Social Insurance and Public Assistance

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764 Series Bf377–394 Bf SOCIAL INSURANCE AND PUBLIC ASSISTANCE TABLE Bf377–394 Old-Age, Survivors, Disability, and Health Insurance – covered workers, earnings, employers, and tax rates: 1937–1999 Contributed by Price V. Fishback and Melissa A. Thomasson Annual maximum taxable earnings per worker For employer and employee each Contribution rate For self-employed persons Old-Age, Old-Age, Employers Survivors Survivors Under HI reporting Insurance Disability Health Insurance Disability Health Under OASDI (Medicare) taxable wages (OASI) Insurance (DI) Insurance (HI) (OASI) Insurance (DI) Insurance (HI) Bf386 1 Bf387 1 Bf388 Bf389 Bf390 Bf391 Bf392 Bf393 Bf394 Year Dollars Dollars Thousand Percent Percent Percent Percent Percent Percent 1970 7,800 7,800 5,690 3.650 0.550 0.60 5.4750 0.8250 0.60 1971 7,800 7,800 5,760 4.050 0.550 0.60 6.0750 0.8250 0.60 1972 9,000 9,000 5,710 4.050 0.550 0.60 6.0750 0.8250 0.60 1973 10,800 10,800 5,760 4.300 0.550 1.00 6.2050 0.7950 1.00 1974 13,200 13,200 5,750 4.375 0.575 0.90 6.1850 0.8150 0.90 1975 14,100 14,100 5,720 4.375 0.575 0.90 6.1850 0.8150 0.90 1976 15,300 15,300 5,840 4.375 0.575 0.90 6.1850 0.8150 0.90 1977 16,500 16,500 5,920 4.375 0.575 0.90 6.1850 0.8150 0.90 1978 17,700 17,700 — 4.275 0.775 1.00 6.0100 1.0900 1.00 1979 22,900 22,900 — 4.330 0.750 1.05 6.0100 1.0400 1.05 1980 25,900 25,900 — 4.520 0.560 1.05 6.2725 0.7775 1.05 1981 29,700 29,700 — 4.700 0.650 1.30 7.0250 0.9750 1.30 1982 32,400 32,400 — 4.575 0.825 1.30 6.8125 1.2375 1.30 1983 35,700 35,700 — 4.775 0.625 1.30 7.1125 0.9375 1.30 1984 37,800 37,800 — 5.200 0.500 1.30 10.4000 1.0000 2.60 1985 39,600 39,600 — 5.200 0.500 1.35 10.4000 1.0000 2.70 1986 42,000 42,000 — 5.200 0.500 1.45 10.4000 1.0000 2.90 1987 43,800 43,800 — 5.200 0.500 1.45 10.4000 1.0000 2.90 1988 45,000 45,000 — 5.530 0.530 1.45 11.0600 1.0600 2.90 1989 48,000 48,000 — 5.530 0.530 1.45 11.0600 1.0600 2.90 1990 51,300 51,300 — 5.600 0.600 1.45 11.2000 1.2000 2.90 1991 53,400 125,000 — 5.600 0.600 1.45 11.2000 1.2000 2.90 1992 55,500 130,200 — 5.600 0.600 1.45 11.2000 1.2000 2.90 1993 57,600 135,000 — 5.600 0.600 1.45 11.2000 1.2000 2.90 1994 60,600 — — 5.260 0.940 1.45 10.5200 1.8800 2.90 1995 61,200 — — 5.260 0.940 1.45 10.5200 1.8800 2.90 1996 62,700 — — 5.260 0.940 1.45 10.5200 1.8800 2.90 1997 65,400 — — 5.350 0.850 1.45 10.7000 1.7000 2.90 1998 68,400 — — 5.350 0.850 1.45 10.7000 1.7000 2.90 1999 72,600 — — 5.350 0.850 1.45 10.7000 1.7000 2.90 1 Data in some years based on automatic adjustment. See text. 2 Data error in original source, which cannot be corrected. Sources U.S. Social Security Administration, Social Security Bulletin: Annual Statistical Supplement (1997), Table 4.B1, p. 167, Table 4.C1, p. 178; (1999), Table 4.B1, p. 165, Table 4.C1, p. 176, Table 2.A3, p. 36. Series Bf380 and Bf388 are reported in the Social Security Bulletin: Annual Statistical Supplement (1981), pp. 84, 96 and (1987), p. 104. Documentation The Old-Age, Survivors, and Disability Insurance (OASDI) program provides monthly benefits to retired and disabled workers and their dependents and to survivors of insured workers. Benefits are paid as a matter of earned right to workers who gain insured status and to their eligible spouses, children, and survivors. A person builds protection under the OASDI program through taxes on earnings from employment covered under Social Security. In 1965, a comprehensive health insurance program (Medicare) for persons 65 years old and older was established. The program consists of a compulsory hospital insurance plan covering hospital and related services and a voluntary supplementary medical insurance plan covering physicians’ and related medical services. The hospital insurance plan is financed through contributions made while the individual is working (except that federal general revenues are used to finance the benefits for certain elderly persons who reach retirement age without becoming insured under the Social Security Act). The supplementary medical insurance plan is financed through voluntary contributions by the elderly matched by the federal government general revenues. The national system of Old Age, Survivors, Disability, and Health Insurance (OASDHI) originally covered employees in industry and commerce. Beginning in 1951, coverage was extended to regularly employed agricultural and domestic workers, to most urban self-employed persons, and, on a voluntary group basis, to employees of nonprofit organizations and to employees of state and local governments not covered by separate retirement programs. During the 1950s, coverage was further extended to self-employed farmers and additional farmworkers, to most professional self-employed persons and, on a voluntary basis, to most state and local government employees covered by their own retirement system. As of January 1957, military personnel were covered on a compulsory basis. Free wage credits for military service from September 1940 through December 1956 are reflected in benefits paid during the years covered by the series (primarily in benefits to young survivors) but do not enter into the count of covered workers or taxable earnings. The additional cost of benefits paid as a result of these credits is met by transfers to the trust funds from general revenues. In 1965, self-employed
SOCIAL WELFARE PROGRAMS Series Bf377–394 765 TABLE Bf377–394 Old-Age, Survivors, Disability, and Health Insurance – covered workers, earnings, employers, and tax rates: 1937–1999 Continued doctors of medicine were covered, and in 1967 the previous elective coverage of ministers became compulsory unless exemption was claimed on grounds of conscience or religious principle. When the OASDHI program began in 1937, fewer than 60 percent of all persons who worked in paid employment during an average week were covered. Following the 1950 amendments, the proportion rose to 75 percent and by 1970 was more than 90 percent. In the mid-1990s about 96 percent of all jobs in the United States were covered. Workers excluded from coverage fall into five major categories: (1) federal civilian employees hired before January 1, 1984, (2) railroad workers, (3) certain employees of state and local governments who are covered under a retirement system, (4) household workers and farm workers whose earnings do not meet certain minimum requirements, and (5) persons with very low net earnings from self-employment (generally less than $400 annually). Federal civil servants hired prior to 1984 and railroad employees are covered, separately, by compulsory, contributory retirement systems of their own. The railroad system is closely coordinated with OASDHI. To qualify for cash benefits, a worker must have worked a sufficient time in covered employment to have acquired an insured status (see series Bf377– 379). Workers are considered “fully insured” when they meet the minimum requirements for insurance; they become “permanently insured” when they become eligible for a required-worker benefit. Workers are insured in the event of disability if they are considered fully insured and have contributed a sufficient amount to receive disability insurance. Under the 1939 amendments, workers were generally “fully insured” for benefits if they had worked in covered employment half the time after 1936 and before age 65 and had a minimum of six calendar quarters of coverage. Subsequent liberalizations permitted a person to become fully insured if he had been in covered work roughly equal to one fourth of the time between 1950 (or age 21, if later) and retirement age or death. Based on the rules in 1970, if a worker died before acquiring a fully insured status but was “currently insured” 1.5 years of employment out of the 3 preceding years, death-survivor benefits may be paid to his young widow with children. To be insured for disability benefits, circa 1970, a worker must generally have worked for at least five out of the ten years before onset of disability. The 1965 amendments eased the eligibility requirements for persons 72 years old and older who were not eligible for cash benefits by introducing a transitional insured status under which a special flat monthly benefit may be paid to persons with three to five quarters of coverage. A 1966 amendment extended these special monthly benefits to certain persons 72 years old and older who could not meet even these minimal requirements. Lump-sum payments became payable in 1937; monthly benefits, in 1940. The original Social Security Act provided for monthly oldage benefits only. Amendments adopted in 1939 added benefits for dependents and survivors of the insured worker. Benefits for disabled persons were added in 1956, and benefits for the dependents of disabled persons, in 1958. Beginning in 1966, the cost of rehabilitation services furnished to disability beneficiaries was also paid by the program. A complete discussion of insured status can be found in the Social Security Bulletin: Annual Statistical Supplement, 1997, p. 372. Since 1940, the OASDHI program has been a pay-as-you-go system funded by taxes on earnings for wage and salary workers and the selfemployed. An employer deducts Social Security contributions from a worker’s pay and adds an equal amount for his tax as employer. The money is forwarded to the Internal Revenue Service and deposited into federal trust funds from which the benefits and administrative expenses are paid. Self-employed persons pay their Social Security contributions with their federal income tax. For example, the information in series Bf386–394 shows that in 1990 a typical worker would pay a tax on earnings up to a maximum of $51,300 of 5.6 percent for Old-Age, Survivors Insurance (OASI), start 0.6 percent for Disability Insurance (DI), and 1.4 percent for Medicare. The employer would pay the matching amount. The self-employed would pay both the worker and employer share, or 11.2 percent for OASI, 1.2 percent for DI, and 2.8 percent for Medicare. The Omnibus Budget Reconciliation Act of 1993 repealed the Medicare maximum so that now all earnings are subject to the Medicare tax. In 1984 the total contribution rate for OASDHI for employers and employees each (the sum of series Bf389–391) includes an automatic tax credit of 0.3 percent for remuneration paid in the calendar year 1984 under the Federal Insurance Contributions Act. During the period 1984 to 1989, the total contribution rate for OASDHI for self-employed (the sum of series Bf392–394) includes an automatic tax credit of 2.7 percent of earnings for self-employed income for taxable years beginning in 1984, 2.3 percent for taxable years beginning in 1985, and 2.0 percent for taxable years beginning in 1986, 1987, 1988, and 1989. During this period, scheduled taxes were credited to the Social Security Trust funds, monies for tax credits were paid from the Treasury, and the reduced tax rates were paid by employees and the self-employed. For more information, see Social Security Bulletin, Annual Statistical Supplement, 1997,Table 2.A4, p. 35. Unlike the income tax, the OASDHI taxes are drawn on the first dollar of earnings; however, the working poor receive some relief from the OASDHI payroll taxes through the earned income tax credit. Series Bf380. The estimated total number of living workers is the estimated number of persons who had covered employment any time during the period from 1937 to the year shown. It is not adjusted to reflect the effect of provisions that coordinate the OASDHI and Railroad Retirement programs and wage credits for military service. It is only partially adjusted to eliminate duplicate counts of persons with taxable earnings reported on more than one Social Security number. Series Bf381–385. Relate only to wage and salary workers for the period 1937–1950. Beginning in 1951, the data include self-employed workers and earnings. Series Bf383. New entrants into covered employment are workers reported with first taxable earnings under the program in a specified year. During the period 1937–1994, 276.2 million different persons were reported with taxable earnings. Series Bf382–383 and Bf385. Preliminary estimates are based on data from the Bureau of Labor Statistics and the National Income and Product Accounts. Series Bf381–383, Bf385, and Bf387. Data for 1996 are preliminary estimates based on data from the Bureau of Labor Statistics and the National Income and Product Accounts. Series Bf386–387. Data for 1975–1978, 1982–1989, and 1993–1996 are based on automatic adjustment under 1972a Act (as modified by 1973a and 1973b Acts), in proportion to increases in the average wage level. The maximum earnings taxable for HI in 1991 is based on 1990 legislation. Series Bf388. No longer reported in statistical supplement after 1977.
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SOCIAL WELFARE: 1929 TO THE PRESENT
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