[Code of Federal Regulations]
[Title 20, Volume 2]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 20CFR404.274]

[Page 89-90]
 
                      TITLE 20--EMPLOYEES' BENEFITS
 
               CHAPTER III--SOCIAL SECURITY ADMINISTRATION
 
PART 404_FEDERAL OLD-AGE, SURVIVORS AND DISABILITY INSURANCE (1950	 )
--Table of Contents
 
              Subpart C_Computing Primary Insurance Amounts
 
Sec. 404.274  Measuring the increase in the indexes.

    (a) General. Depending on the OASDI fund ratio, we measure the rise 
in one index or in both indexes during the applicable measuring period 
(described in paragraphs (b) and (c) of this section) to determine 
whether there will be an automatic cost-of-living increase and if so, 
its amount.
    (b) Measuring period based on CPI. For the increase effective 
December 1984 and later years, the measuring period we use for finding 
the amount of the CPI increase--
    (1) Begins with--
    (i) Any calendar quarter in which an ad hoc benefit increase is 
effective; or, if later,
    (ii) The third calendar quarter of any year in which the last 
automatic increase became effective; and
    (2) Ends with the third calendar quarter of the following year, but 
only if the CPI has increased by at least 3.0 percent (after rounding to 
the nearest one-tenth of one percent) since the beginning of the 
measuring period. (If the CPI increase is less than 3.0 percent, we 
extend the measuring period to the third quarter of the next year, doing 
so repeatedly until the 3.0 percent level is reached.) If this measuring 
period ends in a year after the year in which an ad hoc increase was 
enacted into law or took effect, there can be no cost-of-living increase 
based on this measuring period, and we will apply the rule in paragraph 
(d) of this section.
    (c) Measuring period based on AWI. The measuring period we use for 
finding the amount of the AWI increase--
    (1) Begins with--
    (i) The calendar year before the year in which an ad hoc benefit 
increase is effective; or, if later,
    (ii) The calendar year before the year in which the last automatic 
increase became effective; and
    (2) Ends with the following year, but only if the AWI has increased 
by at least 3.0 percent (after rounding to the nearest one-tenth of one 
percent) in that one-year period. (If the AWI increase is less than 3.0 
percent, we extend the measuring period to the next year, doing so 
repeatedly until the 3.0 percent level is reached.) If this measuring 
period ends in a year in which an ad hoc increase was enacted into law 
or took effect, there can be no cost-of-living increase based on this 
measuring period, and we will apply the rule in paragraph (d) of this 
section.
    (d) When no automatic cost-of-living increase is possible. No 
automatic cost-of-living increase is possible for the calendar year that 
immediately follows a year in which an ad hoc increase was enacted into 
law or took effect. The measuring period for the next automatic cost-of-
living increase--
    (1) Where the measuring period is based on the CPI,
    (i) Begins with the calendar quarter in which the ad hoc increase 
took effect; and

[[Page 90]]

    (ii) Ends with the third calendar quarter of the next year in which 
the CPI has risen by at least 3.0 percent if an ad hoc increase was not 
enacted or effective in the preceding year. (If the CPI increase is less 
than 3.0 percent, or an ad hoc increase was enacted or effective in the 
prior year, we extend the end of the measuring period to the third 
quarter of the following year, doing so repeatedly until the 3.0 percent 
level is reached in a year which does not immediately follow an ad hoc 
increase year.)
    (2) Where the measuring period is based on the AWI,
    (i) Begins with the calendar year before the year in which the ad 
hoc increase took effect; and
    (ii) Ends with the next calendar year in which the AWI has increased 
by at least 3.0 percent and in which an ad hoc increase is not enacted 
or effective. (If the AWI increase is less than 3.0 percent, we extend 
the end of the measuring period to the following year, doing so 
repeatedly until the 3.0 percent level is reached in a year in which an 
ad hoc increase is not enacted or effective.)

[51 FR 12603, Apr. 21, 1986]