What do the Recent Social Security Claiming Changes Mean for Me?
The Bipartisan Budget Act of 2015 (Public Law 114-74; November 2, 2015), made some changes to Social Security’s laws about claiming retirement and spousal benefits. Section 831 of the law (entitled “Closure of Unintended Loopholes”) made several changes to the Social Security Act and closed two complex loopholes that were used primarily by married couples. This fact sheet explains what is changing and how it might affect you.
Determining when to start your Social Security benefits is a complex and personal decision. We encourage you to research your options before you apply for benefits. You may also contact Social Security at 1-800-772-1213 (TTY 1-800-325-0778) to speak with a representative about your retirement options.
Timing of Multiple Benefits (also called “Deemed Filing”)
What was the loophole? The law provides incentives to delay claiming retirement benefits: monthly benefits grow larger for each month you delay receiving retirement benefits between full retirement age (currently 66) and 70. The loophole allowed some married individuals to start receiving spousal benefits at full retirement age, while letting their own retirement benefit grow by delaying it.
How is the law changing? Under existing law, if you are eligible for benefits both as a retired worker and as a spouse (or divorced spouse) in the first month you want your benefits to begin and are not yet full retirement age, you must apply for both benefits. You will receive the higher of the two benefits. This requirement is called “deemed filing” because when you apply for one benefit you are “deemed” to have also applied for the other.
Under the new law deemed filing is extended to apply to those at full retirement age and beyond. In addition, deemed filing may occur in any month after becoming entitled to retirement benefits. For example, if you begin receiving your retirement benefit and only later become eligible for a spousal benefit (or vice versa), you will be “deemed” to have applied for the second benefit as soon as you are eligible for it. Your monthly payment will be the higher of the two benefit amounts.
What is the rationale for this change? Historically, spousal benefits were designed to be paid only to the extent they exceeded any benefit the spouse earned based on his or her own work record. This change in the law preserves the fairness of the incentives to delay, but it means that you cannot receive one type of benefit while at the same time earning a bonus for delaying the other benefit.
Who will be affected? If you turn 62 on or after January 2, 2016, and will be eligible for benefits both as a retired worker and as a spouse (or divorced spouse), then the new law applies to you. Deemed filing applies to retirement benefits, not to survivor’s benefits. So, if you are a widow or widower, you may start your survivor benefit independently of your retirement benefit if you restrict the scope of your application. There are also some exceptions to deemed filing. For example, deemed filing does not apply if you receive spouse's benefits and are also entitled to disability, or if you are receiving spousal benefits because you are caring for the retired worker’s child. If you have questions about your specific situation, contact Social Security.
How and when is Social Security implementing this change? We have already implemented this change with specific instructions to our field office employees because the law applies to those who attain age 62 on January 2, 2016 or later. We are continuing to update our website and materials.
Example 1: Maria turns age 62 after January 1, 2016 and her husband, Joe, is 65. They have each worked enough years to earn a retirement benefit. In March of 2020, Maria has reached her full retirement age and files for benefits. Maria is eligible for a spousal benefit on Joe’s record. Maria must file for both benefits. She can no longer file only for the spousal benefit and delay filing for her own retirement. She will receive a combination of the two benefits that equals the higher amount.
Example 2: Jennie is a 62-year-old widow. She is eligible for retirement benefits based on her work history, and she is also eligible for survivor benefits based on her deceased husband’s record. She starts her survivor benefit this year, restricts the scope of her application to widow’s benefits, and does not start her own retirement benefit, allowing it to grow. At age 70, she starts her own increased retirement benefit, which she will receive for the rest of her life. The new law does not affect her because deemed filing does not apply to widow(er)s. Jennie will receive the higher of the two benefits.
Voluntary Suspension of Benefits (also called “File and Suspend”)
What was the loophole? As described above, retirement benefits grow for each month you delay claiming, between full retirement age (currently 66) and 70. A loophole allowed a worker at full retirement age or older to apply for retirement benefits and then voluntarily suspend payment of those retirement benefits, which allowed a spousal benefit to be paid to his or her spouse while the worker was not collecting retirement benefits. The worker would then restart his or her retirement benefits later, for example at age 70, with an increase for every month retirement benefits were suspended.
How is the law changing? Under the new law, you can still voluntarily suspend benefit payments at your full retirement age (currently 66) in order to earn higher benefits for delaying. But during a voluntary suspension, other benefits payable on your record, such as benefits to your spouse, are also suspended. And, if you have suspended your benefits, you cannot continue receiving other benefits (such as spousal benefits) on another person’s record.
There are some exceptions. If you are a divorced spouse, you can continue receiving a divorced spousal benefit even if your ex-spouse voluntarily suspends his or her retirement benefit.
What is the rationale for this change? There is less rationale for paying dependents if the primary worker has not retired or is not receiving payment from Social Security. It also preserves the fairness of the incentives to delay, so that couples cannot simultaneously receive a benefit and get a bonus for delaying.
Who will be affected? The new law applies to individuals who request a suspension on or after April 30, 2016, which is 180 days after the new law was enacted. Remember, you must have reached your full retirement age (currently 66) in order to request a suspension.
In some situations, we will honor requests received before April 30, 2016, that we are unable to process until after April 30, 2016. For example, there could be a situation where you are already full retirement age, and you contact us to apply for benefits before April 30, 2016, expressing your intent to apply for, and suspend, your benefits. If we cannot take your application until June 2016, we will honor the request for voluntary suspension that we received before April 30, 2016.
If you voluntarily suspended benefits prior to April 30, 2016, you may remain in voluntary suspense status, and the new law will not affect you. Also, if you submit your request before April 30, 2016 and your spouse or children become entitled to benefits either before or after that date, they will not be affected by the new rules and will continue to receive payment.
How and when is Social Security implementing this change? We have developed instructions for our field office employees so they can answer questions before this change takes effect for suspension requests that are submitted on or after April 30, 2016.
Example: Thomas will turn 66 in 2016, and Maria will turn 62. Thomas starts his retirement benefit at his full retirement age, 66, in June 2016, and Maria starts her spousal benefit based on his record. Thomas immediately suspends his benefit. In past years, that would have meant that Maria could continue receiving spousal benefits while Thomas could restart his own benefit at age 70 and receive an increase for each month he waited. Now, because Thomas reached his full retirement age and requested the suspension after April 30, 2016, he is subject to the new law. He can still choose to voluntarily suspend his benefit after his full retirement age, but if he does suspend his benefits, Maria’s spousal benefit will also be suspended.
For more information about these changes, contact Social Security at 1-800-772-1213 (TTY 1-800-325-0778).