Increase in the Primary Insurance Amount (PIA) or monthly benefit amount (MBA) that was allocated before 06/1975.

Increase in the Primary Insurance Amount (PIA) or monthly benefit amount (MBA) that was allocated 06/1975 or later. These increases were given to beneficiaries in June of each year, starting in 06/1975 as explained in SM 04901.001. After 06/1982 percentage increases in beneficiaries’ benefit amounts were increased effective December of each year. There was no COLA in 12/1982 or 06/1983.

The policy on reopening benefit conversions/COLAs is:

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  If, at some point in the past, a substantive error was made in computing the benefit amount (for example, the wrong reduction factor was used), and it cannot be reopened and revised under the rules of administrative finality; and

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  A conversion/COLA was made on that erroneous benefit amount within the 4 years prior to the discovery of the error, but the conversion operation or COLA itself was done correctly (the correct percentage increase was calculated on the cost of living increase); then

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  The resulting benefit amount (the amount after the conversion/COLA) cannot be adjusted; i.e., “frozen” or reduced, as a means of, at least to some extent, correcting the error which was made in the benefit amount more than 4 years earlier.

EXAMPLE

NH filed 02/02/71, entitled to RIB at age 62 (02/02/71). PIA $71.50. The NH's rate was erroneously established as the full PIA, $71.50. Notice of award was sent in 05/71. Rates were paid as follows:

The error was discovered in 07/76 when the NH reported a change of address.

Since the error occurred in the initial determination (over 4 years prior to 07/76) it may not be reopened. Furthermore, since no error occurred in any subsequent conversion/COLA, no revision will be made on this record and the erroneous rate will continue to be converted upward in subsequent conversions/COLAs.

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  If there has been some clerical error made in computing a conversion/COLA (for example increasing it by the wrong percentage), we are only permitted to correct that error and any successive errors resulting from it, following the rules of administrative finality (see GN 04010.010 and GN 04020.080).

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  We cannot at the same time correct, even prospectively, a substantive computation error which is barred to reopening.

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  If a clerical error or error on the face of the evidence, including a substantive computation error, was unfavorable to the claimant, we can always go all the way back and correct it.

EXAMPLE

NH filed 02/02/99, entitled to RIB at age 62 (02/99). PIA $771.50. The NH's rate was erroneously established due to a computation error involving incorrect reduction factors used. The NH's benefit amount established in 02/99 was $672.90. Notice of award was sent in 05/99. Rates were paid as follows:

The error in the number of reduction factors was discovered in 07/05. Since the error occurred in the initial determination made in 02/99 and it has been over 4 years we discovered the error, it cannot be reopened.

During this same time (07/05) we noticed that in 12/2001, we used the incorrect COLA in figuring the NH's benefit increase. We used 3.7% instead of 2.7% which resulted in more benefits being paid than should have been paid. Since correcting the error would be disadvantageous we had to have discovered the error within 4 years. Since we did discover the error within four years, we can correct the error in the COLAs beginning in 12/01 but we cannot correct the initial error in the computation of the NH's benefits.

Any rates which had already been “frozen” under the old policy were increased by 6.4 percent as a result of the June 1976 conversion/COLA. They should also continue to be increased whenever there are any subsequent conversions/COLAs.

A determination that a beneficiary is simultaneously or dually entitled to a RIB or DIB and to an auxiliary or survivor's benefit in a higher amount is an initial determination and is subject to the rules of administrative finality (see GN 03101.070). Therefore, we use the same rules for these cases as for conversion/COLA cases.

For additional information on simultaneous and dual entitlement see RS 00615.768.

An error in reduction made at the time of initial determination of simultaneous or dual entitlement cannot be corrected after 4 years unless the initial determination was unfavorable to the claimant.

If a beneficiary is simultaneously entitled to auxiliary or survivor's benefits on more than one earnings record and should not be, the failure to terminate or suspend payments on one of the earnings records is not an initial determination. Therefore, the rules of administrative finality do not apply and, whenever the failure is noted, the termination or suspension may be effected as of the time it should have occurred (see GN 03101.100B.).