Dear Rusty: My wife is a retired Missouri teacher and now on Medicare. Unfortunately, due to the windfall elimination provision for teachers in our state, she cannot get Social Security. So, she must pay for her Medicare. I’ve never quite understood this and why some states have it, and some don’t. I’m also confused as to why she can’t get my SS if something were to happen to me. Our SS office can’t explain this to us. Can you enlighten us? Signed: Perplexed
Dear Perplexed: Social Security’s Windfall Elimination Provision (WEP), and a sister provision known as the Government Pension Offset (GPO) are probably the most misunderstood (and equally reviled) regulations of the Social Security Act. Your wife, as a retired Missouri teacher, is apparently being affected by WEP and by GPO if she is receiving spousal benefits from your work record; GPO will also affect her survivor benefit if you should predecease her. WEP affects one’s Social Security retirement benefit and GPO affects survivor benefits and spousal benefits. Missouri is one of 27 States where either all, or some, of their employees do not participate in and do not contribute to the Social Security system and are, thus, subject to WEP and GPO. WEP applies if your wife had other employment outside of her teaching career where FICA taxes were withheld from her wages for enough years to entitle her to Social Security benefits. In that case, when she applied for her benefits, the WEP formula was applied and her benefit was reduced. The reduction is determined by using a different formula to compute benefits for a WEP-affected beneficiary, up to a maximum reduction for the year your wife became eligible for Social Security. The reduction is less if you have more than 20 years of “substantial earnings’” in SS-covered employment, and WEP doesn’t apply at all if you have 30 or more years of “substantial earnings” in SS-covered employment. In any case, the WEP reduction to your wife’s Social Security benefit is limited to ½ of her teacher’s pension; however, because of the formula used and the maximum allowable reductions, WEP should not eliminate your wife’s own Social Security retirement benefit. The Government Pension Offset (GPO) applies to the benefit your wife is entitled to as your spouse and will also apply to her survivor’s benefit if you should predecease her. The GPO reduction works differently from the WEP reduction, in that GPO reduces your wife’s Social Security spousal or survivor benefit by 2/3rds of the amount of her teacher’s pension amount, which can eliminate any spousal or survivor’s benefit your wife might be otherwise entitled to. Since you said that “she cannot get Social Security”, I suspect that a combination of WEP (affecting her own SS benefit) and GPO (affecting her spousal benefit) have reduced her Social Security benefit amount to something less her premium for Medicare Part B ($134/month for 2018). If that is the case, your wife would have to pay her Medicare premium separately (it’s typically deducted from Social Security benefits). Both WEP and GPO have been controversial since enacted in 1983. The rationale for these rules was that Social Security benefits are intentionally weighted toward lower-earning recipients, and that giving full benefits to those who aren’t truly lower-earning (because they have a pension from another source which did not contribute to Social Security) isn’t right. Thus, WEP and GPO were enacted to equalize Social Security benefits across all beneficiaries. Nevertheless, due to the unpopularity of these provisions, bills have been submitted in Congress – most recently H.R. 1205, “The Social Security Fairness Act” – which propose to eliminate both WEP and GPO. Although H.R. 1205 has more than 180 co-sponsors we have seen little progress which would suggest the bill will be passed any time soon. While I can’t offer you any way to ease the impact of WEP and GPO to your wife’s Social Security benefits, I hope this at least explains these two provisions more clearly than your Social Security office was able to.
This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website (amacfoundation.org/programs/social-security-advisory) or email us at [email protected].