The Social Security Act Overview
The Social Security Act is America's foremost social welfare law, designed to counteract the dangers of old age, poverty, disability and unemployment through a range of government programs and benefits. The Act was originally passed in 1935, as part of Franklin Delano Roosevelt's Second New Deal. It has been repeatedly amended, expanded, and adapted since that point, particularly in 1965 under Lyndon Johnson, with the creation of Medicare and Medicaid.
Social Security Retirement Benefits
The cornerstone of the Social Security Act is the Social Security payments it provides current retirees. Social Security benefits are funded through payroll taxes collected by the IRS and entrusted to the federal Social Security Trust Funds. Full benefits are available to retirees at the age of 65, though early retirees, starting at 62, may receive reduced benefits. Social Security benefits are "earned entitlements"; a typical worker must have worked ten years before qualifying. In addition to qualifying workers, the spouses and children of workers who have died are typically entitled to the deceased's benefits.
Social Security Disability Insurance
In addition to retirement benefits, the Social Security Act creates disability insurance (SSDI) for workers who suffer a total disability and are removed from the workforce before retirement age. To receive SSDI, the Social Security Act requires that workers show that they can no longer work in their previous occupation, cannot adjust to new work, and cannot return to work for at least a year.
Other Public Welfare Programs Created by the Social Security Act
While the Social Security Act creates a broad range of social programs, general discussion of "Social Security benefits" in the news and media often refers to retirement and disability benefits alone.
Medicaid and Medicare
In addition to disability and retirement benefits, the Social Security Act created and governs the federal Medicaid and Medicare programs. Medicare is designed to help elderly and disabled individuals receive medical treatment. Most people age 65 and older are entitled to hospital and medical insurance under Medicare. Similarly, Medicaid provides health insurance for low-income individuals who are unable to afford health care, regardless of age.
Due to inducements in the Social Security Act, every state, as well as the District of Columbia, Puerto Rico and the U.S. Virgin Islands, has an unemployment insurance program to aid workers who have become involuntarily unemployed and are looking for new, suitable employment. Weekly unemployment benefits will vary from state to state.
Supplemental Security Income and Temporary Assistance for Needy Families
The Social Security Act creates further programs to help meet the basic needs of low-income individuals and families. Supplemental Security Income provides federal funds to the elderly, blind, and disabled people who have little or no income of their own. In addition, the Temporary Assistance for Needy Families program provides financial assistance for pregnant women and families with children. Temporary cash assistance is also available for basic necessities such as food, clothing and housing.
Administration of Social Security Programs
The Social Security Act created the Social Security Administration (SSA), which administers many of the nation's social welfare programs. The SSA often works in cooperation with states, and states administer their own unemployment insurance and Medicaid programs. The SSA is in charge of Social Security retirement benefits, supplemental security income, and initial eligibility for Medicare and disability insurance. The SSA also has its own administrative adjudication system where individuals can appeal a denial of benefits. The Administration has over 1300 field offices throughout the United States.
Funding and Expenditures
Most programs created through the Social Security Act are funded by payroll taxes, with the proceeds from these taxes being managed through Social Security Trust Funds. Social Security is the single largest government program, with over 58 million people currently receiving benefits. Social Security expenditures totaled over $800 billion in 2013, or about a quarter of all government spending.
As the work force ages and more and more individuals enter into retirement, Social Security expenditures have increased at a pace greater than the revenue gained from payroll taxes. 2010 marked the first year in which Social Security payments exceeded Social Security tax revenues causing concern about the government's ability to pay out entitlements in the future.
If you're concerned about retirement, disability, or other benefits, consider contacting a qualified Social Security attorney to discuss your options.