Text Version:
Widow(er)'s Initial
Minimum Amount - Continued
- As an example of the widow(er)’s initial minimum amount, assume the
employee was receiving $1,500 at death ($1,000 tier I and $500 tier II).
- Under previous law, the widow(er) would have initially received $1,250
($1,000 tier I and $250 tier II).
- Under current law, the widow(er)’s initial minimum amount is $1,500
($1,000 tier I, $250 tier II and $250 additional amount).
- With an initial tier I COLA of 2.3 percent, widow(er)’s tier I rises to
$1,023 and with an initial tier II COLA of 0.7 percent, tier II rises to
$251.75. The additional amount is reduced by the dollar amount of the tier I
and tier II increases to $225.25.
- After 9 COLAs, the widow(er)’s tier I is $1,226, the tier II is $266.19
and the additional amount is $7.81.
- After the 10th COLA, there is no longer an additional amount, as the $1,254
tier I and $268.05 tier II total $1,522.05 and now exceed the initial minimum
amount of $1,500.
Notes:
- Assumes employee died in 2007.
- Assumes first COLA of 2.3% tier I and 0.7% tier II. Assumes future COLAs
to also be 2.3% tier I and 0.7% tier II.
- The $250 additional amount is reduced each year by the dollar amount of
the increases applied to tier I and tier II. For example, if tier I increases
by $23 (2.3% cost-of-living) to $1,023 and tier II by $1.75 (0.7%
cost-of-living) to $251.75, the additional amount will decrease by $24.75 to
$225.25. The total amount payable of $1,500 will not change. The annuity
payable will increase only when the tier I and tier II amounts with their
subsequent cost-of-living increases exceed $1,500.
- Assumes no reductions of any kind. If there are Medicare premiums, for
example, total amount is lowered for amount of premium. If premium increases
from year to year, total amount will be reduced by the increase in the
premium.
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