BASIC (09-08)

Citations:

Soc. Sec. Act, Section 224(f)

Social Security Ruling 82-68

Claims that involve a reduction in disability insurance benefits (DIB) benefits due to the receipt of workers’ compensation (WC) and/or public disability benefits (PDB) are selected for a possible benefit increase every three years (i.e., triennially) due to a rise in the national earnings level. This redetermination (redet) of the ACE is protection against inflation.

A. How a triennial redetermination of the ACE can affect DIB payable

An applicable limit, the higher of 80 percent of the number holder’s (NH) ACE or the total family benefit (TFB), is used to compute offset. A triennial redet may increase the ACE, and a higher ACE may result in an increase in benefits payable after offset for the worker and any auxiliaries entitled on the worker’s earnings record.

• If the original ACE is higher than the TFB and is therefore the applicable limit, a redetermined ACE may result in an increase in benefits payable after offset.

• If the TFB is higher than the original ACE and is, therefore, the applicable limit used to compute offset, a redet may cause the ACE to exceed the TFB and thus become the new applicable limit used to compute offset.

NOTE: A redet can never cause a decrease in benefits payable.

B. Determining the effective date of a triennial redetermination of the ACE

1. Determining the effective year(s) of a redet

Each case in which there is an actual reduction in DIB due to WC/PDB requires offset recomputation under the redet provision to determine if the redet ACE yields higher benefits payable after offset.

• If offset is continuous on the account, i.e., there is never a month where all beneficiaries receive full DIB, redetermine the ACE in the third calendar year following the year offset is first imposed (i.e., benefits reduced), or reimposed if there is a break in offset.

• Compute subsequent redeterminations of the ACE every third year thereafter as long as offset on the account is continuous.

NOTE: Redet years are determined by the first year that benefits are actually reduced due to offset, which is not necessarily the same year offset is first considered (as explained in DI 52150.020D First Possible Month of Offset and Examples 1 and 2 in this subsection). In addition, the first redet may apply when less than three full years have passed:

EXAMPLE 1:

The above example illustrates that the first redet is due less than three full years from the first month offset is imposed. The first redet is due in January 2008, the third calendar year after 2005 because 2005 is the first year benefits are reduced due to WC/PDB offset.

EXAMPLE 2: Using the same family composition from the above Example 1, Example 2 below illustrates what happens when offset is not continuous for HB2 and HC1 (i.e., there is a break in offset of at least one month and HB2 and HC1 receive their full monthly benefit amount). The redet “clock” starts over:

2. Determining the effective month of a redet

A redet ACE applies if the triennial redetermination yields a higher amount payable after offset for any beneficiary on the account. If the redet applies, the redet increase is always effective in January of the redet year.

C. Criteria that prohibit a triennial redet of the ACE

Do not compute a triennial redet ACE if any of the following criteria exist:

1. Offset (i.e., benefit reduction) never applies to any beneficiary on the account.

2. Offset terminates in January of the redet year or earlier.

3. HA is age 62/65/FRA (whichever applies) in January of the redet year, or earlier. Age must be proven.

   • Age 62 applies if DIB entitlement is based on 1965 Amendments.

   • Age 65 applies if DIB entitlement is based on 1981 Amendments prior to December 19, 2015.

   • Full Retirement Age (FRA)

   NOTE: Effective December 19, 2015 or later, WC offset termination now extends from age 65 to FRA.

   See DI 52101.005 - Social Security Amendments with Workers’ Compensation/Public Disability Benefit (WC/PDB) Offset Provisions.

4. DIB terminates in January of the redet year or earlier.

5. DIB onset is June 1, 1965, or earlier (the 1965 Amendments introduced WC offset).

6. A triennial redet alert is generated for a year that does not require a redet. (A redet alert may be improperly generated when the worker and an entitled auxiliary have different offset effective dates.)

7. Offset is not continuous for any reason, such as a break in offset due to a high ACE; a break in offset due to excludable expenses credited for the month(s); or a break in offset due to the election of reduced RIB and subsequent re-election of DIB.

NOTE: S7 months do not constitute a break in offset. T8 months do constitute a break in offset unless expedited reinstatement (EXR) is involved and the T8 month equals the MOE of the EXR (see Example below). This exception does not apply to new claims (i.e., new application for DIB) where the T8 month equals the new MOE.

Example of EXR exception (T8 does not constitute a break in offset):

• The first DIB line has a BTM (T8) of 11/2004 (first month benefits are not payable for this period of disability);

• The second DIB line (for the EXR period) has a DAC of “F” and benefits are payable 11/2004 (EXR MOE of 11/2004).

D. Computing a triennial redetermination of the ACE – ICF computation programs, manual computation form, redet ratios, factors to consider

1. ICF computation of a triennial redetermination of the ACE

a. ICF #31 and #32 on the Benefit Computation Menu

Access the most current computation software via the SSA Main Menu, selection #7 (Title II/Interactive Comps), and the subsequent ICF Title II Benefit Computation Menu, selections #31 (“Pre-Adjudicate Comp”) or #32 (“Adjudicate Comp”).

In most instances, ICF programs #31 and #32 automatically compute triennial redets if the redet year(s) falls within the beginning and ending dates of the period involved in the offset computation.

For a list of ICF exclusions requiring a manual computation of the redet ACE, see MSOM ICFT2 031.001D.

b. ICF #28 on the Benefit Computation Menu

ICF #28 includes limitations that do not apply to ICF #31 and #32. Do not use ICF #28 if you can use ICF #31 or #32 to input the offset data. For ICF #28 information, see MSOM ICFT2 028.001.

For ICF limitations for ICF #28 see Workers’ Comp Resource Page .

2. Manually computing redet of the ACE

Use form SSA-3643, Offset Worksheet - Triennial Redetermination, to manually compute a redetermination of the ACE. The computation determines if a triennial redet applies (i.e., the redet ACE increases the benefits payable after offset in January of the redet year for any beneficiary on the account).

For instructions on using the SSA-3643, see DI 52170.015.

If the redet ACE applies, use the new redet ACE in subsequent offset calculations.

NOTE: If a manual computation is necessary due to an ICF limitation or exclusion, enter the information and computation results into ICF #34. Then process the information and computation results via MACADE to effectuate payment and update the WC/PDB data to the MBR.

a. Ratios used to compute the redet ACE

Redetermine an ACE by using the applicable redet ratio (i.e., percentage). The redet ratio is based on the year benefits are first reduced due to WC/PDB offset (i.e., the Offset Effective Date, which may be later than the Offset Considered Date).

• Redet ratios based on offset beginning 1966 are in the chart in DI 52150.085. This chart provides ratios in 3-decimal-place format for redet years 1969-2003 (e.g., 5.844) and 5-decimal-place format for 2004 (e.g., 6.37815).

• Beginning January 2005, redet ratios are not displayed in the POMS chart for Offset Effective Dates 1976 or later; the Office of the Actuary (OACT) has the redet ratios on their website for Offset Effective Dates 1976 or later. (All redet ratios on this website are shown in 5-decimal-place format.)

• To determine ratios effective 2005 or later, use the OACT website at http://www.ssa.gov/OACT/aceredet/ .

Compute redet calculations prior to January 2004 using the 3-decimal-place ratio and redet calculations effective January 2004 using the 5-decimal-place ratio.

The Interactive Computation Facility (ICF) computes triennial redets using the 3-decimal-place ratio prior to January 2004 and the 5-decimal-place ratio beginning January 2004 and continuing. If a redet applies, ICF displays the redet ACE on the ACE Data (WCAC) screen.

b. Triennial redetermination, WC/PDB rate change, and/or PIA recomputation occur in the same month

If the WC/PDB rate changes in the same month that a triennial redet is due, compute the WC/PDB rate change first and then compute the redet.

If a PIA recomputation (i.e., a January PIA increase due to additional covered wages for the previous year), a triennial redet of the ACE, and a WC/PDB rate change all occur in the same month, process the monthly offset computation in the following order:

1. WC/PDB rate change

2. Triennial Redet of the ACE

3. PIA Recomputation

c. Considerations in determining the 100% original ACE (Part B of form SSA-3643) - Recal ACE, Recomp ACE, Redet ACE

When computing a Redet ACE, the redet ratio is applied to the original ACE.

Original ACE is the highest applicable ACE effective the first possible month offset. Use it for the first redet and any subsequent redet on Form SSA-3643 or ICF. However, the original ACE is subject to change based on the following:

• ACE Recalculation (Recal ACE) – the original ACE may be recalculated due to additional earnings. An increase in earnings may be due to an estimate of earnings for years prior to 1978, as explained in DI 52170.035, or additional covered earnings posted to the wage earner’s earnings record.

  NOTE: The resulting Recal ACE is usually considered the original ACE (a recalculation can be retroactive as far back as the first possible month of offset).

• ACE Recomputation (Recomp ACE) - an ACE can be recomputed because of additional earnings used to increase the benefits payable for months after the first month of DIB entitlement.

  A recomputed ACE is always effective in January of the year following the year these additional earnings are posted to the earnings record.

  A recomputed ACE must be compared to the triennial Redet ACE and the higher ACE used effective January of the applicable year.

  In addition, changes in the statutes caused recomputation of the ACE:

  Beginning 02/1968 based on the 1967 Amendments, which allowed the use of over-maximum earnings in the computation of the ACE. (See DI 52150.010 for Average Current Earnings (ACE)).

  Beginning 01/1973 due to the “High-1” ACE provision. (See DI 52150.010 for Average Current Earnings (ACE)). If the “High-1” ACE is higher than the original ACE previously used in the offset computation, the High-1 may be used beginning 01/73 and in redets effective 1/76 or later.

  For limitations regarding ICF programs #31 and #32 for calculating a Recomp ACE - Click here.

NOTE: Do not use a “Redet ACE” or a “Recomp ACE” as an original ACE.

E. Systems-generated triennial ACE redetermination alerts

Each year redet alerts are generated to review for a possible redet increase. The system automatically screens out cases where the criteria for redet are not met. However, if the offset coding on the MBR is incorrect or incomplete, an alert may be generated incorrectly. To prevent future incorrect redet alerts, the Claims Authorizer/Claims Technical Examiner (CA/CTE) notifies the Benefit Authorizer/Benefit Technical Examiner (BA/BTE) to correct the MBR invalidity.

1. ACE redetermination alerts and reverification of WC/PDB payments

As part of the redet alert process, we reverify WC/PDB payments every three years. If the alert is generated for the correct year, ensure that the WC information/verification is current, as follows:

• If WC/PDB information/verification is more than two years old, verify WC/PDB payments via direct contact, online access with State records, etc.

  EXCEPTION: Reverification is not required if the WC claim has been finally settled and the continuing offset is solely due to the proration of a previously verified lump sum settlement. For information on WC/PDB verification and permanent retention procedures, see DI 52145.001.

• If the information/verification is not older than two years and there is no reason to question it, reverification is not required.

2. ACE redetermination alert codes

All redet alerts contain the legend: “(YEAR)-WC Redet and PCACS TOEL (S) – OFFSET WCREDET”. There are three types of redet alerts, Y, W, and Z. These codes are shown at the top of the redet alert.

3. ACE redetermination alert–processing steps

• Verify that a redet is potentially due. (For criteria that prohibit a redet, see DI 52150.080D. in this section.)

• If the alert is erroneously generated, notify the BA/BTE to correct the MBR invalidity.

  NOTE: An erroneous alert is sometimes produced due to inconsistent or questionable data on the MBR (e.g., data fields ACE, PER PMT, WCPDBDET and WCPDBOFF). Corrections, other than adding a STOP date, normally require preparation of a new offset Datasheet.

• Using current WC/PDB information, compute the triennial redetermination of the ACE via ICF, or Form SSA-3643 if a manual computation is necessary. A redet ACE may or may not yield an increase in benefits payable after offset.

F. Redetermination ACE yields an increase

The following indicate that a triennial redetermination of the ACE yields an increase in benefits payable after offset for any beneficiary on the account:

• ICF (#31/#32) displays the redet ACE on the ACE Data (WCAC) screen. (For a screen display and explanation of data field descriptions, see MSOM ICFT2 032.003.)

• ICF (#28 - selection #3 for redets) displays the redet ACE on the IC2J screen. (For a screen display and explanation of data field descriptions, see MSOM ICFT2 028.009.)

• Form SSA-3643 - amount in line G (“Total Benefits Payable after Offset”) exceeds amount in line A (“Total Benefits Payable after Offset in the Month of Redetermination but Without Considering the Current Redetermination”).

If the redet is successfully processed via ICF function 32, a notice is automatically generated. If the redet is processed via MACADE, send proper notification to the beneficiary(s) (MADCAP paragraph J31).

NOTE: If the redet applies, use the redet ACE in subsequent WC/PDB computations. Do not use Form SSA-2455 to manually compute offset if a redet previously applied - use Form SSA-2454 (“Offset Worksheet – Triennial Redetermination Previously Applied”).

G. Redetermination ACE does not yield an increase

• ICF #31 and #32 do not display a redet ACE on the ACE Data (WCAC) screen if the redet ACE does not yield an increase in benefits payable after offset for any beneficiary on the account.

• ICF (#28) displays the remark “No Redet Increases” on the IC2J screen.

• Correct the MBR offset coding if necessary, and annotate the MBR via the special message field that a triennial redet for (designate redet year) does not apply (i.e., yields no increase).

H. Family composition change after Offset First Considered Date - the “fictitious period”

When the family composition changes after the Offset First Considered Date, refigure WC/PDB offset as if the new family composition was in effect from the Offset First Considered Date. This may result in a new, but fictitious, Offset Effective Date. To determine the amounts payable after offset effective with the date the family composition changes, fictitious computations are necessary.

• The “fictitious period” is the period from the Offset First Considered Date through the month before the month the family composition changes.

• The “fictitious period” may include triennial redeterminations of the ACE (redets) and, therefore, fictitious redets are also computed.

NOTE: ICF correctly computed offset when the family composition changes and redets are involved. If a manual computation is required, consider using the Expedient method of determining rates payable after offset. For an explanation of the Expedient and uses, see DI 52150.070.

1. Manual WC/PDB computations involving triennial redet ACE and family composition changes

If a manual computation is required for a family composition change and a triennial redet of the ACE, follow the calculation steps below. These steps are necessary to manually compute the actual amount payable after offset, effective with the month of the family composition change:

1. Compute offset using the new number of beneficiaries (i.e., the new family composition) from the Offset First Considered Date on Form SSA-2455 “Offset Worksheet – Disability Insurance Benefits.” Use the WC/PDB rate effective the month of the family composition change. (See DI 52170.020 for completion of this form.)

   NOTE: This computation may change the Offset Effective Date (OED) to a different (though fictitious) date, as illustrated in Example 1 in this section. The fictitious OED and any offset computation results for the fictitious period are not posted to the MBR. However, if the fictitious period involves a redetermination of the ACE, the fictitious redet ACE is used in subsequent offset computations until replaced by a “real” redet ACE (i.e., an ACE based on the triennial schedule in effect prior to the family composition change). Therefore, a change in the WC/PDB rate after the family composition change (but before the next “real” triennial redet is due) is calculated using the “fictitious” ACE.

2. Compute all triennial redets based on the Offset Effective Date (which may be a fictitious date - see NOTE above) on Form SSA-3643 using the new family composition. Any redets from this Offset Effective Date to the month before the month of the family composition change are “fictitious redets.”

3. Add any applicable increases (e.g., COLAs) that may be due after each “fictitious” redet.

2. Example: Family composition change after an ACE redet yields an increase

A redet is not applicable if offset (reduction in benefits) is not continuous for any reason, such as a break in offset due to a high ACE. However, these rules must be modified when there is change in the family composition, such as a subsequently entitled auxiliary with a DIB MOE after the date of the first potential redet. See following example.

We presume that if HC1 had been entitled in 04/1993, he would have been in partial offset effective 04/1993.

To determine rates payable for the family effective 01/1998 (HC1’s MOET), we must recompute offset retroactively to 04/1993 as though HC1 was entitled in 04/1993 (the month offset was first considered).

1. The fictitious rates payable result in no offset for the NH for 04/1993-03/1994 and the NH’s benefits are offset effective 04/1994. HC1 is offset effective 04/1993 so this creates a fictitious Offset Effective Date of 04/1993. Therefore, a fictitious redet is computed for 01/1996, three calendar years after the new (but fictitious) 04/1993 Offset Effective Date.

2. We must do a reconciliation of the future redet schedule between the prior family composition (NH only entitled) and the new family composition (NH and HC1 entitled) at the point the new family composition becomes effective (HC1 becomes entitled in 01/1998) to adhere to the every third year rule for redets. In this example, after the month of the family composition change (01/1998), any future redets are based on the year offset was actually first imposed (the actual offset effective date of 04/1994).

3. The fictitious rates payable after offset for 04/1993-12/1997 are computed to determine the amount payable to the NH and HC1 beginning 01/1998, the date of the family composition change. Therefore, the amounts previously determined payable after offset for the NH for 04/1993-12/1997 (prior to HC1’s entitlement) do not change.Actual benefits are not offset for 04/1993 through 03/1994.

4. The NH’s actual benefits are offset effective 04/1994. Therefore, as long as there is no break in offset from the actual Offset Effective Date (04/1994), actual redets are due in 01/1997, 01/2000, 01/2003, 01/2006, etc., at three-year intervals.

Use the fictitious Offset Effective Date of 04/1993 and the fictitious redet in 01/1996 only to compute the rates payable beginning 01/1998 (HC1’s MOET).

The ACE DATA output screen (WCAC) in ICF displays the fictitious redet ACE (01/96) as well as the actual redet ACEs (01/97, 01/00, 01/03, 01/06). The following illustrates the WCAC screen for this example:

The first two entries on this screen (04/93, 01/96) only apply to the fictitious computations (due to the family composition change) and therefore display the fictitious Offset Effective Date of 04/93 in the last column.

NOTE: Save ICF computations that include a “fictitious period” as a Pre-Adjudicate with an explanation in the Special Instructions Field on the WCDP (Disposition) screen. For example: “The computation results for MM/YYYY – MM/YYYY are fictitious due to a family composition change (see DI 52150.080I). Actual amounts payable after offset begin MM/YYYY.”

I. References

• DI 52101.005 Social Security Amendments with Workers’ Compensation/Public Disability Benefits (WC/PDB) Offset Provisions

• DI 52150.055 - Protected Increases and Breaks in WC/PDB Payments, Offset, Entitlement

• NL 00725.005 - WC/PDB MADCAP paragraphs

• RS 00615.730 - Maximum Family Benefits

• MSOM ICFT2 028.009 - Triennial Redetermination Output Screen (IC2J) for ICF #28

• DI 52170.020 - Form SSA-2454 (Offset Worksheet - Triennial Redetermination Previously Applied)

• DI 52170.010 - Form SSA-2455 (Offset Worksheet - Disability Insurance Benefits)

• DI 52165.001 - WC/PDB Interactive Computation Facility (ICF) Processing