Social Security Fairness Act: Will every public worker receive a benefit increase because of the new law?

The Social Security Fairness Act, signed into law on January 5, 2025, has brought a wave of hope to millions of retired public servants, including teachers, police officers, and firefighters.

After decades of complaints over reduced Social Security benefits due to overlapping public pensions, this legislation eliminates the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) - two major roadblocks that cut or wiped out benefits for workers who also receive a government pension not covered by Social Security.

However, despite the celebratory headlines, not every public worker will see an increase in benefits. Here's a breakdown of who benefits, when, and what actions affected workers should take.

Who Is Impacted and What Can They Expect?

The end of WEP and GPO will mean higher monthly payments for over 3 million Americans, including:

• Teachers, firefighters, and police officers in states where public employees do not pay into Social Security.
• Federal workers under the Civil Service Retirement System (CSRS).
• Workers covered under foreign social security systems.

However, 72% of public employees already pay into Social Security through payroll taxes and will not see a change. Only those receiving pensions from work that did not deduct Social Security taxes are eligible for increased benefits under the new law.

When Will the Social Security Fairness Act Take Effect?

Starting February 25, 2025, the Social Security Administration (SSA) began adjusting benefits to reflect the changes. Those affected can expect:

• Retroactive payments for benefits owed since January 2024, arriving by March 31, 2025.
• New monthly payments reflecting higher amounts starting April 2025, with April payments covering March benefits.

Beneficiaries impacted will receive mailed notices from SSA detailing the adjustments. In some cases, individuals may get two separate letters: one when WEP and GPO are removed from their records, and another with the updated monthly payment amount.

How Much More Will Retirees Receive?

The average monthly increase is projected at $360, but increases will vary depending on factors such as pension size and type of Social Security benefit. Some retirees could see $1,000 or more per month, while others may see smaller increases.

SSA is also issuing lump sum payments to make up for benefits reduced in 2024, going back to January 2024, when WEP and GPO officially stopped applying.

What Should Beneficiaries Do Now?

If you're currently receiving reduced benefits due to WEP or GPO:

• No action is required, but verify that SSA has your current address and bank details at ssa.gov/myaccount to avoid delays.
• If you never applied for benefits because of WEP or GPO:
• Apply now for retirement or spouse's benefits at ssa.gov/apply or call 1-800-772-1213 and say "Fairness Act" to speak with a representative.

For survivor benefits, applications must be done by phone.

Will Retroactive Payments Affect Taxes?

Yes, retroactive lump sum payments could increase taxable income for 2025. However, recipients can choose whether to count the lump sum as part of current-year income or spread it over past years for tax purposes. The latter option could lower overall taxes owed if income was lower in previous years.

Additionally, since Social Security is taxable based on combined income, higher monthly payments may push some retirees into a higher tax bracket. For instance:

• Singles with combined income over $34,000 may have up to 85% of benefits taxed.
• Married couples with income over $44,000 may also be taxed on up to 85% of benefits.

Avoid Scams: What to Watch Out For

Sadly, scammers are taking advantage of this situation. SSA will never call to demand payment or ask for sensitive information to process benefits. If you get suspicious calls, hang up and report them to the Office of Inspector General at 1-800-269-0271 or visit ssa.gov/scams.

SSA has also rolled out a dedicated Fairness Act webpage and upfront messaging on their national helpline to keep people informed without needing to wait on hold.

A Long-Awaited Win - But Not for Everyone

While the Social Security Fairness Act is a landmark victory for many who have served their communities, it doesn't apply universally. If you've always paid Social Security taxes through your job, you won't be affected by this law.

But for those who qualify, this law provides a significant financial lifeline - and for many, it's justice long overdue.

If you're eligible, make sure your information is up to date, stay alert for scams, and prepare for possible tax implications.

Key Points to Remember:

• Only public workers with pensions not covered by Social Security will benefit.
• Benefit increases and retroactive payments started rolling out in February and March 2025.
• Average monthly increase: $360, but some may see much more.
• No action required for those already receiving benefits, but keep personal info updated.
• Watch out for scams - SSA will never ask for payment to adjust benefits.