A widow and her two children were receiving survivor's insurance benefits on her deceased husband's earnings record. These benefits were reduced so as not to exceed the maximum payment permitted by law. The three beneficiaries were living together when the widow's benefit became subject to deduction because of her employment. Held, despite the deduction which is applicable, the widow may be paid at least a partial benefit for months in which she is employed.

The worker died in December 1960 at age 51, survived by a widow, W, and two children under age 18. In January 1961 the widow filed claim for, and established entitlement to, mother's insurance benefits for herself and child's insurance benefits for each of the children, effective December 1960. The worker's primary insurance amount, based on his average monthly wage, is $119. Sections 202(g) and (d) of the Act provide that the amount of a mother's insurance benefit and (for months after November 1960) the amount of a child's insurance benefit on the earnings record of a deceased worker is three-fourths of the worker's primary insurance amount. Under section 215(g), all benefits which are not a multiple of 10 cents must be rounded to the next higher multiple of 10 cents. Accordingly, W and each child would appear to be entitled to a benefit of $89.25 rounded to $89.30. However, section 203(a) of the Act limits the total amount of benefits which persons may receive on any worker's earnings record to a family maximum, the amount of which depends upon the primary insurance amount. For a primary insurance amount of $119 the family maximum is $254. Therefore, the original benefit of $89.30 for each beneficiary must be reduced to $84.67 (one-third of $254) and this amount must be raised to $84.70. Consequently, W and each child were awarded adjusted monthly benefits of $84.70 effective December 1960.

In April 1961, W notified the Bureau that she had found employment and would be earning wages of over $100 per month beginning with April, and expected her earnings for 1961 to be at least $2,500. Therefore, her benefit for each such month would be subject to a work deduction. A determination as to deductions for 1961 will be made after the end of the year when the exact amount of W's earnings for the year and for each month after March can be ascertained. Meanwhile, an amount equal to the expected deduction must be withheld from her benefit for April and each succeeding month of 1961.

The deduction for April and subsequent months of 1961, on the basis of W's expected earnings, would, under section 203(b), be equal to the amount of her benefit of $84.70 for each month. However, under section 203(a), where the total benefits must be reduced because of the maximum payable to a family on one earnings record, the reduction is made only after any necessary deductions have been applied; that is, in determining whether benefits must be reduced and, if so, how much, only those benefits will be considered which are payable after deductions have been imposed. This means that, beginning April, only the benefits of the two children are considered in determining the effect of the maximum provision in section 203(a). The children's original benefits total $178.60 (2 times $89.30), and this amount does not exceed the maximum of $254. Thus under the circumstances described above, it might appear that beginning April 1961 each child would receive benefits of $89.30 per month, and their mother, W, would receive no benefits.

However, section 203(i) provides that deductions shall be made only to the extent that they reduce the total of benefits which would otherwise be payable on the same earnings record to persons living in the same household. Since W and her two children live in the same household, this provision is applicable. The total amount which would be payable to those living in the household is $178.60, the amount that would be payable to the children during W's employment but for section 203(i). Under section 203(i), the two children would continue to receive $169.40 ($84.70 each) per month, as before W's employment began, and W would be paid a partial benefit of $9.20 per month, which is the difference between $178.60 and $169.40. Thus the amount which will be paid to each child remains $84.70 whether or not W's benefit is subject to deduction.

Accordingly, it is held that W and the two children may each receive benefits of $84.70 per month for months in which no beneficiary is subject to a deduction under section 203; and that, for months during which they are all entitled and living in the same household and W is subject under section 203 to a deduction of the full amount of her benefit, the amount paid to the children will not be affected and W will receive benefit payments of $9.20 per month.

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