Social Security Administration (SSA) Key Terms

Understanding programs and elements of the Social Security Administration

By Michelle Cramer

The Social Security Administration is responsible for overseeing and managing programs that provide financial benefits to working U.S. citizens. As a business owner, it's important to be aware of the programs available for your employees and your requirements in regard to how much to deduct from each employee's payroll check, what benefits they are eligible for, and what you need to report to SSA.

Knowledge of the following terms will assist you in your payroll processes in order to meet SSA regulations.

Social security

Social security is the broad term for the range of benefits offered by the federal government to workers with US citizenship. The main benefits the SSA provides are classified as survivors, disability and retirement.
Try: Get more information on social security from ForeignBorn, including the taxes employees face and how the SSA uses the money.

Medicare

Medicare, overseen by the SSA, consists of the health insurance benefits provided to most individuals age 65 and over. There are four parts. Part A is hospital insurance, Part B is medical insurance, Part C is the Medicare Advantage program and Part D is prescription coverage.
Try: Solutions for Seniors and the Social Security Administration provide more details about Medicare, including explanations of each part.

SSDI

SSDI stands for Social Security Disability Insurance. Individuals receive these benefits if they worked in the United States, suffered an injury and are unable to work because of that injury for a year or more.
Try: Visit the FirstStep website for more information on SSDI.

Form W-2

Form W-2 is an IRS tax form that all employers must file each year for each employee who had federal, state, social security and/or Medicare taxes withheld from his or her earnings. Employers must send a copy of the W-2 for each employee to the SSA.
Try: RealTaxTools helps with common W-2 errors and other items that you should be aware of.

FICA

FICA stands for the Federal Insurance Contributions Act of 1939 and refers to the income taxes withheld from an employee's earnings that go toward social security benefits.
Try: Visit Money-zine for a breakdown of FICA as well as past and current FICA tax rates.

COLA

COLA stands for cost of living adjustment. In regard to the SSA, the COLA is an annual increase in social security tax rates in order to reflect inflation. There is no law or enactment that must meet approval in order for the COLA to be put into effect each year, it is just an automatic adjustment based on COLA calculations.
Try: SeniorArk provides information on how COLA is calculated and what it is.