The claimant was born September 13, 1911 and had worked as a casualty insurance salesman. He first became entitled to social security retirement benefits in September, 1974.

The social security administration ruled that his benefits for the years 1979 through 1982 were subject to work reductions for excess earnings in those years.

The claimant countered that he had not sold any new casualty policies since 1977 and that all his income was from residual commissions from policies he had previously sold. He stated that he did not provide “significant services” in maintaining these policies. The system for renewing the policies was fully automated. He only went into the office for an hour to an hour and a half a week to look over the computer renewals and file them away.

The agency determined that his services were significant. They made a distinction between casualty and life insurance policies. Casualty insurance policies cover a different risk, have a shorter duration (6 to 12 months subject to new terms upon expiration), and there is typically no vested right to a renewal commission for the agent who sold the original policy. Each renewal is similar to selling a new policy, as no new commission is earned unless the agent performs some service. Moreover, the claimant had no employees or outside contractors. His business expenses for meals, travel and entertainment were also indicative of having performed significant services.

Because the amount of the claimant’s commissions for the years in question exceeded the exempt amounts, work deductions were imposed against his benefits.

See Social Security Ruling (SSR) 88-9a.

This material should not be construed as legal advice for any particular fact situation, but is intended for general informational purposes only. For advice specific to any individual situation, an experienced attorney should be contacted.