Personal Finance
Why benefit increases from Social Security Fairness Act may take time
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More than 3.2 million individuals scored a legislative victory due to a new law that will increase the Social Security benefits for which they are eligible.
However, many of those individuals now face a lengthy wait for the extra benefit money coming to them.
The Social Security Fairness Act was signed into law on Jan. 5 by then President Joe Biden. The law eliminates certain provisions — the Windfall Elimination Provision and the Government Pension Offset — that previously reduced Social Security benefits for people who receive pensions from non-covered employment.
The changes will result in higher monthly payments ranging from $360 to $1,190, depending on their circumstances, the Congressional Budget Office has estimated. In addition, the law also provides lump-sum payments for those benefit increases dating back to benefits payable for January 2024 and after.
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The Social Security Administration is already helping some affected beneficiaries, the agency stated on its website. However, it cannot commit to a timeline as to when it will have processed the benefit increases for everyone affected.
“Under SSA’s current budget, SSA expects that it could take more than one year to adjust benefits and pay all retroactive benefits,” the Social Security Administration’s website states.
SSA will struggle without more money, expert says
On Feb. 5, a bipartisan group of Senators sent a letter to Acting Social Security Commissioner Michelle King urging for swift implementation of the benefit changes affecting certain teachers, police officers, firefighters and other public servants.
“We call for the immediate implementation of this legislation to provide prompt relief to the millions of Americans impacted by WEP and GPO,” the Senators wrote.
However, some experts say the agency needs more financial resources to make that happen.
“Congress either provides funding to cover the implementation costs, or SSA is going to struggle to work these cases,” said David A. Weaver, a former Social Security Administration executive who currently teaches statistics at the University of South Carolina.
The Social Security Fairness Act was voted into law with broad bipartisan support in both the House and Senate. Yet retirement policy experts have strongly criticized the new policy. One sticking point is the cost — estimated by the CBO to tally $200 billion over 10 years — with no offsets to help pay that increase.
That outlay will move Social Security’s trust fund depletion date six months closer, according to estimates.
The Social Security Administration is funded through a continuing resolution set to expire in the middle of March.
“When Congress addresses that … it’d be useful for Congress to increase SSA’s budget to account for the implementation costs,” Weaver said.
At a minimum, the agency will need around $200 million to implement the Social Security Fairness Act’s changes, he said.
The last time there was a similar change was with the Senior Citizens Freedom to Work Act of 2000, in which Social Security beneficiaries who had reached full retirement age no longer saw benefit reductions due to earned income.
That law affected about 1 million beneficiaries and cost about $65 million to implement in today’s dollars, according to Weaver. The new Social Security Fairness Act will affect about three times as many beneficiaries, he said.
The Social Security Administration’s staffing is currently at a 50-year low, said Dan Adcock, director of government relations and policy at the National Committee to Preserve Social Security and Medicare.
Prior to President Donald Trump taking office, it had been suggested that additional funding would help the Social Security Administration to fulfill the demands of the WEP and GPO repeal.
If instead the appropriations from Congress to the agency are reduced, the implementation of the new law may take even longer than one year, Adcock said.
Why new law may be complex to implement
As the Social Security Administration works to implement the law’s new benefit changes, the agency will face some pain points that may contribute to delays, according to Weaver.
When the Social Security Fairness Act was first introduced in 2023, the bill called for the changes to go into effect starting with benefits payable for January 2024.
As lawmakers rushed the legislation through in late December, that effective date was not changed. Calculating those back payments will create more work for the Social Security Administration, according to Weaver.
The effective date also presents other potential complications. For example, in any given year, 4% of Social Security beneficiaries die. Consequently, the Social Security Administration will be tasked with identifying more than 100,000 beneficiaries who are affected by the law who may have died in 2024 and distributing money to their survivors, Weaver said.
Moreover, individuals who were affected by the Government Pension Offset, which reduced Social Security benefits for spouses and widows of people who received non-covered pensions, may have previously been told they were not eligible for benefits, Weaver explained. As a result, in some cases they may have never applied for benefits. For those who did apply, their personal addresses or bank account information on file with the agency may be outdated, he added.
For those individuals affected by the GPO, the Social Security Administration will likely have to do a lot of work to find basic information on how to pay them, Weaver said.
For survivors and spouses who are newly eligible for benefits, the agency will also have to confirm those relationships.
The Social Security Administration may be able to automate 95% of the Windfall Elimination Provision cases, Weaver said. Yet some unusual cases may crop up, for example if a beneficiary was also affected by the earnings test. That will require manual input from Social Security employees, and therefore more time to process, Weaver said.
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