Founded in 1935 during the Great Depression, the Social Security Administration (SSA) is the U.S. federal agency responsible for issuing Social Security numbers (SSNs). It also enrolls eligible participants in Medicare and oversees retirement, survivors, disability, and supplemental income programs.

Old-Age, Survivors, and Disability Insurance (OASDI)

Old-age, survivors, and disability insurance (OASDI) is the name of the primary program run by the SSA. Funded largely by taxes, OASDI  contributes to the well-being of millions of Americans each year through the following benefits  :

• Social Security retirement:  This is the earned income that employees receive when they reduce their working hours and eventually retire. To be eligible, you must be 62 years old and have paid into the program for at least 10 years.
• Social Security Disability Insurance (SSDI):  Another earned benefit, SSDI supports people with disabilities or qualifying medical conditions. Eligibility rules state that the beneficiary or a family member (spouse/parent) must have contributed to the program.
• Social Security survivor benefits:  These benefits are paid to widowers, widows, and dependents of eligible workers who had paid into the program and died.
• Supplemental Security Income (SSI):  This entitlement program provides assistance to adults age 65 and older, as well as disabled or blind adults and children who have limited income and resources.

Medicare (hospital insurance)

Medicare is a health insurance program for older individuals age 65 and older, as well as people with disabilities and serious medical conditions. The SSA processes Medicare applications and provides general information, but the  Centers for Medicare & Medicaid Services (CMS)  runs the program.

Who pays for Social Security and Medicare?

The majority of funds in the Social Security system are generated from payroll taxes. This  is mandated by the Federal Insurance Contributions Act (FICA)  and the Self-Employment Contributions Act (SECA).  Additional funding sources for these programs  include:

• Reimbursement from the General Fund of the US Treasury
• Income Tax on Social Security Benefits
• Interest earned by Government bonds under the Trust Fund

A portion of each tax dollar collected goes into a trust fund from which benefits for retirees and surviving spouses and children come. The remainder goes into a separate trust fund that pays benefits to people with disabilities and their families. Collectively, these funds cover the costs of running these programs.

SSI benefits  are funded entirely by general funds in the U.S. Treasury - FICA and SECA taxes do not pay into this program. The general fund is created by personal income taxes, corporate taxes, and other fees.

Social Security taxes for OASDI  are calculated based on income up to a specified amount (the taxable maximum), which is re-evaluated each year. For example, the taxable maximum for 2024 is $168,600. Each contributor pays into Social Security as follows:

• Employees:  6.2%
• Employers:  6.2%
• Self-employed workers:  12.4%

How to Calculate Medicare Taxes

Medicare taxes are also collected in a similar way. Employers and employees share responsibility, and self-employed workers pay the full amount. Each contributor pays into Medicare as follows:

• Employees:  1.45%
• Employer:  1.45%
• Self-employed workers:  2.9%

Employees in higher income ranges have to pay an additional 0.9% in Medicare tax.

As of 2023,  the long-term financial outlook  indicates that the Social Security system is not sustainable indefinitely. Current projections reported by the SSA Board of Trustees indicate that OASI and DI reserves will be exhausted by 2034. This estimate is based on several demographic factors, such as:

• Number of people entering retirement
• Long life expectancy
• Low birth rate

Once the surplus is gone, only payroll taxes and other sources will fund the program. This means the system will only be able to pay out as much as it takes in each year. If future policies and amendments increase funding, the Social Security program could run as it does today.

How is SSN used?

A person's  SSN  is his or her link to the SSA. The agency uses this nine-digit ID to track Social Security earnings throughout their career and to provide benefits when they are eligible to receive them. This number is also used for personal identification purposes. It is common for government agencies, private businesses, financial institutions, and employers to ask for a person's SSN to do any of the following:

• Verify US citizenship
• Run a background check
• Verify identity
• Complete IRS  Form W-2

For example, a Social Security card is typically needed for a person to get approved for a mortgage, obtain a passport, or apply for public assistance. And because of the online help available from the SSA, HR can take extra precautions when hiring new employees.

Through the SSA, HR receives useful information to give to employees, helping them plan for retirement and other major life events. Today's employers and HR professionals also use the government's online tools to process new hires securely and efficiently, such as:

The Social  Security Number Verification System (SSNVS)  lets you confirm a person's identity. Using this online tool, hiring managers can compare their employees' names and SSNs to the most current Social Security records. This step in the hiring process is critical to prevent identity theft and ensure accurate record keeping.

Confirmation of E

E-Verify  is an online system that employers use to process new hires. Jointly administered by the SSA and US Citizenship and Immigration Services (USCIS), this web-based tool makes it easy to confirm that employees are   eligible to work in the US using their Form I-9 .