Rescinded May 10, 2018
Federal Register Vol. 83, No. 91, page 21811
SSR 68-78: SECTIONS 228(c)(1) and (h)(2). -- SPECIAL AGE 72 PAYMENTS FOR UNINSURED INDIVIDUALS -- REDUCTION BECAUSE OF ELIGIBILITY FOR GOVERNMENTAL PENSION
20 CFR 404.377
- Payments made by the Veterans' Administration pursuant to 38 U.S.C. 412 to survivors of certain veterans uninsured under title II of the Social Security Act constitute periodic benefits under a "governmental pension system" within the meaning of section 228(h)(2) of the Act, and accordingly, the special age 72 payment to which a survivor of such uninsured veteran is entitled under section 228 of the Social Security Act is subject to reduction by the amount of the Veterans' Administration payment under 38 U.S.C. 412 to which such survivor may be eligible.
Section 228 of the Social Security Act, as amended, provides, as pertinent here, for monthly payments of $40 to certain persons who (1) reached age 72 before 1968, or (2) have at least 3 quarters of coverage, earned at any time, for each calendar year after 1966 and before the year in which age 72 is attained, and (3) file application for such benefits.
Under section 228(c)(1) of the Act, the monthly benefit amount for any individual entitled under this section must be reduced (but not below zero) by the amount of any periodic benefit under a governmental pension system for which he is eligible for such month.
The term "governmental pension system" is defined in section 228(h)(2) of the Act as:
- * * * the insurance system established by this title or any other system or fund established by the United States * * * which provides for payment of * * * (C) annuities or similar amounts payable on account of personal services performed by any individual (not including * * * any payment by the Veterans' Administration as compensation for service connected disability or death). (Emphasis supplied.)
Title 38, United States Code, section 412 provides in pertinent part:
(a) In the case of any veteran --
- (1) who dies after December 31, 1956, and is not a fully and currently insured individual (as defined in section 414 of title 42) at the time of his death; and
(2) whose death occurs --
- (A) while on activity duty, active duty for training, or inactive duty training; or
- (B) as the result of a service- connected disability incurred after September 15, 1940; and
- (3) who leaves one or more survivors who are not entitled for any month to monthly benefits under section 402 of title 42 [section 202 of the Social Security Act] on the basis of his wages and self- employment income but who would, upon application therefor, be entitled to such benefits if he had been fully and currently insured at the time of his death; the Administrator shall pay for such month benefits under this section to each such survivor in an amount equal to the amount of the benefit which would have been paid for such month to such survivor * * * if such veteran had been both fully and currently insured at the time of his death and if such survivor had filed application therefor on the same date on which application for benefits under this section was filed with the Administrator.
The question raised is whether the special benefit payment provided for by title 38, United States Code, section 412, payable by the Veterans' Administration to survivors of certain veterans who died uninsured under title II of the Social Security Act, is a periodic benefit under a "governmental pension system" as defined in section 228(h)(2) of the Act, supra, so as to require a reduction in the amount of the special age 72 payments to which such survivors may be entitled under section 228 of the Act.
From the underscored clause of section 228(h)(2), supra, hereinafter referred to as the "compensation" exception, it seems clear that periodic payments made by the Veterans' Administration to a veteran's survivors because of his service-connected disability or death would, but for the "compensation" exception, be considered to be within the definition of governmental pension system as "similar amounts payable on account of personal services performed by [the] individual" within the meaning of section 228(h)(2), supra. Accordingly, unless such payments fall within the "compensation" exception, they would be payments under a "governmental pension system" as defined in section 228(h)(2). The specific issue, then, is whether payments made pursuant to title 38, United States Code, section 412, constitute payments within the "compensation" exception.
A review of the legislative history of 38 U.S.C. 412, originally enacted as section 405(a) of Public Law 881, 84th Congress, discloses that the House, in approving H.R. 7089 (84th Congress), which bill became Public Law 881, 84th Congress, adopted a section providing that certain deceased servicemen and veterans would be deemed to have died fully and currently insured for purposes of the Social Security Act. The Senate, however, deleted this provision from the measure. In conference, the present text of 38 U.S.C. 412(a), supra, was agreed upon. The report of the conference committee (H. Rept. 2718) in explaining the compromise provision, stated in part:
- The Conference substitute provides that where an individual dies under the circumstances listed above, and does not die both fully and currently insured for purposes of the Social Security Act, the Administrator of Veterans' Affairs shall, upon application, make monthly payments to the survivors of the deceased individual, not otherwise eligible for payments under the Social Security Act on the individual's wage record, in the same amounts as would have been payable to them under the Social Security Act if such individual had died fully and currently insured. See House Report No. 2718, 84th Cong., 2d Sess., p. 13 (1956). The payments agreed upon were in lieu of those the veteran's survivors would receive if he had died fully and currently insured under the Social Security Act.
Moreover, section 405 of Public Law 881, was enacted as part of title IV thereof, captioned "Old-Age and Survivors' Insurance," rather than as part of title II thereof, captioned "Dependency and Indemnity Compensation." This distinction is recognized in the codification of title 38, the catchline at the heading of most sections in subchapter II, chapter 13, referring to "dependency and indemnity compensation" excepting that to section 412, which uses the term "Benefits." In view of this distinction, it would appear clear that Congress intended that the benefit under section 412, supra, was to be in lieu of a social security benefit rather than treated as dependency and indemnity compensation.
Further, in interpreting statutes, a cardinal rule is that the interpretation should not lead to a "harsh, absurd or unjust result" if that can be avoided.
Thus, another very important consideration in determining whether benefit payments made under section 412, supra, come within the "compensation" exception of section 228(h)(2) of the Act, supra, is the effect of a conclusion that they do. If they do, then it would be possible, for example, for the widow of a deceased uninsured veteran who is entitled to the special age 72 payments to receive such payments without reduction while she was getting benefits equal in amounts to the title II widow's benefits she would have received had the veteran died fully insured. On the other hand, if the veteran actually died fully insured, the widow entitled to special age 72 payments would have those payments reduced by the amount of her title II widow's benefits. Thus, the widow of the uninsured veteran would be treated more favorably than the widow of the insured veteran, even if their circumstances were otherwise identical. There is nothing to indicate that Congress intended to confer greater benefit rights with respect to these special age 72 payments on the widow of a deceased uninsured veteran than on the widow of a veteran who died fully and currently insured.
In the light of the foregoing it is held that payments by the Veterans' Administration pursuant to 38 U.S.C. 412, constitute periodic benefits under a governmental pension system to which the exception therefrom as compensation for a service-connected disability or death does not apply.
 38 United States Code section 101(14) provides: The term "dependency and indemnity compensation" means a monthly payment made by the Administrator to a widow, child, or parent (A) because of a service-connected death occurring after December 31, 1956, or (B) pursuant to the election of a widow, child, or parent, in the case of such a death occurring before January 1, 1957.