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Take it to the Max!

Everyone wants to obtain the maximum 100% of anything for which they are legitimately eligible. A popular discount chain used to run a jingle that began “Get the max for the minimum…”. With the wide array of online and on-sale alternatives, it may be possible to get the best deal with only a minimum of effort. With Social Security, however, getting the maximum benefit to which your family is entitled requires a maximum of attention on your part. When your family includes a child/youth/adult child with a disability, Social Security’s already-complicated rules and formulas take on an added layer of complexity.

If you are a person with a disability or are the parent of one, you are probably aware that a person with a “developmental” disability (that is a disability that starts before her/his age 22) is eligible for benefits on her/his parents’ work records. Unlike typically developing children, who lose this eligibility at age 18, a child/adult child with a disability remains eligible for life. This means that the interdependence of parental (primary) and child (auxiliary) benefits will come up more frequently and have more financial import for families that include what Social Security terms a “Disabled Adult Child”.

Here is a brief refresher on auxiliary benefits. If you worked and paid Social Security taxes for a long enough period of time, then you are covered and are eligible for disability and retirement benefits. You have what is called a “Primary Insurance Amount” (PIA). This number is calculated by applying a multi-part formula to a worker’s average indexed earnings over her/his 35 highest-earning years. For most people, the PIA is the monthly amount that the worker will receive at her/his full retirement age (FRA). When you file for benefits, you also trigger eligibility for your spouse and children who are either minors or have a disability that started before their age 22. In theory, one’s spouse and each of one’s minor children or adult children with a disability are each eligible for an amount up to 50% of one’s PIA.

Clearly, for people who have large families, this could get very expensive for Social Security. It is not surprising, then, that they have another multi-point formula to calculate something called the “Family Maximum”. Without going through the minutiae, generally, the Family Maximum is about 150-180% of the primary worker’s PIA. This mean if your PIA (= FRA retirement benefit) is $1,800, then your entire family’s benefits, including yours, will never be more than $3,240. That also means, if you have one spouse, then you will get your $1,800 and s/he will get $900. But if you have one spouse and one adult child with a disability, they cannot each get their whole $900, because then the family total would be 200% of your PIA and above the maximum. Instead, each “auxiliary” benefit (so, not yours), will be reduced. You will get your $1,800 and they will each get about $745. This assumes that the auxiliaries are not also entitled on their own work records.

There is another complication to the maximum calculation. When you have at least one person in the family, who is entitled to auxiliary benefits on two people’s work records, then a higher “Combined Family Maximum” applies. If, for example, both parents have been working and paying FICA taxes, then their adult child with a disability is eligible on both parents’ work records. Although s/he will only receive one benefit, based on the higher-wage-earning parent, the combined family maximum applies. And the Combined Family Maximum, itself, has an upper limit that changes annually. For benefits starting in 2018, that limit is just over $5,300.

There are other things to keep in mind to enable you to receive the maximum benefits. For example, if one parent or the adult child with a disability is entitled on both his/her own work record and as an auxiliary on someone else’s, only the portion of benefits, that is auxiliary, factors into the family maximum or the combined family maximum. For people who have situations that are a little more complicated than just claiming their own retirement benefit, maximizing Social Security benefits on a family basis requires knowing and juggling quite a few variables. But even an additional $200/month X 12 months X 20 years will become a significant chunk of change, so it’s worth doing the analysis prior to filing.

There are many avenues to see and there are many important steps to take, but attaining your 100% maximum benefits is well worth it. Please, do your research, and rightfully claim your 100% maximum benefits.

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