Tennessee Insurance Practice Exam

Which option is NOT a funding source for social security benefits?

1. State government

2. Payroll taxes

3. Federal government

4. Trust funds

The correct answer is: Federal government

Social Security benefits are primarily funded through a combination of payroll taxes, trust funds, and contributions made at the federal level. Payroll taxes are collected from workers' wages and are a significant source of the funding required to provide Social Security benefits. These taxes are specifically allocated to the Social Security program and are critical to its function. The trust funds, specifically the Old-Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund, are also crucial in financing Social Security. These funds receive money through payroll taxes and are used to pay out benefits to eligible individuals. While the federal government plays a role in administering and overseeing the Social Security program, it does not directly fund Social Security benefits in the way that payroll taxes and trust funds do. The state governments are generally not involved as funding sources for Social Security, which further clarifies their limited role in this specific context. Thus, identifying state government as a non-funding source for Social Security benefits aligns with the defining characteristics of how the program is financed.