How to Handle Income Changes from the Social Security Fairness Act

The Social Security Fairness Act was signed into law in January 2025 by President Biden. It increases Social Security benefits for certain types of workers by repealing two provisions of the Social Security Act that have long affected certain public-sector retirees: the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). 

In the United States, Social Security retirement insurance benefits are generally available to individuals who have worked at least 40 quarters or about 10 years, with benefit amounts based on the average indexed monthly earnings formula. While this framework applies broadly to American workers, it historically excluded some who worked in positions not covered by Social Security, such as certain state and local government jobs, teachers, railroad employees, and some non-profit workers. In 1983, concerned about long-term solvency of the Social Security system, Congress passed amendments that introduced WEP and GPO to limit benefits for those receiving pensions from non-covered employment while also qualifying for Social Security.

The Windfall Elimination Provision adjusted the standard benefit formula, often significantly lowering monthly payments for affected individuals. Meanwhile, the Government Pension Offset reduced spousal and survivor benefits, sometimes to zero, if the recipient also drew a government pension not subject to Social Security tax. These provisions were aimed at preventing perceived "double-dipping," but critics argued they unfairly penalized workers who had contributed to Social Security in other parts of their careers.

With the enactment of the Social Security Fairness Act, those penalties have now been removed. The law is retroactive to Jan. 1, 2024, and the Social Security Administration (SSA) began processing retroactive payments and updating monthly benefit amounts in early 2025. The repeal affects an estimated two million people whose worker benefits were previously reduced under WEP, and about 750,000 individuals whose spousal or survivor benefits were impacted by GPO.

For owners and managers, it’s important to know how to handle these income changes brought about by the Social Security Fairness Act. These changes will need to be reviewed and processed in accordance with HUD’s rules for income calculation, reporting, and verification.

Impacted Retirees

With the enactment of the Social Security Fairness Act, both the WEP and GPO were repealed, effective retroactively from Jan. 1, 2024. This means that impacted retirees will not only see increases in their monthly Social Security checks, but they are also entitled to retroactive payments for the months during which their benefits were previously reduced.

According to estimates by the Congressional Budget Office, the average monthly increase due to the repeal of WEP alone could be around $360, with survivor benefits under GPO increasing by more than $1,000 per month in some cases. The Social Security Administration (SSA) began issuing retroactive lump sum payments in March 2025, with increased monthly payments starting in April 2025 for most affected beneficiaries. And according to the SSA, due to the complexity of the system and SSA’s limited staffing, it may take until late 2025 to fully update all affected records.

The following groups of people are most impacted by the Social Security Fairness Act:

• Teachers, firefighters, and police officers in states where public pensions were exempt from Social Security taxes;
• Federal employees under the Civil Service Retirement System (CSRS), which did not contribute to Social Security; and
• Spouses, widows, and widowers whose benefits were reduced by the GPO.

Treatment of Retroactive Lump Sum Payments

For residents who will see increased payments as a result of the Social Security Fairness Act, the change in Social Security income must be handled in accordance with HUD rules. If a resident is due a retroactive lump sum payment as a result of the law, they will receive a one-time payment, deposited into the bank account SSA has on file or deposited to the resident’s direct express card. This retroactive payment will cover the increase in their benefit amount back to January 2024.

These retroactive lump-sum Social Security payments are excluded from income when calculating annual income for HUD housing eligibility and rent determination. This is clarified in Exhibit 5-1 of HUD Handbook 4350.3, which lists “Deferred periodic amounts from supplemental security income and social security benefits that are received in a lump-sum amount or in prospective monthly amounts” as excluded income. As a result, these lump sum payments should not be included in income calculations for certification, recertification, or interim recertification purposes. That said, documentation of the lump sum should still be retained in the tenant file to support this exclusion.

Treatment of Monthly Benefit Increases, Interim Reporting

The other component of the Social Security Fairness Act is the resulting monthly increases in Social Security benefits for affected retirees. These monthly benefit increases, unlike the retroactive lump sum payments, must be treated as regular income. HUD requires that the gross amount of ongoing Social Security payments before any deductions such as Medicare premiums be counted in the calculation of annual income [HUD Handbook 4350.2, par. 5-6(I)].

According to the SSA, most affected residents/applicants will begin receiving their new monthly benefit amount in April 2025 (for their March 2025 benefit). The SSA also says for the many complex cases that can't be processed automatically, additional time is needed to manually update the records and pay both retroactive benefits and the new benefits amount. The SSA says it's expediting these cases now with the expectation that all beneficiary records will be updated by early November 2025.

Interim recertifications. To ensure that assisted residents pay rents in line with their ability to pay, HUD requires that residents supply information for use in an interim recertification of family income and composition in accordance with HUD requirements. As a result, under current pre-HOTMA HUD leases, all residents must notify the owner when there's an increase in income that results in a cumulative monthly increase of $200 or more, or $2,400 annually [HUD Handbook 4350.3, par. 7-10(A)(4)]. Since the typical increase due to the repeal of WEP is projected to exceed this threshold, many residents will be required to report this change.

Under HOTMA rules, however, whether an interim recertification is conducted depends on if a reexamination threshold is reached. Whether or not an interim recertification is performed doesn't depend on a strict $200 monthly increase amount. Owners must conduct interim reexaminations only if a family’s adjusted income increases or decreases by 10 percent or more from the last determination. Smaller changes don't trigger an interim review unless they cumulatively reach the 10 percent threshold.

Verifying New Income Amounts

New benefit amounts may not be immediately reflected in the Enterprise Income Verification (EIV) system, which can lag by up to 90 days. Until the EIV system is fully updated, you may need to request alternative third-party verification or resident-supplied documentation of the new benefit amounts. You can encourage impacted residents to access their SSA records through the “My Social Security” online portal for third-party verification.

To obtain benefit information using the SSA’s website, the applicant can visit www.ssa.gov/myaccount/proof-of-benefits.html and log in to My Social Security to obtain a benefit verification letter. A tenant or applicant who hasn’t set up an account can easily create one.

To obtain benefit information using the SSA’s toll-free number, a resident would call the SSA at 1-800-772-1213. The benefit verification letters may be requested 24 hours a day using the automated telephone service. TTY 1-800-325-0778 is available Monday through Friday between 7 a.m. and 7 p.m. for individuals who are deaf or hard of hearing. This information is free, and the tenant should receive the letter in the mail within 10 days.

Once the site obtains the benefit verification letter for use in calculating a resident’s income, you should keep a copy of the letter in the tenant’s file and return the original to the tenant or applicant for their records.