What is the Social Security Fairness Act?

What is the Social Security Fairness Act?

The Social Security Fairness Act, signed into law on January 5, 2025, repeals two provisions that reduced Social Security benefits for certain public employees and retirees:

Government Pension Offset (GPO): Reduced or eliminated Social Security spousal/survivor benefits for individuals who received pensions from government jobs where they didn't pay Social Security taxes. The GPO could cut these benefits by two-thirds of a person’s government pension amount.

Windfall Elimination Provision (WEP): Reduced Social Security benefits for individuals who worked in jobs covered by Social Security but also received pensions from employment not covered by Social Security.

The Social Security Fairness Act eliminated these reductions, potentially increasing benefits for millions of public servants including teachers, firefighters, police officers, and other government employees who currently face reduced Social Security benefits despite their years of service.

Here are the top five things Medicaid Long-Term Care recipients in Delaware should know about the Social Security Fairness Act:

1. Income Cap Impact: If your Social Security benefits increase due to the Social Security Fairness Act, and your total income now exceeds Delaware's $2,417.50 monthly income cap for Medicaid long-term care, you must establish a Miller Trust within 30 days to maintain eligibility.
2. Miller Trust Requirements: This is a specialized trust that funnels monthly income, which must be deposited into this trust to maintain Medicaid eligibility. The trust must be properly structured with an elder law attorney to meet Delaware Medicaid Long-Term Care requirements.
3. Retroactive Payment Rules: For any lump-sum retroactive Social Security payments resulting from the legislation, persons have 9 months to spend down these funds before the money affects Medicaid eligibility. These funds must be spent on permissible items.
4. Government Pension Offset (GPO) Elimination: A person may receive increased spousal Social Security benefits that were previously reduced or eliminated due to your government pension. This increased income must be reported to Medicaid and may require Miller Trust arrangements.
5. Reporting Requirements: Any changes to your income from the Social Security Fairness Act must be promptly reported to your Medicaid caseworker to avoid penalties or loss of eligibility.

Are you using Delaware Medicaid Long-Term Care, and your income has been affected by the Social Security Fairness Act? We can help.