[Federal Register Volume 64, Number 207 (Wednesday, October 27, 1999)]
[Rules and Regulations]
[Pages 57774-57776]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-28017]


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SOCIAL SECURITY ADMINISTRATION

20 CFR Part 404

RIN 0960-AE85


Reduction of Title II Benefits Under the Family Maximum 
Provisions in Cases of Dual Entitlement

AGENCY: Social Security Administration.

ACTION: Interim final rules with a request for comments.

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SUMMARY: We are amending our rules concerning the family maximum 
provisions under title II of the Social Security Act (the Act). These 
rules amend how we compute the total monthly benefits payable to a 
family when one or more of the beneficiaries are entitled to benefits 
on another earnings record. In certain specific circumstances, this 
change to our rules will increase the amount of benefits payable to 
some family members entitled on the record to which the family maximum 
applies. These final rules adopt nationwide the holding of the U.S. 
Court of Appeals for the First Circuit in Parisi by Cooney v. Chater. 
Although we are issuing these rules as interim final rules, we are also 
asking for public comments on this change.

DATES: These regulations are effective October 27, 1999. To be sure 
your comments are considered, we must receive them by December 27, 
1999.

ADDRESSES: Comments should be submitted in writing to the Commissioner 
of Social Security, P.O. Box 17703, Baltimore, MD 21235-7703, sent by 
telefax to (410) 966-2830, sent by E-mail to ``[email protected],'' 
or delivered to the Office of Process and Innovation Management, Social 
Security Administration, L2109 West Low Rise Building, 6401 Security 
Boulevard, Baltimore, MD 21235-6401, between 8:00 A.M. and 4:30 P.M. on 
regular business days. Comments may be inspected during these hours by 
making arrangements with the contact person shown below.

FOR FURTHER INFORMATION CONTACT: Regarding this Federal Register 
document-Bill E. Hilton, Social Insurance Specialist, Office of Program 
Benefits, Social Security Administration, 6401 Security Boulevard, 
Baltimore, MD 21235-6401, (410) 965-2468 or TTY (410) 966-5609; 
regarding eligibility or filing for benefits--our national toll-free 
number, 1-800-772-1213 or TTY 1-800-325-0778.

SUPPLEMENTARY INFORMATION:

Background

    Section 203(a) of the Act establishes a limit, derived from a 
worker's primary insurance amount (PIA), on the total monthly benefits 
to which dependents or survivors may be entitled on the basis of one 
worker's earnings record (the family maximum). Under our previous 
regulations, the benefits of each claimant entitled on the worker's 
earnings record were reduced proportionally so that the total monthly 
benefits of those entitled on the record in one month did not exceed 
the family maximum. In calculating total monthly benefits, we included 
all benefits of the claimants who were entitled on the worker's record 
without considering whether the benefits were actually due or payable.
    Our previous regulations were challenged in court by the child of a 
worker who was disabled. The worker and his dependent child, the 
plaintiff in this case, began receiving Social Security benefits on the 
worker's earnings record. The worker's spouse became entitled to 
retirement benefits (old-age benefits) based on her own earnings 
record. Under section 202(r) of the Act, she was deemed also to have 
applied for and become entitled to wife's benefits based on the 
worker's earnings record. The Social Security Administration (SSA) 
determined that because the monthly retirement benefits that she was 
entitled to receive on her own exceeded the amount of her monthly 
wife's benefits on the worker's earnings record, she could only receive 
payment for the retirement benefits payable on her own earnings record. 
However, SSA counted the benefits to which she was entitled on the 
worker's earnings record, but which were not actually paid to her, 
toward the monthly maximum amount of benefits payable on the worker's 
earnings record (the family maximum). Because the total monthly amount 
of the worker's disability benefits, the plaintiff's child's benefits, 
and the wife's benefits exceeded the monthly family maximum limit, SSA 
reduced the amount of the plaintiff's and the wife's monthly benefits.
    In Parisi By Cooney v. Chater, 69 F.3d 614 (1st Cir., 1995), the 
court held that, when computing a reduction under the family maximum 
pursuant to section 203(a) of the Act, SSA should not include the 
monthly benefit that would otherwise be payable to a spouse if payment 
of that spouse's benefit is precluded (by section 202(k)(3)(A) of the 
Act), due to the spouse's dual entitlement to a higher benefit on the 
spouse's own earnings record. To

[[Page 57775]]

implement the Court's ruling in the First Circuit, we issued an 
Acquiescence Ruling (AR) on January 13, 1997 (62 FR 1792). Under this 
ruling (AR 97-1(1)), which applied only to claims for benefits in the 
First Circuit, SSA considers only the amount of monthly dependent's or 
survivor's benefits actually due or payable to the dually-entitled 
person when determining the amount of the benefit reduction because of 
the family maximum. As a result of the Court's decision, we reassessed 
our interpretation in our prior regulations and consistent with our 
rules on acquiescence which were designed to restore national 
uniformity to our programs, we have decided to adopt the court's 
holdings nationwide.

Explanation of Changes

    We are amending Sec. 404.403 of our regulations by adding a new 
paragraph (a)(5). This new paragraph specifies that, in cases involving 
benefits subject to reduction for both the family maximum and dual 
entitlement, we consider only the amount of monthly dependent's or 
survivor's benefits actually due or payable to the dually-entitled 
person when we determine how much to reduce total monthly benefits 
because of the family maximum. We have included examples of how we 
compute benefits payable in such cases.
    These changes are effective for benefits payable for months 
beginning October 1999.
    In conjunction with the revisions we are making to adopt the 
holdings of the Parisi court nationwide, we are publishing elsewhere in 
today's Federal Register a notice rescinding AR 97-1(1).

Clarity of These Regulations

    Executive Order (E.O.) 12866 and the President's memorandum of June 
1, 1998, require each agency to write all rules in plain language. In 
addition to your substantive comments on these rules, we invite your 
comments on how to make these rules easier to understand.
    For example:
     Have we organized the material to suit your needs?
     Are the requirements in the rules clearly stated?
     Do the rules contain technical language or jargon that is 
unclear.
     Would a different format (grouping and order of sections, 
use of headings, paragraphing) make the rules easier to understand?
     Would more (but shorter) sections be better?
     Could we improve clarity by adding tables, lists, or 
diagrams?
     What else could we do to make the rules easier to 
understand?

Electronic Version

    The electronic file of this document is available on the date of 
publication in the Federal Register on the Internet site for the 
Government Printing Office http://www.access.gpo.gov/su__docs/aces/
aces140.html. It is also available on the Internet site for SSA (i.e., 
SSA Online): http://www.ssa.gov/.

Regulatory Procedures

    Pursuant to section 702(a)(5) of the Social Security Act, 42 U.S.C. 
902(a)(5), as amended by section 102 of Public Law 103-296, SSA follows 
the Administrative Procedure Act (APA) rulemaking procedures specified 
in 5 U.S.C. 553 in the development of its regulations. The APA provides 
exceptions to its notice and public comment procedures when an agency 
finds there is good cause for dispensing with such procedures on the 
basis that they are impracticable, unnecessary, or contrary to the 
public interest. We have determined that, under 5 U.S.C. 553(b)(B), 
good cause exists for dispensing with the notice and public comment 
procedures in this case. We have determined that prior public notice 
and comment in this instance would be contrary to the public interest 
since any delay in issuing these rules as final rules would 
unnecessarily deprive the small number of affected beneficiaries of 
increased benefits. Therefore, we are issuing these regulations as 
interim final rules. However, even though we are issuing these rules as 
interim final regulations, we are requesting public comments and will 
issue revised rules if necessary.
    For the same reasons, we also find good cause for dispensing with 
the 30-day delay in the effective date of a substantive rule, provided 
for by 5 U.S.C. 553(d).

Executive Order 12866

    We have consulted with the Office of Management and Budget (OMB) 
and determined that these interim final rules do not meet the criteria 
for a significant regulatory action under Executive Order 12866. Thus, 
they were not subject to OMB review. We have also determined that these 
rules meet the plain language requirement of Executive Order 12866 and 
the President's memorandum of June 1, 1998. However, as noted earlier, 
we invite your comments on how to make the rules easier to understand.

Regulatory Flexibility Act

    We certify that these interim final regulations will not have a 
significant economic impact on a substantial number of small entities. 
Therefore, a regulatory flexibility analysis as provided in the 
Regulatory Flexibility Act, as amended, is not required.

Paperwork Reduction Act

    These interim final regulations will impose no additional reporting 
or recordkeeping requirements requiring OMB clearance.

(Catalog of Federal Domestic Assistance Program Nos. 96.001, Social 
Security-Disability Insurance; 96.002, Social Security-Retirement 
Insurance; 96.004, Social Security-Survivors Insurance)

List of Subjects in 20 CFR Part 404

    Administrative practice and procedure, Blind, Disability benefits, 
Old-Age, Survivors and Disability Insurance, Reporting and 
recordkeeping requirements, Social Security.

    Dated: October 20, 1999.
Kenneth S. Apfel,
Commissioner of Social Security.

    For the reasons set forth in the preamble, we are amending subpart 
E of part 404 of Title 20 of the Code of Federal Regulations as 
follows:

PART 404--FEDERAL OLD-AGE, SURVIVORS AND DISABILITY INSURANCE 
(1950-    )

Subpart E--[Amended]

    1. The authority citation for subpart E of part 404 continues to 
read as follows:

    Authority: Secs. 202, 203, 204(a) and (e), 205(a) and (c), 
222(b), 223(e), 224, 225, and 702(a)(5) of the Social Security Act 
(42 U.S.C. 402, 403, 404(a) and (e), 405(a) and (c), 422(b), 423(e), 
424a, 425, and 902(a)(5)).

    2. We are amending Sec. 404.403 by adding a new paragraph (a)(5) to 
read as follows:


Sec. 404.403  Reduction where total monthly benefits exceed maximum 
family benefits payable.

    (a) * * *
    (5) When a person entitled on a worker's earnings record is also 
entitled to benefits on another earnings record, we consider only the 
amount of benefits actually due or payable on the worker's record to 
the dually-entitled person when determining how much to reduce total 
monthly benefits payable on the worker's earnings record because of the 
maximum. We do not include, in total benefits payable, any amount not 
paid because of that person's entitlement on another earnings record 
(see Sec. 404.407). The effect of this provision is to permit payment 
of up to the full maximum benefits to other beneficiaries who are not 
subject to a deduction or reduction.

[[Page 57776]]

(See Sec. 404.402 for other situations where we apply deductions or 
reductions before reducing total benefits for the maximum.)

    Example 1: A wage earner, his wife and child are entitled to 
benefits. The wage earner's primary insurance amount is $600.00. His 
maximum is $900.00. Due to the maximum limit, the monthly benefits 
for the wife and child must be reduced to $150.00 each. Their 
original benefit rates are $300.00 each.

Maximum--$900.00
Subtract primary insurance amount--$600.00
Amount available for wife and child--$300.00
Divide by 2--$150.00 each for wife and child

    The wife is also entitled to benefits on her own record of 
$120.00 monthly. This reduces her wife's benefit to $30.00. The 
following table illustrates this calculation.

Wife's benefit, reduced for maximum--$150.00
Subtract reduction due to dual entitlement--$120.00
Wife's benefit--$30.00

    In computing the total benefits payable on the record, we disregard 
the $120.00 we cannot pay the wife. This allows us to increase the 
amount payable to the child to $270.00. The table below shows the steps 
in our calculation.

Amount available under maximum--$300.00
Subtract amount due wife after reduction due to entitlement to her 
own benefit--$30.00
Child's benefit--$270.00

    Example 2: A wage earner, his wife and 2 children are entitled 
to benefits. The wage earner's primary insurance amount is 
$1,250.00. His maximum is $2,180.00. Due to the maximum limit, the 
monthly benefits for the wife and children must be reduced to 
$310.00 each. Their original rates (50 percent of the worker's 
benefit) are $625.00 each. The following shows the calculation.

Maximum--$2,180.00
Subtract primary insurance amount--$1,250.00
Amount available for wife and children--$930.00
Divide by 3--$310 each for wife and children

    The children are also entitled to benefits on their own records. 
Child one is entitled to $390.00 monthly and child two is entitled 
to $280.00 monthly. This causes a reduction in the benefit to child 
one to 0.00 and the benefit to child two to $30.00. Again, the 
following illustrates the calculation.

Benefit payable to child 1 reduced for maximum--$310.00
Subtract reduction due to dual entitlement--$390.00
Benefit payable to child 1--$0.00
Benefit payable to child 2, reduced for maximum--$310.00
Subtract reduction for dual entitlement--$280.00
Benefit payable to child 2--$30.00

    In computing the total benefits payable on the record, we 
consider only the benefits actually paid to the children, or $30. 
This allows payment of an additional amount to the wife, increasing 
her benefit to $625.00. This is how the calculation works.
Amount available under maximum for wife and children--$930.00
Subtract amount due children after reduction due to entitlement to 
their own benefits--$30.00
Amount available for wife--$900.00
Amount payable to wife (original benefit)--$625.00

    Example 3: A wage earner, his wife and 4 children are entitled 
to benefits. The wage earner's primary insurance amount is 
$1,250.00. His maximum is $2,180.00. Due to the maximum limit, the 
monthly benefits for the wife and children must be reduced to 
$186.00 each. Their original rates are $625.00 each. This is how the 
calculation works.

Maximum--$2,180.00
Subtract primary insurance amount--$1,250.00
Amount available for wife and children--$930.00
Divide by 5--$186.00 each for wife and four children

    Two children are also entitled to benefits on their own records. 
Child one is entitled to $390.00 monthly and child two is entitled 
to $280.00 monthly. This causes a reduction in the benefit to child 
one to $0.00 and the benefit to child two to $0.00. This calculation 
is as follows.

Benefit to child 1, reduced for maximum--$186.00
Subtract reduction due to dual entitlement--$390.00
Benefit payable to child 1--$0.00

Benefit to child 2, reduced for maximum--$186.00
Subtract reduction for dual entitlement--$280.00
Benefit payable to child two--$0.00

    In computing the total benefits payable on the record, we 
disregard the $372.00 we cannot pay the children. This allows 
payment of an additional amount to the wife, and the two remaining 
children as follows:

Amount available under maximum for wife and children--$930.00
Subtract amount due child one and child two after reduction due to 
entitlement to their own benefits--$0.00
Amount available for wife and the other two children--$930.00
Amount payable to the wife and each of the remaining two children--
$310.00
* * * * *
[FR Doc. 99-28017 Filed 10-26-99; 8:45 am]
BILLING CODE 4191-02-P