Understanding the Family Maximum Benefit (FMB) and the Combined Family Maximum Benefit (CFMB) with Examples

Below is an article explaining the Combined Family Maximum Benefit (CFMB) with examples, including the nuanced situation where dependents receive benefits based on the earnings records of both spouses.

Understanding the Combined Family Maximum Benefit (CFMB) with Examples

When multiple family members draw benefits based on a worker’s or spouse’s earnings record, the Family Maximum Benefit (FMB) comes into play to ensure the total payout is within allowable limits. However, when both spouses have earnings records and dependents receive benefits on either or both records, the Combined Family Maximum Benefit (CFMB) may apply. This article will walk through how the CFMB works with clear examples.

Family Maximum vs. Combined Family Maximum Benefit

Family Maximum Benefit (FMB): This is the maximum amount that can be paid to family members (spouse, children, or disabled adult children) based on one worker’s PIA. The FMB is calculated using a formula based on the worker’s Primary Insurance Amount (PIA).
Combined Family Maximum Benefit (CFMB): When both spouses have earnings records and dependents receive benefits based on both records, the combined maximum ensures the total payout across both records stays within limits.

How Family Maximum Benefit (FMB) is Calculated

For 2024, the Family Maximum Benefit formula is as follows:

150% of the first $1,556 of the worker’s PIA
272% of the next $444
134% of the next $791
105% of any PIA above $3,040

Example 1: One Spouse with Earnings Record and Dependents

Scenario:

Higher Earner’s PIA: $2,000
Worker’s Own Benefit: $2,000
Spouse’s PIA: $300
Spouse’s Own Benefit: $300
Spousal Top-Off: $1,000 - $300 = $700
Disabled Adult Child (DAC) Benefit: 50% of PIA = $1,000

Family Maximum Calculation (Higher Earner’s PIA = $2,000)

150% of the first $1,556 = $2,334
272% of the next $444 = $1,208

Total FMB = $2,334 + $1,208 = $3,542

Payout Summary:

Worker’s Benefit: $2,000
Spousal Top-Off: $700
DAC Benefit: $1,000

Total Benefits = $2,000 + $700 + $1,000 = $3,700

Since $3,700 exceeds the FMB of $3,542, the dependent benefits (spousal top-off and DAC) must be reduced.

Adjusted Dependent Benefits

Total Dependent Benefits: $1,700
Available for Dependents: $3,542 - $2,000 = $1,542

Proportionate Share:

Spousal Top-Off: 41.2%
DAC Benefit: 58.8%

Adjusted Benefits:

Spousal Top-Off: 41.2% of $1,542 = $635
DAC Benefit: 58.8% of $1,542 = $907

Benefit share is flexible and typically the election is for the child to be paid the maximum because children's benefits are not typically subject to tax.

Final Payout Summary:

Worker’s Benefit: $2,000
Spousal Top-Off: $635
DAC Benefit: $907

Total Paid = $2,000 + $635 + $907 = $3,542

Example 2: Combined Family Maximum with Both Spouses Collecting

Scenario:

Higher Earner’s PIA: $2,000
- Delayed Benefit: $2,160
Lower Earner’s PIA: $300
- Delayed Benefit: $324
Spousal Top-Off: $1,000 - $324 = $676
DAC Benefit: 50% of PIA = $1,000

Combined Family Maximum Calculation

Higher Earner’s FMB (PIA = $2,000):
- 150% of the first $1,556 = $2,334
- 272% of the next $444 = $1,208
  Total = $2,334 + $1,208 = $3,542
  Lower Earner’s FMB (PIA = $300):
- 150% of $300 = $450
Combined Family Maximum (CFMB):
CFMB = $3,542 + $450 = $3,992

Initial Total Benefits to be Paid

Worker’s Benefit: $2,160
Lower Earner’s Benefit: $324
Spousal Top-Off: $676
DAC Benefit: $1,000

Total Benefits = $2,160 + $324 + $676 + $1,000 = $4,160

Since $4,160 > $3,992, the dependent benefits must be reduced proportionately.

Adjusted Dependent Benefits

Total Dependent Benefits = $676 + $1,000 = $1,676
Available for Dependents = $3,992 - $2,000 - $300 = $1,692

Proportionate Share:

Spousal Top-Off: 676 ÷ 1,676 ≈ 40.3%
DAC Benefit: 1,000 ÷ 1,676 ≈ 59.7%

Adjusted Benefits:

Spousal Top-Off: 40.3% of $1,692 = $682
DAC Benefit: 59.7% of $1,692 = $1,010

Benefit share is flexible and typically the election is for the child to be paid the maximum because children's benefits are not typically subject to tax.

Final Payout Summary

Worker’s Benefit: $2,160
Lower Earner’s Benefit: $324
Adjusted Spousal Top-Off: $682
Adjusted DAC Benefit: $1,010

Total Paid = $2,160 + $324 + $682 + $1,010 = $3,992

Conclusion

When both spouses have earnings records and dependents receive benefits, the Combined Family Maximum Benefit (CFMB) applies. In these scenarios:

Each spouse’s PIA is used to calculate their individual Family Maximum Benefit (FMB).
The CFMB is the sum of both spouses' FMBs.
If the total dependent benefits exceed the CFMB, they are reduced to fit within the limit.

This ensures the total payout stays within the combined allowable limit, even when both spouses and dependents are receiving benefits.

By understanding how the CFMB works, families can better plan their Social Security strategies and avoid surprises when multiple dependents are involved.

Created 11/4/2024

By: Norm Haug