# Benefits

## Benefit Calculation

The Retirement, Survivors and Disability Benefits are being calculated on an annual basis of 16.5% of the first \$10,000 of cumulative covered earnings, plus 3% of cumulative covered earnings in excess of \$10,000 but not in excess of the next \$30,000, plus 2% of cumulative covered earnings in excess of \$40,000 but not in excess of the next \$262,500, plus 1% of cumulative covered earnings in excess of \$302,500:

 16.5% multiplied by the first \$10,000 3% multiplied by the next \$30,000 2% multiplied by the next \$262,500 1% multiplied by the in excess of \$302,500

The FSMSSA minimum monthly benefit is \$100.00 per month. If the calculations of the monthly benefits fall below \$100.00, the beneficiaries will always receive the minimum payment of \$100.00 per month.

Case No. 1:

An employee has a cumulative taxable wages of \$400,000. By using the formula above, the following is the calculation of the employee’s monthly retirement and disability benefit:16.5% x \$10,000 = \$1650 3% x \$30,000 = \$900 2% x \$262,500 = \$5,250 1% x \$97500 = \$975Total \$400,000 = \$8,775 divide by 12 = \$731.25

Case No. 2:

An employee has a cumulative taxable wages of \$82,500.00. By using the formula above, the following is the calculation of the employee’s monthly retirement and disability benefit:16.5% x \$10,000 = \$1650 3% x \$30,000 = 900 2% x \$42,500 = 850 Total \$82,500 = \$3400 divide by 12 = \$283.33

Case No. 3:

An employee has a cumulative taxable wages of \$32,500.00. By using the same formula above, the following is the calculation of the employee’s monthly retirement and disability benefit:16.5% x \$10,000 = \$1650 3% x \$22,500 = 675 Total \$32,500 = \$2325 divide by 12 = \$193.75

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## Retirement

Social Security is a worker-employee-government insurance program designed to protect you and your family while you work and after retirement. The Social Security Benefits do not intend to replace your earnings, but it will ease the burden the family may experience during sudden loss of income. Social Security is the only pension plan available in the FSM.

Effective January 01, 2011 New Retirement Law Requires that a fully insured wage earner who turns 60 years old on or after the effective date will become eligible for 50% of his or her total calculated benefits with the option of continued employment -excluding earnings test adjustments. This goes on until the new beneficiary reaches 65 years old, which will then make him or her become qualified for 100% of his or her total calculated benefits. However, if he or she decides to continue employment after reaching age 65, earnings test adjustments will be applied to their benefits again.

In order to qualify for retirement, every person must satisfy the following requirements:

• Fully insured with at least \$2,500 in total contributions (a person can pay the difference if his or her contributions is less than \$2,500 in a one-time payment to earn eligibility);
• Has a total coverage of at least 50 quarters.
• Attained age 60 years for 50% of total benefits without earnings test adjustments, and age 65 for 100% of total benefits subject to earnings test.
• Filed application for old age insurance and shall be entitled to an old age insurance benefit for each month, beginning with the month of which both paragraphs (1) & (2) are satisfied and ending with the month preceding the month in which he/she dies.

Fully insured means that a person’s cumulative quarters of coverage is at least as great as the number of years calculated from the later of the date the worker turned age twenty one (21) or June 30, 1968, to the date the worker attains age sixty (60), becomes disabled or dies. Partial years shall be counted as whole years. For example, 37.25 years would be rounded up to 38 years. In any case, a person cannot be fully insured if he or she has less than 12 quarters.

The FSMSSA was established on July 01, 1968 and therefore 1968 is significant because that is the starting point in counting the eligibility of individuals for benefits. We must also consider two additional years needed for the calculation of the fully insured process: the year an individual turns age 21 and the year that individual turns age 60.

To understand how FSMSSA calculates the quarters of coverage for fully insured status, the illustration is as follows:

An employee was born on January 01, 1942; turn 21 on January 01, 1963 and turn 60 on January 01, 2002. By interpreting the law, we must compare the year the employee turns 21 and the year FSMSSA was established, whichever is later. In this illustration, we will use 1968 because it’s later than the date when the individual turns 21. The next step is to determine the year you turn 60, which is 2002.

2002 minus 1968= 34, fully insured

Earning Test.

Any individual who receives retirement, disability, or survivor benefit and who works in covered or non-covered employment shall have his/her quarterly benefit reduced by \$1 for each \$2 earned in a quarter, except there shall be no reduction for the first \$300 earned in a quarter. The reduction shall be applied in one of the subsequent two quarters immediately after the quarter in which the earnings were made, or as soon as possible thereafter.

Evidence of Birth

A public, religious or family record of birth established before a person reaches the age of 5 constitutes preferred evidence of that person’s date of birth.

1. In most cases at least two of the following types of evidence shall be required:

• Birth Registration or Hospital Birth Record obtainable from the Office of Clerk of Court of the State or other public office where such records are maintained in your State or jurisdiction;
• Church Record of baptismal certificates, maintained by churches or religious groups;
• Employment record;
• Family record or personal Bible record;
• School record;
• Census record;
• Official Passport;
• Election record;
• Immigration record;
• Marriage record;
• Insurance policy or policies.

[*Census & Election records may be considered but may not always be considered convincing].

2. Other evidence of age. If you cannot obtain any of the preferred evidence listed above to prove your age, you may provide a sworn statement signed by a physician or midwife who was present at your birth.

In case there exists any reasonable doubt as to the accuracy of the evidence of age you provide, we may require you to provide other documentary material, prepared within five (5) years preceding the date you filed your application, which provides evidence of your date of birth.

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## Disability

Disability is the inability to engage in any substantial gainful employment by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.

The Act provides that “every individual who is fully insured and is disabled and has been disabled for at least three full calendar months, upon filing an application for disability insurance benefits, shall be entitled to a disability insurance benefit for each month beginning with the first month of the waiting period and ending with the month preceding the month in which he dies or recovers from his disability…” 53 FSMC 803(3).

1. In order to be eligible for disability benefits, a person must be:

• fully insured with at least \$1,500 in contributions to the FSMSSA. A person can pay of the difference in a one-time payment if his or her contributions are less than \$1,500 to become eligible. Fully insured means that a person’s cumulative quarters of coverage is at least as great as the number of years calculated from the later of the date the worker turned age twenty one (21) or June 30, 1968, to the date the worker attains age sixty (60), becomes disabled or dies. Partial years shall be counted as whole years. For example, 37.25 years would be rounded up to 38 years. In any case, a person cannot be fully insured if he or she has less than 12 quarters.
• Beginning January 1, 2010 and on, an individual requires at least 45 quarters along with at least \$1,500 in contributions to be fully insured for disability benefits. Furthermore, beginning January 1, 2010 and on, an individual must also meet the definition of currently insured to qualify for disability benefits. To be currently insured, an individual must have at least 20 quarters in the 25-quarter period immediately preceding the quarter in which an individual becomes disabled.
• disabled and has been disabled for at least three full calendar months

2. Evidence Needed. A claimant shall be required to provide FSMSSA proof of the following:

• Eligibility fact – the individual is fully insured;
• Medical fact – evidence proving that the claimant has the claimed disability;
• Durational fact – proof that the disability has lasted for at least three full calendar months, and that it is expected to result in death, or to last not less than 12 months;
• Vocational fact – proof that the disability prevents the claimant from engaging in substantial gainful employment.

3. The burden is upon the claimant to furnish the medical and other evidence needed for the processing of his disability claim. However, recognizing the fact that a number of people in the FSM are not experienced in filling out forms and securing information lodged in medical or Government offices, if requested to do so, SSA Employees shall assist claimants in filling out the disability claim form and report, securing the claimant’s medical record, and referring the record to the disability examiner for assessment, finding and recommendation.

4. The disability applicant has the right to request a hearing from the FSMSSA if the his/her claim is not favorable.

Medical Evidence means any written reports or other documentation prepared by a doctor or other medical personnel, as a result of examination or review of the applicant’s physical or mental condition, or oral testimony by a doctor before FSMSSA at any hearing or investigation of the matter. FSMSSA has the right to utilize its own medical examiner to review the medical records of the applicant, or to conduct his or her own examination of the applicant, and prepare a report or present oral testimony. In the event of a conflict of evidence concerning disability of the applicant, or any related issue, the FSMSS Administrator will make his own findings on the issue of disability based on the standard of a preponderance of the evidence presented.

Dependent’s Benefit. Every surviving child who is dependent upon an individual entitled who died fully insured, shall be entitled, upon filing an application, to a child’s insurance benefit for each month beginning with the month of death of such individual and ending with the month preceding whichever of the following first occurs:

• Benefit are payable during the disability of a child who was disabled before the attainment of age twenty-two;
• The child must prove that he/she was disabled before attainment of age twenty-two;
• The child shall receive disability benefits for life except if he/she improves on his/her disability.

Disability Applications. Generally, the process takes longer than other applications for Social Security benefits. It is encouraged that the following information be made available upon visiting your branch office:

• Proof of age;
• Names, addresses, and phone numbers of doctors, hospitals, clinics, and institutions that treated you and approximate dates of treatment;
• Work activity report and employment history; summary of where you worked in the past 15 years and the kind of work you did;
• Educational background if any;
• If you are applying for surviving spouse benefits, the worker’s death certificate and marriage certificate;
• If you are not a natural child of the deceased worker and you are applying for benefits as a surviving disabled child, proof of dependency and adoption.

Additional evidence may be needed depending on the FSMSSA medical examiner’s needs to satisfy each disability claim.

Disability Recipients. Your claim will be reviewed for verification purposes periodically; re-examination will be conducted to determine your continuing eligibility for disability benefits. A notice will be sent to your address when the re-examination is due and it is important that you respond within the given time period. If there is no response, FSMSSA will stop your monthly benefits until the re-examination is satisfied.

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## Surviving Spouse & Children

FSM Social Security Survivors’ benefits are benefits that can be paid to the family of a deceased worker. Survivor’s benefits can ease the financial burden that sometimes follows a worker’s death by providing the family with continuing cash income. It is an income that may mean the family can stay together, that children can stay together, that children will be able to continue their education, that permanently disabled children can receive a lifetime income.

Who is eligible for this type of benefit?

• the spouse of an individual who died fully insured with at least \$2,500 in contributions
• a child of an individual who died fully insured or currently insured with at least \$2,500 in contributions

Note: If the contributions of the deceased individual is less than \$2,500, the survivors can pay the difference in a one-time payment to earn right to the benefit.

What is fully and currently insured?

• Fully insured means that a person’s cumulative quarters of coverage is at least as great as the number of years calculated from the later of the date the worker turned age twenty one (21) or June 30, 1968, to the date the worker attains age sixty (60), becomes disabled or dies. Partial years shall be counted as whole years. For example, 37.25 years would be rounded up to 38 years. In any case, a person cannot be fully insured if he or she has less than 12 quarters.
• Public Law 15-73: Any individual who passes away on January 1, 2010 and after must have earned at least 50 quarters of coverage and at least \$2,500 in contributions to be considered fully insured.
• Currently insured means an individual has at least 20 quarters in the 25-quarter period ending with the quarter in which a) he retires; a) he becomes disabled; or c) he dies, whichever occurs first.

What is the amount of the benefit for spouse and child(ren)?

The surviving spouse of a fully insured worker eligible shall be paid a monthly benefit or disability in an amount equal to sixty percent (60%) of the retirement or disability insurance benefit calculated for the deceased spouse at the date of death while each surviving child shall be entitled to fifteen percent (15%). If the surviving spouse is receiving his or her share, the children (3 or more) together shall be entitled to forty percent (40%). The only time when the children can receive hundred percent (100%) of the deceased wage earner’s retirement is if the surviving spouse is either deceased or parents are divorce and no payment was ever made to a surviving spouse. When this happens, each child will be entitled to 15% up to the maximum of 7 children or 100% of the deceased wage earner’s retirement benefits.

The total survivor’s benefit paid to the spouse and the children may not exceed the retirement benefit calculated for the decedent as of the date of death, except that if the surviving spouse receives benefits based on his or her own employment coverage, that amount plus the survivors’ benefits for the children may exceed the amount of the deceased retirement benefit. In no event shall the amount paid be less than the minimum established by Social Security Administration.

Spouse

The surviving spouse of an individual who died fully insured, if such spouse has filed application, shall be entitled to a survivor insurance benefit for each month beginning with the month of death of the fully insured spouse and ending with the month preceding the month in which the surviving spouse dies or remarries; provided that such benefit shall be subject to the earning test.

If the spouse of the deceased insured worker is eligible for retirement or disability benefits based on his or her own employment coverage, and is also eligible for surviving spouse benefits, the spouse shall receive whatever benefit pays the largest monthly payment. The surviving spouse cannot receive both benefits.

Child(ren)

Children eligible for benefits shall include only the deceased individual’s biological children and such adopted children whose confirmed petition for adoption by the wage earner has been presented to the Social Security Administration. Every surviving child who fulfills the foregoing and who is dependent upon an individual entitled to old age benefits who was dependent upon an individual who died fully insured or currently insured, shall be entitled, upon filing application, to a child’s insurance benefit for each month beginning with the month of death of such individual and ending with the month preceding whichever of the following first occurs:

1. attainment of age eighteen years, except that benefits are payable until the month before the attainment of twenty-two so long as the beneficiary is a bona fide student, and except that benefits are payable during the disability of a child who was disabled before the attainment of age twenty-two;2. marriage;3. adoption.

A child shall be deemed dependent upon his or her parent or adopting parent unless such individual was not living in the same household with or contributing to the support of the child. Child’s insurance benefits shall be paid to the individual upon whom the child is currently dependent, except such benefit shall be subject to the earning test.

What are the documents required when applying?

1. proof of marriage and proof of your age;2. proof of worker’s death – death certificate;3. Children’s birth certificates, if they are natural children of the decedent;

4. proof of full time school attendance for children age 18-22: School Certification form provided by Social Security.

5. proof of children’s dependency or adoption, if they are applying as dependent or adopted children of the decedent. It is a requirement to at least provide two different types of dependency documents to the Administration.

Note: Customary adoption or Court order for adoption must be petitioned and signed by the wage earner.

Surviving Spouse proof of marriage:

1.A ceremonial marriage may be proven by any of the following:

• certified copy of the public record of marriage;
• certified copy of the church record of marriage;
• marriage Certificate;
• signed statement by clergyman or public official who performed the marriage ceremony;
• other evidence of possible value.
2. proof of worker’s death – death certificate;

• from husband and wife if living together and another statement from two – blood relatives;
• if either husband or wife is dead, a statement from the surviving spouse and a statement from two blood relatives of the deceased.
• living under the same household or known to the community.
3. Children’s birth certificates, if they are natural children of the decedent;

• a court degree;
• statement from a recognized leader familiar with local and traditional custom;
• statements from both husband and wife if still living.

Proof of child(ren)’s relationship to the deceased:

1. If the decedent is a natural parent2. Step relationship must be proved first by establishing the relationship between the child and the natural parent and then proof of marriage between the natural parent and the stepparent.

• Birth Certificate needs to be provided; or
• Baptismal Certificate.

You should notify Social Security immediately if any of the following occurs:

Surviving spouse:

1. Returns to work – earning test applied;2. Remarries (benefits will stop permanently);3. No longer provides for care and custody of children on whose behalf he/she receives benefits.

Surviving children:

1. Death of a child;2. Reaches age 18 and is not a full – time student;3. Marries;

4. Works – earning test is applied;

6. The child is no longer under the custody of the parent, or guardian;

7. Recovers from disability after age 21.

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## Lump Sum Benefits

1. When a worker dies and the benefits paid, including survivor benefits, have been less than four percent of his cumulative covered earnings, the survivors, heirs, or the estate of such individual shall be paid a lump sum benefit, after all rights to survivor benefits have terminated, in an amount equal to four percent of the decedent’s cumulative covered earnings, reduced by the amount of any benefits paid to the insured worker and his eligible dependents. Cumulative covered earnings includes earnings on which the individual has paid contributions to the Trust Territory Social Security System and the FSM Social Security System.

2. In the absence of a will, survivors shall be paid in the following order:

1. spouse, if living, otherwise children in equal shares or guardian, if such children are minors;2. parents in equal shares; or

3. duly appointed legal representatives of the deceased or, if none, person or persons determined to be entitled thereto under the laws and customs of the last domicile of the deceased person.

Optional Lump Sum Payment to Individuals not Fully Insured Who Reach Retirement Age

Any individual who reached retirement age and who is not fully insured for Social Security benefits may, at his or her own option, elect to have a lump sum payment of four percent of his or her total cumulative covered earnings. If an individual elects to accept the lump sum payment, he or she shall lose credit for all quarters of coverage earned up to that point. If that individual returns to work, he or she shall start over again to earn quarters of coverage leading to being currently or fully insured. Only individuals who have resided in the Federated States of Micronesia for at least 1 year preceding their applications for these benefits, and who have either resided in the Federated States of Micronesia for a period of time of not less than 10 years total, or who were born in the Federated States of Micronesia, are eligible for this optional lump sum payment.

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## Payments to Foreign Citizens

Unless modified by a totalization or other international agreement, payments under this act shall be paid to a beneficiary who is not a citizen or national of the Federated States of Micronesia and does not reside in the Federated States of Micronesia, as follows:

1. Payments shall be made to citizens and nationals of the Republic of Palau, the Republic of the Marshall Islands, and the United States as if they were citizens or nationals of the Federated States of Micronesia as long as the Social Security Administration of those nations gives citizens and nationals of the Federated States of Micronesia reciprocal treatment.2. For applications filed after this bill becomes law, payments shall be made to citizens and nationals of other nations if they are fully insured at the time of application, in a lump sum equal to the total amount contributed to the Social Security Administration by the employee while employed in the Federated States of Micronesia as of the date the employee turns age 60, or dies prior to age 60. All payments due under this section shall be payable over six months, from the date of death, or the date of turning age 60, and/or the date of filing an application for such benefits, whichever is later subject to the residency provision.

3. For applications filed prior to the date of this bill becomes law (March 6, 2009), payments shall be made to citizens and nationals of other nations in a lump sum equal to the total amount contributed to the Social Security Administration by the employee while employed in the Federated Stated of Micronesia as of the date the employee ceases to be a resident of the Federated States of Micronesia.

4. An individual resides in the Federated States of Micronesia if they are present in the territory of the Federated States of Micronesia for 180 days out of the last 365 days and have ties to the Federated States of Micronesia that indicate residence such as a home, vehicle, bank account or personal property.

5. Individuals who opt for the lump sum and who subsequently returns to the Federated States of Micronesia to undertake further covered employment, no covered quarters, employee contributions or employer contributions accrued by the individual prior to receiving a lump sum payment shall be counted.

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