Congressional Research Service Examines Social Security Dual Entitlement

Not only is a worker entitled to Social Security, his or her dependents also are eligible for auxiliary benefits when the worker retires, becomes disabled or dies. Some people may be entitled to both; a recently updated Congressional Research Service (CRS) report discusses such situations.

In “Social Security Dual Entitlement” the CRS discusses the circumstances behind and concerning such instances. A typical example such a situation, they say, is when someone is entitled to the retired-worker benefit based on his or her own work record and also is entitled to an auxiliary benefit based on the (deceased) spouse’s work record.

Auxiliary benefits and dual entitlement auxiliary benefits are paid to the eligible spouse, former spouse and children of retired or disabled workers, and to survivors (including dependent parents) of deceased workers.

Auxiliary benefits are equal to a percentage of the insured worker’s basic benefit amount, known as the primary insurance amount (PIA). Spouses and former spouses receive up to 50% of the worker’s PIA, and widow(er)s of deceased workers receive 100% of the worker’s PIA.

Limitations and Mechanics

There are some limitations to dual entitlement, however, the CRS notes. Beneficiaries cannot receive a benefit amount that exceeds the highest single benefit that they are entitled to. Instead, beneficiaries essentially receive the higher of the worker benefit and the auxiliary benefit. Someone with a retired-worker benefit that is higher than his or her auxiliary benefit receives only the retired-worker benefit.

However, the CRS says that someone with an auxiliary benefit higher than his or her retired-worker benefit is referred to as dually entitled. Such individuals receive their retired worker benefit plus a reduced auxiliary benefit amount equal to the full auxiliary benefit minus the retired-worker benefit, in essence receiving the higher auxiliary benefit amount.

Inequity

The CRS notes that the way the law works can lead to inequities among households with different earning profiles. This, they say, is because it can result in proportionally more benefits relative to payroll taxes to single-earner couples than to couples with two earners, on average. “The benefits received by a two-earner household,” it says, “can be as little as half of the benefits received by a single-earner household, despite identical household earnings.”

The CRS explains that this is because the second earner’s retired-worker benefit offsets the spousal benefit—even though the second earner contributes to household earnings, he or she might not contribute to the household’s payable Social Security benefits. And it adds that a similar inequity can occur for widow(er) benefits when the primary earner dies.

The report notes that there have been proposals to address such inequities, such as reducing spousal benefits and earnings sharing, which would consider the household as the contribution source; a couple’s covered earnings would be combined and divided evenly between the spouses.