Example 1: A wage earner, his wife and child are entitled to benefits. The wage earner's primary insurance amount is $600.00. His maximum is $900.00. Due to the maximum limit, the monthly benefits for the wife and child must be reduced to $150.00 each. Their original benefit rates are $300.00 each.
Maximum-$900.00
Subtract primary insurance amount-$600.00
Amount available for wife and child-$300.00
Divide by 2-$150.00 each for wife and child
The wife is also entitled to benefits on her own record of $120.00 monthly. This reduces her wife's benefit to $30.00. The following table illustrates this calculation.
Wife's benefit, reduced for maximum-$150.00
Subtract reduction due to dual entitlement-$120.00
Wife's benefit-$30.00
In computing the total benefits payable on the record, we disregard the $120.00 we cannot pay the wife. This allows us to increase the amount payable to the child to $270.00. The table below shows the steps in our calculation.
Amount available under maximum-$300.00
Subtract amount due wife after reduction due to entitlement to her own benefit-$30.00
Child's benefit-$270.00
Example 2: A wage earner, his wife and 2 children are entitled to benefits. The wage earner's primary insurance amount is $1,250.00. His maximum is $2,180.00. Due to the maximum limit, the monthly benefits for the wife and children must be reduced to $310.00 each. Their original rates (50 percent of the worker's benefit) are $625.00 each. The following shows the calculation.
Maximum-$2,180.00
Subtract primary insurance amount-$1,250.00
Amount available for wife and children-$930.00
Divide by 3-$310 each for wife and children
The children are also entitled to benefits on their own records. Child one is entitled to $390.00 monthly and child two is entitled to $280.00 monthly. This causes a reduction in the benefit to child one to 0.00 and the benefit to child two to $30.00. Again, the following illustrates the calculation.
Benefit payable to child 1 reduced for maximum-$310.00
Subtract reduction due to dual entitlement-$390.00
Benefit payable to child 1-$0.00
Benefit payable to child 2, reduced for maximum-$310.00
Subtract reduction for dual entitlement-$280.00
Benefit payable to child 2-$30.00
In computing the total benefits payable on the record, we consider only the benefits actually paid to the children, or $30. This allows payment of an additional amount to the wife, increasing her benefit to $625.00. This is how the calculation works.
Amount available under maximum for wife and children-$930.00
Subtract amount due children after reduction due to entitlement to their own benefits-$30.00
Amount available for wife-$900.00
Amount payable to wife (original benefit)-$625.00
Example 3: A wage earner, his wife and 4 children are entitled to benefits. The wage earner's primary insurance amount is $1,250.00. His maximum is $2,180.00. Due to the maximum limit, the monthly benefits for the wife and children must be reduced to $186.00 each. Their original rates are $625.00 each. This is how the calculation works.
Maximum-$2,180.00
Subtract primary insurance amount-$1,250.00
Amount available for wife and children-$930.00
Divide by 5-$186.00 each for wife and four children
Two children are also entitled to benefits on their own records. Child one is entitled to $390.00 monthly and child two is entitled to $280.00 monthly. This causes a reduction in the benefit to child one to $0.00 and the benefit to child two to $0.00. This calculation is as follows.
Benefit to child 1, reduced for maximum-$186.00
Subtract reduction due to dual entitlement-$390.00
Benefit payable to child 1-$0.00
Benefit to child 2, reduced for maximum-$186.00
Subtract reduction for dual entitlement-$280.00
Benefit payable to child two-$0.00
In computing the total benefits payable on the record, we disregard the $372.00 we cannot pay the children. This allows payment of an additional amount to the wife, and the two remaining children as follows:
Amount available under maximum for wife and children-$930.00
Subtract amount due child one and child two after reduction due to entitlement to their own benefits-$0.00
Amount available for wife and the other two children-$930.00
Amount payable to the wife and each of the remaining two children-$310.00
If the total of this computation is not a multiple of $0.10, it will be rounded to the next lower multiple of $0.10.
This highest primary insurance amount possible for that year will be based on the average indexed monthly earnings equal to one-twelfth of the contribution and benefit base determined for that year. Thereafter, the total monthly benefits payable to persons on the earnings record of those insured individuals will then be increased only when monthly benefits are increased because of cost-of-living adjustments (see § 404.270ff ).
20 C.F.R. §404.403