Chris Stein, CFP®
Social Security Child-In-Care Spousal Benefits.
A reader from Oregon asks for clarification regarding Social Security's Child-In-Care spousal benefit.
I'm doing some research for a family about the Child-In-Care spousal benefit. The family meets the requirements as (1) Dad is 63 years old and receiving his Social Security retirement benefits. (2) Child is 17 years old and receiving 50% of Dad's Primary Insurance Amount (PIA). (3) Child is permanently disabled and cared for by Mom and Dad in the family home. (4) Mom has contacted SSA and completed the initial application by phone. Here's the question: the SSA worker was reluctant to start the application by phone because Mom (at age 56) is still working and makes just under $6,000 per month, gross income. The SSA worker thought this income level would prevent Mom from being eligible for the Child-In-Care spousal benefit. However, we can't find anything on the SSA website or in our research about the spouse's income being a factor. Mom is aware of the "family maximum benefit" that would likely limit how much she can receive. However, that is based on Dad's PIA, not Mom's income. Can you point us to information on if and how the spouse's income is a factor in eligibility for Child-In-Care spousal benefits?
Let me start with what the Child-in-Care spousal benefit is, which requires that I review the spousal benefit itself.
When a Social Security participant (affectionately referred to as the "number holder") is entitled to a retirement benefit and has started that benefit, his spouse has the potential of a spousal benefit based on his record if the spouse meets the criteria. And that is your case here.
The criteria for the spouse to receive regular spousal benefits include the number holder having filed for retirement benefits and the spouse having reached age 62. That allows the spouse to receive a certain percentage of the number holder's Social Security benefit, depending on the spouse's age when benefits start.
Here's where the Child-In-Care spousal benefit kicks in. Essentially, if you are caring for a minor child of the number holder, Social Security waives the age 62 requirement for the spouse and doesn't reduce the benefit for claiming it before the spouse's Full Retirement Age (FRA). In other words, if you are caring for a qualifying child of the number holder, you can collect the full spousal benefit at any age. And a child qualifies if under the age of 16 or permanently disabled. In your case, the child is 17 but is permanently disabled, so the qualification is met.
You mention the family maximum. Yes, the family maximum will limit the combined child-plus-spousal benefits earned from the father's record. That's not the topic here, so I'm not going too far down that rabbit hole. But it's true that, even though the mother would be entitled to a full spousal benefit, the family maximum is likely to reduce it. No numbers were shared with us, so I can't predict that cap. But it's certainly a factor.
The essence of your question is that no evidence can be found that the Child-In-Care spousal benefit would be affected by the fact that the mother is working. I believe the reason it's so hard to find on the Social Security website, despite all the research, is that nothing about the Child-In-Care spousal benefit makes it an exception to the earnings test. So nothing is mentioned.
The earnings test applies to all benefits you might receive if you're younger than your FRA. It is at one's FRA that the earnings test goes away. So, yes, the fact that the Mom is making $6,000 a month will eliminate any potential spousal benefit, whether as Child-In-Care or any other Social Security benefit. Her earnings are large enough to wipe out any such benefit that she could receive.
So that's the short answer: the earnings test applies to all benefits received before FRA, and it determines whether any benefit is received, including the Child-In-Care spousal benefit.
You might wonder why Social Security grants spouses the ability to collect this benefit at a young age if it's just going to be wiped out by working. (The mother, in this case, is only 56.) The answer is in the title of the benefit: Child-In-Care spousal benefit. The benefit is being paid because (1) the spouse is likely at home or working less to care for the disabled child, and (2) the number holder is no longer working because he is claiming a Social Security retirement benefit.
This is a government benefit to help care for a child who is a financial burden on the family because that care prevents the spouse from going out and working. I believe that's why the benefit is not exempted from the earnings test. (It's not meant to pay someone who's making $6,000 a month.)
The good news is the child will still receive its own benefit in this case, which is 50% of the father's PIA. In addition, the family is probably not receiving much less than if they split that benefit between the child and mother – because of how the family maximum works. So, in short, the total "harm" of a reduced benefit is quite likely minimal, although she is being denied the Child-In-Care spousal benefit because of the family maximum.
One last note: you may have received clarification from Social Security based on a mentioned upcoming phone conversation with them. I hope they gave the same information as I just did – that the earnings test is what's preventing the Child-In-Care spousal benefit from being paid to the spouse. If Social Security shared anything different and you reach out to us again, we will be sure to share that with our readers.