What Is the Family Maximum for Social Security
Social Security's family maximum rules limit the total benefits payable to a casher's family. Different family maximum rules apply to retirement and survivor benefits than to disability benefits. The rules for calculating family unit maximum benefits are complicated. In some particularly complex cases, it is hard to properly implement the family maximum, which tin effect in over- or underpayments. This commodity explains how the family maximum rules work and describes their evolution. We employ Modeling Income in the Near Term, Version 6 information to clarify who is affected by the family maximum and to what extent their benefits are changed.
Kathleen Romig is a senior policy annotator at the Center on Upkeep and Policy Priorities. Dave Shoffner is a social science inquiry analyst with the Office of Retirement Policy, Office of Retirement and Disability Policy, Social Security Administration.
Acknowledgments: The authors thank Joni Lavery, Andrew Hanks, Eric Herbert, Karen Glenn, Mark Sarney, and Natalie Lu for their helpful comments and suggestions.
The findings and conclusions presented in the Bulletin are those of the authors and do not necessarily represent the views of the Heart on Budget 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 | Old-Age and Survivors Insurance |
| PIA | primary insurance amount |
| SSA | Social Security Administration |
Workers receive Social Security retirement and inability benefits based on their covered earnings. Members of their families may besides qualify for benefits based on those earnings—for case, their survivors, spouses, and children. Benefits for family members have always been limited by the family maximum rules. In 1980, Congress established more than restrictive rules for the families of disabled workers, reflecting concerns that some disability beneficiaries were financially too off, or better off, when receiving benefits than they were when working. The family maximum rules take evolved over fourth dimension and have become more than complicated for all beneficiaries, which in some cases brand them difficult to implement. If not implemented correctly, the Social Security Assistants (SSA) may pay beneficiaries improperly.
In this commodity, we depict 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 and then provide an assay 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 Almost Term, Version half-dozen (MINT6) data, we analyze who is affected by the family maximum and to what extent their benefits are changed.
Major Findings
SSA's family maximum rules are complex and affect beneficiaries in unlike means, depending on their earnings levels and benefit types. In particular, the rules that employ to inability beneficiary families differ significantly from those that apply to retirement and survivor casher 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 than restrictive rules employ to disability benefits.
- Retirement and survivor beneficiary families are not affected by the family unit maximum rules unless iii or more than family unit 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 but one family member qualifies. All disability families with three or more than beneficiaries are affected by the family maximum and more than than half of families with two beneficiaries are afflicted.
- Amidst families affected past the family maximum, reductions can exist substantial. For affected disabled-worker families, we estimate that the median reduction is about 33 percent; for survivor families, nearly 23 per centum; for retired-worker families, near xiv percent. For some family members of disabled workers, the family unit maximum rules prevent a benefit from existence paid at all.
Current-Law Family Maximum Rules
In this section, we provide the current basic family unit maximum rules for retirement and survivor benefits and for disability benefits. Nosotros as well hash out current-law rules that are common to both types of benefits.
Rules for Retirement and Survivor Benefits
The family maximum formula for One-time-Age and Survivors Insurance (OASI) benefits is based on a casher'southward primary insurance corporeality (PIA). The PIA is a beneficiary's basic Social Security benefit amount before adjustments for retirement historic period, earnings, and other factors.1 For a worker who reaches historic period 62 or dies in 2015 (before reaching age 62), SSA calculates the family maximum using the following formula:
150 pct of the first $i,056 of the worker's PIA plus
272 percentage of the worker's PIA over $i,056 through $ane,524 plus
134 percent of the worker'southward PIA over $ane,524 through $i,987 plus
175 percent of the worker's PIA over $1,987.
Ultimately, this formula yields a maximum for each family that is betwixt 150 percent and 188 percent of the worker's basic Social Security benefit, or PIA.2 The final amount is rounded to the next everyman ten cents. The dollar amounts in the family maximum formula increase each year according to average wage growth.three
Rules for Disability Benefits
Disability Insurance (DI) beneficiaries are bailiwick to a more than restrictive set of family unit maximum rules than are OASI beneficiaries. As with OASI beneficiaries, people who became entitled to disability benefits before 1979 are subject to a unlike family unit maximum formula. The family maximum for a disabled worker is 85 percent of the worker's boilerplate indexed monthly earnings (AIME), a measure of lifetime earnings.4 Notwithstanding, the family maximum for a disabled worker'due south family cannot be more than than 150 percent or less than 100 percent of his or her PIA. The final corporeality is rounded to the next everyman ten cents.
Rules Common to Both OASI and DI
The family maximum rules are applied in the aforementioned way for both OASI and DI benefits. Kickoff, the family maximum amount is established based on the worker's PIA or AIME. Then, the worker'due south benefit is subtracted from the total benefit amount payable to the family unit. Side by side, the auxiliaries' benefits are reduced proportionately. The worker's own benefit is never reduced; but 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 show how the family maximum rules piece of work, using simplified examples of beneficiary families. We compare benefit amounts before applying the family maximum rules with those later applying those rules. We assume that there are no reductions to total benefit amounts,5 and we utilise the 2015 family maximum and PIA formulas.
Survivors of a deceased worker. Table one illustrates a case in which a worker dies and is survived past a working-historic period spouse and two children, all of whom qualify for survivor benefits.6 Nosotros assume the worker has an AIME of $2,253 and in turn has a PIA of $1,200.7 The rules that apply to survivor beneficiaries are the same as those that apply to families of retired workers.
| Characteristic | Monthly benefit amount ($) | Dominion applied |
|---|---|---|
| Before family unit maximum | ||
| Survivor benefits | ||
| Spouse | 900 | 75% of the worker'southward PIA |
| Kid 1 | 900 | 75% of the worker's PIA |
| Child 2 | 900 | 75% of the worker'south PIA |
| Total family unit benefit | ii,700 | Sum of the survivor benefits |
| After family maximum | ||
| Survivor benefits | ||
| Spouse | 659 | ⅓ of the family maximum amount |
| Child ane | 659 | ⅓ of the family maximum amount |
| Child two | 659 | ⅓ of the family maximum amount |
| Full family unit benefit | 1,976 | Sum of the survivor benefits, capped by the family maximum corporeality |
| SOURCE: Authors' calculations. | ||
| NOTE: Dollar values are rounded to the nearest dollar for presentation purposes, only would actually be rounded downward to the nearest dime. | ||
| AIME = boilerplate indexed monthly earnings; OASI = Onetime-Age and Survivors Insurance; PIA = master insurance amount. | ||
Family of a disabled worker. 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 AIME of $2,253 and a PIA of $1,200.
| Feature | Monthly benefit corporeality ($) | Rule applied |
|---|---|---|
| Earlier family unit maximum | ||
| Worker'due south benefit | ane,200 | 100% of the worker'south PIA |
| Auxiliary benefits | ||
| Spouse | 600 | 50% of the worker'south PIA |
| Kid 1 | 600 | 50% of the worker'southward PIA |
| Child 2 | 600 | 50% of the worker'south PIA |
| Total family benefit | 3,000 | Sum of the worker's and auxiliaries' benefits |
| After family maximum | ||
| Worker'south benefit | 1,200 | 100% of the worker's PIA |
| Auxiliary benefits | ||
| Spouse | 200 | ⅓ of the family maximum corporeality minus the worker'due south PIA ($600) |
| Child 1 | 200 | ⅓ of the family unit maximum amount minus the worker's PIA ($600) |
| Kid 2 | 200 | ⅓ of the family maximum amount minus the worker's PIA ($600) |
| Total family benefit | 1,800 | Sum of the worker's and auxiliaries' benefits, capped by the family unit maximum amount |
| SOURCE: Authors' calculations. | ||
| NOTES: Dollar values are rounded to the nearest dollar for presentation purposes, but would actually be rounded downward to the nearest dime. In this case, 85 percent 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. Every bit a result, the family maximum for this family is $ane,800, or 150 percent of the worker's PIA. | ||
| AIME = boilerplate indexed monthly earnings; DI = Disability Insurance; PIA = primary insurance amount. | ||
Special cases. Most family maximum cases follow the standard family unit maximum rules that employ to OASI and DI cases, as shown earlier. There are also additional rules that apply for more complicated situations. Nosotros briefly describe those rules below and include three detailed illustrations of them in Appendix Tables A-i through A-3. It is in these circuitous cases that improper payments are near mutual, equally indicated in a recent SSA Part of the Inspector General report.8 The incorrect payments mostly occur considering they are calculated manually by SSA employees. The agency uses an automated arrangement to bank 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 fractional 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 every bit well as auxiliary benefits based on someone else's earnings.ix In dual entitlement cases where the auxiliary do good is college than the worker do good, the dually entitled beneficiary receives his or her total worker benefit in addition to a partial auxiliary benefit. The full 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.
For cases in which a person is eligible for both a worker benefit and an auxiliary benefit, the auxiliary do good is reduced or not paid at all. For those beneficiaries, the Parisi case established that any potential but unpaid auxiliary benefits are not included in the family maximum adding.10 Before the Parisi example, a spouse's potential but unpaid spousal benefits would be included in the family maximum and crusade other family members' auxiliary benefits to exist reduced. In the Parisi example, the courts determined that simply auxiliary benefits actually paid would count toward the family maximum, assuasive some beneficiaries to get higher auxiliary benefits than they would accept received before the Parisi decision.eleven
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 unit maximum is the sum of the family unit maximums established for each worker, just 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 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'southward record.
Legislative History
Congress amended the Social Security Human activity and established the family maximum in 1939, the same year information technology created auxiliary benefits. These amendments reflected the change in the accent of the original Social Security programme, from protecting workers in erstwhile age to protecting those workers and their family unit members. Over the years, Congress gradually enacted the following changes:
- The 1939 Amendments set the family unit maximum at the lower of 80 pct of the average monthly wages, $85, or 200 percent of a worker's PIA. The family maximum could not autumn beneath a floor of $20.14
- The 1950 Amendments eliminated the 200 percent of the PIA cap and changed the formula to 80 percentage of the worker'south boilerplate monthly wages, with a maximum of $150 and a minimum of $40.15
- The 1954 Amendments stated that the family maximum could not be less than 150 percent of the PIA.16 The 1954 formula remained, with advertisement hoc changes to the thresholds, until 1971.17
- The 1971 Amendments established a two-tier family maximum formula.eighteen For beneficiaries with PIAsouthward above $628, the family unit maximum was 175 percent of the PIA. For those with PIAs below $628, the prior-police force formula practical. For all beneficiaries, the family unit maximum could non fall below the floor of 150 percent of the PIA, as established in prior police force.
- The 1972 Amendments established an automated cost-of-living adjustment (COLA) for Social Security benefits and a COLA for the family maximum. The COLAsouthward were applied in each twelvemonth after a beneficiary first became entitled, starting in 1975.19
- Legislation in 1972 xx as well liberalized the family unit maximum, requiring its ciphering to exist based on the PIA rather than the boilerplate monthly wage.21 This change immune beneficiaries who became entitled after a do good increment to get the same benefit amounts as did current beneficiaries.22
Congress established the current-law family unit maximum rules in the 1977 and 1980 Amendments. Today'due south OASI beneficiaries are subject area to the rules established in 1977 (with wage-indexed adjustments); DI beneficiaries are subject to the rules established in 1980.
- The 1977 Amendments created a iv-tier formula for all beneficiaries: 150 percent of the first $236 of the worker's PIA, plus 272 percent of the next $106 of his or her PIA, plus 134 per centum of the next $107 of the PIA, plus 175 percent of the remainder.23 The dollar amounts in the formula increase each year according to changes in the average wage alphabetize (AWI). This formula was designed to replicate the range of family maximum amounts established under prior law.
- The 1980 Amendments established a separate family maximum benefit formula for disability beneficiaries at 85 pct of a worker'southward AIME, with a floor of 100 per centum of the worker'due south PIA and a ceiling of 150 pct of the PIA.24 The rule for 85 per centum of the AIME was designed so that a family's full benefits could not exceed the worker's boilerplate earnings. The cap of 150 pct of the PIA affects college-earning workers; without information technology, the rule for 85 percent of the AIME would non take affected them.25 The flooring of 100 percent of the PIA ensures that a worker will always become 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 than 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 likewise off, or meliorate off, when receiving benefits than when working.26
Analysis of Family Maximum Rules
Considering of the more restrictive DI family maximum rules, benefits payable to disability beneficiary families are significantly lower than those for retirement and survivor beneficiary families, especially at the lower end of the earnings scale. In 2015, newly eligible disabled beneficiaries with AIMEs of $903 or less tin 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 take their family benefits reduced, fifty-fifty if they have only one 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 unit 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 than generous than the DI family maximum, replacing a greater proportion of earnings. At the low end of the earnings scale (specifically, for people whose AIMEs 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 maximum is notably less progressive than the OASI family maximum (or PIA), every bit 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 maximum is kinked at the low end because it allows significantly more generous benefits for the families of lower earners.
Nautical chart 1.
OASI and DI family maximum amounts and PIA equally percentages of AIME, 2015
SOURCE: Authors' calculations.
NOTES: Formulas are based on 2015 rules, which utilise to beneficiaries outset eligible in 2015.
AIME = boilerplate indexed monthly earnings; DI = Disability Insurance; OASI = Sometime-Age and Survivors Insurance; PIA = primary insurance amount.
To provide context, we take too estimated the distribution of DI and OASI beneficiary families by their AIME levels:27
- Over 400,000 (23 percent) DI beneficiary families with two or more than beneficiaries have AIMEs of less than $ane,000. This is approximately the level of lifetime earnings at which disabled workers can have no auxiliary beneficiaries.
- Almost 600,000 (33 percent) of such families accept AIMEsouth betwixt $1,000 and $2,000. This is approximately the level of lifetime earnings at which disability beneficiary families with 2 or more members accept their benefits reduced by the family maximum rules.
- The remaining approximately 800,000 (44 percent) DI beneficiary families take an AIME of more than $2,000. This is near the level of lifetime earnings at which disability casher families with three or more members take their benefits reduced past the family maximum rules.
Thus, many DI beneficiaries are subject to the more restrictive family maximum rules that employ at the depression end of the earnings scale, which in many cases mean no or very little auxiliary benefits are paid. OASI beneficiary families have relatively college earnings. Notwithstanding, many of them have AIMEs at the lower finish of the earnings calibration, where the family maximum rules are relatively more generous for OASI beneficiaries.
Methodology
Our analysis is based on information from SSA'south Almanac Statistical Supplement to the Social Security Message, 2013 and Modeling Income in the Well-nigh Term, Version 6. MINT6 is a microsimulation projection model based on the Census Bureau'southward Survey of Income and Program Participation (SIPP). The survey information from SIPP respondents is matched with SSA authoritative records on earnings and benefits through 2009, and then the earnings, benefits, and other life events of those respondents are projected for 2010 and later on years. The MINT6 results shown here are projections for 2015.
Nosotros reweighted the results for the MINT6 respondents to lucifer the criterion of the family do good types shown in the Supplement. This reweighting is necessary because, although the overall population of beneficiary families is similar in the Supplement and MINT6, some subgroup populations differ noticeably. I limitation of a microsimulation model based on a survey, such as MINT, is the difficulty of precisely estimating the population of a less mutual subgroup, such as beneficiary families with a larger number of children receiving benefits. Because larger beneficiary families are particularly important to the analysis hither, reweighting is necessary then that nosotros can align our information with the benchmark population composition shown in the Supplement'southward Tabular array five.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 equally families with more than children.
Effects of Family unit Maximum Rules on Casher Families
In this section, we analyze the populations of OASI and DI beneficiaries that are affected by the family maximum and to what extent their benefits are inverse. Chart two shows the estimated number of beneficiary families affected past the family unit maximum rules. This chart distinguishes families past size, separating those with 2 eligible beneficiaries from those with three or more than eligible beneficiaries. For some families of disabled workers, a member may exist eligible for auxiliary benefits, just not exist paid those benefits because of the family maximum rules. Families with these potentially eligible beneficiaries are included in the nautical chart.
Chart 2.
Number of beneficiary families affected by family maximum rules, by number of eligible beneficiaries in the family, 2015
SOURCE: Authors' estimates using Modeling Income in the Near Term, Version 6.
Annotation: Nosotros categorized casher families by size earlier applying the family maximum rules; in some cases, the auxiliary of a disabled worker may be otherwise eligible for a benefit that is non paid because of the family unit 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 not touch on families with fewer than iii beneficiaries. We gauge that nigh 200,000 families of retired workers and another 200,000 survivors of deceased workers have their benefits reduced by the family unit maximum.
Among affected families of retired workers, we estimate that median family unit benefits are $2,886 before applying the family unit maximum and $2,482 afterward, as shown in Chart three. The median reduction amid affected retired-worker families is $535 (14 percent, not shown). All auxiliaries of retired workers receive at least partial benefits.
Amid affected survivor beneficiary families, we gauge that median family benefits are $3,584 earlier applying the family maximum and $2,401 later on, also shown in the chart. The median reduction amongst affected survivor families is $748 (23 percent, non shown). All qualifying survivors receive at to the lowest degree partial benefits.
Chart 3.
Median family benefit amounts before and afterward applying the family maximum rules among affected families, 2015
SOURCE: Authors' estimates using Modeling Income in the Near Term, Version 6.
Families of Disabled Workers (DI)
In contrast with OASI beneficiary families, many DI casher families are affected by the family maximum. About ane.iv million DI beneficiary families are affected, and about 400,000 of these disabled beneficiary families have their auxiliary benefits reduced to cipher by the family maximum rules. In those cases, the family maximum for the disabled worker is 100 percent of the worker'due south PIA, which leaves nothing for auxiliary beneficiaries.
All families of disabled workers with three or more beneficiaries are afflicted past the family unit maximum. In addition, more than one-half (58 percent) of families of disabled workers with two beneficiaries (1 worker and one auxiliary) are affected. Taken together, amongst disabled-worker families with at least one potentially eligible auxiliary, we estimate that nearly 80 pct are affected by the family maximum.
Chart iii shows median family do good amounts before and after applying the family unit 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 authorities pension offset, or the retirement earnings test, which are calculated after applying the family maximum rules.
Amidst afflicted disability families, we estimate that the median family benefit is $ane,552 before applying the family maximum and $one,140 after applying the maximum, every bit shown in the chart. The median reduction for afflicted disability families is $580 (33 per centum, non shown).
The difference in both the pct affected and the median benefits amongst disabled-worker families shows the impact of the stricter disabled family maximum rules. The DI family 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 three or more than family members receive benefits; when those families are affected, members who qualify as auxiliaries always receive fractional benefits. DI casher families, by contrast, sometimes lose all of their auxiliary benefits, even in cases where only i family member qualifies.
Conclusion
Every bit nosotros accept 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 unit sizes than the retirement and survivor family unit 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 afflicted by the family maximum rules, reductions tin can exist substantial.
Appendix
The Parisi courtroom decision interpreted the Social Security Act as limiting the total benefit corporeality really payable on an private'southward work record, merely non necessarily on the amount of entitlement available in principle. As a result, when determining family maximums, SSA considers just the corporeality of monthly benefits actually due or payable to that person.
How the Parisi Example Affects Benefits
Social Security's dual entitlement dominion stipulates that if a person is eligible for both a worker benefit and an auxiliary benefit, the auxiliary benefit is reduced or non paid at all. In those cases, the Parisi example established that any potential simply unpaid auxiliary do good is not included in the family maximum calculation. The illustration in Table A-ane shows how the Parisi rules work for a person whose auxiliary benefit is non payable because his or her worker benefit is higher. The table uses the same hypothetical disabled-worker beneficiary family every bit that illustrated in Table ii, just assumes that the spouse'due south worker benefit is $ane,000—greater than his or her potential auxiliary benefit of $600.
| Characteristic | Monthly benefit amount ($) | Rule practical |
|---|---|---|
| Before family maximum | ||
| Worker's benefit | 1,200 | 100% of the worker's PIA |
| Spouse'southward worker benefit | 1,000 | 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 | fifty% of the worker's PIA (potentially), merely not actually paid |
| Child one | 600 | 50% of the worker'south PIA |
| Child 2 | 600 | 50% of the worker's PIA |
| Total family do good | 3,400 | Sum of the worker's, spouse's, and auxiliaries' benefits |
| After family maximum | ||
| Worker'due south do good | 1,200 | 100% of the worker'due south PIA |
| Spouse's worker do good | 1,000 | 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 do not count toward the total family maximum auxiliary benefits. |
| Child i | 300 | ½ of the family maximum corporeality minus the worker's PIA ($600) |
| Child 2 | 300 | ½ of the family maximum corporeality minus the worker's PIA ($600) |
| Total family benefit | two,800 | Sum of the worker'south and auxiliaries' benefits, capped by the family maximum corporeality, plus the spouse's worker benefit |
| SOURCE: Authors' calculations. | ||
| NOTES: Dollar values are rounded to the nearest dollar for presentation purposes, but would actually be rounded down to the nearest dime. In this case, 85 percent of the worker'south 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. Every bit a result, the family maximum for this family is $ane,800, or 150 percent of the worker's PIA. | ||
| AIME = average indexed monthly earnings; DI = Disability Insurance; PIA = primary insurance amount. | ||
Dually Entitled Beneficiaries
Table A-2 shows calculations for a disabled-worker family similar to the 1 illustrated in Tabular array A-1—a disabled worker with a spouse and two children, who has an AIME of $two,253 and a PIA of $1,200. In this item exhibit, the spouse is dually entitled to a worker benefit of $100 in addition to his or her auxiliary benefit.29 Every bit in Tabular array A-one, the Parisi rules apply. In this case, merely the auxiliary portion of the spouse'due south benefit would exist reduced by the family maximum. We presume that the children authorize for auxiliary benefits on the worker'south tape, only non on the spouse's.
| Characteristic | Monthly benefit amount ($) | Rule applied |
|---|---|---|
| Before family maximum | ||
| Worker's benefit | 1,200 | 100% of the worker's PIA |
| Spouse'southward worker benefit | 100 | 100% of the spouse's PIA |
| Auxiliary benefits | ||
| Spouse | 500 | Dual entitlement rule—50% of the worker's PIA ($600) minus the spouse's PIA ($100) |
| Child 1 | 600 | 50% of the worker's PIA |
| Child ii | 600 | l% of the worker'due south PIA |
| Total family benefit | 3,000 | Sum of the worker'due south, spouse's, and auxiliaries' benefits |
| After family maximum | ||
| Worker'southward do good | 1,200 | 100% of the worker's PIA |
| Spouse's worker benefit | 100 | 100% of the spouse's PIA |
| Auxiliary benefits | ||
| Spouse | 100 | ⅓ of the family unit maximum amount minus the worker's PIA ($600) minus the spouse'south worker PIA |
| Child 1 | 250 | ⅓ of the family maximum corporeality minus the worker's PIA ($600) plus ½ of the $100 withheld from the spouse's auxiliary benefit |
| Child ii | 250 | ⅓ of the family maximum corporeality minus the worker's PIA ($600) plus ½ of the $100 withheld from the spouse's auxiliary benefit |
| Total family benefit | 1,900 | Sum of the worker's and auxiliaries' benefits, capped by the family maximum amount, plus the spouse's worker do good |
| 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 instance, 85 percent of the worker's AIME is $1,915, which is 160 percent of his or her PIA, greater than the cap of 150 per centum of the PIA that applies to inability beneficiaries. Equally a result, the family maximum for this family is $1,800, or 150 percent of the worker'southward PIA. | ||
| AIME = average indexed monthly earnings; DI = Disability Insurance; PIA = primary insurance amount. | ||
Combined Family Maximum
The combined family maximum is used when a person qualifies for auxiliary benefits on more than one worker'south tape. It is the sum of the family maximums applicable to each worker's record, merely not more than than the statutory upper limits for combined family maximums. 30
In Table A-3, we assume that two workers die, leaving behind three children who qualify for survivor benefits on both of their parents' piece of work records. We assume that the mother has a PIA of $1,200 and the father has a PIA of $1,000. This illustration shows how benefits are calculated in three stages: first, before applying the family maximum rules; second, using the ordinary family unit maximum rules (in this case, the family unit maximum that applies to the mother'due south earnings record—the record on which the children'south benefits are based); third, using the combined family maximum rules that would determine this family's final benefit amounts.
| Feature | Monthly benefit amount ($) | Rule applied |
|---|---|---|
| Before family maximum | ||
| Survivor benefits | ||
| Child 1 | 900 | 75% of the college-earning parent's PIA |
| Kid 2 | 900 | 75% of the college-earning parent's PIA |
| Child 3 | 900 | 75% of the higher-earning parent'southward PIA |
| Total family benefit | 2,700 | Sum of the survivor benefits |
| After family maximum (higher-earning parent only) | ||
| Survivor benefits | ||
| Kid i | 659 | ⅓ of the family maximum amount |
| Kid 2 | 659 | ⅓ of the family unit maximum amount |
| Child three | 659 | ⅓ of the family maximum corporeality |
| Total family unit benefit | one,976 | Family unit maximum amount |
| After combined family unit maximum (both parents) | ||
| Survivor benefits | ||
| Child 1 | 900 | 75% of the higher-earning parent's PIA |
| Child 2 | 900 | 75% of the higher-earning parent's PIA |
| Child 3 | 900 | 75% of the higher-earning parent'southward PIA |
| Total family benefit | 2,700 | Sum of the survivor benefits, which is less than the combined family maximum |
| SOURCE: Authors' calculations. | ||
| Note: Dollar values are rounded to the nearest dollar for presentation purposes, but would actually be rounded down to the nearest dime. | ||
| AIME = average indexed monthly earnings; OASI = Sometime-Age and Survivors Insurance; PIA = principal insurance amount. | ||
Notes
1 For more than data about the PIA and how it is calculated, refer to http://world wide web.socialsecurity.gov/oact/cola/piaformula.html.
2 People who became entitled to benefits before 1979 are discipline to a different family maximum formula (come across SSA'southward Almanac Statistical Supplement to the Social Security Bulletin, 2013 (Table 2.A17), http://www.socialsecurity.gov/policy/docs/statcomps/supplement/2013/2a8-2a19.html#table2.a17.
3 For more information on the boilerplate wage index, which SSA uses to index the family maximum, refer to http://world wide web.socialsecurity.gov/oact/cola/AWI.html.
4 For more information about how SSA calculates the AIME, refer to http://www.socialsecurity.gov/oact/cola/Benefits.html.
v For case, early retirement reductions, retirement earnings test withholdings, the windfall elimination provision reductions, and government alimony offsets.
half dozen For more data most how beneficiaries qualify for survivor benefits, run across SSA'southward "How Social Security Can Help Yous When A Family unit Member Dies," http://world wide web.socialsecurity.gov/pubs/EN-05-10008.pdf.
7 In 2015, the get-go bend point would exist $826. Thus, the first $826 of the AIME would be multiplied by 90 percent for a value of $743.40. The remaining $1,427 of the AIME above the get-go bend signal of $826 would be multiplied by 32 percentage 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 PIA rules round down the value to the nearest dime. For additional information on PIA formula bend points and applicative computation methods, refer to http://world wide web.socialsecurity.gov/oact/cola/piaformula.html.
viii Aligning of Monthly Benefits Nether the Family Maximum Provisions. Audit Study No.A-09-13-13087 (March 11, 2014), http://oig.ssa.gov/sites/default/files/audit/full/pdf/A-09-13-13087.pdf.
nine The total amount a dually entitled beneficiary receives is equal to the college of the worker benefit and the auxiliary benefit.
10 These rules are a effect of the Parisi court determination; for a total description of the ruling, refer to http://www.socialsecurity.gov/OP_Home/rulings/ar/01/AR97-01-ar-01.html. To determine the ruling'south 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.
xi In the Appendix, see Tables A-1 and A-2 for illustrations of how the Parisi example affects benefits.
12 For more information, run into SSA'southward Programme Operations Manual Organization RS 00615.770 (simultaneous entitlement of children on more than 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 be based), https://secure.ssa.gov/poms.nsf/lnx/0300615772.
13 The committee written report for the 1972 Amendments states, "The neb would provide that a child who is entitled to benefits on the earnings record of more than than one worker would get benefits based on the earnings record that results in paying him or her the highest corporeality, if the payment would not reduce the benefits of whatever other individual 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 benefit could otherwise result in a reduction of the benefits for other people entitled on the same earnings tape because of the family maximum limitation.)" (Congressional Tape on S. 18480, Oct 17, 1972)
fourteen Public Police (P.50.) 379.
15 P.L. 734; the thresholds were updated over again in the 1952 Amendments, P.L.82-590.
xvi P.L. 761.
17 P.L.85-840, P.L.87-64, P.50.89-97, and P.L.90-248.
xviii P.L.92-five.
nineteen P.L.92-336.
20 Congress passed two major Social Security bills in 1972. For more data, refer to http://world wide web.socialsecurity.gov/history/1972amend.html.
21 P.50.92-603.
22 Commission 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 (committee reports for P.L.95-216). Congressional members considered setting a flat-charge per unit maximum, but decided that information technology would either result 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 percent to 188 percent. The law provided an exception for those who became entitled to benefits in 1979 or earlier.
24 The DI family maximum rules were described by the chairman of the House Ways and Means Committee every bit "temporary and a transition," but the formula has been maintained since then (Congressional Tape on H. 7410, September 6, 1979).
25 Conference Study, H.R. 3236/P.L.96-265, Inability 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 percentage of earnings if he or she had become entitled to inability benefits in 1976 (Firm commission study, no.96-100, 4). Secretary of Health, Instruction, and Welfare Joseph Califano (who oversaw the Social Security plan) testified that approximately half dozen percent of DI beneficiaries received family benefits that were greater than their previous internet earnings (Congressional Record on H. 7410, September 6, 1979).
27 Authors' calculations using MINT6. For more than information on the authors' methodology and the MINThalf dozen model, encounter the Methodology department.
28 See the Almanac Statistical Supplement to the Social Security Bulletin, 2013 (Table 5.H2), http://world wide web.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, as both the dually entitled spouse and combined family maximum rules may apply.
30 Refer to annotation 12.
Source: https://www.ssa.gov/policy/docs/ssb/v75n3/v75n3p1.html
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