It is important to note that anybody currently taking advantage of any or all of the strategies, File and Suspend, Claim Some Now; Claim More Later, or the Combined Strategy, will continue to be able to do so.
Within the six month period after November 2, 2015, applicants will be able to take advantage of the rules as they existed prior to the enactment of P.L. 114-74.
Under P.L. 114-74, requests for suspension submitted at least 180 days after November 2, 2015, will also suspend the benefits of anyone else who may be receiving benefits on the account, i.e. a spouse or eligible children.
Currently, beneficiaries who have voluntarily suspended monthly benefit payments can request to have any and all withheld benefits repaid in a lump sum. Once P.L. 114-74 goes into effect, the Social Security Administration will only reinstate benefits effective the month following the month in which the request has been submitted, and a lump sum payment for past suspension months will no longer be possible.
Under P.L. 114-74, people born January 1, 1954 or earlier will continue having the option to file a “restricted application.” Anyone born after this date will now be subject to “deemed filing” rules upon reaching Full Retirement Age (FRA). The deemed filing rules state that if a beneficiary is eligible for their own retirement benefit and a spousal benefit at the time an application is submitted, they must claim both benefits concurrently. Beneficiaries are “deemed” to be concurrently applying for both benefits.
It is important to note that anyone born January 1, 1954 or earlier will always have the ability to file a “restricted application” and receive spousal benefits. However, anyone who files a “restricted application” more than 6 months after the enactment of P.L. 114-74 will only be able to receive the spousal benefit if the spouse is actually receiving his or her benefits. If the spouse has asked to have payments suspended, then all payments will be suspended, including those of the person who has filed a “restricted application.”
Changes to the “deemed filing” rules do not affect the options available when choosing between retirement and survivor benefits. A widow or widower will have the option of collecting a benefit on one account and then switching over to the other account at a later date.
Medicare Part B premiums:
Medicare Part B premiums are based on algorithms designed to cover 25% of the overall cost of the program. An analysis of expected 2016 costs indicated that the current $104.90 monthly premium would need to be increased to $120.70. However, because there will not be Cost Of Living Adjustment (COLA) in Social Security benefits in 2016, the “Hold Harmless provision” of the Social Security Act would have shielded approximately 70% of Medicare beneficiaries from having to pay the $15.80 monthly increase in Medicare Part B premiums. As a result, it was estimated that the remaining 30% of beneficiaries (those who were not protected by Hold Harmless) would have had to pay $159.30 per month to cover the revenue shortfall, a 52% increase over the 2015 base premium amount.
In P.L. 114-74, Congress acted to shield impacted Medicare beneficiaries from being required to pay the full $159.30 premium amount by authorizing a loan from the Treasury Department to the Medicare Part B program. As a result, beneficiaries not protected by the Hold Harmless provision” will pay only the anticipated $120.70 Part B premium amount in 2016. These are primarily beneficiaries who receive Medicare Part B benefits but do not have their premiums deducted from a monthly Social Security payment because they are not eligible for benefits, have not yet applied, or have asked to have their monthly payments suspended. However, they will also be responsible for an additional $3.00 per month surcharge which will be used to repay the loan from the Treasury. As a result, they will pay a total of $123.70 per month in 2016, an 18% increase over the 2015 premium.
Medicare beneficiaries who are fully protected by the Hold Harmless provision in 2016 will not be required to pay the $3.00 per month surcharge. It will be added to their premiums beginning the year that they receive a Social Security COLA sufficient to allow for an increase in Part B premiums. Additionally, new Medicare enrollees will also be required to pay this $3.00 per month surcharge until the loan has been repaid, a period of time estimated to be about 5 years.