What Is the Social Security Spousal Benefits Loophole?

Is There Still a Social Security Spousal Benefits Loophole?

For most retirees, the answer is no. The old loopholes that allowed some couples to coordinate retirement and spousal benefits in especially favorable ways were largely closed by the Bipartisan Budget Act of 2015.

That does not mean Social Security spousal benefits disappeared. A spouse may still qualify for benefits based on the worker’s earnings record. What changed is the ability for many people to claim one type of benefit while intentionally delaying another.

Today, many people who apply for either their own retirement benefit or a spousal benefit are treated as applying for both if they are eligible. This rule is known as deemed filing.

What Changed?

What Are Social Security Spousal Benefits?

Social Security spousal benefits are monthly benefits paid to a spouse based on the earnings record of a worker who qualifies for Social Security retirement or disability benefits. These benefits can be especially important when one spouse earned significantly less, spent years out of the workforce, or handled caregiving responsibilities that reduced their own Social Security record.

A spouse’s benefit can be up to 50% of the worker’s primary insurance amount if the spouse claims at full retirement age. The actual amount may be lower if the spouse claims early or if the spouse also qualifies for a higher benefit based on their own work record.

Who Qualifies for Spousal Benefits?

SSA explains that a spouse may qualify for benefits based on a worker’s earnings record when the worker has filed for retirement benefits and the spouse is at least 62 or has a qualifying child in care.

A person may qualify for spousal benefits if:

• The worker is eligible for Social Security retirement or disability benefits.
• The worker has filed for benefits, unless a divorced-spouse rule applies.
• The spouse is at least 62, or has a qualifying child in care.
• The spouse’s own Social Security benefit is lower than the amount available through the spousal benefit.
• The marriage meets SSA’s duration requirements.

For married spouses, the marriage generally must have lasted at least one year before spousal benefits are payable. For divorced spouses, the marriage generally must have lasted at least 10 years, and the divorced spouse must meet SSA’s divorced-spouse benefit rules.

What Was the File-and-Suspend Loophole?

File-and-suspend was one of the best-known Social Security claiming strategies before the 2015 law change. Under the old approach, a worker could file for retirement benefits at full retirement age and then immediately suspend those benefits. This allowed the worker to keep earning delayed retirement credits while, in some cases, the spouse could claim spousal benefits on the worker’s record.

This strategy helped some couples receive income from one spouse’s benefit while allowing the higher earner’s own retirement benefit to grow until age 70. However, the rule changed for suspension requests submitted on or after April 30, 2016.

How Did the Law Change File-and-Suspend?

Under current voluntary suspension rules, if a worker voluntarily suspends retirement benefits after reaching full retirement age, the worker may still earn delayed retirement credits. But benefits payable on that worker’s record, including many spousal benefits, are generally suspended during the voluntary suspension period.

In practical terms, the old file-and-suspend loophole no longer works for most couples. A worker can suspend their own benefit to increase a future benefit, but the suspension generally prevents a spouse from continuing to receive benefits on that worker’s record during the same period.

One important exception: divorced-spouse benefits may continue even if the former spouse voluntarily suspends their own retirement benefit, assuming the divorced spouse otherwise qualifies.

What Was a Restricted Application?

A restricted application allowed some people to apply only for spousal benefits while delaying their own retirement benefit. This was useful because a person could collect a spousal benefit for a period of time while allowing their own retirement benefit to grow through delayed retirement credits.

The Bipartisan Budget Act of 2015 sharply limited this strategy. In general, people born January 2, 1954, or later cannot restrict their application to only spousal benefits if they are also eligible for their own retirement benefit.

What Is Deemed Filing?

Deemed filing means that when you apply for one type of Social Security benefit, SSA may treat you as applying for another benefit if you are eligible for both. This rule commonly affects people who are eligible for both their own retirement benefit and a spousal or divorced-spouse benefit.

For people born January 2, 1954, or later, deemed filing generally applies when eligibility exists for both retirement and spousal benefits. That means you usually cannot choose to claim only the spousal benefit while delaying your own retirement benefit. SSA’s public FAQ also explains that people in this group are generally required to file for both their own retirement benefit and any spousal benefit they are due. See SSA’s answer to “Can I apply only for spouse’s benefits and delay filing for my own retirement benefit?”.

How Much Can a Spouse Receive?

At full retirement age, a spouse’s benefit can be as much as 50% of the worker’s primary insurance amount. The primary insurance amount, often called the PIA, is the worker’s monthly benefit amount at full retirement age. SSA’s Benefits for Spouses page explains this basic benefit rule.

A spouse who claims before full retirement age usually receives a permanently reduced benefit. If the spouse is also eligible for a retirement benefit based on their own work record, SSA generally pays the person’s own benefit first and then pays only an additional amount if the spousal benefit is higher.

Factors That Affect the Spousal Benefit Amount

• Claiming age: Claiming before full retirement age usually reduces the monthly amount.
• The worker’s benefit amount: A higher worker PIA can mean a higher possible spousal benefit.
• The spouse’s own work record: If the spouse’s own benefit is higher, a separate spousal payment may not be available.
• Divorce status: Divorced-spouse benefits can apply under separate rules.
• Child-in-care rules: A spouse caring for a qualifying child may have different eligibility considerations.

Can Divorced Spouses Still Claim Spousal Benefits?

Yes. Divorced-spouse benefits still exist. A divorced person may qualify for benefits on a former spouse’s record if the marriage lasted at least 10 years, the claimant is unmarried, the claimant is at least 62, and the claimant meets SSA’s other requirements.

A former spouse’s remarriage does not necessarily prevent a divorced spouse from qualifying. In many cases, the former spouse does not need to be currently receiving benefits, as long as the divorce has lasted long enough and the former spouse is eligible for retirement or disability benefits.

Spousal Benefits Are Not the Same as Survivor Benefits

Spousal benefits and survivor benefits are often confused, but they are not the same. A spousal benefit is based on a living spouse’s or former spouse’s record. A survivor benefit may be available after a spouse or former spouse dies.

Survivor benefits can follow different age rules, benefit percentages, and claiming strategies. Anyone comparing spousal and survivor benefits should review both options carefully before filing.

Common Social Security Spousal Benefit Mistakes

• Assuming the old loopholes still work. The major file-and-suspend and restricted application strategies were largely closed by the 2015 law.
• Claiming too early without understanding reductions. Spousal benefits may be permanently reduced if claimed before full retirement age.
• Confusing spousal benefits with survivor benefits. These are different benefit categories with different rules.
• Overlooking divorced-spouse benefits. A person may qualify on a former spouse’s record if the marriage lasted at least 10 years and other requirements are met.
• Failing to check both spouses’ estimated benefits. A my Social Security account can help compare estimated retirement and spousal benefit options.
• Not asking for help when eligibility is unclear. Complex issues involving divorce, remarriage, disability, overpayments, or denied benefits may require professional guidance.

How to Apply for Social Security Spousal Benefits

You can apply for Social Security spousal benefits online, by phone, or through a local Social Security office. SSA’s Form SSA-2 information page explains the information and documents SSA may request when someone applies for spouse’s or divorced spouse’s benefits.

Documents SSA may request include:

• Birth certificate or other proof of birth.
• Proof of U.S. citizenship or lawful immigration status if you were not born in the United States.
• Marriage certificate.
• Final divorce decree, if applying as a divorced spouse.
• W-2 forms or self-employment tax returns for the prior year.
• Military discharge papers if you had military service before 1968.

How to Plan Around the Rules Today

Although the old loopholes are mostly gone, strategic planning still matters. The best claiming decision depends on your age, health, marital history, earnings record, spouse’s earnings record, and need for income.

Before filing, consider these steps:

• Create or review your my Social Security account.
• Compare your benefit estimates with any possible spousal benefit.
• Check your full retirement age.
• Review whether early filing would permanently reduce your benefit.
• Confirm whether deemed filing applies to your situation.
• Consider divorced-spouse or survivor benefit rules if they may apply.
• Speak with a trusted advisor or legal professional if your situation is complicated.

When to Get Help With Social Security Benefit Questions

Social Security benefit rules can become difficult when a claim involves divorce, remarriage, survivor benefits, disability benefits, denied claims, overpayments, or unclear eligibility. In those situations, getting professional guidance may help you avoid filing mistakes.

LaPorte Law Firm helps people understand Social Security disability and benefit issues. If you have questions about a claim, eligibility issue, appeal, or benefit problem, contact LaPorte Law Firm to schedule a consultation.