Table of Contents
- What Is the GPO?
- Benefits for a Couple When Both Are Covered by Social Security
- Benefits for a Couple When One Is Covered by Social Security and the Other by a Government Pension
- Does the GPO Affect Medicare?
The Government Pension Offset (GPO), sometimes called the Public Pension Offset, is a provision in Social Security law that can reduce or eliminate the Social Security benefit for spouses, divorced spouses, and surviving spouses who also receive a pension based on their own work for federal, state or local government that was not covered by Social Security. The current provisions became law in 1983.
Prior to the GPO, married couples with one Social Security-covered worker and one government pension-covered worker were treated differently from couples with two Social Security-covered workers. The GPO was designed to provide similar treatment for both types of couples.
Under Social Security law, an individual may receive retirement benefits by working the required number of years to be eligible to receive a worker benefit based on his/her own work record or by being married to a worker, thus becoming entitled to a spousal benefit that is 50 percent of the worker's benefit amount.
When an individual is eligible for benefits both as a worker and as a spouse, he/she always receives the highest benefit amount to which he/she is entitled. The worker's own benefit is calculated as the base. If the worker's benefit is lower than the 50 percent spousal benefit, the worker's benefit is "topped up" to the higher amount. In other words, the Social Security benefit the individual receives as a spouse is offset by the benefit based on his/her own work record. The worker's own and the spousal benefits are not added together. (See Example 1.) This offset of the spousal benefit by the worker's benefit is what the GPO was designed to duplicate.
Before the GPO, couples with one Social Security-covered worker and one covered by a government pension were advantaged because the government-worker spouse could receive the full spousal benefit from Social Security and add it to his/her pension benefit amount--there was no offset.
With the GPO, the amount of a spouse's, divorced spouse's, or widow/er's Social Security benefit is reduced by two-thirds of the amount that individual earns from his/her government pension.
Social Security Benefits for Couples with Two Social Security-Covered Workers
- One half of $1,200, or $600, is Worker A's Social Security spousal benefit.
- $300 (her own Social Security benefit amount) plus $300 from her spouse's work record brings her benefit to the highest amount of the two benefits for which she is eligible--$600.
- Thus, she receives a $600 Social Security benefit--not a $900 benefit.
Example 2: Worker B has earned a Social Security benefit of $1,200 per month. His spouse has earned her own Social Security benefit of $800.
- Fifty percent of $800 is $400--Worker B's spousal benefit amount.
- His $1,200 worker benefit is more than his $400 spousal benefit.
- Thus, Worker B does not receive any Social Security benefits based upon his spouse's earnings because his own benefit is higher. His benefit remains at $1,200.
|1) Monthly Social Security Spouse Benefit Before Offset||1/2 Social Security benefit earned by spouse.|
|2) Monthly Public Pension Benefit|
|Total Monthly Benefit Amount Before Offset||Social Security spousal benefit plus public pension benefit.|
|3) Offset Amount||2/3 of public pension benefit amount (2/3 of line 2).|
|4) Monthly Social Security Benefit After Offset||Social Security benefit before offset minus offset amount--(line 1 minus line 3).|
|Total Monthly Benefit Amount After Offset||Monthly public pension amount plus monthly Social Security benefit after offset (line 2 plus line 4).|| |
Social Security Benefits for Couples with One Social Security-Covered Spouse and One Government Pension-Covered Spouse
Example 1: Worker C is eligible to receive $600 per month in a state pension based on his own work. His spouse has earned a Social Security benefit of $1,000. (See chart above.)
- Two-thirds of his $600 government pension equals $400--the offset amount.
- One-half of $1,000 is $500--the Social Security spousal benefit amount.
- The $500 Social Security spousal benefit amount minus the $400 offset equals $100.
Thus, the $100 Social Security spousal benefit plus the $600 pension equals a total monthly benefit of $700.
Example 2: Worker D has a government pension of $1,200 per month. Her spouse has earned a Social Security benefit, based on his own work record, of $800. (See chart above.)
- Two-thirds of her $1,200 government pension is $800--the offset amount.
- The Social Security spousal benefit is $400--one-half of the $800 benefit her spouse earned.
- The $400 spousal Social Security benefit is less than the offset amount.
- Thus, Worker D receives no Social Security benefit based on her spouse's record and her benefit remains at $1,200.
Even if the GPO reduces or eliminates an individual's spousal Social Security benefits, that person can receive Medicare at age 65, based upon the Social Security work record of his/her spouse.
Written by Laurel Beedon, Senior Policy Advisor, AARP Public Policy Institute
© 1998 AARP
May be copied only for noncommercial purposes and with attribution; permission required for all other purposes.
Public Policy Institute, AARP, 601 E. Street, NW, Washington, DC 20049