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Arizona Social Security Disability Blog

Saturday, December 19, 2015

Social Security and Medicare Changes -- Pluses and Minuses

How will the new laws affect those who are receiving, or will receive, Social Security benefits?


In the budget bill President Obama recently signed into law with bipartisan support, some specific changes affecting Medicare and Social Security were included. For those who presently receive benefits from these agencies, or who foresee doing so in the near future, here is a clarification of what these alterations mean.

File and Suspend Option Being Discontinued May 1, 2016


One option being taken off the table is one known as "file and suspend." Currently, the higher wage earner in a couple who has reached full retirement age can file for his or her own Social Security benefits and immediately suspend them.

This means that the higher wage earner can continue to let the Social Security benefits grow 8 percent annually. During this time period, however, the lower wage earner can file for spousal benefits, receiving the lower amount. This results in the couple receiving a Social Security check while their benefits continue to grow. If the higher earning spouse passes away, the surviving spouse eventually receives the higher benefit.

Since file and suspend will be discontinued as of May 1, 2016, anyone interested in taking advantage of this strategy should apply now. Those already receiving benefits under this method will be grandfathered in until age 70.

Restricted Application also Being Phased Out

Restricted application is similar to, but not the same as, file and suspend. Now, individuals eligible for retirement benefits based on their own work record, as well as spousal benefits based on their spouses' work record, can elect to claim only a spousal benefit at full retirement age, leaving them free to collect a higher benefit in the future.

When the new law goes into effect, however, only individuals born on or before January 1, 1954 will continue to be able to use this option. Those younger than this will automatically receive the larger of the two benefits.

New Funds for Social Security Disability Benefits


Those receiving Social Security Disability (SSD) benefits have had a stressful many months due the fact that it was anticipated that millions of disabled Americans were going to have their benefits reduced by 19 percent by the fourth quarter of 2016. Fortunately, that dire circumstance will not come to pass. The new law remedies the problem by shifting payroll tax revenue from one Social Security trust fund to another. Funds will be shifted from the Old-Age and Survivors Insurance Trust fund to the Disability Insurance Trust fund. This change will save some of the country's most vulnerable citizens from falling below the poverty line.

No Increase in Medicare Part B Premiums and Deductibles

Thirty percent of Medicare beneficiaries were expecting a 52 percent increase in their Medicare Part B insurance premiums, as well as in their deductibles. The new law will protect this targeted population, approximately 17 million people, who will soon pay about $119 per month instead of the predicted $159.30 for Part B.

The other 70 percent of Medicare beneficiaries will continue to pay the same premium in 2016 as they did in 2015 -- $104.90. Beneficiaries will, however, have to pay an extra $3 per month to assist in paying down the money loaned to Medicare by the federal government. In addition, the annual deductible for all Part B beneficiaries will increase in 2016 to $166, an increase of about 15 percent.

If you have any questions regarding your present or future benefits, you should be sure to consult with a skilled and knowledgeable disability attorney.

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