OASDI
Also known as: Old-Age, Survivors, and Disability Insurance, Social Security
OASDI stands for Old-Age, Survivors, and Disability Insurance — the formal name of the U.S. Social Security program. It pays retirement, survivor, and disability benefits funded by payroll taxes on workers and employers.
OASDI — Old-Age, Survivors, and Disability Insurance — is the official name of the federal program most Americans call Social Security. As the name spells out, it provides three kinds of protection: monthly retirement income for older workers, survivor benefits for the families of deceased workers, and disability income for workers who can no longer hold a job because of a qualifying condition.
The program is funded by dedicated payroll taxes collected under FICA (the Federal Insurance Contributions Act). Employees and employers each pay a set percentage of wages up to an annual taxable wage base, and self-employed workers pay both halves themselves under SECA. The line item labeled 'OASDI' on a paycheck is this tax.
Eligibility is earned through work. Workers accumulate credits based on their earnings each year, and most people need 40 credits — roughly ten years of work — to qualify for retirement benefits. Benefit amounts are based on a worker's lifetime earnings history, and claiming before or after full retirement age permanently decreases or increases the monthly check. When Medicare's hospital insurance tax is included with the program, the combined system is sometimes called OASDHI.
State life and health insurance licensing exams cover OASDI within their federal government programs material. Know what the acronym stands for, the three benefit categories, that funding comes from payroll taxes rather than general revenues, and how Social Security disability and survivor benefits interact with private life and disability insurance planning.
Key takeaways
- OASDI is the formal name of Social Security: Old-Age, Survivors, and Disability Insurance.
- It pays retirement, survivor, and disability benefits to eligible workers and their families.
- Funding comes from FICA payroll taxes shared by employees and employers, applied to wages up to an annual cap.
- Most workers need 40 credits (about ten years of work) to qualify for retirement benefits.
- With Medicare hospital insurance included, the program is sometimes called OASDHI.