SSA - POMS: GN 04030.050 - Administrative Finality – Recomputations and Recalculations

A. Definition

Recomputation:

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Is a total redoing of the computation, not just the addition of a high year and subtraction of a low year. A recomputation involves using a year or years of earnings that were not used in the initial base year period when computing the Primary Insurance Amount (PIA).
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Is a new initial determination based on having a new base year or years.
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Is effective the January following the year of “new” additional earnings.
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Must result in an increase in the PIA over the PIA of record. (If the PIA is computed under the 1977 Amendments, the recomputation must result in an increase of at least $1.00. See RS 00605.501). The PIA increase will be given the maximum retroactivity allowed. See RS 00605.401 for additional information on Recomputations.

NOTE: The imposition of the WEP is an exception to the $1.00 rule since a recomputation that imposes WEP will always reduce the PIA. Also, even though the recomputation of a PIA must result in an increase in the PIA, there may be situations where a PIA will increase but the MBA will not increase because administrative finality applies to the incorrect MBA. The PIA increase should be processed in these situations, even if the MBA does not change.

B. Policy

1. Applying Rules of Administrative Finality

Recomputation of the PIA constitutes a new initial determination to which the rules of administrative finality apply. Therefore, after 4 years, an initial recomputation determination can be reopened and revised only in accordance with GN 04010.030D. and GN 04020.001.

EXAMPLE – Recomputation and Administrative Finality

NH attains age 62 on 10/01/2004 and is entitled to retirement benefits that same month. The initial award notice is dated 10/18/2004. When we computed the NH's initial PIA we used all of their earnings from 1951-2003 (the year before their month of entitlement in 2004). The NH's PIA is $950.00 in 10/2004 based on their posted earnings from 1965-2003. In 04/2005 earnings for 2004 are posted to their record. Because 2004 was not in the initial base year period, when we refigure the NH's PIA to include those earnings, it is considered to be a recomputation. Recomputations are effective the January following the year of earnings so this NH’s new PIA would be effective 01/2005. The notice that is sent out informing the NH of the change in their benefit amount is considered an initial determination. In this example, the initial recomputation notice is sent out 04/30/2005. The timeframes for reopening this initial determination is based on the date of the recomputation notice, which is 04/30/2005.

2. Differences Between Recomputation And Statutory Conversions/Cost of Living Adjustments (COLAs)

Recomputations differ from statutory conversions/COLAs (GN 04030.060) with respect to the correction of computation errors which cannot be corrected under the rules of administrative finality.

a. Statutory Conversions/COLAs

A statutory conversion/COLA does not involve refiguring the benefit calculation, it just adds a certain percentage to the existing benefit (see also SM 04901.001 – Social Security Amendments).

We cannot correct earlier computation errors effective with the date of the conversion/COLA unless the error can be corrected using the normal administrative finality rules. We have to give the full percentage increase (see also GN 04030.060 – Administrative Finality – Errors in Conversion Operations).

b. Recomputations

An error in a recomputation may be corrected if it is discovered at some date in the future as long as it is discovered within 4 years of the initial recomputation notice. However, even with the correction there must still be an increase in the PIA. The correction is effective with the date of the new recomputation.

If a PIA is incorrect but barred from reopening due to administrative finality, the incorrect PIA (plus COLA’s) will remain the PIA of record for the beneficiaries involved until and unless a subsequent recomputation PIA using correct or deemed correct earnings exceeds it (at least a $1.00 increase is required for PIAs computed under the 1977 Amendments).

NOTE: If eliminating duplicate postings and adding new earnings would result in a decrease, no recomputation would be done. When an incorrect rate is protected by administrative finality, that protected rate cannot be increased due to an ARF or Delayed Retirement Credits (DRCs). Any applicable ARF/DRCs must be applied to the correctly computed PIA/MBA and the correctly computed rate will not be paid until it exceeds the protected rate.

For additional information on additional earnings, see GN 04010.030D.

For additional information on the statute of limitations, see RS 02201.000 and the exceptions to the statute of limitations in RS 02201.008.

C. Examples

1. Administrative Finality Does Not Permit Correction – Error Discovered After Four Years

NH was awarded in 03/2001 an erroneous PIA of $855.00. The initial award notice was sent 03/07/2001. In 08/2005, SSA received an AERO and established an affirmative action in writing that indicated there were duplicate earnings in the year 2000. The corrected PIA after the 2000 duplicate earnings are removed would be $837.00 effective 03/2001. Since we did not receive the new and material evidence and discover the error within 4 years, we cannot correct the PIA. The PIA remains $855.00 effective 03/2001.

2. Administrative Finality Does Not Permit Correction – Error Discovered After Four Years

A married couple, Sam and Robin, owned a gift shop together during the years 1964-70. The self-employment income from the gift shop was all reported under Sam's SSN. When Sam was awarded RIB benefits in 1995, we used the posted SEI for 1964-70 to figure Sam's benefit amount.

When Robin files for RIB benefits in 2000, we determine that the SEI for 1964-70 should have been split 50/50 between both spouses. Because this determination meets an exception to the statute of limitations (see RS 02201.008 – Exceptions to the Statute of Limitations), we take the correct actions to move half of the posted SEI from Sam to Robin for 1964-70. We figure Robin's RIB using half of the SEI. We refigure Sam's PIA based on the reduced SEI for 1964-70, reducing Sam's benefit amount significantly. However, since we made an initial determination on Sam's benefit amount over 4 years ago, under the rules of administrative finality we cannot correct Sam's benefit amount. This is so even though we were able to change Sam's posted earnings under the rules of the statute of limitations. However, if we had recomputed Sam's benefits within the past 4 years, or if a recomputation is due in the future, we will use the correct earnings as long as the correct PIA is not lower than the protected PIA of record.

3. Administrative Finality Does Not Permit Correction – Subsequent COLA Increases and Incorrect Computation

NH was awarded in 10/2001 an erroneous PIA of $979.00. The initial award letter was sent 10/12/2001. An AERO indicated duplicate earnings for 2000 and was sent to the PSC in 11/2005. An affirmative action in writing was established 11/11/2005. By processing the AERO and removing the duplicate 2000 earnings it would decrease the PIA to $905.00. Since we did not take action to question the error within four years of when the initial determination was made and by correcting the earnings record the PIA would be reduced, we cannot decrease the PIA even though we are able to correct the earnings record and remove the duplicate earnings (see RS 02201.008). So, the 10/2001 PIA of $979.00 remains the protected PIA.

Subsequent COLAs for 12/2001, 12/2002, 12/2003 and 12/2004 raise the PIA to $1067.70. We later receive the 2004 earnings. When we process the correct recomputation effective 01/2005 using the corrected earnings record, we come up with a PIA of $960.00. Because a recomputation by law must always result in an increase, SSA would NOT process the recomputation to $960.00. The PIA would remain at $1067.70. In 12/2006, the NH gets another COLA to $1100.00. In 01/2007 we get the NH's earnings for 2006 and we consider another recomputation. If this recomputation using the corrected earnings record is at least $1.00 higher than the PIA of $1100.00, we would process the recomputation and pay the higher PIA. If the recomputation was lower than $1101.00, we would not process it. SSA continues doing this every year the NH has new earnings and each time we compare the existing protected PIA to the new recomputed PIA. Each time we consider a recomputation we use the correct computation factors (earnings, eligibility year and bend points). If a higher PIA is computed using the correct figures, we process the recomputation. If a lower PIA is computed using the correct figures, we do NOT process the recomputation. The protected PIA remains the PIA of record (see RS 00605.405).

NOTE: If the duplicate earnings are not removed, each additional year of earnings will trigger AERO to increase the PIA. The earnings record should be corrected or AERO will continue to give incorrect recomputation increases on incorrect earnings.

D. Definition — Recalculation

A Recalculation:

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Is any change to earnings for the years used in the initial base years (1951-year before month/year of entitlement) resulting in a change to the PIA.
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Is NOT an initial determination used to count the time for reopening. It is ALWAYS a revised initial determination. The time for reopening a revised initial determination is counted from the date of the notice of the initial determination (see GN 04001.040).
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Can result in an increase or decrease in the PIA.
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Can be effective in any month of the year.
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Can include an increase in delayed retirement credits (DRCs).

See RS 00605.401 for additional information on Recalculations.

NOTE: If a recalculation is based on a change in date of birth for a beneficiary, follow RM 10212.200 – Changing Numident Data-Other than Name Change, to develop evidence of age and process an SS-5 to correct the date of birth shown on the beneficiary’s Numident record.

E. Policy — Calculation cannot be Reopened but Increase is Payable Due to Additional Earnings

Where the calculation of the benefit amount may not be reopened under the rules of administrative finality but an increase would be payable due to additional earnings being credited to the earnings record under section 205(c) (4) and (5) of the Social Security Act, recalculate the benefit rate and pay the increased amount effective with the month we received the new evidence.

Refigure the calculation only if an increase in the benefit amount results.

EXAMPLE

A NH was awarded benefits in 03/2000. In 05/2005, the NH noticed that there was only $36,500 in earnings for the year 1999. In 05/2005, the NH brought in their W2 from another employer for 1999 showing they had additional earnings of $46,500 for a yearly total of $83,000. Since it’s been over 4 years from the date of their initial award notice and the earnings suspense file for SSA did not have record of these earnings being reported by their employer, these earnings cannot be credited back to the date of their initial award since they are considered new and material evidence. The increase in their benefit will be processed when we received these additional earnings in 05/2005 since we cannot reopen and revise this case since it’s been over 4 years from the date of the NH's initial award notice.

F. Policy — Revised Initial Determinations and Recalculations

1. Applying Rules Of Administrative Finality

Recalculation of the PIA constitutes a revised initial determination to which the rules of administrative finality apply. Therefore, before deciding whether a recalculation can be reopened, you must determine the date of the initial determination that the recalculation revised. If more than 4 years have passed from the date of the initial determination, a recalculation can be reopened and revised only in accordance with GN 04020.001 and GN 04010.030D.

NOTE: When calculating the period subject to reopening, remember, we count the time for reopening a recalculation from the date of the initial determination, not the revised determination.

2. Example — Recalculation, Recomputation and Administrative Finality

The NH was awarded benefits based on a PIA of $450.00 beginning April 1995. Their claim was adjudicated using earnings through 1994. Notice of the award was sent 05/15/95. Their initial PIA was increased by a COLA to $461.70 effective 12/95.

The computer run of 10/97 AERO included credit for duplicate postings of 1994 earnings as well as the correct amount of the worker's 1995 earnings. This action increased the worker's PIAs to $460.00 effective 04/95, $471.90 effective 12/95, and $475.00 effective 01/96.

In 07/99 a CA reviews a category 5 PIA LOW exception from the 10/98 AERO run and establishes an affirmative action in writing. The CA determines that the prior PIAs included credit for a duplicate posting for 1994 which has now been removed from the earnings record. Based on the correct earnings, the PIAs would be $450.00 effective 04/95 and $470.00 effective 01/96.

None of the reasons for unrestricted reopening apply. The recalculation that incorrectly increased the 04/95 PIA in the 10/97 AERO run was a revised determination. Since the CA is reviewing the case in 07/99, more than four years after the 05/95 notice, the incorrect 04/95 benefit amount (MBA) based on the revised PIA determination is protected by administrative finality.

The prior AERO run in 10/97 had also processed a recomputation effective 01/96 increasing the PIA to $475.00. This recomputation, which included the incorrect 1994 earnings and correct 1995 earnings, was an initial determination. The CA can reopen this recomputation since the date (07/99) the CA is working the AERO exception is within four years of the notice of recomputation. The CA cannot, however, decrease the 01/96 MBA to less than the 12/95 benefit amount (protected 04/95 MBA plus the COLA). Although the correct recomputation PIA effective 01/96 would be $470.00, the CA can only reopen the 01/96 recomputation to lower the MBA to the protected amount, which was based on the incorrect PIA of $471.90. This amount plus subsequent COLAs will remain in effect unless a subsequent recomputation using the correct earnings increases the MBA to a higher amount.

G. References

RS 00605.401 – Recomputations and Recalculations

RS 00605.501 – Current Recomputations – 1977 Amendments

RS 00605.580 – Recalculation of Benefits

SM 04610.086 – How to Process AERO Cases When Administrative Finality is Involved

Social Security

Program Operations Manual System (POMS)

GN 04030.050 Administrative Finality – Recomputations and Recalculations