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Chapter 07 - Government-Mandated Social Security Programs

Chapter 07
Government-Mandated Social Security Programs

True / False Questions

1. The Social Security Act was amended in 1965 to create the Medicare program. (Medicare)
TRUE

2. The national federal-state unemployment insurance program provides weekly income to

individuals who become unemployed for any reason. (Unemployment Insurance)
FALSE

3. The Medicare tax is subject to a taxable wage base. (Financing OASDI and Medicare
Programs)
FALSE

4. Medigap insurance supplements Medicare Parts A & B and is available from private
insurance companies. (Medigap Insurance)
TRUE

5. The largest share of the FICA tax funds OASDI programs. (Financing OASDI and Medicare
Programs)
TRUE

6. The Unemployment Compensation Act of 2008 expanded the EUC benefits to 20 weeks
nationwide. (Unemployment Insurance Benefit Amounts)
TRUE

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Chapter 07 - Government-Mandated Social Security Programs

7. In 2015, more than 64 million Americans received Social Security benefits. (Employers
Required to Participate in Social Security Programs)
TRUE

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Chapter 07 - Government-Mandated Social Security Programs

8. Social Security disability benefits are available to disabled workers who are unable to work
as a result of a serious medical impairment that lasts at least 12 months. (Disability Benefits)
TRUE

9. Based on the 2015 report on the status of Medicare, the projected date of the Medicare trust
fund exhaustion is 2050. (Financing OASDI and Medicare Programs)
FALSE

10. The Social Security Administration increases retirement benefits by a designated

percentage for each month worked beyond full retirement until age 70. (Old-Age Benefits)
TRUE

11. In general, an employee must earn at least 30 credits to be eligible to receive retirement
benefits. (Qualifying for OASDI Benefits)
FALSE

12. Social Security pays only for total disability. (Disability Benefits)
TRUE

13. Part A coverage automatically qualifies an individual to enroll in Part B coverage for a
monthly premium. (Eligibility Criteria for Medicare Benefits)
TRUE

14. The Social Security Administration pays monthly survivor benefits at a level ranging from
71.5% to 100% of the primary insurance amount. (Survivor Benefits)
TRUE

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Chapter 07 - Government-Mandated Social Security Programs

15. Medicare Part A only covers outpatient hospital care and services. (Medicare Part A
Coverage)
FALSE

16. Self-employed individuals must pay a FICA rate that is twice as much as a factory worker
has to pay. (Financing OASDI and Medicare Programs)
TRUE

17. Most states impose a waiting period, usually two weeks following submission of a claim,
prior to paying unemployment benefits. (Eligibility Criteria for Unemployment Insurance
Benefits)
FALSE

18. An employee's average indexed monthly earnings determines the initial primary insurance
amount for OASDI benefits. (Determining Benefit Amounts)
TRUE

19. Physicians' fees and custodial care in a nursing home are covered by Medicare Part
A. (Medicare Part A Coverage)
FALSE

20. Medicare Part D was first offered in 2004. (Medicare Prescription Drug Benefit)
FALSE

21. In 2016, 6.2% of employer and employee contributions were set aside from FICA to fund
OASDI programs. (OASDI Programs)
TRUE

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Chapter 07 - Government-Mandated Social Security Programs

22. Social Security retirement funds are expected to remain sustainable in the coming
decades. (Financing OASDI and Medicare Programs)
FALSE

23. Medicare Part B covers the services not included under Medicare Past A. (Medicare Part B
Coverage)
TRUE

24. Medicare Part D was established by the Medicare Prescription Drug Improvement and
Modernization Act of 2003. (Medicare Prescription Drug Benefit)
TRUE

25. The Social Security Administration is the only federal agency overseeing Social Security
programs. (Administration of Social Security Programs)
FALSE

26. Medicare Select plans are Medigap policies that present higher premiums. (Medigap
Insurance)
FALSE

27. The original Medicare plan is a fee-for-service plan managed by the federal government.
(Medicare)
TRUE

28. Social Security programs were geared toward promoting the social good, which refers to a
booming economy, low levels of unemployment, progressive wages and benefits, and safe and
healthful working condition. (Government-Mandated Social Security Programs)
TRUE

29. OASDI is the abbreviation for the term Old-Age, Survivor, and Disability Income.
(Introduction to the Social Security Programs)
FALSE

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Chapter 07 - Government-Mandated Social Security Programs

30. Coverage rules are the same across OASDI, Medicare, and the unemployment insurance
programs. (Employers Required to Participate in Social Security Programs)
FALSE

31. The state share of unemployment taxes may be used only for benefit costs. (Administration
of Social Security Programs)
TRUE

32. The Social Security Administration only issues Social Security numbers to U.S. citizens.
(Social Security Numbers)
FALSE

33. Employees forfeit Social Security credits when they change jobs or become unemployed.
(Qualifying for OASDI Benefits)
FALSE

34. Automatic cost-of-living adjustments are applied to OASDI benefits to guard against
inflation. (Determining Benefit Amounts)
TRUE

35. The age for collecting full Social Security retirement benefits is gradually increasing from
65 to 67 over a 22-year period ending in 2022. (Old-Age Benefits)
TRUE

36, Analysis suggests that, based on an average life expectancy, taking a lower monthly benefit
sooner would lead to earning about the same total benefit over one’s lifetime as an individual
who put off retirement to claim a higher monthly benefit. (Old-Age Benefits)
TRUE

37. In general, a worker needs to have accumulated at least 50 credits to qualify family
members for survivor benefits. (Survivor Benefits)

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Chapter 07 - Government-Mandated Social Security Programs

FALSE

38. Stepchildren, grandchildren, or adopted children are not considered as eligible for survivor
benefits. (Survivor Benefits)
FALSE

39. The Social Security Administration defines disability as an inability to engage in any
substantial gainful activity because of a medically determinable physical or mental impairment
that is expected to result in death, or that has lasted for a continuous 12 months. (Disability
Benefits)
TRUE

40. A percentage of annual wages is one of the methods states use to calculate weekly
unemployment benefit amounts. (Unemployment Insurance Benefit Amounts)
TRUE

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Chapter 07 - Government-Mandated Social Security Programs

Multiple Choice Questions

41. In 2016, how much did an employee have to make to earn a credit for OASDI? (Qualifying
for OASDI Benefits)
A. $1500
B. $2240
C. $1200
D. $1260

42. This Medicare program offers voluntary supplemental medical insurance. (Medicare Part B
Coverage)
A. Medicare Part B
B. Medicare Part A
C. Medicare Advantage
D. Medicare Part C

43. Effective 2016, what was the annual increase in Social Security benefits? (Determining
Benefit Amounts) A. 1%
B. no increase
C. 7.2%
D. 9%

44. Which of the following are eligible for OASDI? (Employers Required to Participate in
Social Security Programs)
A. Self employed individuals
B. Federal government workers
C. 10 year railroad employees
D. Children under 18

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Chapter 07 - Government-Mandated Social Security Programs

45. Which Medicare program provides beneficiaries the opportunity to receive health care from
a variety of options? (Medicare Part C: Medicare Advantage)
A. Medicare Advantage
B. Medigap
C. Medicare Part C
D. Medicare Select

46. At what age are retirees first eligible for Social Security benefits? (Old-Age Benefits)
A. 65
B. 62
C. 70
D. 67

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Chapter 07 - Government-Mandated Social Security Programs

47. In 2015, what was the annual monthly benefit for all retired workers? (Old-Age Benefits)
A. $855
B. $1,000
C. $1,335
D. $1,754

48. In 2016, approximately, what was the average monthly survivor benefit for a widowed and
two children? (Survivor Benefits)
A. $1,860
B. $2,120
C. $2,680
D. $3,210

49. In 2016, what was the average monthly disability benefit for all disabled workers?
(Disability Benefits)
A. $540
B. $1,166
C. $2,245
D. $3,450

50. OASDI taxes are subject to a taxable wage base. What was the taxable wage base for
everyone in 2016? (Financing OASDI and Medicare Programs)
A. $80,100
B. $118,500
C. $120,100
D. $140,100

51. Which of the following is the state unemployment tax? (Unemployment Insurance Benefit
Amounts)
A. FICA
B. FUTA
C. SUTA
D. COLA

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Chapter 07 - Government-Mandated Social Security Programs

52. Which of the following is not one of the factors believed to have hastened the deterioration
of the OASDI and Medicare trust funds? (Financing OASDI and Medicare Programs)
A. longer life expectancy
B. increased insurance claims
C. high levels of unemployment
D. immigration

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Chapter 07 - Government-Mandated Social Security Programs

53. Which of the following is not one of three methods states use to calculate weekly
unemployment benefit amounts? (Unemployment Insurance Benefit Amounts)
A. A fraction of the highest wages for a calendar quarter earned
during the base period.
B. A percentage of annual wages.
C. A percentage of the average weekly wage earned during the base period.
D. A percentage of the average monthly wages earned during the base period.

54. Which of the following are not covered by Medicare Part B? (Medicare Part B Coverage)
A. Outpatient care
B. Hospitalization
C. Laboratory services
D. Health screenings

55. What is the amount of contribution employer and employees must make to the Medicare tax
which supports Medicare Part A? (Financing OASDI and Medicare Programs)
A. 1.45%
B. 50%
C. 3%
D. 4%

56. The Social Security Administration defines “gainful” work activity as all of the following,
except: (Disability Benefits)

A. Work intended for profit, whether or not a profit is realized.

B. Work performed for pay or profit.
C. Work performed full-time.
D. Work of a nature generally performed for pay or profit.

57. Which of the following statements is true when comparing workers’ compensation with
Social Security disability and survivors’ benefits? (Disability Benefits)

A. Worker’s compensation pays for medical care for work-related injuries.

B. Workers’ compensation does not pay for permanent partial or permanent total disability.
C. Social Security pays benefits for permanent partial or permanent total disability.
D. Social Security payments do not have a waiting period.

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Chapter 07 - Government-Mandated Social Security Programs

58. Which of the following Medicare coverage would cover physical therapy, occupational
therapy, and speech-language therapy ordered by a doctor? (Medicare Part A Coverage)

A. Medicare Part B
B. Medicare Part A
C. Medicare Part D
D. Medicare Part E

59. The state unemployment employer tax rate varies according to ______ system.
(Unemployment Insurance Benefit Amounts)

A. an experience rating
B. a duration of work
C. an average indexed monthly earnings
D. a fully insured

60. Funding for OASDI and Medicare programs requires equal employer and employee
contributions under the _________.

A. Fair Labor Standards Act of 1938

B. Federal Insurance Contributions Act
C. The Social Security Act of 1935
D. Titles III and IX of the Social Security Act

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Chapter 07 - Government-Mandated Social Security Programs

Essay Questions

61. Describe how OASDI and Medicare programs are financed. (Financing OASDI and
Medicare Programs)

Main Points:
• Funding for OASDI and Medicare programs requires equal employer and employee
contributions under the Federal Insurance Contributions Act (FICA).
• FICA requires that an employer pay tax based on its payroll; employees contribute tax
based on earnings, which is withheld from each paycheck.
• The Self-Employment Contributions Act (SECA) requires that self-employed
individuals contribute to the OASDI programs, but at a different rate.
• The tax rate is subject to an increase each year to sufficiently fund OASDI programs.
• FICAS requires employers and employees to contribute 7.65% each; for self-employed
individuals, it is generally double that amount, or 15.3%.
• This tax is apportioned between OASDI and Medicare programs with the largest share
of the FICA tax funding the OASDI program.
• The Medicare tax, or hospital insurance tax, supports the Medicare Part A program.

62. List and define the three parts of the OASDI program. (Old-Age, Survivor, and Disability
Insurance (OASDI))

Main Points:
• OASDI stands for old-age, survivor, and disability insurance.
• Old-age benefits provide retirement income for retired workers.
• The Survivor portion of the program is where the Social Security Administration pays
benefits to eligible family members of deceased workers.
• The Disability portion of the program is where the Social Security Administration pays
benefits to seriously disabled workers and family members, paying only for total
disability.

63. Briefly discuss the eligibility criteria for unemployment insurance benefits? (Eligibility
Criteria for Unemployment Insurance Benefits)

Main Points

• Limited voluntary employment and involuntary unemployment

o Voluntary termination usually disqualifies workers from receiving benefits,
unless they chose to quit for reasonable causes
o Reasonable cause refers to the creation of working conditions that cannot be
tolerated by any sensible person
• Minimum earnings and employment requirements
o Must have been employed for a minimum period of time

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Chapter 07 - Government-Mandated Social Security Programs

• Called the Base Period

• A waiting period
o Usually one week following claim
o Possible reasons
• Need for processing time
• To limit costs
• Capacity to work and availability for work
o Mentally & physically able (ability)
o Willing and ready (motivation)
• Actively seeking suitable work
o Jobs that require skills, knowledge, ability similar to individual’s customary
work
o Job offers employment terms and conditions that don’t violate relevant laws

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Chapter 07 - Government-Mandated Social Security Programs

64. Explain the concept of the coverage gap within the Medicare prescription drug benefit, or
Medicare Part D. (Medicare Prescription Drug Benefit)

Main Points

• A participant pays the deductible, $360 in 2016, before Medicare begins to provide
coverage
• For expenses above $360 through $3,310, the participant pays small copayments for
each prescription
• For expenses above $3,310 through $4,850, the participant pays
o 45% of the cost of brand-name drugs
o 58% for generic drugs
o This expense range is known as the coverage gap.
• For expenses greater than $4,850, the participant pays a small copayment equal to 5% of
the cost of the prescription.

65. Briefly discuss Medicare Part A coverage. (Medicare Part A Coverage)

Main Points

• Compulsory hospitalization insurance covers both inpatient and outpatient hospital care
and services
o Inpatient hospital care in a semiprivate room, meals, general nursing, and other
hospital supplies and services
o Home health services limited to reasonable and essential part-time or
intermittent skilled nursing care and home health aide services, and physical
therapy, occupational therapy, and speech-language pathology ordered by a
doctor
o Hospice care for people with terminal illness (that is, illness that is expected to
lead to death within six months), including pharmaceutical products for
symptom control and pain relief, medical and support services from a
Medicare-approved hospice provider, and other services not otherwise covered
by Medicare (for example, grief counseling)
o Skilled nursing facility care, including semiprivate room, meals, skilled nursing
and rehabilitative services, and supplies for up to 100 days per year
o

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