Social Security Special Earnings Limit Rule

[iEngineer]

What is the name of your state? What is the name of your state? Pennsylvania

I’m trying to help my father understand why his Social Security retirement benefits are currently suspended.

A little history of his application/situation: He is 65 and under full retirement age. Applied for both retirement benefits & Medicare over the summer (1-month prior to his 65th birthday). His application was approved, and he received his first check in October (for September benefits).

At some point in October, social security mailed him a form to update/confirm his income. A few weeks later, he received a notice that his benefits were being suspended. He called them on the phone, and they kept saying that his income was over the yearly threshold of $18,960.

What I don’t understand though is that he filled out the initial application indicating that he anticipated $36,000 in 2021 (he included unemployment in this). I guess whenever he received the form in October he called and was told that unemployment doesn’t count, so he filled it out as $34,000. He also indicated that he did not anticipate making over $1,580 a month through the rest of the year.

I was under the impression that SSA has a Special Earnings Limit Rule (https://www.ssa.gov/benefits/retirement/planner/rule.html) for situations like this. Meaning his income prior to retirement doesn’t exclude him from receiving benefits during the months he is retired.

The only issue I can see where things may have gone wrong is his first month. He said he listed date in early September for his retirement date, but things changed with his employer, and this didn’t end up occurring until later in September. He received a benefit check for September though (which gets paid-in October). This change in date would have resulted in him not being eligible for September benefits though since his earnings would have exceeded $1,580

From everything I’ve read though is that he should still be eligible for benefits in October, November, and December though. Is this correct? Since he retired in late September, he is being careful to not exceed $1,500 a month (leaving a little buffer before he hits the full $1,580).

For what it’s worth also, I helped him add up his pay stubs…his earnings should only be $30,500 for 2021 (this includes the portion he earned before retirement plus the estimated $1,500 a month after retirement).

Any help understanding why benefits are suspended are appreciated. I’m getting conflicting examples online with that Special Earnings Limit Rule, or if there isn't any such thing for a part-year retirement, with earnings prior to that date over the annual limit.

 

[Janke]

It is true that the monthly earnings test applies for the first year of retirement if he is under FRA and not the annual earnings test. Happens to lots of people since most don't retire on 12/31. So I agree this sounds like an error. If he has a contact in his local office from his initial filing, I would call them first. If not he can call his local office general line or if that doesn't work, -1-800-772-1213 for the teleservice representative. Someone can take the corrective action although they may need his statement in writing. There may be a form to use but I don't know what it is and a quick Google search was not helpful.

 

[iEngineer]

Thank you so much for answering. He was able to reach out to someone at the national 800 number this week. The person he spoke with confirmed what we were initially thinking, that the payment for September was what caused an issue. From what he explained to me it should just cause him to miss this month's direct deposit (which would have been for October), since he was paid last month (for September) when he was over the monthly earnings limit. The representative said he should then get a check next month (for November) provided his earnings this month remain under the monthly limit. Hopefully that'll be the last of it.

The only thing that still has us somewhat confused is that Medicare wants a payment for premiums from now through January. I understand that these premiums come out of the normal benefits, but it seems odd to have to owe through January when Social Security says he should get monthly payments resumed next month. The medicare letter makes it seem that they are under the impression his next monthly payment would be issued in February, but it does seem like a standard form type letter. I'm debating asking him to call someone from Medicare or just pay for the premiums and hope that the only negative of that would be there would be no deductions from the benefits payments in December & January.

 

[LdiJ]

Thank you so much for answering. He was able to reach out to someone at the national 800 number this week. The person he spoke with confirmed what we were initially thinking, that the payment for September was what caused an issue. From what he explained to me it should just cause him to miss this month's direct deposit (which would have been for October), since he was paid last month (for September) when he was over the monthly earnings limit. The representative said he should then get a check next month (for November) provided his earnings this month remain under the monthly limit. Hopefully that'll be the last of it.

The only thing that still has us somewhat confused is that Medicare wants a payment for premiums from now through January. I understand that these premiums come out of the normal benefits, but it seems odd to have to owe through January when Social Security says he should get monthly payments resumed next month. The medicare letter makes it seem that they are under the impression his next monthly payment would be issued in February, but it does seem like a standard form type letter. I'm debating asking him to call someone from Medicare or just pay for the premiums and hope that the only negative of that would be there would be no deductions from the benefits payments in December & January.

I recommend just paying the Medicare premiums and sort out any duplicate payments (if any) later on. He won't want to risk any break down in Medicare coverage as that can have life long consequences.