OASDI, Case Study Example

Abstract

The current paper discusses specific features of Old Age, Survivors, and Disability Insurance (OASDI). Real-life examples are used to evaluate individual eligibility and benefits OASDI provides to different groups of workers. The concepts of disability and survivors are discussed.

Old Age, Survivors, and Disability Insurance is the major social insurance system in the United States. With 96% employees covered, OASDI provides an extensive system of benefits (Social Security Online, 2008). The system was designed to replace the loss of income in case of disability, death, or retirement. However, in order to be eligible for OASDI benefits, employees must know their rights and the criteria used by OASDI to determine individual eligibility for each particular type of benefits.

1. Only those fully covered by OASDI are eligible for survivors compensation. In case Simon is killed in an automobile accident, his wife Andrea will be able to receive OASDI benefits, because she was married to Simon for more than 9 months prior to his death and cares for a child, who is under age 18 (Social Security Online, 2008). In this situation, she will be able to get 75% of his PIA (Social Security Online, 2008). Although the law sets the limit on the amount of benefits paid to widows and family members in a way that does not make them better off than they used to be while the worker was alive and employed (Social Security Online, 2008), it is obvious that Simon earns less than Andrea does, and his wife will definitely receive her benefits in due time.
2. If Andrea has her vocal cords damaged, she is eligible for disability compensation under OASDI. Theoretically, Andrea can receive her compensation in case she has “20 quarters of coverage in the 40 calendar quarters ending with the disability onset” (Social Security Online, 2008). OASDI defines disability as a physical or mental impairment that lasts for the period of no less than 12 months (Social Security Online, 2008). Also, such impairment should be severe enough as to leave an employee no chance to fulfill his (her) primary obligations. However, OASDI specifies that a person is considered impaired in case he (she) cannot participate in any gainful employment activity, which national activity offers. Given that Andrea can successfully utilize her employment potential in other areas, she will not be eligible for disabilities compensation.
3. Everything is different with the situation, in which Andrea is shot by a student for getting a bad mark. In this case, Andrea will not be able to work or to apply for any other work available in national economy. Her disability is expected to last for the continuous period of not less than 12 months, and she will be eligible for disability benefits under OASDI (Social Security Online, 2008). The specific amount of benefit will be calculated on the basis of Andrea’s average wages, as well as her age, work experience, and educational background. Also, she will begin receiving her payments only in five months after being the status of disabled, which is applicable for all cases of continuous disability under OASDI (Social Security Online, 2008).
4. Special attention should be paid to the situation, in which Simon decides to retire at 62 and to work as a part-time accountant. Under OASDI, some of the employee benefits can be withheld based on the amount of annual earnings they get (Social Security Online, 2008). For 62-year-old Simon, his benefits will reduce $1 for each $2 earned above $8,640, which means that before retiring, Simon should consider how much he will earn as a part-time employee and whether these earnings can compensate for the losses in OASDI benefits in his situation (Social Security Online, 2008).
5. If Simon decides to quit his job in order to find a new one, the amount of his unemployment compensation will be reduced. Usually, “unemployed workers can be disqualified for benefits if they receive types of disqualifying income. This includes severance pay, wages in lieu of notice, and workers’ compensation” (Rosenbloom, 2001). OASDI is included into the list of benefits, which, if applied to an individual, automatically reduce the amount of unemployment insurance in case of unemployment. Sometimes, states can reduce the amount of unemployment compensation by one-half, depending on how much the person is paid under OASDI (Rosenbloom, 2001). That is why Simon will not receive full amount of unemployment benefits he may have if not covered by OASDI.

References

Rosenbloom, J.S. (2001). The handbook of employee benefits: Design, funding, and administration. McGraw-Hill Professional.

Social Security Online. (2008). Social Insurance Programs. Retrieved September 24, 2009 from http://www.ssa.gov/policy/docs/progdesc/sspus/oasdi.pdf