What pensions will affect Social Security? Government Pension Offset

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Government Pension Offset (GPO) is today’s topic, concluding the series about pensions that can affect Social Security benefits.  

Earlier posts established that most pensions have no impact on Social Security benefits because they are based on work covered by Social Security. Exceptions are government pensions from work not covered by Social Security. This mainly involves federal, state or local government pensions. 

Since 1983, a government pension from work not covered by Social Security can affect your Social Security in two ways. The Windfall Elimination Provision (WEP), involves benefits payable to you on your own SSA record. A different formula is used to compute the Social Security benefit amount when the WEP is involved. Use the separate WEP calculator on the Social Security website if the WEP will affect you.  

The Government Pension Offset (GPO) affects Social Security benefits payable to you based on the SSA record of someone else. Unlike the  WEP, the Government Pension Offset is a direct offset against potential Social Security benefits. Some or all of your Social Security benefit as a spouse, widow or widower may be offset because of your government pension.

The GPO reduces the amount of your Social Security spouse’s, widow’s or widower’s benefits by two-thirds of the amount of your government pension. For example, if you receive a monthly civil service pension of $600, two-thirds of that, or $400, must be used to offset your Social Security spouse’s, widow’s or widower’s benefits. The GPO is based on the gross amount of your government pension. 

Why is there a Government Pension Offset? Social Security law has always required that a benefit paid to a person based on someone else’s work record be offset dollar for dollar by the amount of his or her own SSA retirement benefit. This includes benefits to wives, husbands, widows, widowers and others.

 Before the 1983 GPO legislation, a person receiving a government pension from work not covered by Social Security was not subject to the same dollar for dollar offset.This person could potentially have received a full SSA spousal or survivor benefit plus their government pension. 

With the Government Pension Offset provision, Congress intended to ensure that when determining the amount of spousal benefit, government employees who did not pay Social Security taxes would be treated in a similar manner to those who worked in the private sector.  

Exceptions exist to when the GPO applies. If the GPO might affect you, more information, including these exceptions, is in Government Pension Offset, SSA publication 05-10007, available from any SSA office and online at http://www.socialsecurity.gov/pubs/10007.html#a0=3.

 

Enrolling in Medicare based on age or disability.

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Q: Is Medicare coverage the same whether received for age or disability? How do I enroll in Medicare? 

A: Medicare Hospital (Part A) and Medical (Part B) provide the same individual coverage whether based on reaching age 65 or because the person receives Social Security disability benefits. Based on age, Medicare begins at age 65. People are automatically enrolled in Medicare after two years if receiving Social Security disability, earlier if benefits are because of Lou Gehrig’s disease (amyotrophic lateral sclerosis). People with permanent kidney failure obtain Medicare coverage if receiving maintenance dialysis or a kidney transplant and meet other requirements. Medicare does not provide family coverage. 

Medicare Hospital (Part A) and Medical (Part B) coverage is the same across the entire country. Medicare Prescription Drug Coverage (Part D) varies based on the specific policy purchased. 

How you enroll in Medicare depends on whether or not you receive monthly Social Security benefits. If already receiving benefits, a Medicare card is automatically mailed to you a few months before your birthday. Unless you instruct otherwise, you are enrolled in Medicare Part A (Hospital) and Part B (Medical) effective with the first day of the month you reach age 65. 

If not receiving monthly benefits, you must take action to enroll in Medicare.  For this, complete your Medicare application online or speak to a SSA representative. 

To use the online Medicare application, you must be at least age 64 years and 8 months old, not currently have any Medicare coverage, and do not want to start receiving Social Security benefits yet. You can apply for Medicare and apply online for Social Security benefits later. Completing the Medicare application online takes about 10 minutes and, in most cases, you are finished once your application is submitted electronically. There are no forms to sign and usually no documentation is required. Based on zip code, your local Social Security office will process your application and contact you if more information is needed. Otherwise, you will receive your Medicare card in the mail. 

If you prefer speaking directly with a SSA representative, make an appointment by calling the Social Security national toll-free number, 1-800-772-1213 (TTY 1-800-325-0778) or your local office. National number hours are 7:00am – 7:00pm, standard business days. Local office hours vary, but are usually 9:00am-3:30pm. Appointments normally go to your local office for completion. You can choose to conduct it by telephone or by visiting the office. 

For more information about applying for Medicare only and delaying retirement benefits, read Applying for Medicare Only – Before You Decide.

General Medicare information is at http://www.socialsecurity.gov/pgm/medicare.htm and in Medicare (SSA publication 05-10043), available online or from any SSA office.

Social Security & Open Government

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On his first day in office, President Barack Obama issued a call for increased openness in government. The White House issued the Open Government Directive, calling upon each Federal agency to create a plan for how it intended to increase and accelerate openness in its programs and operations. That led to the first SSA Open Government Plan in 2010.

Early in April 2012, Michael J. Astrue, Commissioner of Social Security, presented the updated Open Government Plan 2.0.  It highlights successes from the 2010 plan and reflects Social Security commitment to increase transparency, expand participation and collaboration, implement initiatives, and make open government sustainable.  It reports on planned actions and commitments contained in the first Open Government Plan. Transparency includes a commitment to sharing information to help public understand SSA programs and to hold the agency accountable for performance. 

A visit to the SSA Open Government Initiative website can bring you to a topic that interests you whether or not you want to read the plan. Find links to agency internal and budget information. Read Trust Fund information. At the data tab, learn about claims volume, phone service, Internet usage, and program accuracy. The intention is to provide you with convenient, one-stop access to useful information along with explanations about that information. 

Social Security is a public program. Public feedback was sought in developing this plan. You are invited to share your ideas to improve it. Several locations on the SSA Open Government Initiative website invite your comments.  

What pensions will affect Social Security? Windfall Elimination Provision

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Most pensions have no impact on Social Security benefits because they are based on work covered by Social Security.  

However, a government pension from work not covered by Social Security can affect the amount of your SSA benefit. This mainly involves government pensions and that is how I will refer to them. One example is a pension from the old Federal Civil Service Retirement System (CSRS). Some state pensions are involved because not all state employees are covered by Social Security. Local government entities, such as a school district, might not have SSA coverage and be affected by this too. Sometimes a government pension from another country could be involved. 

Since 1983, a government pension from work not covered by Social Security could affect your Social Security in two ways. The first, called the Windfall Elimination Provision, involves benefits payable to you on your own SSA record. The second, called the Government Pension Offset, involves benefits payable to you based on the SSA record of someone else. 

The Windfall Elimination Provision (WEP) is today’s topic. 

Since the government pension was from work where Social Security taxes were not taken out of your pay, you would have also worked long enough in other jobs that were covered by Social Security to qualify for SSA benefits. 

The Windfall Elimination Provision is not a direct offset or reduction of the pension against the Social Security benefit. It affects how the amount of your retirement or disability benefit is calculated. The formula used results in a lower Social Security amount than you otherwise would receive.

Why is this? Social Security benefits replace a percentage of a worker’s pre-retirement earnings. By design, lower-paid workers get a larger percentage of pre-retirement earnings than higher paid workers. Work not covered by Social Security does not appear on the person’s SSA record. This incorrectly makes the person’s average earnings appear lower, leading to a larger percentage of pre-retirement earnings paid. The Windfall Elimination Provision benefit formula is intended to adjust for this. 

The WEP formula takes into account how many years of work you have under Social Security covered employment. Overall, the Social Security benefit reduction cannot be more than one-half of the amount of the pension from work not covered by Social Security taxes.

The Windfall Elimination Provision does not affect most people. You need to know about the WEP if it affects you.  Learn more in SSA publication 05-10045 – Windfall Elimination Provision. 

Do you have a pension from work not covered by Social Security?  If yes, use the special calculators at http://www.socialsecurity.gov/retire2/anyPiaWepjs04.htm to estimate future benefits.  Other SSA calculators do not usually adjust for these pensions.

The Government Pension Offset will be a future topic. It involves benefits payable to you based on the SSA record of someone else, if you receive a government pension from work not covered by Social Security.

How many people are paying into Social Security?

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Social Security statistical data is often about the number of people receiving benefits and benefit amounts.

Just released data for 2009 is very different. Down to individual state and county levels, this new publication has data about the number of people employed and paying into Social Security (table 3) with separate information about Medicare taxable earnings (table 6).

Earnings and Employment Data for Workers Covered Under Social Security and Medicare, by State and County, 2009
This annual statistical report presents employment and earnings data by sex and age for people in employment covered under Social Security and Medicare. The tables include data on workers in the 50 states, District of Columbia, Puerto Rico, U.S. Virgin Islands, American Samoa, and Guam.

Direct link:  http://www.ssa.gov/policy/docs/statcomps/eedata_sc/2009/index.html

Data is available in html, pdf and excel formats. Choose North Dakota, Minnesota or any state of interest. Based on format used, you might first see data for all states. Scroll to tables 3 or 6 for specific state and county information. 

Table 3:  Number of persons with Social Security (OASDI) taxable earnings, amount taxable, and contributions, by county, sex, and type of earnings, 2009. ( Note: OASDI = Old Age, Survivors and Disability Insurance)

Table 6: Number of persons with Medicare Part A (HI) taxable earnings, amount taxable, and contributions, by county, sex, and type of earnings, 2009. 

 

Surviving Divorced Spouse benefits

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Q: My ex-husband recently died. Can I get Social Security benefits from his record?

A: Perhaps. Surviving divorced spouse is the Social Security name for this type of survivors benefit.  Men and women can receive survivors benefits. SSA survivors information is at http://www.socialsecurity.gov/pgm/survivors.htm  

The divorced spouse of a person who died could get benefits the same as a widow or widower, if the marriage lasted 10 years or more. Benefits to a surviving divorced spouse exist based on disability or age. Either way, they do not affect survivor benefits being paid to others on the record. In other words, if benefits are payable to you as a surviving divorced spouse, they would not reduce benefits paid to his widow or any eligible children.  

In general, remarriage before age 60, age 50 if disabled, prevents you from receiving these benefits as long as the new marriage continues. Remarriage after you reach age 60, age 50 if disabled, will continue to qualify you for survivor benefits. Exceptions exist so always contact Social Security about your particular situation before getting married.  

Whether as a widow, widower or surviving divorced spouse, the earliest you could start benefits based on age is 60. Benefits started that young are reduced because you are not yet at your own full retirement age (FRA).  

Eligibility for Social Security based on your own work record and also for survivors benefits provides an option to maximize benefits. If your own retirement benefit is higher, you can start reduced benefits as a widow, widower or as a surviving divorced spouse as early as age 60.  Later, you can switch to your own higher retirement benefit as early as age 62 or leave it to continue increasing until your full retirement age or some other age. If the survivor benefit is higher, you can start your own reduced retirement as early as age 62 and then later switch to the higher survivor benefit.   

Of course, financial need might mean that taking the highest benefit as soon as possible is best. You might plan to continue working without starting any SSA benefit for years yet. Whatever you chose, being eligible on more than one record does not mean getting all of one benefit plus all of the other. You would receive up to the highest amount. 

Estimate your own Social Security retirement online at the Retirement Planner section and the Retirement Estimator.  For an estimate on the record of someone else, including survivors benefits, call the national SSA toll-free number, 1-800-772-1213 (TTY 1-800-325-0778), or your local office.

Will my military, or other pension, affect my Social Security?

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Q:  Will my military retirement pension reduce my Social Security? I heard that a government pension could reduce SSA benefits. 

A:  Your military retirement pension will not reduce your Social Security benefit. Current military personnel pay SSA taxes and earn Social Security coverage. Earnings for active duty service or active duty training have been covered employment since 1957. Earnings for inactive duty service in the reserves, such as weekend drills, have been covered since 1988. As with other employment covered by Social Security, military employment is posted automatically to your SSA record without any action needed by you. In addition to retirement, military employment provides coverage for SSA disability and survivor benefits. 

Most pensions have no impact on Social Security benefits because they are based on work that is covered by Social Security. However, a government pension from work that was not covered by Social Security can affect the amount of your SSA benefit. This involves all levels of government and dates to 1983 legislation signed by President Reagan.    

For example, until 1984 Federal government employment was under the Civil Service Retirement System (CSRS) and not covered by Social Security. If you worked for a Federal agency with CSRS coverage, you did not pay Social Security tax on your earnings and those earnings are not on your SSA record. Since it is a government pension based on work not covered by Social Security, a CSRS pension affects SSA benefits. 

In 1984, the Federal Employees Retirement System (FERS) began. People starting Federal employment in 1984 or later are covered by FERS, as are some who switched to FERS from CSRS. Work under FERS is covered by Social Security so a FERS pension does not affect SSA benefits. 

A pension from any level of government can affect SSA benefits if the work was not covered by Social Security. Depending on the state, not all state employees are covered by Social Security. Local government entities, such as a school district, might not have SSA coverage. If you are covered only by your state or local pension plan and do not pay Social Security taxes on your earnings, that government pension will likely affect any SSA benefits to you. Sometimes a government pension from another country could be involved. 

If your employment is covered by Social Security, a pension from it is unlikely to impact your SSA benefits. Most employment is covered by Social Security. Most pensions do not affect SSA benefits. 

A government pension from work not covered by Social Security could affect your Social Security in two ways. The first, called the Windfall Elimination Provision, involves benefits payable to you on your own SSA record. The second, called the Government Pension Offset, involves benefits payable to you based on the SSA record of someone else. 

More about these in the future.  

Note that the Social Security Administration will not routinely know if you are eligible for a government based pension from work not covered by Social Security until you file an application for benefits. As a result, benefit estimates you have received may not have been adjusted that pension.

Social Security appeals process – Appeals Council

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Today completes the Social Security Administration appeals process series. Whether a person is applying for benefits or already receiving them, nearly all Social Security and Supplemental Security Income (SSI) claim decisions can be appealed. Disability related actions are a major area for appeals now but other topics can be at issue. Basics of the appeal process are the same for Social Security retirement, survivors and disability benefits as well as the separate Supplemental Security Income (SSI) program.  

Appeals Council Review:  the third level of appeal  

To reach this point, a person disagrees with both the original decision and the first two appeals process levels of reconsideration and hearing. If you disagree with the hearings decision of the Administrative Law Judge, you may file a request for review with the Appeals Council.  

Consistent with the other levels of appeal, stay within the timeframes provided in your decision letter if using the Social Security appeals process. The general rule is that you must make your request in writing within 60 days from the date you receive the decision letter. The assumption is that that you received the decision letter five days after the date on the letter.  

Local Social Security offices are not directly involved with cases involving a request for Appeals Council review.  Based in Falls Church, Virginia, the Appeals Council is a component of the SSA Office of Disability Adjudication and Review (ODAR), one of the largest administrative judicial systems in the world.  

The Appeals Council looks at all requests for review, but it may deny a request if it believes the hearing decision was correct. If the Appeals Council decides to review your case, it will either decide your case itself or return it to an Administrative Law Judge for further review. When the Appeals Council reviews your case it may consider any of the issues considered by the Administrative Law Judge, including those issues that were favorably decided in your case. You receive a copy of the Appeals Council’s final action on your case. 

More about a Social Security Appeals Council review is at http://www.socialsecurity.gov/appeals/appeals_process.html.  

As the last administrative decisional level, the Appeals Council renders the Social Security Administration’s (SSA’s) final decision. If you disagree with the Appeals Council’s decision, or if the Appeals Council decides not to review your case, you would then have to go to the last level of the appeals process, filing civil suit in a federal district court.  

The entire Social Security Administration appeals process is summarized in SSA publication 05-10041, “The Appeals Process” at http://www.socialsecurity.gov/pubs/10041.html.  

SSA 1099 replacement & tax information

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Even for this time of year, I have received far more questions about taxes and Social Security over the last month than usual. Most of the following has appeared here before within separate posts. Today I intend to restate and summarize tax related questions so they are located in one place. Social Security Administration employees cannot provide tax advice.

Q: How can I replace the SSA-1099 for 2011?

A: Request a replacement SSA-1099 online at www.socialsecurity.gov.  Start at the “Top Services” section of the homepage. Go to “services for people already receiving benefits”, then to “Get a Form 1099”and follow the simple instructions. The 1099 is not seen when requesting a replacement. You will not be able to print it from your computer. 

The replacement SSA-1099 will arrive in about 10 days at your address on file with Social Security. If you recently changed your mailing address, call the Social Security national toll-free number, 800-772-1213 (TTY 800-325-0778) to report your new mailing address and request a replacement Form SSA-1099 at the same time.  

At “services for people already receiving benefits” you can also request a replacement Medicare card or a letter to verify the amount of your Social Security benefit.  

This was originally posted at the beginning of March, far in advance of tax deadlines. Since we are now in April, I hope this information is no longer needed.   

Q: Are my Social Security benefits taxable?

A: About one-third of people who receive Social Security retirement, survivors or disability benefits have to pay federal taxes on their benefits.

Generally, you have to pay federal taxes on part of your SSA benefits if you file a federal tax return as an individual and your total income is more than $25,000. If filing a joint return, you have to pay these taxes if you and your spouse have a total income that is more than $32,000. If paying income tax on your Social Security benefits, you might pay tax on up to either up to 50 percent or up to 85 percent of your SSA. 

No one pays income tax on more than 85 percent of his or her SSA benefits based on IRS rules.  

See http://www.socialsecurity.gov/planners/taxes.htm  for more about taxation of SSA benefits.  Also see IRS Publication 915, Social Security and Equivalent Railroad Retirement Benefits and IRS Publication 554, Tax Guide for Seniors. 

Note:  Supplemental Security Income (SSI) benefits are not taxable.

Q: Are taxes withheld from Social Security benefits?

A: Federal taxes are not routinely withheld from Social Security benefits. You can request withholding.

Q: How do I arrange to have Federal taxes withheld from my SSA benefits?

A: Complete Internal Revenue Service (IRS) form W-4V and return it to your local Social Security office to start voluntary tax withholding. To change or end an ongoing voluntary withholding you would complete another form W-4V.  You can do this as needed during the year. 

Withholding is by your selected percentage of monthly benefits, not a flat dollar amount. When completing the W-4V you select the percentage of benefits for tax withholding. Available options are to have 7 percent, 10 percent, 15 percent or 25 percent of your monthly benefit withheld. 

Voluntary withholding is for Federal taxes only. The Social Security Administration has no authority to withhold state or local taxes from your benefit.  

Social Security employees cannot provide tax advice. Discuss questions with your tax preparer or call IRS at 1-800-829-3676 (TTY 1-800-829-4059).

The most misused Social Security number of all time

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Very soon it will be April 1st, a popular day for jokes and tricks. In that spirit, today you will learn about the most misused Social Security number (SSN) of all time. However, unlike an April Fool’s Day trick, this story is true and has its start in the early days of the Social Security program.  

This story starts in 1938. To set the stage, remember that having a Social Security number (SSN) was still a relatively new idea. The original Social Security Act of 1935 authorized the creation of a record keeping system but did not expressly mention Social Security numbers.  

A 1936 Treasury regulation required the issuance of an account number to each employee covered by the Social Security program. The Social Security Board considered various numbering systems, eventually settling on an early version of Social Security number card so that employees could record their SSN and show it to employers when needed. 

Approximately 30 million applications for SSNs were processed between November 1936 and June 30, 1937. Since the Social Security Board did not have a network of field offices in late 1936, it contracted with the U.S. Postal Service to distribute and assign the first batch of Social Security numbers through its 45,000 local post offices around the country. 

As part of a product promotion, in 1938 a New York state wallet manufacturer decided to show how well the new Social Security cards fit into its wallets. A sample SSN card was inserted in each wallet for display purposes, much as wallets today often have stock photos in them. Note:  today SSA advises people not to carry Social Security number cards with them unless expecting to need it immediately.  

This sample card was only half the size of a real card, was printed all in red, and had the word “specimen” written across the face. Unfortunately, it also showed a real Social Security number, that of Mrs. Hilda Whitcher, secretary to the president of the wallet manufacturer.

Woolworth stores and other department stores all over the country sold the wallet.  Despite the different size, color and word “specimen” written on the wallet card, many purchasers of the wallet adopted the sample SSN as their own. 

How many?  A lot.  In the peak year of 1943, 5,755 people were using Mrs. Whitcher’s SSN. She was given a new number and the original number voided. To curtail its use, a Social Security campaign publicized that the number was not to be used.   

While this might have helped, it did not solve the problem and the SSN “issued by Woolworth” continued to be used for many years.  As late as 1977, twelve people still used the SSN.  In all, over 40,000 people reported Mrs. Whitcher ‘s original number as their SSN.

 What did Mrs. Whitcher have to say about all this? In later years she observed: “They started using the number. They thought it was their own. I can’t understand how people can be so stupid. I can’t understand that.”

Over time there have been over a dozen similar situations but the Whitcher case is by far the worst involving a real SSN and an actual person. 

This story is true.  Following is a photo of Mrs. Whitcher with her own SSN card and a wallet version.