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<h1 itemprop="headline">Understanding the Social Security Family Maximum</h1>
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<div id="hByline">by <span itemprop="author">Kathleen Romig and Dave Shoffner</span><br>Social Security Bulletin, <abbr title="Volume">Vol.</abbr> 75, <abbr title="Number">No.</abbr> 3, 2015 (released August 2015)</div>
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<div id="breadcrumbs" itemscope itemtype="http://schema.org/BreadcrumbList">You are here: <span itemprop="itemListElement" itemscope itemtype="http://schema.org/ListItem"><a href="/" itemprop="item"><span itemprop="name">Social Security Administration</span></a><meta itemprop="position" content="1" /></span> > <span itemprop="itemListElement" itemscope itemtype="http://schema.org/ListItem"><a href="/policy/index.html" itemprop="item"><span itemprop="name">Research, Statistics & Policy Analysis</span></a><meta itemprop="position" content="2" /></span> > <span itemprop="itemListElement" itemscope itemtype="http://schema.org/ListItem"><a href="/policy/docs/ssb/index.html" itemprop="item"><span itemprop="name">Social Security Bulletin</span></a><meta itemprop="position" content="3" /></span> > <span itemprop="itemListElement" itemscope itemtype="http://schema.org/ListItem"><a href="index.html" itemprop="item"><span itemprop="name"><abbr title="Volume">Vol.</abbr> 75, <abbr title="Number">No.</abbr> 3</span></a><meta itemprop="position" content="4" /></span></div>
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<h4>Related Content</h4>
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<div class="rcItems">
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<p><abbr class="spell">FAQ</abbr>: <a href="/faqs/en/questions/KA-02107.html">Is there a limit to the amount of monthly benefits my family can get on my record?</a></p>
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<div class="introBox">
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<p id="synopsis" itemprop="description">Social Security's family maximum rules limit the total benefits payable to a beneficiary's family. Different family 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 difficult to properly implement the family maximum, which can result in over- or underpayments. This article explains how the family maximum rules work and describes their evolution. We use Modeling Income in the Near Term, Version 6 data to analyze who is affected by the family maximum and to what extent their benefits are changed.</p>
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<hr />
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<div class="eightypercent">
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<p>Kathleen Romig is a senior policy analyst at the Center 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.</p>
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<p><i>Acknowledgments:</i> The authors thank Joni Lavery, Andrew Hanks, Eric Herbert, Karen Glenn, Mark Sarney, and Natalie Lu for their helpful comments and suggestions.</p>
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<p>Contents of this publication are <a href="/policy/accessibility.html">not copyrighted</a>; any items may be reprinted, but citation of the <i>Social Security Bulletin</i> as the source is requested. The findings and conclusions presented in the <i>Bulletin</i> 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. </p>
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</div>
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</div>
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<h2>Introduction</h2>
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<div class="abbrtable">
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<table role="presentation">
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<caption>Selected Abbreviations</caption>
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||
<colgroup span="1" style="width:25%"></colgroup>
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<colgroup span="1"></colgroup>
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<tbody>
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<tr>
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<td><abbr>AIME</abbr></td>
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<td>average indexed monthly earnings</td>
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</tr>
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<tr>
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<td><abbr class="spell">AWI</abbr></td>
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||
<td>average wage index</td>
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||
</tr>
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||
<tr>
|
||
<td><abbr class="spell">DI</abbr></td>
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||
<td>Disability Insurance</td>
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||
</tr>
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||
<tr>
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||
<td><abbr>MINT</abbr></td>
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||
<td>Modeling Income in the Near Term</td>
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||
</tr>
|
||
<tr>
|
||
<td><abbr class="spell">OASI</abbr></td>
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||
<td>Old-Age and Survivors Insurance</td>
|
||
</tr>
|
||
<tr>
|
||
<td><abbr class="spell">PIA</abbr></td>
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||
<td>primary insurance amount</td>
|
||
</tr>
|
||
<tr>
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||
<td><abbr class="spell">SSA</abbr></td>
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||
<td>Social Security Administration</td>
|
||
</tr>
|
||
</tbody>
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||
</table>
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||
</div>
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||
<p>Workers receive Social Security retirement and disability benefits based on their covered earnings. Members of their families may also qualify for benefits based on those earnings—for example, their survivors, spouses, and children. Benefits for family members have always 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 as well off, or better off, when receiving benefits than they were when working. The family maximum rules have evolved over time and have become more complicated for all beneficiaries, which in some cases make them difficult to implement. If not implemented correctly, the Social Security Administration (<abbr class="spell">SSA</abbr>) may pay beneficiaries improperly.</p>
|
||
<p>In this article, we describe the current family maximum rules using illustrations of different benefit types. We also describe the rules for beneficiaries entitled to benefits on multiple earnings records. We explain how the family maximum rules have evolved over time and then 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 Near Term, Version 6 (<abbr>MINT</abbr>6) data, we analyze who is affected by the family maximum and to what extent their benefits are changed.</p>
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||
<h2>Major Findings</h2>
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||
<p><abbr class="spell">SSA</abbr>'s family 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:</p>
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||
<ul>
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||
<li>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 disability benefits.</li>
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||
<li>Retirement and survivor beneficiary families are not affected by the family maximum rules unless three or more family members receive benefits; when those beneficiary families are affected, auxiliary beneficiaries (or auxiliaries) always receive partial benefits.</li>
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||
<li>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 three or more beneficiaries are affected by the family maximum and more than half of families with two beneficiaries are affected.</li>
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||
<li>Among families affected by the family maximum, reductions can be substantial. For affected disabled-worker families, we estimate that the median reduction is about 33 percent; for survivor families, about 23 percent; for retired-worker families, about 14 percent. For some family members of disabled workers, the family maximum rules prevent a benefit from being paid at all.</li>
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||
</ul>
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||
<h2>Current-Law Family Maximum Rules</h2>
|
||
<p>In this section, we provide the current basic family maximum rules for retirement and survivor benefits and for disability benefits. We also discuss current-law rules that are common to both types of benefits.</p>
|
||
<h3>Rules for Retirement and Survivor Benefits</h3>
|
||
<p>The family maximum formula for <span class="nobr">Old-Age</span> and Survivors Insurance (<abbr class="spell">OASI</abbr>) benefits is based on a beneficiary's primary insurance amount (<abbr class="spell">PIA</abbr>). The <abbr class="spell">PIA</abbr> is a beneficiary's basic Social Security benefit amount before adjustments for retirement age, earnings, and other factors.<sup><a href="#mn1" id="mt1">1</a></sup> For a worker who reaches age 62 or dies in 2015 (before reaching age 62), <abbr class="spell">SSA</abbr> calculates the family maximum using the following formula:</p>
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||
<blockquote>150 percent of the first $1,056 of the worker's <abbr class="spell">PIA</abbr> <i>plus</i></blockquote>
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||
<blockquote>272 percent of the worker's <abbr class="spell">PIA</abbr> over $1,056 through $1,524 <i>plus</i></blockquote>
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||
<blockquote>134 percent of the worker's <abbr class="spell">PIA</abbr> over $1,524 through $1,987 <i>plus</i></blockquote>
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||
<blockquote>175 percent of the worker's <abbr class="spell">PIA</abbr> over $1,987.</blockquote>
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||
<p>Ultimately, this formula yields a maximum for each family that is between 150 percent and 188 percent of the worker's basic Social Security benefit, or <abbr class="spell">PIA</abbr>.<sup><a href="#mn2" id="mt2">2</a></sup> The final amount is rounded to the next lowest ten cents. The dollar amounts in the family maximum formula increase each year according to average wage growth.<sup><a href="#mn3" id="mt3">3</a></sup></p>
|
||
<h3>Rules for Disability Benefits</h3>
|
||
<p>Disability Insurance (<abbr class="spell">DI</abbr>) beneficiaries are subject to a more restrictive set of family maximum rules than are <abbr class="spell">OASI</abbr> beneficiaries. As with <abbr class="spell">OASI</abbr> beneficiaries, people who became entitled to disability benefits before 1979 are subject to a different family maximum formula. The family maximum for a disabled worker is 85 percent of the worker's average indexed monthly earnings (<abbr>AIME</abbr>), a measure of lifetime earnings.<sup><a href="#mn4" id="mt4">4</a></sup> However, the family maximum for a disabled worker's family cannot be more than 150 percent or less than 100 percent of his or her <abbr class="spell">PIA</abbr>. The final amount is rounded to the next lowest ten cents.</p>
|
||
<h3>Rules Common to Both <abbr class="spell">OASI</abbr> and <abbr class="spell">DI</abbr></h3>
|
||
<p>The family maximum rules are applied in the same way for both <abbr class="spell">OASI</abbr> and <abbr class="spell">DI</abbr> benefits. First, the family maximum amount is established based on the worker's <abbr class="spell">PIA</abbr> or <abbr>AIME</abbr>. Then, the worker's benefit is subtracted from the total benefit amount payable to the family. Next, the auxiliaries' benefits are reduced proportionately. The worker's 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.</p>
|
||
<h3>Illustrations of the Family Maximum</h3>
|
||
<p>The following exhibits show how the family maximum rules work, using simplified examples of beneficiary families. We compare benefit amounts before applying the family maximum rules with those after applying those rules. We assume that there are no reductions to full benefit amounts,<sup><a href="#mn5" id="mt5">5</a></sup> and we use the 2015 family maximum and <abbr class="spell">PIA</abbr> formulas.</p>
|
||
<p class="noindent"><span class="h4">Survivors of a deceased worker</span>. Table 1 illustrates a case in which a worker dies and is survived by a working-age spouse and two children, all of whom qualify for survivor benefits.<sup><a href="#mn6" id="mt6">6</a></sup> We assume the worker has an <abbr>AIME</abbr> of $2,253 and in turn has a <abbr class="spell">PIA</abbr> of $1,200.<sup><a href="#mn7" id="mt7">7</a></sup> The rules that apply to survivor beneficiaries are the same as those that apply to families of retired workers.</p>
|
||
<div class="table" id="table1">
|
||
<table>
|
||
<caption><span class="tableNumber">Table 1. </span>Illustration of the family maximum rules for a surviving family, 2015
|
||
<div class="borderThin italic nonbold" style="background-color:#eee;margin:.75em 20%;padding:.5em">
|
||
<div>
|
||
<div class="float-left" style="width:30%">Assumptions:</div>
|
||
<div class="float-left">Worker's <abbr>AIME</abbr> = $2,253<br>Worker's <abbr class="spell">PIA</abbr> = $1,200</div>
|
||
</div>
|
||
<div class="clear" style="padding-top:.5em">
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||
<div class="float-left" style="width:30%">Family maximum:</div>
|
||
<div class="float-left"><abbr class="spell">OASI</abbr> family maximum (on the worker's <abbr class="spell">PIA</abbr>): <br>150% × $1,056 + 272% × $144 = $1,976</div>
|
||
</div>
|
||
<div class="clear"></div>
|
||
</div>
|
||
</caption>
|
||
<colgroup span="1" style="width:14em"></colgroup>
|
||
<colgroup span="1" style="width:8em"></colgroup>
|
||
<colgroup span="1" style="width:35em"></colgroup>
|
||
<thead>
|
||
<tr>
|
||
<th class="stubHeading" id="c1">Characteristic</th>
|
||
<th id="c2">Monthly benefit amount ($)</th>
|
||
<th class="spanner" id="c3">Rule applied</th>
|
||
</tr>
|
||
</thead>
|
||
<tbody>
|
||
<tr>
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||
<th colspan="3" class="panel" id="r1">Before family maximum</th>
|
||
</tr>
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||
<tr>
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||
<th class="stub0" id="r2" headers="r1 c1">Survivor benefits</th>
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||
<td colspan="2"> </td>
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||
</tr>
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||
<tr>
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||
<th class="stub1" id="r3" headers="r1 r2 c1">Spouse</th>
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||
<td class="rightpad1" headers="r1 r2 r3 c2">900</td>
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||
<td class="align-left" headers="r1 r2 r3 c3">75% of the worker's <abbr class="spell">PIA</abbr></td>
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||
</tr>
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||
<tr>
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||
<th class="stub1" id="r4" headers="r1 r2 c1">Child 1</th>
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||
<td class="rightpad1" headers="r1 r2 r4 c2">900</td>
|
||
<td class="align-left" headers="r1 r2 r4 c3">75% of the worker's <abbr class="spell">PIA</abbr></td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r5" headers="r1 r2 c1">Child 2</th>
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||
<td class="rightpad1 border-bottom" headers="r1 r2 r5 c2">900</td>
|
||
<td class="align-left" headers="r1 r2 r5 c3">75% of the worker's <abbr class="spell">PIA</abbr></td>
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||
</tr>
|
||
<tr>
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||
<th class="stub2" id="r6" headers="r1 c1">Total family benefit</th>
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||
<td class="rightpad1" headers="r1 r6 c2">2,700</td>
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||
<td class="align-left" headers="r1 r6 c3">Sum of the survivor benefits</td>
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||
</tr>
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||
<tr>
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||
<th colspan="3" class="panel" id="r7">After family maximum</th>
|
||
</tr>
|
||
<tr>
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||
<th class="stub0" id="r8" headers="r7 c1">Survivor benefits</th>
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||
<td colspan="2"> </td>
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||
</tr>
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||
<tr>
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||
<th class="stub1" id="r9" headers="r7 r8 c1">Spouse</th>
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||
<td class="rightpad1" headers="r7 r8 r9 c2">659</td>
|
||
<td class="align-left" headers="r7 r8 r9 c3">⅓ of the family maximum amount</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r10" headers="r7 r8 c1">Child 1</th>
|
||
<td class="rightpad1" headers="r7 r8 r10 c2">659</td>
|
||
<td class="align-left" headers="r7 r8 r10 c3">⅓ of the family maximum amount</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r11" headers="r7 r8 c1">Child 2</th>
|
||
<td class="rightpad1 border-bottom" headers="r7 r8 r11 c2">659</td>
|
||
<td class="align-left" headers="r7 r8 r11 c3">⅓ of the family maximum amount</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub2" id="r12" headers="r7 c1">Total family benefit</th>
|
||
<td class="rightpad1" headers="r7 r12 c2">1,976</td>
|
||
<td class="align-left" headers="r7 r12 c3">Sum of the survivor benefits, capped by the family maximum amount</td>
|
||
</tr>
|
||
</tbody>
|
||
<tfoot>
|
||
<tr>
|
||
<td class="firstNote" colspan="3">SOURCE: Authors' calculations.</td>
|
||
</tr>
|
||
<tr>
|
||
<td class="note" colspan="3">NOTE: Dollar values are rounded to the nearest dollar for presentation purposes, but would actually be rounded down to the nearest dime.</td>
|
||
</tr>
|
||
<tr>
|
||
<td class="lastNote" colspan="3"><abbr>AIME</abbr> = average indexed monthly earnings; <abbr class="spell">OASI</abbr> = <span class="nobr">Old-Age</span> and Survivors Insurance; <abbr class="spell">PIA</abbr> = primary insurance amount.</td>
|
||
</tr>
|
||
</tfoot>
|
||
</table>
|
||
</div>
|
||
<p class="noindent"><span class="h4">Family of a disabled worker</span>. Table 2 illustrates a case in which a worker becomes disabled and has a spouse and two children who qualify for auxiliary disability benefits. We assume, as we did in Table 1, that the worker has an <abbr>AIME</abbr> of $2,253 and a <abbr class="spell">PIA</abbr> of $1,200.</p>
|
||
<div class="table" id="table2">
|
||
<table>
|
||
<caption><span class="tableNumber">Table 2. </span>Illustration of the family maximum rules for a family of a disabled worker, 2015
|
||
<div class="borderThin italic nonbold" style="background-color:#eee;margin:.75em 20%;padding:.5em">
|
||
<div>
|
||
<div class="float-left" style="width:30%">Assumptions:</div>
|
||
<div class="float-left">Worker's <abbr>AIME</abbr> = $2,253<br>Worker's <abbr class="spell">PIA</abbr> = $1,200</div>
|
||
</div>
|
||
<div class="clear" style="padding-top:.5em">
|
||
<div class="float-left" style="width:30%">Family maximum:</div>
|
||
<div class="float-left"><abbr class="spell">DI</abbr> family maximum (applied to the worker's <abbr>AIME</abbr>):<br>85% × $2,253 = $1,915, which is more than 150%<br>of the worker's <abbr class="spell">PIA</abbr>, so the family maximum =<br>150% × $1,200 = $1,800</div>
|
||
</div>
|
||
<div class="clear"></div>
|
||
</div>
|
||
</caption>
|
||
<colgroup span="1" style="width:14em"></colgroup>
|
||
<colgroup span="1" style="width:8em"></colgroup>
|
||
<colgroup span="1" style="width:40em"></colgroup>
|
||
<thead>
|
||
<tr>
|
||
<th class="stubHeading" id="c1">Characteristic</th>
|
||
<th id="c2">Monthly benefit amount ($)</th>
|
||
<th class="spanner" id="c3">Rule applied</th>
|
||
</tr>
|
||
</thead>
|
||
<tbody>
|
||
<tr>
|
||
<th colspan="3" class="panel" id="r1">Before family maximum</th>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r2" headers="r1 c1">Worker's benefit</th>
|
||
<td class="rightpad1" headers="r1 r2 c2">1,200</td>
|
||
<td class="align-left" headers="r1 r2 c3">100% of the worker's <abbr class="spell">PIA</abbr></td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r3" headers="r1 c1">Auxiliary benefits</th>
|
||
<td colspan="2"> </td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r4" headers="r1 r3 c1">Spouse</th>
|
||
<td class="rightpad1" headers="r1 r3 r4 c2">600</td>
|
||
<td class="align-left" headers="r1 r3 r4 c3">50% of the worker's <abbr class="spell">PIA</abbr></td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r5" headers="r1 r3 c1">Child 1</th>
|
||
<td class="rightpad1" headers="r1 r3 r5 c2">600</td>
|
||
<td class="align-left" headers="r1 r3 r5 c3">50% of the worker's <abbr class="spell">PIA</abbr></td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r6" headers="r1 r3 c1">Child 2</th>
|
||
<td class="rightpad1 border-bottom" headers="r1 r3 r5 c2">600</td>
|
||
<td class="align-left" headers="r1 r3 r5 c3">50% of the worker's <abbr class="spell">PIA</abbr></td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub2" id="r7" headers="r1 c1">Total family benefit</th>
|
||
<td class="rightpad1" headers="r1 r7 c2">3,000</td>
|
||
<td class="align-left" headers="r1 r7 c3">Sum of the worker's and auxiliaries' benefits</td>
|
||
</tr>
|
||
<tr>
|
||
<th colspan="3" class="panel" id="r8">After family maximum</th>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r9" headers="r8 c1">Worker's benefit</th>
|
||
<td class="rightpad1" headers="r8 r9 c2">1,200</td>
|
||
<td class="align-left" headers="r8 r9 c3">100% of the worker's <abbr class="spell">PIA</abbr></td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r10" headers="r8 c1">Auxiliary benefits</th>
|
||
<td colspan="2"> </td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r11" headers="r8 r10 c1">Spouse</th>
|
||
<td class="rightpad1" headers="r8 r10 r11 c2">200</td>
|
||
<td class="align-left" headers="r8 r10 r11 c3">⅓ of the family maximum amount minus the worker's <abbr class="spell">PIA</abbr> ($600)</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r12" headers="r8 r10 c1">Child 1</th>
|
||
<td class="rightpad1" headers="r8 r10 r12 c2">200</td>
|
||
<td class="align-left" headers="r8 r10 r12 c3">⅓ of the family maximum amount minus the worker's <abbr class="spell">PIA</abbr> ($600)</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r13" headers="r8 r10 c1">Child 2</th>
|
||
<td class="rightpad1 border-bottom" headers="r8 r10 r13 c2">200</td>
|
||
<td class="align-left" headers="r8 r10 r13 c3">⅓ of the family maximum amount minus the worker's <abbr class="spell">PIA</abbr> ($600)</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub2" id="r14" headers="r8 c1">Total family benefit</th>
|
||
<td class="rightpad1" headers="r8 r14 c2">1,800</td>
|
||
<td class="align-left" headers="r8 r14 c3">Sum of the worker's and auxiliaries' benefits, capped by the family maximum amount</td>
|
||
</tr>
|
||
</tbody>
|
||
<tfoot>
|
||
<tr>
|
||
<td class="firstNote" colspan="3">SOURCE: Authors' calculations.</td>
|
||
</tr>
|
||
<tr>
|
||
<td class="note" colspan="3">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 percent of the worker's <abbr>AIME</abbr> is $1,915, which is 160 percent of his or her <abbr class="spell">PIA</abbr>, greater than the cap of 150 percent of the <abbr class="spell">PIA</abbr> that applies to disability beneficiaries. As a result, the family maximum for this family is $1,800, or 150 percent of the worker's <abbr class="spell">PIA</abbr>.</td>
|
||
</tr>
|
||
<tr>
|
||
<td class="lastNote" colspan="3"><abbr>AIME</abbr> = average indexed monthly earnings; <abbr class="spell">DI</abbr> = Disability Insurance; <abbr class="spell">PIA</abbr> = primary insurance amount.</td>
|
||
</tr>
|
||
</tfoot>
|
||
</table>
|
||
</div>
|
||
<p class="noindent"><span class="h4">Special cases</span>. Most family maximum cases follow the standard family maximum rules that apply to <abbr class="spell">OASI</abbr> and <abbr class="spell">DI</abbr> cases, as shown earlier. There are also additional rules that apply for more complicated situations. We briefly describe those rules below and include three detailed illustrations of them in Appendix Tables <span class="nobr"><a href="#tableA1">A-1</a></span> through <span class="nobr"><a href="#tableA3">A-3</a>.</span> It is in these complex cases that improper payments are most common, as indicated in a recent <abbr class="spell">SSA</abbr> Office of the Inspector General report.<sup><a href="#mn8" id="mt8">8</a></sup> The incorrect payments generally occur because they are calculated manually by <abbr class="spell">SSA</abbr> employees. The agency uses an automated system to check standard family 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.</p>
|
||
<p class="noindent"><span class="h5">Dually entitled beneficiaries</span>. These beneficiaries are entitled to worker benefits based on their own earnings as well as auxiliary benefits based on someone else's earnings.<sup><a href="#mn9" id="mt9">9</a></sup> In dual entitlement cases where the auxiliary benefit is higher than the worker benefit, the dually entitled beneficiary receives his or her full worker benefit in addition to a partial auxiliary benefit. The total benefit is the same amount as the full auxiliary benefit. For these dually entitled beneficiaries, the family maximum only applies to the auxiliary portion of the benefit.</p>
|
||
<p>For cases in which a person is eligible for both a worker benefit and an auxiliary benefit, the auxiliary benefit is reduced or not paid at all. For those beneficiaries, the <i>Parisi</i> case established that any potential but unpaid auxiliary benefits are <i>not</i> included in the family maximum calculation.<sup><a href="#mn10" id="mt10">10</a></sup> Before the <i>Parisi</i> case, a spouse's potential but unpaid spousal benefits would be included in the family maximum and cause other family members' auxiliary benefits to be reduced. In the <i>Parisi</i> case, the courts determined that only auxiliary benefits actually paid would count toward the family maximum, allowing some beneficiaries to get higher auxiliary benefits than they would have received before the <i>Parisi</i> decision.<sup><a href="#mn11" id="mt11">11</a></sup></p>
|
||
<p class="noindent"><span class="h5">Combined family maximum</span>. The combined family maximum is used when a person qualifies for auxiliary benefits on more than one worker's record. The combined family maximum is the sum of the family maximums established for each worker, but it does not exceed the statutory upper limits for combined family maximums<i>.</i><sup><a href="#mn12" id="mt12">12</a></sup> For cases in which a beneficiary qualifies for benefits on multiple records, his or her <i>benefits</i> are determined based on the work record of the worker that will yield the highest benefit amount.<sup><a href="#mn13" id="mt13">13</a></sup> However, the <i>family maximum</i> is determined based on the sum of the family maximums established for each worker's record.</p>
|
||
<h2>Legislative History</h2>
|
||
<p>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 old age to protecting those workers and their family members. Over the years, Congress gradually enacted the following changes:</p>
|
||
<ul>
|
||
<li><b>The 1939 Amendments</b> set the family maximum at the lower of 80 percent of the average monthly wages, $85, or 200 percent of a worker's <abbr class="spell">PIA</abbr>. The family maximum could not fall below a floor of $20.<sup><a href="#mn14" id="mt14">14</a></sup></li>
|
||
<li><b>The 1950 Amendments</b> eliminated the 200 percent of the <abbr class="spell">PIA</abbr> cap and changed the formula to 80 percent of the worker's average monthly wages, with a maximum of $150 and a minimum of $40.<sup><a href="#mn15" id="mt15">15</a></sup></li>
|
||
<li><b>The 1954 Amendments</b> stated that the family maximum could not be less than 150 percent of the <abbr class="spell">PIA</abbr>.<sup><a href="#mn16" id="mt16">16</a></sup> The 1954 formula remained, with ad hoc changes to the thresholds, until 1971.<sup><a href="#mn17" id="mt17">17</a></sup></li>
|
||
<li><b>The 1971 Amendments</b> established a <span class="nobr">two-tier</span> family maximum formula.<sup><a href="#mn18" id="mt18">18</a></sup> For beneficiaries with <abbr class="spell">PIA</abbr>s above $628, the family maximum was 175 percent of the <abbr class="spell">PIA</abbr>. For those with <abbr class="spell">PIA</abbr>s below $628, the prior-law formula applied. For all beneficiaries, the family maximum could not fall below the floor of 150 percent of the <abbr class="spell">PIA</abbr>, as established in prior law.</li>
|
||
<li><b>The 1972 Amendments</b> established an automatic cost-of-living adjustment (<abbr>COLA</abbr>) for Social Security benefits and a <abbr>COLA</abbr> for the family maximum. The <abbr>COLA</abbr>s were applied in each year after a beneficiary first became entitled, starting in 1975.<sup><a href="#mn19" id="mt19">19</a></sup></li>
|
||
<li><b>Legislation in 1972</b><sup><a href="#mn20" id="mt20">20</a></sup> also liberalized the family maximum, requiring its computation to be based on the <abbr class="spell">PIA</abbr> rather than the average monthly wage.<sup><a href="#mn21" id="mt21">21</a></sup> This change allowed beneficiaries who became entitled after a benefit increase to get the same benefit amounts as did current beneficiaries.<sup><a href="#mn22" id="mt22">22</a></sup></li>
|
||
</ul>
|
||
<p>Congress established the current-law family maximum rules in the 1977 and 1980 Amendments. Today's <abbr class="spell">OASI</abbr> beneficiaries are subject to the rules established in 1977 (with wage-indexed adjustments); <abbr class="spell">DI</abbr> beneficiaries are subject to the rules established in 1980.</p>
|
||
<ul>
|
||
<li><b>The 1977 Amendments</b> created a <span class="nobr">four-tier</span> formula for all beneficiaries: 150 percent of the first $236 of the worker's <abbr class="spell">PIA</abbr>, plus 272 percent of the next $106 of his or her <abbr class="spell">PIA</abbr>, plus 134 percent of the next $107 of the <abbr class="spell">PIA</abbr>, plus 175 percent of the remainder.<sup><a href="#mn23" id="mt23">23</a></sup> The dollar amounts in the formula increase each year according to changes in the average wage index (<abbr class="spell">AWI</abbr>). This formula was designed to replicate the range of family maximum amounts established under prior law.</li>
|
||
<li><b>The 1980 Amendments</b> established a separate family maximum benefit formula for disability beneficiaries at 85 percent of a worker's <abbr>AIME</abbr>, with a floor of 100 percent of the worker's <abbr class="spell">PIA</abbr> and a ceiling of 150 percent of the <abbr class="spell">PIA</abbr>.<sup><a href="#mn24" id="mt24">24</a></sup> The rule for 85 percent of the <abbr>AIME</abbr> was designed so that a family's total benefits could not exceed the worker's average earnings. The cap of 150 percent of the <abbr class="spell">PIA</abbr> affects higher-earning workers; without it, the rule for 85 percent of the <abbr>AIME</abbr> would not have affected them.<sup><a href="#mn25" id="mt25">25</a></sup> The floor of 100 percent of the <abbr class="spell">PIA</abbr> 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 maximum rules in the 1980 Amendments, Congress intended to strengthen work incentives for disabled beneficiaries, reflecting concerns that some of those individuals were financially as well off, or better off, when receiving benefits than when working.<sup><a href="#mn26" id="mt26">26</a></sup></li>
|
||
</ul>
|
||
<h2>Analysis of Family Maximum Rules</h2>
|
||
<p>Because of the more restrictive <abbr class="spell">DI</abbr> family maximum rules, benefits payable to disability beneficiary families are significantly lower than those for retirement and survivor beneficiary families, particularly at the lower end of the earnings scale. In 2015, newly eligible disabled beneficiaries with <abbr>AIME</abbr>s of $903 or less can have no auxiliary beneficiaries because the <abbr class="spell">DI</abbr> family maximum for such workers is 100 percent of their <abbr class="spell">PIA</abbr>. Newly eligible disabled beneficiaries with <abbr>AIME</abbr>s between $904 and $1,942 have their family benefits reduced, even if they have only one auxiliary, because the family maximum caps their benefits at 85 percent of their <abbr>AIME</abbr> (rather than 150 percent of their <abbr class="spell">PIA</abbr>, which could allow for one unreduced auxiliary beneficiary).</p>
|
||
<p>Chart 1 shows <abbr class="spell">OASI</abbr> and <abbr class="spell">DI</abbr> family maximum amounts as well as the <abbr class="spell">PIA</abbr> formula (which establishes basic benefit amounts) as percentages of <abbr>AIME</abbr> and at each level of <span class="nobr"><abbr>AIME</abbr>—</span>a measure of lifetime earnings. At all earnings levels, the <abbr class="spell">OASI</abbr> family maximum is more generous than the <abbr class="spell">DI</abbr> family maximum, replacing a greater proportion of earnings. At the low end of the earnings scale (specifically, for people whose <abbr>AIME</abbr>s are $903 or less in 2015), the <abbr class="spell">DI</abbr> family maximum is equal to the worker's <abbr class="spell">PIA</abbr>, which means that no benefits will be paid to disabled-worker family members. The <abbr class="spell">DI</abbr> family maximum is notably less progressive than the <abbr class="spell">OASI</abbr> family maximum (or <abbr class="spell">PIA</abbr>), as shown by the slope of each line in Chart 1. The <abbr class="spell">DI</abbr> family maximum line slopes downward in a relatively straight line, while the <abbr class="spell">OASI</abbr> family maximum is kinked at the low end because it allows significantly more generous benefits for the families of lower earners.</p>
|
||
<div class="chartCenter">
|
||
<div class="chart700" id="chart1">
|
||
<div class="title">Chart 1.<br><abbr class="spell">OASI</abbr> and <abbr class="spell">DI</abbr> family maximum amounts and <abbr class="spell">PIA</abbr> as percentages of <abbr>AIME</abbr>, 2015</div>
|
||
<div class="scrollChart"><img src="v75n3p1-chart01.gif" alt="Line chart with tabular version below." width="677" height="350" /></div>
|
||
<div class="table altTable"><a class="altToggle" href="">Show as table</a>
|
||
<table>
|
||
<caption><span class="tableNumber">Table equivalent for Chart 1. </span><abbr class="spell">OASI</abbr> and <abbr class="spell">DI</abbr> family maximum amounts and <abbr class="spell">PIA</abbr> as percentages of <abbr>AIME</abbr>, 2015</caption>
|
||
<colgroup span="1" style="width:10em"></colgroup>
|
||
<colgroup span="3" style="width:10em"></colgroup>
|
||
<thead>
|
||
<tr>
|
||
<th class="stubHeading" scope="col"><abbr>AIME</abbr> ($)</th>
|
||
<th scope="col"><abbr class="spell">OASI</abbr> family maximum</th>
|
||
<th scope="col"><abbr class="spell">DI</abbr> family maximum</th>
|
||
<th scope="col"><abbr class="spell">PIA</abbr></th>
|
||
</tr>
|
||
</thead>
|
||
<tbody>
|
||
<tr>
|
||
<th class="stub0" scope="row">500</th>
|
||
<td>135.0</td>
|
||
<td>90.0</td>
|
||
<td>90.0</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" scope="row">1,000</th>
|
||
<td>119.9</td>
|
||
<td>85.0</td>
|
||
<td>79.9</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" scope="row">1,500</th>
|
||
<td>95.9</td>
|
||
<td>85.0</td>
|
||
<td>63.9</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" scope="row">2,000</th>
|
||
<td>87.8</td>
|
||
<td>83.9</td>
|
||
<td>56.0</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" scope="row">2,500</th>
|
||
<td>87.6</td>
|
||
<td>76.7</td>
|
||
<td>51.2</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" scope="row">3,000</th>
|
||
<td>87.5</td>
|
||
<td>72.0</td>
|
||
<td>48.0</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" scope="row">3,500</th>
|
||
<td>84.5</td>
|
||
<td>68.5</td>
|
||
<td>45.7</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" scope="row">4,000</th>
|
||
<td>79.3</td>
|
||
<td>66.0</td>
|
||
<td>44.0</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" scope="row">4,500</th>
|
||
<td>75.3</td>
|
||
<td>64.0</td>
|
||
<td>42.6</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" scope="row">5,000</th>
|
||
<td>72.7</td>
|
||
<td>62.3</td>
|
||
<td>41.5</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" scope="row">5,500</th>
|
||
<td>68.4</td>
|
||
<td>58.7</td>
|
||
<td>39.1</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" scope="row">6,000</th>
|
||
<td>64.9</td>
|
||
<td>55.6</td>
|
||
<td>37.1</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" scope="row">6,500</th>
|
||
<td>61.9</td>
|
||
<td>53.1</td>
|
||
<td>35.4</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" scope="row">7,000</th>
|
||
<td>59.4</td>
|
||
<td>50.9</td>
|
||
<td>33.9</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" scope="row">7,500</th>
|
||
<td>57.2</td>
|
||
<td>49.0</td>
|
||
<td>32.7</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" scope="row">8,000</th>
|
||
<td>55.3</td>
|
||
<td>47.4</td>
|
||
<td>31.6</td>
|
||
</tr>
|
||
</tbody>
|
||
<tfoot>
|
||
<tr>
|
||
<td class="noNotes" colspan="4"> </td>
|
||
</tr>
|
||
</tfoot>
|
||
</table>
|
||
</div>
|
||
<div class="firstNote">SOURCE: Authors' calculations.</div>
|
||
<div class="note">NOTES: Formulas are based on 2015 rules, which apply to beneficiaries first eligible in 2015.</div>
|
||
<div class="lastNote"><abbr>AIME</abbr> = average indexed monthly earnings; <abbr class="spell">DI</abbr> = Disability Insurance; <abbr class="spell">OASI</abbr> = <span class="nobr">Old-Age</span> and Survivors Insurance; <abbr class="spell">PIA</abbr> = primary insurance amount.</div>
|
||
</div>
|
||
</div>
|
||
<p>To provide context, we have also estimated the distribution of <abbr class="spell">DI</abbr> and <abbr class="spell">OASI</abbr> beneficiary families by their <abbr>AIME</abbr> levels:<sup><a href="#mn27" id="mt27">27</a></sup></p>
|
||
<ul>
|
||
<li>Over 400,000 (23 percent) <abbr class="spell">DI</abbr> beneficiary families with two or more beneficiaries have <abbr>AIME</abbr>s of less than $1,000. This is approximately the level of lifetime earnings at which disabled workers can have no auxiliary beneficiaries.</li>
|
||
<li>Almost 600,000 (33 percent) of such families have <abbr>AIME</abbr>s between $1,000 and $2,000. This is approximately the level of lifetime earnings at which disability beneficiary families with two or more members have their benefits reduced by the family maximum rules.</li>
|
||
<li>The remaining approximately 800,000 (44 percent) <abbr class="spell">DI</abbr> beneficiary families have an <abbr>AIME</abbr> of more 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.</li>
|
||
</ul>
|
||
<p>Thus, many <abbr class="spell">DI</abbr> beneficiaries are subject to the more restrictive family maximum rules that apply at the low end of the earnings scale, which in many cases mean no or very little auxiliary benefits are paid. <abbr class="spell">OASI</abbr> beneficiary families have relatively higher earnings. Still, many of them have <abbr>AIME</abbr>s at the lower end of the earnings scale, where the family maximum rules are relatively more generous for <abbr class="spell">OASI</abbr> beneficiaries.</p>
|
||
<h2>Methodology</h2>
|
||
<p>Our analysis is based on information from <abbr class="spell">SSA</abbr>'s <i><a href="/policy/docs/statcomps/supplement/2013/index.html">Annual Statistical Supplement to the Social Security Bulletin, 2013</a></i> and Modeling Income in the Near Term, Version 6. <abbr>MINT</abbr>6 is a microsimulation projection model based on the Census Bureau's Survey of Income and Program Participation (<abbr>SIPP</abbr>). The survey information from <abbr>SIPP</abbr> respondents is matched with <abbr class="spell">SSA</abbr> 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 <abbr>MINT</abbr>6 results shown here are projections for 2015.</p>
|
||
<p>We reweighted the results for the <abbr>MINT</abbr>6 respondents to match the benchmark of the family benefit types shown in the <i>Supplement</i>. This reweighting is necessary because, although the overall population of beneficiary families is similar in the <i>Supplement</i> and <abbr>MINT</abbr>6, some subgroup populations differ noticeably. One limitation of a microsimulation model based on a survey, such as <abbr>MINT</abbr>, is the difficulty of precisely estimating the population of a less common subgroup, such as beneficiary families with a larger number of children receiving benefits. Because larger beneficiary families are particularly important to the analysis here, reweighting is necessary so that we can align our data with the benchmark population composition shown in the <i>Supplement's</i> <a href="/policy/docs/statcomps/supplement/2013/5h.html#table5.h2">Table 5.H2</a>,<sup><a href="#mn28" id="mt28">28</a></sup> which is based on all administrative records of beneficiaries in December 2012. Our reweighting method is able to more precisely capture narrower subgroups such as families with more children.</p>
|
||
<h2>Effects of Family Maximum Rules on Beneficiary Families</h2>
|
||
<p>In this section, we analyze the populations of <abbr class="spell">OASI</abbr> and <abbr class="spell">DI</abbr> beneficiaries that are affected by the family maximum and to what extent their benefits are changed. Chart 2 shows the estimated number of beneficiary families affected by the family maximum rules. This chart distinguishes families by size, separating those with two eligible beneficiaries from those with three or more eligible beneficiaries. For some families of disabled workers, a member may be eligible for auxiliary benefits, but not be paid those benefits because of the family maximum rules. Families with these potentially eligible beneficiaries are included in the chart.</p>
|
||
<div class="chartCenter">
|
||
<div class="chart400" id="chart2">
|
||
<div class="title">Chart 2.<br>Number of beneficiary families affected by family maximum rules, by number of eligible beneficiaries in the family, 2015</div>
|
||
<div class="scrollChart"><img src="v75n3p1-chart02.gif" alt="Stacked bar chart with tabular version below." width="316" height="342" /></div>
|
||
<div class="table altTable"><a class="altToggle" href="">Show as table</a>
|
||
<table>
|
||
<caption><span class="tableNumber">Table equivalent for Chart 2. </span>Number of beneficiary families affected by family maximum rules, by number of eligible beneficiaries in the family, 2015</caption>
|
||
<colgroup span="1" style="width:15em"></colgroup>
|
||
<colgroup span="2" style="width:10em"></colgroup>
|
||
<thead>
|
||
<tr>
|
||
<th class="stubHeading" scope="col">Family benefit type</th>
|
||
<th scope="col">Three or more eligible beneficiaries</th>
|
||
<th scope="col">Two eligible beneficiaries</th>
|
||
</tr>
|
||
</thead>
|
||
<tbody>
|
||
<tr>
|
||
<th class="stub0" scope="row">Families of retired workers</th>
|
||
<td>222,738</td>
|
||
<td>0</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" scope="row">Survivors of deceased workers</th>
|
||
<td>212,867</td>
|
||
<td>0</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" scope="row">Families of disabled workers</th>
|
||
<td>910,863</td>
|
||
<td>526,808</td>
|
||
</tr>
|
||
</tbody>
|
||
<tfoot>
|
||
<tr>
|
||
<td class="noNotes" colspan="3"> </td>
|
||
</tr>
|
||
</tfoot>
|
||
</table>
|
||
</div>
|
||
<div class="firstNote">SOURCE: Authors' estimates using Modeling Income in the Near Term, Version 6.</div>
|
||
<div class="lastNote">NOTE: We categorized beneficiary 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 not paid because of the family maximum rules. Such families are included in this chart.</div>
|
||
</div>
|
||
</div>
|
||
<h3>Families of Retired Workers and Survivors of Deceased Workers (<abbr class="spell">OASI</abbr>)</h3>
|
||
<p>The family maximum affects all <abbr class="spell">OASI</abbr> families with three or more beneficiaries, but does not affect families with fewer than three beneficiaries. We estimate that about 200,000 families of retired workers and another 200,000 survivors of deceased workers have their benefits reduced by the family maximum.</p>
|
||
<p>Among affected families of retired workers, we estimate that median family benefits are $2,886 before applying the family maximum and $2,482 afterward, as shown in Chart 3. The median reduction among affected retired-worker families is $535 (14 percent, not shown). All auxiliaries of retired workers receive at least partial benefits.</p>
|
||
<p>Among affected survivor beneficiary families, we estimate that median family benefits are $3,584 before applying the family maximum and $2,401 afterward, also shown in the chart. The median reduction among affected survivor families is $748 (23 percent, not shown). All qualifying survivors receive at least partial benefits.</p>
|
||
<div class="chartCenter">
|
||
<div class="chart700" id="chart3">
|
||
<div class="title">Chart 3.<br>Median family benefit amounts before and after applying the family maximum rules among affected families, 2015</div>
|
||
<div class="scrollChart"><img src="v75n3p1-chart03.gif" alt="Bar chart with tabular version below." width="617" height="332" /></div>
|
||
<div class="table altTable"><a class="altToggle" href="">Show as table</a>
|
||
<table>
|
||
<caption><span class="tableNumber">Table equivalent for Chart 3. </span>Median family benefit amounts before and after applying the family maximum rules among affected families, 2015</caption>
|
||
<colgroup span="1" style="width:15em"></colgroup>
|
||
<colgroup span="2" style="width:8em"></colgroup>
|
||
<thead>
|
||
<tr>
|
||
<th class="stubHeading" scope="col">Family benefit type</th>
|
||
<th scope="col">Before applying family maximum rules</th>
|
||
<th scope="col">After applying family maximum rules</th>
|
||
</tr>
|
||
</thead>
|
||
<tbody>
|
||
<tr>
|
||
<th class="stub0" scope="row">Families of retired workers</th>
|
||
<td>2,886</td>
|
||
<td>2,482</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" scope="row">Survivors of deceased workers</th>
|
||
<td>3,584</td>
|
||
<td>2,401</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" scope="row">Families of disabled workers</th>
|
||
<td>1,552</td>
|
||
<td>1,140</td>
|
||
</tr>
|
||
</tbody>
|
||
<tfoot>
|
||
<tr>
|
||
<td class="noNotes" colspan="3"> </td>
|
||
</tr>
|
||
</tfoot>
|
||
</table>
|
||
</div>
|
||
<div class="onlyNote">SOURCE: Authors' estimates using Modeling Income in the Near Term, Version 6.</div>
|
||
</div>
|
||
</div>
|
||
<h3>Families of Disabled Workers (<abbr class="spell">DI</abbr>)</h3>
|
||
<p>In contrast with <abbr class="spell">OASI</abbr> beneficiary families, many <abbr class="spell">DI</abbr> beneficiary families are affected by the family maximum. About 1.4 million <abbr class="spell">DI</abbr> 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 maximum for the disabled worker is 100 percent of the worker's <abbr class="spell">PIA</abbr>, which leaves nothing for auxiliary beneficiaries.</p>
|
||
<p>All families of disabled workers with three or more beneficiaries are affected by the family maximum. In addition, more than half (58 percent) of families of disabled workers with two beneficiaries (one worker and one auxiliary) are affected. Taken together, among disabled-worker families with at least one potentially eligible auxiliary, we estimate that nearly 80 percent are affected by the family maximum.</p>
|
||
<p>Chart 3 shows median family benefit amounts before and after applying the family maximum rules. Those values include the effects of benefit reduction factors and delayed retirement credits. They do not account for the effects of the windfall elimination provision, the government pension offset, or the retirement earnings test, which are calculated after applying the family maximum rules.</p>
|
||
<p>Among affected disability families, we estimate that the median family 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, not shown).</p>
|
||
<p>The difference in both the percentage affected and the median benefits among disabled-worker families shows the impact of the stricter disabled family maximum rules. The <abbr class="spell">DI</abbr> family maximum affects many more families and a wider range of family sizes than the <abbr class="spell">OASI</abbr> family maximum. <abbr class="spell">OASI</abbr> beneficiary families are not affected by the family maximum rules unless three or more family members receive benefits; when those families are affected, members who qualify as auxiliaries always receive partial benefits. <abbr class="spell">DI</abbr> beneficiary families, by contrast, sometimes lose all of their auxiliary benefits, even in cases where only one family member qualifies.</p>
|
||
<h2>Conclusion</h2>
|
||
<p>As we have shown in this study, Social Security's family 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. The disabled family maximum affects many more families and a wider range of family sizes than the retirement and survivor family maximum. All disability families with three or more beneficiaries are affected by the family maximum and more than half of families with two beneficiaries are affected. Families of disabled workers, particularly those with low earnings, sometimes lose all of their auxiliary benefits. For all families affected by the family maximum rules, reductions can be substantial.</p>
|
||
<h2 id="appendix">Appendix</h2>
|
||
<p>The <i>Parisi court decision</i> interpreted the Social Security Act as limiting the total benefit amount actually payable on an individual's work record, but not necessarily on the amount of entitlement available in principle. As a result, when determining family maximums, <abbr class="spell">SSA</abbr> considers only the amount of monthly benefits actually due or payable to that person.</p>
|
||
<h3>How the Parisi Case Affects Benefits</h3>
|
||
<p>Social Security's dual entitlement rule stipulates that if a person is eligible for both a worker benefit and an auxiliary benefit, the auxiliary benefit is reduced or not paid at all. In those cases, the <i>Parisi</i> case established that any potential but unpaid auxiliary benefit is <i>not</i> included in the family maximum calculation. The illustration in Table <span class="nobr">A-1</span> shows how the <i>Parisi</i> rules work for a person whose auxiliary benefit is not payable because his or her worker benefit is higher. The table uses the same hypothetical disabled-worker beneficiary family as that illustrated in <a href="#table2">Table 2</a>, but assumes that the spouse's worker benefit is $1,000—greater than his or her potential auxiliary benefit of $600.</p>
|
||
<div class="table" id="tableA1">
|
||
<table>
|
||
<caption><span class="tableNumber">Table A-1. </span>Illustration of the family maximum for a family of a disabled worker under <i>Parisi</i> rules, 2015
|
||
<div class="borderThin italic nonbold" style="background-color:#eee;margin:.75em 20%;padding:.5em">
|
||
<div>
|
||
<div class="float-left" style="width:30%">Assumptions:</div>
|
||
<div class="float-left">Worker's <abbr>AIME</abbr> = $2,253<br>Worker's <abbr class="spell">PIA</abbr> = $1,200<br>Spouse's <abbr class="spell">PIA</abbr> = $1,000</div>
|
||
</div>
|
||
<div class="clear" style="padding-top:.5em">
|
||
<div class="float-left" style="width:30%">Family maximum:</div>
|
||
<div class="float-left"><abbr class="spell">DI</abbr> family maximum (applied to the worker's <abbr>AIME</abbr>):<br>85% × $2,253 = $1,915, which is more than 150% <br>of the worker's <abbr class="spell">PIA</abbr>, so the family maximum = <br>150% × $1,200 = $1,800</div>
|
||
</div>
|
||
<div class="clear"></div>
|
||
</div>
|
||
</caption>
|
||
<colgroup span="1" style="width:14em"></colgroup>
|
||
<colgroup span="1" style="width:8em"></colgroup>
|
||
<colgroup span="1" style="width:40em"></colgroup>
|
||
<thead>
|
||
<tr>
|
||
<th class="stubHeading" id="c1">Characteristic</th>
|
||
<th id="c2">Monthly benefit amount ($)</th>
|
||
<th class="spanner" id="c3">Rule applied</th>
|
||
</tr>
|
||
</thead>
|
||
<tbody>
|
||
<tr>
|
||
<th colspan="3" class="panel" id="r1">Before family maximum</th>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r2" headers="r1 c1">Worker's benefit</th>
|
||
<td class="rightpad1" headers="r1 r2 c2">1,200</td>
|
||
<td class="align-left" headers="r1 r2 c3">100% of the worker's <abbr class="spell">PIA</abbr></td>
|
||
</tr>
|
||
<tr class="top">
|
||
<th class="stub0" id="r3" headers="r1 c1">Spouse's worker benefit</th>
|
||
<td class="rightpad1" headers="r1 r3 c2">1,000</td>
|
||
<td class="align-left" headers="r1 r3 c3">100% of the spouse's <abbr class="spell">PIA</abbr>; dual entitlement rule—spouse receives his or her own <abbr class="spell">PIA</abbr> because the auxiliary benefit is less</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r4" headers="r1 c1">Auxiliary benefits</th>
|
||
<td colspan="2"> </td>
|
||
</tr>
|
||
<tr style="color:#aaa">
|
||
<th class="stub1" id="r5" headers="r1 r4 c1">Spouse</th>
|
||
<td class="rightpad1 linethrough" headers="r1 r4 r5 c2">600</td>
|
||
<td class="align-left" headers="r1 r4 r5 c3">50% of the worker's <abbr class="spell">PIA</abbr> (potentially), but not actually paid</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r6" headers="r1 r4 c1">Child 1</th>
|
||
<td class="rightpad1" headers="r1 r4 r6 c2">600</td>
|
||
<td class="align-left" headers="r1 r4 r6 c3">50% of the worker's <abbr class="spell">PIA</abbr></td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r7" headers="r1 r4 c1">Child 2</th>
|
||
<td class="rightpad1 border-bottom" headers="r1 r4 r7 c2">600</td>
|
||
<td class="align-left" headers="r1 r4 r7 c3">50% of the worker's <abbr class="spell">PIA</abbr></td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub2" id="r8" headers="r1 c1">Total family benefit</th>
|
||
<td class="rightpad1" headers="r1 r8 c2">3,400</td>
|
||
<td class="align-left" headers="r1 r8 c3">Sum of the worker's, spouse's, and auxiliaries' benefits</td>
|
||
</tr>
|
||
<tr>
|
||
<th colspan="3" class="panel" id="r9">After family maximum</th>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r10" headers="r9 c1">Worker's benefit</th>
|
||
<td class="rightpad1" headers="r9 r10 c2">1,200</td>
|
||
<td class="align-left" headers="r9 r10 c3">100% of the worker's <abbr class="spell">PIA</abbr></td>
|
||
</tr>
|
||
<tr class="top">
|
||
<th class="stub0" id="r11" headers="r9 c1">Spouse's worker benefit</th>
|
||
<td class="rightpad1" headers="r9 r11 c2">1,000</td>
|
||
<td class="align-left" headers="r9 r11 c3">100% of the spouse's <abbr class="spell">PIA</abbr>; dual entitlement rule—spouse receives his or her own <abbr class="spell">PIA</abbr> because the auxiliary benefit is less</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r12" headers="r9 c1">Auxiliary benefits</th>
|
||
<td colspan="2"> </td>
|
||
</tr>
|
||
<tr class="top" style="color:#aaa">
|
||
<th class="stub1" id="r13" headers="r9 r12 c1">Spouse</th>
|
||
<td class="rightpad1 linethrough" headers="r9 r12 r13 c2">600</td>
|
||
<td class="align-left" headers="r9 r12 r13 c3"><i>Parisi</i> rules: The spouse does not receive an auxiliary benefit, so potential auxiliary benefits do not count toward the total family maximum auxiliary benefits.</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r14" headers="r9 r12 c1">Child 1</th>
|
||
<td class="rightpad1" headers="r9 r12 r14 c2">300</td>
|
||
<td class="align-left" headers="r9 r12 r14 c3">½ of the family maximum amount minus the worker's <abbr class="spell">PIA</abbr> ($600)</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r15" headers="r9 r12 c1">Child 2</th>
|
||
<td class="rightpad1 border-bottom" headers="r9 r12 r15 c2">300</td>
|
||
<td class="align-left" headers="r9 r12 r15 c3">½ of the family maximum amount minus the worker's <abbr class="spell">PIA</abbr> ($600)</td>
|
||
</tr>
|
||
<tr class="top">
|
||
<th class="stub2" id="r16" headers="r9 c1">Total family benefit</th>
|
||
<td class="rightpad1" headers="r9 r16 c2">2,800</td>
|
||
<td class="align-left" headers="r9 r16 c3">Sum of the worker's and auxiliaries' benefits, capped by the family maximum amount, <i><b>plus</b></i> the spouse's worker benefit</td>
|
||
</tr>
|
||
</tbody>
|
||
<tfoot>
|
||
<tr>
|
||
<td class="firstNote" colspan="3">SOURCE: Authors' calculations.</td>
|
||
</tr>
|
||
<tr>
|
||
<td class="note" colspan="3">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 percent of the worker's <abbr>AIME</abbr> is $1,915, which is 160 percent of his or her <abbr class="spell">PIA</abbr>, greater than the cap of 150 percent of the <abbr class="spell">PIA</abbr> that applies to disability beneficiaries. As a result, the family maximum for this family is $1,800, or 150 percent of the worker's <abbr class="spell">PIA</abbr>.</td>
|
||
</tr>
|
||
<tr>
|
||
<td class="lastNote" colspan="3"><abbr>AIME</abbr> = average indexed monthly earnings; <abbr class="spell">DI</abbr> = Disability Insurance; <abbr class="spell">PIA</abbr> = primary insurance amount.</td>
|
||
</tr>
|
||
</tfoot>
|
||
</table>
|
||
</div>
|
||
<h3>Dually Entitled Beneficiaries</h3>
|
||
<p>Table <span class="nobr">A-2</span> shows calculations for a disabled-worker family similar to the one illustrated in Table <span class="nobr">A-1</span>—a disabled worker with a spouse and two children, who has an <abbr>AIME</abbr> of $2,253 and a <abbr class="spell">PIA</abbr> of $1,200. In this particular exhibit, the spouse is dually entitled to a worker benefit of $100 in addition to his or her auxiliary benefit.<sup><a href="#mn29" id="mt29">29</a></sup> As in Table <span class="nobr">A-1,</span> the <i>Parisi</i> rules apply. In this case, only the auxiliary portion of the spouse's benefit would be reduced by the family maximum. We assume that the children qualify for auxiliary benefits on the worker's record, but not on the spouse's.</p>
|
||
<div class="table" id="tableA2">
|
||
<table>
|
||
<caption><span class="tableNumber">Table A-2. </span>Illustration of the family maximum rules for a family of a disabled worker with a dually entitled auxiliary, under <i>Parisi</i> rules, 2015
|
||
<div class="borderThin italic nonbold" style="background-color:#eee;margin:.75em 20%;padding:.5em">
|
||
<div>
|
||
<div class="float-left" style="width:30%">Assumptions:</div>
|
||
<div class="float-left">Worker's <abbr>AIME</abbr> = $2,253<br>Worker's <abbr class="spell">PIA</abbr> = $1,200<br>Spouse's <abbr class="spell">PIA</abbr> = $100</div>
|
||
</div>
|
||
<div class="clear" style="padding-top:.5em">
|
||
<div class="float-left" style="width:30%">Family maximum:</div>
|
||
<div class="float-left"><abbr class="spell">DI</abbr> family maximum (applied to the worker's <abbr>AIME</abbr>): <br>85% × $2,253 = $1,915, which is more than 150% <br>of the worker's <abbr class="spell">PIA</abbr>, so the family maximum = <br>150% × $1,200 = $1,800</div>
|
||
</div>
|
||
<div class="clear"></div>
|
||
</div>
|
||
</caption>
|
||
<colgroup span="1" style="width:14em"></colgroup>
|
||
<colgroup span="1" style="width:8em"></colgroup>
|
||
<colgroup span="1" style="width:40em"></colgroup>
|
||
<thead>
|
||
<tr>
|
||
<th class="stubHeading" id="c1">Characteristic</th>
|
||
<th id="c2">Monthly benefit amount ($)</th>
|
||
<th class="spanner" id="c3">Rule applied</th>
|
||
</tr>
|
||
</thead>
|
||
<tbody>
|
||
<tr>
|
||
<th colspan="3" class="panel" id="r1">Before family maximum</th>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r2" headers="r1 c1">Worker's benefit</th>
|
||
<td class="rightpad1" headers="r1 r2 c2">1,200</td>
|
||
<td class="align-left" headers="r1 r2 c3">100% of the worker's <abbr class="spell">PIA</abbr></td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r3" headers="r1 c1">Spouse's worker benefit</th>
|
||
<td class="rightpad1" headers="r1 r3 c2">100</td>
|
||
<td class="align-left" headers="r1 r3 c3">100% of the spouse's <abbr class="spell">PIA</abbr></td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r4" headers="r1 c1">Auxiliary benefits</th>
|
||
<td colspan="2"> </td>
|
||
</tr>
|
||
<tr class="top">
|
||
<th class="stub1" id="r5" headers="r1 r4 c1">Spouse</th>
|
||
<td class="rightpad1" headers="r1 r4 r5 c2">500</td>
|
||
<td class="align-left" headers="r1 r4 r5 c3">Dual entitlement rule—50% of the worker's <abbr class="spell">PIA</abbr> ($600) minus the spouse's <abbr class="spell">PIA</abbr> ($100)</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r6" headers="r1 r4 c1">Child 1</th>
|
||
<td class="rightpad1" headers="r1 r4 r6 c2">600</td>
|
||
<td class="align-left" headers="r1 r4 r6 c3">50% of the worker's <abbr class="spell">PIA</abbr></td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r7" headers="r1 r4 c1">Child 2</th>
|
||
<td class="rightpad1 border-bottom" headers="r1 r4 r7 c2">600</td>
|
||
<td class="align-left" headers="r1 r4 r7 c3">50% of the worker's <abbr class="spell">PIA</abbr></td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub2" id="r8" headers="r1 c1">Total family benefit</th>
|
||
<td class="rightpad1" headers="r1 r8 c2">3,000</td>
|
||
<td class="align-left" headers="r1 r8 c3">Sum of the worker's, spouse's, and auxiliaries' benefits</td>
|
||
</tr>
|
||
<tr>
|
||
<th colspan="3" class="panel" id="r9">After family maximum</th>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r10" headers="r9 c1">Worker's benefit</th>
|
||
<td class="rightpad1" headers="r9 r10 c2">1,200</td>
|
||
<td class="align-left" headers="r9 r10 c3">100% of the worker's <abbr class="spell">PIA</abbr></td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r11" headers="r9 c1">Spouse's worker benefit</th>
|
||
<td class="rightpad1" headers="r9 r11 c2">100</td>
|
||
<td class="align-left" headers="r9 r11 c3">100% of the spouse's <abbr class="spell">PIA</abbr></td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r12" headers="r9 c1">Auxiliary benefits</th>
|
||
<td colspan="2"> </td>
|
||
</tr>
|
||
<tr class="top">
|
||
<th class="stub1" id="r13" headers="r9 r12 c1">Spouse</th>
|
||
<td class="rightpad1" headers="r9 r12 r13 c2">100</td>
|
||
<td class="align-left" headers="r9 r12 r13 c3">⅓ of the family maximum amount minus the worker's <abbr class="spell">PIA</abbr> ($600) minus the spouse's worker <abbr class="spell">PIA</abbr></td>
|
||
</tr>
|
||
<tr class="top">
|
||
<th class="stub1" id="r14" headers="r9 r12 c1">Child 1</th>
|
||
<td class="rightpad1" headers="r9 r12 r14 c2">250</td>
|
||
<td class="align-left" headers="r9 r12 r14 c3">⅓ of the family maximum amount minus the worker's <abbr class="spell">PIA</abbr> ($600) plus ½ of the $100 withheld from the spouse's auxiliary benefit</td>
|
||
</tr>
|
||
<tr class="top">
|
||
<th class="stub1" id="r15" headers="r9 r12 c1">Child 2</th>
|
||
<td class="rightpad1 border-bottom" headers="r9 r12 r15 c2">250</td>
|
||
<td class="align-left" headers="r9 r12 r15 c3">⅓ of the family maximum amount minus the worker's <abbr class="spell">PIA</abbr> ($600) plus ½ of the $100 withheld from the spouse's auxiliary benefit</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub2" id="r16" headers="r9 c1">Total family benefit</th>
|
||
<td class="rightpad1" headers="r9 r16 c2">1,900</td>
|
||
<td class="align-left" headers="r9 r16 c3">Sum of the worker's and auxiliaries' benefits, capped by the family maximum amount, <i><b>plus</b></i> the spouse's worker benefit</td>
|
||
</tr>
|
||
</tbody>
|
||
<tfoot>
|
||
<tr>
|
||
<td class="firstNote" colspan="3">SOURCE: Authors' calculations.</td>
|
||
</tr>
|
||
<tr>
|
||
<td class="note" colspan="3">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 percent of the worker's <abbr>AIME</abbr> is $1,915, which is 160 percent of his or her <abbr class="spell">PIA</abbr>, greater than the cap of 150 percent of the <abbr class="spell">PIA</abbr> that applies to disability beneficiaries. As a result, the family maximum for this family is $1,800, or 150 percent of the worker's <abbr class="spell">PIA</abbr>.</td>
|
||
</tr>
|
||
<tr>
|
||
<td class="lastNote" colspan="3"><abbr>AIME</abbr> = average indexed monthly earnings; <abbr class="spell">DI</abbr> = Disability Insurance; <abbr class="spell">PIA</abbr> = primary insurance amount.</td>
|
||
</tr>
|
||
</tfoot>
|
||
</table>
|
||
</div>
|
||
<h3>Combined Family Maximum</h3>
|
||
<p>The combined family maximum is used when a person qualifies for auxiliary benefits on more than one worker's record. It is the sum of the family maximums applicable to each worker's record, but not more than the statutory upper limits for combined family maximums<i>.</i><sup><a href="#mn30" id="mt30">30</a></sup></p>
|
||
<p>In Table <span class="nobr">A-3,</span> we 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 <abbr class="spell">PIA</abbr> of $1,200 and the father has a <abbr class="spell">PIA</abbr> of $1,000. This illustration shows how benefits are calculated in three stages: first, before applying the family maximum rules; second, using the ordinary family maximum rules (in this case, the family maximum that applies to the mother's earnings record—the record on which the children's benefits are based); third, using the combined family maximum rules that would determine this family's final benefit amounts.</p>
|
||
<div class="table" id="tableA3">
|
||
<table>
|
||
<caption><span class="tableNumber">Table A-3. </span>Illustration of the combined family maximum rules for a survivor family, 2015
|
||
<div class="borderThin italic nonbold" style="background-color:#eee;margin:.75em 20%;padding:.5em">
|
||
<div>
|
||
<div class="float-left" style="width:30%">Assumptions:</div>
|
||
<div class="float-left">Mother's <abbr>AIME</abbr> = $2,253<br>Mother's <abbr class="spell">PIA</abbr> = $1,200<br>Father's <abbr>AIME</abbr> = $1,628<br>Father's <abbr class="spell">PIA</abbr> = $1,000</div>
|
||
</div>
|
||
<div class="clear" style="padding-top:.5em">
|
||
<div class="float-left" style="width:30%">Family maximum:</div>
|
||
<div class="float-left"><abbr class="spell">OASI</abbr> family maximum (on the mother's <abbr class="spell">PIA</abbr> only): <br>150% × $1,056 + 272% × $144 = $1,976</div>
|
||
</div>
|
||
<div class="clear" style="padding-top:.5em">
|
||
<div class="float-left" style="width:30%">Combined family maximum:</div>
|
||
<div class="float-left">Family maximum based on the mother's <abbr class="spell">PIA</abbr><br>($1,976) plus the family maximum based on the <br>father's <abbr class="spell">PIA</abbr> (150% × $1,000) = $3,476</div>
|
||
</div>
|
||
<div class="clear"></div>
|
||
</div>
|
||
</caption>
|
||
<colgroup span="1" style="width:14em"></colgroup>
|
||
<colgroup span="1" style="width:8em"></colgroup>
|
||
<colgroup span="1" style="width:38em"></colgroup>
|
||
<thead>
|
||
<tr>
|
||
<th class="stubHeading" id="c1">Characteristic</th>
|
||
<th id="c2">Monthly benefit amount ($)</th>
|
||
<th class="spanner" id="c3">Rule applied</th>
|
||
</tr>
|
||
</thead>
|
||
<tbody>
|
||
<tr>
|
||
<th colspan="3" class="panel" id="r1">Before family maximum</th>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r2" headers="r1 c1">Survivor benefits</th>
|
||
<td colspan="2"> </td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r3" headers="r1 r2 c1">Child 1</th>
|
||
<td class="rightpad1" headers="r1 r2 r3 c2">900</td>
|
||
<td class="align-left" headers="r1 r2 r3 c3">75% of the higher-earning parent's <abbr class="spell">PIA</abbr></td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r4" headers="r1 r2 c1">Child 2</th>
|
||
<td class="rightpad1" headers="r1 r2 r4 c2">900</td>
|
||
<td class="align-left" headers="r1 r2 r4 c3">75% of the higher-earning parent's <abbr class="spell">PIA</abbr></td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r5" headers="r1 r2 c1">Child 3</th>
|
||
<td class="rightpad1 border-bottom" headers="r1 r2 r5 c2">900</td>
|
||
<td class="align-left" headers="r1 r2 r5 c3">75% of the higher-earning parent's <abbr class="spell">PIA</abbr></td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub2" id="r6" headers="r1 c1">Total family benefit</th>
|
||
<td class="rightpad1" headers="r1 r6 c2">2,700</td>
|
||
<td class="align-left" headers="r1 r6 c3">Sum of the survivor benefits</td>
|
||
</tr>
|
||
<tr>
|
||
<th colspan="3" class="panel" id="r7">After family maximum (higher-earning parent only)</th>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r8" headers="r7 c1">Survivor benefits</th>
|
||
<td colspan="2"> </td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r9" headers="r7 r8 c1">Child 1</th>
|
||
<td class="rightpad1" headers="r7 r8 r9 c2">659</td>
|
||
<td class="align-left" headers="r7 r8 r9 c3">⅓ of the family maximum amount</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r10" headers="r7 r8 c1">Child 2</th>
|
||
<td class="rightpad1" headers="r7 r8 r10 c2">659</td>
|
||
<td class="align-left" headers="r7 r8 r10 c3">⅓ of the family maximum amount</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r11" headers="r7 r8 c1">Child 3</th>
|
||
<td class="rightpad1 border-bottom" headers="r7 r8 r11 c2">659</td>
|
||
<td class="align-left" headers="r7 r8 r11 c3">⅓ of the family maximum amount</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub2" id="r12" headers="r7 c1">Total family benefit</th>
|
||
<td class="rightpad1" headers="r7 r12 c2">1,976</td>
|
||
<td class="align-left" headers="r7 r12 c3">Family maximum amount</td>
|
||
</tr>
|
||
<tr>
|
||
<th colspan="3" class="panel" id="r13">After combined family maximum (both parents)</th>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r14" headers="r13 c1">Survivor benefits</th>
|
||
<td colspan="2"> </td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r15" headers="r13 r14 c1">Child 1</th>
|
||
<td class="rightpad1" headers="r13 r14 r15 c2">900</td>
|
||
<td class="align-left" headers="r13 r14 r15 c3">75% of the higher-earning parent's <abbr class="spell">PIA</abbr></td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r16" headers="r13 r14 c1">Child 2</th>
|
||
<td class="rightpad1" headers="r13 r14 r16 c2">900</td>
|
||
<td class="align-left" headers="r13 r14 r16 c3">75% of the higher-earning parent's <abbr class="spell">PIA</abbr></td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r17" headers="r13 r14 c1">Child 3</th>
|
||
<td class="rightpad1 border-bottom" headers="r13 r14 r17 c2">900</td>
|
||
<td class="align-left" headers="r13 r14 r17 c3">75% of the higher-earning parent's <abbr class="spell">PIA</abbr></td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub2" id="r18" headers="r13 c1">Total family benefit</th>
|
||
<td class="rightpad1" headers="r13 r18 c2">2,700</td>
|
||
<td class="align-left" headers="r13 r18 c3">Sum of the survivor benefits, which is less than the combined family maximum</td>
|
||
</tr>
|
||
</tbody>
|
||
<tfoot>
|
||
<tr>
|
||
<td class="firstNote" colspan="3">SOURCE: Authors' calculations.</td>
|
||
</tr>
|
||
<tr>
|
||
<td class="note" colspan="3">NOTE: Dollar values are rounded to the nearest dollar for presentation purposes, but would actually be rounded down to the nearest dime.</td>
|
||
</tr>
|
||
<tr>
|
||
<td class="lastNote" colspan="3"><abbr>AIME</abbr> = average indexed monthly earnings; <abbr class="spell">OASI</abbr> = <span class="nobr">Old-Age</span> and Survivors Insurance; <abbr class="spell">PIA</abbr> = primary insurance amount.</td>
|
||
</tr>
|
||
</tfoot>
|
||
</table>
|
||
</div>
|
||
<div id="notes">
|
||
<h2>Notes</h2>
|
||
<p> <a href="#mt1" id="mn1">1</a> For more information about the <abbr class="spell">PIA</abbr> and how it is calculated, refer to <a href="/oact/cola/piaformula.html">http://www.socialsecurity.gov/oact/cola/piaformula.html</a>.</p>
|
||
<p> <a href="#mt2" id="mn2">2</a> People who became entitled to benefits before 1979 are subject to a different family maximum formula (see <abbr class="spell">SSA</abbr>'s <i>Annual Statistical Supplement to the Social Security Bulletin, 2013</i> (Table 2.A17), <a href="/policy/docs/statcomps/supplement/2013/2a8-2a19.html#table2.a17">http://www.socialsecurity.gov/policy/docs/statcomps/supplement/2013/2a8-2a19.html#table2.a17</a>. </p>
|
||
<p> <a href="#mt3" id="mn3">3</a> For more information on the average wage index, which <abbr class="spell">SSA</abbr> uses to index the family maximum, refer to <a href="/oact/cola/AWI.html">http://www.socialsecurity.gov/oact/cola/<abbr class="spell">AWI</abbr>.html</a>.</p>
|
||
<p> <a href="#mt4" id="mn4">4</a> For more information about how <abbr class="spell">SSA</abbr> calculates the <abbr>AIME</abbr>, refer to <a href="/oact/cola/Benefits.html">http://www.socialsecurity.gov/oact/cola/Benefits.html</a>.</p>
|
||
<p> <a href="#mt5" id="mn5">5</a> For example, early retirement reductions, retirement earnings test withholdings, the windfall elimination provision reductions, and government pension offsets.</p>
|
||
<p> <a href="#mt6" id="mn6">6</a> For more information about how beneficiaries qualify for survivor benefits, see <abbr class="spell">SSA</abbr>'s “How Social Security Can Help You When A Family Member Dies,” <a href="/pubs/EN-05-10008.pdf">http://www.socialsecurity.gov/pubs/<abbr class="spell">EN</abbr>-05-10008.pdf</a>.</p>
|
||
<p> <a href="#mt7" id="mn7">7</a> In 2015, the first bend point would be $826. Thus, the first $826 of the <abbr>AIME</abbr> would be multiplied by 90 percent for a value of $743.40. The remaining $1,427 of the <abbr>AIME</abbr> above the first bend point of $826 would be multiplied by 32 percent for a value of $456.64. Together, $743.40 + 456.64 = $1,200.04. For presentation purposes, the dollar values reported are rounded to the nearest dollar, but the actual <abbr class="spell">PIA</abbr> rules round down the value to the nearest dime. For additional information on <abbr class="spell">PIA</abbr> formula bend points and applicable computation methods, refer to <a href="/oact/cola/piaformula.html">http://www.socialsecurity.gov/oact/cola/piaformula.html</a>.</p>
|
||
<p> <a href="#mt8" id="mn8">8</a> <i>Adjustment of Monthly Benefits Under the Family Maximum Provisions</i>. Audit Report <abbr title="Number">No.</abbr> <span class="nobr">A-09-13</span>-13087 (March 11, 2014), http://oig.ssa.gov/sites/default/files/audit/full/pdf/A-09-13-13087.pdf.</p>
|
||
<p> <a href="#mt9" id="mn9">9</a> The total amount a dually entitled beneficiary receives is equal to the higher of the worker benefit and the auxiliary benefit.</p>
|
||
<p><a href="#mt10" id="mn10">10</a> These rules are a result of the <i>Parisi</i> court decision; for a full description of the ruling, refer to <a href="/OP_Home/rulings/ar/01/AR97-01-ar-01.html">http://www.socialsecurity.gov/OP_Home/rulings/ar/01/AR97-01-ar-01.html</a>. To determine the ruling's applicability in all states, refer to <a href="https://secure.ssa.gov/poms.nsf/lnx/0202603045">https://secure.ssa.gov/poms.nsf/lnx/0202603045</a>. Examples are given here, <a href="https://secure.ssa.gov/poms.nsf/lnx/0300615768">https://secure.ssa.gov/poms.nsf/lnx/0300615768</a>.</p>
|
||
<p><a href="#mt11" id="mn11">11</a> In the Appendix, see Tables <span class="nobr"><a href="#tableA1">A-1</a></span> and <span class="nobr"><a href="#tableA2">A-2</a></span> for illustrations of how the <i>Parisi</i> case affects benefits.</p>
|
||
<p><a href="#mt12" id="mn12">12</a> For more information, see <abbr class="spell">SSA</abbr>'s Program Operations Manual System <abbr class="spell">RS</abbr> 00615.770 (simultaneous entitlement of children on more than one worker's record), <a href="https://secure.ssa.gov/apps10/poms.NSF/lnx/0300615770">https://secure.ssa.gov/apps10/poms.NSF/lnx/0300615770</a>; and <abbr class="spell">RS</abbr> 00615.772 (determination of the worker record upon which benefits will be based), <a href="https://secure.ssa.gov/poms.nsf/lnx/0300615772">https://secure.ssa.gov/poms.nsf/lnx/0300615772</a>.</p>
|
||
<p><a href="#mt13" id="mn13">13</a> The committee report for the 1972 Amendments states, “The bill would provide that a child who is entitled to benefits on the earnings record of more than one worker would get 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 individual who is entitled to benefits based on that earnings record. (Entitlement of a child on the earnings record that will give him or her the highest benefit could otherwise result 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, October 17, 1972)</p>
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<p><a href="#mt14" id="mn14">14</a> Public Law (<abbr>P.L.</abbr>) 379.</p>
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<p><a href="#mt15" id="mn15">15</a> <abbr>P.L.</abbr> 734; the thresholds were updated again in the 1952 Amendments, <abbr>P.L.</abbr> <span class="nobr">82-590.</span></p>
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||
<p><a href="#mt16" id="mn16">16</a> <abbr>P.L.</abbr> 761.</p>
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<p><a href="#mt17" id="mn17">17</a> <abbr>P.L.</abbr> <span class="nobr">85-840,</span> <abbr>P.L.</abbr> <span class="nobr">87-64,</span> <abbr>P.L.</abbr> <span class="nobr">89-97,</span> and <abbr>P.L.</abbr> <span class="nobr">90-248.</span></p>
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<p><a href="#mt18" id="mn18">18</a> <abbr>P.L.</abbr> <span class="nobr">92-5.</span></p>
|
||
<p><a href="#mt19" id="mn19">19</a> <abbr>P.L.</abbr> <span class="nobr">92-336.</span></p>
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||
<p><a href="#mt20" id="mn20">20</a> Congress passed two major Social Security bills in 1972. For more information, refer to <a href="/history/1972amend.html">http://www.socialsecurity.gov/history/1972amend.html</a>.</p>
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||
<p><a href="#mt21" id="mn21">21</a> <abbr>P.L.</abbr> <span class="nobr">92-603.</span></p>
|
||
<p><a href="#mt22" id="mn22">22</a> Committee report for <abbr>P.L.</abbr> <span class="nobr">92-603.</span></p>
|
||
<p><a href="#mt23" id="mn23">23</a> Congress intended the maximum family benefit to range from 150 percent to 188 percent of the worker's <abbr class="spell">PIA</abbr>, as it did under prior law (committee reports for P.L. <span class="nobr">95-216).</span> Congressional members considered setting a <span class="nobr">flat-rate</span> maximum, but decided that it would either result in many families getting lower benefits or would have to cost more in order 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.</p>
|
||
<p><a href="#mt24" id="mn24">24</a> The <abbr class="spell">DI</abbr> family maximum rules were described by the chairman of the House Ways and Means Committee as “temporary and a transition,” but the formula has been maintained since then (Congressional Record on H. 7410, September 6, 1979).</p>
|
||
<p><a href="#mt25" id="mn25">25</a> Conference Report, <abbr>H.R.</abbr> 3236/<abbr>P.L.</abbr> <span class="nobr">96-265,</span> Disability Amendments of 1980, 26.</p>
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||
<p><a href="#mt26" id="mn26">26</a> Studies had shown that a median wage earner with qualifying dependents would have received family benefits that replaced 90 percent of earnings if he or she had become entitled to disability benefits in 1976 (House committee report, <abbr title="number">no.</abbr> <span class="nobr">96-100,</span> 4). Secretary of Health, Education, and Welfare Joseph Califano (who oversaw the Social Security program) testified that approximately 6 percent of <abbr class="spell">DI</abbr> beneficiaries received family benefits that were greater than their previous net earnings (Congressional Record on H. 7410, September 6, 1979).</p>
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||
<p><a href="#mt27" id="mn27">27</a> Authors' calculations using <abbr>MINT</abbr>6. For more information on the authors' methodology and the <abbr>MINT</abbr>6 model, see the Methodology section.</p>
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<p><a href="#mt28" id="mn28">28</a> See the <i>Annual Statistical Supplement to the Social Security Bulletin, 2013</i> (Table 5.H2), <a href="/policy/docs/statcomps/supplement/2013/5h.html#table5.h2">http://www.socialsecurity.gov/policy/docs/statcomps/supplement/2013/5h.html#table5.h2</a>.</p>
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<p><a href="#mt29" id="mn29">29</a> If a family includes both a dually entitled spouse and eligible children, the rules are more complex, as both the dually entitled spouse and combined family maximum rules may apply.</p>
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<p><a href="#mt30" id="mn30">30</a> Refer to note 12.</p>
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