Social Security Disability Benefits

To receive disability benefits the worker must meet two requirements: 

(1) he must be both fully insured and disability insured
(2) his disability must be expected to last for at least 12 months or is expected to result in death. 

Benefits begin in the seventh full month of disability (i.e., there is a six-month waiting period) and continue until age 65 when the worker will begin to receive his retirement benefit. 

Disability benefits consist of a monthly income for the disabled worker and his dependents and an “income freeze” for retirement purposes. The amount of income to which a worker and his family is entitled depends on the primary insurance amount (the amount the worker would be entitled to if he were retiring). The “income freeze” benefit is valuable because it provides that years during which the worker was disabled and earned no income be excluded in determining the retirement income benefit. Thus, by excluding years during which no income was earned because of disability, the income freeze provision increases the individual’s retirement income. 

Medical care (Medicare). Generally, all persons over age 65 are eligible for benefits under Medicare. Available benefits cover the costs of both hospitals and doctors. 

Hospital costs 

Under this section of Medicare each person over age 65 is entitled to receive 90 days of hospitalization for each illness. When an individual has been out of the hospital for at least 60 days, he is entitled to another 90 days hospitalization. In short, the individual is entitled to an unlimited number of
90-day hospital stays as long as they are separated by periods of at least 60 days. During a hospital stay all services normally provided by the hospital to patients are covered. The Medicare recipient shares in the above costs by paying a deductible (i.e., in 1971, he paid the first $60 of hospital bills plus $15 per day after the first
60 days). 

The purpose of the cost sharing is to discourage over-utilization of hospital services. 

In addition to the coverage for 90 days, each individual has a 60-day “lifetime reserve” with a daily deductible. The reserve provides the individual with extra protection if his hospital stay exceeds 90 days. However, the lifetime reserve is not replaced or renewed as is the basic 90-day hospital coverage. Medicare recipients are entitled also to benefits covering the cost of nursing homes (i.e., 100 days of coverage) and home health service such as the costs of visiting nurses. 

Doctor bills 

Unlike hospital coverage, an individual must elect to come under the coverage for doctors’ costs. After an annual deductible, coverage is provided for 80 percent of a reasonable charge for physicians’ services in or out of the hospital. Benefits also cover up to 50 percent of the cost, to a certain maximum, for treatment of mental illness outside a hospital. The monthly cost of the coverage for doctors’ services is matched by the federal government from general funds.