Government Employee and Social Security Benefits

Originally, the Social Security program excluded government workers. Changes in the law have now allowed states to add optional Social Security coverage to their public pension plans. However, many employees opted out of coverage. Laws have excluded some public employees from coverage and mandated coverage for others. Federal laws have reduced Social Security benefits for annuitants whose government pension was based on their own work, rather than as a dependent of a government worker.

  1. Dual Coverage

    • Congress added Section 218 to the Social Security Act effective 1951, authorizing states to provide optional Social Security and Medicare coverage for employees. Approximately 25 percent of government employees still do not pay into Social Security. Beginning April 1986, all new employees and most current government employees pay into the Medicare program, even if they do not participate in Social Security. If a government employee worked some years under just the government plan before starting to also work under Social Security, the employment under just the government plan may affect his Social Security. SSA figures what part of the employee's public pension comes from non-covered work and uses that to offset the Social Security benefit.

    Temporary Government Employees

    • Temporary state employees and all government employees not eligible to participate in the government pension system must receive Social Security coverage. Mandatory coverage does not apply to some state workers, such as those hired under non-federally funded programs to alleviate unemployment or to help out in a natural disaster. For these workers, Social Security benefits are unaffected by the fact that they were government employees. Their Social Security benefit amounts may be smaller if they regularly worked in jobs that did not have Social Security coverage.

    Federal Employees

    • Prior to 1984, federal employees paid into the Civil Service Retirement System (CSRS) rather than Social Security. Beginning in 1984, new employees entered the Federal Employees Retirement System. Current employees could either switch completely to FERS or stay in the Civil Service system. Federal employees who did not switch still paid into Medicare, beginning in 1984. Their CSRS pensions may affect any Social Security benefits under the Government Pension Offset (GPO) and Windfall Elimination Provisions (WEPs) of Social Security. FERS annuitants are not subject to GPO or WEP. FERS employees who are eligible to retire before age 62 receive a special FERS supplement equal to their age 62 Social Security benefit until they start collecting Social Security at age 62.

    Government Pension Offset

    • GPO affects Social Security benefits based on a spouse who worked under Social Security. Until 1977, when male government employees retired, they could not collect their spouses' Social Security benefits since, unlike females, males had to establish they received one-half of their support from their spouse. In 1977, the Supreme Court eliminated this inequality, creating an additional class of government employees potentially eligible for SSA benefits. In response, in 1977 Congress repealed all Social Security gender-based eligibility statutes and established Government Pension Offset for spouses' Social Security benefits. GPO offsets Social Security dependent benefits by two-thirds of the government pension. If the government employee worked the last 60 months of his government job under both Social Security and his government pension plan, his is excluded from GPO.

    Windfall Elimination Provision

    • WEP applies when an individual is concurrently eligible for Social Security and government pensions based on his own work. Beneficiaries who had substantial earnings under Social Security for at least 30 years are exempt from the offset. Annuitants with substantial earnings for 21 to 29 years receive a smaller offset according to the number of years. The amount considered substantial varies from year to year. For example, Social Security covered earnings of $900 in the year 1951 are considered substantial; in 2010, earnings must be $19,800. The maximum WEP benefit reduction in 2010 was $380.

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