The Social Security Administration allows certain family members to receive derivative payments from the eligible family member. These payments are subject to formulas used by the SSA to ascertain maximum benefit levels. The amount is capped at what the SSA calls the Family Maximum Benefit.
Depending on the situation, derivative benefits could be paid to spouses, children, survivors or even parents of an eligible individual. The amount each individual could receive depends on multiple factors including whether the individual is a minor child, disabled adult child, retirement-aged spouse, or parent caring for minor or disabled children. Generally, the maximum amount any one individual can receive is 50 to 80 percent of the amount drawn by the named individual receiving SSA benefits from whom the other claims are derived.
The primary beneficiary’s payment amount is not reduced by derivative claims. For example, if a child makes a claim, the parent will not see a reduction in the amount received. This is true for multiple children or other claimants. The amount of benefits is calculated by a formula using the primary beneficiary’s Primary Insurance Amount, which is the amount the person is eligible to receive if they wait until full retirement age. Essentially, the maximum amount is based upon the earning record. Benefits paid to a divorced spouse do not count toward the FMB, which is an important consideration for many.
Computation of SSA benefits can be complicated, especially when considering FMB questions. Many individuals who are eligible to claim benefits based on a family member fail to do so simply because they are unaware of the possibility. Consulting a qualified and experienced Social Security Disability attorney may help individuals with questions about SSA claims or procedures understand eligibility and computation of benefits.
Source: United States Social Security Administration, “Formula for Family Maximum Benefit.”