Social Security for Families, Disability, and Healthcare

Social Security — the financial safety net for millions of Americans — is not just for retirees. It also provides crucial support for families coping with a death, people with disabilities, and those who need help paying for healthcare.

When a spouse or parent passes away, Social Security can help keep a family afloat while they grieve. For people unable to provide for themselves due to a disability, it enables them to meet basic needs. And when medical expenses pile up, Social Security can ease the burden of healthcare-related financial anxiety.

For the tens of millions of Americans confronting these situations, Social Security helps them afford one of the most valuable things in the world: peace of mind.  

Social Security Benefits for Families

Social Security casts a wide net of support for families. Primarily, it covers spouses, children, and in some cases, dependent grandchildren. In essence, it’s designed to protect people who rely on a family member’s income or are financially tied to a worker in a dependent way. 

Social Security for Spouses

When a married couple retires, each spouse will receive their own monthly Social Security benefit, based on their individual 35-year average earnings history.

But, what if one spouse didn’t work outside the home, or didn’t earn enough to qualify for Social Security? That’s where spousal benefits come in. Even if someone isn’t eligible to receive their own benefit, once they reach full retirement age (FRA) they are eligible to receive an amount equal to 50% of their spouse’s benefit. If both spouses worked, the lower-earning spouse receives the larger of their own benefit, or an amount equal to half of their spouse’s Social Security benefit.  

Key points about spousal Social Security benefits:

• Marriage duration: You must be married for at least one year to be eligible for spousal benefits.
  • Age requirement: You must be at least 62 years old to claim spousal benefits, but must reach FRA to qualify for the maximum 50% of your spouse’s benefit.
  • Spousal benefits: Your spouse must be receiving Social Security for you to claim benefits on their record.
  • No advantage to waiting: You won’t receive increased benefits by waiting past your FRA before you start collecting.
    

Divorced-Spouse Benefits

When a couple divorces, a different set of Social Security rules applies. A divorcee can be eligible to receive 50% of their former spouse’s Social Security, but there are a few requirements:

• You must have been married for at least 10 years
• Your ex-spouse must be old enough to receive Social Security
• You must be at least 62 years old
• You must be currently unmarried

If you remarry, and then divorce, you may still be able to claim benefits based on your former spouse’s work history. Each situation is unique, so be sure to consult with someone at your local Social Security Administration office or check your eligibility online.

Social Security Benefits for Children

Under certain circumstances, a child can receive Social Security benefits.

For a child under 18 years old, if their parent is retired or disabled, they can receive an amount equal to up to 50% of their parent’s full benefit. If their parent is deceased, the child may receive an amount equal to up to 75% of their benefit.

There is a family maximum amount. If multiple family members are eligible for a parent’s Social Security, they may collectively receive 150%-180% of the parent’s full benefit.

Here is a quick breakdown of the rules concerning children receiving Social Security benefits:

• The child must be unmarried and
  • Be under 18 years old
  • Be 18-19 years old and a full-time high school student or
  • Be 18 or older, but with a disability that began before age 22

Typically, a child’s Social Security benefits end when they turn 18.

You can’t apply for child Social Security benefits online. You must call or visit your local Social Security office and have the necessary documents and information.  

Social Security Survivor Benefits

Survivor benefits are available to:

• Widows
• Children
• Some grandchildren
• Dependent parents

To provide survivor benefits, a deceased wage earner must have worked long enough to earn Social Security credits. Generally, this requires at least 10 years of work.

Widows can receive up to 100% of the deceased spouse’s benefit if they begin receiving it at their FRA or later. If they start receiving benefits earlier, the amount may be reduced. If a widow is caring for someone under 16, or a disabled child, they could receive full benefits, regardless of their age.

Children can receive survivor benefits if they’re under 18 (or up to 19 and in high school), or at any age if they were disabled before age 22 and remain disabled.

Grandchildren qualify only under certain conditions — usually if they were dependent on the deceased for at least a year before the death.

Dependent parents must be at least 62 and have relied on the deceased for at least half of their financial support at the time of the death.

Social Security Disability (SSDI)

Social Security Disability Insurance (SSDI) is a federal program that provides income to individuals who are unable to work due to a qualifying disability before reaching retirement age. Here’s how it works:

• Eligibility: To qualify for SSDI, individuals must have a medical condition that meets the Social Security Administration’s (SSA) definition of disability. This means the condition must significantly impair their ability to perform work-related activities and is expected to last at least 12 months or result in death.
• Work History: Applicants must have a sufficient work history, which generally means having paid Social Security taxes for a certain number of years. The number of work credits required varies depending on the age at which the individual becomes disabled.
• Application Process: Individuals apply for SSDI through the SSA, providing medical documentation and evidence of their inability to work. The application process can be complex and may require appeals if the initial claim is denied.
• Monthly Benefits: If approved, SSDI recipients receive monthly cash payments. The amount is based on their average earnings during their working years, up to a maximum limit. These benefits are intended to help cover basic living expenses.
• Medicare Coverage: After receiving SSDI for 24 months, individuals become eligible for Medicare, providing access to healthcare services.
• Reviews and Adjustments: SSDI benefits are subject to periodic reviews to determine if recipients still meet the disability criteria. If individuals recover and return to work, their benefits may be adjusted or ceased.

Essentially, SSDI serves as a crucial income stream to help individuals maintain financial stability while they cope with disabilities that prevent them from working.

Social Security and Healthcare

Social Security and Medicare are closely linked, although they serve different purposes. Generally, people become eligible for Medicare at age 65, and many Americans begin to take Social Security as early as age 62, or sooner if they’re approved for SSDI.

Here’s how Social Security benefits can help offset healthcare costs:

• Regular Income Stream: Social Security provides a consistent monthly income, which can be used to cover basic healthcare needs. For many retirees, this income can help pay for out-of-pocket healthcare expenses like doctor visits, prescriptions and co-pays.
• Medicare Premiums: Once a person turns 65, they become eligible for Medicare, which typically requires premiums for Part B (medical insurance) and Part D (prescription drug coverage). Social Security benefits are automatically applied toward these premiums, reducing the immediate financial burden. For most retirees, their Medicare Part B premium is deducted directly from their Social Security check.
• Cost-of-Living Adjustments (COLA): Social Security payments are typically increased through a COLA to help keep pace with inflation each year, which can help seniors keep up with rising healthcare costs. While the COLA may not always fully offset healthcare inflation (which often outpaces general inflation), and in some years there is no COLA whatsoever, it provides some cushion against growing expenses.

The bottom line is that, while Social Security was not specifically designed to cover healthcare expenses, it can still provide valuable financial support that helps people manage the increasing costs of medical care, Medicare premiums, and long-term care.

If you have detailed questions about Social Security and how it pertains to your unique financial situation, consider scheduling an appointment with a Financial Advisor.

Frequently Asked Questions

What documents will I need to apply for Social Security benefits?

You’ll likely need your Social Security number (or card), birth certificate, a photo ID and/or proof of U.S. citizenship (passport, green card). For spousal benefits, you’ll need a marriage certificate, or a divorce decree. For survivor benefits, a death certificate may be necessary. You’ll also need a bank account and routing numbers for direct deposit.

How are Social Security benefits taxed?

Social Security benefits can be taxed federally, but it depends on your total income and filing status. The IRS uses a formula based on provisional income, also known as combined income, which is your adjusted gross income, plus non-taxable interest, plus ½ of your Social Security benefits, to determine taxation.

You’ll never pay tax on more than 85% of your benefits, no matter your income.

Most states don’t tax Social Security, but a handful do.

Can I receive multiple types of Social Security benefits at the same time?

Generally, you can qualify for more than one type of Social Security benefit, but you won’t receive the full amount from each category. Instead, the Social Security Administration will pay the highest benefit you’re eligible for. 

How long after a death should I wait to apply for survivor benefits?

There’s no waiting period. You should contact Social Security as soon as possible after a death.

How long does it take to receive benefits after applying?

It depends on the type of benefit and the accuracy of your application. It’s best to apply 2-3 months before you want benefits to start.

Can I work while receiving survivor or disability benefits?

Yes, you can work while receiving survivor or disability benefits, but how much you earn can affect how much you receive. Benefits may be reduced if you’re under FRA or earn over certain limits. Consult the Social Security Administration about your exact situation.  

What types of disability qualify someone for Social Security benefits?

Any condition that prevents a person from engaging in substantial gainful activity may qualify as a disability under Social Security rules. The Social Security Administration maintains a detailed list of qualifying impairments, known as the “Blue Book,” which includes conditions such as epilepsy, depression and cancer. Disability claims must be supported by medical evidence, including documentation from a licensed physician.

First Command does not provide legal or tax advice, and this article does not contain any legal or tax advice. Any recommendations provided to you in this article are strictly for financial planning purposes only. Should you require legal or tax advice, you should consult with your attorney or tax advisor.