Cost-of-Living Increase and Other Determinations (for 2009)

Federal Register: October 30, 2008 (Volume 73, Number 211)

Notices

Page 64651-64657

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

DOCID:fr30oc08-84

SOCIAL SECURITY ADMINISTRATION

Office of the Commissioner

Docket No. SSA-2008-0049

Cost-of-Living Increase and Other Determinations for 2009

AGENCY: Social Security Administration.

ACTION: Notice.

SUMMARY: We have determined--

(1) A 5.8 percent cost-of-living increase in Social Security benefits under title II of the Social Security Act (the Act), effective for December 2008;

(2) An increase in the Federal Supplemental Security Income (SSI) monthly benefit amounts under title XVI of the Act for 2009 to $674 for an eligible individual, $1,011 for an eligible individual with an eligible spouse, and $338 for an essential person;

(3) The student earned income exclusion to be $1,640 per month in 2009 but not more than $6,600 in all of 2009;

(4) The dollar fee limit for services performed as a representative payee to be $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 2009;

(5) The dollar limit on the administrative-cost assessment charged to attorneys representing claimants to be $83 in 2009;

(6) The national average wage index for 2007 to be $40,405.48;

(7) The Old-Age, Survivors, and Disability Insurance (OASDI) contribution and benefit base to be $106,800 for remuneration paid in 2009 and self-employment income earned in taxable years beginning in 2009;

(8) The monthly exempt amounts under the Social Security retirement

Page 64652

earnings test for taxable years ending in calendar year 2009 to be

$1,180 and $3,140;

(9) 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 2009 to be $744 and

$4,483;

(10) 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 2009 to be $950, $1,372, and $1,789;

(11) The amount of taxable earnings a person must have to be credited with a quarter of coverage in 2009 to be $1,090;

(12) The ``old-law'' contribution and benefit base to be $79,200 for 2009;

(13) The monthly amount deemed to constitute substantial gainful activity for statutorily blind individuals in 2009 to be $1,640, and the corresponding amount for non-blind disabled persons to be $980;

(14) The earnings threshold establishing a month as a part of a trial work period to be $700 for 2009; and

(15) Coverage thresholds for 2009 to be $1,700 for domestic workers and $1,500 for election workers.

FOR FURTHER INFORMATION CONTACT: Jeffrey L. Kunkel, Office of the Chief

Actuary, Social Security Administration, 6401 Security Boulevard,

Baltimore, MD 21235, (410) 965-3013. Information relating to this announcement is available on our Internet site at 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 www.socialsecurity.gov.

SUPPLEMENTARY INFORMATION: In accordance with the Act, we must publish within 45 days after the close of the third calendar quarter of 2008 the benefit increase percentage and the revised table of ``special minimum'' benefits (section 215(i)(2)(D)). Also, we must publish on or before November 1 the national average wage index for 2007 (section 215(a)(1)(D)), the OASDI fund ratio for 2008 (section 215(i)(2)(C)(ii)), the OASDI contribution and benefit base for 2009

(section 230(a)), the amount of earnings required to be credited with a quarter of coverage in 2009 (section 213(d)(2)), the monthly exempt amounts under the Social Security retirement earnings test for 2009

(section 203(f)(8)(A)), the formula for computing a primary insurance amount for workers who first become eligible for benefits or die in 2009 (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 2009 (section 203(a)(2)(C)).

Cost-of-Living Increases

General

The next cost-of-living increase, or automatic benefit increase, is 5.8 percent for benefits under titles II and XVI of the Act. Under title II, OASDI benefits will increase by 5.8 percent for individuals eligible for December 2008 benefits, payable in January 2009. This increase is based on the authority contained in section 215(i) of the

Act.

Under title XVI, Federal SSI payment levels will also increase by 5.8 percent effective for payments made for the month of January 2009 but paid on December 31, 2008. This is based on the authority contained in section 1617 of the Act.

Automatic Benefit Increase Computation

Under section 215(i) of the Act, the third calendar quarter of 2008 is a cost-of-living computation quarter for all the purposes of the

Act. We are required to increase benefits, effective for December 2008, for individuals entitled under title II of the Act and to increase maximum benefits payable to a family. For December 2008, the benefit increase is the percentage increase in the Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers from the third quarter of 2007 to 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, 2007, is: For July 2007, 203.700; for August 2007, 203.199; and for September 2007, 203.889. The arithmetic mean for that calendar quarter is 203.596. The corresponding

CPI 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 this calendar quarter is 215.495.

Thus, because the CPI for the calendar quarter ending September 30, 2008, exceeds that for the calendar quarter ending September 30, 2007 by 5.8 percent (rounded to the nearest 0.1), beginning December 2008, a cost-of-living benefit increase of 5.8 percent is effective for benefits under title II of the Act.

Section 215(i) also specifies that an automatic benefit increase under title II, effective for December of any year, will be limited to the increase in the national average wage index for the prior year if the ``OASDI fund ratio'' for that year is below 20 percent. The OASDI fund ratio for a year is the ratio of the combined assets of the Old-

Age and Survivors Insurance and Disability Insurance Trust Funds at the beginning of that year to the combined expenditures of these funds during that year. (The expenditures in the ratio's denominator exclude transfer payments between the two trust funds and reduce any transfers to the Railroad Retirement Account by any transfers from that account into either trust fund.) For 2008, the OASDI fund ratio is assets of

$2,238,500 million divided by estimated expenditures of $623,507 million, or 359 percent. Because the 359 percent OASDI fund ratio exceeds 20 percent, the automatic benefit increase for December 2008 is not limited.

Title II Benefit Amounts

In accordance with section 215(i) of the Act, in the case of workers and family members for whom eligibility for benefits (i.e., the worker's attainment of age 62, or disability or death before age 62) occurred before 2009, benefits will increase by 5.8 percent beginning with benefits for December 2008 which are payable in January 2009. In the case of first eligibility after 2008, the 5.8 percent increase will not apply.

For eligibility after 1978, benefits are generally determined using a benefit formula provided by the Social Security Amendments of 1977

(Pub. L. 95-216), as described later in this notice.

For eligibility before 1979, we determine benefits by means of a benefit table. The table is available on the Internet at www.socialsecurity.gov/OACT/ProgData/tableForm.html, or by writing to:

Social Security Administration, Office of Public Inquiries, Windsor

Park Building, 6401 Security Boulevard, Baltimore, MD 21235.

Section 215(i)(2)(D) of the Act requires that, when we determine an automatic increase in Social Security benefits, we will publish in the

Federal Register a revision of the range of the primary insurance amounts and corresponding maximum family benefits based on the dollar amount and other provisions described in section 215(a)(1)(C)(i). We refer to these benefits as ``special minimum'' benefits. These benefits are payable to certain individuals with long periods of

Page 64653

relatively low earnings. To qualify for such benefits, an individual must have at least 11 ``years of coverage.'' To earn a year of coverage for purposes of the special minimum benefit, a person must earn at least a certain proportion of the ``old-law'' contribution and benefit base (described later in this notice). For years before 1991, the proportion is 25 percent; for years after 1990, it is 15 percent. In accordance with section 215(a)(1)(C)(i), the table below shows the revised range of primary insurance amounts and corresponding maximum family benefit amounts after the 5.8 percent automatic benefit increase.

Special Minimum Primary Insurance Amounts and Maximum Family Benefits

Payable for December 2008

Primary

Maximum

Number of years of coverage

insurance

family amount

benefit

11............................................

$36.90

$56.10 12............................................

75.10

113.70 13............................................

113.60

171.00 14............................................

151.60

228.10 15............................................

189.40

285.20 16............................................

227.80

342.80 17............................................

266.10

400.50 18............................................

304.30

457.60 19............................................

342.40

515.00 20............................................

380.70

572.00 21............................................

419.10

629.80 22............................................

457.00

687.00 23............................................

495.80

745.10 24............................................

533.90

802.00 25............................................

572.00

858.70 26............................................

610.80

917.10 27............................................

648.50

974.30 28............................................

686.80

1,031.40 29............................................

725.00

1,089.10 30............................................

763.20

1,145.80

Title XVI Benefit Amounts

In accordance with section 1617 of the Act, maximum Federal SSI benefit amounts for the aged, blind, and disabled will increase by 5.8 percent effective January 2009. For 2008, we derived the monthly benefit amounts for an eligible individual, an eligible individual with an eligible spouse, and for an essential person--$637, $956, and $319, respectively--from corresponding yearly unrounded Federal SSI benefit amounts of $7,651.53, $11,476.00, and $3,834.53. For 2009, these yearly unrounded amounts increase by 5.8 percent to $8,095.32, $12,141.61, and

$4,056.93, respectively. Each of these resulting amounts must be rounded, when not a multiple of $12, to the next lower multiple of $12.

Accordingly, the corresponding annual amounts, effective for 2009, are

$8,088, $12,132, and $4,056. Dividing the yearly amounts by 12 gives the corresponding monthly amounts for 2009--$674, $1,011, and $338, respectively. In the case of an eligible individual with an eligible spouse, we equally divide the amount payable between the two spouses.

Title VIII of the Act provides for special benefits to certain

World War II veterans residing outside the United States. Section 805 provides that ``[t]he benefit under this title payable to a qualified individual for any month shall be in an amount equal to 75 percent of the Federal benefit rate [the maximum amount for an eligible individual] under title XVI for the month, reduced by the amount of the qualified individual's benefit income for the month.'' Thus the monthly benefit for 2009 under this provision is 75 percent of $674, or

$505.50.

Student Earned Income Exclusion

A blind or disabled child, who is a student regularly attending school, college, university, or a course of vocational or technical training, can have limited earnings that are not counted against his or her SSI benefits. The maximum amount of such income that may be excluded in 2008 is $1,550 per month but not more than $6,240 in all of 2008. These amounts increase based on a formula set forth in regulation 20 CFR 416.1112.

To compute each of the monthly and yearly maximum amounts for 2009, we increase the corresponding unrounded amount for 2008 by the latest cost-of-living increase. If the amount so calculated is not a multiple of $10, we round it to the nearest multiple of $10. The unrounded monthly amount for 2008 is $1,548.10. We increase this amount by 5.8 percent to $1,637.89, which we then round to $1,640. Similarly, we increase the unrounded yearly amount for 2008, $6,240.38, by 5.8 percent to $6,602.32 and round this to $6,600. Thus, the maximum amount of the income exclusion applicable to a student in 2009 is $1,640 per month but not more than $6,600 in all of 2009.

Fee for Services Performed as a Representative Payee

Sections 205(j)(4)(A)(i) and 1631(a)(2)(D)(i) of the Act permit a qualified organization to collect from an individual a monthly fee for expenses incurred in providing services performed as such individual's representative payee. Currently the fee is limited to the lesser of:

(1) 10 percent of the monthly benefit involved; or (2) $35 per month

($68 per month in any case in which the individual is entitled to disability benefits and we have determined that payment to the representative payee would serve the interest of the individual because the individual has an alcoholism or drug addiction condition and is incapable of managing such benefits). The dollar fee limits are subject to increase by the automatic cost-of-living increase, with the resulting amounts rounded to the nearest whole dollar amount. Thus, we increase the current amounts by 5.8 percent to $37 and $72 for 2009.

Attorney Assessment Fee

Under sections 206(d) and 1631(d) of the Act, whenever a fee for services is required to be paid to an attorney who has represented a claimant, we must impose on the attorney an assessment to cover administrative costs. Such assessment shall be no more than 6.3 percent of the attorney's fee or, if lower, a dollar amount that is subject to increase by the automatic cost-of-living increase. We derive the dollar limit for December 2008 by increasing the unrounded limit for December 2007, $79.25, by 5.8 percent, which gives $83.85. We then round $83.85 to the next lower multiple of $1. The dollar limit effective for

December 2008 is thus $83.

National Average Wage Index for 2007

General

Under various provisions of the Act, several amounts increase automatically with annual increases in the national average wage index.

The amounts are: (1) The OASDI contribution and benefit base; (2) the exempt amounts under the retirement earnings test; (3) the dollar amounts, or bend points, in the primary insurance amount and maximum family benefit formulas; (4) the amount of earnings required for a worker to be credited with a quarter of coverage; (5) the ``old-law'' contribution and benefit base (as determined under section 230 of the

Act as in effect before the 1977 amendments); (6) the substantial gainful activity amount applicable to statutorily blind individuals; and (7) the coverage threshold for election officials and election workers. Also, section 3121(x) of the Internal Revenue Code requires that the domestic employee coverage threshold be based on changes in the national average wage index.

In addition to the amounts required by statute, two amounts increase automatically under regulatory requirements. The amounts are:

(1) The substantial gainful activity amount applicable to non-blind disabled persons; and (2) the monthly earnings threshold that establishes a month as part of a trial work period for disabled beneficiaries.

Page 64654

Computation

We determined the national average wage index for calendar year 2007 based on the 2006 national average wage index of $38,651.41 announced in the Federal Register on October 25, 2007 (72 FR 60703), along with the percentage increase in average wages from 2006 to 2007 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 $37,078.27 and $38,760.95 for 2006 and 2007, respectively. To determine the national average wage index for 2007 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 2006 national average wage index of

$38,651.41 by the percentage increase in average wages from 2006 to 2007 (based on SSA-tabulated wage data) as follows, with the result rounded to the nearest cent.

Amount

Multiplying the national average wage index for 2006 ($38,651.41) by the ratio of the average wage for 2007 ($38,760.95) to that for 2006

($37,078.27) produces the 2007 index, $40,405.48. The national average wage index for calendar year 2007 is about 4.54 percent greater than the 2006 index.

OASDI Contribution and Benefit Base

General

The OASDI contribution and benefit base is $106,800 for remuneration paid in 2009 and self-employment income earned in taxable years beginning in 2009.

The OASDI contribution and benefit base serves two purposes:

(a) It is the maximum annual amount of earnings on which OASDI taxes are paid. The OASDI tax rate for remuneration paid in 2009 is 6.2 percent for employees and employers, each. The OASDI tax rate for self- employment income earned in taxable years beginning in 2009 is 12.4 percent. (The Hospital Insurance tax is due on remuneration, without limitation, paid in 2009, at the rate of 1.45 percent for employees and employers, each, and on self-employment income earned in taxable years beginning in 2009, at the rate of 2.9 percent.)

(b) It is the maximum annual amount of earnings used in determining a person's OASDI benefits.

Computation

Section 230(b) of the Act provides the formula used to determine the OASDI contribution and benefit base. Under the formula, the base for 2009 shall be the larger of: (1) The 1994 base of $60,600 multiplied by the ratio of the national average wage index for 2007 to that for 1992; or (2) the current base ($102,000). If the resulting amount is not a multiple of $300, it shall be rounded to the nearest multiple of $300.

Amount

Multiplying the 1994 OASDI contribution and benefit base amount

($60,600) by the ratio of the national average wage index for 2007

($40,405.48 as determined above) to that for 1992 ($22,935.42) produces the amount of $106,759.42. We round this amount to $106,800. Because

$106,800 exceeds the current base amount of $102,000, the OASDI contribution and benefit base is $106,800 for 2009.

Retirement Earnings Test Exempt Amounts

General

We withhold Social Security benefits when a beneficiary under the normal retirement age (NRA) has earnings in excess of the applicable retirement earnings test exempt amount. (NRA is the age of initial benefit entitlement for which the benefit, before rounding, is equal to the worker's primary insurance amount. The NRA is age 66 for those born in 1943-54, and it gradually increases to age 67.) A higher exempt amount applies in the year in which a person attains his or her NRA, but only with respect to earnings in that year's months prior to such attainment, and a lower exempt amount applies at all other ages below

NRA. Section 203(f)(8)(B) of the Act, as amended by section 102 of Pub.

L. 104-121, provides formulas for determining the monthly exempt amounts. The corresponding annual exempt amounts are exactly 12 times the monthly amounts.

For beneficiaries attaining NRA in the year, we withhold $1 in benefits for every $3 of earnings in excess of the annual exempt amount for months prior to such attainment. For all other beneficiaries under

NRA, we withhold $1 in benefits for every $2 of earnings in excess of the annual exempt amount.

Computation

Under the formula applicable to beneficiaries who are under NRA and who will not attain NRA in 2009, the lower monthly exempt amount for 2009 shall be the larger of: (1) The 1994 monthly exempt amount multiplied by the ratio of the national average wage index for 2007 to that for 1992; or (2) the 2008 monthly exempt amount ($1,130). If the resulting amount is not a multiple of $10, it shall be rounded to the nearest multiple of $10.

Under the formula applicable to beneficiaries attaining NRA in 2009, the higher monthly exempt amount for 2009 shall be the larger of:

(1) The 2002 monthly exempt amount multiplied by the ratio of the national average wage index for 2007 to that for 2000; or (2) the 2008 monthly exempt amount ($3,010). If the resulting amount is not a multiple of $10, it shall be rounded to the nearest multiple of $10.

Lower Exempt Amount

Multiplying the 1994 retirement earnings test monthly exempt amount of $670 by the ratio of the national average wage index for 2007

($40,405.48) to that for 1992 ($22,935.42) produces the amount of

$1,180.34. We round this to $1,180. Because $1,180 is larger than the corresponding current exempt amount of $1,130, the lower retirement earnings test monthly exempt amount is $1,180 for 2009. The corresponding lower annual exempt amount is $14,160 under the retirement earnings test.

Higher Exempt Amount

Multiplying the 2002 retirement earnings test monthly exempt amount of $2,500 by the ratio of the national average wage index for 2007

($40,405.48) to that for 2000 ($32,154.82) produces the amount of

$3,141.48. We round this to $3,140. Because $3,140 is larger than the corresponding current exempt amount of $3,010, the higher retirement earnings test monthly exempt amount is $3,140 for 2009. The corresponding higher annual exempt amount is $37,680 under the retirement earnings test.

Computing Benefits After 1978

General

The Social Security Amendments of 1977 provided a method for computing benefits which generally applies when a worker first becomes eligible for benefits after 1978. This method uses the worker's

``average indexed monthly earnings'' 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 general wage levels that occurred during the worker's years of employment. Such indexing ensures that a worker's future

Page 64655

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, 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 average indexed monthly earnings.

For example, to compute the average indexed monthly earnings for a worker attaining age 62, becoming disabled before age 62, or dying before attaining age 62, in 2009, we divide the national average wage index for 2007, $40,405.48, by the national average wage index for each year prior to 2007 in which the worker had earnings. Then we multiply the actual wages and self-employment income, as defined in section 211(b) of the Act and credited for each year, by the corresponding ratio to obtain the worker's indexed earnings for each year before 2007. We consider any earnings in 2007 or later at face value, without indexing. We then compute the average indexed monthly earnings for determining the worker's primary insurance amount for 2009.

Computing the Primary Insurance Amount

The primary insurance amount is the sum of three separate percentages of portions of the average indexed monthly earnings. 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 2009, we multiply each of the 1979 bend-point amounts by the ratio of the national average wage index for 2007 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 2007 ($40,405.48) to that for 1977 ($9,779.44) produces the amounts of $743.70 and $4,482.87. We round these to $744 and $4,483. Accordingly, the portions of the average indexed monthly earnings to be used in 2009 are the first $744, the amount between $744 and $4,483, and the amount over $4,483.

Consequently, for individuals who first become eligible for old-age insurance benefits or disability insurance benefits in 2009, or who die in 2009 before becoming eligible for benefits, their primary insurance amount will be the sum of:

(a) 90 percent of the first $744 of their average indexed monthly earnings, plus

(b) 32 percent of their average indexed monthly earnings over $744 and through $4,483, plus

(c) 15 percent of their average indexed monthly earnings over

$4,483.

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 2009, we multiply each of the 1979 bend-point amounts by the ratio of the national average wage index for 2007 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 2007 ($40,405.48) to that for 1977

($9,779.44) produces the amounts of $950.29, $1,371.72, and $1,789.02.

We round these amounts to $950, $1,372, and $1,789. Accordingly, the portions of the primary insurance amounts to be used in 2009 are the first $950, the amount between $950 and $1,372, the amount between

$1,372 and $1,789, and the amount over $1,789.

Consequently, for the family of a worker who becomes age 62 or dies in 2009 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 $950 of the worker's primary insurance amount, plus

(b) 272 percent of the worker's primary insurance amount over $950 through $1,372, plus

(c) 134 percent of the worker's primary insurance amount over

$1,372 through $1,789, plus

(d) 175 percent of the worker's primary insurance amount over

$1,789.

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 2009 is $1,090. 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.

Page 64656

Computation

Under the prescribed formula, the quarter of coverage amount for 2009 shall be the larger of: (1) The 1978 amount of $250 multiplied by the ratio of the national average wage index for 2007 to that for 1976; or (2) the current amount of $1,050. 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 2007 ($40,405.48) to that for 1976 ($9,226.48) produces the amount of $1,094.82. We then round this amount to $1,090. Because $1,090 exceeds the current amount of $1,050, the quarter of coverage amount is $1,090 for 2009.

``Old-Law'' Contribution and Benefit Base

General

The ``old-law'' contribution and benefit base for 2009 is $79,200.

This is the base that would have been effective under the Act without the enactment of the 1977 amendments.

The ``old-law'' contribution and benefit base is used by:

(a) The Railroad Retirement program to determine certain tax liabilities and tier II benefits payable under that program to supplement the tier I payments which correspond to basic Social

Security benefits,

(b) the Pension Benefit Guaranty Corporation to determine the maximum amount of pension guaranteed under the Employee Retirement

Income Security Act (section 230(d) of the Act),

(c) Social Security to determine a year of coverage in computing the special minimum benefit, as described earlier, and

(d) Social Security to determine a year of coverage (acquired whenever earnings equal or exceed 25 percent of the ``old-law'' base for this purpose only) in computing benefits for persons who are also eligible to receive pensions based on employment not covered under section 210 of the Act.

Computation

The ``old-law'' contribution and benefit base shall be the larger of: (1) The 1994 ``old-law'' base ($45,000) multiplied by the ratio of the national average wage index for 2007 to that for 1992; or (2) the current ``old-law'' base ($75,900). If the resulting amount is not a multiple of $300, it shall be rounded to the nearest multiple of $300.

Amount

Multiplying the 1994 ``old-law'' contribution and benefit base amount ($45,000) by the ratio of the national average wage index for 2007 ($40,405.48) to that for 1992 ($22,935.42) produces the amount of

$79,276.80. We round this amount to $79,200. Because $79,200 exceeds the current amount of $75,900, the ``old-law'' contribution and benefit base is $79,200 for 2009.

Substantial Gainful Activity Amounts

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. Both SGA amounts increase in accordance with increases in the national average wage index.

Computation

The monthly SGA amount for statutorily blind individuals under title II for 2009 shall be the larger of: (1) Such amount for 1994 multiplied by the ratio of the national average wage index for 2007 to that for 1992; or (2) such amount for 2008. The monthly SGA amount for non-blind disabled individuals for 2009 shall be the larger of: (1)

Such amount for 2000 multiplied by the ratio of the national average wage index for 2007 to that for 1998; or (2) such amount for 2008. In either case, if the resulting amount is not a multiple of $10, it shall be rounded to the nearest multiple of $10.

SGA Amount for Statutorily Blind Individuals

Multiplying the 1994 monthly SGA amount for statutorily blind individuals ($930) by the ratio of the national average wage index for 2007 ($40,405.48) to that for 1992 ($22,935.42) produces the amount of

$1,638.39. We then round this amount to $1,640. Because $1,640 is larger than the current amount of $1,570, the monthly SGA amount for statutorily blind individuals is $1,640 for 2009.

SGA Amount for Non-Blind Disabled Individuals

Multiplying the 2000 monthly SGA amount for non-blind individuals

($700) by the ratio of the national average wage index for 2007

($40,405.48) to that for 1998 ($28,861.44) produces the amount of

$979.99. We then round this amount to $980. Because $980 is larger than the current amount of $940, the monthly SGA amount for non-blind disabled individuals is $980 for 2009.

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 2008, any month in which earnings exceed $670 is considered a month of services for an individual's trial work period. In 2009, this monthly amount increases to $700.

Computation

The method used to determine the new amount is set forth in our regulations at 20 CFR 404.1592(b). Monthly earnings in 2009, 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 2007 to that for 1999, or, if larger, such amount for 2008. 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 2007 ($40,405.48) to that for 1999 ($30,469.84) produces the amount of $702.82. We then round this amount to $700. Because $700 is larger than the current amount of $670, the monthly earnings threshold is $700 for 2009.

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 2009, this threshold is $1,700.

Section 3121(x) of the Internal Revenue Code provides the formula for increasing the threshold.

Page 64657

Computation

Under the formula, the domestic employee coverage threshold amount for 2009 shall be equal to the 1995 amount of $1,000 multiplied by the ratio of the national average wage index for 2007 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 2007

($40,405.48) to that for 1993 ($23,132.67) produces the amount of

$1,746.68. We then round this amount to $1,700. Accordingly, the domestic employee coverage threshold amount is $1,700 for 2009.

Election Worker Coverage Threshold

General

The minimum amount an election worker must earn so that such earnings are covered under Social Security or Medicare is the election worker coverage threshold. For 2009, this threshold is $1,500. Section 218(c)(8)(B) of the Act provides the formula for increasing the threshold.

Computation

Under the formula, the election worker coverage threshold amount for 2009 shall be equal to the 1999 amount of $1,000 multiplied by the ratio of the national average wage index for 2007 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 Worker Coverage Threshold Amount

Multiplying the 1999 election worker coverage threshold amount

($1,000) by the ratio of the national average wage index for 2007

($40,405.48) to that for 1997 ($27,426.00) produces the amount of

$1,473.25. We then round this amount to $1,500. Accordingly, the election worker coverage threshold amount is $1,500 for 2009.

(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)

Dated: October 24, 2008.

Michael J. Astrue,

Commissioner of Social Security.

FR Doc. E8-25905 Filed 10-29-08; 8:45 am

BILLING CODE 4191-02-P