History Of The Social Security Program

In 1935, after bank failures and a stock market crash had wiped out the savings of millions of Americans, the nation turned to their president to guarantee the elderly a decent income. In those days, only a handful of workers had access to pensions from their employers or through State governmental pension programs. Over half of America's elderly lacked sufficient income to be self-supporting. The Social Security Act was enacted at the urging of President Franklin D. Roosevelt to create a social insurance program that ensures workers would have a source of income after they retired.

In the decades that have followed, Social Security has become one of the federal government's most popular and essential programs. Despite all our efforts to encourage savings and investment, the private retirement picture has not changed much in recent decades. Even today, barely half of all workers have access to retirement plans at work, and millions reach retirement age without enough private savings to provide an adequate living in retirement. Social Security is still the foundation for most seniors' retirement. Without this critical safety-net program, over half of all older Americans would fall into poverty. Social Security does exactly what it was designed to do. It gives retired people a secure, basic income for as long as they live. At the end of 2005, more than 48 million people were receiving Social Security benefits: 33 million retired workers and their dependents, 7 million survivors of deceased workers, and 8 million disabled workers and their families.

Over time, the Democratic Party has implemented changes to the Social Security program in order to adjust to changing times. In 1965, President Lyndon B. Johnson proposed and later signed the legislation to create Medicare. The Medicare program was added to provide universal, affordable health care benefits to retirees. Medicare is the largest health insurance program in the United States. At the end of 1966, Medicare served approximately 3.9 million individuals. As of 2003, it serves about 41 million people. There are 5.6 million Medicare beneficiaries enrolled in managed care programs.

Medicare is an entitlement program similar to Social Security and is not based on financial need. Medicare benefits are available to all American citizens over the age of 65 because they or their spouses have paid Social Security taxes through their working years. Since Medicare is a federal program, the rules for eligibility remain constant throughout the nation and coverage remains continuous regardless of where an individual receives treatment in the United States. Medicare benefits were initially divided into two different categories referred to as Part A and Part B. Medicare Part A is hospital insurance that provides basic coverage for hospital stays and post-hospital nursing facilities, home health care, and hospice care for terminally ill patients. Most people automatically receive Part A when they turn 65 and do not have to pay a premium because they or their spouse paid Medicare taxes while they were working.

Medicare Part B is medical insurance. It covers most fees associated with basic doctor visits and laboratory testing. It also pays for some outpatient medical services such as medical equipment, supplies, and home health care and physical therapy. However, these services and supplies are only covered by Part B when medically necessary and prescribed by a doctor. Enrollment in Part B is optional and the Medicare recipient pays a premium of approximately $65 per month for these added benefits. The amount of the premium is periodically adjusted. Not every person who receives Medicare Part A enrolls in Part B. Although Medicare provides a fairly broad coverage of medical treatment, neither Part A nor B pays for the cost of prescription drugs or other medications.

Medicare is funded solely by the federal government. States do not make matching contributions to the Medicare fund. Social Security contributions, monthly premiums paid by program participants, and general government revenues generate the money used to support the Medicare program. Insurance coverage provided by Medicare is similar to that provided by private health insurance carriers. Medicare usually pays 50-80% of the medical bill, while the recipient pays the remaining balance for services provided.

In 1997, Medicare recipients were given the option of receiving benefits through private insurance plans instead of the Original Medicare Plan. These programs are known as "Medicare + Choice" or "Part C" Plans. In 2003, the Medicare Prescription Drug, Improvement, and Modernization Act was implemented and Part C became known as Medicare Advantage (MA) Plans. Medicare Advantage (MA) plan is an alternative to Original fee-for-service Medicare and a Medicare supplemental insurance policy. Medicare sponsors MA plans as part of the Medicare program and pays the plans to manage beneficiaries' health care. In order to join one of these plans, you have to have Medicare Part A and Part B and you must continue to pay the Part B premiums ($88.50 in 2006). You receive all Medicare-covered benefits through the private plan chosen. These benefits can include prescription drug coverage. Most of these plans have extra benefits and lower co-payments than in the Original Medicare plan. However, you generally have to see doctors that belong to the plan or go to certain hospitals to get services.

There are four types of MA plans:

* Medicare Health Maintenance Organizations (HMOs)

* Medicare Preferred Provider Organizations (PPOs)

* Medicare Private Fee-for-Service Plans (PFFS)

* Medicare Special Needs Plans

In addition to offering comparable coverage