[Federal Register Volume 74, Number 207 (Wednesday, October 28, 2009)]
[Notices]
[Pages 55614-55618]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-25930]


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SOCIAL SECURITY ADMINISTRATION

[Docket No. SSA-2009-0064]


Office of the Commissioner; Cost-of-Living Increase and Other 
Determinations for 2010

AGENCY: Social Security Administration.

ACTION: Notice.

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SUMMARY: Under title II of the Social Security Act (Act), there will be 
no cost-of-living increase in Social Security benefits effective for 
December 2009. As a result, the following items will remain at their 
2009 levels:
    (1) The Federal Supplemental Security Income (SSI) monthly benefit 
amounts for 2010, under title XVI of the Act, will remain $674 for an 
eligible individual, $1,011 for an eligible individual with an eligible 
spouse, and $338 for an essential person;
    (2) The special benefit amount under title VIII of the Act for 
certain World War II veterans will remain $505.50 in 2010;
    (3) The student earned income exclusion under title XVI of the Act 
will remain $1,640 per month in 2010 but not more than $6,600 in all of 
2010;
    (4) The dollar fee limit for services performed as a representative 
payee will remain $37 per month ($72 per month in the case of a 
beneficiary who is disabled and has an alcoholism or drug addiction 
condition that leaves him or her incapable of managing benefits) in 
2010;
    (5) The dollar limit on the administrative-cost assessment charged 
to attorneys representing claimants will remain $83 in 2010;
    (6) The Old-Age, Survivors, and Disability Insurance (OASDI) 
contribution and benefit base will remain $106,800 for remuneration 
paid in 2010 and self-employment income earned in taxable years 
beginning in 2010;
    (7) The monthly exempt amounts under the Social Security retirement 
earnings test for taxable years ending in calendar year 2010 will 
remain $1,180 and $3,140;
    (8) The ``old-law'' contribution and benefit base under title II of 
the Act will remain $79,200 for 2010; and

[[Page 55615]]

    (9) The monthly amount deemed to constitute substantial gainful 
activity for statutorily blind individuals in 2010 will remain $1,640.
    The national average wage index for 2008 is $41,334.97. The 
following items are affected by this index:
    (1) The dollar amounts (``bend points'') used in the primary 
insurance amount benefit formula for workers who become eligible for 
benefits, or who die before becoming eligible, in 2010 will be $761 and 
$4,586;
    (2) The bend points used in the formula for computing maximum 
family benefits for workers who become eligible for benefits, or who 
die before becoming eligible, in 2010 will be $972, $1,403, and $1,830;
    (3) The amount of taxable earnings a person must have to be 
credited with a quarter of coverage in 2010 will be $1,120;
    (4) The monthly amount deemed to constitute substantial gainful 
activity for non-blind disabled persons will be $1,000 in 2010;
    (5) The earnings threshold establishing a month as a part of a 
trial work period will be $720 for 2010; and
    (6) Coverage thresholds for 2010 will be $1,700 for domestic 
workers and $1,500 for election officials and election workers.

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

SUPPLEMENTARY INFORMATION: In accordance with the Act, we must publish 
on or before November 1 the national average wage index for 2008 
(section 215(a)(1)(D)), the amount of earnings required to be credited 
with a quarter of coverage in 2010 (section 213(d)(2)), the formula for 
computing a primary insurance amount for workers who first become 
eligible for benefits or die in 2010 (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 2010 (section 203(a)(2)(C)).

Cost-of-Living Increases

General

    There will be no cost-of-living increase for benefits under titles 
II and XVI of the Act.

Computation

    By law a cost-of-living increase for benefits is set based on the 
percentage increase in the Consumer Price Index (CPI) for Urban Wage 
Earners and Clerical Workers from the last computation quarter (the 
third quarter of 2008 in this case) to the third quarter of the current 
year (2009 in this case).
    Section 215(i)(1) of the Act provides that the CPI for a cost-of-
living computation quarter shall be the arithmetic mean of this index 
for the 3 months in that quarter. In accordance with 20 CFR 404.275, we 
round the arithmetic mean, if necessary, to the nearest 0.001. The CPI 
for Urban Wage Earners and Clerical Workers for each month in the 
quarter ending September 30, 2008, is: For July 2008, 216.304; for 
August 2008, 215.247; and for September 2008, 214.935. The arithmetic 
mean for that calendar quarter is 215.495. The corresponding CPI for 
each month in the quarter ending September 30, 2009, is: For July 2009, 
210.526; for August 2009, 211.156; and for September 2009, 211.322. The 
arithmetic mean for this calendar quarter is 211.001. Thus, because the 
CPI for the calendar quarter ending September 30, 2009, is not greater 
than the CPI for the calendar quarter ending September 30, 2008, the 
calendar quarter ending September 30, 2009, is not a cost-of-living 
computation quarter and there is no cost-of-living increase.

Other Program Amounts That Change Based on the Cost-of-Living Increase

    Several other program amounts also adjust based on the cost-of-
living increase. These include the title VIII benefit amount, the 
student earned income exclusion, the fee for services performed by a 
representative payee, and the attorney assessment fee. Because there 
will be no cost-of-living increase, these program amounts will not 
increase in 2010, but rather will remain at their 2009 levels.

Program Amounts That Change Based on the Increase in the National 
Average Wage Index, but Only When There Is a Cost-of-Living Increase

    Certain other program amounts are adjusted annually based on the 
increase in the national average wage index, rather than the CPI 
increase, but only if there also is a cost-of-living increase in 
benefits that year (as determined under section 215(i) of the Act). 
These amounts include the OASDI contribution and benefit base, the 
retirement earnings test exempt amounts, the ``old-law'' contribution 
and benefit base, and the substantial gainful activity amount for 
individuals who are statutorily blind. Because there is no cost-of-
living increase this year, these amounts will not increase in 2010, but 
rather will remain at their 2009 levels.

Program Amounts That Change Based on the Increase in the National 
Average Wage Index, Without Regard to the Cost-of-Living Increase

    Some program amounts are adjusted annually based on the increase in 
the national average wage index whether there is a cost-of-living 
increase in that year or not. These include:
     The dollar amounts (``bend points'') in the formulae used 
to compute the primary insurance amount and maximum family benefit for 
workers who become eligible for benefits, or die before becoming 
eligible, in 2010;
     The amount of taxable earnings required to earn a quarter 
of coverage;
     The substantial gainful activity amount for non-blind 
disabled individuals;
     The earnings threshold to establish a trial work period;
     The coverage threshold for election officials and election 
workers; and
     The domestic employee coverage threshold.

These amounts will increase in 2010 based on the increase in the 
national average wage. In the sections that follow, we explain the 
calculation of the percentage increase in the national average wage and 
the corresponding increases in each of these program amounts.

National Average Wage Index for 2008

Computation

    We have determined the national average wage index for calendar 
year 2008 based on the 2007 national average wage index of $40,405.48 
announced in the Federal Register on October 30, 2008 (73 FR 64651), 
along with the percentage increase in average wages from 2007 to 2008 
measured by annual wage data. We tabulate the annual wage data, 
including 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 $38,760.95 and $39,652.61 for 2007 and 
2008, respectively. To determine the national average wage index for 
2008 at a level

[[Page 55616]]

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 2007 national average wage index of $40,405.48 by the 
percentage increase in average wages from 2007 to 2008 (based on SSA-
tabulated wage data) as follows, with the result rounded to the nearest 
cent.

Amount

    Multiplying the national average wage index for 2007 ($40,405.48) 
by the ratio of the average wage for 2008 ($39,652.61) to that for 2007 
($38,760.95) produces the 2008 index, $41,334.97. The national average 
wage index for calendar year 2008 is about 2.30 percent greater than 
the 2007 index.

Computing Benefits After 1978

General

    The Social Security Amendments of 1977 provided a method for 
computing benefits that 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 indexing ensures that a worker's future benefit 
level will reflect the general rise in the standard of living that will 
occur during his or her working lifetime. To compute the average 
indexed monthly earnings, we first determine the required 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 2010, we divide the national average wage 
index for 2008, $41,334.97, by the national average wage index for each 
year prior to 2008 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 
2008. We consider any earnings in 2008 or later at face value, without 
indexing. We then compute the average indexed monthly earnings for 
determining the worker's primary insurance amount for 2010.

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 2010, we multiply each of the 1979 
bend-point amounts by the ratio of the national average wage index for 
2008 to that average for 1977. We then round these results to the 
nearest dollar. Multiplying the 1979 amounts of $180 and $1,085 by the 
ratio of the national average wage index for 2008 ($41,334.97) to that 
for 1977 ($9,779.44) produces the amounts of $760.81 and $4,585.99. We 
round these to $761 and $4,586. Accordingly, the portions of the 
average indexed monthly earnings to be used in 2010 are the first $761, 
the amount between $761 and $4,586, and the amount over $4,586.
    Consequently, for individuals who first become eligible for old-age 
insurance benefits or disability insurance benefits in 2010, or who die 
in 2010 before becoming eligible for benefits, their primary insurance 
amount will be the sum of:
    (a) 90 percent of the first $761 of their average indexed monthly 
earnings, plus
    (b) 32 percent of their average indexed monthly earnings over $761 
and through $4,586, plus
    (c) 15 percent of their average indexed monthly earnings over 
$4,586.
    We round this amount to the next lower multiple of $0.10 if it is 
not already a multiple of $0.10. This formula and the rounding 
adjustment described above are contained in section 215(a) of the Act.

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 changed 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 2010, we multiply each of the 1979 
bend-point amounts by the ratio of the national average wage index for 
2008 to that average for 1977. Then we round this amount to the nearest 
dollar. Multiplying the amounts of $230, $332, and $433 by the ratio of 
the national average wage index for 2008 ($41,334.97) to that for 1977 
($9,779.44) produces the amounts of $972.15, $1,403.27, and $1,830.17. 
We round these amounts to $972, $1,403, and $1,830. Accordingly, the 
portions of the primary insurance amounts to be used in 2010 are the 
first $972, the amount between $972 and $1,403, the amount between 
$1,403 and $1,830, and the amount over $1,830.
    Consequently, for the family of a worker who becomes age 62 or dies 
in 2010 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 $972 of the worker's primary insurance 
amount, plus
    (b) 272 percent of the worker's primary insurance amount over $972 
through $1,403, plus

[[Page 55617]]

    (c) 134 percent of the worker's primary insurance amount over 
$1,403 through $1,830, plus
    (d) 175 percent of the worker's primary insurance amount over 
$1,830.
    We then round this amount to the next lower multiple of $0.10 if it 
is not already a multiple of $0.10. This formula and the rounding 
adjustment described above are contained in section 203(a) of the Act.

Quarter of Coverage Amount

General

    The amount of earnings required for a quarter of coverage in 2010 
is $1,120. 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 
2010 shall be the larger of: (1) The 1978 amount of $250 multiplied by 
the ratio of the national average wage index for 2008 to that for 1976; 
or (2) the current amount of $1,090. 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

    Multiplying the 1978 quarter of coverage amount ($250) by the ratio 
of the national average wage index for 2008 ($41,334.97) to that for 
1976 ($9,226.48) produces the amount of $1,120.01. We then round this 
amount to $1,120. Because $1,120 exceeds the current amount of $1,090, 
the quarter of coverage amount is $1,120 for 2010.

Substantial Gainful Activity Amount for Non-Blind Disabled Individuals

General

    A finding of disability under titles II and XVI of the Act requires 
that a person, except for a title XVI disabled child, 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 under title II while Federal 
regulations (20 CFR 404.1574 and 416.974) specify a lower SGA amount 
for non-blind individuals.

Computation

    The monthly SGA amount for non-blind disabled individuals for 2010 
shall be the larger of: (1) Such amount for 2000 multiplied by the 
ratio of the national average wage index for 2008 to that for 1998; or 
(2) such amount for 2009. In either case, if the resulting amount is 
not a multiple of $10, it shall be rounded to the nearest multiple of 
$10.

Amount

    Multiplying the 2000 monthly SGA amount for non-blind individuals 
($700) by the ratio of the national average wage index for 2008 
($41,334.97) to that for 1998 ($28,861.44) produces the amount of 
$1,002.53. We then round this amount to $1,000. Because $1,000 is 
larger than the current amount of $980, the monthly SGA amount for non-
blind disabled individuals is $1,000 for 2010.

Trial Work Period Earnings Threshold

General

    During a trial work period, a beneficiary receiving Social Security 
disability benefits may test his or her ability to work and still be 
considered disabled. We do not consider services performed during the 
trial work period as showing that the disability has ended until 
services have been performed in at least 9 months (not necessarily 
consecutive) in a rolling 60-month period. In 2009, any month in which 
earnings exceed $700 is considered a month of services for an 
individual's trial work period. In 2010, this monthly amount increases 
to $720.

Computation

    The method used to determine the new amount is set forth in our 
regulations at 20 CFR 404.1592(b). Monthly earnings in 2010, used to 
determine whether a month is part of a trial work period, is such 
amount for 2001 ($530) multiplied by the ratio of the national average 
wage index for 2008 to that for 1999, or, if larger, such amount for 
2009. If the amount so calculated is not a multiple of $10, we round it 
to the nearest multiple of $10.

Amount

    Multiplying the 2001 monthly earnings threshold ($530) by the ratio 
of the national average wage index for 2008 ($41,334.97) to that for 
1999 ($30,469.84) produces the amount of $718.99. We then round this 
amount to $720. Because $720 is larger than the current amount of $700, 
the monthly earnings threshold is $720 for 2010.

Domestic Employee Coverage Threshold

General

    The minimum amount a domestic worker must earn so that such 
earnings are covered under Social Security or Medicare is the domestic 
employee coverage threshold. For 2010, this threshold is $1,700. 
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 2010 shall be equal to the 1995 amount of $1,000 multiplied by the 
ratio of the national average wage index for 2008 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

    Multiplying the 1995 domestic employee coverage threshold amount 
($1,000) by the ratio of the national average wage index for 2008 
($41,334.97) to that for 1993 ($23,132.67) produces the amount of 
$1,786.87. We then round this amount to $1,700. Accordingly, the 
domestic employee coverage threshold amount is $1,700 for 2010.

Election Official and Election Worker Coverage Threshold

General

    The minimum amount an election official and election worker must 
earn so that such earnings are covered under Social Security or 
Medicare is the election official and election worker coverage 
threshold. For 2010, this threshold is $1,500. Section 218(c)(8)(B) of 
the Act provides the formula for increasing the threshold.

Computation

    Under the formula, the election official and election worker 
coverage threshold amount for 2010 shall be equal to the 1999 amount of 
$1,000

[[Page 55618]]

multiplied by the ratio of the national average wage index for 2008 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 Official and Election Worker Coverage Threshold Amount

    Multiplying the 1999 coverage threshold amount ($1,000) by the 
ratio of the national average wage index for 2008 ($41,334.97) to that 
for 1997 ($27,426.00) produces the amount of $1,507.15. We then round 
this amount to $1,500. Accordingly, the election official and election 
worker coverage threshold amount is $1,500 for 2010.

(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 20, 2009.
Michael J. Astrue,
Commissioner of Social Security.
[FR Doc. E9-25930 Filed 10-27-09; 8:45 am]
BILLING CODE 4191-02-P