determinable physical or mental impairment that is expected to result in death, or that has lasted for a continuous 12 months. (Disability Benefits)

40. A percentage of annual wages is one of the methods states use to calculate weekly unemployment benefit amounts. (Unemployment Insurance Benefit Amounts)

 
Multiple Choice Questions

41. In 2016, how much did an employee have to make to earn a credit for OASDI? (Qualifying for OASDI Benefits)

A. $1500
B. $2240
C. $1200
D. $1260

42. This Medicare program offers voluntary supplemental medical insurance. (Medicare Part B Coverage)
A. Medicare Part B
B. Medicare Part A
C. Medicare Advantage
D. Medicare Part C

43. Effective 2016, what was the annual increase in Social Security benefits? (Determining Benefit Amounts) A. 1%
B. no increase
C. 7.2%
D. 9%

44. Which of the following are eligible for OASDI? (Employers Required to Participate in Social Security Programs)
A. Self employed individuals
B. Federal government workers
C. 10 year railroad employees
D. Children under 18

45. Which Medicare program provides beneficiaries the opportunity to receive health care from a variety of options? (Medicare Part C: Medicare Advantage)
A. Medicare Advantage
B. Medigap
C. Medicare Part C
D. Medicare Select

46. At what age are retirees first eligible for Social Security benefits? (Old-Age Benefits)
A. 65
B. 62
C. 70
D. 67

47.  In 2015, what was the annual monthly benefit for all retired workers? (Old-Age Benefits)
A. $855
B. $1,000
C. $1,335
D. $1,754

48. In 2016, approximately, what was the average monthly survivor benefit for a widowed and two children? (Survivor Benefits)
A. $1,860
B. $2,120
C. $2,680
D. $3,210

49. In 2016, what was the average monthly disability benefit for all disabled workers? (Disability Benefits)
A. $540
B. $1,166
C. $2,245
D. $3,450

50. OASDI taxes are subject to a taxable wage base. What was the taxable wage base for everyone in 2016? (Financing OASDI and Medicare Programs)
A. $80,100
B. $118,500
C. $120,100
D. $140,100

51. Which of the following is the state unemployment tax? (Unemployment Insurance Benefit Amounts)
A. FICA
B. FUTA
C. SUTA
D. COLA

52. Which of the following is not one of the factors believed to have hastened the deterioration of the OASDI and Medicare trust funds? (Financing OASDI and Medicare Programs)
A. longer life expectancy
B. increased insurance claims
C. high levels of unemployment
D. immigration

53. Which of the following is not one of three methods states use to calculate weekly unemployment benefit amounts? (Unemployment Insurance Benefit Amounts) A. A fraction of the highest wages for a calendar quarter earned during the base period.
B. A percentage of annual wages.
C. A percentage of the average weekly wage earned during the base period.
D. A percentage of the average monthly wages earned during the base period.

54. Which of the following are not covered by Medicare Part B? (Medicare Part B Coverage)
A. Outpatient care
B. Hospitalization
C. Laboratory services
D. Health screenings

55. What is the amount of contribution employer and employees must make to the Medicare tax which supports Medicare Part A? (Financing OASDI and Medicare Programs)
A. 1.45%
B. 50%
C. 3%
D. 4%

56. The Social Security Administration defines “gainful” work activity as all of the following, except: (Disability Benefits)

A. Work intended for profit, whether or not a profit is realized.

B. Work performed for pay or profit.

C. Work performed full-time.

D. Work of a nature generally performed for pay or profit.

57. Which of the following statements is true when comparing workers’ compensation with Social Security disability and survivors’ benefits? (Disability Benefits)

A. Worker’s compensation pays for medical care for work-related injuries.

B. Workers’ compensation does not pay for permanent partial or permanent total disability.

C. Social Security pays benefits for permanent partial or permanent total disability.

D. Social Security payments do not have a waiting period.

58. Which of the following Medicare coverage would cover physical therapy, occupational therapy, and speech-language therapy ordered by a doctor? (Medicare Part A Coverage)

A. Medicare Part B

B. Medicare Part A

C. Medicare Part D

D. Medicare Part E

59. The state unemployment employer tax rate varies according to ______ system. (Unemployment Insurance Benefit Amounts)

A. an experience rating

B. a duration of work

C. an average indexed monthly earnings

D. a fully insured

60. Funding for OASDI and Medicare programs requires equal employer and employee contributions under the _________.

A. Fair Labor Standards Act of 1938

B. Federal Insurance Contributions Act

C. The Social Security Act of 1935

D. Titles III and IX of the Social Security Act

 Essay Questions
 

61. Describe how OASDI and Medicare programs are financed. (Financing OASDI and Medicare Programs)

Main Points:

• Funding for OASDI and Medicare programs requires equal employer and employee contributions under the Federal Insurance Contributions Act (FICA).
• FICA requires that an employer pay tax based on its payroll; employees contribute tax based on earnings, which is withheld from each paycheck.
• The Self-Employment Contributions Act (SECA) requires that self-employed individuals contribute to the OASDI programs, but at a different rate.
• The tax rate is subject to an increase each year to sufficiently fund OASDI programs.
• FICAS requires employers and employees to contribute 7.65% each; for self-employed individuals, it is generally double that amount, or 15.3%.
• This tax is apportioned between OASDI and Medicare programs with the largest share of the FICA tax funding the OASDI program.
• The Medicare tax, or hospital insurance tax, supports the Medicare Part A program.
• OASDI stands for old-age, survivor, and disability insurance.
• Old-age benefits provide retirement income for retired workers.
• The Survivor portion of the program is where the Social Security Administration pays benefits to eligible family members of deceased workers.
• The Disability portion of the program is where the Social Security Administration pays benefits to seriously disabled workers and family members, paying only for total disability.
• Limited voluntary employment and involuntary unemployment
  • Voluntary termination usually disqualifies workers from receiving benefits, unless they chose to quit for reasonable causes
  • Reasonable cause refers to the creation of working conditions that cannot be tolerated by any sensible person
• Minimum earnings and employment requirements
  • Must have been employed for a minimum period of time
    • Called the Base Period
• A waiting period
  • Usually one week following claim
  • Possible reasons
    • Need for processing time
    • To limit costs
• Capacity to work and availability for work
  • Mentally & physically able (ability)
  • Willing and ready (motivation)
• Actively seeking suitable work
  • Jobs that require skills, knowledge, ability similar to individual’s customary work
  • Job offers employment terms and conditions that don’t violate relevant laws
• A participant pays the deductible, $360 in 2016, before Medicare begins to provide coverage
• For expenses above $360 through $3,310, the participant pays small copayments for each prescription
• For expenses above $3,310 through $4,850, the participant pays
  • 45% of the cost of brand-name drugs
  • 58% for generic drugs
  • This expense range is known as the coverage gap.
• For expenses greater than $4,850, the participant pays a small copayment equal to 5% of the cost of the prescription.
• Compulsory hospitalization insurance covers both inpatient and outpatient hospital care and services
  • Inpatient hospital care in a semiprivate room, meals, general nursing, and other hospital supplies and services
  • Home health services limited to reasonable and essential part-time or intermittent skilled nursing care and home health aide services, and physical therapy, occupational therapy, and speech-language pathology ordered by a doctor
  • Hospice care for people with terminal illness (that is, illness that is expected to lead to death within six months), including pharmaceutical products for symptom control and pain relief, medical and support services from a Medicare-approved hospice provider, and other services not otherwise covered by Medicare (for example, grief counseling)
  • Skilled nursing facility care, including semiprivate room, meals, skilled nursing and rehabilitative services, and supplies for up to 100 days per year