GPO and WEP Explained: Q & A

JANUARY 2004
- Answers to Most Frequently Asked Questions - Over the course of the years that our Association has been fighting
to repeal Social Security's GPO (Government Pension Offset) and WEP
(Windfall Elimination Provision), we have received hundreds of
communications from our members and other interested parties. Here are
some of the most frequent questions and our answers to them. (Editor's Note: Periodically we offer an explanation of the GPO and WEP for our new members and as a refresher for all of us.)

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WHAT IS THE GPO?

The
GPO affects members who apply for SS spousal benefits, based upon their
husband or wife's work record under the program, and fail to satisfy
two exceptions. Members must either be eligible for their public
pension before December 1, 1982 and meet all requirements for SS
spousal benefits in effect in January 1977 (i.e., husband received
one-half support from his wife), or be eligible for their pension
before July 1, 1983 and receiving one-half support from his or her
spouse.

Unless a member satisfies
one of these two exceptions, then the amount of their SS spousal
benefits will be reduced by two-thirds of their public pension. For
example, if your pension is $9,000 and you're eligible for $6,000 in SS
spousal benefits, two-thirds of your pension ($6,000) would
unfortunately reduce your SS benefits to zero. Note: Even if you do not
receive actual benefits, you can still be covered by Medicare.

WHEN DID THE GPO BECOME LAW?

The
GPO was a provision in the 1977 Social Security Amendments signed into
law by President Jimmy Carter, at a time when the Democrats controlled
both the House and Senate. The provision originated in the Senate
Finance Committee, then chaired by Sen. Russell Long (D-LA). House Ways
and Means Committee Chairman Al Ullman (D-OR) pushed through an
amendment in the House to provide a five-year transition period so that
the GPO was not effective until 1982. Subsequent amendments changed the
effective date to 1983, and applied the $1-for-$1 offset against
two-thirds of the pension, instead of the entire pension used as the
offset in the original provision.

WHAT IS THE WEP?

The
WEP affects members who apply for their own (not spousal) SS benefits
and fail to satisfy certain exceptions. A major exception is that
members, who were eligible for their public pension before January 1,
1986 (i.e., 20/more years of service under age 55, or 10/more years
over 55) or have at least 30 years of substantial coverage under Social
Security, are exempt from the WEP. (There is some relief for those with
20-30 years of SS coverage.)

If a
member doesn't satisfy the exceptions, then they are subject to the
WEP, meaning that their SS benefits will be calculated using a
different formula. Under that different formula, instead of receiving
90% of the first $606, which the member earned on the average each
month (in this case, $545.40), the member would receive only 40% of
their first $606 ($242.40) - more than 55% less in benefits.

WHEN DID THE WEP BECOME LAW?

The
WEP was enacted as part of the 1983 Social Security Refinancing Act,
designed to shore up the financing of the Social Security Trust Fund.
That Act was signed into law by President Ronald Reagan, after being
adopted by the Democratic-controlled House where Rep. Dan Rostenkowski
(D-IL) chaired the House Ways and Means Committee and the
Republican-controlled Senate, where Sen. Robert Dole (R-KS) chaired the
Senate Finance Committee.

WHAT STATES HAVE RETIREES HURT BY THE GPO AND WEP?

In
addition to Massachusetts, there are 26 states that have public
retirees and employees who could be hurt by either the GPO/WEP. Like
the Commonwealth, the first 6 states, listed below, have almost all or
a large majority of their employees not contributing to Social
Security, and, therefore, potentially affected by these laws as
retirees. The remaining 20 states are ranked in terms of the percent of
employees who may be impacted (66-16%). They are: California, Colorado,
Illinois, Louisiana, Ohio, Texas, Florida, New York, Nevada,
Connecticut, Kentucky, Minnesota, Georgia, Missouri, Michigan,
Tennessee, Wisconsin, Washington, Indiana, Pennsylvania, Alaska, Maine,
Hawaii, Montana, New Mexico and New Hampshire.

WHAT CAN I DO TO HELP?

As
with any issue - be it at the federal or state level, it's vital to
keep informed. And as we do with all issues of utmost interest, our
Association strives to provide our members with the most up-to-date
information through a variety of outlets including the Voice, our
24-hour hotline (1-800-368-8778) or the web site
(www.massretirees.com). Please take advantage of these resources and
remember you can call the office or your Association officers at the
telephone numbers listed on your membership card.

Second,
timing is critical. Over the years, we have called upon members, in
specific parts of the country (i.e., Florida, Maine, Vermont, etc.), to
contact their congressmen and senators on the GPO/WEP. While we do not
discourage individual initiative on these issues, please act if and
when we contact you - that's when we believe you can have the greatest
i

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