SSR 65-12: SECTIONS 216(i), 217(a) and (e), and 223. -- DISABILITY -- INSURED STATUS -- USE OF MILITARY SERVICE WAGE CREDITS

20 CFR 404.120 and 404.1310

SSR 65-12

Where a disabled serviceman had been granted military retirement pay, based upon active military service from June 1927 through April 1951 and, after receiving such pay for 3 years, waived his right thereto in order to receive a higher rate of compensation from the Veteran's Administration based solely upon his disability, held, not withstanding the fact that he is no longer receiving military retirement pay, he is not entitled to military service wage credits under section 217 of the Social Security Act for the purpose of becoming entitled to disability insurance benefits but he is entitled to such credits for the purpose of establishing a period of disability under section 216(i) of the Act.

The claimant, V, age 56, filed application on may 6, 1962, to establish a period of disability insurance benefits. He submitted he was placed on the disability retired list. The Marine corps certified that May 1, 1951, through May 31, 1954, V received military retirement pay computed on a formula which included a multiple of active service. In order to increase his monthly income, V waived his military retirement pay effective June 1, 1954, Veteran's Administration compensation, based on 100 percent disability. He was advised by the service department that should his compensation be reduced or terminated, the retirement pay would be reinstate. V had no civilian employment or self-employment. The medical evidence submitted established that V is under a disability for purposes of title II of the Social Security Act beginning May 1, 1951.

V seeks to establish a period of disability and entitlement to disability insurance benefits under title II of the Social Security Act solely on the basis of military service wage credits. The question presented is whether military service wage credits for service during the World War II and post World War II periods may be granted the claimant to establish quarters of coverage an insured status either for purposes of establishing a period of disability or for entitlement to disability insurance benefits.

To establish a period of disability under section 216(i) and to become entitled to disability insurance benefits under section 223, a person must entitled to disability insurance benefits under section 223, a person must be fully insured and have 10 quarters of coverage in the 40 calendar quarters ending with the calendar quarter in which his disability began or in any subsequent calendar quarter. These quarters of coverage may be acquired on the basis of earnings from employment or self-employment covered under the provisions of title II of the Social Security Act.

Section 217(a)(1) provides in pertinent part as follows:

"For purposes of determining entitlement to and the amount of any monthly payable under this title on the basis of the wages. World War II veteran, and for purposes of section 21(i)(3), such veteran shall be deemed to have been paid wages (in addition to the wages, if any, actually paid to him) of $160 in each month during any part of which he served in the active military or naval service of the United States during World War II. This subsection shall not be applicable in the case of any monthly benefit or lump-sum death payment if --

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"(B) a benefit * * * which is based, in whole or in part, upon the active military or naval service of such veteran during World War II is determined by andy agency or wholly owned instrumentality of the United States (other than the Veterans' Administration) to be payable by it under any other law the United States or under a system established by such agency or instrumentality. * * * The provisions of clause (B) shall * * * not apply for purposes of section 216(i)(3)."

Section 217(d) defines the World War II period as beginning September 16, 1940 and ending the close of July 24, 1947. Section 217(e) sets forth essentially the same provisions as section 217(a) except that they are applicable to veterans who served in the active military or naval service of the United States during the post-World War II period July 25, 1947 through December 31, 1956.

Section 404.1310 of the Social Security Administration Regulations (20 CFR 404.1310) provides in pertinent part:

"* * * World War II service wage credits are not granted if any part of the veteran's active service during the World War II period has been credited toward another 'Federal benefit' (see ยง 404.1311) and post-World War II service wage credits are not granted if any part of the veteran's active service during the post World War II period has been credited toward another Federal benefit. However, notwithstanding the fact that part or all of the veteran's active service during the World War II or post-World War II period, as the case may be, has been credited towards another 'Federal benefit' these provisions do not apply:

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"To the extent that such World War II or post-World War II service wage credits are used solely for the purpose of meeting the insured status and quarters of coverage requirements necessary under section 216(i)(3) of the Act to establish a period of disability."

Section 404.1311 of the Social Security Administration Regulations provides that:

"* * * a Federal benefit means any periodic retirement or survivor benefit (including a lump-sum payment which is a commutation of or a substitute for periodic payments) determined by another Federal department, agency (other than the Veterans' Administration) or wholly owned instrumentality of the United States to be payable under any law or under a program or pension system established by such department, agency, or instrumentality * * *."

The Act clearly precludes the granting of military service credits where such service is the basis for another benefit which has been determined "to be payable" by an agency or wholly owned instrumentality of the United States (other than the Veterans' Administration). In Sutherland v. Flemming, 189 F.Supp. 712, U.S.D.C., N.D., Ala., November 22, 1960, the court stated:

"* * * The statute provides that a veteran shall be deemed to have been paid wages unless 'a benefit * * * is determined by any agency * * * of the United States (other than the Veterans' Administration) to be payable by it * * *.' The fact that a determination was made that the veteran was entitled to the benefit of retirement pay on account of his miliary service precludes the presumption that he was paid wages during such service."

The language of clause (B) in sections 217(a) and 217(e) of the Act is broad. The use of words "a benefit" does not expressly limit its operation to cases of contemporaneous payment of benefits by this agency and another Federal agency. It is clear that once any benefit is determined to be payable by another agency based on military and naval service in the relevant periods, section 217(a) and 217(e) are not applicable. Sections 217(a) and 217(e) were designed to prevent the payment of social security benefits upon the basis of a veteran's service where the same service is being used as the basis of a benefit awarded by some other Federal agency (other than the Veterans' Administration).

The evidence herein discloses that the award of V's retirement pay was based in part on World War II Service and in part on post-World War II service. Since the Marine Corps has determined a retirement benefit to be payable to V based in whole or in part on such service in both periods, sections 217(a) and 217(e) of the Act and the implementing regulations specifically prohibit granting military service wage credits for monthly social security benefits. This is true whether or not benefits are actually paid under that determination. SSR 61-49, C.B. 1960-61, p. 110. Without wage credits for either period of service V has not met the special earnings requirements of the Act in that he has not acquired 20 quarters of coverage in the 40-quarter period ending with the calendar quarter in which his disability began or in any subsequent calendar quarter and, therefore, he is not insured for purposes of disability insurance benefits under section 223 of the Act.

However, both sections 217(a) and 217(e) provide that the restriction on their applicability due to the award of another Federal benefit does not apply for purposes of section 216(i)(3). Section 404.120 of the Social Security Administration Regulations (20 CFR 404.120) expressly provides in pertinent part that:

"* * * For the purpose of meeting the disability insured status requirements for the establishment of a period of disability only, quarters of coverage may be granted for:

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"A period of military service to 1957 * * * even though such period of service may not be used for other purposes of Title II of the Social Security Act because of periodic benefit which is based in whole or in part on the same period of military service, is payable by another Federal agency."

Thus, military service may service may result in wage credits and give the veteran quarters of coverage needed for purposes of establishing a period of disability, even though for other title II purposes the wage credits could not be granted because another Federal benefit was based on such military service. A period of disability may be advantageous to a worker in several ways. Among other advantages, the period of disability is excluded (under section 214(a) of the Act) in determining the number of quarters of coverage he needs for fully insured status, and thus operates to reduce the number otherwise required. In the present case, for example, if no period of disability is established, V would need 20 quarters of coverage to be fully insured upon attaining age 62 in 1968; whereas, with a period of disability beginning in 1951, V would need only 6 quarters of coverage (which he conceivably could acquire by engaging in covered employment or self-employment).

Accordingly, it is held that for purposes of establishing entitlement to disability insurance benefits under section 223 of the Act, no military service wage credits may be granted for V's service during the period September 16, 1940, through April 30, 1951, since another Federal agency has determined that a benefit is payable to him based on the same service. It is further held, however, that for purposes of establishing a period of disability under section 216(i)(3), V may be granted military service wage credits for such service, that he has met the earnings requirement for the establishment of a period of disability and, having met the other pertinent requirements therefor, is entitled to the establishment of a period of disability beginning May 1, 1951, the date of onset of his disability.

[V instituted civil suit for review of Secretary's decision and on April 18, 1963, the Secretary's decision was affirmed without opinion. Preston v. Celebrezze U.S.D.C., S.D. of Fla. (No. 540-62-Civ.-DD) (CCH U.I.R., Fed. Par 14,819).]


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