News & Information

CCH® UNEMPLOYMENT INSURANCE — 6/29/15

SSA issues final rule explaining 60-month period of employment to receive GPO exemption for spouse’s benefits

The SSA has issued a final rule that adopts, with clarifying changes, the proposed rule the agency previously published in the Federal Register on August 3, 2007 (72 Fed. Reg. 43202). The final rule revises the SSA’s Government Pension Offset (GPO) regulations to reflect changes to the Social Security Act made by Section 9007 of the Omnibus Budget Reconciliation Act of 1987 (OBRA 1987) and Section 418 of the Social Security Protection Act of 2004 (SSPA). The regulations explain how and when the SSA will reduce the Social Security spouse's benefit for some people who receive federal, state, or local government pensions if Social Security did not cover their government work. The final rule becomes effective on July 15, 2015.

Background

Under the GPO, the benefits of an insured worker's eligible spouse who has a government pension based on noncovered employment is reduced so as to prevent what Congress saw as a windfall if he or she also could receive a pension based on his or her own noncovered work and an unreduced Social Security spouse's benefit, regardless of a dependency on the insured spouse. The GPO provision was designed to provide parity with workers who earned their own Social Security retirement benefits and who are eligible to receive a spouse's benefits under Social Security as well. These workers have their spouse's benefits offset by their retirement benefits and receive the larger of the two. Accordingly, the GPO prevents individuals who receive a government pension based on noncovered earnings from receiving more in combined pension and Social Security spouse's benefits than individuals who worked in covered employment and also were eligible for spouse's benefits under Social Security. The GPO adjusts the spouse's benefits of a government worker to prevent a windfall.

Clarifying changes made

The SSA now has finalized the changes it announced in the Notice of Proposed Rulemaking (NPRM) in 2007, with the modifications listed below. No other changes were made. The agency:

• Reworded and reorganized the proposed regulatory language to better explain how it will apply the GPO rules. The language changes do not affect the substance of the regulation as proposed in the NPRM.
• Proposed replacing the words “receiving” and “received” in the NPRM with the word “payable,” but decided against the change. Variations of the term “receive” more clearly describe the fact that a government pension plan must pay a person a periodic benefit for GPO to apply. Additionally, use of the term “receive” in the section maintains consistency throughout the SSA’s regulations.
• Simplified the language in proposed §404.408a(a)(1), and redesignated the section as §404.408a(a)(2). The SSA also redesignated proposed §404.408a(a)(1) as (a)(2) because it added a new §404.408a(a)(1). In the proposed rules, the SSA used the terms “government pension” and “noncovered employment” without a definition. It also referred to an individual's “Social Security benefits as a wife, husband, widow, widower, mother or father, divorced or surviving divorced spouse” throughout proposed §404.408a(a), as well as in proposed §404.408a(b) and (d).

To simplify and clarify the rules, the SSA added a definitional paragraph to §404.408a(a) for these terms. In addition, it defined the terms “government pension” and “noncovered employment” in §404.408a(a)(1)(i) and (a)(1)(ii) and added §404.408a(a)(2)(iii) to define “spouse's benefits,” which is a single term used to represent those beneficiaries affected by this section: Wives, husbands, widows, widowers, mothers, fathers, divorced or surviving divorced spouses. Using a single term to describe these groups simplifies the rules and makes them easier to understand, but the addition of the term does not change or affect the categories of beneficiaries affected or change the substance of the rules the SSA proposed.

• Simplified the language in proposed §404.408a(a)(3) and moved it to §404.408a(b)(6), except for the final sentence of (3)(ii).
• Revised the final sentence of proposed §404.408a(a)(3)(ii) and moved it to §404.408a(a)(2).
• Simplified the first sentence of proposed §404.408a(a)(4) and moved it to §404.408a(b)(6)(ii) to clarify that it applies to the last-60-months rule.
• Simplified the second sentence of proposed §404.408a(a)(4) and moved it to §404.408a(a)(1)(ii) to clarify that it applies to all of §404.408a.
• Simplified the language of proposed §404.408a(d) and added provisions from proposed §404.408a(a)(5); revised the language of proposed §404.408a(b)(6) and moved it to §404.408a(b)(7); and simplified formerly proposed §404.408a(a)(2) and moved it to §404.408a(b)(8) as a new exception.

For further information, contact Sylvia Diaz, Social Insurance Specialist, Office of Income Security Programs, Social Security Administration, 6401 Security Boulevard, Baltimore, Maryland 21235- 6401, (410) 965-1981 (80 Fed. Reg. 34048, June 15, 2015).