Reduction of Disability BenefitsWorkers' Compensation and Public Disability Benefits and Payments

SOCIAL SECURITY ADMINISTRATION

20 CFR Part 404

[Regulations No. 4]

RIN 0960-AE35

Reduction of Disability Benefits--Workers' Compensation and

Public Disability Benefits and Payments

AGENCY: Social Security Administration (SSA).

ACTION: Proposed rule.

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SUMMARY: We propose to revise our rules on reduction of Social Security

benefits based on disability on account of receipt of workers'

compensation and/or public disability benefits and payments provided

under Federal (other than Social Security), State, or local laws or

plans to clarify our existing policies. We also propose to adopt a

uniform method for proration of workers' compensation and public

disability benefit/payment settlements. In addition, we propose to

incorporate into our rules certain policy interpretations established

previously in relevant Social Security Rulings (SSRs). Finally, we

propose to update provisions that have not been changed since 1984.

DATES: To be sure that your comments are considered, we must receive

them no later than November 3, 1997.

ADDRESSES: Comments should be submitted in writing to the Commissioner

of Social Security, P.O. Box 1585, Baltimore, MD 21235, sent by telefax

to (410) 966-2830, sent by E-mail to ``[email protected]'', or

delivered to the Division of Regulations and Rulings, Social Security

Administration, 3-B-1 Operations Building, 6401 Security Boulevard,

Baltimore, MD 21235-0001, between 8:00 a.m. and 4:30 p.m. on regular

business days. Comments may be inspected during these same hours by

making arrangements with the contact person shown below.

FOR FURTHER INFORMATION CONTACT: Daniel T. Bridgewater, Legal

Assistant, Division of Regulations and Rulings, Social Security

Administration, 6401 Security Boulevard, Baltimore, MD 21235, (410)

965-3298 for information about these rules.

SUPPLEMENTARY INFORMATION:

Background

Certain disabled workers may be eligible for cash benefits under

both workers' compensation and/or other public disability benefit

programs and the Social Security disability insurance (SSDI) program.

Section 224 of the Social Security Act (the Act) provides for a

reduction in SSDI benefits so that total benefits under both workers'

compensation and/or other public disability benefit programs and SSDI

do not exceed the higher of 80 percent of a worker's predisability

earnings (``average current earnings'') or the total family benefit

(i.e., the sum of the individual's Social Security disability benefits

and the Social Security benefits payable to others based upon his work

record) under Social Security before reduction.

Present Policy

The policy interpreted in SSRs over the years has focused mainly on

certain aspects of the law. First, some State workers' compensation

laws prescribe specific benefit amounts for certain permanent

impairments (e.g., loss of a bodily member) without regard to actual

loss of wages. Some beneficiaries questioned whether Congress intended

to exclude such benefits based on permanent impairments from the SSDI

benefit reduction. This issue was resolved in the courts, and SSA

developed two SSRs to reflect its policy that permanent impairment

benefits, compensable under State workers' compensation laws, are

subject to offset against SSDI benefits. (SSR 74-21c, based on Grant v.

Weinberger, 482 F.2d 1290 (6th Cir. 1973), and SSR 92-6c, based on

Davidson v. Sullivan, 942 F.2d 90 (1st Cir. 1991)). More recent cases,

Krysztoforski v. Chater, 55 F.3d 857 (3rd Cir. 1995) and Hodge v.

Shalala, 27 F.3d 430 (9th Cir. 1994), also uphold SSA's policy in this

regard. We now propose to amend our regulatory language to reflect this

policy interpretation.

Second, some have questioned our policy that non-covered earnings

(i.e., those earnings from employment not covered under the Act) cannot

be used in determining the ``average current earnings'' for an

individual. This policy, which is described in SSR 92-2a, is based on

section 224(a) of the Act, which provides that ``average current

earnings'' are to be computed by reference to the average monthly wage

under section 215(b) of the Act and to wage and self-employment income

totals under sections 209(a)(1) and 211(b)(1) of the Act. These

statutory sections are concerned strictly with wages and self-

employment income covered under the Act, and, thus, we cannot count

non-covered earnings.

Judicial precedent strongly supports the Social Security

Administration's (SSA) position: Prather v. Shalala, 844 F. Supp. 239

(D. Md. 1993), aff'd w/o opinion, 14 F.3d 595 (4th Cir. 1994); Smith v.

Sullivan, 982 F.2d 308 (8th Cir. 1992); Sousa v. Shalala, No. C-92-2796

MHP (N.D. Cal. Jan. 19, 1995); Everette v. Chater, No. 92-C-714 (E.D.

Wis. Aug. 8, 1995). Accordingly, we propose to clarify the regulatory

language to express this policy in a more direct manner.

Proposed Policy--Proration of Lump-Sum Awards

In many cases, an individual may receive some or all of his or her

workers' compensation in a lump-sum. Because a lump-sum award is a

substitute for periodic payments, the Act requires that we look to

State law to see what rate would have been paid had the workers'

compensation payment been made on a periodic basis, and that we prorate

and offset at the rate that most closely approximates State law.

State workers' compensation laws clearly define how to compute the

periodic rate. States base the weekly rate on a specified percentage of

the worker's average weekly wage subject to a maximum amount set by

law. Forty-two States use sixty-six and two-thirds percent.

SSA has been using three methods to establish the rate of offset.

In order of priority, they are as follows:

1. The rate specified in the award. (If the award specifies a rate

based on life expectancy, we use that rate and list the case for future

reference.)

2. The periodic rate paid prior to the lump-sum award (if no rate

was specified in the award).

3. The State's workers' compensation maximum weekly rate in effect

at the time of the injury (if no rate was

[[Page 46683]]

specified in the award and if no periodic payments were made).

For years, lump-sum awards were rare, and they were prorated using

method 1 or 2. Method 3 was added later.

Our experience in determining rates has been that, in almost every

case, because of the worker's actual earnings, the specified percentage

of the average weekly wage would have exceeded the State's maximum

rate. Thus, the worker would have received the State's maximum periodic

rate. Likewise, the prior periodic rate would have been paid at the

maximum rate.

Although we believed that this policy would closely approximate the

monthly rate that would have been paid in the absence of a lump-sum

settlement, we have witnessed an ever-increasing number of cases

nationwide where attorneys are requesting insurers to specify an

artificially low rate in the lump-sum award. For example, some awards

purport to set a proration rate based on the worker's life expectancy.

This rate, often lower than the State's minimum rate, results in little

or no offset under our present method of proration.

We do not believe that the use of a life expectancy rate in the

lump sum award is a bona fide representation of the periodic rate that

would have otherwise been paid. We do not believe that disabled workers

would, in fact, accept such low rates if the lump-sum award were paid

periodically. Also, we do not believe that these low rates are

specified when SSA disability benefits and offset are not an issue.

Life expectancy can be based on subjective factors, such as health,

life style, age, job, etc. Given the fact that these workers are

disabled, it does not appear to be reasonable to utilize life

expectancies to age 75 or older as these awards specify.

We conducted a survey in States where this practice started. One of

the questions we asked of the States was whether a low rate based on

life expectancy was a bona fide representation of the lump-sum award

and in accordance with State law. Six of the eight States said, ``No.''

(One State said the question did not apply and one did not return the

survey.)

It is clear that while State law may not provide life expectancy as

the basis for a lump-sum award or as the basis for periodic benefits

that the lump-sum represents, the actual awards do contain such

language. Once a lump-sum award has been agreed upon, it is of no

consequence to the insurer how the award is portrayed (i.e., whether

the proration rate of the lump-sum award is based on the worker's life

expectancy or the State's maximum weekly rate).

When our order of priority for setting the rate of offset was

established, lump-sum awards were quite straightforward, even rare.

Currently, lump-sum awards are being structured individually in order

to best circumvent the offset required by section 224 of the Act.

Attorneys have even called SSA personnel to seek guidance in

structuring lump-sums to avoid offset.

In short, our policy on the proration of lump-sum awards has become

a tool by which people avoid the offsets intended by Congress, rather

than a means of approximating, as nearly as practicable, the offset

that would have occurred had benefits been paid periodically. It thus

can be viewed as no longer satisfying the requirements of section

224(b) of the Act.

In order to prorate and offset a lump-sum award using a rate that

is more representative of the periodic rate that would have otherwise

been paid under State law and in order to ensure a more uniform policy

for all lump-sum cases nationwide, we propose a change in the order of

priority for determining the weekly rate used. Specifically, we propose

that lump-sum awards be prorated based on:

1. The rate specified in the award; but only if that rate is based

on the percentage of the worker's average weekly wage required by State

law;

2. The periodic rate paid prior to the lump-sum award (if method 1

does not apply); or

3. The State's maximum weekly rate in effect at the time of the

injury (if methods 1 and 2 do not apply).

We believe this proposed change is needed to better implement

section 224 of the Act more effectively.

Proposed Policy--Exclusion of Legal and Medical Expenses

Our present policy is that when workers incur legal, medical, and

related expenses in connection with the claim for workers' compensation

payments or related injury, those expenses are excluded from the lump-

sum award for purposes of the offset computation to the extent

consonant with applicable law. Any deductions from the workers'

compensation payment such as tax withholdings, life insurance, medical

premiums, etc., are included in the amount used in the offset

computations, as are amounts garnished or attached to satisfy legal

obligations.

There are three methods which we use in prorating a lump-sum award

with excludable expenses:

Method A--Delays imposition of offset because it allows SSA to take

the excludable expenses from the beginning of the proration. This is

advantageous to the worker who is approaching age 62 or 65 years of age

or when a closed period of disability is involved.

Method B--Divides the lump-sum award, minus the expenses by the

total lump-sum award. This percentage is then multiplied by the weekly

rate, resulting in a reduced weekly rate. This method reduces the

weekly workers' compensation rate so the offset amount is lowered

during the entire proration period.

Method C--Reduces the lump-sum award by the amount of the

excludable expenses prior to the proration. This method removes offset

at the earliest possible time and could even end the proration prior to

the first possible month of offset.

Until 1971, only Method C was used. Since then, we have used the

method most advantageous to the claimant, unless the lump-sum award

specifies the manner in which expenses are to be deducted.

We propose to return to our pre-1971 policy for prorating a lump-

sum award with excludable expenses. Using only Method C would provide

uniformity and consistency for all claimants. Since the Act and the

regulations do not require a specific method of proration, we believe

Methods A and B can be discontinued.

Lastly, the meaning of the term ``related'' expenses has caused

unnecessary confusion. We have received several questions as to whether

items such as new homes, patios, ramps, costs of vans and vacations,

moving expenses to a milder climate, etc., may be ``related'' expenses.

Because we are aware of no expenses, other than medical or legal

expenses, that should be excluded from offset, we propose to remove the

category of ``related'' expenses and offset only medical and legal

expenses.

Miscellaneous Proposed Changes

We propose to change the language in section 404.408(a)(1)

regarding the application of the offset to certain individuals who

first became entitled to SSDI after 1965 but before September 1981

based on a period of disability that began after June 1, 1965, and

before March 1981. We wish to delete the word, ``first,'' as it is not

required by the law. Also, we wish to delete the dates ``September

1981'' and ``March 1981'' to remove an anomaly that affects claims with

a month of entitlement of September 1981 or later with disability

onsets prior to March 1981.

[[Page 46684]]

Example: A claim is filed September 1982 establishing a

disability onset date of January 10, 1980. The month of entitlement

is determined to be September 1981. This example would not be

covered by the current regulatory language.

We also propose to change the language in section 404.408(a)(1)(i)

and elsewhere to refer to ``benefits or payments'' under a workers'

compensation law or plan, rather than simply ``benefits,'' as many

attorneys have claimed that certain workers' compensation is not a

``benefit'' but is in fact a ``payment.''

We propose to change the language in section 404.408(a)(2)(i)

regarding individuals entitled to SSDI who also are concurrently

entitled to certain other payments based on disability. We believe

``concurrently'' is redundant.

In addition, we propose to make revisions throughout Sec. 404.408

to add the language ``workers' compensation,'' where appropriate, to

current references to ``public disability benefits'' because ``workers'

compensation'' is the designation given for the majority of public

disability benefits other than SSDI or Supplemental Security Income

benefits. Using this language makes explicit that section 404.408

applies to ``workers' compensation'' laws.

Finally, in Sec. 404.408 (h), (i), (j), (k), and (l), we propose to

remove outdated, unnecessary computation examples, leaving one basic

example in paragraph (h) of this section. We believe that the removal

of outdated, unnecessary examples will clarify this rule.

Electronic Version

The electronic file of this document is available on the Federal

Bulletin Board (FBB) at 9:00 a.m. on the date of publication in the

Federal Register. To download the file, modem dial (202) 512-1387. The

FBB instructions will explain how to download the file and the fee.

This file is in WordPerfect and will remain on the FBB during the

comment period.

Regulatory Procedures

Executive Order 12866

We have consulted with the Office of Management and Budget (OMB)

and determined that these proposed rules do not meet the criteria for a

significant regulatory action under Executive Order 12866. Thus, they

are not subject to OMB review.

Regulatory Flexibility Act

We certify that these proposed rules will not have a significant

economic impact on a substantial number of small entities since these

rules affect only individuals. Therefore, a regulatory flexibility

analysis as provided in Public Law 96-354, the Regulatory Flexibility

Act, is not required.

Paperwork Reduction Act

These proposed rules impose no additional reporting or

recordkeeping requirements necessitating clearance by OMB.

(Catalog of Federal Domestic Assistance Program No. 96.001 Social

Security--Disability Insurance)

List of Subjects in 20 CFR Part 404

Administrative practice and procedure, Blind, Disability benefits,

Old-Age, Survivors, and Disability Insurance, Reporting and

recordkeeping requirements, Social Security.

Dated: August 26, 1997.

John J. Callahan,

Acting Commissioner of Social Security.

PART 404--FEDERAL OLD-AGE, SURVIVORS AND DISABILITY INSURANCE

(1950- )

For the reasons set out in the preamble, subpart E of part 404 of

chapter III of title 20 of the Code of Federal Regulations is amended

as follows:

1. The authority citation for subpart E of part 404 continues to

read as follows:

Authority: Secs. 202, 203, 204 (a) and (e), 205 (a) and (c),

222(b), 223(e), 224, 225, and 702(a)(5) of the Social Security Act

(42 U.S.C. 402, 403, 404 (a) and (e), 405 (a) and (c), 422(b),

423(e), 424a, 425, and 902(a)(5)).

2. Section 404.408 is amended by removing Example 2 from paragraph

(h)(2) and by removing the examples from paragraphs (i), (j), (k), and

(l)(3) and by revising the section heading and the headings and texts

of the following paragraphs: (a)(1) introductory text, (a)(1)(i),

(a)(1)(ii), (a)(2)(i), (b)(1), (b)(2)(ii), (c)(1) introductory text,

(c)(1)(i), (c)(3), (c)(5), (d)--introductory text, (d)(1), (d)(2), (e),

(f), (g), (h)(2)--Example 1, (j), (k), (l)(1), and (l)(2)(i). They read

as follows:

Sec. 404.408 Reduction of benefits based on disability on account of

receipt of certain other disability benefits or payments provided under

Federal, State, or local laws or plans.

(a) * * *

(1) The individual became entitled to disability insurance benefits

after 1965 based on a period of disability that began after June 1,

1965 (but see paragraph (a)(2) of this section), and

(i) The individual entitled to the disability insurance benefit is

also entitled to periodic benefits or payments under a workers'

compensation law or plan of the United States or a State for that month

for an injury or illness, and

(ii) The Commissioner has, in a month before that month, received a

notice of the entitlement, and

* * * * *

(2) * * *

(i) The individual entitled to the disability insurance benefit is

also, for that month, entitled to a periodic benefit (including

workers' compensation or any other payments) on account of a total or

partial disability (whether or not permanent) under a law or plan of

the United States, a State, a political subdivision, or an

instrumentality of two or more of these entities, and

* * * * *

(b) When reduction not made. (1) The reduction of a benefit

otherwise required by paragraph (a)(1) of this section is not made if

the workers' compensation law or plan under which the periodic benefit

or payment is payable provides for the reduction of such periodic

benefit or payment when anyone is entitled to a benefit under title II

of the Act on the basis of the earnings record of an individual

entitled to a disability insurance benefit under section 223 of the

Act.

(2) * * *

(ii) The benefit or payment is a Veterans' Administration benefit,

a public disability benefit (except workers' compensation) payable to

an employee based on employment covered under Social Security, a

benefit based on need, or a wholly private pension or private insurance

benefit.

(c) Amount of reduction--(1) General. The total of benefits for a

month under sections 223 and 202 of the Act to which paragraph (a) of

this section applies is reduced monthly (but not below zero) by the

amount by which the sum of the monthly disability insurance benefits

payable on the disabled individual's earnings record and benefits or

payments under a workers' compensation law or plan payable for that

month exceeds the higher of:

(i) Eighty percent of the individual's average current earnings, as

defined in paragraph (c)(3) of this section; or

* * * * *

(3) Average current earnings defined.

(i) Beginning January 1, 1979, for purposes of this section, an

individual's average current earnings is the largest amount computed

under either paragraph (c)(3)(i)(A), (B), or (C) of this section (after

reducing the amount to the next lower multiple of $1 when the amount is

not a multiple of $1):

(A) The average monthly wage (determined under section 215(b) of

the Act as in effect prior to January 1979) used for purposes of

computing the individual's disability insurance benefit under section

223 of the Act;

[[Page 46685]]

(B) One-sixtieth of the total of the individual's wages and

earnings from self-employment covered under the Act, without the

limitations under sections 209(a) and 211(b)(1) of the Act (see

paragraph (c)(3)(ii) of this section), for the 5 consecutive calendar

years after 1950 for which the wages and earnings from self-employment

covered under the Act (see subpart K of this part) were highest; or

(C) One-twelfth of the total of the individual's wages and earnings

from self-employment covered under the Act, without the limitations

under sections 209(a) and 211(b)(1) of the Act (see paragraph

(c)(3)(ii) of this section), for the calendar year in which the

individual had the highest wages and earnings from self-employment

during the period consisting of the calendar year in which the

individual became disabled and the 5 years immediately preceding that

year.

(ii) Method of determining calendar year earnings in excess of the

limitations under sections 209(a) and 211(b)(1) of the Act. For the

purposes of paragraph (c)(3)(i) of this section, the extent by which

the wages or earnings from self-employment of an individual exceed the

maximum amount of earnings creditable under sections 209(a) and

211(b)(1) of the Act in any calendar year after 1950 and before 1978

will ordinarily be estimated on the basis of the earnings information

available in the records of the Social Security Administration. (See

subpart I of this part.) If an individual provides satisfactory

evidence of the actual earnings in any year, the extent, if any, by

which the earnings exceed the limitations under sections 209(a) and

211(b)(1) of the Act shall be determined by the use of such evidence

instead of by the use of estimates.

* * * * *

(5) Computing disability insurance benefits. When reduction is

required, the total monthly Social Security disability insurance

benefits payable after reduction can be more easily computed by

subtracting the monthly amount of the other workers' compensation/

public disability benefits or payments from the higher of paragraph

(c)(1)(i) or (ii) of this section. This is the method employed in the

example used in this section.

(d) Items not counted for reduction. Amounts paid or incurred and/

or a reasonable estimate of amounts to be incurred, by the individual

for medical and/or legal expenses in connection with the claim for

workers' compensation/public disability benefits or payments (see

Sec. 404.408 (a) and (b)) or the injury or occupational disease on

which the workers' compensation/public disability award or settlement

agreement is based, are excluded in computing the reduction under

paragraph (a) of this section to the extent they are consonant with the

applicable Federal, State, or local law or plan. The reduction must

reflect either the actual amount of expenses already paid or incurred

and/or a reasonable estimate of amounts to be incurred, given the

circumstances in the individual's case, of future medical and/or legal

expenses. The total of such expenses will be subtracted from the total

of a settlement agreement prior to the proration of the reduction. Any

expenses not established by evidence required by the Commissioner or

not reflecting a reasonable estimate of the individual's actual future

expenses will not be excluded. These medical and/or legal expenses may

be evidenced by the workers' compensation/public disability award,

compromise agreement, a court order, or by other evidence as the

Commissioner may require. This other evidence may consist of:

(1) A detailed statement by the individual's physician or the

employer's insurance carrier; or

(2) Bills, receipts, or canceled checks; or

* * * * *

(e) Certification by individual concerning eligibility for workers'

compensation/public disability benefits or payments. Where it appears

that an individual may be eligible for a workers' compensation/public

disability benefit or payment which would give rise to a reduction

under paragraph (a) of this section, the individual may be required, as

a condition of certification for payment of any benefit under section

223 of the Act to any individual for any month, and of any benefit

under section 202 of the Act for any month based on such individual's

earnings record, to furnish evidence as requested by the Commissioner

and to certify as to:

(1) Whether he or she has filed or intends to file any claim for a

workers' compensation/public disability benefit or payment; and

(2) If he or she has so filed, whether there has been a decision on

the claim. The Commissioner may rely, in the absence of evidence to the

contrary, upon a certification that he or she has not filed and does

not intend to file such a claim, or that he or she has filed and no

decision has been made, in certifying any benefit for payment pursuant

to section 205(i) of the Act.

(f) Verification of eligibility or entitlement to a workers'

compensation/public disability benefit or payment under paragraph (a).

Section 224 of the Act requires the head of any Federal agency to

furnish the Commissioner information from the Federal agency's records

that is needed to determine the reduction amount, if any, or verify

other information to carry out the provisions of this section. The

Commissioner is authorized to enter into agreements with States,

political subdivisions, and other organizations that administer a law

or plan of workers' compensation/public disability benefits in order to

obtain information that may be required to carry out the provisions of

this section.

(g) Workers' compensation/public disability benefit or payment

payable on other than a monthly basis. (1) Where workers' compensation/

public disability benefits or payments are paid periodically but not

monthly, or are paid in a lump-sum as a commutation of or a substitute

for periodic benefits or payments, the reduction under this section is

made at the time or times and in the amounts that the Commissioner

determines will approximate, as nearly as practicable the reduction

required under paragraph (a) of this section.

(2) The rate at which to prorate the benefits or payments is the

rate in the award if that rate is based on the percentage of the

worker's average weekly wage required by Federal or State law.

Otherwise, the rate to be used is the prior periodic rate or the

State's maximum weekly rate in effect at the time of the injury.

(3) All lump-sum awards, whether for total or partial disability,

for temporary or permanent disability, or for scheduled or unscheduled

disabilities, including loss of body function, will be offset against

Social Security disability insurance benefits as provided in paragraph

(a) of this section.

(h) * * *

(2) * * *

Example: Effective September 1995, Harold is entitled to a

monthly disability primary insurance amount of $507.90 and a monthly

public disability benefit of $410.00 from the State. Eighty percent

of Harold's average current earnings is $800.00. Because this amount

($800.00) is higher than Harold's disability insurance benefit

($507.90), we subtract Harold's monthly public disability benefit

($410.00) from eighty percent of his average current earnings

($800.00). This leaves Harold a reduced monthly disability benefit

of $390.00.

(j) Effect of social security disability insurance benefit or

payment increases. Any increase in benefits due to a recomputation or a

statutory increase in benefit rates is not subject to the reduction for

workers' compensation/public disability benefits or payments

[[Page 46686]]

under paragraph (a) of this section and does not change the amount to

be deducted from the family benefit or payment. The increase is simply

added to what amount, if any, is payable. If a new beneficiary becomes

entitled to monthly benefits on the same earnings record after the

increase, the amount of the reduction is redistributed among the new

beneficiaries entitled under section 202 of the Act and deducted from

their current benefit rate.

(k) Effect of changes in the amount of the workers' compensation/

public disability benefit or payment. Any change in the amount of the

workers' compensation/public disability benefit or payment received

will result in a recalculation of the reduction under paragraph (a) of

this section and, potentially, an adjustment in the amount of such

reduction. For those individuals described in paragraph (a)(1) of this

section who do not meet the conditions specified in paragraph (a)(2) of

this section, any increased reduction will be imposed effective with

the month after the month the Commissioner received notice of the

increase in the workers' compensation benefit or payment (it should be

noted that only workers' compensation can cause this reduction).

Adjustments due to a decrease in the amount of the workers'

compensation/public disability benefit or payment will be effective

with the actual date the decreased amount was effective. For

individuals described in paragraph (a)(2) of this section, any increase

or decrease in the reduction will be imposed effective with the actual

date of entitlement to the new amount of the workers' compensation/

public disability benefit or payment.

(l) Redetermination of benefits--(1) General. In the second

calendar year after the year in which reduction under this section in

the total of an individual's benefits under section 223 of the Act and

any benefits under section 202 of the Act based on his or her wages and

self-employment income was first required (in a continuous period of

months), and in each third year thereafter, the amount of those

benefits which are still subject to reduction under this section are

redetermined. The redetermination will be made unless it results in any

decrease in the total amount of benefits payable under title II of the

Act on the basis of the workers' wages and self-employment income. The

redetermined benefit is effective with the January following the year

in which the redetermination is made.

(2) * * *

(i) The ratio of the average of the total wages (as defined in

Sec. 404.1048(c)) of all persons for whom wages were reported to the

Secretary of the Treasury or his delegate for the calendar year before

the year in which the redetermination is made, to the average of the

total wages of all persons reported to the Secretary of the Treasury or

his delegate for calendar year 1977 or, if later, the calendar year

before the year in which the reduction was first computed (but not

counting any reduction made in benefits for a previous period of

disability); and

* * * * *

[FR Doc. 97-23506 Filed 9-3-97; 8:45 am]

BILLING CODE 4190-29-P