Social Security Administration

What Is the Social Security Administration?

Established in 1935 during the Great Depression, the Social Security Administration (SSA) is the US federal agency responsible for issuing Social Security numbers (SSNs). It also enrolls eligible participants into Medicare and oversees retirement, survivor, disability, and supplemental income programs.

Free Report: The State of HR Data Privacy

Cybercrime is alarmingly common—and employee data is a major target. BambooHR surveyed 1,500 US workers about their experiences and how HR can better protect their personal information.

Get the Report

Old-Age, Survivors, and Disability Insurance (OASDI)

Old-Age, Survivors, and Disability Insurance (OASDI) is the name of the primary program run by the SSA. Largely funded by taxes, OASDI contributes to the wellbeing of millions of Americans each year through the following benefits:

Medicare (Hospital Insurance)

Medicare is a health insurance program for older individuals age 65 and older, as well as people with disabilities and serious medical conditions. The SSA processes Medicare applications and provides general information, but the Centers for Medicare & Medicaid Services (CMS) runs the program.

Who Pays for Social Security and Medicare?

Payroll taxes make up the majority of the funds in the Social Security system. This is mandated by the Federal Insurance Contributions Act (FICA) and Self-Employment Contributions Act (SECA). Additional funding sources for these programs include:

A portion of every tax dollar collected goes into a trust fund, which is where the benefits for retirees and surviving spouses and children come from. The remaining portion goes into a separate trust fund that pays benefits to people with disabilities and their families. Collectively, these funds cover the costs to run these programs.

SSI benefits are financed entirely by the general funds in the US Treasury—FICA and SECA taxes don’t pay into this program. The General Fund is built by personal income taxes, corporate taxes, and other levies.

How to Calculate Social Security Taxes

Social Security taxes for OASDI are calculated based on earnings up to a specified amount (the taxable maximum), which is reassessed each year. For instance, the taxable maximum for 2024 is $168,600. Each contributor pays into Social Security as follows:

How to Calculate Medicare Taxes

Medicare taxes are collected similarly. Employers and employees share the responsibility, and self-employed workers submit the full amount. Each contributor pays into Medicare as follows:

Workers at higher income thresholds pay an additional 0.9% in Medicare taxes.

Will Social Security Run Out?

As of 2023, the long-term financial outlook indicates the Social Security system isn’t sustainable indefinitely. Current estimates reported by the SSA Board of Trustees suggest that OASI and DI reserves will be depleted by 2034. This projection is based on several demographic factors, such as:

Once the surplus is gone, only payroll taxes and other sources will fund the program. This means the system will only be able to pay out as much as it takes in each year. If future policies and amendments increase funding, the Social Security program can run as it does today.

How Are SSNs Used?

A person’s SSN is their link to the SSA. The agency uses this nine-digit ID to track Social Security earnings during their career and assign benefits when they’re eligible to receive them. This number is also used for personal identification purposes. It’s routine for government agencies, private businesses, financial institutions, and employers to ask for a person’s SSN to do any of the following:

For example, a Social Security card is commonly necessary for someone to be approved for a mortgage, get a passport, or apply for public assistance. And thanks to the online support available from the SSA, HR can take extra care when hiring new employees.

Social Security Administration: Human Resources Support

Through the SSA, human resources gain helpful information to pass on to employees, assisting them in planning for retirement and other major life events. Today’s employers and HR professionals also use online tools from the government to process new hires securely and efficiently, such as:

Social Security Number Verification System (SSNVS)

The Social Security Number Verification System (SSNVS) lets you confirm a person’s identification. Using this online tool, hiring managers can compare the names and SSNs of their employees against the most current Social Security records. This step in the hiring process is vital for preventing identity theft and ensuring accurate recordkeeping.


E-Verify is the online system employers use to process new hires. Jointly administered by the SSA and US Citizenship and Immigration Services (USCIS), this web-based tool makes it easy to confirm employees are eligible to work in the US using their Form I-9.

Free eBook: The Definitive Guide to HR Data and Reporting

HR teams that use data and reporting are 10x more likely to effectively provide insights to leaders. Our beginner-friendly guide will help you get started—or identify opportunities to uplevel your approach.

Get the Guide