| Latest amount & definition |
The amount of earnings required for a "quarter
of coverage" in 2005 is $920. A quarter of coverage
is the basic unit for determining whether a worker is
insured under the
Social Security program. You may also see a quarter of coverage
referred to as a "credit" or "unit of credit." |
| History See
historical series of earnings needed
to earn one quarter of coverage, 1975-2005. |
For years before 1978, an individual generally
was credited with a quarter of coverage for each quarter in which wages
of $50 or more were paid, or an individual was credited with 4 quarters
of coverage for every taxable year in which $400 or more of self-employment
income was earned. Beginning in 1978, employers generally report wages
on an annual, instead of quarterly, basis. With this change to annual
reporting, the law provided that a quarter of coverage be credited for
each $250 of an individual's total wages and self-employment income for
calendar year 1978 (up to a maximum of 4 quarters of coverage for the
year). After 1978, the amount of earnings needed for a quarter of
coverage increases automatically each year with increases in the
national average wage index. |
| Determination of the quarter of
coverage amount for 2005 |
The law specifies that the quarter of coverage
(QC) amount for 2005 is equal to the 1978 amount of $250 multiplied
by the ratio of the national average wage index
for 2003 to that for 1976, or, if larger, the 2004 amount
of $900. If the amount so determined is not a multiple
of $10, it shall be rounded to the nearest multiple of $10.
Calculation details
Amounts in
formula |
1978 earnings for one QC | $250 |
| 1976 average wage index | $9,226.48 |
| 2003 average wage index | $34,064.95 |
| Computation | $250 times ($34,064.95 divided by $9,226.48)
equals $923.02, which rounds to $920. |
| Higher amount | $920 exceeds $900,
so the earnings needed to earn one QC in 2005 is $920 |
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