2016 Social Security Changes That You Should Know About

Submitted by dfm on Wed, 03/09/2016 - 17:26

The start of each year introduces the possibility of the SSA implementing drastic changes that citizens and pundits alike fear will one day be inevitable. Fortunately, based on the annual Fact Sheet released by the SSA, 2016 will not be one of those years. Nevertheless, Social Security attorneys and advocates should be aware of important changes that can affect both your clients and your bottom line in 2016.

Cost of Living
The Consumer Price Index for Urban Wage Earners and Clerical Workers changed little from 2014 Q3 and 2015 Q3 (234.242 to 233.278). On account of this decrease, there is no Cost-of-Living Adjustment (COLA) in 2016.

The Social Security portion (OASDI) of the FICA tax rate will remain 6.20% for employees and the 12.40% for self-employed individuals. The maximum taxable earnings for Social Security (OASDI only) will not increase from the 2015 threshold of $118,500.

Maximum Social Security Benefit
Since there is no COLA in 2016, the maximum benefit decreased to $2663/month from $2639/month in 2015. This is a decrease of 0.90% from the previous year.

Substantial Gainful Activity and Trial Work Period
The SGA thresholds have increased to $1130/month from $1090/month for non-blind individuals and remained at $1820/month for blind individuals. The Trial Work Period (TWP) threshold was raised by 3.8% to $810/month.

SSI Payments, Resource Limits, and Student Exclusion
SSI individual and couple federal payments remain unchanged at $733/month and $1100/month, respectively. Similarly, the SSI resource limits will stay at $2000/month for individuals and $3000/month for couples. Lastly, there was no change to the SSI student exclusion limits, which is $1780/month and $7180 annually.

Below is a summary table of the main statistics previously described:

Statistic 2016 Amount/Rate 2015 Amount/Rate Change
OASDI Employee Tax Rate 7.65% 7.65% None
OASDI Self-Employed Tax Rate 15.30% 15.30% None
Max Taxable OASDI Earnings $118,500 $118,500 None
Max Social Security Benefit $2639/month $2663/month -0.90%
Quarter of Coverage $1260/quarter $1220/quarter +3.2%
Federal SSI Individual Payment $733/month $733/month None
Federal SSI Couple Payment $1100/month $1100/month None

*All figures obtained from the SSA Fact Sheet of 2016 Social Security Changes

As the table above displays, the SSA has modified very little for 2016. The maximum Social Security benefit declined by less than one percent, due to no COLA, and the amount required for a quarter of coverage increased by about 3%. Unfortunately, the CPI-W decreased to 231.061 in January 2016, which is even lower than the 2015 Q3 figure. Although this does not bode well for a 2017 COLA, this figure could change as 2016 progresses. Overall, the encouraging news is that, judging from these numbers, very little should change for your Social Security clients and the amount of third-party representative fees in 2016, provided that approval rates remain constant.