AR 97-1 (1) (Rescinded 10/27/99)
EFFECTIVE/PUBLICATION DATE: 01/13/97
Acquiescence Ruling 97-1(1)
Whether, in determining the amount of benefit reduction under the maximum family benefits provision in section 203(a) of the Social Security Act (the Act) in cases where a beneficiary is entitled to benefits on more than one earnings record, only those monthly benefits payable on the worker's earnings record after application of the simultaneous benefit provisions are included in calculating the total monthly benefits payable on that record.
Sections 202(k)(3)(A), 202(r) and 203(a) of the Social Security Act (42 U.S.C. 402(k)(3)(A), 402(r) and 403(a)); 20 CFR 404.304(d), 404.403, 404.404, 404.407(a), 404.623; Social Security Ruling 62-7.
First (Maine, New Hampshire, Massachusetts, Rhode Island, Puerto Rico).
Parisi By Cooney v. Chater, 69 F.3d 614 (1st Cir. 1995).
This Ruling applies to determinations or decisions at all administrative levels (i.e., initial, reconsideration, Administrative Law Judge (ALJ) hearing or Appeals Council).
Anthony Parisi, the worker, became disabled in February 1988. He and Anthony Parisi II, his dependent child and the plaintiff in this case, began receiving Social Security benefits on Anthony Parisi's earnings record. In 1991, Adriana Parisi, the worker's spouse, became entitled to retirement benefits (old-age benefits) based on her own earnings record. Under section 202(r) of the Act, Adriana was deemed also to have applied for and become entitled to wife's benefits based on the worker's earnings record. The Social Security Administration (SSA) determined under section 202(k)(3)(A) of the Act that because the monthly retirement benefits that Adriana was entitled to receive on her own record exceeded the amount of her monthly wife's benefits on Anthony Parisi's earnings record, she could only receive payment for the retirement benefits payable on her own earnings record.
SSA counted the wife's benefits to which Adriana was entitled, but which were not actually paid to her, toward the monthly maximum amount of benefits payable on Anthony Parisi's earnings record under section 203(a) of the Act (the family maximum). Because the total monthly amount of Anthony's disability benefits, the plaintiff's child's benefits, and Adriana's wife's benefits exceeded the monthly family maximum limit, SSA reduced the amount of the plaintiff's and the wife's monthly benefits.
The plaintiff's request for reconsideration of the benefit reduction was denied, and he requested a hearing before an ALJ. The ALJ found that Adriana's wife's benefits should not be counted toward the family maximum. However, the Appeals Council reversed the ALJ's decision and the plaintiff appealed to the district court. The district court found that the family maximum limit on monthly benefits was meant to include only "effective entitlements" that result in actual payment of benefits. Because Adriana's entitlement to wife's benefits was only "conditional" upon her not being entitled to a greater amount of monthly benefits on her own earnings record, the district court concluded that Adriana's wife's benefits should not be counted toward the family maximum. SSA appealed and the United States Court of Appeals for the First Circuit, while offering somewhat different reasoning, found that the district court correctly reversed the Appeals Council's decision.
After reviewing the statutory language in sections 203(a) and 202(k)(3)(A) of the Act, the legislative history, SSA's regulations and policy considerations, the Court of Appeals held that "Adriana's non-payable spousal benefits d[id] not count toward the section 03(a) 'family maximum' . . . [because] section 03(a) operates to limit the total amount of benefits actually payable on a single worker's record, not the amount of entitlements theoretically available." The court further held that because Adriana's deemed entitlement to wife's benefits resulted in "zero payable benefits" under section 202(k)(3)(A) of the Act, none of her benefits should be included in the family maximum computation required under section 203(a).
Without reviewing SSA's definition of "entitlement," the court reasoned that, if SSA was correct in arguing that section 203(a) of the Act places a limit on entitlements, it would be contradictory and impossible to enforce compliance with the family maximum cap by reducing payable benefits. The court held that section 203(a) of the Act requires SSA to consider the actual amount of benefits payable under the relevant benefits provisions (read as a whole), not purely theoretical entitlements, in calculating the total monthly benefits payable on the worker's earnings record. The court noted that its conclusion did not undermine SSA's definition of "entitlement" and that Adriana had entitlement, in an abstract way, to wife's benefits under section 202(b)(1) of the Act.
The court also held that the statutory language requires that monthly benefits be reduced under the family maximum only as much "as necessary" to enforce compliance and that, because the reduction in Parisi's case depended on the calculation of Adriana's wife's benefits, which amounted to zero due to her simultaneous entitlement to a higher benefit on her own earnings record, a reduction was not necessary. Accordingly, the court concluded that the total amount of benefits payable on the worker's record did not exceed the family maximum and that Anthony's child's benefits should not be reduced.
Section 203(a) of the Act establishes a limit, derived from the worker's primary insurance amount, on the total monthly benefits to which dependents or survivors may be entitled on the basis of one worker's earnings record (the family maximum). Under SSA's regulations implementing section 203(a) of the Act (20 CFR 404.403 and 404.404), the benefits of each claimant entitled on a worker's earnings record are reduced proportionately so that the total benefits of those entitled on the record in one month do not exceed the family maximum. In calculating total monthly benefits, SSA includes all benefits of the claimants who are entitled on the worker's record without considering whether the benefits are actually due or payable.
The Parisi court held that, when computing a reduction under the family maximum pursuant to section 203(a) of the Act, SSA should not include the monthly benefit that would otherwise be payable to the spouse if payment of that spouse's benefit is precluded by section 202(k)(3)(A) of the Act due to the spouse's simultaneous entitlement to a higher benefit on the spouse's own earnings record.
This Ruling applies only to cases involving claimants whose benefits are reduced because of the family maximum and who reside in Maine, New Hampshire, Massachusetts, Rhode Island or Puerto Rico at the time of the determination or decision at any administrative level, i.e., initial, reconsideration, ALJ hearing or Appeals Council.
When the total benefits due or payable for any month on the earnings record of a worker exceed the maximum amount under section 203(a) of the Act (the family maximum applies) and a person entitled on the worker's earnings record is simultaneously entitled to benefits on another earnings record, SSA will consider only the amount of monthly dependent's or survivor's benefits actually due or payable to the simultaneously-entitled person when determining the amount of the benefit reduction because of the family maximum. Adjudicators will continue to apply SSA's other policies for applying and calculating the family maximum reduction.
 The First Circuit's reasoning differed from the district court's analysis that distinguished between "effective" and "conditional" entitlements. The court held that this distinction had "no roots in the statutory language."
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