Social Security Spousal Benefits: How a 2015 Act Closed Loopholes

The Social Security Administration has been managing benefits for retired people in the U.S. since it was founded in 1935. Most Americans spend their working years contributing to Social Security. They retire at a set age and receive a certain amount of monthly benefits paid to fund their retirement years.

While each individual and couple will likely research the best strategies for drawing down Social Security benefits, some practices weren't intended by the Social Security Administration. For example, some loopholes impacting spousal benefits closed following the Bipartisan Budget Act (BBA) of 2015.

According to the Social Security Administration, before the BBA passage in 2015, “Social Security loopholes were in place that allowed couples with financial means to obtain additional or enhanced benefits that Congress did not intend, and are contrary to the goals of the Social Security program.”

The loopholes in spousal benefits are also called “aggressive claiming strategies.” They enable families of financial means to take advantage of benefits in a way that most middle-class workers can't. The SSA also says that this type of claiming strategy can harm the entire program by impacting the formulas used to determine how Social Security benefits are calculated and distributed.

The Social Security Administration explains two loopholes that were closed by the BBA of 2015.

One was “claim then suspend” or “file then suspend,” which allowed a worker to file for benefits but then suspend the payments. In this case, the spouse was still allowed to receive benefits although they weren't retired and not collecting benefits.

Unfair aspects of this were that the worker’s Social Security credits would continue growing while payments were suspended, which resulted in higher payments later on. The lower-earning spouse would receive benefits based on the higher-earning spouse’s income.

Another loophole for spouses in the Social Security system was a restricted application. A spouse eligible for both spousal benefits and retirement benefits would file a restricted application for only spousal benefits. After that, the spouse would delay claiming retirement benefits based on their own earnings until a later age. This could go up to age 70, and during that time their retirement benefits could continue to grow.

Both of these spousal benefits loopholes were closed with the passage of the Bipartisan Budget Act of 2015, which went into effect in April 2016.

Under current law, the maximum amount someone can receive is 50 percent of their spouse’s full Social Security benefit (if you wait until your full retirement age). People might be eligible for Social Security spousal benefits even if they are divorced, widowed, or only recently married.

Usually, if your retirement benefits are higher than what you would receive in spousal benefits, you would get the higher amount instead of the spousal benefit. However, if your retirement benefits would be lower than the amount from spousal benefits, you would receive the spousal benefits. Whichever figure is higher is what the SSA will give you.