Combining Social Security Maximum Family Benefits With Disabled Adult Child
Social Security's family maximum rules limit the total benefits payable to a beneficiary'due south family unit. Unlike family maximum rules apply to retirement and survivor benefits than to disability benefits. The rules for computing family maximum benefits are complicated. In some particularly complex cases, it is hard to properly implement the family maximum, which tin can result in over- or underpayments. This article explains how the family maximum rules work and describes their evolution. Nosotros use Modeling Income in the Near Term, Version 6 data to clarify who is affected by the family maximum and to what extent their benefits are changed.
Kathleen Romig is a senior policy analyst at the Centre on Budget and Policy Priorities. Dave Shoffner is a social science research analyst with the Office of Retirement Policy, Office of Retirement and Disability Policy, Social Security Administration.
Acknowledgments: The authors thank Joni Lavery, Andrew Hanks, Eric Herbert, Karen Glenn, Mark Sarney, and Natalie Lu for their helpful comments and suggestions.
The findings and conclusions presented in the Message are those of the authors and do not necessarily represent the views of the Center on Budget and Policy Priorities or the Social Security Administration.
Introduction
| AIME | average indexed monthly earnings |
| AWI | average wage index |
| DI | Disability Insurance |
| MINT | Modeling Income in the Nigh Term |
| OASI | Old-Age and Survivors Insurance |
| PIA | main insurance amount |
| SSA | Social Security Administration |
Workers receive Social Security retirement and disability benefits based on their covered earnings. Members of their families may besides authorize for benefits based on those earnings—for instance, their survivors, spouses, and children. Benefits for family unit members have ever been limited by the family maximum rules. In 1980, Congress established more restrictive rules for the families of disabled workers, reflecting concerns that some disability beneficiaries were financially besides off, or improve off, when receiving benefits than they were when working. The family maximum rules have evolved over time and have go more than complicated for all beneficiaries, which in some cases make them difficult to implement. If not implemented correctly, the Social Security Administration (SSA) may pay beneficiaries improperly.
In this commodity, we describe the current family maximum rules using illustrations of different benefit types. We too describe the rules for beneficiaries entitled to benefits on multiple earnings records. We explain how the family maximum rules have evolved over time and and so provide an analysis of the rules at different earnings levels, by comparing those for retirement and survivor families with those for disability families. Using Modeling Income in the Nigh Term, Version six (MINT6) data, we clarify who is affected by the family unit maximum and to what extent their benefits are changed.
Major Findings
SSA'southward family maximum rules are complex and affect beneficiaries in unlike ways, depending on their earnings levels and benefit types. In particular, the rules that apply to inability beneficiary families differ significantly from those that apply to retirement and survivor beneficiary families. Our findings include the following:
- The disabled family unit maximum affects many more families and a wider range of family unit sizes than the retirement and survivor family maximum because more restrictive rules apply to disability benefits.
- Retirement and survivor beneficiary families are not affected by the family maximum rules unless 3 or more than family members receive benefits; when those beneficiary families are affected, auxiliary beneficiaries (or auxiliaries) always receive partial benefits.
- Disability casher families, by contrast, sometimes lose all of their auxiliary benefits, even in cases where merely i family member qualifies. All inability families with three or more beneficiaries are affected by the family unit maximum and more than half of families with two beneficiaries are affected.
- Among families affected by the family maximum, reductions can exist substantial. For affected disabled-worker families, we guess that the median reduction is about 33 percent; for survivor families, about 23 pct; for retired-worker families, about fourteen percent. For some family unit members of disabled workers, the family maximum rules forestall a benefit from being paid at all.
Current-Law Family Maximum Rules
In this section, we provide the current bones family unit maximum rules for retirement and survivor benefits and for inability benefits. We also discuss current-law rules that are mutual to both types of benefits.
Rules for Retirement and Survivor Benefits
The family maximum formula for Old-Historic period and Survivors Insurance (OASI) benefits is based on a beneficiary's primary insurance amount (PIA). The PIA is a beneficiary'south basic Social Security benefit amount before adjustments for retirement age, earnings, and other factors.one For a worker who reaches age 62 or dies in 2015 (before reaching age 62), SSA calculates the family maximum using the following formula:
150 percentage of the offset $1,056 of the worker's PIA plus
272 percent of the worker's PIA over $1,056 through $1,524 plus
134 percentage of the worker'due south PIA over $one,524 through $1,987 plus
175 pct of the worker's PIA over $1,987.
Ultimately, this formula yields a maximum for each family that is between 150 percent and 188 percent of the worker's bones Social Security do good, or PIA.two The last corporeality is rounded to the adjacent lowest ten cents. The dollar amounts in the family maximum formula increase each twelvemonth co-ordinate to average wage growth.3
Rules for Inability Benefits
Disability Insurance (DI) beneficiaries are subject to a more restrictive prepare of family unit maximum rules than are OASI beneficiaries. As with OASI beneficiaries, people who became entitled to inability benefits earlier 1979 are subject to a different family unit maximum formula. The family maximum for a disabled worker is 85 per centum of the worker's average indexed monthly earnings (AIME), a measure out of lifetime earnings.4 However, the family unit maximum for a disabled worker'southward family cannot exist more 150 per centum or less than 100 percent of his or her PIA. The concluding amount is rounded to the next lowest x cents.
Rules Common to Both OASI and DI
The family maximum rules are applied in the same way for both OASI and DI benefits. Beginning, the family maximum corporeality is established based on the worker's PIA or AIME. So, the worker's benefit is subtracted from the total benefit amount payable to the family unit. Next, the auxiliaries' benefits are reduced proportionately. The worker'southward own benefit is never reduced; only the benefits of his or her auxiliaries are reduced. The benefits for divorced spouses (including surviving divorced spouses) are never reduced.
Illustrations of the Family Maximum
The post-obit exhibits evidence how the family maximum rules work, using simplified examples of beneficiary families. We compare benefit amounts earlier applying the family unit maximum rules with those after applying those rules. We presume that there are no reductions to full do good amounts,five and we use the 2015 family maximum and PIA formulas.
Survivors of a deceased worker. Table i illustrates a case in which a worker dies and is survived by a working-historic period spouse and two children, all of whom qualify for survivor benefits.six We assume the worker has an AIME of $2,253 and in turn has a PIA of $one,200.7 The rules that apply to survivor beneficiaries are the same equally those that apply to families of retired workers.
| Characteristic | Monthly do good amount ($) | Rule applied |
|---|---|---|
| Earlier family maximum | ||
| Survivor benefits | ||
| Spouse | 900 | 75% of the worker's PIA |
| Child 1 | 900 | 75% of the worker's PIA |
| Kid 2 | 900 | 75% of the worker'south PIA |
| Total family benefit | 2,700 | Sum of the survivor benefits |
| Afterwards family maximum | ||
| Survivor benefits | ||
| Spouse | 659 | ⅓ of the family maximum amount |
| Child 1 | 659 | ⅓ of the family maximum amount |
| Child ii | 659 | ⅓ of the family maximum amount |
| Total family do good | 1,976 | Sum of the survivor benefits, capped by the family maximum amount |
| SOURCE: Authors' calculations. | ||
| NOTE: Dollar values are rounded to the nearest dollar for presentation purposes, just would actually be rounded down to the nearest dime. | ||
| AIME = average indexed monthly earnings; OASI = Old-Age and Survivors Insurance; PIA = primary insurance amount. | ||
Family of a disabled worker. Table 2 illustrates a example in which a worker becomes disabled and has a spouse and 2 children who qualify for auxiliary disability benefits. We assume, as we did in Table 1, that the worker has an AIME of $ii,253 and a PIA of $ane,200.
| Characteristic | Monthly benefit corporeality ($) | Rule practical |
|---|---|---|
| Before family maximum | ||
| Worker's benefit | ane,200 | 100% of the worker's PIA |
| Auxiliary benefits | ||
| Spouse | 600 | 50% of the worker's PIA |
| Child i | 600 | l% of the worker's PIA |
| Child 2 | 600 | l% of the worker'southward PIA |
| Total family do good | 3,000 | Sum of the worker's and auxiliaries' benefits |
| Later on family maximum | ||
| Worker's do good | 1,200 | 100% of the worker'south PIA |
| Auxiliary benefits | ||
| Spouse | 200 | ⅓ of the family maximum amount minus the worker's PIA ($600) |
| Child i | 200 | ⅓ of the family unit maximum amount minus the worker's PIA ($600) |
| Kid two | 200 | ⅓ of the family maximum amount minus the worker's PIA ($600) |
| Total family benefit | 1,800 | Sum of the worker's and auxiliaries' benefits, capped by the family unit maximum amount |
| SOURCE: Authors' calculations. | ||
| NOTES: Dollar values are rounded to the nearest dollar for presentation purposes, but would actually be rounded down to the nearest dime. In this case, 85 pct of the worker's AIME is $ane,915, which is 160 percentage of his or her PIA, greater than the cap of 150 percent of the PIA that applies to disability beneficiaries. As a event, the family maximum for this family is $one,800, or 150 percentage of the worker'south PIA. | ||
| AIME = average indexed monthly earnings; DI = Disability Insurance; PIA = master insurance amount. | ||
Special cases. About family maximum cases follow the standard family maximum rules that apply to OASI and DI cases, every bit shown before. At that place are besides additional rules that apply for more complicated situations. We briefly describe those rules below and include 3 detailed illustrations of them in Appendix Tables A-ane through A-3. Information technology is in these complex cases that improper payments are virtually common, as indicated in a recent SSA Role of the Inspector General written report.eight The incorrect payments generally occur because they are calculated manually by SSA employees. The agency uses an automated system to bank check standard family maximum cases; for more complicated cases—such as dually entitled spouses (for instance, individuals receiving both a worker benefit and a fractional spouse do good), "child-in-intendance" benefits, or combined family maximum cases—in that location is no such automated review.
Dually entitled beneficiaries. These beneficiaries are entitled to worker benefits based on their own earnings as well equally auxiliary benefits based on someone else's earnings.ix In dual entitlement cases where the auxiliary benefit is college than the worker benefit, the dually entitled beneficiary receives his or her full worker do good in addition to a partial auxiliary benefit. The total do good is the aforementioned amount equally the full auxiliary benefit. For these dually entitled beneficiaries, the family maximum merely applies to the auxiliary portion of the benefit.
For cases in which a person is eligible for both a worker benefit and an auxiliary benefit, the auxiliary do good is reduced or not paid at all. For those beneficiaries, the Parisi example established that whatsoever potential but unpaid auxiliary benefits are not included in the family maximum calculation.ten Before the Parisi case, a spouse'south potential simply unpaid spousal benefits would exist included in the family maximum and cause other family members' auxiliary benefits to be reduced. In the Parisi case, the courts adamant that only auxiliary benefits actually paid would count toward the family maximum, assuasive some beneficiaries to become college auxiliary benefits than they would accept received earlier the Parisi decision.xi
Combined family maximum. The combined family maximum is used when a person qualifies for auxiliary benefits on more than one worker'south tape. The combined family maximum is the sum of the family unit maximums established for each worker, but it does not exceed the statutory upper limits for combined family maximums. 12 For cases in which a beneficiary qualifies for benefits on multiple records, his or her benefits are adamant based on the work record of the worker that will yield the highest do good amount.thirteen However, the family maximum is determined based on the sum of the family maximums established for each worker'southward record.
Legislative History
Congress amended the Social Security Act and established the family maximum in 1939, the same year it created auxiliary benefits. These amendments reflected the change in the emphasis of the original Social Security program, from protecting workers in sometime age to protecting those workers and their family unit members. Over the years, Congress gradually enacted the following changes:
- The 1939 Amendments set the family maximum at the lower of fourscore percent of the average monthly wages, $85, or 200 percentage of a worker's PIA. The family maximum could not autumn below a floor of $xx.14
- The 1950 Amendments eliminated the 200 percentage of the PIA cap and inverse the formula to 80 pct of the worker'southward boilerplate monthly wages, with a maximum of $150 and a minimum of $forty.15
- The 1954 Amendments stated that the family maximum could not be less than 150 percent of the PIA.16 The 1954 formula remained, with advertising hoc changes to the thresholds, until 1971.17
- The 1971 Amendments established a ii-tier family maximum formula.18 For beneficiaries with PIAsouthward above $628, the family maximum was 175 percent of the PIA. For those with PIAsouth below $628, the prior-law formula practical. For all beneficiaries, the family maximum could not fall below the floor of 150 percentage of the PIA, as established in prior law.
- The 1972 Amendments established an automatic cost-of-living aligning (COLA) for Social Security benefits and a COLA for the family maximum. The COLAs were applied in each year after a beneficiary first became entitled, starting in 1975.19
- Legislation in 1972 twenty also liberalized the family unit maximum, requiring its computation to be based on the PIA rather than the average monthly wage.21 This change allowed beneficiaries who became entitled after a do good increase to get the same benefit amounts as did current beneficiaries.22
Congress established the current-law family maximum rules in the 1977 and 1980 Amendments. Today'southward OASI beneficiaries are field of study to the rules established in 1977 (with wage-indexed adjustments); DI beneficiaries are subject to the rules established in 1980.
- The 1977 Amendments created a iv-tier formula for all beneficiaries: 150 percent of the first $236 of the worker'south PIA, plus 272 percent of the next $106 of his or her PIA, plus 134 percent of the next $107 of the PIA, plus 175 percent of the residuum.23 The dollar amounts in the formula increment each year according to changes in the boilerplate wage alphabetize (AWI). This formula was designed to replicate the range of family maximum amounts established under prior police force.
- The 1980 Amendments established a separate family unit maximum benefit formula for disability beneficiaries at 85 percent of a worker's AIME, with a flooring of 100 per centum of the worker'southward PIA and a ceiling of 150 percent of the PIA.24 The rule for 85 percentage of the AIME was designed so that a family's total benefits could non exceed the worker'due south average earnings. The cap of 150 percent of the PIA affects higher-earning workers; without it, the rule for 85 percent of the AIME would not accept affected them.25 The flooring of 100 percent of the PIA ensures that a worker volition always get the full benefit to which he or she is entitled, even if none of his or her dependents receives auxiliary benefits. In establishing the more restrictive disability family maximum rules in the 1980 Amendments, Congress intended to strengthen work incentives for disabled beneficiaries, reflecting concerns that some of those individuals were financially equally well off, or improve off, when receiving benefits than when working.26
Analysis of Family Maximum Rules
Because of the more than restrictive DI family maximum rules, benefits payable to disability beneficiary families are significantly lower than those for retirement and survivor beneficiary families, particularly at the lower cease of the earnings scale. In 2015, newly eligible disabled beneficiaries with AIMEs of $903 or less can have no auxiliary beneficiaries because the DI family maximum for such workers is 100 percent of their PIA. Newly eligible disabled beneficiaries with AIMEsouth betwixt $904 and $1,942 have their family benefits reduced, even if they have simply one auxiliary, because the family unit maximum caps their benefits at 85 percentage of their AIME (rather than 150 percent of their PIA, which could allow for one unreduced auxiliary beneficiary).
Chart 1 shows OASI and DI family maximum amounts likewise as the PIA formula (which establishes basic benefit amounts) as percentages of AIME and at each level of AIME—a measure out of lifetime earnings. At all earnings levels, the OASI family unit maximum is more generous than the DI family maximum, replacing a greater proportion of earnings. At the low cease of the earnings scale (specifically, for people whose AIMEsouthward are $903 or less in 2015), the DI family unit maximum is equal to the worker'due south PIA, which means that no benefits will be paid to disabled-worker family unit members. The DI family maximum is notably less progressive than the OASI family unit maximum (or PIA), as shown by the gradient of each line in Chart 1. The DI family maximum line slopes downwards in a relatively direct line, while the OASI family unit maximum is kinked at the depression end because it allows significantly more generous benefits for the families of lower earners.
Nautical chart 1.
OASI and DI family unit maximum amounts and PIA as percentages of AIME, 2015
SOURCE: Authors' calculations.
NOTES: Formulas are based on 2015 rules, which apply to beneficiaries commencement eligible in 2015.
AIME = average indexed monthly earnings; DI = Inability Insurance; OASI = One-time-Age and Survivors Insurance; PIA = primary insurance amount.
To provide context, we have also estimated the distribution of DI and OASI beneficiary families by their AIME levels:27
- Over 400,000 (23 per centum) DI beneficiary families with 2 or more beneficiaries take AIMEs of less than $ane,000. This is approximately the level of lifetime earnings at which disabled workers can have no auxiliary beneficiaries.
- Almost 600,000 (33 per centum) of such families have AIMEsouth betwixt $1,000 and $ii,000. This is approximately the level of lifetime earnings at which disability beneficiary families with two or more than members have their benefits reduced by the family maximum rules.
- The remaining approximately 800,000 (44 percent) DI casher families have an AIME of more than than $2,000. This is about the level of lifetime earnings at which inability beneficiary families with three or more members have their benefits reduced by the family maximum rules.
Thus, many DI beneficiaries are subject to the more restrictive family unit maximum rules that apply at the low stop of the earnings calibration, which in many cases mean no or very little auxiliary benefits are paid. OASI beneficiary families take relatively higher earnings. Yet, many of them have AIMEs at the lower end of the earnings scale, where the family maximum rules are relatively more generous for OASI beneficiaries.
Methodology
Our analysis is based on data from SSA'southward Annual Statistical Supplement to the Social Security Bulletin, 2013 and Modeling Income in the Nigh Term, Version vi. MINT6 is a microsimulation projection model based on the Demography Bureau's Survey of Income and Program Participation (SIPP). The survey information from SIPP respondents is matched with SSA authoritative records on earnings and benefits through 2009, and then the earnings, benefits, and other life events of those respondents are projected for 2010 and later years. The MINTsix results shown here are projections for 2015.
We reweighted the results for the MINT6 respondents to match the benchmark of the family benefit types shown in the Supplement. This reweighting is necessary considering, although the overall population of casher families is similar in the Supplement and MINTvi, some subgroup populations differ noticeably. Ane limitation of a microsimulation model based on a survey, such every bit MINT, is the difficulty of precisely estimating the population of a less common subgroup, such equally beneficiary families with a larger number of children receiving benefits. Because larger beneficiary families are particularly important to the assay here, reweighting is necessary so that we can marshal our information with the benchmark population composition shown in the Supplement's Tabular array five.H2,28 which is based on all authoritative records of beneficiaries in Dec 2012. Our reweighting method is able to more than precisely capture narrower subgroups such every bit families with more children.
Effects of Family Maximum Rules on Beneficiary Families
In this department, we analyze the populations of OASI and DI beneficiaries that are affected past the family unit maximum and to what extent their benefits are changed. Chart two shows the estimated number of beneficiary families affected by the family maximum rules. This chart distinguishes families past size, separating those with 2 eligible beneficiaries from those with three or more eligible beneficiaries. For some families of disabled workers, a member may be eligible for auxiliary benefits, only not be paid those benefits considering of the family maximum rules. Families with these potentially eligible beneficiaries are included in the nautical chart.
Chart ii.
Number of beneficiary families affected past family maximum rules, by number of eligible beneficiaries in the family, 2015
SOURCE: Authors' estimates using Modeling Income in the Near Term, Version half-dozen.
NOTE: We categorized casher families by size before applying the family maximum rules; in some cases, the auxiliary of a disabled worker may be otherwise eligible for a benefit that is non paid because of the family maximum rules. Such families are included in this chart.
Families of Retired Workers and Survivors of Deceased Workers (OASI)
The family unit maximum affects all OASI families with three or more beneficiaries, just does not touch on families with fewer than iii beneficiaries. We estimate that about 200,000 families of retired workers and another 200,000 survivors of deceased workers take their benefits reduced past the family maximum.
Among affected families of retired workers, we guess that median family benefits are $2,886 before applying the family maximum and $2,482 after, equally shown in Nautical chart three. The median reduction among affected retired-worker families is $535 (fourteen percent, not shown). All auxiliaries of retired workers receive at least fractional benefits.
Among affected survivor beneficiary families, nosotros estimate that median family unit benefits are $3,584 before applying the family maximum and $two,401 afterward, likewise shown in the nautical chart. The median reduction among affected survivor families is $748 (23 percent, not shown). All qualifying survivors receive at least partial benefits.
Chart three.
Median family benefit amounts before and afterward applying the family maximum rules among affected families, 2015
SOURCE: Authors' estimates using Modeling Income in the Virtually Term, Version 6.
Families of Disabled Workers (DI)
In contrast with OASI beneficiary families, many DI beneficiary families are affected by the family unit maximum. Nearly 1.4 meg DI beneficiary families are affected, and about 400,000 of these disabled beneficiary families have their auxiliary benefits reduced to zero by the family maximum rules. In those cases, the family unit maximum for the disabled worker is 100 pct of the worker's PIA, which leaves nothing for auxiliary beneficiaries.
All families of disabled workers with three or more beneficiaries are affected past the family unit maximum. In addition, more than half (58 percent) of families of disabled workers with 2 beneficiaries (one worker and one auxiliary) are affected. Taken together, amongst disabled-worker families with at to the lowest degree 1 potentially eligible auxiliary, we approximate that nearly 80 percent are afflicted by the family maximum.
Chart iii shows median family unit do good amounts before and subsequently applying the family unit maximum rules. Those values include the effects of do good reduction factors and delayed retirement credits. They do non account for the effects of the windfall elimination provision, the authorities pension offset, or the retirement earnings test, which are calculated after applying the family maximum rules.
Amongst affected disability families, we estimate that the median family do good is $1,552 before applying the family maximum and $1,140 later applying the maximum, as shown in the chart. The median reduction for affected disability families is $580 (33 percent, not shown).
The deviation in both the percent affected and the median benefits among disabled-worker families shows the bear on of the stricter disabled family maximum rules. The DI family unit maximum affects many more families and a wider range of family unit sizes than the OASI family maximum. OASI beneficiary families are not afflicted by the family maximum rules unless iii or more family members receive benefits; when those families are affected, members who qualify as auxiliaries ever receive partial benefits. DI beneficiary families, by contrast, sometimes lose all of their auxiliary benefits, even in cases where only one family unit fellow member qualifies.
Determination
Equally nosotros take shown in this study, Social Security'south family maximum rules are complex and affect beneficiaries in unlike ways, depending on their earnings levels and benefit types. In particular, the rules that apply to disability beneficiary families differ significantly from those that apply to retirement and survivor beneficiary families. The disabled family unit maximum affects many more families and a wider range of family sizes than the retirement and survivor family maximum. All disability families with 3 or more beneficiaries are afflicted by the family maximum and more than one-half of families with ii beneficiaries are affected. Families of disabled workers, particularly those with depression earnings, sometimes lose all of their auxiliary benefits. For all families affected by the family unit maximum rules, reductions can be substantial.
Appendix
The Parisi court decision interpreted the Social Security Act as limiting the full benefit amount really payable on an private'south piece of work record, but not necessarily on the amount of entitlement available in principle. Equally a event, when determining family maximums, SSA considers only the amount of monthly benefits actually due or payable to that person.
How the Parisi Example Affects Benefits
Social Security's dual entitlement dominion stipulates that if a person is eligible for both a worker do good and an auxiliary benefit, the auxiliary benefit is reduced or non paid at all. In those cases, the Parisi case established that any potential but unpaid auxiliary benefit is not included in the family unit maximum calculation. The illustration in Table A-1 shows how the Parisi rules piece of work for a person whose auxiliary benefit is not payable considering his or her worker benefit is higher. The tabular array uses the same hypothetical disabled-worker casher family as that illustrated in Table 2, but assumes that the spouse's worker do good is $1,000—greater than his or her potential auxiliary benefit of $600.
| Characteristic | Monthly benefit amount ($) | Rule applied |
|---|---|---|
| Earlier family unit maximum | ||
| Worker's do good | 1,200 | 100% of the worker's PIA |
| Spouse's worker benefit | 1,000 | 100% of the spouse'southward PIA; dual entitlement rule—spouse receives his or her ain PIA considering the auxiliary benefit is less |
| Auxiliary benefits | ||
| Spouse | 600 | fifty% of the worker's PIA (potentially), but not actually paid |
| Kid i | 600 | 50% of the worker's PIA |
| Child 2 | 600 | 50% of the worker's PIA |
| Total family unit benefit | 3,400 | Sum of the worker'southward, spouse's, and auxiliaries' benefits |
| Later family unit maximum | ||
| Worker's do good | 1,200 | 100% of the worker'southward PIA |
| Spouse'south worker benefit | one,000 | 100% of the spouse's PIA; dual entitlement rule—spouse receives his or her ain PIA because the auxiliary benefit is less |
| Auxiliary benefits | ||
| Spouse | 600 | Parisi rules: The spouse does not receive an auxiliary benefit, so potential auxiliary benefits practice not count toward the total family maximum auxiliary benefits. |
| Kid 1 | 300 | ½ of the family maximum corporeality minus the worker's PIA ($600) |
| Kid ii | 300 | ½ of the family maximum amount minus the worker'due south PIA ($600) |
| Full family benefit | two,800 | Sum of the worker's and auxiliaries' benefits, capped by the family maximum corporeality, plus the spouse's worker benefit |
| SOURCE: Authors' calculations. | ||
| NOTES: Dollar values are rounded to the nearest dollar for presentation purposes, only would actually exist rounded down to the nearest dime. In this example, 85 percentage of the worker's AIME is $ane,915, which is 160 pct of his or her PIA, greater than the cap of 150 pct of the PIA that applies to inability beneficiaries. Every bit a result, the family unit maximum for this family unit is $1,800, or 150 percent of the worker's PIA. | ||
| AIME = average indexed monthly earnings; DI = Disability Insurance; PIA = primary insurance corporeality. | ||
Dually Entitled Beneficiaries
Table A-2 shows calculations for a disabled-worker family like to the one illustrated in Table A-1—a disabled worker with a spouse and two children, who has an AIME of $ii,253 and a PIA of $one,200. In this particular exhibit, the spouse is dually entitled to a worker do good of $100 in improver to his or her auxiliary benefit.29 As in Table A-1, the Parisi rules utilise. In this case, only the auxiliary portion of the spouse'southward benefit would be reduced by the family unit maximum. We assume that the children qualify for auxiliary benefits on the worker'due south tape, only not on the spouse'southward.
| Characteristic | Monthly benefit amount ($) | Dominion applied |
|---|---|---|
| Before family maximum | ||
| Worker's benefit | 1,200 | 100% of the worker's PIA |
| Spouse'southward worker benefit | 100 | 100% of the spouse'south PIA |
| Auxiliary benefits | ||
| Spouse | 500 | Dual entitlement dominion—50% of the worker'southward PIA ($600) minus the spouse'south PIA ($100) |
| Child 1 | 600 | 50% of the worker'southward PIA |
| Child 2 | 600 | l% of the worker's PIA |
| Full family unit benefit | 3,000 | Sum of the worker'due south, spouse's, and auxiliaries' benefits |
| Subsequently family unit maximum | ||
| Worker's benefit | one,200 | 100% of the worker'southward PIA |
| Spouse'south worker benefit | 100 | 100% of the spouse'due south PIA |
| Auxiliary benefits | ||
| Spouse | 100 | ⅓ of the family maximum amount minus the worker'southward PIA ($600) minus the spouse'southward worker PIA |
| Child 1 | 250 | ⅓ of the family maximum amount minus the worker'south PIA ($600) plus ½ of the $100 withheld from the spouse's auxiliary do good |
| Child 2 | 250 | ⅓ of the family maximum corporeality minus the worker's PIA ($600) plus ½ of the $100 withheld from the spouse's auxiliary do good |
| Total family do good | 1,900 | Sum of the worker'southward and auxiliaries' benefits, capped by the family unit maximum amount, plus the spouse'southward worker benefit |
| SOURCE: Authors' calculations. | ||
| NOTES: Dollar values are rounded to the nearest dollar for presentation purposes, just would actually exist rounded down to the nearest dime. In this case, 85 percent of the worker'due south AIME is $one,915, which is 160 percentage of his or her PIA, greater than the cap of 150 per centum of the PIA that applies to disability beneficiaries. As a result, the family maximum for this family is $1,800, or 150 percent of the worker's PIA. | ||
| AIME = average indexed monthly earnings; DI = Disability Insurance; PIA = main insurance amount. | ||
Combined Family unit Maximum
The combined family unit maximum is used when a person qualifies for auxiliary benefits on more than i worker'south record. It is the sum of the family unit maximums applicable to each worker's record, but not more than the statutory upper limits for combined family maximums. 30
In Table A-iii, nosotros assume that ii workers die, leaving behind three children who qualify for survivor benefits on both of their parents' piece of work records. We assume that the mother has a PIA of $1,200 and the male parent has a PIA of $1,000. This illustration shows how benefits are calculated in three stages: commencement, before applying the family maximum rules; second, using the ordinary family maximum rules (in this case, the family unit maximum that applies to the mother'due south earnings record—the record on which the children's benefits are based); tertiary, using the combined family maximum rules that would determine this family's final benefit amounts.
| Characteristic | Monthly benefit amount ($) | Dominion applied |
|---|---|---|
| Before family maximum | ||
| Survivor benefits | ||
| Kid i | 900 | 75% of the college-earning parent's PIA |
| Kid 2 | 900 | 75% of the higher-earning parent'south PIA |
| Kid iii | 900 | 75% of the higher-earning parent'south PIA |
| Total family unit benefit | 2,700 | Sum of the survivor benefits |
| After family maximum (higher-earning parent only) | ||
| Survivor benefits | ||
| Kid one | 659 | ⅓ of the family unit maximum corporeality |
| Child 2 | 659 | ⅓ of the family maximum amount |
| Kid 3 | 659 | ⅓ of the family maximum amount |
| Total family unit benefit | one,976 | Family maximum amount |
| Subsequently combined family maximum (both parents) | ||
| Survivor benefits | ||
| Child i | 900 | 75% of the college-earning parent'due south PIA |
| Child 2 | 900 | 75% of the higher-earning parent's PIA |
| Child 3 | 900 | 75% of the higher-earning parent's PIA |
| Total family unit benefit | 2,700 | Sum of the survivor benefits, which is less than the combined family maximum |
| SOURCE: Authors' calculations. | ||
| NOTE: Dollar values are rounded to the nearest dollar for presentation purposes, only would really be rounded downwards to the nearest dime. | ||
| AIME = average indexed monthly earnings; OASI = Old-Age and Survivors Insurance; PIA = master insurance corporeality. | ||
Notes
1 For more information nigh the PIA and how information technology is calculated, refer to http://www.socialsecurity.gov/oact/cola/piaformula.html.
2 People who became entitled to benefits before 1979 are subject to a different family unit maximum formula (see SSA's Almanac Statistical Supplement to the Social Security Bulletin, 2013 (Table 2.A17), http://www.socialsecurity.gov/policy/docs/statcomps/supplement/2013/2a8-2a19.html#table2.a17.
three For more information on the average wage alphabetize, which SSA uses to index the family maximum, refer to http://world wide web.socialsecurity.gov/oact/cola/AWI.html.
4 For more data nigh how SSA calculates the AIME, refer to http://www.socialsecurity.gov/oact/cola/Benefits.html.
5 For example, early retirement reductions, retirement earnings test withholdings, the windfall elimination provision reductions, and government pension offsets.
6 For more information about how beneficiaries qualify for survivor benefits, see SSA'south "How Social Security Tin Help You When A Family unit Member Dies," http://www.socialsecurity.gov/pubs/EN-05-10008.pdf.
7 In 2015, the first bend betoken would exist $826. Thus, the outset $826 of the AIME would be multiplied by xc percent for a value of $743.40. The remaining $1,427 of the AIME above the start bend point of $826 would exist multiplied by 32 per centum for a value of $456.64. Together, $743.40 + 456.64 = $one,200.04. For presentation purposes, the dollar values reported are rounded to the nearest dollar, merely the actual PIA rules round downwardly the value to the nearest dime. For additional information on PIA formula bend points and applicable computation methods, refer to http://www.socialsecurity.gov/oact/cola/piaformula.html.
viii Adjustment of Monthly Benefits Under the Family Maximum Provisions. Inspect Report No.A-09-13-13087 (March 11, 2014), http://oig.ssa.gov/sites/default/files/inspect/total/pdf/A-09-13-13087.pdf.
9 The total amount a dually entitled beneficiary receives is equal to the higher of the worker do good and the auxiliary benefit.
x These rules are a effect of the Parisi court decision; for a total description of the ruling, refer to http://www.socialsecurity.gov/OP_Home/rulings/ar/01/AR97-01-ar-01.html. To determine the ruling's applicability in all states, refer to https://secure.ssa.gov/poms.nsf/lnx/0202603045. Examples are given here, https://secure.ssa.gov/poms.nsf/lnx/0300615768.
11 In the Appendix, see Tables A-i and A-2 for illustrations of how the Parisi case affects benefits.
12 For more information, see SSA'south Plan Operations Manual System RS 00615.770 (simultaneous entitlement of children on more than one worker's record), https://secure.ssa.gov/apps10/poms.NSF/lnx/0300615770; and RS 00615.772 (conclusion of the worker record upon which benefits will be based), https://secure.ssa.gov/poms.nsf/lnx/0300615772.
13 The commission report for the 1972 Amendments states, "The pecker would provide that a child who is entitled to benefits on the earnings record of more than than 1 worker would get benefits based on the earnings record that results in paying him or her the highest amount, if the payment would non reduce the benefits of any other individual who is entitled to benefits based on that earnings record. (Entitlement of a kid on the earnings tape that will give him or her the highest benefit could otherwise upshot in a reduction of the benefits for other people entitled on the same earnings record because of the family unit maximum limitation.)" (Congressional Record on S. 18480, October 17, 1972)
14 Public Constabulary (P.Fifty.) 379.
15 P.L. 734; the thresholds were updated again in the 1952 Amendments, P.50.82-590.
16 P.L. 761.
17 P.L.85-840, P.L.87-64, P.L.89-97, and P.L.ninety-248.
18 P.L.92-5.
19 P.Fifty.92-336.
twenty Congress passed two major Social Security bills in 1972. For more information, refer to http://www.socialsecurity.gov/history/1972amend.html.
21 P.L.92-603.
22 Committee written report for P.L.92-603.
23 Congress intended the maximum family benefit to range from 150 per centum to 188 percent of the worker's PIA, as it did under prior law (commission reports for P.Fifty.95-216). Congressional members considered setting a flat-rate maximum, merely decided that information technology would either consequence in many families getting lower benefits or would accept to cost more in society to provide similar benefit levels to what was provided with the range of family maximums from 150 percent to 188 percent. The law provided an exception for those who became entitled to benefits in 1979 or earlier.
24 The DI family maximum rules were described by the chairman of the House Means and Means Committee equally "temporary and a transition," but the formula has been maintained since then (Congressional Record on H. 7410, September vi, 1979).
25 Conference Report, H.R. 3236/P.L.96-265, Disability Amendments of 1980, 26.
26 Studies had shown that a median wage earner with qualifying dependents would have received family benefits that replaced xc percent of earnings if he or she had become entitled to disability benefits in 1976 (Business firm commission report, no.96-100, four). Secretary of Health, Educational activity, and Welfare Joseph Califano (who oversaw the Social Security program) testified that approximately 6 percentage of DI beneficiaries received family benefits that were greater than their previous net earnings (Congressional Record on H. 7410, September 6, 1979).
27 Authors' calculations using MINT6. For more data on the authors' methodology and the MINThalf dozen model, meet the Methodology department.
28 See the Annual Statistical Supplement to the Social Security Bulletin, 2013 (Table v.H2), http://www.socialsecurity.gov/policy/docs/statcomps/supplement/2013/5h.html#table5.h2.
29 If a family includes both a dually entitled spouse and eligible children, the rules are more circuitous, every bit both the dually entitled spouse and combined family maximum rules may apply.
30 Refer to note 12.
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