[Federal Register Volume 65, Number 206 (Tuesday, October 24, 2000)]
[Notices]
[Pages 63663-63668]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-27249]


=======================================================================
-----------------------------------------------------------------------

SOCIAL SECURITY ADMINISTRATION

Office of the Commissioner


Cost-of-Living Increase and Other Determinations for the Year 
2001

AGENCY: Social Security Administration.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: The Commissioner has determined--
    (1) A 3.5 percent cost-of-living increase in Social Security 
benefits under title II of the Social Security Act (the Act), effective 
for December 2000;
    (2) An increase in the Federal Supplemental Security Income (SSI) 
monthly benefit amounts under title XVI of the Act for 2001 to $530 for 
an eligible individual, $796 for an eligible individual with an 
eligible spouse, and $266 for an essential person;
    (3) The national average wage index for 1999 to be $30,469.84;
    (4) The Old-Age, Survivors, and Disability Insurance (OASDI) 
contribution and benefit base to be $80,400 for remuneration paid in 
2001 and self-employment income earned in taxable years beginning in 
2001;
    (5) For beneficiaries under age 65, the monthly exempt amount under 
the Social Security retirement earnings test for taxable years ending 
in calendar year 2001 to be $890;
    (6) The dollar amounts (``bend points'') used in the benefit 
formula for workers who become eligible for benefits in 2001 to be $561 
and $3,381;
    (7) The dollar amounts (``bend points'') used in the formula for 
computing maximum family benefits for workers who become eligible for 
benefits in 2001 to be $717, $1,034, and $1,349;
    (8) The amount of earnings a person must have to be credited with a 
quarter of coverage in 2001 to be $830;
    (9) The ``old-law'' contribution and benefit base to be $59,700 for 
2001;
    (10) The monthly amount of substantial gainful activity applicable 
to statutorily blind individuals in 2001 to be $1,240;
    (11) Coverage thresholds for 2001 to be $1,300 for domestic workers 
and $1,100 for election workers; and
    (12) The OASDI fund ratio to be 215.4 percent for 2000.

FOR FURTHER INFORMATION CONTACT: Jeffrey L. Kunkel, Office of the Chief 
Actuary, Social Security Administration, 6401 Security Boulevard, 
Baltimore, MD 21235, (410) 965-3013. For information on eligibility or 
claiming benefits, call 1-800-772-1213. Information relating to this 
announcement is available on the Internet at
http://www.ssa.gov/OACT/COLA/index.html.

SUPPLEMENTARY INFORMATION: In accordance with the Act, the Commissioner 
must publish within 45 days after the close of the third calendar 
quarter of 2000 the benefit increase percentage and the revised table 
of ``special minimum'' benefits (section 215(i)(2)(D)). Also, the 
Commissioner must publish on or before November 1 the national average 
wage index for 1999 (section 215(a)(1)(D)), the OASDI fund ratio for 
2000 (section 215(i)(2)(C)(ii)), the OASDI contribution and benefit 
base for 2001 (section 230(a)), the amount of earnings required to be 
credited with a quarter of coverage in 2001 (section 213(d)(2)), the 
monthly exempt amounts under the Social Security retirement earnings 
test for 2001 (section 203(f)(8)(A)), the formula for computing a 
primary insurance amount for workers who first become eligible for 
benefits or die in 2001 (section 215(a)(1)(D)), and the formula for 
computing the maximum amount of benefits payable to the family of a 
worker who first becomes eligible for old-age benefits or dies in 2001 
(section 203(a)(2)(C)).

Cost-of-Living Increases

    General. The cost-of-living increase is 3.5 percent for benefits 
under titles II and XVI of the Act. Under title II, OASDI benefits will 
increase by 3.5 percent beginning with December 2000 benefits, payable 
in January 2001. This increase is based on the authority contained in 
section 215(i) of the Act (42 U.S.C. 415(i)).
    Under title XVI, Federal SSI payment levels will also increase by 
3.5 percent effective for payments made for the month of January 2001 
but paid on December 29, 2000. This is based on the authority contained 
in section 1617 of the Act (42 U.S.C. 1382f).
    Automatic Benefit Increase Computation. Under section 215(i) of the 
Act, the third calendar quarter of 2000 is a cost-of-living computation

[[Page 63664]]

quarter for all the purposes of the Act. The Commissioner is, 
therefore, required to increase benefits, effective with December 2000, 
for individuals entitled under section 227 or 228 of the Act, to 
increase primary insurance amounts of all other individuals entitled 
under title II of the Act, and to increase maximum benefits payable to 
a family. For December 2000, the benefit increase is the percentage 
increase in the Consumer Price Index for Urban Wage Earners and 
Clerical Workers from the third quarter of 1999 through the third 
quarter of 2000.
    Section 215(i)(1) of the Act provides that the Consumer Price Index 
for a cost-of-living computation quarter shall be the arithmetic mean 
of this index for the 3 months in that quarter. We round the arithmetic 
mean, if necessary, to the nearest 0.1. The Department of Labor's 
Consumer Price Index for Urban Wage Earners and Clerical Workers for 
each month in the quarter ending September 30, 1999, is: for July 1999, 
163.3; for August 1999, 163.8; and for September 1999, 164.7. The 
arithmetic mean for this calendar quarter is 163.9. The corresponding 
Consumer Price Index for each month in the quarter ending September 30, 
2000, is: for July 2000, 169.4; for August 2000, 169.3; and for 
September 2000, 170.4. The arithmetic mean for this calendar quarter is 
169.7. Thus, because the Consumer Price Index for the calendar quarter 
ending September 30, 2000, exceeds that for the calendar quarter ending 
September 30, 1999 by 3.5 percent, a cost-of-living benefit increase of 
3.5 percent is effective for benefits under title II of the Act 
beginning December 2000.
    Title II Benefit Amounts. In accordance with section 215(i) of the 
Act, in the case of workers and family members for whom eligibility for 
benefits (i.e., the worker's attainment of age 62, or disability or 
death before age 62) occurred before 2001, benefits will increase by 
3.5 percent beginning with benefits for December 2000 which are payable 
in January 2001. In the case of first eligibility after 2000, the 3.5 
percent increase will not apply.
    For eligibility after 1978, benefits are generally determined by a 
benefit formula provided by the Social Security Amendments of 1977 
(Pub. L. 95-216), as described later in this notice.
    For eligibility before 1979, we determine benefits by means of a 
benefit table. You may obtain a copy of this table by writing to: 
Social Security Administration, Office of Public Inquiries, 4100 Annex, 
Baltimore, MD 21235. The table is also available on the Internet at 
address

http://www.ssa.gov/OACT/ProgData/tableForm.html.
    Section 215(i)(2)(D) of the Act requires that, when the 
Commissioner determines an automatic increase in Social Security 
benefits, the Commissioner shall publish in the Federal Register a 
revision of the range of the primary insurance amounts and 
corresponding maximum family benefits based on the dollar amount and 
other provisions described in section 215(a)(1)(C)(i). We refer to 
these benefits as ``special minimum'' benefits. These benefits are 
payable to certain individuals with long periods of relatively low 
earnings. To qualify for such benefits, an individual must have at 
least 11 ``years of coverage.'' To earn a year of coverage for purposes 
of the special minimum, a person must earn at least a certain 
proportion (25 percent for years before 1991, and 15 percent for years 
after 1990) of the ``old-law'' contribution and benefit base. In 
accordance with section 215(a)(1)(C)(i), the table below shows the 
revised range of primary insurance amounts and corresponding maximum 
family benefit amounts after the 3.5 percent benefit increase.

  Special Minimum Primary Insurance Amounts and Maximum Family Benefits
                        Payable for December 2000
------------------------------------------------------------------------
                                                  Primary      Maximum
          Number of years of coverage            insurance      family
                                                   amount      benefit
------------------------------------------------------------------------
11............................................       $29.40       $44.70
12............................................        59.40        89.80
13............................................        89.70       134.90
14............................................       119.50       179.80
15............................................       149.50       224.50
16............................................       179.60       270.20
17............................................       209.70       315.40
18............................................       239.90       360.30
19............................................       269.90       405.50
20............................................       299.80       450.50
21............................................       330.20       495.90
22............................................       360.00       540.80
23............................................       390.40       586.60
24............................................       420.50       631.50
25............................................       450.50       676.10
26............................................       480.80       722.10
27............................................       510.70       766.90
28............................................       540.70       811.80
29............................................       570.80       857.10
30............................................       600.90       902.00
------------------------------------------------------------------------

    Title XVI Benefit Amounts. In accordance with section 1617 of the 
Act, Federal SSI benefit amounts for the aged, blind, and disabled will 
increase by 3.5 percent effective January 2001. For 2000, we derived 
the monthly benefit amounts for an eligible individual, an eligible 
individual with an eligible spouse, and for an essential person--$512, 
$769, and $257, respectively--from corresponding yearly unrounded 
Federal SSI benefit amounts of $6,154.26, $9,230.35, and $3,084.18. For 
2001, these yearly unrounded amounts increase by 3.5 percent to 
$6,369.66, $9,553.41, and $3,192.13, respectively. Each of these 
resulting amounts must be rounded, when not a multiple of $12, to the 
next lower multiple of $12. Accordingly, the corresponding annual 
amounts, effective for 2001, are $6,360, $9,552, and $3,192. Dividing 
the yearly amounts by 12 gives the corresponding monthly amounts for 
2001--$530, $796, and $266, respectively. We reduce the monthly amount 
by subtracting monthly countable income. In the case of an eligible 
individual with an eligible spouse, we equally divide the amount 
payable between the two spouses.
    Fee for Services Performed as a Representative Payee. Sections 
205(j)(4)(A)(i) and 1631(a)(2)(D)(i) of the Act permit a qualified 
organization to collect from an individual a monthly fee for expenses 
incurred in providing services performed as such individual's 
representative payee. Currently the fee is limited to the lesser of: 
(1) 10 percent of the monthly benefit involved; or (2) $ 28 per month 
($54 per month in any case in which the individual is entitled to 
disability benefits and the Commissioner has determined that payment to 
the representative payee would serve the interest of the individual 
because the individual has an alcoholism or drug addiction condition 
and is incapable of managing such benefits). The dollar fee limits are 
subject to increase by the automatic cost-of-living increase, with the 
resulting amounts rounded to the nearest whole dollar amount. Thus we 
will increase the current amounts by 3.5 percent to $29 and $56 for 
2001.

National Average Wage Index for 1999

    General. Under various provisions of the Act several amounts 
increase automatically with annual increases in the national average 
wage index. The amounts are: (1) The OASDI contribution and benefit 
base; (2) the retirement test exempt amounts; (3) the dollar amounts, 
or ``bend points,'' in the primary insurance amount and maximum family 
benefit formulas; (4) the amount of earnings required for a worker to 
be credited with a quarter of coverage; (5) the ``old-law'' 
contribution and benefit base (as determined under section 230 of the 
Act as in effect before the 1977 amendments); (6) the substantial 
gainful activity amount applicable to statutorily blind individuals; 
and (7) the coverage

[[Page 63665]]

threshold for election officials and election workers. Also, section 
3121(x) of the Internal Revenue Code requires that the domestic 
employee coverage threshold be based on changes in the national average 
wage index.
    Computation. The determination of the national average wage index 
for calendar year 1999 is based on the 1998 national average wage index 
of $28,861.44 announced in the Federal Register on October 25, 1999 (64 
FR 57506), along with the percentage increase in average wages from 
1998 to 1999 measured by annual wage data tabulated by the Social 
Security Administration (SSA). The wage data tabulated by SSA include 
contributions to deferred compensation plans, as required by section 
209(k) of the Act. The average amounts of wages calculated directly 
from these data were $27,686.75 and $29,229.69 for 1998 and 1999, 
respectively. To determine the national average wage index for 1999 at 
a level that is consistent with the national average wage indexing 
series for 1951 through 1977 (published December 29, 1978, at 43 FR 
61016), we multiply the 1998 national average wage index of $28,861.44 
by the percentage increase in average wages from 1998 to 1999 (based on 
SSA-tabulated wage data) as follows (with the result rounded to the 
nearest cent):
    Amount. The national average wage index for 1999 is $28,861.44 
times $29,229.69 divided by $27,686.75, which equals $30,469.84. 
Therefore, the national average wage index for calendar year 1999 is 
$30,469.84.

OASDI Contribution and Benefit Base

    General. The OASDI contribution and benefit base is $80,400 for 
remuneration paid in 2001 and self-employment income earned in taxable 
years beginning in 2001.
    The OASDI contribution and benefit base serves two purposes:
    (a) It is the maximum annual amount of earnings on which OASDI 
taxes are paid. The OASDI tax rate for remuneration paid in 2001 is 6.2 
percent for employees and employers, each. The OASDI tax rate for self-
employment income earned in taxable years beginning in 2001 is 12.4 
percent. (The Hospital Insurance tax is due on remuneration, without 
limitation, paid in 2001, at the rate of 1.45 percent for employees and 
employers, each, and on self-employment income earned in taxable years 
beginning in 2001, at the rate of 2.9 percent.)
    (b) It is the maximum annual amount used in determining a person's 
OASDI benefits.
    Computation. Section 230(b) of the Act provides the formula used to 
determine the OASDI contribution and benefit base. Under the formula, 
the base for 2001 shall be the larger of: (1) The 1994 base of $60,600 
multiplied by the ratio of the national average wage index for 1999 to 
that for 1992; or (2) the current base ($76,200). If the resulting 
amount is not a multiple of $300, it shall be rounded to the nearest 
multiple of $300.
    Amount. The ratio of the national average wage index for 1999, 
$30,469.84 as determined above, compared to that for 1992, $22,935.42, 
is 1.3285059. Multiplying the 1994 OASDI contribution and benefit base 
amount of $60,600 by the ratio of 1.3285059 produces the amount of 
$80,507.46 which rounds to $80,400. Because $80,400 exceeds the current 
base amount of $76,200, the OASDI contribution and benefit base is 
$80,400 for 2001.

Retirement Earnings Test Exempt Amounts

    General. We withhold Social Security benefits when a beneficiary 
under the normal retirement age (NRA) has earnings in excess of the 
applicable retirement earnings test exempt amount. (NRA is the age at 
which the benefit, before rounding, is equal to the worker's primary 
insurance amount. The NRA is age 65 for those born before 1938, and it 
will gradually increase to age 67.) For 2001, NRA is age 65. From 1978 
through 1999, when the retirement earnings test applied to individuals 
beyond the NRA, higher exempt amounts applied to beneficiaries aged 65 
to 69 compared to those under age 65. Under Pub. L. 106-182, the 
``Senior Citizens'' Freedom to Work Act of 2000,'' which ended the 
retirement earnings test for beneficiaries who have attained NRA, these 
higher exempt amounts still apply in the year in which a person attains 
his/her NRA, but only for months prior to such attainment. Section 
203(f)(8)(B) of the Act, as amended by section 102 of Pub. L. 104-121, 
provides formulas for determining the monthly exempt amounts. The 
amendment set the higher annual exempt amount to $25,000 for 2001 and 
$30,000 for 2002. After 2002, the higher exempt amount will increase 
under the applicable formula. The corresponding monthly exempt amounts 
are exactly one-twelfth of the annual amounts.
    For beneficiaries attaining NRA in the year, we withhold $1 in 
benefits for every $3 of earnings in excess of the annual exempt amount 
for months prior to such attainment. For all other beneficiaries under 
NRA, we withhold $1 in benefits for every $2 of earnings in excess of 
the annual exempt amount.
    Computation. Under the formula applicable to beneficiaries under 
the NRA, the monthly exempt amount for 2001 shall be the larger of: (1) 
The 1994 monthly exempt amount multiplied by the ratio of the national 
average wage index for 1999 to that for 1992; or (2) the 2000 monthly 
exempt amount ($840). If the resulting amount is not a multiple of $10, 
it shall be rounded to the nearest multiple of $10.
    Exempt Amount for Beneficiaries Under NRA. The ratio of the 
national average wage index for 1999, $30,469.84, compared to that for 
1992, $22,935.42, is 1.3285059. Multiplying the 1994 retirement 
earnings test monthly exempt amount of $670 by the ratio 1.3285059 
produces the amount of $890.10. We round this to $890. Because $890 is 
larger than the corresponding current exempt amount of $840, the 
retirement earnings test monthly exempt amount for beneficiaries under 
NRA is $890 for 2001. The corresponding retirement earnings test annual 
exempt amount for these beneficiaries is $10,680.

Computing Benefits After 1978

    General. The Social Security Amendments of 1977 provided a method 
for computing benefits which generally applies when a worker first 
becomes eligible for benefits after 1978. This method uses the worker's 
``average indexed monthly earnings'' to compute the primary insurance 
amount. We adjust the computation formula each year to reflect changes 
in general wage levels, as measured by the national average wage index.
    We also adjust, or ``index,'' a worker's earnings to reflect the 
change in general wage levels that occurred during the worker's years 
of employment. Such indexation ensures that a worker's future benefits 
reflect the general rise in the standard of living that occurs during 
his or her working lifetime. To compute the average indexed monthly 
earnings, we first determine the needed number of years of earnings. 
Then we select that number of years with the highest indexed earnings, 
add the indexed earnings, and divide the total amount by the total 
number of months in those years. We then round the resulting average 
amount down to the next lower dollar amount. The result is the average 
indexed monthly earnings.
    For example, to compute the average indexed monthly earnings for a 
worker attaining age 62, becoming disabled before age 62, or dying 
before attaining age 62, in 2001, we divide the national average wage 
index for 1999,

[[Page 63666]]

$30,469.84, by the national average wage index for each year prior to 
1999 in which the worker had earnings. Then we multiply the actual 
wages and self-employment income, as defined in section 211(b) of the 
Act and credited for each year, by the corresponding ratio to obtain 
the worker's indexed earnings for each year before 1999. We consider 
any earnings in 1999 or later at face value, without indexing. We then 
compute the average indexed monthly earnings for determining the 
worker's primary insurance amount for 2001.
    Computing the Primary Insurance Amount. The primary insurance 
amount is the sum of three separate percentages of portions of the 
average indexed monthly earnings. In 1979 (the first year the formula 
was in effect), these portions were the first $180, the amount between 
$180 and $1,085, and the amount over $1,085. We call the dollar amounts 
in the formula governing the portions of the average indexed monthly 
earnings the ``bend points'' of the formula. Thus, the bend points for 
1979 were $180 and $1,085.
    To obtain the bend points for 2001, we multiply the corresponding 
1979 bend-point amounts by the ratio between the national average wage 
index for 1999, $30,469.84, and for 1977, $9,779.44. We then round 
these results to the nearest dollar. For 2001, the ratio is 3.1157040. 
Multiplying the 1979 amounts of $180 and $1,085 by 3.1157040 produces 
the amounts of $560.83 and $3,380.54. We round these to $561 and 
$3,381. Accordingly, the portions of the average indexed monthly 
earnings to be used in 2001 are the first $561, the amount between $561 
and $3,381, and the amount over $3,381.
    Consequently, for individuals who first become eligible for old-age 
insurance benefits or disability insurance benefits in 2001, or who die 
in 2001 before becoming eligible for benefits, their primary insurance 
amount will be the sum of:
    (a) 90 percent of the first $561 of their average indexed monthly 
earnings, plus
    (b) 32 percent of their average indexed monthly earnings over $561 
and through $3,381, plus
    (c) 15 percent of their average indexed monthly earnings over 
$3,381.
    We round this amount to the next lower multiple of $.10 if it is 
not already a multiple of $.10. This formula and the rounding 
adjustment described above are contained in section 215(a) of the Act 
(42 U.S.C. 415(a)).

Maximum Benefits Payable to a Family

    General. The 1977 amendments continued the long established policy 
of limiting the total monthly benefits that a worker's family may 
receive based on his or her primary insurance amount. Those amendments 
also continued the then existing relationship between maximum family 
benefits and primary insurance amounts but did change the method of 
computing the maximum amount of benefits that may be paid to a worker's 
family. The Social Security Disability Amendments of 1980 (Pub. L. 96-
265) established a formula for computing the maximum benefits payable 
to the family of a disabled worker. This formula applies to the family 
benefits of workers who first become entitled to disability insurance 
benefits after June 30, 1980, and who first become eligible for these 
benefits after 1978. For disabled workers initially entitled to 
disability benefits before July 1980, or whose disability began before 
1979, we compute the family maximum payable the same as the old-age and 
survivor family maximum.
    Computing the Old-Age and Survivor Family Maximum. The formula used 
to compute the family maximum is similar to that used to compute the 
primary insurance amount. It involves computing the sum of four 
separate percentages of portions of the worker's primary insurance 
amount. In 1979, these portions were the first $230, the amount between 
$230 and $332, the amount between $332 and $433, and the amount over 
$433. We refer to such dollar amounts in the formula as the ``bend 
points'' of the family-maximum formula.
    To obtain the bend points for 2001, we multiply the corresponding 
1979 bend-point amounts by the ratio between the national average wage 
index for 1999, $30,469.84, and the average for 1977, $9,779.44. Then 
we round this amount to the nearest dollar. For 2001, the ratio is 
3.1157040. Multiplying the amounts of $230, $332, and $433 by 3.1157040 
produces the amounts of $716.61, $1,034.41, and $1,349.10. We round 
these amounts to $717, $1,034, and $1,349. Accordingly, the portions of 
the primary insurance amounts to be used in 2001 are the first $717, 
the amount between $717 and $1,034, the amount between $1,034 and 
$1,349, and the amount over $1,349.
    Consequently, for the family of a worker who becomes age 62 or dies 
in 2001 before age 62, we will compute the total amount of benefits 
payable to them so that it does not exceed:
    (a) 150 percent of the first $717 of the worker's primary insurance 
amount, plus
    (b) 272 percent of the worker's primary insurance amount over $717 
through $ 1,034, plus
    (c) 134 percent of the worker's primary insurance amount over 
$1,034 through $ 1,349, plus
    (d) 175 percent of the worker's primary insurance amount over 
$1,349.
    We then round this amount to the next lower multiple of $.10 if it 
is not already a multiple of $.10. This formula and the rounding 
adjustment described above are contained in section 203(a) of the Act 
(42 U.S.C. 403(a)).

Quarter of Coverage Amount

    General. The amount of earnings required for a quarter of coverage 
in 2001 is $830. A quarter of coverage is the basic unit for 
determining whether a worker is insured under the Social Security 
program. For years before 1978, we generally credited an individual 
with a quarter of coverage for each quarter in which wages of $50 or 
more were paid, or with 4 quarters of coverage for every taxable year 
in which $400 or more of self-employment income was earned. Beginning 
in 1978, employers generally report wages on an annual basis instead of 
a quarterly basis. With the change to annual reporting, section 352(b) 
of the Social Security Amendments of 1977 amended section 213(d) of the 
Act to provide that a quarter of coverage would be credited for each 
$250 of an individual's total wages and self-employment income for 
calendar year 1978, up to a maximum of 4 quarters of coverage for the 
year.
    Computation. Under the prescribed formula, the quarter of coverage 
amount for 2001 shall be the larger of: (1) The 1978 amount of $250 
multiplied by the ratio of the national average wage index for 1999 to 
that for 1976; or (2) the current amount of $780. Section 213(d) 
further provides that if the resulting amount is not a multiple of $10, 
it shall be rounded to the nearest multiple of $10.
    Quarter of Coverage Amount. The ratio of the national average wage 
index for 1999, $ 30,469.84, compared to that for 1976, $9,226.48, is 
3.3024339. Multiplying the 1978 quarter of coverage amount of $250 by 
the ratio of 3.3024339 produces the amount of $825.61, which must then 
be rounded to $830. Because $830 exceeds the current amount of $780, 
the quarter of coverage amount is $830 for 2001.

``Old-Law'' Contribution and Benefit Base

    General. The ``old-law'' contribution and benefit base for 2001 is 
$59,700. This is the base that would have been effective under the Act 
without the enactment of the 1977 amendments. We compute the base under 
section 230(b)

[[Page 63667]]

of the Act as it read prior to the 1977 amendments.
    The ``old-law'' contribution and benefit base is used by:
    (a) the Railroad Retirement program to determine certain tax 
liabilities and tier II benefits payable under that program to 
supplement the tier I payments which correspond to basic Social 
Security benefits,
    (b) the Pension Benefit Guaranty Corporation to determine the 
maximum amount of pension guaranteed under the Employee Retirement 
Income Security Act (as stated in section 230(d) of the Social Security 
Act),
    (c) Social Security to determine a year of coverage in computing 
the special minimum benefit, as described earlier, and
    (d) Social Security to determine a year of coverage (acquired 
whenever earnings equal or exceed 25 percent of the ``old-law'' base 
for this purpose only) in computing benefits for persons who are also 
eligible to receive pensions based on employment not covered under 
section 210 of the Act.
    Computation. The ``old-law'' contribution and benefit base shall be 
the larger of: (1) The 1994 ``old-law'' base ($45,000) multiplied by 
the ratio of the national average wage index for 1999 to that for 1992; 
or (2) the current ``old-law'' base ($56,700). If the resulting amount 
is not a multiple of $300, it shall be rounded to the nearest multiple 
of $300.
    Amount. The ratio of the national average wage index for 1999, 
$30,469.84, compared to that for 1992, $22,935.42, is 1.3285059. 
Multiplying the 1994 ``old-law'' contribution and benefit base amount 
of $45,000 by the ratio of 1.3285059 produces the amount of $59,782.76. 
We round this amount to $59,700. Because $59,700 exceeds the current 
amount of $56,700, the ``old-law'' contribution and benefit base is 
$59,700 for 2001.

Substantial Gainful Activity Amounts

    General. A finding of disability under titles II and XVI of the Act 
requires that a person be unable to engage in substantial gainful 
activity (SGA). A person who is earning more than a certain monthly 
amount (net of impairment-related work expenses) is ordinarily 
considered to be engaging in SGA. The amount of monthly earnings 
considered as SGA depends on the nature of a person's disability. 
Section 223(d)(4)(A) of the Act specifies a higher SGA amount for 
statutorily blind individuals while Federal regulations specify a lower 
SGA amount (currently $700 per month) for non-blind individuals. At 
this time, only the SGA amount for statutorily blind individuals 
increases in accordance with increases in the national average wage 
index. Later this year, however, we will issue a Final Rule in the 
Federal Register announcing a wage-indexed SGA amount applicable to 
non-blind disabled beneficiaries for 2001.
    Computation. The monthly SGA amount for statutorily blind 
individuals for 2001 shall be the larger of: (1) Such amount for 1994 
multiplied by the ratio of the national average wage index for 1999 to 
that for 1992; or (2) such amount for 2000. If the resulting amount is 
not a multiple of $10, it shall be rounded to the nearest multiple of 
$10.
    SGA Amount for Statutorily Blind Individuals. The ratio of the 
national average wage index for 1999, $30,469.84, compared to that for 
1992, $22,935.42, is 1.3285059. Multiplying the 1994 monthly SGA amount 
for statutorily blind individuals of $930 by the ratio of 1.3285059 
produces the amount of $1,235.51. We then round this amount to $1,240. 
Because $ 1,240 is larger than the current amount of $1,170, the 
monthly SGA amount for statutorily blind individuals is $1,240 for 
2001.

Domestic Employee Coverage Threshold

    General. Section 2 of the ``Social Security Domestic Employment 
Reform Act of 1994'' (Pub. L. 103-387) increased the threshold for 
coverage of a domestic employee's wages paid per employer from $50 per 
calendar quarter to $1,000 per annum in calendar year 1994. The statute 
held the coverage threshold at the $1,000 level for 1995 and then 
increased the threshold in $100 increments for years after 1995. 
Section 3121(x) of the Internal Revenue Code provides the formula for 
increasing the threshold.
    Computation. Under the formula, the domestic employee coverage 
threshold amount for 2001 shall be equal to the 1995 amount of $1,000 
multiplied by the ratio of the national average wage index for 1999 to 
that for 1993. If the resulting amount is not a multiple of $100, it 
shall be rounded to the next lower multiple of $100.
    Domestic Employee Coverage Threshold Amount. The ratio of the 
national average wage index for 1999, $30,469.84, compared to that for 
1993, $23,132.67, is 1.3171778. Multiplying the 1995 domestic employee 
coverage threshold amount of $1,000 by the ratio of 1.3171778 produces 
the amount of $1,317.18, which must then be rounded to $1,300. 
Accordingly, the domestic employee coverage threshold amount is $1,300 
for 2001.

Election Worker Coverage Threshold

    General. Section 303(b) of Pub. L. 103-296, the ``Social Security 
Independence and Program Improvements Act of 1994,'' increased from 
$100 a year to $1,000 a year the amount an election official or 
election worker must be paid for the earnings to be covered under 
Social Security or Medicare, effective January 1, 1995. Beginning in 
the year 2000, the coverage threshold increases automatically with 
increases in the national average wage index.
    Computation. Under the formula, the election worker coverage 
threshold amount for 2001 shall be equal to the 1999 amount of $1,000 
multiplied by the ratio of the national average wage index for 1999 to 
that for 1997. If the amount so determined is not a multiple of $100, 
it shall be rounded to the nearest multiple of $100.
    Election Worker Coverage Threshold Amount. The ratio of the 
national average wage index for 1999, $30,469.84, compared to that for 
1997, $27,426.00, is 1.1109837. Multiplying the 1999 election worker 
coverage threshold amount of $1,000 by the ratio of 1.1109837 produces 
the amount of $1,110.98, which we then round to $1,100. Accordingly, 
the election worker coverage threshold amount is $1,100 for 2001.

OASDI Fund Ratio

    General. In addition to providing an annual automatic cost-of-
living increase in OASDI benefits, section 215(i) of the Act also 
includes a ``stabilizer'' provision that can limit such benefit 
increase under certain circumstances. If the combined assets of the 
OASI and DI Trust Funds, as a percentage of annual expenditures, are 
below a specified threshold, the automatic benefit increase is equal to 
the lesser of: (1) The increase in the national average wage index; or 
(2) the increase in prices. The threshold specified for the OASDI fund 
ratio is 20.0 percent for benefit increases for December of 1989 and 
later. The law also provides for subsequent ``catch-up'' benefit 
increases for beneficiaries whose previous benefit increases were 
affected by this provision. ``Catch-up'' benefit increases can occur 
only when trust fund assets exceed 32.0 percent of annual expenditures.
    Computation. Section 215(i) specifies the computation and 
application of the OASDI fund ratio. The OASDI fund ratio for 2000 is 
the ratio of the combined assets of the OASI and DI Trust Funds at the 
beginning of 2000 to the estimated expenditures of the OASI and DI 
Trust Funds during 2000,

[[Page 63668]]

excluding transfer payments between the OASI and DI Trust Funds, and 
reducing any transfers to the Railroad Retirement Account by any 
transfers from that account into either trust fund.
    Ratio. The combined assets of the OASI and DI Trust Funds at the 
beginning of 2000 equaled $896,133 million, and we estimate the 
expenditures in 2000 to be $416,120 million. Thus, the OASDI fund ratio 
for 2000 is 215.4 percent, which exceeds the applicable threshold of 
20.0 percent. Therefore, the stabilizer provision does not affect the 
benefit increase for December 2000. Although the OASDI fund ratio 
exceeds the 32.0-percent threshold for potential ``catch-up'' benefit 
increases, the stabilizer provision has not reduced any past benefit 
increase. Thus, no ``catch-up'' benefit increase is required.

(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; 96.006 
Supplemental Security Income)

    Dated: October 18, 2000.
Kenneth S. Apfel,
Commissioner of Social Security.
[FR Doc. 00-27249 Filed 10-23-00; 8:45 am]
BILLING CODE 4191-02-P