TN 7 (12-11)

GN 02603.050 Computing Deductions Before Reduction

A. Exceptions to deduction before reduction

When deduction before reduction is involved, compute benefits to other auxiliaries or survivors using the methods in GN 02603.050C or GN 02603.050D (in this section). There are three exceptions and exceptions 2 and 3 apply only for cases processed under the new rule as explained in GN 02603.045:

1. Full permanent deduction

Deductions based on the annual earnings test become permanent deductions based on a closed year work report. See RS 02510.015. All other deduction events are permanent in the year of the event. If a beneficiary is subject to a full permanent deduction for any reason and no other deduction is involved for any beneficiary, disregard that beneficiary when distributing the family maximum.

2. Rate reduced to $0.00

If dual entitlement reduces a beneficiary's rate to $0.00 (technically entitled) regardless of other deductions that may apply for any other beneficiary on record disregard the dually entitled beneficiary when distributing the family maximum.

3. Partial payable rate

If dual entitlement reduces a beneficiary's rate to a partial payable rate and no other deduction is involved for any other beneficiary, subtract the partial payable rate and distribute the remainder to the other survivors or auxiliaries when distributing the family maximum.

NOTE: In all cases, beneficiaries are still limited to the original benefit amount.

B. Procedure for applying deduction before reduction

For deduction before reduction cases, follow these steps:

  1. Apply the maximum family benefit payable to all auxiliaries or survivors subject to the family maximum.

  2. Apply the deductions shown in GN 02603.040.

  3. Redistribute the maximum family benefit payable to the auxiliaries or survivors who are subject to the family maximum and not subject to a deduction. (Subtract the partial payable rate if GN 02603.050A.3. applies.)

NOTE: Other types and combinations of deductions involve a more complex calculation. For more details on redistributing benefits in both permanent and temporary deduction cases, see GN 02603.050C (in this section) and GN 02603.05D (in this section).

C. Procedure for permanent deductions

1. Definitions for terms used in the formulas

When permanent deductions are involved, use the following formula to compute benefit amounts when reduction for the family maximum is required.

Terms used:

  • BIC = Beneficiary Identification Code

  • OB = original benefit (including any applicable widow(er) delayed retirement credits)
    TOTOB = total of all original benefits
    HH = household
    PTAP = permanent total amount payable

    • The family maximum minus:

      • PIA on life cases

      • Total amount of work deductions to be imposed against auxiliaries or survivors due to the number holder’s work

      • Workers’ compensation (WC) or public disability benefit (PDB) offset amount for all workers or deductees

      • Age reduction amount for all workers or deductees

      • Government pension offset (GPO) amount for all workers or deductees

      • Partial benefit payable to any worker or deductee

      • For cases where the rule in GN 02603.045 does not apply, use the dual entitlement reduction amount for all deductees

2. Formula for permanent deductions

The worker or deductee rate will be $0.00 if a total deduction applies, or the partial payable rate, if applicable.

The non-worker or non-deductee rate

           OB x PTAP              
= TOTOB - OBs for all workers or deductees

 

When the case involves permanent deductions, and the decision or determination requires you to reduce the family maximum, use the following formula to compute benefit amounts. When different OBs are involved, calculate the rate for each OB. Use the OB if the result of this calculation is greater than the OB. After making the calculation, then reduce the non-worker or non-deductee for age, WC, PDB, GPO and, in non-Parisi cases as explained in GN 02603.045, the dual entitlement rate.

3. Claims Processing

The benefit amount being adjudicated should be entered on the MBEN screen of the A101. This is the amount before applying deduction before reduction.

D. Procedure for temporary deductions

1. Definitions used in the formulas

When the annual earnings test applies before the close of the work year, consider the deduction event temporary. See RS 02510.005 when temporary work deductions are involved; use the following formula to compute benefit amounts when family maximum reduction is required. This ensures that a beneficiary in a separate household will not receive an increase in benefits because of temporary work deductions. The benefit increase applies only when the deduction becomes permanent when a closed year report of earnings is processed.

Definitions used:

  • BIC = Beneficiary Identification Code

  • OB = original benefit (including any applicable widow(er) delayed retirement credits)

TOTOB = total of all original benefits

HH = household

TTAP = (temporary total amount payable)

The family maximum minus:

  • PIA on life cases

  • Total amount of work deductions to be imposed against auxiliaries or survivors due to the number holder’s work

  • Workers' compensation (WC) or public disability benefit (PDB) offset amount for any worker in the same HH

  • Age reduction amount for any worker in the same HH

  • Government pension offset (GPO) amount for any worker in same HH

  • Partial benefit payable to any other deductee

  • For cases where the new rule in GN 02603.045 does not apply - the dual entitlement reduction amount for all workers or deductees

2. Formula for temporary deductions

The worker's rate will always be $0.00 because there are no partial deductions for temporary work deductions.

The non-worker or non-deductee rate =

           OB x TTAP              
TOTOB - OB for any worker in same HH
and - OB for any other deductee

When different OBs are involved, calculate the rate for each OB. Use the OB if the result of this calculation is greater than the OB. Reduce the non-worker or non-deductee rate for age, worker’s compensation (WC), public disability benefits (PDB), government pension offset (GPO) and, on cases where the new rule in GN 02603.045 does not apply, the dual entitlement amount.

3. Claims Processing

Enter the adjudicated benefit amount on the MBEN screen of the A101. This is the amount before applying deduction before reduction.


To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/0202603050
GN 02603.050 - Computing Deductions Before Reduction - 12/16/2011
Batch run: 12/19/2011
Rev:12/16/2011