1994 Changes in OASDI, SSI, Medicare, Food Stamp, and Vetera

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The Annual Statistical Supplement to the Social Security Bulletin contains program summaries for various social welfare programs as well as program histories for the Old-Age, Survivors, and Disability Insurance (OASDI); Supplemental Security Income (SSI); Medicare; veterans' benefits; and Food Stamp programs. Through the 1992 edition, the Supplements were published at the end of the year or early in the following year and, therefore, included changes resulting from the automatic adjustment provisions as well as from new legislation.

Beginning with the 1993 edition, the Supplement has been released earlier in order to make the statistical tables available as promptly as possible. The 1994 edition was issued in September 1994. This note serves to update that edition to take account of changes in provisions since then.

Annual automatic adjustments of monthly benefits; maximum annual taxable earnings; premium, deductible, and coinsurance amounts; and other program elements are provided in the legislation governing the above programs. The cost-of-living adjustment (COLA) for OASDI and SSI monthly benefits, effective December 1994 for OASDI and January 1995 for SSI, is 2.8 percent. The announcement of this and other information regarding automatic adjustments under the OASDI and SSI programs appeared in the Federal Register on October 31, 1994.(1) Information about changes applicable to Medicare appeared in the Federal Register on December 1, 1994.(2) Food Stamp increases became effective October 1, 1994, and rises in veterans' benefits, in December 1994.

In addition to providing the new program amounts, this note discusses the major program changes introduced by the Social Security Domestic Employment Reform Act of 1994 (P.L.103-387), which became law on October 22, 1994.

The tables included here are selected, updated tables--in some cases, shortened versions--from the 1994 Supplement. Accordingly, the table numbers are taken from the corresponding tables in the Supplement.

Old-Age, Survivors, and Disability Insurance (OASDI) Coverage, Financing, and Insured Status

The Social Security Domestic Employment Reform Act of 1994 simplifies the procedures for the reporting of wages paid to domestic employees and the payment of Social Security taxes on those wages. Under previous provisions, individuals who hired domestic employees generally were required to withhold and pay Social Security taxes when the worker's cash wages were $50 or more in a calendar quarter; the exception was that the wages paid to domestic employees of farm operators were subject to the annual thresholds that are used for determining coverage for agricultural employees. When the $50 threshold was reached, the employer had to file a quarterly report with the Internal Revenue Service, submitting with it the required Social Security tax for both the employer and the employee.

The 1994 legislation requires individuals who employ domestic workers to report any Social Security (and applicable State unemployment insurance) taxes for wages paid these workers on a calendar-year basis. It also enables an individual who employs only domestic workers to report these taxes on his or her own Federal income tax return. The quarterly threshold of $50 is replaced with an annual threshold of $1,000, which is subject to automatic adjustments in proportion to increases in the average wage level. Increases in the threshold occur only in $100 increments. The same threshold applies to wages paid for domestic work on a farm. However, the new legislation exempts from Social Security coverage any wages paid to a worker for domestic service performed in any year during which the worker is under age 18, unless household employment is the principal occupation of the worker. Being a student is considered to be an occupation under this definition.

The $1,000 threshold is effective for calendar year 1994 and will be subject to automatic adjustments for years after 1995. …