rity income (SSI) payments or offsetting government pensions; (4) the payee is not determined; and (5) administrative reasons. Under the "retirement test" the maximum allowable annual earnings without benefits being withheld is $6,000 in 1982 for beneficiaries aged 65 and over ($4,440 for beneficiaries under age 65). This amount is known as the "exempt amount." Benefits are reduced by $1 in benefits for every $2 in annual earnings above the exempt amount. The exempt amount is indexed to rises in the average wage in the economy. Each year that an automatic benefit increase occurs, the exempt sum of earnings is adjusted for wage increases, effective January 1. If average wages in the economy fall in a particular year, the exempt amount would not be lowered. The law provides that it may not be reduced. According to the 1981 Social Security Trustee's Report,2 the annual "exempt amounts" for the next 4 calendar years is as follows: The age at which the retirement test no longer applies is scheduled to go to age 70 in 1983. Some of the administrative reasons for withholding benefits are: (a) refusal of beneficiary to accept checks for personal reasons; (b) beneficiary's residence in certain foreign countries; and (c) under certain conditions, an alien beneficiary's residence outside the United States for more than 6 full consecutive calendar months. Suspension of monthly benefit payments does not affect eligibility for hospital insurance benefits. AUTOMATIC BENEFIT ADJUSTMENTS If the cost-of-living as measured by the Bureau of Labor Statistics' Consumer Price Index (CPI) rises by 3 percent or more over approximately a 1-year interval, a benefit increase for social security and SSI recipients is triggered. The change in the CPI is measured from the first calendar quarter of one year to the first calendar quarter of the next year. If it shows a 3 percent or more increase, a benefit increase of equivalent amount will be due for the month of June following the end of the measuring period. The CPI for the two calendar quarters used to measure the change represents the straight average of the CPI for each of the 3 months in both quarters. The following example, which uses the latest benefit increase computation, illustrates how it is done: 2 Intermediate (II-B) assumptions. 1. The CPI for the first quarter of 1980 was 236.6. This was the arithmetical average of the CPI for January, February and March, 1980. The average CPI for the 1st quarter of 1980 is thus: 709.7/3=236.6 2. The CPI for the first quarter of 1981 was 263.1. This was the arithmetical average of the CPI for January, February and March, 1981. Month in 1981: January February. March.. Total................. The average CPI for the 1st quarter of 1981 is thus: 789.4/3=263.1 260.7 263.5 265.2 789.4 3. The percentage increase in the CPI from the first quarter of 1980 to the first quarter of 1981 is: The benefit increase is rounded to the nearest 0.1 percent. It applies to all types of beneficiaries. The Secretary of Health and Human Services (HHS) is required by law to publish the amount of the increase in the Federal Register within 45 days after the close of the measuring period (which typically means by May 15th of each year). The change in the CPI for March of each year (the closing month of the measuring period) is announced by the Bureau of Labor Statistics somewhere between the 20th and 25th of April. The benefit increase first appears in July benefit checks, i.e., 3 months after the close of the measuring period. CHARACTERISTICS OF BENEFICIARY POPULATION Tables 6 through 8 provide detailed information on the numbers of various OASI beneficiaries, the average amount of monthly benefits by type of beneficiary and beneficiary population by age group and type of benefit for 1970, 1975, 1977, 1979, and 1981. More detailed information is shown in table 8 for calendar year 1979. TABLE 6. OASI CASH BENEFITS: AVERAGE AMOUNT OF MONTHLY BENEFITS BY TYPE AND NUMBER OF BENEFICIARIES, CALENDAR YEARS 1970, 1975, 1977, 1979 AND 1981 |