How You Earn Work Credits (Quarters of Coverage)

One of the rules for most types of benefits to be payable is that the worker must be “fully insured.” Simplified, fully insured means that you were employed or self-employed for a given period of time and paid Social Security (F.I.C.A.) taxes on your earnings.

During your working years, your wages are posted to your Social Security record, and you receive earnings credits based on those wages. Social Security  uses these credits to determine your eligibility for retirement benefits or for disability or survivors benefits if you should become disabled or die.

Each year the amount of earnings needed for a credit rises as average earnings levels rise. In 2000, you receive one credit for each $780 of earnings, up to the maximum of four credits per year.

The credits you earn remain on your Social Security record even if you change jobs or have no earnings for a while.

Special Rules For Some Jobs
Special rules for earning Social Security coverage apply to certain types of work.

If you are self-employed, you earn Social Security credits the same way employees do (one credit for each $780 in net earnings, but no more than four credits per year). However, special rules apply if you have net annual earnings of less than $400.

If you are in the military, you earn Social Security credits the same way civilian employees do. You also may receive additional earnings credits under certain conditions.

Other kinds of work also have special rules about how you earn credits. Some of these jobs are—

• domestic work;
• farm work; or
• work for a church or church–controlled organization that has been exempted from payment of Social Security taxes.

How Many Credits Do You Need?
The number of credits you need to be eligible for benefits depends on your age and the type of Social Security benefit for which you are applying.

Retirement Benefits
Everyone born in 1929 or later needs 40 credits to be eligible for retirement benefits. People born before 1929 need fewer credits.

See the table below.

If you work for a nonprofit organization covered by Social Security since 1984, a special provision applies that may allow you to receive retirement benefits with fewer credits.

Disability Benefits
How many credits you need for disability benefits depends on your age when you become disabled.

If you become disabled before age 24, you generally need six credits during the three-year period ending when your disability begins.

If you are 24 through 30, you generally need credits for half of the period between age 21 and the time you become disabled.

If you are disabled at age 31 or older, you need the number of credits shown in the following table. Also, you must have earned at least 20 of the credits in the 10 years immediately before you became disabled.

Disability Benefits
How many credits you need for disability benefits depends on your age when you become disabled.

If you become disabled before age 24, you generally need six credits during the three-year period ending when your disability begins.

If you are 24 through 30, you generally need credits for half of the period between age 21 and the time you become disabled.

If you are disabled at age 31 or older, you need the number of credits shown in the following table. Also, you must have earned at least 20 of the credits in the 10 years immediately before you became disabled.

Survivors Benefits
The family of a deceased worker may be able to get survivors benefits, even though the deceased worker had fewer credits than are needed for retirement benefits.

If the deceased worker was born in 1929 or before, one credit is needed for each year after 1950, up to the year of death, in order for your family members to collect survivors benefits.

If the deceased worker was born in 1930 or later, one credit is needed for each year after age 21, up to the year of death.

Regardless of when the deceased was born, dependent children could get survivors benefits if the deceased worker had six credits in the three years before his or her death. Their benefits could continue until they reach age 18 (or age 19 if they are attending an elementary or secondary school full time).

A widow or widower caring for dependent children who are under age 16 or disabled also may be able to get benefits.

Medicare
The Social Security credits you earn also count toward eligibility for Medicare when you reach age 65. You may be eligible for Medicare at an earlier age if you are entitled to disability benefits for 24 months or more. Your dependents or survivors also may be eligible for Medicare at age 65 or if they are disabled.

People who need kidney dialysis or a kidney transplant for permanent kidney failure may be eligible for Medicare at any age.

Not Everyone Earns Credits

Not all employees work in jobs covered by Social Security. Some of these employees are—

• most federal employees hired before 1984 (but since January 1, 1983, all federal employees have paid the Medicare hospital insurance part of the Social Security tax);
• railroad employees with more than 10 years of service;
• employees of some state and local governments that chose not to participate in Social Security; or
• children under age 21 who work for a parent (except a child age 18 or over who works in the parent's business).