Old Age, Survivors’, and Disability Insurance

Federal Old Age, Survivors’, and Disability Insurance (OSADI) benefits are monthly payments made to retired workers, to families whose wage earner has died, and to workers who are unemployed because of sickness, injury, or disability. Workers qualify for these benefits by having been employed for the mandatory minimum amount of time and by having made contributions to Social Security. There is no financial need requirement that must be satisfied. Once a worker qualifies for OSADI benefits, his family is entitled to those benefits as well. The entire program is geared toward helping families as a matter of social policy.

Two large funds are held in trust to pay benefits under OASDI: the Old Age and Survivors’ Trust Fund (OASTF) and the Disability Insurance Trust Fund (DITF). As workers and employers make payroll contributions to these funds, money is paid out in benefits to people currently qualified to receive monthly checks. The OASTF provides benefits to retired workers, their spouses, their children, and other survivors of deceased workers, such as parents and divorced spouses. The DITF provides benefits to disabled workers, their spouses, and their dependent children. DITF also pays for rehabilitation services provided to the disabled.

The OASDI program is funded by payroll taxes levied on employees, employers, and the self-employed. The tax is imposed upon the employee’s taxable income, up to a maximum amount, with the employer contributing an equal amount. Self-employed workers contribute twice the amount levied on employees. However, to put self-employed individuals in approximately the same position as employees, self-employed individuals can deduct half of these taxes for both Social Security and income tax purposes.

Inside Old Age, Survivors’, and Disability Insurance