A: It is. Social Security will be able to help your friend's family financially. Money will flow to the surviving spouse, of course, but also to the children. It's pretty much a universal benefit. Social Security says that 98 out of every 100 children in the U.S. could receive benefits if a working parent dies.
The system provides what amounts to substantial insurance coverage in the event that a family breadwinner dies or becomes disabled.
Take a hypothetical worker who was making an average wage and became disabled last year at age 30. She has a husband, 28, a 2-year-old and a newborn. The value of the disability benefits that she and her family would collect by the time she turned 67 would be equal to a $443,000 disability insurance policy. If the worker had died, the income protection for her survivors would be equal to a $612,000 life insurance policy.
Under this system, about 1.9 million children who have lost parents get monthly payments that average $816. Households consisting of young widows or widowers with two children, meanwhile, receive an average total of $2,680.
"The money from Social Security allowed us to stay in our home," recalled a friend of mine who was left with two young children when her husband died. I've known several other cases where husbands and fathers died early in life, and the benefits that began flowing to their children helped those families survive.
Q: How long do benefits for children continue?
A: Generally until age 18. But if they're full-time students at an elementary or secondary school, they can continue to receive benefits either until they graduate or until two months after they turn 19, whichever comes first.
An eligible child is typically the biological child of a deceased or disabled worker. In addition, an adopted child or stepchild can be eligible. So can a dependent grandchild.
Q: What about other dependents that a family may have — parents of the worker, for instance?
A: Social Security also will pay benefits to parents, if they were receiving more than half of their support from the person who died.
Q: How are children able to receive these benefits?
A: When a person works and pays Social Security taxes, he or she earns Social Security credits. Those credits remain on the worker's record and can be used, when the worker dies or becomes disabled, to provide benefits to his or her spouse and children.
Q: I've heard of Social Security benefits for the children of older parents who are still living and in good health. Is that true? How does it work?
A: It's a form of retirement benefit. Suppose a man fathers a child when he's 56. Ten years later, he retires and begins benefits. The child is now 10, and, just as the man's wife would be eligible for a retirement benefit of her own, the child qualifies for one, too. The money generally stops at age 18.
Q: Do all children receive the same amount?
A: No. A child's payment generally depends on the earnings of the worker, with a rule of thumb that a child can receive up to 75 percent of a deceased worker's benefit. If the parent is still living, the ceiling is 50 percent.
However, reductions can kick in when a family has many children who are eligible for benefits. The rules are complicated, but generally they limit Social Security's total payout to between 150 and 180 percent of the worker's basic benefit amount.
For more information, see the Social Security publication "Benefits for Children."
Q: You've talked about parents becoming disabled. What if it's a child who's disabled?
A: A disabled child may qualify for Supplemental Security Income (SSI), if the household meets the low-income conditions for which SSI is designed. At 18, the child can apply for adult status in SSI, but different rules will apply. For instance, the child may have to qualify based on tests that measure adult disability. At 22, the person may also qualify for benefits under the separate Social Security Disability Insurance program.
The Social Security Administration encourages young people who get disability benefits from SSI and SSDI to take advantage of rehabilitation and training programs that can help them find jobs. These youths are permitted to keep more of their earnings without tripping income limits that would normally knock them out of the programs. This can help them pay for equipment, such as a wheelchair, that is needed in their daily activities.
For more information, see the publication "Benefits for Children With Disabilities." (PDF)
Q: What other programs exist to help children with their finances, health and education?
A: One of the most popular federal-state programs in the nation is called the Children's Health Insurance Program (CHIP). Working through state Medicaid offices, CHIP offers free or low-cost medical care to eligible children and other family members. It enables states to provide health insurance to children from families whose income is too high for Medicaid but too low to afford private health insurance. The CHIP program generally covers prescription drugs, immunizations, vision, hospital care and mental health services. More information is available from the federal government online or at your state Medicaid office.
You can apply for the Medicaid and CHIP programs by calling 877-KIDS-NOW (877-543-7669), toll-free. The programs cover children and teens up to age 19. Young people up to age 21 also may be covered by Medicaid.
A good source of information for help for children with disabilities can be found on this federal government website. It also contains detailed instructions on how parents can file applications for their children for the SSI and SSDI programs.
Stan Hinden, a former columnist for the Washington Post, wrote How to Retire Happy: The 12 Most Important Decisions You Must Make Before You Retire. Have a question? Check out the AARP Social Security Question and Answer Tool.
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