[Federal Register Volume 75, Number 206 (Tuesday, October 26, 2010)]
[Notices]
[Pages 65696-65700]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-26983]
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SOCIAL SECURITY ADMINISTRATION
Office of the Commissioner
[Docket No. SSA-2010-0054]
Cost-of-Living Increase and Other Determinations for 2011
AGENCY: Social Security Administration.
ACTION: Notice.
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SUMMARY: Under title II of the Social Security Act (Act), there will be
no cost-of-living increase in Social Security benefits effective for
December 2010. As a result, the following items will remain at their
2010 levels:
(1) The maximum Federal Supplemental Security Income (SSI) monthly
benefit amounts for 2011, under title XVI of the Act, will remain $674
for an eligible individual, $1,011 for an eligible individual with an
eligible spouse, and $338 for an essential person;
(2) The special benefit amount under title VIII of the Act for
certain World War II veterans will remain $505.50 in 2011;
(3) The student earned income exclusion under title XVI of the Act
will remain $1,640 per month in 2011, but not more than $6,600 in all
of 2011;
(4) The dollar fee limit for services performed as a representative
payee will
[[Page 65697]]
remain $37 per month ($72 per month in the case of a beneficiary who is
disabled and has an alcoholism or drug addiction condition that leaves
him or her incapable of managing benefits) in 2011;
(5) The dollar limit on the administrative-cost assessment charged
to attorneys representing claimants will remain $83 in 2011;
(6) The Old-Age, Survivors, and Disability Insurance (OASDI)
contribution and benefit base will remain $106,800 for remuneration
paid in 2011 and self-employment income earned in taxable years
beginning in 2011;
(7) The monthly exempt amounts under the Social Security retirement
earnings test for taxable years ending in calendar year 2011 will
remain $1,180 and $3,140;
(8) The ``old-law'' contribution and benefit base under title II of
the Act will remain $79,200 for 2011; and
(9) The monthly amount deemed to constitute substantial gainful
activity for statutorily blind individuals in 2011 will remain $1,640.
The national average wage index for 2009 is $40,934.93. This index
affects the following items:
(1) The dollar amounts (``bend points'') used in the primary
insurance amount benefit formula for workers who become eligible for
benefits, or who die before becoming eligible, in 2011 will be $753 and
$4,542;
(2) The bend points used in the formula for computing maximum
family benefits for workers who become eligible for benefits, or who
die before becoming eligible, in 2011 will be $963, $1,390, and $1,812;
(3) The amount of taxable earnings a person must have to be
credited with a quarter of coverage in 2011 will be $1,120;
(4) The monthly amount deemed to constitute substantial gainful
activity for non-blind disabled persons will be $1,000 in 2011;
(5) The earnings threshold establishing a month as a part of a
trial work period will be $720 for 2011; and
(6) Coverage thresholds for 2011 will be $1,700 for domestic
workers and $1,500 for election officials and election workers.
FOR FURTHER INFORMATION CONTACT: Susan C. Kunkel, Office of the Chief
Actuary, Social Security Administration, 6401 Security Boulevard,
Baltimore, MD 21235, (410) 965-3016. Information relating to this
notice is available on our Internet site at http://www.socialsecurity.gov/oact/cola/index.html. For information on
eligibility or claiming benefits, call 1-800-772-1213, or visit our
Internet site, Social Security Online, at http://www.socialsecurity.gov.
SUPPLEMENTARY INFORMATION: In accordance with the Act, we must publish
on or before November 1 the national average wage index for 2009
(section 215(a)(1)(D)), the amount of earnings required to be credited
with a quarter of coverage in 2011 (section 213(d)(2)), the formula for
computing a primary insurance amount for workers who first become
eligible for benefits or die in 2011 (section 215(a)(1)(D)), and the
formula for computing the maximum amount of benefits payable to the
family of a worker who first becomes eligible for old-age benefits or
dies in 2011 (section 203(a)(2)(C)).
Cost-of-Living Increases
General
There will be no cost-of-living increase for benefits under titles
II and XVI of the Act.
Computation
By law a cost-of-living increase for benefits is determined based
on the percentage increase, if any, in the Consumer Price Index (CPI)
for Urban Wage Earners and Clerical Workers from the last computation
quarter that resulted in a cost-of-living increase to the third quarter
of the current year. Computation quarters are third calendar quarters.
Because the last cost-of-living increase became effective for those
eligible to receive Title II benefits for December 2008, the last
computation quarter is the third quarter of 2008.
Section 215(i)(1) of the Act provides that the CPI for a cost-of-
living computation quarter shall be the arithmetic mean of this index
for the 3 months in that quarter. In accordance with 20 CFR 404.275, we
round the arithmetic mean, if necessary, to the nearest 0.001. The CPI
for Urban Wage Earners and Clerical Workers for each month in the
quarter ending September 30, 2008, is: For July 2008, 216.304; for
August 2008, 215.247; and for September 2008, 214.935. The arithmetic
mean for that calendar quarter is 215.495. The corresponding CPI for
each month in the quarter ending September 30, 2010, is: For July 2010,
213.898; for August 2010, 214.205; and for September 2010, 214.306. The
arithmetic mean for this calendar quarter is 214.136. Thus, because the
CPI for the calendar quarter ending September 30, 2010, is not greater
than the CPI for the calendar quarter ending September 30, 2008, the
calendar quarter ending September 30, 2010, is not a cost-of-living
computation quarter and there is no cost-of-living increase.
Program Amounts That Change Based on the Cost-of-Living Increase
Several program amounts adjust based on the cost-of-living
increase. These include the maximum Federal SSI benefit amounts under
title XVI, the title VIII benefit amount, the student earned income
exclusion, the fee for services performed by a representative payee,
and the attorney assessment fee. Because there will be no cost-of-
living increase, these program amounts will not increase in 2011, but
rather will remain at their 2010 levels.
Program Amounts That May Increase Based on the Change in the National
Average Wage Index, but Only If There Is a Cost-of-Living Increase
Certain other program amounts are adjusted annually based on the
change in the national average wage index, rather than the CPI
increase, but only if there also is a cost-of-living increase for
benefits (as determined under section 215(i) of the Act). Moreover,
these amounts cannot decrease even if there is a decrease in the
national average wage index. These amounts include the OASDI
contribution and benefit base, the retirement earnings test exempt
amounts, the ``old-law'' contribution and benefit base, and the
substantial gainful activity amount for individuals who are statutorily
blind. Because there is no cost-of-living increase this year, these
amounts will remain at their 2010 levels for 2011.
Program Amounts That May Change Based on the Change in the National
Average Wage Index, Without Regard to the Cost-of-Living Increase
Some program amounts are adjusted annually based on the change
(increase or decrease) in the national average wage index whether there
is a cost-of-living increase in that year or not. These include:
The dollar amounts (``bend points'') in the formulae used
to compute the primary insurance amount and maximum family benefit for
workers who become eligible for benefits, or die before becoming
eligible, in 2011;
The amount of taxable earnings required to earn a quarter
of coverage;
The substantial gainful activity amount for non-blind
disabled individuals;
The earnings threshold to establish a trial work period;
The domestic employee coverage threshold; and
[[Page 65698]]
The coverage threshold for election officials and election
workers.
In the sections that follow, we explain the calculation of the
national average wage and the corresponding changes in each of these
program amounts.
National Average Wage Index for 2009
Computation
We have determined the national average wage index for calendar
year 2009 based on the 2008 national average wage index of $41,334.97
announced in the Federal Register on October 28, 2009 (74 FR 55614),
along with the percentage change in the average wage from 2008 to 2009
measured by annual wage data. We tabulate the annual wage data,
including contributions to deferred compensation plans, as required by
section 209(k) of the Act. The average amounts of wages calculated
directly from these data were $39,652.61 and $39,268.85 for 2008 and
2009, respectively. To determine the national average wage index for
2009 at a level that is consistent with the national average wage
indexing series for 1951 through 1977 (published December 29, 1978, at
43 FR 61016), we multiply the 2008 national average wage index of
$41,334.97 by the percentage change in the average wage from 2008 to
2009 (based on SSA-tabulated wage data) as follows, with the result
rounded to the nearest cent.
Amount
Multiplying the national average wage index for 2008 ($41,334.97)
by the ratio of the average wage for 2009 ($39,268.85) to that for 2008
($39,652.61) produces the 2009 index, $40,934.93. The national average
wage index for calendar year 2009 is about 0.97 percent lower than the
2008 index.
Computing Benefits After 1978
General
The Social Security Amendments of 1977 provided a method for
computing benefits that generally applies when a worker first becomes
eligible for benefits after 1978. This method uses the worker's
``average indexed monthly earnings'' (AIME) to compute the primary
insurance amount. We adjust the computation formula each year to
reflect changes in general wage levels, as measured by the national
average wage index.
We also adjust, or ``index,'' a worker's earnings to reflect the
change in the general wage levels that occurred during the worker's
years of employment. Such indexing ensures that a worker's future
benefit level will reflect the general rise in the standard of living
that will occur during his or her working lifetime. To compute the
average indexed monthly earnings, we first determine the required
number of years of earnings. Then we select that number of years with
the highest indexed earnings, add the indexed earnings for those years,
and divide the total amount by the total number of months in those
years. We then round the resulting average amount down to the next
lower dollar amount. The result is the AIME.
Computing the Primary Insurance Amount
The primary insurance amount is the sum of three separate
percentages of portions of the AIME. In 1979 (the first year the
formula was in effect), these portions were the first $180, the amount
between $180 and $1,085, and the amount over $1,085. We call the dollar
amounts in the formula governing the portions of the average indexed
monthly earnings the ``bend points'' of the formula. Thus, the bend
points for 1979 were $180 and $1,085.
To obtain the bend points for 2011, we multiply each of the 1979
bend-point amounts by the ratio of the national average wage index for
2009 to that average for 1977. We then round these results to the
nearest dollar. Multiplying the 1979 amounts of $180 and $1,085 by the
ratio of the national average wage index for 2009 ($40,934.93) to that
for 1977 ($9,779.44) produces the amounts of $753.45 and $4,541.61. We
round these to $753 and $4,542. Accordingly, the portions of the AIME
to be used in 2011 are the first $753, the amount between $753 and
$4,542, and the amount over $4,542.
Consequently, for individuals who first become eligible for old-age
insurance benefits or disability insurance benefits in 2011, or who die
in 2011 before becoming eligible for benefits, their primary insurance
amount will be the sum of:
(a) 90 percent of the first $753 of their AIME, plus
(b) 32 percent of their AIME over $753 and through $4,542, plus
(c) 15 percent of their AIME over $4,542.
We round this amount to the next lower multiple of $0.10 if it is
not already a multiple of $0.10. This formula and the rounding
adjustment described above are contained in section 215(a) of the Act.
Maximum Benefits Payable to a Family
General
The 1977 amendments continued the long established policy of
limiting the total monthly benefits that a worker's family may receive
based on his or her primary insurance amount. Those amendments also
continued the then existing relationship between maximum family
benefits and primary insurance amounts but changed the method of
computing the maximum amount of benefits that may be paid to a worker's
family. The Social Security Disability Amendments of 1980 (Pub.L. 96-
265) established a formula for computing the maximum benefits payable
to the family of a disabled worker. This formula applies to the family
benefits of workers who first become entitled to disability insurance
benefits after June 30, 1980, and who first become eligible for these
benefits after 1978. For disabled workers initially entitled to
disability benefits before July 1980, or whose disability began before
1979, we compute the family maximum payable the same as the old-age and
survivor family maximum.
Computing the Old-Age and Survivor Family Maximum
The formula used to compute the family maximum is similar to that
used to compute the primary insurance amount. It involves computing the
sum of four separate percentages of portions of the worker's primary
insurance amount. In 1979, these portions were the first $230, the
amount between $230 and $332, the amount between $332 and $433, and the
amount over $433. We refer to such dollar amounts in the formula as the
``bend points'' of the family-maximum formula.
To obtain the bend points for 2011, we multiply each of the 1979
bend-point amounts by the ratio of the national average wage index for
2009 to that average for 1977. Then we round this amount to the nearest
dollar. Multiplying the amounts of $230, $332, and $433 by the ratio of
the national average wage index for 2009 ($40,934.93) to that for 1977
($9,779.44) produces the amounts of $962.74, $1,389.69, and $1,812.46.
We round these amounts to $963, $1,390, and $1,812. Accordingly, the
portions of the primary insurance amounts to be used in 2011 are the
first $963, the amount between $963 and $1,390, the amount between
$1,390 and $1,812, and the amount over $1,812.
Consequently, for the family of a worker who becomes age 62 or dies
in 2011 before age 62, we will compute the total amount of benefits
payable to them so that it does not exceed:
(a) 150 percent of the first $963 of the worker's primary insurance
amount, plus
[[Page 65699]]
(b) 272 percent of the worker's primary insurance amount over $963
through $1,390, plus
(c) 134 percent of the worker's primary insurance amount over
$1,390 through $1,812, plus
(d) 175 percent of the worker's primary insurance amount over
$1,812.
We then round this amount to the next lower multiple of $0.10 if it
is not already a multiple of $0.10. This formula and the rounding
adjustment described above are contained in section 203(a) of the Act.
Quarter of Coverage Amount
General
The amount of earnings required for a quarter of coverage in 2011
is $1,120. A quarter of coverage is the basic unit for determining
whether a worker is insured under the Social Security program. For
years before 1978, we generally credited an individual with a quarter
of coverage for each quarter in which wages of $50 or more were paid,
or with 4 quarters of coverage for every taxable year in which $400 or
more of self-employment income was earned. Beginning in 1978, employers
generally report wages on an annual basis instead of a quarterly basis.
With the change to annual reporting, section 352(b) of the Social
Security Amendments of 1977 amended section 213(d) of the Act to
provide that a quarter of coverage would be credited for each $250 of
an individual's total wages and self-employment income for calendar
year 1978, up to a maximum of 4 quarters of coverage for the year.
Computation
Under the prescribed formula, the quarter of coverage amount for
2011 shall be the larger of: (1) the 1978 amount of $250 multiplied by
the ratio of the national average wage index for 2009 to that for 1976;
or (2) the current amount of $1,120. Section 213(d) further provides
that if the resulting amount is not a multiple of $10, it shall be
rounded to the nearest multiple of $10.
Quarter of Coverage Amount
Multiplying the 1978 quarter of coverage amount ($250) by the ratio
of the national average wage index for 2009 ($40,934.93) to that for
1976 ($9,226.48) produces the amount of $1,109.17. We then round this
amount to $1,110. Because $1,110 is less than the current amount of
$1,120, the quarter of coverage amount is $1,120 for 2011.
Substantial Gainful Activity Amount for Non-Blind Disabled Individuals
General
A finding of disability under titles II and XVI of the Act requires
that a person, except for a title XVI disabled child, be unable to
engage in substantial gainful activity (SGA). A person who is earning
more than a certain monthly amount (net of impairment-related work
expenses) is ordinarily considered to be engaging in SGA. The amount of
monthly earnings considered as SGA depends on the nature of a person's
disability. Section 223(d)(4)(A) of the Act specifies a higher SGA
amount for statutorily blind individuals under title II while Federal
regulations (20 CFR 404.1574 and 416.974) specify a lower SGA amount
for non-blind individuals.
Computation
The monthly SGA amount for non-blind disabled individuals for 2011
shall be the larger of: (1) Such amount for 2000 multiplied by the
ratio of the national average wage index for 2009 to that for 1998; or
(2) such amount for 2010. If the resulting amount is not a multiple of
$10, it shall be rounded to the nearest multiple of $10.
Amount
Multiplying the 2000 monthly SGA amount for non-blind individuals
($700) by the ratio of the national average wage index for 2009
($40,934.93) to that for 1998 ($28,861.44) produces the amount of
$992.83. We then round this amount to $990. Because $990 is less than
the current amount of $1,000, the monthly SGA amount for non-blind
disabled individuals is $1,000 for 2011.
Trial Work Period Earnings Threshold
General
During a trial work period, a beneficiary receiving Social Security
disability benefits may test his or her ability to work and still be
considered disabled. We do not consider services performed during the
trial work period as showing that the disability has ended until
services have been performed in at least 9 months (not necessarily
consecutive) in a rolling 60-month period. In 2010, any month in which
earnings exceed $720 is considered a month of services for an
individual's trial work period. In 2011, this monthly amount remains at
$720.
Computation
The method used to determine the new amount is set forth in our
regulations at 20 CFR 404.1592(b). Monthly earnings in 2011, used to
determine whether a month is part of a trial work period, is such
amount for 2001 ($530) multiplied by the ratio of the national average
wage index for 2009 to that for 1999, or, if larger, such amount for
2010. If the amount so calculated is not a multiple of $10, we round it
to the nearest multiple of $10.
Amount
Multiplying the 2001 monthly earnings threshold ($530) by the ratio
of the national average wage index for 2009 ($40,934.93) to that for
1999 ($30,469.84) produces the amount of $712.03. We then round this
amount to $710. Because $710 is less than the current amount of $720,
the monthly earnings threshold is $720 for 2011.
Domestic Employee Coverage Threshold
General
The minimum amount a domestic worker must earn so that such
earnings are covered under Social Security or Medicare is the domestic
employee coverage threshold. For 2011, this threshold is $1,700.
Section 3121(x) of the Internal Revenue Code provides the formula for
increasing the threshold.
Computation
Under the formula, the domestic employee coverage threshold amount
for 2011 shall be equal to the 1995 amount of $1,000 multiplied by the
ratio of the national average wage index for 2009 to that for 1993. If
the resulting amount is not a multiple of $100, it shall be rounded to
the next lower multiple of $100.
Domestic Employee Coverage Threshold Amount
Multiplying the 1995 domestic employee coverage threshold amount
($1,000) by the ratio of the national average wage index for 2009
($40,934.93) to that for 1993 ($23,132.67) produces the amount of
$1,769.57. We then round this amount to $1,700. Accordingly, the
domestic employee coverage threshold amount is $1,700 for 2011.
Election Official and Election Worker Coverage Threshold
General
The minimum amount an election official and election worker must
earn so that such earnings are covered under Social Security or
Medicare is the election official and election worker coverage
threshold. For 2011, this threshold is $1,500. Section 218(c)(8)(B) of
the Act provides the formula for increasing the threshold.
[[Page 65700]]
Computation
Under the formula, the election official and election worker
coverage threshold amount for 2011 shall be equal to the 1999 amount of
$1,000 multiplied by the ratio of the national average wage index for
2009 to that for 1997. If the amount so determined is not a multiple of
$100, it shall be rounded to the nearest multiple of $100.
Election Official and Election Worker Coverage Threshold Amount
Multiplying the 1999 coverage threshold amount ($1,000) by the
ratio of the national average wage index for 2009 ($40,934.93) to that
for 1997 ($27,426.00) produces the amount of $1,492.56. We then round
this amount to $1,500. Accordingly, the election official and election
worker coverage threshold amount is $1,500 for 2011.
(Catalog of Federal Domestic Assistance: Program Nos. 96.001 Social
Security-Disability Insurance; 96.002 Social Security-Retirement
Insurance; 96.004 Social Security-Survivors Insurance; 96.006
Supplemental Security Income)
Michael J. Astrue,
Commissioner of Social Security.
[FR Doc. 2010-26983 Filed 10-25-10; 8:45 am]
BILLING CODE 4191-02-P