New Budget Law Means Changes to Your Social Security and Medicare Benefits

Social security is economic security for retired, disabled people or families of retired, disabled or diseased workers. Many people today are engulfed with promotions and invitation of benefits and security system seminars on how to maximize their social security income. On November 2nd, 2015 the president signed into law the, Bipartisan Budget Act of 2015 which has put an end to loopholes used in the past while filing forbenefits and made significant changes to the benefits system. Now what has changed according to new budget act?

The biggest change for claiming Social Security benefits is that the “File and Suspend” strategy has been abolished. Previously, married couples could maximize their Social Security benefits by having one spouse file for retirement benefits, then suspending the benefits shortly after filing. Typically, the person who is suspending the benefits is the individual who has had a higher earnings record. This strategy allowed married couples to file spousal benefits and receive higher benefits based on the lower income of the spouse.

Under the Bipartisan Budget Act, when a person files for suspension of benefits, not only does the individual not receive any benefits during the suspension period but, his or her spouse also does not receive any spousal benefits. Any current retirement benefits claims will not be affected, however the Bipartisan Budget Act will apply towards new file and suspend benefit claims.

Another benefit strategy that has been eliminated is using the process of restricted applications. This strategy is mainly used to increase the overall longevity of one’s Social Security benefits. When an individual reaches full retirement age and is eligible for both the spousal benefits and his or her own benefits, they can file a restricted application to only receive the spousal benefits. By doing so, they delay receiving their own retirement benefits in order to earn the delayed retirement credits. These delayed credits increase Social Security benefits by 8% a year.

Under the rules of the Bipartisan Budget Act; when you file for Social Security benefits, you are simultaneously filing for both your spousal benefits and your individual benefits. For those people who turn 62 after 2015, they will have two options for claiming their Social Security benefits; either they can start claiming benefits anytime at or after turning 62 and receive a lower total amount of benefits. Or they can delay receiving benefits until they are older, as late as 70, in order to maximize their benefit amount, but not receive any benefits until that time.

An additional benefit of the Bipartisan Budget Act is that it sets the premium rates for people who receive Medicare Part B coverage and there will not be an increase for most people in 2016. People who have their Medicare premiums deducted out of their Social Security benefits will not see an increase in rates for 2016. This is roughly 70% of Americans who are covered with Medicare Part B. However, the other 30% of people will see their premium rates rise from $104.90 to approximately $119 per month. This is due to the fact that there was no cost-ofliving increase, the premium increase is considered a relief for those people who fall
under the 30% category; otherwise they would have had to incur the full load of the Medicare increase, which would have been higher than 50%.

 


Sources
USA Today -
http://www.usatoday.com/story/money/columnist/powell/2015/11/12/socialsecurity-
medicare-changes-budget-law-retirement/75164246/

Loveland, Ohio magazine
http://lovelandmagazine.com/2015/11/the-bipartisan-budget-act-of-2015/

FedSmith
http://www.fedsmith.com/2015/11/02/bipartisan-budget-act-of-2015-signedinto-
law/

NBC News
http://www.nbcnews.com/politics/congress/house-passes-sweeping-two-yearbipartisan-
budget-deal-n453226