Glossary of Social Security & Medicare Terms

Administrative law judge. A federally appointed, legally experienced official who presides over hearings and makes rulings on Social Security application and benefit decisions.

Appeal. A procedure for challenging an application or benefit decision by the Social Security Administration. If you disagree with a decision at one level, you can appeal it at the next. The appeals process has four successive steps:

• Reconsideration by a Social Security official not involved in the initial decision

• Hearing, generally with an administrative law judge

• Appeals Council review

• Federal court

Appeals Council. The Social Security Administration body that reviews appeal of rulings by administrative law judges.

Application for benefits. The form you must complete and sign to apply for Social Security benefits, Supplemental Security Income (SSI) or Medicare.

Authorized representative. A person you formally appoint to represent you in a Social Security benefit application or appeal. An authorized representative can attend meetings with Social Security officials, help you gather evidence to back your claim and access information in your Social Security file, among other things. Someone who is simply helping you fill out an application or other form need not be an authorized representative.

Auxiliary benefits. Benefits that go to a living wage earner's spouse and children based on the wage earner's earnings record. Also known as family benefits.

Average indexed monthly earnings (AIME). A dollar amount representing your average monthly income across your working life. It is derived by averaging up to 35 of your highest-earning years (adjusted for historical wage growth) and dividing the resulting figure by 12 to arrive at a monthly average. AIME is key to the Social Security benefit calculation.

Award letter. An official letter explaining the Social Security Administration's decision on your application for benefits. Also known as a decision notice.

Beneficiary. An individual who receives Social Security benefits.

Benefit verification letter. A document provided on request from Social Security that you can use as proof of your benefits, Supplemental Security Income or Medicare. Also known as a benefits letter, budget letter, proof-of-award letter or proof-of-income letter.

Blue Book. The Social Security Administration's online compendium of physical and mental conditions that meet the agency's definition of disability and the medical criteria that qualify someone with such a condition to receive disability benefits.

Break-even point. A calculation that can help you determine when to claim your retirement benefits, reflecting the fact that the later you begin collecting benefits, the higher your monthly payments. So, the sum total of payments you start receiving at full retirement age or later will eventually catch up with the sum of reduced monthly payments you can start getting earlier. The longer you expect to live past that break-even point, the more you could gain from delaying the start of your benefits.

Breadwinner. The individual upon whose lifetime earnings records a claim for benefits is made, including claims by spouses and other dependents. Also known as a wage earner, worker or number holder.

Child. A biological child, adopted child, stepchild or dependent grandchild who potentially qualifies for benefits based on a worker's earnings record.

Compassionate allowance. A Social Security initiative in which people with certain severe medical conditions are designated for fast-track consideration of applications for disability benefits.

Computation years. The years in which someone received earnings that are used to calculate a Social Security benefit. For retired workers, this will be their highest-paid 35 years. For disabled and deceased workers, the number of computation years could be lower, depending on the age at which they became disabled or died.

Consultative examination. A special medical examination or test that the government requests and pays for when additional information is needed to process a claim for disability benefits.

Contribution and benefit base. Also known as maximum taxable earnings, this is the amount of a person's yearly gross income that is subject to Social Security taxes, and the maximum amount of earnings that can be counted in the Social Security benefit calculation. The figure is adjusted annually based on national wage trends; in 2021 it is $142,800.

Cost-of-living adjustment (COLA). Annual change to Social Security benefits so that they keep pace with inflation. In years with little or no inflation, there may be no Social Security COLA, although this is rare.

Covered employment. Work in which you and an employer are required to pay into Social Security via payroll tax contributions. Most jobs in the U.S. economy are covered employment.

CPI-W. A consumer price index for urban wage earners and clerical workers compiled by the federal government and used to calculate annual Social Security cost-of-living-adjustments.

Death benefit. Sometimes called a “lump-sum death payment," a one-time payment of $255 to the spouse or, in some cases, child of a Social Security–covered worker who dies. The survivor must file for the lump-sum death benefit within two years of the worker's death.

Decision notice. An official letter explaining the Social Security Administration's decision on your application for benefits. Also known as an award letter or denial letter, depending on the result.

Deemed filing. A rule holding that if you are eligible for both your own retirement benefit and a spousal benefit when you file for Social Security, you are automatically deemed to be filing for both. You will receive the higher of the two benefits.

Delayed retirement credits. A boost to your retirement benefit that Social Security applies for every month between full retirement age and age 70 that you put off claiming your benefits. The credits increase your eventual benefit by 2/3 of 1 percent for each month you delay filing, which adds up to 8 percent per year.

Dependent. A family member, such as a spouse, child or grandchild, who may qualify for Social Security benefits based on a worker's earnings record.

Disability. An illness or injury that is severe enough to prevent an individual from working for at least a year or is likely to result in their death. The Social Security Administration applies this standard in determining whether someone qualifies for disability benefits.

Disability benefits. Monthly payments to an individual whose physical or mental condition meets Social Security's definition of disability. The Social Security Administration operates two such benefit programs, Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI).

Disability Determination Service (DDS). A state agency that works closely with the Social Security Administration to review applications for disability benefits.

Disability review. A periodic medical evaluation of someone receiving disability benefits to confirm that they still qualify as disabled. A beneficiary whose condition is considered likely or possible to improve will generally get an initial review six to 18 months after becoming disabled, with follow-ups every three years thereafter.

Divorced-spouse benefit. Also called an ex-spousal benefit, a type of Social Security benefit paid to a wage earner's former husband or wife. The benefit can be up to 50 percent of the wage earner's primary insurance amount. The couple must have been married for at least 10 years for a divorced spouse to claim this benefit.

Divorced widow(er). Also called a “surviving divorced spouse," the living former spouse of a deceased worker who paid into Social Security. A divorced widow(er) may be able to collect survivor benefits on the late ex-spouse's earnings record, if the marriage lasted at least 10 years.

Dual entitlement. When you're entitled to benefits on more than one earnings record — for example, your own retirement payment and a spouse's benefit. Dual entitlement does not mean you collect the sum of both benefits. Social Security will pay only the higher amount, although it might draw from both earnings records to do so.

Earliest eligibility age (EEA). The lowest age at which individuals can apply for Social Security benefits.

For retirement and spousal benefits, the EEA is 62.

For widows or widowers, the EEA is 60 (50 if they are disabled), except as noted below.

For widows or widowers with children who are under age 16 or disabled, there is no EEA.

To apply for disability benefits, there is no EEA.

Early retirement benefits. Retirement benefits that are reduced for being claimed early, between age 62 and full retirement age. The reduction is calculated based on the number of months before full retirement age that benefits are claimed.

Earnings record. Your past earnings from covered employment that are on file with the Social Security Administration, upon which your benefit calculation is based. Also known as an earnings history.

Earnings limit. Also known as the earnings test, this is a cap on the amount of income from work people who collect retirement, spousal or survivor benefits and are under full retirement age can earn before Social Security will withhold a portion of benefits. The limits are adjusted annually. In 2021, benefits are reduced by: $1 for every $2 in earnings above $18,960 in the years before you reach full retirement age. $1 for every $3 in earnings above $50,520 during the year in which you reach full retirement age. The earnings limit is lifted, and benefit withholding ends, in the month you reach full retirement age.

Eligible. Meeting the requirements for age, credits and relationship (such as spouse or child of a wage earner) necessary to receive a Social Security benefit. Eligibility doesn't automatically enroll you in Social Security; when eligible, you need to apply for a benefit.

Entitled. Having completed an application for Social Security benefits for which you are eligible.

Family benefits. Benefits that go to a living wage earner's spouse and children based on the wage earner's earnings record. Also known as auxiliary benefits.

Family maximum. The ceiling on benefits that can be paid collectively to family members of a wage earner on that person's earnings record, including retirement, disability, spousal, children's or survivor benefits. Also known as the maximum family benefit. If the wage earner of record is retired or deceased, the family maximum will be between 150 percent and 188 percent of his or her primary insurance amount. For a disabled worker's family, it is between 100 and 150 percent of the worker's primary insurance amount.

FICA tax. The payroll tax that funds Social Security and Medicare, levied under the Federal Insurance Contributions Act (FICA). The Social Security portion is 12.4 percent of gross wages up to an annually adjusted cap (for 2021, it's $142,800).

File and suspend. A now-defunct strategy for married couples to maximize benefits. It allowed a spouse to receive family benefits on the record of a mate who had claimed but then voluntarily suspended his or her own retirement benefit. In this way the couple could receive some money from Social Security while both spouses earned delayed retirement credits to boost their eventual retirement payments.

The Bipartisan Budget Act of 2015 outlawed this practice. Retired workers can still suspend their retirement benefits, but their mates cannot draw spousal benefits during the suspension period.

Full retirement age (FRA). The age at which you become entitled to the full retirement benefit calculated from your earnings history (or to the full spouse's or survivor benefit calculated from a family member's work record). Claiming Social Security before FRA reduces your benefit. The full retirement age is based on your year of birth. For retirement and spouse benefits, It is currently 66 and 2 months and will rise incrementally to 67 over the next several years; FRA differs for survivor benefits. For survivor benefit it is 66 but will also eventually increase to 67.

Full retirement benefit (FRB). The benefit you receive at full retirement age. It is equal to 100 percent of the primary insurance amount. Retirement benefits increase if claimed after full retirement age, up to age 70.

Gainful activity. Work you do for pay. The Social Security Administration annually sets a dollar amount of gainful activity it considers “substantial.” If you earn more, you cannot collect disability benefits (except in limited circumstances involving efforts to return to the labor force). The threshold for substantial gainful activity in 2021 is $1,310 per month ($2,190 for the blind).

Government Pension Offset (GPO). A Social Security rule that reduces the dependent benefits paid to a spouse, widow or widower on another person's work record if the dependent receives a pension from a government job in which he or she did not pay FICA taxes.

Hearing. An appeal, usually before an administrative law judge, of a decision by the Social Security Administration on a benefit matter. If an adverse ruling is going to be reversed, it is most likely to happen at this stage of the review process.

Insured status. Your status toward eligibility for Social Security, based on your total number of Social Security credits. Generally, you are “fully insured” at 40 credits, the level to qualify for retirement benefits for yourself and spousal and survivor benefits for your family. In some circumstances, the widow or widower and children of a worker who dies with “currently insured status” (as few as six credits) may collect a form of survivor benefits. See “mother's or father's benefit.”

International Social Security Agreement. A U.S. agreement with another country to coordinate Social Security with the comparable program in that country. Also called “totalization agreements,” these pacts ensure that: Americans working in those countries (and people from those countries working in the U.S.) do not pay Social Security taxes in both places on the same income. Those workers can combine credits from both countries if necessary to qualify for benefits in one of them. As of April 2021 the U.S. had such agreements with 30 countries.

Listing of impairments. An official compilation of highly severe conditions. The Listing of impairments lays out detailed criteria that enable an individual to qualify for Social Security disability benefits. The listing of impairments makes up the bulk of the Blue Book.

Lump-sum death payment. Sometimes called a death benefit, a one-time payment of $255 to the spouse or, in some cases, child of a Social Security–covered worker who dies. The survivor must file for the lump-sum death benefit within two years of the worker's death.

Marriage. A legal marriage, in which one spouse (or ex-spouse) is entitled to collect Social Security benefits on the earnings record of another. This includes same-sex marriages and may include state-recognized common-law marriages.

Maximum family benefit. The ceiling on benefits that can be paid collectively to family members of a wage earner on that person's earnings record, including retirement, disability, spousal, children's or survivor benefits. Also known as family maximum. If the wage earner of record is retired or deceased, the family maximum will be between 150 percent and 188 percent of his or her primary insurance amount. For a disabled worker's family, it is between 100 and 150 percent of the worker's primary insurance amount.

Maximum taxable earnings. Also known as the contribution and benefit base, this is the amount of a person's yearly gross income that is subject to Social Security taxes, and the maximum amount of earnings that can be counted in the Social Security benefit calculation. The figure is adjusted annually based on national wage trends; in 2021 it is $142,800.

Medicaid. A health insurance program for low-income individuals and families, primarily funded by the federal government but largely run by the states. In most states, people receiving Supplemental Security Income (SSI) are automatically eligible for Medicaid.

Medicare. The U.S. government health care program primarily servng individuals 65 and older. Younger people can qualify if they suffer from end-stage renal disease or amyotrophic lateral sclerosis (ALS) or have been receiving Social Security disability benefits for at least two years. The Social Security Administration manages Medicare enrollment.

Medicare has four parts: A (hospital insurance), B (supplementary medical insurance), C (Medicare Advantage) and D (prescription-drug coverage).

Medicare Advantage. An alternative to the original Medicare program in which private health insurers that contract with Medicare offer basic services and extras, generally with an additional premium and a limited choice of providers. Also known as Medicare Part C.

Medicare Part A. The part of Medicare that provides hospital insurance. Part A covers a portion of hospital expenses, temporary rehabilitation in a skilled nursing facility or hospice, and some home health care.

Medicare Part B. The part of Medicare that provides health insurance, covering doctors’ visits and other outpatient services.

Medicare Part D. The part of Medicare that provides prescription-drug coverage. Part D is handled by Medicare-approved private plans. You can obtain Part D coverage in a stand-alone plan or as an element of a Medicare Advantage policy.

Medigap. Private, supplemental health coverage designed to fill in gaps in Medicare coverage. Also known as Medicare Supplement Insurance.

Month of election. In a claim for retirement, spouse's or widow(er) benefits, the month an applicant chooses for benefits to begin.

Mother's or father's benefit. A form of benefit available to the spouse (or divorced spouse) of a deceased wage earner on the basis of caring for that worker's under-16 or disabled child.

My Social Security. An online account you can set up at the Social Security website and use to check your earnings history, get estimate of future benefits and access services such as requesting a replacement Social Security card or changing direct deposit information for benefit payments. You do not need to be collecting benefits to open a My Social Security account.

National Average Wage Index. A measure of wage trends calculated by Social Security and used to annually update the earnings limit, maximum taxable earnings and other key figures that determine benefit eligibility and payment amounts.

Non-covered employment. Work for an employer that did not withhold Social Security taxes from your wages. The vast majority of U.S. workplaces are covered, but some state and local government offices are not, nor is work in most other countries.

Number holder. The individual upon whose lifetime earnings record a claim for benefits is made, including claims by spouses and other dependents. Also known as a wage earner, worker or breadwinner.

Offset. A reduction in Social Security Disability Insurance (SSDI) payments if the beneficiary is also collecting workers’ compensation or some other form of public disability benefit. Under federal rules, SSDI and workers’ comp combined cannot exceed 80 percent of the recipient's average earnings prior to becoming disabled; if they do, the offset is applied to get the combined benefits below the cap.

Old-Age, Survivors and Disability Insurance (OASDI). The formal name for Social Security, encompassing benefits for retirees, disabled workers, dependent family members and survivors.

Onset date. The date on which someone became disabled under Social Security's definition — that is, their condition prevented them from working. When it approves a claim for disability benefits, Social Security determines the “established onset date” and uses it to determine when payments should start.

Overpayment notice. Formal notification that the Social Security Administration believes you've been paid more in benefits than you're entitled to and owe it money. You may challenge an overpayment notice by filing a request for reconsideration, or ask Social Security to waive recovery of the debt.

Presumptive disability. A finding by Social Security that applicants for Supplemental Security Income (SSI) who have certain severe medical conditions or are terminally ill are likely to have their claims approved and can receive up to six months of benefit payments while awaiting a formal decision.

Primary insurance amount (PIA). An amount equal to your Social Security benefit at full retirement age. The PIA is derived from a wage earner's average indexed monthly earnings by a progressive formula — that is, one weighted to provide proportionally higher benefits to lower-income workers. It is also the base from which the family maximum is calculated.

Program Operations Manual System (POMS). The primary guide for Social Security Administration employees in making determinations about benefits. Most of it is publicly available online.

Progressivity. The feature of Social Security designed to make benefits relatively more generous for low earners than for high earners. Progressivity is achieved mainly through the formula used to calculate the primary insurance amount.

Protective filing date. The date you contact the Social Security Administration about making an application for benefits. The protective filing date may help you gain back benefits if much time passes before the application is complete. Applications for retirement, disability and other Social Security benefits must be completed within six months of the protected filing date, Supplemental Security Income applications within 60 days.

Quarters of coverage. Now known as Social Security credits, these are units that count toward entitlement for benefits, based on earnings in covered employment. The amount of each unit is adjusted annually based on trends in wage growth. In 2021, you receive one credit for $1,470 in earnings on which you paid Social Security taxes. You can earn up to four credits per year. You must have at least 40 credits to qualify for Social Security retirement benefits.

Reconsideration. The first step in challenging an adverse decision on an application for benefits. It involves a review by a Social Security official who was not involved in the initial denial of your claim and is usually required before you can request a hearing with an administrative law judge.

Red Book. A comprehensive guide to employment opportunities open to people with disabilities who are receiving benefits under the Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) programs.

Reduction factor. The monthly amount by which benefits can be reduced if claimed before full retirement age.

Replacement rate. The percentage of preretirement earnings replaced by Social Security benefits. It is about 40 percent for average earners, more for low earners, less for high earners.

Representative payee. An individual or organization authorized to receive and manage Social Security benefits on behalf of a beneficiary who is unable to do so. Payees must use the benefits to meet the needs of the beneficiary, save anything extra and keep records.

Residual functional capacity. An individual's remaining ability to function in the workplace, despite the limitations of a physical or mental condition. This can be an important factor in Social Security's assessment of whether an individual can work or is disabled.

Restricted application. A method of applying for one type of Social Security benefit and excluding others for which you may also be eligible. In general, an application filed with Social Security covers all benefits for which you qualify. Restricted applications are most common when the choice is between retirement and survivor benefits; there are tight limits on using them to pick between retirement and spouse's benefits.

Retirement benefits. Payments made to workers who've earned Social Security retirement coverage, starting as early as age 62. The Social Security Administration sometimes calls such payments retirement insurance benefits (RIB) or retired-worker benefits.

Retroactive benefits. Benefit payments predating the time of application, sometimes available to individuals older than full retirement age, the disabled and certain dependents.

SECA tax. The payroll tax for Social Security and Medicare paid by self-employed people under the Self-Employment Contribution Act (SECA). The Social Security portion is currently set at 12.4 percent of net earnings up to a yearly cap known as maximum taxable earnings ($142,800 in 2021). The Medicare portion is 2.9 percent on all net earnings — there is no cap.

Social insurance. An idea imported from Europe that national governments could adapt insurance principles for the benefit of all members of a society.

Social Security Act. The 1935 federal law that created the Social Security program. The original act included benefits for retirees and the unemployed, among other provisions. The law was amended in 1956 to add disability as a benefit category.

Social Security Administration (SSA). The federal agency that runs Social Security, Supplemental Security Income, and enrollment in Medicare parts A and B. SSA is headquartered in Baltimore and maintains more than 1,200 field offices in communities across all 50 states, the District of Columbia and U.S. territories.

Social Security credits. Formerly known as quarters of coverage, Social Security credits are units that count toward entitlement for benefits, based on earnings in covered employment. The amount of each unit is adjusted annually based on trends in wage growth. In 2021, you receive one credit for $1,470 in earnings on which you paid Social Security taxes. You can earn up to four credits per year. You must have at least 40 credits to qualify for Social Security retirement benefits.

Social Security Disability Insurance (SSDI). Monthly benefit payments available to people who are unable to work due to disability, and to members of their families. SSDI is funded by Social Security taxes and benefits are calculated from the recipient's earnings record, as are retirement benefits.

Social Security Handbook. A comprehensive guide to Social Security and its regulations, written for the public and available online.

Social Security number (SSN). The nine-digit identifier for Social Security, usually assigned during infancy. New numbers are assigned randomly under a system adopted in 2011.

Social Security statement. A personal summary of Social Security benefits you've earned and projected future benefits. You can view your Social Security statement online by opening a My Social Security account. If you do not have an online account, Social Security will mail you a statement three months before your 60th birthday and will continue to do so annually until you claim your benefits.

Social Security trust funds. Separate accounts in the U.S. Treasury that hold the taxes collected under the Federal Insurance Contributions Act (FICA) and the Self-Employment Contributions Act (SECA), and from which Social Security benefits are paid. There are two such funds: the Old-Age and Survivors Insurance (OASI) Trust Fund and the Disability Insurance (DI) Trust Fund.

Special earnings limit rule. An exception to Social Security's earnings limit, which subjects beneficiaries below full retirement age to a reduction of benefits if they continue to work and their income exceeds a certain yearly threshold. The normal earnings limit is based on full-year income. The special rule allows Social Security to apply a monthly earnings limit during one calendar year, usually the one in which you start collecting benefits. That way, your Social Security payments are not reduced by what you earned in the part of the year predating your retirement, even if that income exceeds the annual cap.

Spouse's benefit. A type of Social Security benefit available to married couples. One spouse can claim up to 50 percent of the other spouse's full retirement benefit, depending on the age of the claimant. Also called a spousal benefit.

Substantial gainful activity (SGA). An income-based factor In eligibility for disability benefits. A person whose work earnings exceed a monthly threshold is considered by Social Security to be engaged in substantial gainful activity and ineligible for disability benefits. The cap is adjusted annually for national wage trends. In 2021, it is $2,190 a month for blind people and $1,310 a month for the non-blind disabled. Both figures apply to Social Security Disability Insurance (SSDI) benefits. For Supplemental Security Income (SSI), only the limit for non-blind claimants applies.

Supplemental Security Income (SSI). A cash assistance program run by the Social Security Administration that pays monthly benefits to low-income individuals who are age 65 and over, blind, or disabled. SSI benefits are paid out of general U.S. tax revenue, not out of Social Security taxes.

Surviving divorced spouse. Also called a divorced widow or widower, the living former spouse of a deceased worker who paid into Social Security. A surviving divorced spouse may be able to collect survivor benefits on the late ex-spouse's earnings record, if the marriage lasted at least 10 years.

Survivors benefit. A type of Social Security payment available to surviving spouses and children of a late wage earner, based on the deceased's earnings record. A worker's elderly parents, grandchildren and ex-spouses may also be eligible for survivor benefits.

Totalization agreement. A U.S. agreement with another country to coordinate Social Security with the comparable program in that country. Also called “International Social Security Agreements,” these pacts ensure that: Americans working in those countries (and people from those countries working in the U.S.) do not pay Social Security taxes in both places on the same income. Those workers can combine credits from both countries if necessary to qualify for benefits in one of them. As of April 2021, the U.S. had such agreements with 30 countries.

Treating doctor. A physician or psychologist who treats an individual who has applied for disability benefits. The Social Security Administration gives significant weight to the observations of a treating doctor in weighing disability claims.

Trial work period. A span of nine months in which someone getting Social Security disability benefits may work without interruption of benefits. During the trial work period, the restriction on substantial gainful activity isn't enforced. The nine months of trial work can be spread over five years.

Trustees report. A detailed annual disclosure of Social Security's finances released by its board of trustees. The six-member board includes the secretary of the treasury, the commissioner of Social Security, the secretary of health and human services, the secretary of labor and two representatives of the public.

Vocational expert (VE). A government-paid occupational expert who may testify at a disability hearing to help Social Security determine if the applicant can still do his or her previous work or other work. The VE's testimony will primarily cover the type of skill and exertion required to perform the applicant's previous job or other jobs in the economy.

Voluntary suspension. A request by a wage earner to temporarily halt retirement benefits so he or she can earn delayed retirement credits and increase their benefit amount. Only beneficiaries between full retirement age and 70 can suspend benefits.

Wage earner. The individual upon whose lifetime earnings record a claim for benefits is made, including claims by spouses and other dependents. Also known as a worker, breadwinner or number holder.

Waiver of recovery. A request by a beneficiary to waive repayment of a debt to Social Security resulting from an overpayment of benefits.

Widow(er) benefit. A type of survivor benefit paid to the spouse of a deceased wage earner.

Windfall Elimination Provision (WEP). A rule that can reduce Social Security retirement payments to individuals who earned pensions through non-covered employment in which they did not pay into Social Security. The WEP primarily affects federal workers hired before 1984 and some employees of state and local government agencies, but it can also apply to workers who earned pensions in other countries.

Withdrawal of benefits. A means for people collecting benefits to effectively cancel their Social Security (by retroactively withdrawing their application for benefits) and reapply later for a higher monthly payment. The catch is that you must repay any benefits you've already received. This option is generally used by people who claim early retirement and then change their mind about locking in a reduced benefit. However, you can only withdraw an application for retirement benefits during the first year you are collecting them. For spouse's or survivor benefits, the withdrawal window remains open until full retirement age.