New law ignites a wave of new Social Security benefit claims. And checks.
The first wave of Social Security claims resulting from the Social Security Fairness Act signed into law on Jan. 5 has been processed and checks are being sent, the Social Security Administration said.
The Social Security Fairness Act eliminated the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), which reduce Social Security benefits for certain retirees who also receive pension income. Together, WEP and GPO affect nearly 3 million Americans including police officers, firefighters, postal workers and public school teachers.
The number of payments the SSA has made is a tiny fraction of the millions of Americans who may be entitled to bigger Social Security checks, but the SSA says it’s working on it.
“To date, we have processed approximately 30,000 of these new initial claims and, depending on their age and other factors of entitlement, some of these new beneficiaries are receiving retroactive payments,” an SSA spokesperson told Paste BN in an email. “We continue to work on the process.”
Why are payments taking so long?
Since the Act's "effective date is retroactive (to January 2024), the SSA must adjust people's past benefits as well as future benefits," the agency said last month.
However, the SSA said it wasn’t given a budget to calculate these changes for millions of Americans affected by the new law.
"SSA's ability to implement the law in a timely manner and without negatively affecting day-to-day customer service relies on funding," the agency said. "The Act did not provide money to implement the law... Helping people with this new and unfunded workload is made more difficult by SSA's ongoing staffing shortages, including operating under a hiring freeze since November 2024" which is likely to continue.
Originally, the SSA estimated that affected beneficiaries would have to wait a year or more to receive any money. However, late Tuesday, the SSA said it now expects beneficiaries who are due a retroactive payment as a result of the new law, will have that one-time payment deposited into their bank account on file by the end of March.
Since Social Security benefits are paid one month behind, it said most affected beneficiaries will begin receiving their new monthly benefit amount in April, covering March.
Anyone whose monthly benefit is adjusted, or who will get a retroactive payment, will receive a mailed notice from Social Security explaining the benefit change or retroactive payment. Some beneficiaries may receive two mailed notices, the first when WEP or GPO is removed from their record, and a second when their monthly benefit amount is adjusted for their new monthly payment amount. They could also receive the retroactive payment before receiving the mailed notice, the SSA said.
Reactions to the delay
The original yearlong delay had set off a firestorm, prodding both Republican and Democratic senators to demand in a letter “immediate implementation of this legislation to provide prompt relief to the millions of Americans impacted by WEP and GPO.”
Since then, the SSA said it's used automation to speed up payments. Additional time will only be needed for complex cases that can't be processed automatically. In those cases, the SSA said it will have to manually update the records and pay both retroactive benefits and the new benefits amount.
Divorced, retired police officer Mike Barker, 67, in Brimfield, Ohio, who hasn't received any additional money yet said he was disappointed checks were taking a while to arrive but not entirely surprised.
"Bureaucracy at its finest," he said. Still, "I have plans to use the (retroactive) check for travel.”
What can beneficiaries do to speed up payments?
The biggest help would be to make sure your information is updated, the SSA said.
◾People filing a new initial claim can check the status of their claim through their personal my Social Security account, the SSA spokesperson said. They’ll receive a notice in the mail once their claim is processed. Benefit payments will be made through direct deposit for people with current bank account information on their records.
◾For current beneficiaries whose benefits are reduced by WEP or GPO, the spokesperson recommends they review their mailing address and/or direct deposit information on file at the SSA. Generally, no other actions are needed.
The easiest way for most beneficiaries to update their address or direct deposit information is online with their Social Security account. There’s no need to call or visit a Social Security office, the spokesperson said.
The SSA provides updates on its Social Security Fairness Act webpage and strongly encourages people to subscribe to receive alerts when the website is updated.
It also recommended beneficiaries owed retroactive payments not contact SSA until April since checks will be sent throughout March. It also said beneficiaries shouldn't ask about their monthly benefit amount until they've received their April payment because the new amount won't be reflected until then for the March period.
How much can affected beneficiaries expect to receive?
The amount of additional monthly money each affected worker would receive can vary depending on factors such as the type of Social Security benefit received and the amount of the person's pension, the SSA said.
"Some people's benefits will increase very little while others may be eligible for over $1,000 more each month," it said.
How did WEP and GPO reduce Social Security benefits?
WEP and GPO, established in 1983, were intended to prevent Social Security from overpaying people who worked in non-covered pension jobs, policy experts said. People with earnings outside the Social Security system can look like low earners.
Since Social Security replaces a higher percentage of prior earnings for low-paid workers than for higher-paid workers, those who received healthy government salaries for decades would receive the same advantage in Social Security calculations as longtime low-income workers, proponents of the rules argued.
Here’s how each provision worked:
◾The Windfall Elimination Provision reduced Social Security for those who received so-called “non-covered” pension income from jobs, typically public sector roles, that didn’t contribute Social Security payroll taxes. The reduction could be significant – up to half the pension amount.
◾The Government Pension Offset reduced survivor or spousal benefits if a person’s pension is non-covered. GPO affected fewer people, but it cut the Social Security benefit by two-thirds of the pension amount. If two-thirds of your government pension is more than your Social Security benefit, your benefit could be reduced to zero.
Repealing WEP and GPO remains controversial
Even though the Social Security Fairness Act was passed with bipartisan support, the move remains controversial.
WEP was necessary to close a loophole, said Gary Brewer, a retired certified public accountant in Sacramento, California. "Remember, the affected government retirees were exempt from Social Security for their work covered by a substitute plan," he said. "For many, the substitute plan is the primary pension, and Social Security is secondary. As they are collecting on a secondary income, they shouldn’t be able to come in as low-wage earners receiving the low-income boost simply because most of their earnings were exempt from Social Security coverage."
As for GPO, Brewer offered an example to show how the repeal would favor public workers with pensions:
◾Monica and Chandler earned a Social Security benefit of $3,000 per month in their careers. Neither would get a spousal benefit because they both were receiving more than 50% of their spouse’s amount. The total family income is $6,000 for two careers.
◾Monica earned a Social Security benefit of $3,000 per month as a chef, while Chandler earned a $3,000 benefit from his substitute plan as a firefighter. Chandler would also receive a $1,500 spousal benefit from Social Security now that GPO is repealed since there's no longer an offset. The total family income would be $7,500 for two careers.
"Any spousal benefit received is offset by retirement benefits ‒ except in the case of certain government retirees now (with the new law)," he said. "The rest of us just have to deal with it."
(This story was updated with new information.)
Medora Lee is a money, markets, and personal finance reporter at Paste BN. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.