Question

Calculate the Primary Insurance Amount for an individual who has an Average Indexed Monthly Earnings amount of $5,000 per month.

Answer 1

Every year, the PIA calculation ranges are difference. For 2020 the range is 90% from the first $960, 32% from earnings over $960 but under $5,785, and 15% of monthly earnings over $5,785.

Monthly indexed income is given as $5,000 in the question.

Thus, on first 960*90% = $864

The total earning is below $5,785 and therefore the third slab of 15% won't be applicable , thus the remaining balance after the first 960 i.e. ($5,000 - $960) = $4,040 would have and amount of = 32%* 4,040 = $1,292.8

Total Primary insurane amount (PIA) = ($864+$1,292.8) = $2,156.8

Anser to the same would be $2,156.8