TN 4 (11-06)
RM 01310.010 Information Contained in the Social Security Statement
This section provides an exhibit of the Social Security Statement, reviews its contents, and answers questions that individuals may have upon receiving it.
We use information in our records to produce the information on the statement. The form contains fixed and individually variable language. Each Statement also contains a vendor identification number in a lower margin. If an SSN holder reports a misprinted or illegible statement, we can use this number to track the statement and identify printing contractor production problems.
The following exhibit features all four pages of the green-highlighted, automatic-issuance version of the statement, which goes to more than 140 million SSN holders each year. The on-request (blue-highlighted) version of the form is virtually the same. In the explanations that follow the exhibit, we will point out the few differences between the two.
1. Social Security Statement (Form SSA-7005-SM-SI)
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2. A Statement From Social Security (Form SSA-L-7005-SM-SI)
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1. Covered Earnings
These are the earnings on which workers pay Social Security and Medicare taxes. Covered earnings include most wages, defined in the Social Security Act as “remuneration from employment” (with certain exceptions), and self-employment income, defined as net earnings from self-employment. Beginning in 1983, certain government employment wages are covered, and taxed, for Medicare only. This is known as Medicare Qualified Government Employment (MQGE). Covered wages are subject to Social Security and Medicare taxes under the Federal Insurance Contribution Act (FICA) and self employment is subject to the Self Employment Contribution Act (SECA).
2. Non-Covered Employment
Employment which is not covered at all, and that which is covered for Medicare only, may be the basis of a pension from earnings not covered for Social Security. This may subject the person’s primary benefits to the WEP, and spousal benefits to GPO. The Social Security Protection Act (SSPA) requires SSA to provide specific information about WEP and GPO to persons whose records, “indicate a likelihood of noncovered employment.”
“Noncovered Employment” for Social Security purposes includes “un-posted” Non-Covered Earnings (NCE), recorded in the MEF “Unposted Detail Segment” since 1978, and MQGE which is “posted” in the MEF Posted Detail Segment.
Lack of data prior to 1978
SSA has no records of NCE prior to 1978, when SSA switched from quarterly to annual wage reporting and began processing Forms W2 for both SSA and IRS. Prior to 1978, IRS passed to SSA quarterly reports of Social Security wages only. Statement recipients age 52 to 65 in 2006 were 24 to 37 years old in 1978 and can have significant pre-78 NCE about which we know nothing. A person with NCE, but only prior to 1978, may have vested rights to a pension from non-covered employment, but will not receive the WEP paragraph intended for persons with non-covered earnings.
Earnings reported as not covered for Social Security are stored as “details” in the Unposted Detail Segment of the MEF, but are not included in the MEF Summary Segment, since these earnings are not used for insured status nor PIA computations.
State and Local wages, 1978 -- 1983
From 1978 to 1983, some States continued to report quarterly for covered workers, and also annually (W2s) for all workers, with the W2s coded and stored as UPNCE even for those with the same wages posted quarterly, as covered state employment. Because of this, some persons may have erroneous earnings details which would affect WEP and GPO issues.
Medicare Qualified Government Employment (MQGE)
Many people in employment not covered for Social Security, including federal employees, began paying Medicare taxes in 1983. A Medicare amount on a Statement can be identified as MQGE if there is no Social Security amount for the year. If the Social Security amount is less than the Social Security maximum, the amount of Medicare wages in excess of the Social Security amount on a Statement can be recognized as MQGE if the individual had both covered and MQGE income that year. However, if the Social Security amount is the maximum for the year, the “excess” Medicare is not likely to be MQGE, but rather, wages above the Social Security maximum, taxed for Medicare only. Such wages are stored as details with employment type “H”, while MQGE has a “Q.” This can be verified by reading the MEF details on a DEQY query.
“Unposted” Non-covered Earnings (UPNCE)
Details recorded in the MEF “Unposted” Details Segment with the employment types shown in the list below are considered NCE for the purpose of the WEP and GPO provisions of the SSPA. If any such details are found, the Statement will include the WEP paragraph which mentions the maximum monthly benefit reduction possible due to the WEP.
|Kind of Wages||Employment Type Code|
|State and Local||G|
|State and Local Tips||S|
|Limit of Liability State and Local||V|
|State and Local Agricultural||W|
|State and Local Limit of Liability Agricultural||X|
Most non-covered wages from schools and police and fire departments have employment type “A”. Many of the types listed above are extremely rare. Some common sources of un-posted non-covered wages are work-study jobs for college students, and full or part-time employment for religious or non-profit organizations which have not elected to participate in Social Security.
3. Maximum Covered Earnings
Each year, there is a maximum amount of earnings on which workers pay Social Security taxes. These amounts are set by a formula in the law. From 1966 through 1990, the same maximum amount applied to earnings taxable for Medicare. Beginning in 1991, the annual maximum for Medicare earnings increased above the Social Security amount until the cap was removed entirely in 1994. SSN holders now pay Medicare taxes on all their earnings.
NOTE: The Medicare program did not begin until 1966.
D. Descriptions of Pages within Form SSA-7005-SM
1. Page 1
On both the automatically issued and the on-request versions of the statement, the legend “Prepared Especially for [SSN holder's name]” will appear at the top just under the form title. The SSN holder's name and mailing address will be entered so that the information is displayed appropriately in a business-size window envelope.
The remainder of the first page is devoted to a special message from the Commissioner of Social Security. The message discusses the purpose of the Social Security program and encourages SSN holders to use their Social Security protection as a cornerstone on which to plan their financial futures. The message may be changed from time to time to reflect concerns the Commissioner wishes to emphasize.
On-request Statement variation: In the opening paragraph of the message, the first sentence of the on-request version reads: “We are pleased to send you the Social Security Statement you requested.”
The upper right of the page in both versions features a table of contents pointing out the personal information on pages 2 and 3 and the general Social Security facts on page 4.
2. Page 2
The top of page 2 provides personalized estimates of the potential benefit payments for which the SSN holder and his/her family may qualify. RM 01310.015 - RM 01310.017 discuss how we derive this information.
NOTE: In the past, the PEBES form rounded the benefit estimates off to the nearest $5. Because since 1999 the PEBES system uses the common computation utility from the MCS to calculate these estimates, the Statement now shows the actual calculated amount.
For persons who do not have enough earnings on record to qualify for any of the three types of benefits, the entry of their personal information for that benefit explains how many credits they need and how many they currently have. The text at the bottom of page 2 provides a general explanation that no benefit estimate is given on this statement when SSN holders are not insured, but if they continue to work and subsequently become insured, we will provide an estimate at that time.
John Baker, age 26, currently has enough credits to qualify for disability and survivor benefits, but he does not yet have the 40 quarters he needs to be insured for retirement benefits. His Statement will show estimated disability and survivor benefit amounts, but instead of a retirement benefit estimate, it will show the following language:
“To get retirement benefits, you need 40 credits of work. Your record shows that you have at least 32 credits at this time.”
At the middle of the page are the facts about the SSN holder that were used to prepare the statement. RM 01310.018 describes where this information comes from.
WEP and GPO information
Beginning in FY 2007, there are extended explanations of the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO). Persons who have any earnings not covered for Social Security, either MQGE, or “un-posted non-covered” earnings, or both, get a WEP paragraph which cites the maximum reduction possible due to the WEP.
To assist SSA employees dealing with questions related to the WEP and GPO information, coding appears at the bottom of page 2, under the GPO paragraph in the right-hand column, and under the colored line. One, two or three letters appear between square brackets. If the person has any earnings covered for Social Security, there will be a “C”; if there is any MQGE on their record, there will be an “M”, and if there are any un-posted non-covered earnings, there will be an “X”.
3. Page 3
Page 3 discusses the importance of SSN holders' records of earnings and encourages them to check the accuracy of the reported earnings and let us know of any errors.
At the top of the page, we provide the SSN holder with a year-by-year display of the earnings on record to date. The chart begins with the first year for which the SSN holder had fully covered earnings or Medicare-qualified government employment (MQGE). Social Security-covered and Medicare-covered (including MQGE) earnings are shown in separate columns. The money amounts are shown in whole dollars, up to each year's maximum covered amount.
For young workers, recently arrived immigrants, and other persons who only recently began working in covered employment or self-employment, the earnings may only fill one side of the page. On these Statements, the right side of the page contains additional text messages about Social Security programs. These messages may be changed from time to time.
We no longer display the estimated Social Security and Medicare taxes that SSN holders have paid in the year-by-year earnings chart. Instead, the estimated aggregate amounts of taxes paid are shown at the bottom of the page. As now required by law, we also show the aggregate estimated taxes the SSN holder's employers have paid on the posted earnings. If the SSN holder's record includes any reported self-employment income, the total of his or her estimated taxes will be different from the aggregate amount shown for the employers.
4. Page 4
This page provides additional general information about Social Security benefits. It also tells the SSN holder about more detailed publications covering special areas of interest that they can request from SSA. We encourage them to use these informational materials as they begin planning to apply for benefits.
At the bottom of the page, we tell the SSN holder how to contact us by telephone, mail, our Internet website or through local field offices. The 800 number shown is the national number: 1-800-772-1213. For persons living outside the United States who do not have access to the 800 number, we give the mailing address for the Division of International Operations in Baltimore.