Dec 22, 2024
In the wee hours of the morning on Saturday December 21, the Senate passed the Social Security Fairness Act by a vote of 76 to 20. The legislation had already passed by a vote of 327 to 75 in the House. All that remains for the bill to become law is for President Biden to sign it. Since he is on record for saying that he supports the bill and is prepared to sign it, there is every expectation that will happen, and soon.
The legislation eliminates two provisions that have tortured millions of public service employees and their families for decades. The Windfall Elimination Provision (WEP) reduced Social Security benefits for people who receive pensions from “noncovered” employment, meaning earnings that were not subjected to Social Security taxes. The Government Pension Offset (GPO) was even more punishing, dramatically reducing or even eliminating survivor benefits that might otherwise have been available to spouses and children. Groups most affected by WEP and GPO were police, firefighters, and public school teachers for whom contributions were made into special pension programs instead of Social Security. Also affected were some people who became entitled to pensions based on work in foreign countries as well as Social Security benefits based on U.S. earnings. Now it appears certain that both of those provisions will soon be history.
The effective date of the legislation will be retroactive to January 1, 2024. The changes, though welcomed by those directly affected, will be of little solace to people who were deprived of tens of thousands of benefit dollars over decades, including many who may have died before this legislation becomes effective.
You can expect a splash of news coverage over the next few days, before the topic gets moved off the front pages by other items of interest. You can also expect that it will take the Social Security Administration weeks and maybe months to ramp up their capacity to deal with the changes and make adjustments in benefits. The good news is that when the extra dollars begin to flow into beneficiaries’ bank accounts, they should be be paid in full retroactively.
Oct 14, 2021
The bad news is that inflation is up – way up – year over year. The good news is that yesterday SSA announced a 5.9% Cost of Living Adjustment (COLA) for 2022. This is the largest increase since the 7.4% COLA in 1982 and, more recently, the 5.8% adjustment in 2009.
The Social Security Act provides a formula for determining each COLA, based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The just-announced 5.9% COLA was determined by the percentage increase in the average CPI-W for the third quarter of 2021 over the average for the third quarter of 2020.
The increase is applied to all Primary Insurance Amounts, and thus all Social Security benefits, beginning with the December 2021 benefit, which shows up in the recipient’s bank account in January 2022. The COLA also applies to Supplemental Security Income (SSI) benefits for January 2022.
The contribution and benefit base (aka the “wage base”), which is the maximum amount of earnings that is subject to Social Security taxes in a given year, has also increased: from $142,700 in 2021 to $147,000 in 2022. The wage base is tied to changes in the National Average Wage Index rather than to the COLA. This is another bad news/good news situation for high wage earners: yes, $4,300 more in earnings will be subject to OASDI taxes, but potential benefits will also be higher.
Here is a link to the 2022 Social Security Fact Sheet, which shows year over year increases in a variety of automatic adjustments. Medicare premium adjustments have not yet been announced, but that information should be available in the coming weeks.
Sep 22, 2020
Until mid-March of this year there were three ways of applying for Social Security benefits, or for enrolling in Medicare:
- In person at your local SSA office:
- By telephone, using either the national toll-free number (1-800-772-1213) or calling your local office (https://secure.ssa.gov/ICON/main.jsp); or
- Online through the ssa.gov website
On March 16, 2020, SSA announced that as of the following day local offices would be “closed to the public for in-person service.” https://www.ssa.gov/news/press/releases/2020/#3-2020-2 As a result, since March 17 anyone wishing to apply for benefits has been limited to telephone or online filing.
FILING ONLINE FOR RETIREMENT (INCLUDING SPOUSAL) OR DISABILITY BENEFITS[1]
You must have established a “my Social Security” account before you are permitted to file online. The advantages of filing online are: (1) you can do it when it’s convenient for you; (2) you do not have to travel to the local office; (3) you don’t need an appointment; and (4) you will not have to wait for a claims rep to answer the phone. On the other hand, there is no claims representative to speak with if you get stuck in the middle of the application.
I filed online for my own benefits several years ago. The process went smoothly and took less than 40 minutes: far less time than most folks spend getting to their local office and finding a parking space, or waiting on the telephone to reach a claims representative.
On the other hand, my wife filed her application (pre-COVID) online, with me at her side. Although we did everything correctly, a poorly trained representative in our local office reviewed the online submission and made a mess of the process: it took several phone calls and three subsequent trips to the local office to set things straight.
If you are reasonably confident in your ability to apply online, I suggest you give it a shot. If you run into difficulty during the process, take a break and look for help, rather than submitting an application that may be problematic. I increasingly refer clients to a professional service where, for a very modest fee, an experienced professional will (by phone) walk you through the online application line by line as you make the entries on your computer. Virtually everyone who has used this service has indicated they were glad they did.
RESTRICTED APPLICATION FOR SPOUSAL BENEFITS ONLY: if you were born before January 2, 1954 and are eligible to file a restricted application, be sure to make it absolutely clear that you are not applying for your own benefits, but rather for spousal benefits only.
- Be sure to check “Yes” next to the following question: “If you are eligible for both retirement benefits and spouse’s benefits, do you want to delay the start of retirement benefits?”
- You might also say something in the Remarks section like: “I am restricting the scope of my application to spousal benefits only. I want to delay receipt of my own retirement benefits to earn Delayed Retirement Credits.” or “I wish to exclude my own retirement benefits from the scope of this application.”
Before you actually hit the submit button, be sure to print out a copy of the application. This enables you to make sure the application accurately reflects what you intended to do. It will also serve as evidence of what you did in case there is a dispute down the road.
APPLYING FOR BENEFITS BY PHONE
You may call the national toll-free number (800-772-1213), or you may call your local office after first locating a phone number at https://secure.ssa.gov/ICON/main.jsp. Whichever number you call, expect a lengthy wait. Eventually you will be rewarded when a live person answers the phone. This is generally not a cause for celebration, as it is likely that all you will be able to do at the moment is to make an appointment to speak with a claims representative at a later date.
Even if you cannot get an appointment for the month in which you planned to begin benefits, calling for the appointment should entitle you to a “protective filing.” This means, for example, that if you call SSA in April to claim benefits that month and they can’t give you an appointment until June or July, once you do complete the application SSA will backdate it to be effective as of the month in which you called for the appointment (i.e., April). Be sure to ask for the protective filing when you call for the appointment, and try to get a written confirmation if possible, to avoid having to fight for it several months later.
When the actual filing appointment begins, a claims representative will ask questions, you will answer them, and the rep will record your answers on the application. Some claims representatives are excellent, but others may be inexperienced and/or inadequately trained – and you might not be able to tell the difference. Many applicants have received information and/or recommendations from claims representatives that was either not in the applicants’ best interest, was flat-out wrong, or both.
When you have completed the application over the phone, be sure to ask for a written copy of the document if the representative does not offer it.
PREPARING TO FILE AN APPLICATION
The most important preparation you can undertake is to decide on your claiming strategy before beginning the application process. It may be a “no-brainer” as far as you are concerned, but you should fully understand the range of claiming strategies available to you before making your decisions, ideally with input from a Social Security expert and your financial planner.
Some representatives may try to talk you out of what you’ve already decided upon by insisting that you should do something that will produce a higher immediate monthly payment. This can happen during a phone application session, or even several days after you have submitted an online filing. I recommend that you decide on your strategy in advance, go in well prepared, and then hold your ground if the rep suggests something different. At least do yourself the favor of getting a second opinion from a Social Security expert before allowing yourself to be persuaded to change course by a stranger who knows little about your situation.
SSA suggests that you gather certain information and have it on hand when you file no matter which method you use. https://www.ssa.gov/forms/ssa-1.html One of the more important items is “Your bank or other financial institution’s Routing Transit Number and the account number.” Benefits are paid by direct deposit into an account you designate, so it’s critical to get this piece right the first time.
I found one “trick” question when I applied for benefits: “Have you used any other names?” My first reaction was “of course not.” Then I recalled that when I got my first Social Security card at age 14 I used my full middle name. Somewhere along the way I dropped the middle name and began using just my middle initial, which appears on my current Social Security card.
Finally, remember that just before you sign you will have to attest, under penalty of perjury, that everything in the application is true and correct to the best of your knowledge, and declare your understanding that “anyone who knowingly gives a false statement about a material fact in this information … commits a crime and may be subject to a fine or imprisonment.”
Keep in mind that if you do make a mistake SSA will make you pay for it, and if SSA makes a mistake, SSA will still make you pay for it. Sometimes the mistake is discovered several years after you have begun receiving benefits. More often than not, SSA discovers that they have overpaid you and they want their money back NOW. If you cannot pay them in a lump sum, they have the power to collect their pound of flesh out of your benefit payments until the over-payment is recovered.
At some point the pandemic will end and in-person filing will be added back to the menu of claiming options. However, online filing will continue to provide the most convenient and reliable method of applying for the benefits you have paid for over your decades-long working career.
Peter M. Weinbaum
The Social Security Maven®
[1] As of this writing (September 22, 2020), SSA does not accept online applications for survivor benefits.
For assistance in identifying your claiming options and advice on filing, fill out the online questionnaire and submit it after attaching the requested earnings information. Clicking on the services page will lead you to a description of the various ways I work and the fee structure.
