What does fica oasdi mean

what does fica oasdi mean

Social Security Bulletin - Annual Statistical Supplement (2002)

[The following sections of text excerpted from the 2002 Annual Statistical Supplement pp. 9-17 are augmented by tables of program history available in pdf format through links at the relevant section heading.]

Social Security (Old-Age, Survivors, and Disability Insurance)

The Old-Age, Survivors, and Disability Insurance (OASDI) program provides monthly benefits to qualified retired and disabled workers and their dependents, and to survivors of insured workers. Eligibility and benefit amounts are determined by the worker's contributions to Social Security. Benefits are paid as an earned right to workers, their families and their survivors. There is no means test to qualify for benefits.

At the end of December 2001, 45.9 million people were receiving benefits at a rate exceeding $36 billion each month ($432 billion annually). According to the latest Social Security Trustees Report, these cash benefits comprised 4½ percent of the nation's gross domestic product. During the same year, approximately 153 million employees and self-employed workers, along with employers, contributed more than $516 billion to the OASDI trust funds—through which contributions are credited and benefits are paid.

Social Security benefits are essential to the economic well-being of millions of individuals. Social Security pays benefits to more than 90 percent of those 65 or older. It is the major source of income (providing 50 percent or

more of total income) for 64 percent of the beneficiaries. It contributes 90 percent or more of income for almost one-third of the beneficiaries, and is the only source of income for 20 percent of them.

Contributions and Trust Funds

A person contributes to Social Security either through payroll taxes or self-employment taxes under the Federal Insurance Contributions Act (FICA) or the Self-Employed Contributions Act (SECA). Employers match the employee contribution, while self-employed workers pay an amount equal to the combined employer-employee contributions. (Self-employed workers receive a special tax deduction to ease the impact of paying the higher rate.) There is a maximum yearly amount of earnings subject to OASDI taxes, $84,900 in 2002. There is no upper limit on taxable earn­ings for Medicare Hospital Insurance. Employees whose contributions exceed the maximum taxable amount because they worked for more than one employer can receive refunds of excess FICA payments when they file their tax returns.

Taxes are allocated to the Old-Age (Retirement) and Survivors Insurance (OASI), the Disability Insurance (DI), and the Hospital Insurance (HI) Trust Funds. In addition to the taxes on covered earnings, OASI and DI trust fund rev­enues include interest on trust fund securities, income from taxation of OASI and DI benefits, certain technical trans­fers, and gifts or bequests. By law, the OASI and DI trust funds may only be disbursed for:

Source: www.law.cornell.edu

Category: Insurance

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