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A Glossary of Common Terms Used in Social Security

Common Terms Used in Social Security

Social Security pays five types of benefits such as – Retirement, Disability, Spouse’s/dependent children, Survivors and Medicare. Social Security Disability Benefits are determined on the basis of a medical chart review, which is an important service for disability lawyers. The social security system is rather complex. Accurate medical record review is necessary to determine Disability Benefits. Disability lawyers also require medical records services to prove the extent of disability of a disabled applicant.

Attorneys and medical review companies must be aware of all important terminology related to social security. Here are clear and simple explanations for some common terms related to Social Security.

Advance Designation      

As part of the Strengthening Protections for Social Security Beneficiaries Act of 2018, the SSA offers advance designation to capable adults and emancipated minors who are applying for or receiving Social Security benefits, Supplemental Security Income, or Special Veterans Benefits. Beneficiaries can designate up to three individuals who serve as their representative payee, if the need ever arises. It is optional, and individuals can update or withdraw advance designation at any time.

AIME (Average Indexed Monthly Earnings)

SSA calculates social security benefits using average indexed monthly earnings. Up to 35 years of a worker's indexed earnings are summarized in average. After determining the number of years, the sum of your 35 highest years of indexed earnings (up to age 60) will be divided by the total number of months worked in those years.

Appeal (Appeal Rights)   

Beneficiaries who are not satisfied with the Social Security Administration’s benefit decision have the right to appeal against the decision and the appeals process involves key successive steps such as – reconsideration by a Social Security official not involved in the initial decision, hearing with an administrative law judge, Appeals Council review or Federal court.

Benefit verification letter

This is an official letter from Social Security that states the amount an individual receives each month in Social Security benefits or Supplemental Security Income (SSI) payments. Also referred to as benefits letter, budget letter, proof-of-award letter or proof-of-income letter, this letter is a proof that shows that someone is receiving benefits or is waiting for a decision.

Cost-of-living adjustment (COLA)

Following an increase in the cost of living, Social Security benefits and Supplemental Security Income (SSI) payments may be increased each year. There may be no Social Security COLA for the years with little or no inflation.

Computation years

It refers to those years with the highest earnings taken from the base years and are used to calculate Social Security benefits. Total earnings for the computation years will be added and divided by the number of months in those years to get the Average Monthly Earnings (AME) or the AIME. Often, the number of computation years could be lower for disabled and deceased workers, depending on the age at which they became disabled or died.

DRCs (delayed retirement credits)

These credits are used to increase the amount of the beneficiary’s old-age benefit amount. They may earn a credit for each month during the period beginning with the month they attain full retirement age and ending with the month they attain age 70.

Early Retirement   

Insured workers can start getting Social Security retirement benefits as early as age 62, but the benefit amount will be less than what they might have got, if they waited until full retirement age. Taking retirement benefits early will permanently reduce the benefits. The reduction is calculated based on the number of months before full retirement age, when benefits are claimed.

FICA Tax     

FICA is Federal Insurance Contributions Act; this tax is deducted from the employee’s wages and funds the Social Security and Medicare programs. While the Social Security portion is 12.4% of gross wages up to an annually adjusted cap, the Medicare portion is 2.9% of all earnings.

FRA (full retirement age)

This is the age at which a person will be able to collect the full retirement benefit amount. SSA’s Retirement Age Calculator helps determine full retirement age and the effect receiving benefits early could have. The FRA is based on the year of birth. Claiming Social Security before FRA reduces your benefit.

Lifetime Earnings “Earnings Record”  

This is a chronological history of the amount of money workers earned each year during their working lifetime. The credits earned remain on Social Security record even when they change jobs or do not have any earnings.

PIA (primary insurance amount)

The sum of three separate percentages of portions of the AIME, primary insurance amount is equal to the Social Security benefit at full retirement age. While the percentage of PIA formula is fixed by law, the dollar amounts or bend points change annually with changes in the national average wage index.

Social Security Credits

As a worker earns and pays Social Security taxes, he/she earns credits that count toward their eligibility for future Social Security benefits. A maximum of four credits can be earned each year; 40 credits are necessary to qualify for benefits. At the same time, younger people need fewer credits to qualify for disability/survivors’ benefits.

For the determination of disability by the SSA, medical records are very important. Professional providers of medical review solutions will be up to date with all relevant terminologies related to the SSD claims and attorneys can rely on such services to get accurate review for all types of medical records.

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