3 Changes to Social Security Benefits in 2016 that Could Affect You

The “Claim and Suspend” strategy, also known as “File and Suspend,” allows a worker to claim their social security benefit and immediately suspend benefit payments. This has been an effective tool to maximize a worker’s benefits. However, based on a new budget act and a few emergency messages published by the Social Security Administration (SSA), the rules have changed.

What does the new budget act do ?
The Bipartisan Budget Act of 2015 (BBA 2015) allows an applicant to receive “Delayed Retirement Credits” for each month a worker is entitled to a benefit but has suspended the actual payment of those funds. A Delayed Retirement Credit increases the amount the beneficiary receives when payments resume and, by extension, the amount a widow, minor child, or disabled adult child receives.

The increase is based on a percentage of the worker’s primary insurance amount. The exact percentage depends on the worker’s date of birth and number of credits. There is no indication in BBA 2015 or the emergency messages that this has changed. However, there were other significant changes.

Changes to Social Security Benefits

1. Effective April 30, 2016, a spouse, minor child, or disabled adult child can no longer claim their auxiliary benefit even while the beneficiary’s claim was suspended. BBA 2015 is not entirely clear on who this affects. Whether this rule applies is based on the application date and the applicants date of birth. While a person must apply on or before April 30, 2016, there is ambiguity on the age limit. Some have openly disagreed with the SSA’s interpretation; however, most interpretations agree that anyone born after September 1, 1950 will not be eligible. Whether or not those born after that date will qualify is uncertain. However, since an application must be submitted before April 30th, a person born on or before September 1, 1950 should seek immediate legal assistance to maximize their benefits.
2. Workers can no longer retroactively collect the suspended payments at a later date as a lump sum. This was a helpful option for those who experience a sudden change of circumstances and find they need extra funds sooner than expected. BBA 2015 was ambiguous on this point but the SSA released an emergency message stating “an individual may not receive benefits for the period of voluntary suspension.”
3. A person eligible for both a benefit on their own account and an auxiliary benefit on another account cannot suspend their benefit and collect the excess auxiliary benefit. This will no longer be allowed for requests submitted on or after April 30, 2016.

The new claim and suspend rules add a layer of complexity to your retirement options.

Between the dual eligibility issues, potential effects on children and spouses, and other complexities, navigating “Claim and Suspend” may seem futile but an experienced elder law attorney can help.

To maximize your benefits under these new rules, contact the Law Office of Christina Lesher today at (713) 529-5900.