Multiple members of a single family might be eligible for benefits even if only one member of the family is disabled. This most commonly occurs where a parent is entitled to disability benefits. The children, if they are minors and live with the disabled parent, could also be entitled to benefits. These are called auxiliary benefits.
When this happens, Social Security has special rules in place regarding what benefits each member of the family can receive. The most important of these is the so-called family maximum. Not surprisingly, this title describes exactly what the rule does. Depending on the family's circumstances, different rules apply.
Warning: Math Ahead
For auxiliary benefits Social Security caps the total amount that family can get at 150% of the benefits the disabled worker is entitled to receive. The total can be no lower than the disabled person's monthly benefit. The actual number is derived from a very complicated formula. In essence, the family maximum is 85% of the
average monthly earnings of the disabled person. So long as that number is higher than 100% of the disabled person's monthly benefit, Social Security will pay auxiliary benefits. The benefits stop at 150% of the monthly benefit amount.
The Four Little Does And How They Grew
To use a simple example, consider Jane Doe and her 4 children. Ms. Doe is entitled to $1,000 per month in benefits. Under this scenario, Ms. Doe gets her full $1,000. Her four children are entitled to split $500 per month. Each child would receive $125 a month. The Doe family would get a total of $1,500 a month, or 150% of Ms. Doe's monthly benefit. Without the family maximum, each child would get 50% of her mother's benefit. The family total would be $3,000 a month. Thus, the family maximum can make a drastic difference to those persons affected by it.
Now lets make it a little more complicated. If two members of a family are entitled to disability benefits on their own earnings records and also to auxiliary benefits, each person can collect the full amount of his or her benefits. The family maximum will only apply to the auxiliary benefits, if any. This is the good news. The bad news is that the family is still limited by the combined family maximum.
The Poor Get It Worst Of All
Per Social Security's own calculations, for those disabled persons who earned less than $903 per month, Social Security will not pay any auxiliary benefits. Even if that disabled worker made $1,924 per month, her auxiliary benefits would still be reduced; this would be true if she had only one auxiliary beneficiary, i.e., one minor child. A family cannot be assured of getting auxiliary benefits until the disabled person's monthly earnings are more than $3,000. It is patently unfair to punish the poor like this. But, there does not seem to be any interest in Congress is addressing this issue.
Keep in mind, this information only applies to disability cases. Social Security has another set of family maximum rules for retirees and survivors.
As you can tell, this is complicated stuff. Social Security has stated that more errors are made in family maximum calculations than in any other benefits. If you
believe you and your family could be affected by the family maximum, it would be worth taking the time to research the issue. One good place to start would be with this website.