The Social Security Scenario for 2016 – What Will Change and What Will Not

Though it has passed through many major changes, Social Security has remained a strong pillar of support for Americans, ensuring financial security for disabled as well as retired individuals. The Administration’s disability determination is very stringent, with benefits being granted only after a stringent medical record review. Social security disability attorneys help applicants determine whether they are eligible for the benefits after a thorough review of the relevant medical records, usually with the support of a medical record review company. Claimants who are represented by a good attorney stand a better chance of getting their application approved.

Anticipated Changes in Social Security for 2016

2016 is projected as a very active year for the SS program with significant legal revisions being introduced. Let us look at some of the major changes to expect this New Year.

No Increase in Cost-of-living (COLA) Adjustment: For the third time since COLA began in 1975, there will be no increase in payment in 2016. This is because there has been no inflation. In 2010 and 2011 also, there had been no increase. The COLA adjustment was 1.7% in 2015. For retired workers, the average monthly benefit is expected to be $1,341 per month in 2016. Retired couples who are both receiving benefits will receive around $2,212 per month.

File and Suspend Strategy Will Not be Available from May 2016: This is viewed as the biggest change for Social Security for 2016, and was introduced as part of the budget deal this November. The last effective date for beneficiaries to file and suspend will likely be April 29. To use the file and suspend provision, applicants must have reached full retirement age.

Individuals Reaching Early Retirement Age Cannot Use the Restricted Application Strategy: The file as a spouse first strategy or restricted application has also been impacted by the budget deal though in a different way. The age at which filing for spousal benefits is automatically considered to be a filing for one’s own retirement benefits also, has been increased from 66 to 70. Earlier, the file as a spouse first strategy involved filing a restricted application when one reached the age of 66 or later to receive spousal benefits alone. This meant that one’s retirement benefits could be left intact to collect delayed retirement credits and grow. So what does the new law mean? Restricted application will be effectively unavailable, because age 70 is the latest date at which an applicant can wait to claim retirement benefits. However, those who reach the age of 62 by the end of 2015 will be able to file restricted applications when they reach full retirement age, even if it takes many years before they are actually eligible to file. Individuals who reach the age of 62 in 2016 on any day other than January 1 will not be eligible to use this strategy.

No Change in Tax Cap: The maximum amount of earnings taxable under Social Security will remain at $118, 500 in 2016. This is because there is no change in COLA. Earnings more than this amount are not used to calculate retirement payouts or subject to the SS portion of the payroll tax.

Earnings Limit Changes: For people aged 65 and younger, the SS earnings limit will remain $15,720 if they are working and claiming social security payments at the same time. Those who are earning more than this amount will have $1 in benefits temporarily withheld for every 2 dollars in earnings above the limit.

For those who are turning 66 in 2016, the earnings limit will increase to $41, 880. The reduction in payments for earning too much will fall to $1 withheld for every 3 dollars in excess earnings. For a retiree turning 66 in 2016, the earnings limit doesn’t apply anymore and benefit payments are recalculated to include continued earnings and withheld payments.

Annual Increases for Various Aspects: In 2016, the amount of earnings required for a quarter of coverage will increase by $40 to $1,260. The earnings threshold constituting substantial gainful activity for all disabled beneficiaries except the blind will increase by $40 to $1,130.

The formula for calculating SS benefits will also change a bit. The “bend points” for benefits will increase, with the lower bend point rising by $30 dollars to $856 and the upper bend point increasing by $177 to $5,157. The maximum family benefit formula will also be impacted by such increases, which places an upper limit on the total amount of benefits family members can receive on a single person’s employment history.

Medicare Premium Increase: Most retirees already receiving SS benefits will continue to pay the same Medicare Part B premium in 2016. This is because the law prevents Medicare Part B premiums from increasing faster than SS payments for most existing beneficiaries.

Compared to people who previously signed up for social security benefits, retirees who are for the first time signing up for Medicare B in 2016 and high-income Medicare beneficiaries may have to pay higher monthly premiums.

Maximum Possible Benefit Will Reduce: For a 66-year-old worker who signs up for SS benefits in 2016, the maximum possible payment will be $2,639 per month. This is $24 less than $2,663 in 2015. According to the SSA, this decrease occurs because there is an increase in the national average wage index though there is no COLA.

Access Online Services for Social Security Benefits

Social Security beneficiaries can make use of the many convenient online services that the Administration provides. Workers can create a personal social security account that enables them to view the taxes they have paid and get a personalized estimate of their payments each month at various claiming ages. Retired workers can make use of this account to obtain a benefit verification letter, adjust their direct deposit, obtain a replacement Medicare card or request a replacement SSA-1099 form. With a view to better serving applicants, the SSA has extended the office hours of many of its field offices since March 2015 though most offices continue to close to the public at noon on Wednesdays alone.