TN 10 (01-08)
RS 01404.005 Lag Period – and Lag Earnings
1. Lag Period
The lag period is the current year (i.e., year of filing or requesting revision of the E/R) and the preceding year.
2. Lag Earnings
Lag earnings are unposted earnings paid (i.e. wages) or derived (i.e. SE) in the lag period. Policy
1. When Lag Earnings Must Be Developed
Lag earnings must be developed in claims cases when:
Insured status is dependent upon the lag earnings development (GN 01010.440); or
The claimant insists upon using lag earnings in the computation and evidence of the lag earnings is provided with 10 days per RS 01404.005C.2;
The case is a DIB case and the date last insured is less than 2 years in the future.
The case is a DIB case involving workers compensation/public disability benefit and the alleged lag earnings affect the average current earnings figure; or
The use of lag earnings establishes entitlement to spouse’s benefits; or
An employment or coverage question (for either wages or SE) is raised by the claimant and the discrepancy affects either the PIA or deductions.
The NH is applying for premium reduced Hospital Insurance (HI) (Part A of Medicare), has less than 30 QCs and the use of lag earnings results in crediting the 30th QC. (HI 00801.134)
Lag earnings must be developed in the following claims and preclaims situations:
IMPORTANT: Unposted lag earnings may be used for computation purposes in claims cases but may not be added to the MEF for the current year or the year before the current year.
2. When Not To Develop Lag Earnings
The majority of earnings are posted to an individual’s earnings record within a few months after the close of the taxable year upon the processing of the employer report or IRS SE data. AERO adjustments are also regularly processed; thus, the time period in which lag earnings are posted and credited to the individual’s benefit is not considered disadvantageous to the claimant.
Do not develop for lag earnings unless one of the factors requiring development in RS 01404.005B.1. exists.
NOTE: If the claimant requests the lag earnings be included explain to the claimant that their earnings record will be credited with any additional earnings shortly after receipt of the employer’s earnings report. And the effect, if any, these earnings will have on the benefit payable will automatically be determined and credited to their benefit along with any retroactive payment due.
3. Totalization Claim Involved
Claims for totalized benefits under international agreements may require that SSA develop earnings through the month of filing or death.
Total Social Security credits must be known to determine what pro-rata share of the theoretical benefit will be paid.
NOTE: Lag development may not be necessary in some cases.
Take the following action when the NH or claimant questions lag earnings:
1. Preclaim Situations
Explain the year(s) which are lag and that the earnings are not posted for this period due to the time required to receive, process and credit the employer reports each year.
If the NH questions current year earnings, advise the NH to keep copies of his W-2, pay stubs or any other evidence of earnings. Advise the NH to contact SSA at least 6 months after the close of the taxable year if there is a question concerning the earnings shown on their Social Security Statement.
If the NH questions unposted earnings for the preceding calendar year and the NH's reason for the non-posting appears questionable, advise the NH to contact SSA approximately 6 months after the end of the current year for a Social Security Statement (or the office may request a DEQY at that time) to determine if the wages were posted. Advise the NH to call or contact SSA if the earnings are not posted at that time.
If the inquiry is made after May, query the ERQY to determine if an employer report has been received. If the ERQY indicates that the employer's report has been received, advise the NH of the fact and suggest that the NH request a Social Security Statement after the end of the year to verify whether the earnings were posted.
2. Claims Situations
In claims situations, review the E/R with claimant and:
If lag earnings are necessary for the NH to obtain insured status or development of lag earnings is required per RS 01404.005B.1. then:
Develop for evidence of earnings per RS 01404.018, and
Enter “N” to the question on the EARN screen: “Do you wish us to compute your benefits and complete your claim without using unposted recent earnings (Y/N)?
NOTE: If evidence of the earnings is not received within 10 days, process the claim without using lag. Do not consider this a partial award.
If insured status is not an issue or development of lag earnings is not otherwise required per RS 01404.005B.1., then:
Do not obtain an allegation of the lag earnings or discuss including lag earnings in the computation with the claimant.
Do not complete the MCS EARN screen, instead leave it blank and enter through it. MCS does not require any entry on the screen.
If the alleged lag earnings are entered on the EARN screen complete it as usual but show the “PRF” code with “N” and enter “Y” in response to the question: “Do you wish us to compute your benefits and complete your claim without using unposted recent earnings? (Y/N)”
NOTE: If lag earnings are not entered on the EARN screen, the adjudicator will need to complete the DEME manually as appropriate for deduction purposes. If evidence of lag is submitted which permits the use of the wages in the initial claim, then:
Include the earnings for computation purposes; and
Do not take any action to add the earnings to the MEF; and
Do not consider this a partial award. (GN 01010.110).
If evidence of the earning is subsequently submitted, process the recomputation.
3. Internet Application
If the claimant files an internet application and indicates that they wish to include their recent earnings in their benefit computation, then:
Determine whether the earnings are needed for insured status; and
Develop as appropriate for the earnings (RS 01404.018); and
Enter “N” to the question on the MCS EARN screen: “Do you wish us to compute your benefits and complete your claim without using unposted recent earnings? (Y/N)”
If earnings are not needed for insured status, then:
Request an Interactive Computation or an ICERS to determine whether the earnings will affect the benefit payable.
If inclusion of the lag earnings will not affect the benefit payable, do not take any additional action. Enter “Y” to the question on the MCS EARN screen: “Do you wish us to compute your benefits and complete your claim without using unposted recent earnings? (Y/N)”
If the lag earnings will increase the benefit payable and the claimant indicated on the application that they wished to include the earnings, take the following action:
Contact the claimant to explain that the earnings will be credited and posted shortly and that any retroactive benefits due will be processed.
If the claimant insists upon using the earnings, develop as appropriate and enter “N” to the question on the MCS EARN screen: “Do you wish us to compute your benefits and complete your claim without using unposted recent earnings? (Y/N)”
If evidence is not received within 10 days process the claim without using lag. Do not consider this a partial award. (GN 01010.110).
If the claimant states subsequent to our contact that it is not necessary to include the lag earnings, enter “Y” to the question on the MCS EARN screen: “Do you wish us to process your benefits and complete your claim without using unposted recent earnings? (Y/N)”
If the evidence is subsequently submitted after the claim has been adjudicated, process the recomputation after the NH or claimant is in current pay.
4. Posted Earnings during the Lag Period Incorrect
If posted earnings for an employer in the lag period are incorrect then:
Earnings posted during the lag period are no longer considered lag and corrective action may be taken.
NOTE: If the claimant alleges more than one employer during the lag period and earnings are posted accurately for some of the employers but not all, do not develop for the missing earnings (unless required per RS 01404.005B.1.)