Massachusetts Retirees United Legislative Interests at the

Federal Level

Prepared by
Marie Ardito
MRU Information Coordinator

If you see any issue that you are really interested in, send for more information to  mardito@retireesunited.org

Repeal of the WEP/GPO

If Collecting a Federal Pension or State Pension from Massachusetts and 14 other States

LIST OF STATES AFFECTED BY GPO/WEP (15 states = 30% of U.S.)
Alaska Connecticut Louisiana Massachusetts Ohio California Georgia Kentucky Missouri Rhode Island
Colorado Illinois Maine Nevada Texas Plus all those in any state collecting a Government Pension

Government Pension Offset (GPO)

• Will not receive Social Security or will have it reduced by 2/3 either as a spousal or survivor benefit if not eligible to retire by December 1, 1982 or July 1, 1983
• Will be eligible for Medicare

Windfall Elimination Provision (WEP)

Will receive a greatly reduced percentage of what you are entitled to in Social Security unless:

• Eligible to retire prior to January 1986
• Have 30 years of substantial earnings
• You are eligible for Medicare

Eligible to retire

By the dates specified above one must be 55 years of age and have ten years of service or have 20 years of service and be any age. The MTRS is the one who decides eligibility not Social Security. To see if you have 30 years of substantial earnings see the chart

What Constitutes Substantial Earning?

On the linked page scroll down to the section on substantial earnings.

Present Status

To find the updated present status of the bill click here. You will see the number of Representatives in each state that are currently signed on to co-sponsor the bill.

How Can You Help

When emailing a friend, relative, former colleague, in another state, not just the 15 states affected, send them a copy of the tally of their state acquired from the above tally. If their Representative or Senators are not aboard ask them to email them and ask them to co-sponsor the bill. Ask them to ask others they know in the state to do the same.  It only takes five constituents contacting a member of Congress to send up a red flag that this is an important issue.  

New Federal Legislation Attempting to Get Filed

Cafeteria Plan for Retirees

Presently you are paying tax on the money that you pay for health care premiums. If you are only on the town/city plan, this is deducted from your pension but you still pay federal tax on that amount.

In addition, if you are on Medicare, that is deducted from your Social Security and if you pay taxes on your Social Security you are also paying tax on the money deducted for Medicare

NARFE estimates that the average amount of taxes paid is $410 - $820.

Under the Cafeteria Plan which many of us were under while we were working, your health care premiums were deducted from your salary before it was federally taxed.  Those in the private sector not only paid less in Federal Tax but in FICA and Medicare Tax because it was subtracted there as well. As a retiree, we pay tax on the money we pay for our health care premium. Fair????

MRU is supporting the passage of H.R.1413 filed by Congressmen Joseph Crowley and John McHugh of New York on May 10, 2009. You can view here Congressman Crowley’s speech to Speaker Pelosi when he filed the bill. Also by clicking here you can see a complete copy of the bill.

Medicare B Surcharge 2007

If you are married and your modified adjusted gross income is over $160,000 or you are single and it is over $80,000 you will pay the premium surcharge.

The surcharge is based on your Adjusted Gross Income of two years previous. (2005)

 If Single 2007 (double everything except the percent if married)

Will the premium surcharge change after 2007?

Yes. It increases dramatically. For 2008 the surcharge percentages will be double those shown in the  previous tables  and will be based on 2006 income.

Single - 2008 Rates

Double first two columns if married.

What does this mean in dollars and cents?

Medicare B premium for a single individual is $96.40 a month this year without the surcharge. 

With the surcharge those in:

First row would pay $122.20 a month;

Second row $160.90 a month;

Third row $199.70 a month;

Fourth row $238.40 a month.

For 2009 the surcharge percentages will be triple those shown in the first table and will be based on your 2007 income.

The first two columns are blank, as we do not know what the increase in the amount of income will be.

Supposedly Washington is looking to repeal or revamp the Medicare D legislation that became effective a few years ago. This surcharge was part of that legislative package. We have not been able to learn if this surcharge is going to be repealed. At first sight this may not seem as if it should concern us as the amounts seem high. First of all it is based on the salary of two years previous and a lot of things you are able to deduct for tax purposes are not deductible for surcharge purposes.  There are so many things that must be studied about this in order to educate our members. For example, does money inherited affect you so that you would fall under the surcharge? It is imperative that people become aware of this surcharge when taking TSA distributions, selling stock, etc. etc. etc. This should never have happened. The justification supposedly is that those in the private sector have a cap on the money they are taxed under Social Security. There is no cap on what they pay in Medicare tax. They pay it on their whole salary. Explain to me how that justifies this?! 

Income Tax on Social Security Benefits

When Social security began the benefit was never supposed to be taxed. In 1983, Reagan signed a bill to allow 50% of SS annuity benefits to be taxed. This was the same time that the GPO/WEP penalties went into effect!

The Basic Rule

Up to 50% of Social Security benefits are taxable if total “provisional income” (adjusted gross income, tax-exempt interest and one half of Social Security benefits) exceeds a base amount.

BASE AMOUNT

·      $25,000 for single taxpayers

·      $32,000 for married taxpayers filing jointly

Very few Social Security recipients reached this amount in 1983. Now, most are paying tax on their Social Security. The amounts have never increased and we feel this should be addressed legislatively.

In 1993 Clinton increased the taxation to 85% when:

1. 1)   provisional income for single taxpayers exceeds $34,000
2. provisional income  for married taxpayers filing jointly exceeds $44,00
3. all married taxpayers file separate returns but do not live apart

Legislation should be filed to increase the amounts in both the 50% and 85% bracket and then provide for increases each year (similar to what they do with the surcharge)

Continue to Support

There is a bill that I would like to see MRU continue to support even though we are not the ones asking for it to be filed. Tim Bassett of the Essex County Retirement System asked Senator McGee to file the following:

Legislation that would require a 30 days written notice and a hearing must be held for retirees before a town/city/district/regional school district/ etc. could reduce the amount the municipality pays for hospital, group life, surgical, medical dental or other health insurance for its retirees. This bill gives retirees a voice in what will happen to their health insurance premiums or coverage.

Tim assures me this bill will be refilled and welcomes our willingness to work with him on its passage.

General information

Legislative issues involving seniors nationally.

You can find a great deal of information about municipal retirees returning to work for municipalities at this site. It sets all of the states into categories so that you can check out the rules for returning to the public sector work force in different states.