Will Delayed Retirement Increase Amount Disabled Adult Children Can Draw
Social Security's family unit maximum rules limit the total benefits payable to a beneficiary'south family. Different family unit maximum rules apply to retirement and survivor benefits than to disability benefits. The rules for calculating family maximum benefits are complicated. In some particularly complex cases, it is hard to properly implement the family maximum, which tin can outcome in over- or underpayments. This article explains how the family unit maximum rules work and describes their development. We use Modeling Income in the Nearly Term, Version 6 data to analyze who is affected by the family unit maximum and to what extent their benefits are inverse.
Kathleen Romig is a senior policy analyst at the Heart on Upkeep and Policy Priorities. Dave Shoffner is a social science enquiry analyst with the Function of Retirement Policy, Role of Retirement and Inability Policy, Social Security Administration.
Acknowledgments: The authors thank Joni Lavery, Andrew Hanks, Eric Herbert, Karen Glenn, Marker Sarney, and Natalie Lu for their helpful comments and suggestions.
The findings and conclusions presented in the Bulletin are those of the authors and do not necessarily represent the views of the Center on Upkeep and Policy Priorities or the Social Security Administration.
Introduction
| AIME | boilerplate indexed monthly earnings |
| AWI | boilerplate wage index |
| DI | Disability Insurance |
| MINT | Modeling Income in the Near Term |
| OASI | Erstwhile-Age and Survivors Insurance |
| PIA | primary insurance amount |
| SSA | Social Security Administration |
Workers receive Social Security retirement and disability benefits based on their covered earnings. Members of their families may also authorize for benefits based on those earnings—for example, their survivors, spouses, and children. Benefits for family members have always been express by the family unit maximum rules. In 1980, Congress established more restrictive rules for the families of disabled workers, reflecting concerns that some inability beneficiaries were financially likewise off, or improve off, when receiving benefits than they were when working. The family maximum rules have evolved over time and accept become more than complicated for all beneficiaries, which in some cases make them difficult to implement. If non implemented correctly, the Social Security Assistants (SSA) may pay beneficiaries improperly.
In this article, nosotros describe the current family maximum rules using illustrations of dissimilar benefit types. Nosotros also draw 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 assay of the rules at different earnings levels, by comparing those for retirement and survivor families with those for inability families. Using Modeling Income in the Most Term, Version 6 (MINT6) data, we analyze who is affected by the family unit maximum and to what extent their benefits are inverse.
Major Findings
SSA's family unit maximum rules are complex and affect beneficiaries in different 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. Our findings include the following:
- The disabled family maximum affects many more families and a wider range of family sizes than the retirement and survivor family maximum because more restrictive rules apply to inability benefits.
- Retirement and survivor casher families are not affected by the family unit maximum rules unless three or more family members receive benefits; when those beneficiary families are affected, auxiliary beneficiaries (or auxiliaries) always receive fractional benefits.
- Disability beneficiary families, by contrast, sometimes lose all of their auxiliary benefits, even in cases where only one family member qualifies. All disability families with iii or more beneficiaries are affected past the family maximum and more than than half of families with two beneficiaries are affected.
- Amid families affected by the family maximum, reductions can be substantial. For afflicted disabled-worker families, we gauge that the median reduction is well-nigh 33 percent; for survivor families, about 23 per centum; for retired-worker families, about 14 pct. For some family members of disabled workers, the family maximum rules prevent a benefit from being paid at all.
Current-Constabulary Family Maximum Rules
In this section, nosotros provide the electric current basic family maximum rules for retirement and survivor benefits and for disability benefits. We also talk over current-law rules that are mutual to both types of benefits.
Rules for Retirement and Survivor Benefits
The family unit maximum formula for Quondam-Age and Survivors Insurance (OASI) benefits is based on a beneficiary'southward primary insurance amount (PIA). The PIA is a beneficiary's basic Social Security do good amount before adjustments for retirement age, earnings, and other factors.one For a worker who reaches age 62 or dies in 2015 (before reaching historic period 62), SSA calculates the family unit maximum using the post-obit formula:
150 percent of the starting time $ane,056 of the worker'due south PIA plus
272 percent of the worker's PIA over $1,056 through $1,524 plus
134 percent of the worker'south PIA over $ane,524 through $1,987 plus
175 percent of the worker'due south PIA over $ane,987.
Ultimately, this formula yields a maximum for each family that is betwixt 150 percent and 188 percent of the worker'southward bones Social Security benefit, or PIA.ii The final corporeality is rounded to the next everyman ten cents. The dollar amounts in the family maximum formula increase each twelvemonth according to average wage growth.three
Rules for Inability Benefits
Disability Insurance (DI) beneficiaries are bailiwick to a more restrictive set of family unit maximum rules than are OASI beneficiaries. Equally with OASI beneficiaries, people who became entitled to disability benefits before 1979 are discipline to a unlike family maximum formula. The family unit maximum for a disabled worker is 85 percentage of the worker's average indexed monthly earnings (AIME), a measure of lifetime earnings.4 Even so, the family unit maximum for a disabled worker's family unit cannot be more than than 150 percentage or less than 100 percentage of his or her PIA. The final amount is rounded to the next lowest 10 cents.
Rules Common to Both OASI and DI
The family unit maximum rules are applied in the same mode for both OASI and DI benefits. First, the family maximum corporeality is established based on the worker's PIA or AIME. Then, the worker's benefit is subtracted from the total benefit amount payable to the family unit. Adjacent, the auxiliaries' benefits are reduced proportionately. The worker's own do good 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 following exhibits prove how the family maximum rules piece of work, using simplified examples of casher families. We compare do good amounts earlier applying the family maximum rules with those after applying those rules. We assume that there are no reductions to full benefit amounts,v and we employ the 2015 family maximum and PIA formulas.
Survivors of a deceased worker. Tabular array i illustrates a example 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 $one,200.seven The rules that apply to survivor beneficiaries are the same every bit those that employ to families of retired workers.
| Feature | Monthly do good amount ($) | Rule practical |
|---|---|---|
| Before family maximum | ||
| Survivor benefits | ||
| Spouse | 900 | 75% of the worker's PIA |
| Child 1 | 900 | 75% of the worker'due south PIA |
| Child ii | 900 | 75% of the worker's PIA |
| Full family benefit | 2,700 | Sum of the survivor benefits |
| After family unit maximum | ||
| Survivor benefits | ||
| Spouse | 659 | ⅓ of the family maximum amount |
| Child i | 659 | ⅓ of the family unit maximum amount |
| Child 2 | 659 | ⅓ of the family maximum amount |
| Full family benefit | 1,976 | Sum of the survivor benefits, capped by the family unit maximum amount |
| SOURCE: Authors' calculations. | ||
| NOTE: Dollar values are rounded to the nearest dollar for presentation purposes, but would actually be rounded downwardly to the nearest dime. | ||
| AIME = average indexed monthly earnings; OASI = Old-Historic period and Survivors Insurance; PIA = primary insurance amount. | ||
Family unit of a disabled worker. Table 2 illustrates a instance in which a worker becomes disabled and has a spouse and ii children who qualify for auxiliary disability benefits. We assume, as nosotros did in Table ane, that the worker has an AIME of $two,253 and a PIA of $one,200.
| Characteristic | Monthly benefit amount ($) | Rule practical |
|---|---|---|
| Earlier family maximum | ||
| Worker's benefit | 1,200 | 100% of the worker's PIA |
| Auxiliary benefits | ||
| Spouse | 600 | 50% of the worker's PIA |
| Child 1 | 600 | 50% of the worker's PIA |
| Child 2 | 600 | fifty% of the worker'due south PIA |
| Total family unit benefit | 3,000 | Sum of the worker's and auxiliaries' benefits |
| After family unit maximum | ||
| Worker's benefit | ane,200 | 100% of the worker's PIA |
| Auxiliary benefits | ||
| Spouse | 200 | ⅓ of the family maximum amount minus the worker's PIA ($600) |
| Kid ane | 200 | ⅓ of the family maximum amount minus the worker'south PIA ($600) |
| Kid 2 | 200 | ⅓ of the family maximum amount minus the worker'south PIA ($600) |
| Total family benefit | ane,800 | Sum of the worker's and auxiliaries' benefits, capped by the family maximum amount |
| SOURCE: Authors' calculations. | ||
| NOTES: Dollar values are rounded to the nearest dollar for presentation purposes, but would really be rounded down to the nearest dime. In this case, 85 per centum of the worker's AIME is $1,915, which is 160 percent of his or her PIA, greater than the cap of 150 percent of the PIA that applies to disability beneficiaries. As a result, the family maximum for this family is $one,800, or 150 pct of the worker's PIA. | ||
| AIME = average indexed monthly earnings; DI = Inability Insurance; PIA = primary insurance amount. | ||
Special cases. Most family maximum cases follow the standard family maximum rules that apply to OASI and DI cases, equally shown earlier. At that place are too boosted rules that apply for more complicated situations. We briefly depict those rules below and include three detailed illustrations of them in Appendix Tables A-1 through A-3. Information technology is in these complex cases that improper payments are most mutual, as indicated in a recent SSA Office of the Inspector General report.8 The wrong payments generally occur because they are calculated manually by SSA employees. The bureau uses an automated system to check standard family unit maximum cases; for more complicated cases—such as dually entitled spouses (for example, individuals receiving both a worker benefit and a partial spouse benefit), "child-in-care" benefits, or combined family maximum cases—there is no such automated review.
Dually entitled beneficiaries. These beneficiaries are entitled to worker benefits based on their own earnings equally well equally auxiliary benefits based on someone else's earnings.ix In dual entitlement cases where the auxiliary do good is higher than the worker do good, the dually entitled beneficiary receives his or her total worker do good in addition to a partial auxiliary do good. The total benefit is the same amount every bit the total auxiliary benefit. For these dually entitled beneficiaries, the family maximum only applies to the auxiliary portion of the benefit.
For cases in which a person is eligible for both a worker do good and an auxiliary benefit, the auxiliary benefit is reduced or not paid at all. For those beneficiaries, the Parisi example established that any potential merely unpaid auxiliary benefits are non included in the family maximum calculation.x Earlier the Parisi instance, a spouse's potential simply unpaid spousal benefits would be included in the family maximum and crusade other family members' auxiliary benefits to be reduced. In the Parisi case, the courts determined that only auxiliary benefits really paid would count toward the family maximum, assuasive some beneficiaries to get higher auxiliary benefits than they would take 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'due south record. The combined family maximum is the sum of the family unit maximums established for each worker, simply information technology does not exceed the statutory upper limits for combined family maximums. 12 For cases in which a casher qualifies for benefits on multiple records, his or her benefits are determined based on the piece of work record of the worker that will yield the highest benefit amount.13 Yet, the family maximum is adamant based on the sum of the family maximums established for each worker's record.
Legislative History
Congress amended the Social Security Act and established the family unit maximum in 1939, the same yr information technology created auxiliary benefits. These amendments reflected the change in the accent of the original Social Security programme, from protecting workers in old age to protecting those workers and their family members. Over the years, Congress gradually enacted the following changes:
- The 1939 Amendments prepare the family unit maximum at the lower of fourscore percent of the boilerplate monthly wages, $85, or 200 percent of a worker's PIA. The family unit maximum could not fall below a flooring of $xx.14
- The 1950 Amendments eliminated the 200 pct of the PIA cap and changed the formula to 80 percentage of the worker's boilerplate monthly wages, with a maximum of $150 and a minimum of $twoscore.fifteen
- The 1954 Amendments stated that the family maximum could not be less than 150 percent of the PIA.16 The 1954 formula remained, with ad hoc changes to the thresholds, until 1971.17
- The 1971 Amendments established a two-tier family maximum formula.18 For beneficiaries with PIAsouthward above $628, the family unit maximum was 175 per centum of the PIA. For those with PIAs below $628, the prior-police force formula practical. For all beneficiaries, the family maximum could not fall below the floor of 150 per centum of the PIA, as established in prior law.
- The 1972 Amendments established an automatic cost-of-living adjustment (COLA) for Social Security benefits and a COLA for the family maximum. The COLAs were applied in each twelvemonth after a beneficiary first became entitled, starting in 1975.19
- Legislation in 1972 20 also liberalized the family maximum, requiring its computation to exist based on the PIA rather than the boilerplate monthly wage.21 This change allowed beneficiaries who became entitled subsequently a benefit increment to go the same do good amounts as did electric current beneficiaries.22
Congress established the current-law family maximum rules in the 1977 and 1980 Amendments. Today's OASI beneficiaries are subject area to the rules established in 1977 (with wage-indexed adjustments); DI beneficiaries are discipline 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's PIA, plus 272 percent of the next $106 of his or her PIA, plus 134 percent of the adjacent $107 of the PIA, plus 175 percent of the remainder.23 The dollar amounts in the formula increase each year co-ordinate to changes in the boilerplate wage index (AWI). This formula was designed to replicate the range of family maximum amounts established nether prior law.
- The 1980 Amendments established a divide family unit maximum benefit formula for disability beneficiaries at 85 pct of a worker's AIME, with a floor of 100 pct of the worker's PIA and a ceiling of 150 percent of the PIA.24 The rule for 85 percent of the AIME was designed and then that a family's total benefits could not exceed the worker's average earnings. The cap of 150 per centum of the PIA affects college-earning workers; without information technology, the dominion for 85 percent of the AIME would non have afflicted them.25 The flooring of 100 percentage of the PIA ensures that a worker will 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 unit maximum rules in the 1980 Amendments, Congress intended to strengthen work incentives for disabled beneficiaries, reflecting concerns that some of those individuals were financially likewise off, or meliorate 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 inability beneficiary families are significantly lower than those for retirement and survivor casher families, particularly at the lower finish of the earnings calibration. In 2015, newly eligible disabled beneficiaries with AIMEs of $903 or less can take no auxiliary beneficiaries considering the DI family maximum for such workers is 100 percent of their PIA. Newly eligible disabled beneficiaries with AIMEs between $904 and $1,942 have their family benefits reduced, even if they have only i auxiliary, because the family maximum caps their benefits at 85 percent 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 as well as the PIA formula (which establishes basic benefit amounts) as percentages of AIME and at each level of AIME—a measure of lifetime earnings. At all earnings levels, the OASI family maximum is more generous than the DI family maximum, replacing a greater proportion of earnings. At the depression end of the earnings scale (specifically, for people whose AIMEsouthward are $903 or less in 2015), the DI family maximum is equal to the worker's PIA, which means that no benefits will be paid to disabled-worker family members. The DI family unit 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 downward in a relatively straight line, while the OASI family unit maximum is kinked at the low end because it allows significantly more generous benefits for the families of lower earners.
Chart i.
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 first eligible in 2015.
AIME = average indexed monthly earnings; DI = Disability Insurance; OASI = Sometime-Age and Survivors Insurance; PIA = main insurance amount.
To provide context, we have besides estimated the distribution of DI and OASI beneficiary families past their AIME levels:27
- Over 400,000 (23 percent) DI beneficiary families with two or more beneficiaries take AIMEsouth of less than $ane,000. This is approximately the level of lifetime earnings at which disabled workers can have no auxiliary beneficiaries.
- Nearly 600,000 (33 percent) of such families have AIMEs betwixt $one,000 and $2,000. This is approximately the level of lifetime earnings at which disability beneficiary families with 2 or more members have their benefits reduced past the family maximum rules.
- The remaining approximately 800,000 (44 per centum) DI beneficiary families have an AIME of more than than $2,000. This is near the level of lifetime earnings at which disability 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 use at the low end of the earnings scale, which in many cases mean no or very little auxiliary benefits are paid. OASI beneficiary families accept 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'due south Annual Statistical Supplement to the Social Security Bulletin, 2013 and Modeling Income in the Near Term, Version vi. MINT6 is a microsimulation projection model based on the Census Bureau's Survey of Income and Plan Participation (SIPP). The survey information from SIPP respondents is matched with SSA administrative 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 MINThalf dozen 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 because, although the overall population of beneficiary families is like in the Supplement and MINThalf dozen, some subgroup populations differ noticeably. 1 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 as casher families with a larger number of children receiving benefits. Considering larger beneficiary families are peculiarly important to the analysis hither, reweighting is necessary so that nosotros tin can align our information with the benchmark population limerick shown in the Supplement'southward Table 5.H2,28 which is based on all administrative records of beneficiaries in December 2012. Our reweighting method is able to more precisely capture narrower subgroups such every bit families with more children.
Effects of Family Maximum Rules on Beneficiary Families
In this section, we analyze the populations of OASI and DI beneficiaries that are afflicted by the family maximum and to what extent their benefits are changed. Chart 2 shows the estimated number of beneficiary families afflicted past the family maximum rules. This chart distinguishes families past size, separating those with two eligible beneficiaries from those with 3 or more eligible beneficiaries. For some families of disabled workers, a member may be eligible for auxiliary benefits, but non exist paid those benefits because of the family maximum rules. Families with these potentially eligible beneficiaries are included in the chart.
Chart 2.
Number of beneficiary families affected by family maximum rules, past number of eligible beneficiaries in the family, 2015
SOURCE: Authors' estimates using Modeling Income in the Well-nigh Term, Version vi.
NOTE: We categorized beneficiary families by size earlier applying the family maximum rules; in some cases, the auxiliary of a disabled worker may exist 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 maximum affects all OASI families with iii or more beneficiaries, but does non bear upon families with fewer than three beneficiaries. We judge that about 200,000 families of retired workers and some other 200,000 survivors of deceased workers have their benefits reduced by the family maximum.
Amidst affected families of retired workers, we estimate that median family benefits are $2,886 earlier applying the family maximum and $ii,482 later, as shown in Chart 3. The median reduction amongst affected retired-worker families is $535 (14 percent, not shown). All auxiliaries of retired workers receive at least partial benefits.
Among afflicted survivor beneficiary families, we estimate that median family unit benefits are $3,584 before applying the family maximum and $two,401 subsequently, besides shown in the chart. The median reduction among affected survivor families is $748 (23 per centum, non shown). All qualifying survivors receive at least partial benefits.
Nautical chart 3.
Median family unit benefit amounts before and after applying the family unit maximum rules among affected families, 2015
SOURCE: Authors' estimates using Modeling Income in the Near Term, Version six.
Families of Disabled Workers (DI)
In contrast with OASI casher families, many DI casher families are affected by the family maximum. Most 1.4 one thousand thousand DI casher families are affected, and nigh 400,000 of these disabled beneficiary families have their auxiliary benefits reduced to zip by the family maximum rules. In those cases, the family maximum for the disabled worker is 100 pct of the worker's PIA, which leaves zilch for auxiliary beneficiaries.
All families of disabled workers with three or more beneficiaries are affected past the family maximum. In improver, more than than half (58 percentage) of families of disabled workers with two beneficiaries (1 worker and one auxiliary) are affected. Taken together, among disabled-worker families with at least i potentially eligible auxiliary, we estimate that nearly fourscore percent are affected past the family maximum.
Nautical chart 3 shows median family benefit amounts before and afterwards applying the family unit maximum rules. Those values include the effects of benefit reduction factors and delayed retirement credits. They do not business relationship for the effects of the windfall emptying provision, the authorities alimony offset, or the retirement earnings test, which are calculated later applying the family unit maximum rules.
Amongst affected disability families, we estimate that the median family unit benefit is $1,552 before applying the family maximum and $1,140 after applying the maximum, as shown in the chart. The median reduction for affected disability families is $580 (33 percent, non shown).
The difference in both the pct afflicted and the median benefits amidst disabled-worker families shows the impact of the stricter disabled family maximum rules. The DI family unit maximum affects many more families and a wider range of family sizes than the OASI family maximum. OASI casher families are not affected by the family maximum rules unless iii or more family members receive benefits; when those families are affected, members who qualify every bit auxiliaries e'er receive partial benefits. DI beneficiary families, by contrast, sometimes lose all of their auxiliary benefits, fifty-fifty in cases where only one family member qualifies.
Conclusion
As we have shown in this study, Social Security'southward family unit maximum rules are complex and affect beneficiaries in dissimilar means, depending on their earnings levels and benefit types. In particular, the rules that use to disability casher families differ significantly from those that utilise to retirement and survivor beneficiary families. The disabled family maximum affects many more than families and a wider range of family sizes than the retirement and survivor family maximum. All inability families with three or more beneficiaries are affected by the family maximum and more than than half of families with ii beneficiaries are affected. Families of disabled workers, specially those with depression earnings, sometimes lose all of their auxiliary benefits. For all families affected past the family maximum rules, reductions can be substantial.
Appendix
The Parisi courtroom decision interpreted the Social Security Human activity as limiting the full benefit corporeality actually payable on an individual'due south work record, but not necessarily on the amount of entitlement available in principle. Every bit a result, when determining family maximums, SSA considers only the amount of monthly benefits actually due or payable to that person.
How the Parisi Case Affects Benefits
Social Security'due south dual entitlement rule stipulates that if a person is eligible for both a worker do good and an auxiliary benefit, the auxiliary benefit is reduced or not paid at all. In those cases, the Parisi case established that any potential but unpaid auxiliary benefit is non included in the family maximum calculation. The illustration in Table A-one shows how the Parisi rules work for a person whose auxiliary benefit is non payable because his or her worker do good is higher. The tabular array uses the aforementioned hypothetical disabled-worker beneficiary family unit as that illustrated in Table ii, merely assumes that the spouse'south worker do good is $ane,000—greater than his or her potential auxiliary do good of $600.
| Feature | Monthly benefit amount ($) | Rule applied |
|---|---|---|
| Before family unit maximum | ||
| Worker's benefit | 1,200 | 100% of the worker'south PIA |
| Spouse'south worker benefit | 1,000 | 100% of the spouse's PIA; dual entitlement dominion—spouse receives his or her own PIA because the auxiliary benefit is less |
| Auxiliary benefits | ||
| Spouse | 600 | 50% of the worker's PIA (potentially), but not really paid |
| Kid 1 | 600 | 50% of the worker's PIA |
| Child ii | 600 | 50% of the worker'south PIA |
| Full family unit benefit | iii,400 | Sum of the worker's, spouse's, and auxiliaries' benefits |
| Afterwards family unit maximum | ||
| Worker'due south benefit | 1,200 | 100% of the worker's PIA |
| Spouse'south worker benefit | ane,000 | 100% of the spouse's PIA; dual entitlement rule—spouse receives his or her own PIA because the auxiliary benefit is less |
| Auxiliary benefits | ||
| Spouse | 600 | Parisi rules: The spouse does not receive an auxiliary benefit, and then potential auxiliary benefits practice not count toward the total family maximum auxiliary benefits. |
| Child 1 | 300 | ½ of the family maximum amount minus the worker's PIA ($600) |
| Child 2 | 300 | ½ of the family maximum corporeality minus the worker'southward PIA ($600) |
| Total family benefit | two,800 | Sum of the worker'due south and auxiliaries' benefits, capped by the family maximum amount, plus the spouse's worker benefit |
| SOURCE: Authors' calculations. | ||
| NOTES: Dollar values are rounded to the nearest dollar for presentation purposes, simply would really be rounded down to the nearest dime. In this case, 85 percent of the worker's AIME is $1,915, which is 160 per centum of his or her PIA, greater than the cap of 150 percent of the PIA that applies to inability beneficiaries. As a result, the family maximum for this family is $1,800, or 150 percent of the worker'due south PIA. | ||
| AIME = boilerplate indexed monthly earnings; DI = Inability Insurance; PIA = principal insurance corporeality. | ||
Dually Entitled Beneficiaries
Table A-2 shows calculations for a disabled-worker family unit similar to the ane illustrated in Table A-i—a disabled worker with a spouse and two children, who has an AIME of $2,253 and a PIA of $1,200. In this particular exhibit, the spouse is dually entitled to a worker do good of $100 in improver to his or her auxiliary benefit.29 As in Tabular array A-ane, the Parisi rules apply. In this case, only the auxiliary portion of the spouse's do good would be reduced by the family maximum. We assume that the children qualify for auxiliary benefits on the worker's tape, but non on the spouse'due south.
| Characteristic | Monthly benefit amount ($) | Rule applied |
|---|---|---|
| Before family maximum | ||
| Worker'southward benefit | 1,200 | 100% of the worker'south PIA |
| Spouse's worker do good | 100 | 100% of the spouse's PIA |
| Auxiliary benefits | ||
| Spouse | 500 | Dual entitlement rule—50% of the worker's PIA ($600) minus the spouse'due south PIA ($100) |
| Child ane | 600 | 50% of the worker's PIA |
| Child 2 | 600 | 50% of the worker's PIA |
| Total family do good | three,000 | Sum of the worker's, spouse'due south, and auxiliaries' benefits |
| Later on family maximum | ||
| Worker's benefit | ane,200 | 100% of the worker'south PIA |
| Spouse's worker benefit | 100 | 100% of the spouse's PIA |
| Auxiliary benefits | ||
| Spouse | 100 | ⅓ of the family maximum amount minus the worker'due south PIA ($600) minus the spouse'due south worker PIA |
| Kid 1 | 250 | ⅓ of the family unit maximum amount minus the worker'southward PIA ($600) plus ½ of the $100 withheld from the spouse's auxiliary do good |
| Child two | 250 | ⅓ of the family maximum amount minus the worker's PIA ($600) plus ½ of the $100 withheld from the spouse'south auxiliary benefit |
| Total family benefit | i,900 | Sum of the worker'southward and auxiliaries' benefits, capped by the family maximum corporeality, plus the spouse'due south worker do good |
| SOURCE: Authors' calculations. | ||
| NOTES: Dollar values are rounded to the nearest dollar for presentation purposes, but would actually exist rounded down to the nearest dime. In this case, 85 percent of the worker'south AIME is $ane,915, which is 160 percent of his or her PIA, greater than the cap of 150 percent of the PIA that applies to disability beneficiaries. As a result, the family maximum for this family is $1,800, or 150 per centum of the worker's PIA. | ||
| AIME = average indexed monthly earnings; DI = Disability Insurance; PIA = principal insurance corporeality. | ||
Combined Family Maximum
The combined family unit maximum is used when a person qualifies for auxiliary benefits on more one worker'southward tape. It is the sum of the family maximums applicable to each worker'southward tape, but not more than the statutory upper limits for combined family maximums. 30
In Tabular array A-3, nosotros assume that two workers die, leaving behind three children who qualify for survivor benefits on both of their parents' work records. We assume that the mother has a PIA of $1,200 and the father has a PIA of $1,000. This illustration shows how benefits are calculated in three stages: first, before applying the family maximum rules; 2nd, using the ordinary family maximum rules (in this instance, the family unit maximum that applies to the mother's earnings record—the tape on which the children's benefits are based); third, using the combined family maximum rules that would make up one's mind this family'south final do good amounts.
| Characteristic | Monthly benefit amount ($) | Rule applied |
|---|---|---|
| Before family maximum | ||
| Survivor benefits | ||
| Child ane | 900 | 75% of the higher-earning parent'southward PIA |
| Kid ii | 900 | 75% of the higher-earning parent'due south PIA |
| Child three | 900 | 75% of the higher-earning parent'south PIA |
| Full family unit do good | two,700 | Sum of the survivor benefits |
| After family maximum (higher-earning parent simply) | ||
| Survivor benefits | ||
| Child 1 | 659 | ⅓ of the family maximum amount |
| Child ii | 659 | ⅓ of the family maximum corporeality |
| Child 3 | 659 | ⅓ of the family maximum amount |
| Total family benefit | 1,976 | Family maximum amount |
| After combined family maximum (both parents) | ||
| Survivor benefits | ||
| Child 1 | 900 | 75% of the higher-earning parent's PIA |
| Child two | 900 | 75% of the higher-earning parent's PIA |
| Kid 3 | 900 | 75% of the higher-earning parent'south PIA |
| Total family benefit | 2,700 | Sum of the survivor benefits, which is less than the combined family unit maximum |
| SOURCE: Authors' calculations. | ||
| NOTE: Dollar values are rounded to the nearest dollar for presentation purposes, but would actually be rounded down to the nearest dime. | ||
| AIME = average indexed monthly earnings; OASI = Onetime-Age and Survivors Insurance; PIA = principal insurance corporeality. | ||
Notes
1 For more than information about the PIA and how it 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 maximum formula (come across SSA'due south Almanac Statistical Supplement to the Social Security Message, 2013 (Tabular array 2.A17), http://www.socialsecurity.gov/policy/docs/statcomps/supplement/2013/2a8-2a19.html#table2.a17.
3 For more data on the average wage index, which SSA uses to alphabetize the family maximum, refer to http://www.socialsecurity.gov/oact/cola/AWI.html.
iv For more information about how SSA calculates the AIME, refer to http://www.socialsecurity.gov/oact/cola/Benefits.html.
5 For example, early on retirement reductions, retirement earnings test withholdings, the windfall emptying provision reductions, and authorities pension offsets.
half dozen For more information about how beneficiaries qualify for survivor benefits, see SSA's "How Social Security Can Assist You When A Family Member Dies," http://www.socialsecurity.gov/pubs/EN-05-10008.pdf.
7 In 2015, the first bend point would be $826. Thus, the start $826 of the AIME would exist multiplied past 90 percent for a value of $743.40. The remaining $i,427 of the AIME above the start bend point of $826 would be multiplied by 32 percent 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, only the actual PIA rules round down the value to the nearest dime. For additional information on PIA formula curve points and applicative ciphering methods, refer to http://www.socialsecurity.gov/oact/cola/piaformula.html.
8 Adjustment of Monthly Benefits Under the Family Maximum Provisions. Audit Written report No.A-09-13-13087 (March 11, 2014), http://oig.ssa.gov/sites/default/files/audit/full/pdf/A-09-thirteen-13087.pdf.
ix The total corporeality a dually entitled beneficiary receives is equal to the higher of the worker benefit and the auxiliary benefit.
x These rules are a result of the Parisi court conclusion; for a full description of the ruling, refer to http://world wide web.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-1 and A-2 for illustrations of how the Parisi example affects benefits.
12 For more data, meet SSA's Programme Operations Manual System RS 00615.770 (simultaneous entitlement of children on more than one worker'due south record), https://secure.ssa.gov/apps10/poms.NSF/lnx/0300615770; and RS 00615.772 (determination of the worker record upon which benefits will exist based), https://secure.ssa.gov/poms.nsf/lnx/0300615772.
13 The committee report for the 1972 Amendments states, "The pecker would provide that a child who is entitled to benefits on the earnings tape of more than than one worker would go benefits based on the earnings record that results in paying him or her the highest amount, if the payment would not reduce the benefits of any other private who is entitled to benefits based on that earnings record. (Entitlement of a kid on the earnings record that will give him or her the highest do good could otherwise consequence in a reduction of the benefits for other people entitled on the same earnings record because of the family maximum limitation.)" (Congressional Record on S. 18480, Oct 17, 1972)
14 Public Law (P.L.) 379.
xv P.Fifty. 734; the thresholds were updated again in the 1952 Amendments, P.L.82-590.
16 P.50. 761.
17 P.L.85-840, P.L.87-64, P.L.89-97, and P.Fifty.xc-248.
18 P.Fifty.92-5.
19 P.L.92-336.
20 Congress passed 2 major Social Security bills in 1972. For more data, refer to http://www.socialsecurity.gov/history/1972amend.html.
21 P.50.92-603.
22 Committee report for P.L.92-603.
23 Congress intended the maximum family benefit to range from 150 percent to 188 percent of the worker's PIA, as it did under prior law (commission reports for P.L.95-216). Congressional members considered setting a flat-rate maximum, but decided that it would either upshot in many families getting lower benefits or would have to price more in lodge to provide similar benefit levels to what was provided with the range of family maximums from 150 percentage to 188 percent. The constabulary 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 Ways and Ways Committee equally "temporary and a transition," but the formula has been maintained since then (Congressional Tape on H. 7410, September half dozen, 1979).
25 Briefing 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 unit benefits that replaced 90 pct of earnings if he or she had become entitled to disability benefits in 1976 (Business firm committee report, no.96-100, four). Secretary of Health, Education, and Welfare Joseph Califano (who oversaw the Social Security programme) testified that approximately six percent 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 information on the authors' methodology and the MINT6 model, see the Methodology section.
28 See the Almanac 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 complex, every bit both the dually entitled spouse and combined family maximum rules may utilize.
xxx Refer to note 12.
Source: https://www.ssa.gov/policy/docs/ssb/v75n3/v75n3p1.html
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