Millions of beneficiaries of Social Security will now be able to have their full benefits restored to them under a new law that was signed into effect by former President Joe Biden prior to the new administration stepping into office in January.
Here is what you need to know about the Social Security Fairness Act and who it impacts.
The Social Security Fairness Act
Many public sector employees such as federal employees, police officers, teachers, railroad employees, and firefighters had their Social Security benefits reduced — or in some cases, eliminated entirely — because their employers had provided alternate pensions. In January, however, former President Joe Biden signed into law the Social Security Fairness Act which effectively restored the full benefits of this cohort of impacted public sector employees. These employees will have their full benefits restored retroactively dating back to January 2024 as well.
“The bill I’m signing is about a simple proposition: Americans who have worked hard all their life to earn an honest living should be able to retire with economic security and dignity — that’s the entire purpose of the Social Security system,” said former President Joe Biden in January at a signing ceremony at the White House. “This is a big deal.”
As such, around 2.8 million Social Security beneficiaries will now get to welcome an increase to their monthly benefit checks thanks to the new Social Security Fairness Act. It should be noted, however, that if you are a beneficiary impacted by this new law, your Medicare premiums and how much is paid could also be faced with change under the new act.
Changes to Medicare under the Social Security Fairness Act
Prior to the Social Security Fairness Act, the onus of sending in the Medicare payment was on the retiree. Beneficiaries of Social Security, on the other hand, have their premiums deducted from their benefit amount automatically. As such, now that those gaining from the Social Security Fairness Act will begin receiving benefits, their Medicare premiums will also eventually be deducted automatically.
It should be noted, however, that if you are currently paying your monthly Medicare premiums directly to the Centers for Medicare & Medicaid Services, the Social Security Administration (SSA) recommends that you continue to do so even if you are now covered by Social Security. This means that new beneficiaries should continue to pay their premiums as per the instructions on their bill. Once your record has been updated, the agency will send you a notice stating so and going forward from then, your premiums will be deducted from your benefit automatically.
Additionally, for those who had prepaid their premiums to the Centers for Medicare & Medicaid Services, a refund could be owed to you once the automatic payments come into effect. If this is the case, the SSA will issue the refund to you.
In the case of those who pay their premiums through Medicare Easy Pay or through online bill payments, the following should be noted upon receiving the SSA notice for automated payments, according to AOL:
- If you use Medicare Easy Pay, complete the Authorization Agreement for Preauthorized Payments form (SF-5510) to stop the payments.
- If you pay via online bill payment, log in to your bank’s online banking or contact the bank to stop the payments.
Lastly, your premiums for Medicare Part B and Part D could also increase due to the changes in your benefits by triggering an Income Related Monthly Adjustment Amount (IRMAA). Your monthly premium is determined in relation to your modified adjusted gross income, and the Social Security Fairness Act could cause this to increase since it increases your benefits, meaning your premiums are subject to an increase as well.
For 2025, the standard premium which is paid by most beneficiaries stands at $185 and covers 25% of Medicare Part B and Part D’s costs — with the remainder subsidized by the government. Depending on their modified adjusted gross income, higher income earners can pay up between 35% and 85% of the total cost.