Copyright 2016 by Joan E. Emery
The File and Suspend (also known as Voluntary Suspension of Benefits) Rules Are Changing
Section 831 of the Bipartisan Budget Act of 2015 ("BBA") made two key changes in Social Security. Changes in the file and suspend rules are key changes. Changes in the restricted application rules are also key changes. Today I'll discuss the changes in the file and suspend rules.
A. The New Subsection (z) Rules Imposed by the BBA
1. New subsection (z) of 42 USC §402 provides that any person who has attained retirement age and who is entitled to old-age benefits may request that those benefits be suspended. There are a few special exceptions to the file and suspend rule, such as where a mandatory suspension of benefits is in place, benefits have been terminated, etc. However, under the new subsection (z) rules, when the person who is entitled to receive benefits requests the suspension of benefits, (1) no retroactive benefits may be paid to that person, (2) no other individual may receive monthly benefits on the basis of the wages and self-employment income of the person who suspended benefits, and (3) no monthly benefit can be paid to the person whose benefits are suspended, based on another individual’s wages and self-employment income.
2. The changes imposed by the new subsection (z) will apply to requests for benefit suspension which are submitted at least 180 days from November 2, 2015. That would be on or about April 29, 2016, but the final date should be set by the Social Security Administration.
B. How These New Rules Will Impact Social Security Recipients
1. The new rules should not impact anyone who has a file and suspend in place or who submits a request to file and suspend within at least 180 days from November 2, 2015.
2. Three changes will affect those who file and suspend after the effective date. First, the option to file and suspend and then (for example, in the event of poor health) cancel the file and suspend and receive benefits retroactive to the date of the original filing will cease to be an option. Additionally, the new file and suspend rules will now prevent the other spouse from receiving spousal benefits under the work record of the spouse who has filed and suspended after the effective date. Finally, a spouse who files and suspends after the effective date cannot collect a spousal benefit based on the other spouse’s work record.
I am an attorney practicing in the Chicago area.