Understanding Exceptions to Benefit Reductions: The Savings Clause, § 404.405

In the realm of Social Security benefits, there are certain exceptions, known as “savings clauses,” which prevent benefits from being lowered or guarantee minimum increases for certain individuals. These clauses ensure that statutory changes don’t disadvantage the recipients. This article will discuss the various situations where a savings clause may come into effect, providing exceptions to the reduction rules.

Section 1: The Savings Clause for Months after August 1972

This savings clause prevents the reduction described in § 404.403(a) from applying to benefits for months after August 1972 in cases where:

1. Two or more persons were entitled to benefits for August 1972 based on the filing of an application in August 1972 or earlier.
2. The total of such benefits was subject to reduction for the maximum under § 404.403 for January 1971.

In these cases, the maximum family benefits on the insured individual’s earnings record for any month after August 1972 may not be less than the larger of:

1. The maximum family benefits determined under the applicable table in section 215(a) of the Act; or
2. The total obtained by multiplying each benefit for August 1972 after reduction for the maximum, but before deduction or reduction for age, by 120 percent and raising each such increased amount to the next higher multiple of 10 cents.

Section 2: The Savings Clause for Months after December 1972

This savings clause prevents the reduction described in § 404.403 from applying to benefits for months after December 1972 in three specific cases:

1. Redetermination of widow’s or widower’s benefits.
2. Entitlement to child’s benefits based on disability which began between ages 18 and 22.
3. Entitlement of certain surviving divorced mothers.

Each of these cases has its own set of criteria that must be met for the savings clause to apply.

Section 3: The Savings Clause for Months after December 1973

This savings clause prevents the reduction described in § 404.403 from applying to benefits for months after December 1973 where:

1. Two or more persons were entitled to monthly benefits for January 1971 or earlier based on applications filed in January 1971 or earlier.
2. The total of such benefits was subject to reduction for the maximum under § 404.403 for January 1971 or earlier.

In these cases, the maximum family benefits payable on the insured individual’s earnings record for any month after January 1971 may not be less than the larger of:

1. The maximum family benefit for such month shown in the applicable table in section 215(a) of the Act.
2. The largest amount which has been determined payable for any month for persons entitled to benefits on the insured individual’s earnings records.

Section 4: The Savings Clause for Months after May 1978

This savings clause applies to the family maximum for months after May 1978 and is calculated for all beneficiaries as if none of them had received a benefit increase because of the retirement credit. This clause applies if:

1. One or more persons were entitled to monthly benefits for May 1978 on the wages and self-employment income of a deceased wage earner.
2. The benefit for June 1978 of at least one of those persons is increased by reason of a delayed retirement credit.
3. The total amount of monthly benefits to which all those persons are entitled is reduced because of the maximum or would be so reduced except for certain restrictions.

Example: The Savings Clause for Redetermination of Widow’s or Widower’s Benefits

Imagine John, a widower, and his two children, Emily and James, have been receiving Social Security benefits since his wife’s death in 1971. In December 1972, the Social Security Administration redetermines John’s widower’s benefit due to the Social Security Amendments of 1972. This redetermination could potentially lead to a decrease in the family’s total benefits.

However, due to the savings clause for months after December 1972, the reduction described in § 404.403 does not apply in this case. The following criteria are met:

1. Two or more persons (John, Emily, and James) were entitled to benefits for December 1972 on the earnings record of John’s deceased wife.
2. At least one person (John) is entitled to benefits as the deceased individual’s widow or widower for December 1972 and January 1973.
3. The total benefits to which all persons are entitled for January 1973 are reduced (or would be reduced if deductions were not applicable) for the maximum under § 404.403.

Because of the savings clause, John’s benefit for months after December 1972 will not be less than it would have been if his widower’s benefit had not been redetermined under the Social Security Amendments of 1972. This ensures that John and his children do not experience a decrease in their benefits due to the redetermination.

Conclusion: The savings clauses provide exceptions to benefit reduction rules, ensuring that recipients are not unfairly affected by statutory changes. By understanding these situations, individuals can better navigate the complexities of Social Security benefits

https://www.ssa.gov/OP_Home/cfr20/404/404-0405.htm