Using 2015 earnings for 2016 retirement benefits

Q: I am working through December and have completed my Social Security online application to start retirement in 2016. Will 2015 earnings be used to determine my retirement amount?

A: Your best 35 earning years, adjusted for inflation, are used to compute your SSA retirement amount. Assuming your 2015 earnings are one of these best 35 years, they will be used.

Employers report employee earnings to Social Security annually with W-2 information. Since the employer deadline for providing W-2’s to Social Security is the last day of February (longer if filing electronically), your 2015 earnings will not be immediately available. This is not a problem.

No matter how many years a person has been receiving Social Security benefits, retirement amounts are automatically recomputed every year when new earnings are posted to his or her work record. If new earnings increase benefits, the new amount is retroactive to the start of a year. Reviews generally occur in the fall, after most W-2’s for the prior year are posted to individual work records. This means your 2015 earnings will be on your work record in the fall of 2016, with any resulting benefit increase received retroactively to January 2016.

Especially for people working part-time after retirement, new earnings do not guarantee an increase in monthly Social Security benefits. For an increase, new earnings would have to be better than one of the 35 years already used and increase your overall average earnings.

While emphasizing that all new work is automatically reviewed for a benefit increase, you can make this occur faster by providing a copy of your W-2 to your local Social Security office and requesting a review. Either way, it all comes out the same.

Did you know? Employers can electronically transmit W-2 data to Social Security through SSA Business Services Online (BSO) In addition to reducing paperwork, the filing deadline is extended to March 31 when filing W-2 data electronically. Firms providing payroll services need only register once to transmit W-2 date for all clients. Learn more or register for this free service at

Spousal child-in-care benefits

Q: I recently reached age 62 and start early Social Security in January. I will also receive dependent benefits for our 17-year-old son who is in high school and lives at home. Can my wife receive Social Security on my record now because our son will? She is in her 50’s and working.

A: Based on the information provided, the answer here is no but the question helps showcase a type of spousal benefit that many people are not aware of.

When discussing potential Social Security spousal benefits to either husband or wife, most people think only of a spouse also at least early retirement age of 62. Another variation of spousal benefits is possible to your spouse of any age when a child is receiving Social Security through your work record.

Potential spousal benefits because children are receiving benefits are mentioned in the publication Benefits for Children and in the Retirement Benefits booklet (page 10) which states “However, if your spouse is taking care of a child who is under age 16, or disabled, and gets Social Security benefits on your record, your spouse gets full benefits, regardless of age.”

Since this type of spousal benefit is possible because there is an eligible child under the age of 16 or disabled receiving benefits, the age of the spouse is not a factor for eligibility or amount.

When working full time, many parents who might otherwise be entitled to this type of spousal benefit choose not to file for it. This is because the annual earnings test applies to them and expected earnings could negate any SSA potentially payable. Earnings test amounts for 2016 will be the same as in 2015.

Note that the child receiving benefits must be under age 16 or eligible because of disability. Since the child referred to in the above question is already age 17 with no mention of being disabled, benefits to him would not make his mother eligible for benefits.

When payable, amounts for this benefit are based on the retiree’s full retirement age (FRA) amount, not his or her actual monthly Social Security amount. Child and spouse each receive the same monthly amount of up to one-half of the retiree’s FRA amount. If payable, these spousal benefits are not reduced for age. Estimate your FRA amount with the Retirement Estimator tool in the SSA Retirement Planner or by viewing your SSA Statement through your my Social Security account.

Although this question referred to Social Security retirement benefits, the same type of spousal benefit is available if a worker receives Social Security disability benefits, with an eligible child as above.

If the worker is deceased, Social Security survivors benefits could be payable to a widow or widower of any age if an eligible child younger than age 16 or disabled received benefits.

Another important item is related to this original question. If you receive Social Security benefits for someone else, you are that person’s representative payee and responsible for accounting to Social Security about how benefits are used. As payee, the father in this question is responsible for making any necessary reports concerning his son’s eligibility to Social Security. A booklet about being a representative payee is here.



Military Service and Social Security

Veteran’s Day is almost here so today’s topic is military service and Social Security. As usual, follow the Social Security website links for more information.

Q: Can I receive both Social Security and military retirement?

A: Yes. Active duty military service has been Social Security covered employment since 1957. Generally, there is no reduction of your Social Security benefits because of your military retirement. More about this is here within the SSA Retirement Planner section.

Q: Do I need Medicare if I have VA medical coverage?

A: The choice is yours. Medicare Hospital Insurance (Part A) does not have a monthly premium and nearly everyone eligible enrolls. Medicare Medical Insurance (Part B) does have a premium so people choose to enroll and pay a monthly premium.

Keep in mind at least two items when making your decision. First, you might not always be near a VA medical facility when services are needed. Second, how does your other medical coverage work with Medicare? For example, according to the TRICARE website, a retiree or family member of a retiree must enroll in Medicare Part B when eligible to remain eligible for TRICARE. Do your research. The Medicare website is

Q: Am I automatically eligible for Social Security disability if receiving VA Compensation?

A: No. These are separate programs with different rules. For Social Security disability, you must meet work and medical requirements as outlined in the SSA Disability Planner section.

Military service members can receive expedited processing of their SSA disability claim.

The Wounded Warriors expedited process is for service members if disabled while on active military service on or after October 1, 2001, regardless of where the disability occurs. You can apply for Social Security disability benefits at any time while in military status or after discharge, whether you are still hospitalized, in a rehabilitation program, or undergoing outpatient treatment in a military or civilian medical facility.

SSA disability applications of veterans with a VA compensation rating of 100 percent Permanent and Total (P&T) impairment also receive expedited review.

Q: Is it true that veterans get a special increase to their Social Security benefit amount?

A: No, but this is a very popular myth. I often get emails referring to this “secret” SSA benefit for veterans.

In summary, for service before 1957, when Social Security coverage began for military service, veterans received a special credit adding to their overall lifetime earnings record. This was not a direct increase to a benefit amount but it could increase that amount. Small sums were involved. Doing this was routine and automatic. Requesting it was not needed.

Now ended, from 1957 – 2001 these additions to overall lifetime earnings continued in different ways with a maximum annual amount of $1,200 added to earnings. Again, this was not a direct benefit increase, just an increase to the persons overall earnings record. Details are in the factsheet Military Service and Social Security.


Filing online for retirement after Medicare


Q: Can I use the Social Security online retirement application even if I am already on Medicare?

A: Yes, you can. Complete your retirement application about 3 months before you want benefits to begin.

You can file online for Social Security retirement, just for Medicare or for both retirement and Medicare.

If already receiving Social Security benefits at age 65, you cannot file online for Medicare because Medicare information is automatically sent to you.

More about the Social Security online retirement is at

Other online SSA applications are available to apply for benefits as a spouse or for disability.

More about Social Security online services is at



How much do you give up for early retirement?

Q: How much is my Social Security retirement reduced if I start early?

A: This depends on how many months younger you are than full retirement age (FRA), also called normal retirement age. Full retirement age is the age at which a person may first become entitled to full or unreduced retirement benefits. No matter what your FRA is, you may start receiving benefits as early as age 62 or as late as age 70.

Starting retirement when younger than FRA is called early retirement. Starting when older than FRA is called delayed retirement. Social Security retirement amounts are partly based on the number of months that you are younger or older than FRA.

Based on year of birth, full retirement age ranges from age 65 to 67 under current legislation. It is age 66 for birth years 1943 – 1954. The “find your retirement age” section of the SSA Retirement Planner shows the month-by-month percentage of benefit received from age 62 to FRA for any year of birth. Monthly changes are small but they add up over time.

To use these charts, you need to know your estimated benefit amount at full retirement age. For this, use the Retirement Estimator. An estimated amount is also shown on your Social Security Statement, available when you create a my Social Security account.

Using a full retirement age of 66, starting retirement exactly at age 62 results in a monthly benefit reduced to 75 percent of your FRA amount, a permanent 25 percent reduction. Starting with a different month changes this. For example, starting at age 62 plus 4 months results in 76.7 percent of the FRA amount and starting at 62 plus 5 months results in 77.1 percent being received.

By comparison, if born in 1956 your FRA is age 66 and 4 months. Now when starting retirement at age 62, the monthly amount received is reduced to 73.3 percent of the FRA amount. Starting retirement at age 62 plus 4 months results in 75 percent received and starting at 62 plus 5 months results in 75.4 percent of FRA amount being received. This is because you would receive reduced benefits for more months.

As a general rule, early or late retirement will give you about the same total Social Security benefits over your lifetime. If you retire early, the monthly benefit amounts will be smaller to take into account the longer period you will receive them. If you retire late, you will get benefits for a shorter period of time but the monthly amounts will be larger to make up for the months when you did not receive anything.

The following image shows part of the month-by-month reduced benefit percentages for FRA of 66. Actual FRA charts provide this month-by-month, age 62 to FRA, for the different full retirement ages.


Retirement earnings test amounts for 2016

Q: Is the amount I can earn in 2016 before my Social Security retirement is reduced known yet?

A: Yes. The 2016 amounts will be the same as for 2015. They are not changing.

The annual retirement earnings test concerns how your own employment earnings in a year affect your Social Security in that year. The earnings test includes only your personal gross wages or net self-employment for the full calendar year. Your other income or income of a spouse is not applicable.

As of today, the “Getting Benefits While Working” page of the Social Security Retirement Planner shows only 2015, but the same information will apply for 2016.

Changes to annual earnings test amounts are related to cost-of-living adjustments (COLA). Since there will not be a 2016 COLA change (press release here),  amounts earnable in 2016 before Social Security retirement or survivors benefits are reduced will not change either. Read this in COLA information here, which states:

 “Will the retirement earnings test exempt amounts change in 2016?

No. The earnings limit for workers who are younger than “full” retirement age (age 66 for people born in 1943 through 1954) will remain $15,720. (We deduct $1 from benefits for each $2 earned over $15,720.)  

The earnings limit for people turning 66 in 2016 will stay at $41,880. (We deduct $1 from benefits for each $3 earned over $41,880 until the month the worker turns age 66.) There is no limit on earnings for workers who are “full” retirement age or older for the entire year.”

The earnings test does not apply to people receiving Social Security benefits due to their own disability. If receiving due to disability, contact Social Security before working.


Medicare Part D (Prescription Drug) Open Season & Extra Help

The Medicare Part D (prescription drug coverage) plan open enrollment period started October 15 and ends December 7.

Learn about Part D at the Medicare website,  The Medicare homepage shows the Open Enrollment dates with a link labeled “Review your health and drug coverage options” that takes you to the Medicare Plan Finder. There you can complete a general search of plans in your ZIP code or a more detailed search based on more personal information. The 2016 plans are now available to review and compare.


Review your existing Part D plan each year. Insurance plans and your specific needs change. A plan that previously fit your needs might not be your best choice now. You need a list of your medicines, including dosages and frequency, to compare plans. Spouses can choose different plans.

Social Security representatives cannot help you choose a Part D prescription drug plan. Along with the official Medicare website tools to help you, state agencies might be available to help you. The North Dakota Insurance Department website has a schedule of statewide Part D enrollment events and the Minnesota Board of Aging, Health Insurance Counseling Program, helps too.

The Part D (Drug Coverage) page of the Medicare website contains a “Find someone to talk to” link, usually the State Health Insurance Assistance Program (SHIP) and others.

Everyone currently enrolled in Medicare can purchase a Part D prescription drug plan. Unlike Medicare Part A (Hospital) or Part B (Medical), Part D plans are purchased through private insurers. You shop for the plan that best suits your needs. Joining a Medicare prescription drug plan is voluntary and participants pay an additional monthly premium for the coverage.

Although Social Security representatives cannot help you choose a Part D plan, the agency does administer the Extra Help portion of Medicare Part D for people with limited income and resources.

Extra Help is an income and resource based subsidy to help pay for part of monthly premiums, annual deductibles, and prescription co-payments. More about Extra Help is at

Financial requirements for the Prescription Drug Coverage Extra Help vary in part if you have earnings, support other family members or if you live in Alaska or Hawaii. General  requirements  include that:

Your resources must be limited to $13,640 for an individual or $27,250 for a married couple living together. Resources include such things as bank accounts, stocks and bonds. We do not count your home, car or any life insurance policy as resources; and

Your annual income must be limited to $17,655 for an individual or $23,895 for a married couple living together. Even if your annual income is higher, you still may be able to get some help. Some examples where you may have higher income and still qualify for Extra Help include if you or your spouse: Support other family members who live with you, have earnings from work, or live in Alaska or Hawaii.  

The Extra Help website page has a section to help you decide if you might qualify for Extra Help assistance and has a list of information that you will need.  Follow the See if you qualify for Extra Help and apply link to use this. Keep in mind that using only the “Find out if you qualify” tool” is not an application and does not provide a formal decision. An Extra Help application can be completed regardless of the “see if you qualify” results. Complete an Extra Help application at the same link if desired.

An Extra Help application can be completed at any time, not only during the Part D open enrollment period. 

People with Medicare and receiving Supplemental Security Income (SSI) are automatically eligible for Extra Help and should not apply.

Applying for the Part D Extra Help program does not enroll you in a prescription drug plan. Enrolling in a Part D prescription drug plan is separate and different from applying for the Extra Help program.

You can also call the SSA national toll-free number, 1-800-772-1213 (TTY 1-800-325-0778), or your local office for Part D Extra Help information and to apply.

Part D Exta Help

No 2016 Social Security or SSI cost-of-living adjustment (COLA)

There will not be a 2016 Social Security or Supplemental Security Income cost-of-living adjustment (COLA). The following is from today’s Social Security press release.

Law Does Not Provide for a Social Security Cost-of-Living Adjustment for 2016 

With consumer prices down over the past year, monthly Social Security and Supplemental Security Income (SSI) benefits for nearly 65 million Americans will not automatically increase in 2016. 

The Social Security Act provides for an automatic increase in Social Security and SSI benefits if there is an increase in inflation as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The period of consideration includes the third quarter of the last year a cost-of-living adjustment (COLA) was made to the third quarter of the current year. As determined by the Bureau of Labor Statistics, there was no increase in the CPI-W from the third quarter of 2014 to the third quarter of 2015. Therefore, under existing law, there can be no COLA in 2016. 

Other adjustments that would normally take effect based on changes in the national average wage index also will not take effect in January 2016. Since there is no COLA, the statute also prohibits a change in the maximum amount of earnings subject to the Social Security tax, as well as the retirement earnings test exempt amounts. These amounts will remain unchanged in 2016. The attached fact sheet provides more information on 2016 Social Security and SSI changes. 

The Department of Health and Human Services has not yet announced Medicare premium changes for 2016. Should there be an increase in the Medicare Part B premium, the law contains a “hold harmless” provision that protects approximately 70 percent of Social Security beneficiaries from paying a higher Part B premium, in order to avoid reducing their net Social Security benefit. Those not protected include higher income beneficiaries subject to an income-adjusted Part B premium and beneficiaries newly entitled to Part B in 2016. In addition, beneficiaries who have their Medicare Part B premiums paid by state medical assistance programs will see no change in their Social Security benefit. The state will be required to pay any Medicare Part B premium increase. 

Information about Medicare changes for 2016, when available, will be found at 

For additional information, please go to

Need a letter proving your benefit amount? Easy.

Q: I need a letter proving the amount of my Social Security. How can I get this?

A: When needed, benefit verification letters prove the amount of your Social Security or Supplemental Security Income (SSI) income for any purpose whether you are applying for a mortgage loan, heating assistance or something else.

Based on the information you chose to include, a verification letter can also confirm your current Medicare health insurance coverage, age or type of benefits received.

The easiest way, if you created an online my Social Security account, is to request and download a benefit verification letter online at your convenience.

For Social Security, SSI or Medicare, you select information to be included in the verification letter. For example, you can show the type of benefit received with the amount, the amount only, or even that you have an application for benefits pending. For this and other online services, create your personal my Social Security account at

You can also telephone the national SSA telephone number, 800-772-1213, (TTY) 800-325-0778, 7:00am – 7:00pm standard business days, or contact your local office for a benefit verification letter. Allow several days mailing time for either of these.

Fast Facts & Figures About Social Security, 2015

FastFacts2015-2 The new Fast Facts & Figures About Social Security, 2015 booklet is now available.

I like this booklet. Perhaps you will too.

Issued annually, this short booklet answers frequently asked questions about the programs administered by the Social Security Administration (SSA). It highlights basic program data for the Social Security retirement, survivors, and disability (OASDI) and Supplemental Security Income (SSI) programs.

Tables and charts illustrate the range of program beneficiaries, from the country’s oldest to its youngest citizens. In all, about 64.2 million people received some type of Social Security benefit or SSI assistance in 2014.

Different topics are easily tabbed for your interest. All are worth your time. In particular, see the “Relative Importance of Social Security” chart in the “Income of the Aged Population” section.