TN 7 (12-11)

References to old rule and new rule in these examples refer to the treatment of dual entitlement situations as explained in GN 02603.045. New rule means it is a case affected by the change as described in that section.

A. Examples of permanent full deductions

1. Full deduction

The primary insurance amount (PIA) is $300.40 and the family maximum is $548.40. A mother (E) and three surviving children (C3, 2, 1) are entitled. E is subject to a full deduction. The original benefit for each of them (75% of the PIA) is $225.30. The total original benefit (TOTOB) is 225.30 x 4 survivors (E, C3, C2, and C1). The adjusted benefit is the rate initially payable. That is $548.40 divided by 4 individuals = 137.10.

Using the formula in GN 02603.050C.2. to compute the readjusted rate, each C rate is:

_______OB x PTAP_________ = 225.30 x 548.40 = 182.80

TOTOB – OB for E 901.20 – 225.30

Because only one deduction applies we can disregard E and divide the $548.40 by three as explained in GN 02603.050B. Each C will receive $182.80.

2. Full deduction and deduction amount exceeds the adjusted benefit

The PIA is $300.40 and the family maximum is $548.40. A mother (E) and two children (C2, 1) are entitled to benefits. The original benefit for each of them (75% of the PIA) is $225.30. The adjusted benefit is the rate initially payable. The total original benefit (TOTOB) is 225.30 x 2 survivors (E, C1). We do not include the share for C2 since C2 is subject to a full deduction. That is $548.40 divided by 2 individuals = 225.30.

Using the formula in GN 02603.50C.2. the rate for E and C1 is:

_______OB x PTAP_________ = 225.30 x 548.40 = 274.20

TOTOB – OB for C2 675.90 – 225.30

Since the result is greater than the OB, E and C1 will only receive the OB of 225.30.

Because only one deduction applies, we can disregard C2 and divide the $548.40 by 2 as explained in GN 02603.050B, E and C1 could each be entitled to $274.20 However, each is limited to the OB of $225.30.

3. Full work deduction and WC/PDB offset is Involved

The PIA is $600.00 and the family maximum is $900.00. The number holder, a spouse (HB2) and three children (HC3, 2, 1) are entitled. Each auxiliary is subject to WC or PDB offset of $10.00. HB2 is also subject to a full work deduction. Using the formula, each HC rate is:

_______OB x PTAP*_________ = 300.00 x 290.00 = 96.60

TOTOB – OB for HB2 1200.00 – 300.00

*Derive the PTAP ($290.00) by subtracting the PIA ($600.00) and the WC or PDB offset amount ($10.00) from the family maximum ($900.00).

4. Full deduction for dual entitlement and WC or PDB offset is involved

A disabled wage earner is entitled to a PIA of $289.40 and a family maximum of $434.10. A spouse (HB) and two children from a prior marriage (HC2, 1) are entitled. The spouse is full retirement age (FRA). Each auxiliary is entitled to $48.20 reduced to $6.80 after WC or PDB offset. HB becomes entitled on her own record to a PIA of $140.00 that is less than one-half of the $289.40. A combined family maximum (CFM) does not apply. Adjust her benefit as a spouse to $0.00 (it does not terminate). Under the old rule, rates to HC2 and HC1 do not change.

Under the new rule if this case meets the criteria in GN 02603.045, disregard HB’s entitlement; HC2, and HC1 would each be entitled to $72.30. WC or PDB offset would make HC2 and HC1 each due $10.20 after offset. (For more information on redistributing the WC, see DI 52150.070)

Using the formula, each HC rate is:

_______OB x PTAP_________ = 144.70 x 144.70 = 72.30

TOTOB – OB for HB 434.10 – 144.70

For a more complex example involving the Parisi court decision along with workers' compensation, protected increases and combined family maximums, see Example 5 in DI 52150.055.

5. Full deduction for dual entitlement

The PIA is $400.00 and the family maximum is $650.00. A number holder, spouse (B), and two children (C2, C1,) from a prior marriage are entitled.

B becomes entitled on her own record. Her PIA is $100.00 and because she is FRA, she is entitled to an unreduced benefit of $100.00. A CFM does not apply. Her benefit as a B does not terminate because her own PIA is less than 1 /2 the PIA on that record. Therefore, she is technically entitled as a B. Adjust her rate to $0.00. Under the old procedure, the children would have continued to receive $83.30 each. Under the new procedure, the children will receive more because of B's reduced rate. Because there are no other deduction events, we can disregard B and divide the $250.00 by two. C2, C1 are each due $125.00.

It may appear that we can just redistribute B's $83.30. However, because of rounding each child would then be due $124.90 and lose $0.10. Instead, we must redistribute the maximum to the two children. Each is then due $125.00.

Using the formula in GN 02603.050C also yields a benefit of $125.00 each.

_______OB x PTAP*_________ = 200.00 x 250.00 = 125.00

TOTOB – OB for B 600.00 – 200.00

*PTAP = family maximum minus PIA = 650.00 – 400.00 = 250.00

The rates payable are then:

6. Full deduction because of dual entitlement with combined family maximum

The PIA is $400.00 and the family maximum is $650.00. A number holder, spouse (B), and three children (C3, C2, C1) are entitled.

B and the children become entitled on her record. Her PIA is $160.00 and the maximum is $280.00. Rates will change on the first record because of the new combined family maximum of $930.00.

Because she is FRA, she is entitled to an unreduced benefit of $160.00. Her benefit as a B does not terminate because her own PIA is less than 1/2 the PIA on that record. She is therefore technically entitled as a B. Adjust her rate to $0.00. Under the old rule, rates for the children would not increase. Under the new rule, using the formula in GN 02603.050C each C rate is:

_______OB x PTAP*_________ = 200.00 x 530.00 = 176.60

TOTOB – OB for B 800.00 – 200.00

*PTAP = family maximum minus PIA = 930.00 – 400.00 = 530.00

The rates payable are then:

7. Full deduction because of dual entitlement and combined family maximum allows increase for the dually entitled person

The PIA is $400.00 and the family maximum is $650.00. A number holder, (A) spouse (B), and one child (C1) are entitled.

B and C1 become entitled on B’s own record. Her PIA is $160.00 and the maximum is $280.00. Because she is FRA, she is entitled to an unreduced benefit of $160.00. Her benefit as a B does not terminate because her own PIA is less than 1/2 the PIA on that record. Therefore, she is technically entitled as a B. Adjust her rate to $0.00. Under the new rule, we can disregard B's entitlement and pay C1 the full OB of $200.00.

Using the formula in GN 02603.050C will also C1's rate as $200.00.

_______OB x PTAP*_________ = 200.00 x 250.00 = 250.00

TOTOB – OB for B 400.00 – 200.00

*PTAP = family maximum minus PIA = 650.00 – 400.00 = 250.00

Since the result is greater than the OB rate and C1 cannot receive more than the OB amount, only the OB of $200.00 is payable.

When using either method to compute C1's rate, the result is that C1 will receive the full OB. This might lead one to assume that there is no reason to consider a combined family maximum (CFM.) However, when combining the maximums, B would also be entitled to her full OB before making the deduction for dual entitlement. Her rate as a B would then be $40.00. ($200.00 minus her own PIA of $160.00.)

The rates payable are $400.00 to A, $40.00 to B (plus $160.00 on her own record) and $200.00 to C1.

NOTE: The same rates are therefore payable using either the old or the new rule.

8. Full deduction because of dual entitlement and age reduction applies to the dually entitled person

The PIA is $400.00 and the family maximum is $650.00. A number holder, spouse (B), and two children (C2, C1) from a prior marriage are entitled. B is age 62 and reduced for age; the children are in another household and not in her care.

B is entitled on her own record. A CFM does not apply. Her PIA is $100.00 and because her month of entitlement (MOET) is 36 months prior to FRA, reduce her benefit to $80.00. Her benefit as a B does not terminate because her own PIA is less than 1/2 the PIA on that record. Therefore, she is technically entitled as a B. Reduce her rate to $0.00. Under the old procedure, the children would have continued to receive $83.30 each. Using the formula in GN 02603.050 their rates would have been:

_______OB x PTAP*_________ = 200.00 x 166.70 = 83.30

TOTOB – OB for B 600.00 – 200.00

*PTAP = 650.00 – 400.00 – 83.30 = 166.70

Under the new procedure described in GN 02603.045, the children will receive more because of B's dual entitlement. Using the formula in GN 02603.050, each C rate is:

_______OB x PTAP*_________ = 200.00 x 250.00 = 125.00

TOTOB – OB for B 600.00 – 200.00

*PTAP = 650.00 – 400.00 = 250.00

The PTAP = 650.00 - 400.00 = 250.00

The rates payable are 400.00 to A, 0.00 to B (80.00 on her own record), 125.00 to C2, and 125.00 to C1.

This example shows that B's age reduction has no effect because we consider her dual entitlement first. Therefore this case can be worked using the method in GN 02603.050B. Disregard B's entitlement and divide the maximum two ways. C2 and C1 are each due $125.00.

9. Full deduction because of dual entitlement and age reduction applies to another beneficiary

The PIA is $600.00 and the family maximum is $900.00. A number holder, spouse (B) and two children (C1, C2) from a prior marriage are entitled. B receives a reduced benefit because her MOET is 36 months prior to her full retirement age (FRA); the children are in another household and not in her care. The B is not entitled on her own record.

C2 becomes entitled to disability benefits on his or her own record. C2’s own PIA is $200.00. The benefit as C2 does not terminate, but is reduced it to $0.00. Under the old procedure, the rates of the other auxiliaries would not change because of C2’s dual entitlement. Under the new procedure described in GN 02603.045, the other auxiliaries will receive an increase because of C2's reduced rate. We can disregard C2 and distribute the $300.00 to B and C1 or use the formula:

_______OB x PTAP*_________ = 300.00 x 300.00 = 150.00

TOTOB – OB for C2 900.00 – 300.00

*PTAP = 900.00 – 600.00 = 300.00

Either way, we would apply B's age reduction to the result.

The rates payable are then:

B. Examples of permanent partial deductions

1. Partial deduction

The PIA is $300.40 and the family maximum is $548.40. A mother (E) and three children (C3, 2, 1) are entitled to benefits. E is subject to a partial deduction of $99.90 a month leaving a benefit due of $37.20. Using the formula, each survivor rate is:

_______OB x PTAP*_________ = 225.30 x 511.20 = 170.40

TOTOB – OB for E 901.20 – 225.30

*PTAP = 548.40 – 37.20 = 511.20

2. Partial deduction and age reduction Involved

The PIA is $500.00 and the family maximum is $750.00. A number holder, spouse (B), and two children (C2, C1) from a prior marriage are entitled to benefits. B is subject to age reduction. The children are in another household and not in her care.

B is has a retirement insurance benefit (RIB) PIA of $80.00 on her own record and she became entitled 36 months prior to FRA and is entitled to $64.00 (the RIB is reduced because of her age). Due to her dual entitlement, her rate as a B is:

Unreduced B Rate of $83.30 – RIB PIA of $80.00 = $3.30

Reduce the $3.30 for age to $2.40.

In order to redistribute only the amount being withheld because of dual entitlement we must account for the entire $83.30 due B. Of that amount $80.00 is withheld for dual entitlement, $2.40 is payable and $0.90 is withheld for age reduction. We then have $80.00 to redistribute.

Using the formula in GN 02603.050, rates for the two Cs are:

_______OB x PTAP*_________ = 250.00 x 246.70 = 123.30

TOTOB – OB for B (deductee) 750.00 – 250.00

*PTAP = family maximum minus PIA minus age reduction for the deductee minus partial payable to the deductee = 750.00 – 500.00 – 0.90 – 2.40 = 246.70

3. Partial deduction for dual entitlement and WC or PDB offset is involved

The PIA is $289.40 and the family maximum is $434.10. A spouse (HB) and two children from a prior marriage (HC2, 1) are entitled. The spouse is FRA. Each auxiliary is entitled to $48.20 but reduced to $6.80 after applying WC or PDB offset. HB becomes entitled on her own record to a PIA of $8.20. A combined family maximum (CFM) does not apply. Her benefit as a spouse does not terminate, but is reduced to $40.00. Under the old rule, rates to HC2 and HC1 would not increase because of the decrease in HB's rate.

Do not apply the new rule, because this scenario does not meet the criteria in GN 02603.050B. Instead, we must compute benefits using the formula in GN 02603.050C.

Using this formula, each HC rate is:

_______OB x PTAP*_________ = 144.70 x 104.70 = 52.30

TOTOB – OB for HB 434.10 – 144.70

*Derive the PTAP of 104.70 by subtracting the PIA of 289.40 from the maximum of 434.10 and then subtracting HB's partial payable of 40.00.

Compute the WC offset using the new benefit amounts. DI 52170.010 explains how to compute offset when beneficiaries are entitled to different amounts.

C. Examples of temporary deductions

1. Temporary work deduction

The PIA is $300.40 and the family maximum is $548.40. A mother (E) and three children (C3, C2, and C1) are entitled to benefits. E is subject to a full deduction because of her work. C1 is in a separate household. Using the formulas, each rate is:

C1 will receive the increase when the deduction becomes permanent.

2. Temporary work deduction and dual entitlement

The PIA is $300.40 and the family maximum is $548.40. A mother (E) and three children (C3, 2, 1) are entitled to benefits. E is subject to a full deduction because of her work. C1 is in a separate household. C2 is also entitled to $280.00 on his or her own record. Under the old rule C2 is included in the distribution of benefits even though he or she is only technically entitled.

Using the new rule, because C2’s benefit is $0.00 we can disregard C2's entitlement when computing other rates. Using the formula in GN 02603.050D each rate is:

When the deduction for E becomes permanent, C1 will receive the increase to $225.30.