The primary insurance amount (PIA) is a crucial component in determining Social Security benefits.
In some cases, the PIA may be recomputed to include additional earnings or due to changes in computation methods. This blog post highlights the reasons for recomputing the primary insurance amount, as outlined in § 404.281.
- Earnings Not Included in Earlier Computation or Recomputation (§ 404.281(a))
The most common reason for recomputing a PIA is to include earnings that were not used in the initial computation or an earlier recomputation. This results in a revised average monthly wage or revised average indexed monthly earnings.
- New Computation Method Enacted (§ 404.281(b))
If a new method for computing or recomputing PIAs is enacted into law, and you are eligible to have your PIA recomputed under the new method, it will be recomputed if doing so would increase your PIA.
- Earnings in the Year You Reach Age 62 or Become Disabled (§ 404.281(c))
In the initial computation of your PIA, earnings in the year you become entitled to old-age insurance benefits or become disabled are not used. However, these earnings (called lag earnings) can be used in a recomputation. The higher benefits will be paid in the year after the year you become entitled to old-age benefits or become disabled.
- Earnings Not Reported in Time (§ 404.281(d))
Earnings in the year before you become entitled to old-age insurance benefits, become disabled, or the year you die might not be reported in time to use them in computing your PIA. In this case, your PIA will be recomputed based on the new earnings information, and the higher benefits will be paid beginning with the month you became entitled or died.
- Earnings After Entitlement (§ 404.281(e))
Earnings you have after becoming entitled to benefits will be used in a recomputation of your PIA.
- Entitlement to a Monthly Pension (§ 404.281(f))
Your PIA will be recomputed if, in a month after becoming entitled to old-age or disability insurance benefits, you become entitled to a pension based on non-covered employment. Additionally, your PIA will be recomputed after your death to disregard a monthly pension based on non-covered employment that affected your PIA.
Conclusion: Understanding the reasons for recomputing your primary insurance amount can help ensure you receive the correct Social Security benefits. By accounting for additional earnings, changes in computation methods, and other factors, the Social Security Administration aims to provide the most accurate benefits possible.