Changing the method for calculating quarters of coverage: the impact on workers' insured status

The 1977 Social Security Amendments specified that, beginning in 1978, a worker would be credited with one quarter of coverage for a designated amount of annual earnings. For 1978, a worker received one quarter of coverage (up to a total of four) for each $250 in annual earnings from employment or self-employment. Before 1978, a worker who was paid $50 in wages in a calendar quarter was credited with a quarter of coverage. A person who had $400 or more in self-employment income in a year was credited with four quarters of coverage. Some workers received more quarters of coverage under the new provisions than they would have under the old, and other workers received less. Since a worker's receipt of benefits depends on his or her insured status, which is based on quarters of coverage, this change can affect a worker's eligibility for benefits. This study indicates that if $250 in annual earnings had been required for one quarter of coverage in 1977, more than 2.1 million workers would have had a change in their insured status for disabled worker benefits, and about 700,000 workers would have had a change in their insured status for survivor benefits. Those whose insured status was affected were most likely to have had marginal earnings records--for example, they had four to seven quarters of coverage when six were needed. (This effect was expected when the legislation was passed.) This article examines those whose eligibility for benefits was most likely to have been affected.