TN 24 (09-02)
RS 00615.201 Reduced Spouse's Benefits
A. Policy - general
1. When spouse's benefits are reduced
Spouse is under FRA and does not have a child in care.
After 12/72 a spouse reentitled prior to FRA as a spouse on the same earnings is reduced the same number of months as the earlier entitlement. An ARF at FRA will remove all months of nonentitlement.
After 12/72, spouse reentitled after FRA on the same NH's record (after a period of nonentitlement). The spouse is eligible for an ARF for nonentitlement months.
2. When spouse's benefits are not reduced
Spouse's benefits are not reduced:
For any month that the spouse has an entitled child of the NH in care and under 16, or 16 and over who is disabled and the child is entitled to child's benefits on any record.
NOTE: Benefits for a spouse with a child-in-care convert to aged spouse benefits as follows: (1) if the spouse is FRA or over and had a child-in-care for all months prior to FRA, benefits will convert to aged spouse benefits effective with the month there is no longer a child-in-care; (2) if the spouse is FRA or over and had a child-in-care for only some of the pre-FRA months, benefits will convert to aged spouse benefits effective with the month there is no longer a child-in-care. At that time we will apply an ARF for those pre-FRA months when there was a child-in-care. See RS 00615.482C. ; (3) if the spouse is between 62 and FRA, benefits will convert with the month there is no longer a child-in-care. An ARF will be applied at FRA to reduce the reduction factor for any prior entitlement as a reduced spouse, taking into consideration all months of child-in-care. See RS 00615.482C. When RIB entitlement is involved, for months with a child-in-care, the amount payable as a spouse will always be the difference between the unreduced spouse benefit and the reduced RIB rate.
For all months before FRA for a divorced spouse if she/he had an entitled child of the NH in care in the first month that she/he was entitled to benefits as a divorced spouse.
For any person who first becomes entitled to spouse's benefits at or after FRA unless he/she has been entitled to a reduced RIB prior to FRA.
For a person who becomes entitled to spouse's benefits after previous entitlement to a spouse's benefit on another earnings record. The entitlement to the first spouse's benefit has no effect on the amount of the spouse's benefit on the second earnings record.
B. Policy - reduced spouse’s benefits
1. Amount of spouse's reduction
a. First 36 months
The unreduced spouse's benefit is 50% of the NH's unreduced PIA (subject to reduction for the family maximum and up to a $105 limitation for months 2/68 through 12/69). This is reduced by 25/36 of 1% for each of the first 36 months. The total reduction for 36 months is 25%.
b. Months in excess of 36
When there are more than 36 reduction months (RF), the unreduced spouse's benefit is reduced by 25% (for the first 36 months) plus 5/12 of 1% for each month in excess of 36.
c. Reduction formulas
Reduced spouse's benefits are computed as follows:
If the total RF is 1 through 36:
OB multiplied by (144 minus RF)
then divided by 144 equals the MBA
If the total RF is 37 through 60:
OB multiplied by (180 minus ARM)
then divided by 240 equals the MBA
(ARM = Number of RF in excess of 36.)
Round the result down to the next dime for benefits after 5/82 and up to the next dime for benefits prior to 6/82. If the spouse's benefit is reduced because of the family maximum, use the reduced amount in place of the OB.
NOTE: The basic reduction for a spouse is 25/36 of one percent per month. 25/36 of one percent is equal to 1/144. So, by multiplying the PIA by 143/144 we are in effect reducing the PIA by 1/144. Using 142/144 for 2 RF we are reducing the PIA by 2 times 25/36 times .01%. The fraction provides both a simplified method of computing reduced benefits and a more accurate method. The basic reduction for a spouse after the first 36 months is 5/12 of one percent. 5/12 of one percent is equal 1/240. When we multiply the PIA by 180/240 we start with a benefit already reduced by 25%. By subtracting 1/240 for each RF after 36 we are therefore reducing the PIA by 25% plus 5/12 of one percent for each of those months.
d. Reduction percentage is based only on number of RF
The reduction for each of the first 36 RF is 25/36 of 1%. The reduction for each month greater than 36 is 5/12 of 1%. The reduction amount is based solely on the number of months involved.
EXAMPLE: Benefits for a person with a FRA of 67 who is entitled at age 62 will be reduced for 60 months of early entitlement. At age 67 we find that an ARF is applicable for 25 months. It is not material when those months actually occurred. After the ARF, a reduction for 35 months applies. The reduction is calculated using 25/36 of 1% for 35 months regardless of when those 35 months occurred.
2. Chart - spouse's benefit reduction factors
This chart shows the factors to use when determining a reduced spouse's rate. Multiply the spouse's benefit by the fraction shown for the applicable number of reduction months (RF). Round the result down to the next dime for benefits after 5/82 and up to the next dime for benefits prior to 6/82. This chart can be used whether a spouse's full retirement age is 65 or greater.