Federal Health Insurance Basics

The federal government plays an important role in providing health insurance benefits. Health insurance is provided through the OASDHI program or Social Security. Disability income coverage is available to all fully insured workers. Medical expense reimbursement coverage is offered to everyone over age 65, anyone who has qualified for Social Security disability payments for more than 2 years, and anyone on dialysis.

The federal government administers 3 types of health coverage that you need to know for the purpose of the exam:

1. Disability Income Coverage
2. Medical Expense Reimbursement Coverage
3. Coverage for Military

The federal Social Security system was created in the 1930s to serve as a base upon which the private sector was expected to build a more substantial program of personal savings and insurance protection. Social Security is an entitlement, which means that every working American who contributes can expect to receive some benefits out of it.

The program is known as OASDHI, which stands for Old Age, Survivors, Disability, and Health Insurance. OASDHI is funded by payroll taxes paid by employers and employees. The tax is deducted from a worker’s earnings, up to a maximum level known as the “maximum taxable wage base.”

Before a person will qualify for any Social Security benefits, he/she must be at least currently insured. To be currently insured, a person needs a minimum of 6 credits in the preceding 13 quarters. This means the person must have been working and paying OASDHI taxes for at least 6 of the last 13 calendar quarters. To be fully insured and thus eligible for disability and retirement benefits, a person must have forty credits. A person can earn no more than four Social Security credits in a calendar year.

Disability insurance provided through OASDHI is based on requirements that are much more stringent than those found in commercial disability income policies. To qualify for Social Security disability benefits, the insured worker’s disability must be expected to last at least 12 months or result in death and prevent him/her from engaging in any gainful activity or occupation. There is also a 5-month waiting period before benefits commence (payments begin in the sixth month following the onset of the disability).

Lesson Summary

The federal government provides health insurance benefits through the OASDHI program, or Social Security, with 3 main types of coverage:

• Disability Income Coverage
• Medical Expense Reimbursement Coverage
• Coverage for Military

Social Security is based on payroll taxes paid by employers and employees, with eligibility criteria:

• Currently insured with a minimum of 6 credits in the last 13 quarters
• Fully insured with forty credits for disability and retirement benefits

Social Security disability benefits have stringent requirements, including a 5-month waiting period.