How Social Security Works!

By Victor Makris Attorney at Law

713 526 9966
 Your Speaker

Victor Makris, Attorney

Born in Houston
Congressional Intern in College
University of Houston Law Center 1977
Makris Law Firm PC 1978 Present
Board Certified Personal Injury Trial Law
Practice Areas Social Security, Personal
Injury, Family Law, Bankruptcy, Probate,
Criminal Defense and more
Gotta call the office!!!
SOCIAL SECURITY?
THE TERM SOCIAL SECURITY WAS
FIRST USED BY?
ANSWER
WINSTON CHURCHILL
DESCRIBING BRITISH SYSTEM
ORIGINS OF US SYSTEM
BISMARK GAVE US AGE 65

IN 1930 2% OF POPULATION LIVED TO AGE

65

SS LAW PASSED IN 1935

PAY AS YOU GO SOCIAL INSURANCE

 How are benefits paid?

FICA [Federal Insurance

Contributions Act] = payroll taxes
FICA goes into Social Security
Trust Fund
What year first monthly
SS retirement check paid?
1936?
1939?
1940?
1942?
Answer: 1940

On Jan. 31, 1940, Ida M. Fuller, age 65,

received the first monthly Social
Security retirement benefit. Between
1937 and 1939, she had contributed
roughly $25 in taxes. Her first check
was for $22.54. By the time she died 35
years later at age 100, she had
collected about $23,000 in benefits.
IDA FULLER AND THE FIRST
SS RETIREMENT CHECK
TOO MUCH INCOME TAX?
150,000,000 US WORKERS PAY
AVERAGE INCOME TAX
2003 - 7.3% (doubled)
1955 - 3.4%
AVERAGE PAYROLL TAX

2003 - 15% (Tripled)

1955 - 5.6%
 THE GREAT EQUALIZER

FAMILY OF 4 WITH $55,000 INCOME

TAX IS $8,000.00 INCLUDING EMPLOYER MATCH

10% OF TAXPAYERS MAKE OVER $100,000

Pay 31% of payroll tax
Pay 64% of income tax

62% of TAXPAYERS EARN LESS $50,000

Pay 30% of payroll tax
Only 7% of income tax
 HOW LONG TO GET YOUR $
1980 TOOK SS RETIREE 3 YEARS

By 2003 IT TAKES ABOUT 15 YEARS

AFFECTS EARLY RETIREMENT

80% OF RETIREMENT BENEFIT
WHO DOES SS HELP

How Does Social Security

Help People with
Disabilities & Their
Families?
 Current Design: The Positives

Set monthly payment

Adjusted yearly for inflation
Move among 3 programs: work
history, age, eligibility category
Same benefit formula all programs
 Social & Family Insurance

All workers share risk of common

life events

Provides benefits for themselves

& family, even younger workers

Guaranteed monthly payment

 Essential Protection

Millions of families face disability

Adults with serious disabilities have

very low employment rate

Families of workers who become

disabled need guaranteed income
 Value of Social Security

For young workers with spouse and

2 children
Life insurance policy = $403,000
Disability policy = $ 353,000

Affordable disability insurance

 How to earn insurance

Workers & employers pay FICA [Federal

Insurance Contributions Act] taxes

Workers earn credits for eligibility

earned per quarters of work for 2015
$1,220 per quarter
Spouse and family receive benefits off
wage earners record when worker
becomes disabled, retires or dies
 Not just retired workers

Over 1/3 monthly benefit payments

go to 17 million non-retirees
TYPE OF BENEFITS
RETIREMENT BENEFITS
SURVIVOR BENEFITS
DISABILITY BENEFITS
MEDICARE
SSI - MEDICAID

APPEAL PROCESS IS THE SAME

 Social Security Insurance
Retirement - insures retirees in
their 60s after they retire

Survivors - insures dependent

children and widow(ers)

Disability - insures against loss of

ability to work due to disability
 Retirement Insurance

Retirees

Spouses Widow(er)s

Minor Children of retirees To age 18

 Survivors Insurance
Monthly life insurance if worker dies
Minor children until age 18

Spouses of deceased workers,retirees

Disabled widow(er)s at age 50-59

Widow(er)s at age 60

Adult children disabled before 22

 Disability Insurance

Disabled workers
Minor children and spouses

Disabled adult children before 22

whose parents are on SS
 People with Disabilities

May receive all 3 types of Social

Security benefits

Family members also eligible

 ADULT DISABLED CHILDREN
Severe disability before age 22

Significant work limitations & single

Qualify when parent is receiving SS

disability, retirement or dies on SS

Rarely leave program

Often move among programs

ADVANTAGES OF AGE
IN GETTING DISABILITY

REGULATIONS ARE
FRIENDLIER TO DISABILITY
APPLICANTS AGE 50 AND
OVER
 Younger Workers: Disability

Need fewer credits than older

workers to qualify
Must prove significant work
limitations
Benefit amount depends on
workers previous earnings
Benefits for both spouse & children
SSD AND SSI

How are Social Security &

SSI Disability Programs
Different?
Social Security Act

Title II Old Age, Survivors, &

Disability Insurance: Social
Security

Title XVI: Supplemental Security

Income [SSI]
Different Programs:
Title II & Title XVI
Title II: OASDI Title XVI: SSI
SS FICA payroll General revenues
deduction from federal budget
Workers Default program for
Other beneficiaries: aged, blind,disabled
spouses & children adults & children
No asset/income Asset/income limits
limit Medicaid
Medicare
Receiving Both Benefits

May get Social Security disability &

SSI at same time limited income &
resources
May get 1 benefit now & another
later
But rules about working while getting
benefits differ for each program
 Paying Current Benefits

Pay as you go system

Most money coming in pays current

beneficiaries due to

Very low administrative costs

What are the Trust Funds?

Technically 2 trust funds:

Old Age and Survivors Insurance

Disability Insurance

People with disabilities get benefits

from both

Policymakers treat as 1 fund

 Whats the big concern?
Is there enough money to pay future Old
Age, Survivors & Disability Insurance
benefits?

Solvency = ability to pay legal obligations

NOT issue for Supplemental Security

Income [SSI]
A DEVELOPING CONCERN
WHEN MONIES COME INTO THE TRUST
FUNDS WHAT HAPPENS TO THAT
MONEY?

TREASURY BILLS TAKE THE MONEY

OUT AND PUT AN IOU IN
IS SS BROKE?
Media and government officials alike
have called the system BROKE

GEORGE W. BUSH

PRIVATE ACCOUNTS SAGA

NO but there is a shortfall
There is a predicted shortfall in the
amount of money coming in vs the
amount of benefits that will have to be
paid.

The year this begins differs depending

on who you talk to
 Some Current Projections

Pay full benefits using payroll tax

income: until 2020

Pay full benefits using payroll tax

income & redeeming Trust Fund
bonds: until 2035

Approximate 29% shortfall after

WHATS THE PLAN?
Tweaking the Engine to
Prevent Shortfall in the Future
 Proposals to fix
Social Security

Increase payroll taxes all income

Raise retirement age to 67 to 70
Reduce monthly benefits
Asset and/or income cap
Inject more money from Treasury
adding to national debt
Raise the Cap on Income
Subject to FICA Taxes
Now $118,500

Raising it to first $190,000 of

income closes 31% of shortfall

Complete removal closes 99%

of shortfall
Raise the payroll tax rate on
employers and employees
An increase from 7.65% to
8.2% on employer and
employee

Eliminates half the shortfall

Apply payroll tax to benefits
Tax on health benefits

Flexible spending accounts

Closes 11% of shortfall

Raising age of retirement
67 to 70

Closes 65% of the shortfall

Index benefits for longevity
As life expectancy increases
lower annual benefit

Closes 21% of shortfall

WHATS THE BEST PLAN TO
FIX THE SHORTFALLS
A LITTLE BIT OF EACH OF ABOVE
PHASE THEM IN SLOWLY
OVER A FIVE YEAR PERIOD
TO AVOID SETBACK TO U.S.
ECONOMIC RECOVERY
BIPARTISAN BUDGET ACT OF 2015
FILE AND SUSPEND
You file for your own benefits at or after full retirement age;
Suspend your benefits until age 70;
Spouse or dependent collects in the meantime;
You receive increased benefit at age 70.
You must be 66 and file before May 1, 2016

RESTRICTED APPLICATION
You file for your spousal benefits at or after full retirement age;
Restricted application for spousal benefits only;
Your defer your own benefit and allow it to grow and claim later.
Must be 62 prior to end of 2015
You can file when you reach age of full retirement
 BASIC TEST FOR GETTING
SOCIAL SECURITY DISABILITY
MENTAL OR PHYSICAL IMPAIRMENT

LASTING MORE THAN ONE YEAR

PRECLUDING COMPETITIVE WORK IN

PREVIOUS EMPLOYMENT AND

OTHER EMPLOYMENT IN LOCAL OR

REGIONAL ECONOMY
 HOW TO PROVE DISABILITY
THROUGH MEDICAL RECORDS!!!!

BY GETTING TREATMENT!!!!

HARRIS COUNTY HOSPITAL DISTRICT

PROGRAM

MHMRA
PRESUMPTIVE DISABILITY
LISTING IE - MULTIPLE SCLEROSIS

MOTOR DYSFUNCTION IN 2
EXTREMITIES OR MORE

VISUAL OR MENTAL IMPAIRMENT

MUSCLE WEAKNESS ON REPETITIVE

ACTIVITY
Compassionate Allowances
Fast Track grant of benefits

Even with minimal medical records

200 different serious illnesses

Diagnosis is the key

 THERE ARE 4 RULES

FOR GETTING DISABILITY

APPEAL
APPEAL

APPEAL

APPEAL

D O N T G I V E U P!!!
APPLICATION PROCESS
APPLY FOR BENEFITS
RECONSIDERATION
REQUEST A HEARING
APPEALS COUNCIL/FEDERAL
COURT
 PROCESS TIME
APPLICATION TO HEARING
8 - 14 MONTHS
APPEALS COUNCIL 8 MONTHS
FEDERAL COURT 12 14 MTHS
DIG IN PROBLEMS OF
WORKING, UNEMP BENEFITS,
& WORKERS COMP
 VICTOR MAKRIS
MAKRIS LAW FIRM, PC
713 526 9966
1 866 526 9966
CALL IF YOU HAVE ANY
QUESTIONS
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T H A N K Y O U!
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