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1 1 (January 31, 2025)

handle is hein.crs/goveshu0001 and id is 1 raw text is: The Social Security Fairness Act of 2023 January 31, 2025 The Social Security Fairness Act of 2023 (P.L. 118-273) was signed into law on January 5, 2025. The legislation repeals two provisions under Social Security-the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP)-for monthly benefits payable after December 2023. This In Focus provides summary information on how the two provisions worked, who will be affected by the act, and how the legislation may interact with other components under Social Security and other programs. Finally, this In Focus discusses recent issues related to the implementation of the act. Background Social Security is a work-related federal insurance program that provides monthly cash benefits to workers and their eligible family members in the event of a worker's retirement, disability, or death. A worker's employment or self-employment is considered covered by Social Security if the services performed in that job result in earnings that are taxable and creditable for program purposes. Although participation in Social Security is compulsory for most workers, about 6% of all workers in paid employment or self-employment are not covered by Social Security and thus not subject to its payroll tax (e.g., about one-quarter of state and local government employees and most civilian federal employees who were hired before 1984). The GPO and the WEP were two separate provisions designed to place Social Security beneficiaries who had some noncovered earnings in approximately the same position they would have been in had all their earnings been covered by the program. The GPO, enacted in 1977 (P.L. 95-216), adjusted the Social Security spousal or widow(er) benefits of most people who also received federal, state, or local government pensions based on earnings not covered by Social Security. The GPO was intended to replicate the dual entitlement rule for beneficiaries whose entire careers were covered by the program. Under the dual entitlement rule, a person's Social Security spousal or widow(er) benefit is reduced by the amount of his or her own Social Security retired- or disabled-worker benefit (i.e., a 100% offset). The GPO reduced certain individuals' Social Security spousal or widow(er) benefits by two-thirds of their noncovered government pensions (i.e., a 67% offset). The GPO was designed to place spouses and widow(er)s who received noncovered government pensions in approximately the same position as spouses and widow(er)s whose entire careers were covered by Social Security. The WEP, enacted in 1983 (P.L. 98-21), reduced the Social Security benefits of certain retired or disabled workers (and their family members) who were also entitled to pension benefits based on earnings from noncovered jobs (including certain foreign pensions). The Social Security benefit formula is intended to help workers who spend their careers in low-paying jobs by providing them with relatively higher benefits in relation to their career-average earnings in covered employment than the benefits for workers with high career-average earnings. However, the formula could not differentiate between those who worked in low-paid jobs throughout their careers and other workers who appeared to have been low paid because they worked many years in jobs not covered by Social Security. (These years are shown as zeros for Social Security benefit calculation purposes.) The WEP was intended to remove this unintended advantage or windfall that these latter beneficiaries would otherwise have received from Social Security. Supporters of the GPO and the WEP said that the provisions were reasonable means to prevent overgenerous benefits to certain people due to their noncovered employment. However, critics pointed out that these provisions were not well understood. They argued that many people affected by the provisions were unprepared for smaller Social Security benefits than they had expected in making retirement plans. They further pointed out that affected individuals considered the provisions to be unfair and somewhat arbitrary with respect to how the benefit reductions were computed. Some lawmakers regularly introduced legislation to repeal or modify these provisions. Benefadaries Affected The Social Security Fairness Act of 2023 repeals the GPO and WEP. The act may affect both current and future Social Security beneficiaries. As of January 2025, SSA says about 3.2 million individuals had their Social Security benefits reduced or eliminated by the GPO, the WEP, or both. Under the new law, those affected beneficiaries are expected to receive an increase in their monthly benefits and may also receive retroactive payments for benefits payable dated back to January 2024. All 50 states, the District of Columbia, outlying areas (including American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, the U.S. Virgin Islands, and U.S. overseas military bases), and foreign countries had Social Security beneficiaries affected by the GPO/WEP, but the number of affected beneficiaries varied widely by state. Nine states (California, Texas, Ohio, Illinois, Florida, Massachusetts, Colorado, Louisiana, and Georgia) accounted for nearly 60% of affected beneficiaries in December 2023. The Congressional Budget Office (CBO) estimated that eliminating the GPO would increase monthly benefits in

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