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.



Medicare premiums and deductibles for 2016

The official Medicare website,, now has 2016 Medicare premiums and deductibles information.

Medicare is administered by the Department of Health & Human Services, Centers for Medicare & Medicaid Services (CMS).

The CMS press release announcing 2016 Medicare premiums and deductibles also contains this information. Here is part of that press release:

Part B Premiums/Deductibles

As the Social Security Administration previously announced, there will no Social Security cost of living increase for 2016. As a result, by law, most people with Medicare Part B will be “held harmless” from any increase in premiums in 2016 and will pay the same monthly premium as last year, which is $104.90. 

Beneficiaries not subject to the “hold harmless” provision will pay $121.80, as calculated reflecting the provisions of the Bipartisan Budget Act signed into law by President Obama last week. Medicare Part B beneficiaries not subject to the “hold-harmless” provision are those not collecting Social Security benefits, those who will enroll in Part B for the first time in 2016, dual eligible beneficiaries who have their premiums paid by Medicaid, and beneficiaries who pay an additional income-related premium. These groups account for about 30 percent of the 52 million Americans expected to be enrolled in Medicare Part B in 2016.

As in past years. there are several different Medicare Part B (Medical) monthly premium rates in 2016.

The following is copied from the “Medicare 2015 & 2016 costs at a glance” pages of the Medicare website. Note that this is only a portion of the information there.




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.


More about SSI, including data for your state and county

Last week I wrote about 1972 Legislation creating the Supplemental Security Income (SSI) program with links to some national SSI statistics.

Since then, two online publications with much more information about SSI became available.

The SSI Annual Statistical Report, 2014, is the first and much more detailed of these publications.

This annual report describes the SSI program and who receives benefits. The tables present data on such topics as recipient characteristics, disability and work incentives, applications, awards, and denials.

If you work with need-based programs this report might be useful to you. A casual reader will probably find the second publication, shown below, more interesting.

Here are tidbits from the Highlights section of the SSI Annual Statistical Report, 2014:

Size and Scope of the Supplemental Security Income Program

About 8.3 million people received federally administered payments in December 2014.

The average monthly payment in December 2014 was $532.

Total payments for the year were almost $55 billion, including more than $3 billion in federally administered state supplementation.  

Profile of Recipients

The majority were female (53 percent).

Sixteen percent were under age 18, 59 percent were aged 18 to 64, and 25 percent were aged 65 or older.

Most (86 percent) were eligible on the basis of a disability.

Six out of 10 recipients under age 65 were diagnosed with a mental disorder.

Fifty-eight percent of SSI recipients had no income other than their SSI payment.

Thirty-three percent of SSI recipients also received Social Security benefits.

Of the people receiving SSI benefits, 1.5 percent were residing in a Title XIX institution where Medicaid was paying more than half of the cost.

Despite their disabilities, about 315,000 recipients (4.3 percent) were working in December 2014.

The second report, SSI Recipients by State and County, 2014, brings SSI data to the state and county level in an easy to read format.

For each state and county, information shown includes the number of people receiving SSI as of December 2014, benefit category and age ranges for recipients and overall amount of SSI payments received. County data on Supplemental Security Income (SSI) are a measure of the local impact of the program.

How many people in your state and county receive Supplemental Security Income? How much money does that represent each month? Find out in SSI Recipients by State and County, 2014.




Questions about SSA survivors benefits

Q: Now age 63, I have been receiving Social Security disability for several years. My wife is age 60. If I were to die soon, would my wife be able to receive my Social Security? How much would she receive?

A: If widowed at age 60, she is old enough to receive Social Security survivors benefits. It would not matter if you were receiving Social Security benefits before death or not. From the Social Security survivors benefits page, go to the Survivors Planner section for more information about potential benefits.

The amount of survivors benefit payable to her at age 60 through your record is based primarily on your work history and her age when beginning the benefits. When someone receiving Social Security benefits dies, the amount he or she had been receiving could be a factor in the survivors amount.

Survivor estimates are not available online. Since you receive Social Security benefits, obtain an estimate by contacting Social Security. If not yet receiving benefits, create a my Social Security account and go to your Social Security Statement for estimated survivors benefits for your family. This can help with your family financial planning.

Not all survivor benefits to a widow or widower are based on that person’s age. Potential benefits to a parent because minor children receive benefits or to a disabled widow or widower are examples of this. Learn more in the Survivors Planner section.

When age is a factor, 60 is the youngest age possible to start monthly survivors benefits. If widowed when younger, monthly benefits could not begin until age 60 although a one-time benefit towards funeral costs might be payable immediately. At age 60, the amount is permanently reduced to about 71.5 percent of the benefit if waiting to full retirement age.

Starting Social Security survivors benefits when first eligible might not be your best option. This is a personal decision. As when starting retirement, include overall finances and employment plans in your decision. If also eligible for your own retirement, you could start the lower benefit first and switch to the higher one later.

Contact Social Security whenever there is a death in the family. Even if benefits are not immediately payable, future options can be discussed. survivorsplanner

The start of Supplemental Security Income (SSI)

Legislation creating Supplemental Security Income (SSI) was signed into law on October 30, 1972, by President Richard M. Nixon as part of the Social Security Amendments of 1972 (Public Law 92-603).

SSI was a new Federal income program for the needy aged, blind and disabled. The Social Security Administration was assigned responsibility for it.

Based on need, not work, Supplemental Security Income (SSI) is very different from Social Security retirement, survivors or disability benefits. SSI is funded by general revenues, not Social Security taxes, and pays benefits to disabled or blind adults and children having limited income and resources. SSI benefits are also payable to people age 65 or older without disabilities who meet the financial limits.

Why was SSI created? The following is from the “Historical Development of Economic Insurance” article in the History section of the Social Security website:

In the original 1935 Social Security Act, programs were introduced for needy aged and blind individuals and, in 1950, needy disabled individuals were added. These three programs were known as the “adult categories” and were administered by State and local governments with partial Federal funding. Over the years, the State programs became more complex and inconsistent, with as many as 1,350 administrative agencies involved and payments varying more than 300% from State to State. 

In 1969, President Nixon identified a need to reform these and related welfare programs to “bring reason, order, and purpose into a tangle of overlapping programs.” In 1971, Secretary of Health, Education and Welfare, Elliot Richardson, proposed that SSA assume responsibility for the “adult categories.” In the Social Security Amendments of 1972, Congress federalized the “adult categories” by creating the SSI program and assigned responsibility for it to SSA. 

SSA was chosen to administer the new program because of its reputation for successful administration of the existing social insurance programs. SSA’s nationwide network of field offices and large-scale data processing and record-keeping operations also made it the logical choice to perform the major task of converting over 3 million people from State welfare programs to SSI.

Based largely on records transferred from state agencies across the country, first payments under the SSI program began in January 1974.

I was already with the Social Security Administration at that time and clearly remember the difficulties involved as everyone worked to get the new SSI program working in a time long before instant computer access to information.

SSI payments today are a maximum Federal amount of $733 per individual or $1,100 to a couple if both people are eligible. States can choose to add to this if desired. SSI amounts are reduced by other income, including Social Security.

As of September 2015, the national, average monthly Federal payment for all SSI recipients was $523.78. More national SSI information as of September 2015, including number of recipients by category and payment amounts is here.

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