What Social Security Is and How Its Benefits Work

What does Social Security mean?

In the United States, people often use “Social Security” to mean Old-Age, Survivors, and Disability Insurance, or OASDI. The Social Security Administration (SSA) administers this federal program ¹.

The name can cause confusion because the SSA also administers other programs, including Supplemental Security Income (SSI), and because Medicare is often discussed alongside Social Security. These programs are not all the same benefit. A payment’s source and purpose matter more than the agency name a person associates with it.

What does the program provide?

OASDI covers three broad situations: retirement, disability, and the loss of a worker who supported eligible family members. The program developed over time, and the law has been amended to change its provisions ¹.

Social Security is not simply a single, identical payment for every person. Eligibility and benefit amounts depend on the benefit involved and the person’s circumstances. The supplied source gives an average monthly benefit figure for May 2025, but an average cannot tell an individual why a particular payment arrived or what it represents ¹.

A person trying to identify a payment should check the notice or account information that came with it, or contact the agency responsible for the benefit. The source provided here does not describe a specific $90 payment, so it cannot establish that such a payment is a Social Security benefit.

How is Social Security funded?

The program is funded mainly by payroll taxes collected on covered earnings. These taxes are commonly called FICA for employees and employers, or SECA for self-employed workers. The source says tax applies to covered earnings up to a limit set by law ¹.

Social Security revenue is formally placed in separate trust funds for retirement and survivors insurance, and for disability insurance. In broad terms, that means the program is financed through a dedicated system rather than by sending every worker’s tax directly to that worker as an individual account ¹.

Coverage is widespread, but not universal. The source notes that some state and local government workers are covered by pension plans instead of Social Security ¹.

How did Social Security develop, and how is Medicare different?

The Social Security Act was signed in 1935. The original law included old-age insurance as well as other social programs. The retirement program later expanded to include benefits for spouses and minor children of retired workers, and disability benefits were added in 1954 ¹.

Medicare is health insurance, not a retirement or disability cash benefit. It was added in 1965, and a Medicare payroll tax followed in 1966, according to the source ¹. The programs are often mentioned together, but Medicare coverage and Social Security payments serve different purposes.

Program rules and funding can change through legislation. The supplied reference includes time-sensitive projections and tax limits, but those details may change; readers should check current information with the relevant official agency before relying on them.