the portions of the primary insurance amounts to be used in 1999 are determined to be the first $645, the amount between $645 and $931, the amount between $931 and $1,214, and the amount over $1,214. Consequently, for the family of a worker who becomes age 62 or dies in 1999 before age 62, the total amount of benefits payable to them will be computed so that it does not exceed: (a) 150 percent of the first $645 of the worker's primary insurance amount, plus (b) 272 percent of the worker's primary insurance amount over $645 through $931, plus (c) 134 percent of the worker's primary insurance amount over $931 through $1,214, plus (d) 175 percent of the worker's primary insurance amount over $1,214. This amount is then rounded to the next lower multiple of $.10 if it is not already a multiple of $.10. This formula and the rounding adjustment described above are contained in section 203(a) of the Act (42 U.S.C. 403(a)). Quarter of Coverage Amount General The 1999 amount of earnings required for a quarter of coverage is $740. A quarter of coverage is the basic unit for determining whether a worker is insured under the Social Security program. For years before 1978, an individual generally was credited with a quarter of coverage for each quarter in which wages of $50 or more were paid, or an individual was credited with 4 quarters of coverage for every taxable year in which $400 or more of self-employment income was earned. Beginning in 1978, wages generally are no longer reported on a quarterly basis; instead, annual reports are made. 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 1999 shall be equal to the larger of (1) the 1978 amount of $250 multiplied by the ratio of the national average wage index for 1997 to that for 1976, or (2) the current amount of $700. Section 213(d) further provides that if the amount so determined is not a multiple of $10, it shall be rounded to the nearest multiple of $10. Quarter of Coverage Amount The ratio of the national average wage index for 1997, $27,426.00, compared to that for 1976, $9,226.48, is 2.9725312. Multiplying the 1978 quarter of coverage amount of $250 by the ratio of 2.9725312 produces the amount of $743.13, which must then be rounded to $740. Because $740 exceeds the current amount of $700, the quarter of coverage amount is determined to be $740 for 1999. "Old-Law" Contribution and Benefit Base General The 1999 "old-law" contribution and benefit base is $53,700. This is the base that would have been effective under the Act without the enactment of the 1977 amendments. The base is computed under section 230(b) of the Act as it read prior to 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 (as stated in section 230(d) of the Social Security 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 base is computed using the automatic adjustment formula in section 230(b) of the Act as it read prior to the enactment of the 1977 amendments, but with the revised indexing formula introduced by section 321(g) of the "Social Security Independence and Program Improvements Act of 1994." Under the formula, the “oldlaw" 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 1997 to that for 1992, or (2) the current "old-law" base ($50,700). If the amount so determined is not a multiple of $300, it shall be rounded to the nearest multiple of $300. Amount The ratio of the national average wage index for 1997, $27,426.00, compared to that for 1992, $22,935.42, is 1.1957924. Multiplying the 1994 “old-law” contribution and benefit base amount of $45,000 by the ratio of 1.1957924 produces the amount of $53,810.66 which must then be rounded to $53,700. Because $53,700 exceeds the current amount of $50,700, the "old-law" contribution and benefit base is determined to be $53,700 for 1999. Substantial Gainful Activity Amount for Blind Individuals A finding of disability under titles II and XVI of the Act requires that a person be unable to engage in substantial gainful activity (SGA). Under current regulations, a person who is not statutorily blind and who is earning more than $500 a month (net of impairment-related work expenses) is ordinarily considered to be engaging in SGA. Section 223(d)(4)(A) of the Act specifies a higher SGA amount for statutorily blind individuals. This higher SGA amount increases in accordance with increases in the national average wage index. Computation The monthly SGA amount for statutorily blind individuals for 1999 shall be the larger of (1) such amount for 1994 multiplied by the ratio of the national average wage index for 1997 to that for 1992, or (2) such amount for 1998. If the amount so determined is not a multiple of $10, it shall be rounded to the nearest multiple of $10. SGA Amount for Statutorily Blind Individuals The ratio of the national average wage index for 1997, $27,426.00, compared to that for 1992, $22,935.42, is 1.1957924. Multiplying the 1994 monthly SGA amount for statutorily blind individuals of $930 by the ratio of 1.1957924 produces the amount of $1,112.09. This must then be rounded to $1,110. Because $1,110 is larger than the current amount of $1,050, the monthly SGA amount for statutorily blind individuals is determined to be $1,110 for 1999. Domestic Employee Coverage Threshold Section 2 of the "Social Security Domestic Employment Reform Act of 1994" (Pub. L. 103-387) increased the threshold for coverage of a domestic employee's wages paid per employer from $50 per calendar quarter to $1,000 in calendar year 1994. The statute holds the coverage threshold at the $1,000 level for 1995 and then increases the threshold in $100 increments for years after 1995. The formula for increasing the threshold is provided in section 3121(x) of the Internal Revenue Code. Computation Under the formula, the domestic employee coverage threshold amount for 1999 shall be equal to the 1995 amount of $1,000 multiplied by the ratio of the national average wage index for 1997 to that for 1993. If the amount so determined is not a multiple of $100, it shall be rounded to the next lower multiple of $100. Domestic Employee Coverage Threshold Amount The ratio of the national average wage index for 1997, $27,426.00, compared to that for 1993, $23,132.67, is 1.1855960. Multiplying the 1995 domestic employee coverage threshold amount of $1,000 by the ratio of 1.1855960 produces the amount of $1,185.60, which must then be rounded to $1,100. Accordingly, the domestic employee coverage threshold amount is determined to be $1,100 for 1999. OASDI Fund Ratio General In addition to providing an annual automatic cost-of-living increase in OASDI benefits, section 215(i) of the Act also includes a “stabilizer" provision that can limit such benefit increase under certain circumstances. If the combined assets of the OASI and DI Trust Funds, as a percentage of annual expenditures, are below a specified threshold, the automatic benefit increase is equal to the lesser of (1) the increase in the national average wage index or (2) the increase in prices. The threshold specified for the OASDI fund ratio is 20.0 percent for benefit increases for December of 1989 and later. The law also provides for subsequent "catch-up" benefit increases for beneficiaries whose previous benefit increases were affected by this provision. "Catch-up" benefit increases can occur only when trust fund assets exceed 32.0 percent of annual expenditures. Computation Section 215(i) specifies the computation and application of the OASDI fund ratio. The OASDI fund ratio for 1998 is the ratio of (1) the combined assets of the OASI and DI Trust Funds at the beginning of 1998 to (2) the estimated expenditures of the OASI and DI Trust Funds during 1998, excluding transfer payments between the OASI and DI Trust Funds, and reducing any transfers to the Railroad Retirement Account by any transfers from that account into either trust fund. Ratio The combined assets of the OASI and DI Trust Funds at the beginning of 1998 equaled $655,510 million, and the expenditures are estimated to be $382,871 million. Thus, the OASDI fund ratio for 1998 is 171.2 percent, which exceeds the applicable threshold of 20.0 percent. Therefore, the stabilizer provision does not affect the benefit increase for December 1998. Although the OASDI fund ratio exceeds the 32.0-percent threshold for potential "catch-up" benefit increases, no past benefit increase has been reduced under the stabilizer provision. Thus, no "catch-up" benefit increase is required. (Catalog of Federal Domestic Assistance: Program Nos. 96.001 Social Security-Disability Insurance; 96.002 Social Security-Retirement Insurance; 96.003 Social Security-Special Benefits for Persons Aged 72 and Over; 96.004 Social Security-Survivors Insurance; 96.006 Supplemental Security Income.) Dated: October 21, 1998. Kenneth S. Apfel, Commissioner, Social Security Administration 1998 Cost-of-Living Increase and Other Determinations 4 AGENCY: Social Security Administration. ACTION: Notice. SUMMARY: The Commissioner has determined (1) A 2.1 percent cost-of-living increase in Social Security benefits under title II of the Social Security Act (the Act), effective for December 1997; (2) An increase in the Federal Supplemental Security Income (SSI) monthly benefit amounts under title XVI of the Act for 1998 to $494 for an eligible individual, $741 for an eligible individual with an eligible spouse, and $247 for an essential person; (3) The national average wage index for 1996 to be $25,913.90; (4) The Old-Age, Survivors, and Disability Insurance (OASDI) contribution and benefit base to be $68,400 for remuneration paid in 1998 and self-employment income earned in taxable years beginning in 1998; 4 This material was published in the Federal Register on October 30, 1997, at 62 FR 58762. (5) For beneficiaries under age 65, the monthly exempt amount under the Social Security retirement earnings test for taxable years ending in calendar year 1998 to be $760; (6) The dollar amounts ("bend points") used in the benefit formula for workers who become eligible for benefits in 1998 and in the formula for computing maximum family benefits; (7) The amount of earnings a person must have to be credited with a quarter of coverage in 1998 to be $700; (8) The "old-law" contribution and benefit base to be $50,700 for 1998; (9) The monthly amount of substantial gainful activity applicable to statutorily blind individuals in 1998 to be $1,050; (10) The domestic worker coverage threshold to be $1,100 for 1998; and (11) The OASDI fund ratio to be 152.9 percent for 1997. SUPPLEMENTARY INFORMATION: The Commissioner is required by the Act to publish within 45 days after the close of the third calendar quarter of 1997 the benefit increase percentage and the revised table of "special minimum" benefits (section 215(i)(2)(D)). Also, the Commissioner is required to publish on or before November 1 the national average wage index for 1996 (section 215(a)(1)(D)), the OASDI fund ratio for 1997 (section 215(i)(2)(C)(ii)), the OASDI contribution and benefit base for 1998 (section 230(a)), the amount of earnings required to be credited with a quarter of coverage in 1998 (section 213(d)(2)), the monthly exempt amounts under the Social Security retirement earnings test for 1998 (section 203(f)(8)(A)), the formula for computing a primary insurance amount for workers who first become eligible for benefits or die in 1998 (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 1998 (section 203(a)(2)(C)). Cost-of-Living Increases General The cost-of-living increase is 2.1 percent for benefits under titles II and XVI of the Act. Under title II, OASDI benefits will increase by 2.1 percent beginning with the December 1997 benefits, which are payable in January 1998. This increase is based on the authority contained in section 215(i) of the Act (42 U.S.C. 415(i)). Under title XVI, Federal SSI payment levels will also increase by 2.1 percent effective for payments made for the month of January 1998 but paid on December 31, 1997. This is based on the authority contained in section 1617 of the Act (42 U.S.C. 1382f). The percentage increase effective January 1998 is the same as the title II percentage increase and the annual payment amount is rounded, when not a multiple of $12, to the next lower multiple of $12. Automatic Benefit Increase Computation Under section 215(i) of the Act, the third calendar quarter of 1997 is a cost-ofliving computation quarter for all the purposes of the Act. The Commissioner is, therefore, required to increase benefits, effective with December 1997, for individuals entitled under section 227 or 228 of the Act, to increase primary insurance amounts of all other individuals entitled under title II of the Act, and to increase maximum benefits payable to a family. For December 1997, the benefit increase is the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers from the third quarter of 1996 through the third quarter of 1997. Section 215(i)(1) of the Act provides that the Consumer Price Index for a cost-ofliving computation quarter shall be the arithmetic mean of this index for the 3 months in that quarter. The arithmetic mean is rounded, if necessary, to the nearest 0.1. The Department of Labor's Consumer Price Index for Urban Wage Earners and Clerical Workers for each month in the quarter ending September 30, 1996, is: for July 1996, 154.3; for August 1996, 154.5; and for September 1996, 155.1. The arithmetic mean for this calendar quarter is 154.6. The corresponding Consumer Price Index for each month in the quarter ending September 30, 1997, is: for July 1997, 157.5; for August 1997, 157.8; and for September 1997, 158.3. The arithmetic mean for this calendar quarter is 157.9. Thus, because the Consumer Price Index for the calendar quarter ending September 30, 1997, exceeds that for the calendar quarter ending September 30, 1996 by 2.1 percent, a cost-of-living benefit increase of 2.1 percent is effective for benefits under title II of the Act beginning December 1997 Title II Benefit Amounts In accordance with section 215(i) of the Act, in the case of insured 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 1998, benefits will increase by 2.1 percent beginning with benefits for December 1997 which are payable in January 1998. In the case of first eligibility after 1997, the 2.1 percent increase will not apply. For eligibility after 1978, benefits are generally determined by 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, benefits are determined by means of a benefit table. A copy of this table may be obtained by writing to: Social Security Administration, Office of Public Inquiries, 4100 Annex, Baltimore, MD 21235. The table is also available on the Internet at address http://www.ssa.gov/OACT/ ProgData/tableForm.html. Section 215(i)(2)(D) of the Act requires that, when the Commissioner determines an automatic increase in Social Security benefits, the Commissioner shall 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). These benefits are referred to as "special minimum" benefits and are payable to certain individuals with long periods of 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, a person must earn at least a certain proportion (25 percent for years before 1991, and 15 percent for years after 1990) of the "old-law" contribution and benefit base. 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 2.1 percent benefit increase. SPECIAL MINIMUM PRIMARY INSURANCE AMOUNTS AND MAXIMUM FAMILY BENEFITS PAYABLE FOR DECEMBER 1997 Section 227 of the Act provides flat-rate benefits to a worker who became age 72 before 1969 and was not insured under the usual requirements, and to his or her spouse or surviving spouse. Section 228 of the Act provides similar benefits at age 72 for certain uninsured persons. The current monthly benefit amount of $199.00 for an individual under sections 227 and 228 of the Act is increased by 2.1 percent to obtain the new amount of $203.10. The current monthly benefit amount of $99.50 for a spouse under section 227 is increased by 2.1 percent to $101.50. |