Most of the news about Social Security has been about the two percent drop in the amount workers will be paying into the Social Security trust fund this year as part of the bill that extended the Bush tax cuts.
But what you may not be aware of are other changes that will take away some of the options regarding Social Security claims.
According to U.S. News and World Report, one of the options being eliminated is the “free loan option.” That means retirees will not be able to get an interest-free loan from the Social Security trust fund this year.
The Social Security Administration announced back in December, that individuals will not be able to begin payments at age 62, pay back all the benefits received at age 70 without interest, and then reclaim at a higher rate due to delayed claiming.
Withrdawal policy revision
Under the new rules, Social Security beneficiaries may withdraw an application for retirement benefits only within 12 months of their first Social Security payment and are limited to one withdrawal per lifetime. In a statement about the rule change, the Social Security Administration said that the free loan costs the Social Security trust fund the use of money during the period the beneficiary is receiving benefits with the intent of later withdrawing the application and the interest earned on these funds,.
The Center for Retirement Research at Boston College estimates that mass utilization of this claiming strategy could cost the system between $5.5 billion and $11 billion, primarily going to high-income households with enough liquid assets to pay back the benefits.
The second option being eliminated is the retroactive benefit suspensions. U.S. News says retirees will still be allowed to suspend their benefits temporarily and restart them later, which can result in bigger Social Security checks to account for the months or years in which payment was not received.
However, beneficiaries will not be able to suspend benefits retroactivelyand pay back money already received in exchange for higher payments in the future. Retirees will be allowed to suspend benefits voluntarily only for months in which they did not receive payments or future benefits beginning the month after the request is made.
Adios paper checks
And finally those Social Security checks people used to watch for in their mailboxes are going the way of the dinosaur. According to U.S, News, retirees who apply for benefits on or after May 1, 2011, will no longer have the option of receiving a paper check in the mail. They can have their payments deposited directly into a bank or credit union account or loaded onto a prepaid Direct Express Debit MasterCard.
Richard Gregg, Treasury Fiscal Assistant Secretary, says this important change will provide significant savings to American taxpayers who will no longer incur the annual $120 million price tag associated with paper checks He says it will save Social Security $1 billion over the next 10 years. Retirees already receiving paper checks will need to switch to direct deposit or the prepaid debit card by March 1, 2013.
