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Money Explainers
  • 29/6/2025
A look at three major shifts: Medicaid cuts, Canada's digital tax dispute, and the end of Social Security's GPO. How will these impact you? #EconomicImpact #SocialWelfare#PolicyChanges

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00:00Good evening, we bring you an important update regarding a significant change to social security
00:05provisions that impacts a specific group of beneficiaries. We're referring to the elimination
00:10of the government pension offset or GPO. This rule was officially removed in January 2025,
00:16marking a notable shift in how spousal and survivor benefits are calculated for those
00:21also receiving a non-social security pension. The GPO was a social security provision that
00:27had the effect of reducing and in some cases, completely eliminating certain American social
00:32security benefits. To understand the GPO, one must first grasp social security's spousal and
00:39survivor benefits. These benefits are designed to pay eligible individuals a portion of their
00:44spouse's full social security benefits. This legislative change was a direct response to a
00:50Supreme Court ruling in Califano v. Goldfarb in 1977, which deemed a sex-based distinction in
00:57survivor benefits unconstitutional. However, this was heavily criticized, and the reduction was
01:03later changed to two-thirds of the non-covered government pension. For example, if someone
01:08received a monthly non-covered pension of $1,200, two-thirds or $800 would be deducted from their
01:16spousal benefit. If their spousal benefit was $1,000, they would then receive $200 from social security.
01:22It's crucial to note that if this reduction amount was higher than the monthly social security benefit,
01:28the individual might not have received any social security benefits at all. Previously,
01:33men had to prove financial dependence on their deceased wives to receive survivor benefits.
01:39While women did not have to prove dependence on their husbands, while both involved pensions and
01:43reductions in social security payments, as of December 2023, approximately 1% of all social
01:50security beneficiaries had their benefits reduced by the GPO, with spouses and widows, widowers equally
01:57affected. This raised concerns about fairness, as these workers were receiving pensions without
02:03having paid social security taxes on those government earnings, and it added hundreds of millions of
02:08dollars to the program's annual cost. Congress thus created the GPO to ensure that individuals
02:15receiving pensions from non-covered government employment would not receive full social security
02:20spousal and survivor benefits. For spousal benefits, the maximum amount is 50% of the spouse's full
02:27retirement age benefit, also known as the primary insurance amount, or PI. Survivor benefits,
02:33conversely, can go up to 100% of the PI. These benefits are particularly vital for individuals,
02:40who either do not qualify for social security on their own, or would only receive a very modest
02:45amount. The GPO specifically impacted the social security spousal or survivor benefits of most workers
02:51who receive federal, state and local pensions from employment not covered by social security.
02:57The origin of the GPO dates back to the social security amendments of 1977.
03:01The Supreme Court's decision meant that hundreds of thousands of retired men who had worked in
03:06government positions not covered by social security, suddenly qualified for spousal or
03:11widower benefits. Initially, the GPO completely offset social security spousal benefits by 100%
03:18of the non-covered government pension. It is also important to clarify that the GPO is distinct
03:23from the windfall elimination provision. WEP could affect individuals receiving both a non-covered pension
03:29and social security retirement or disability benefits. GPO specifically applied to those
03:35receiving a government pension alongside social security, spousal or survivor benefits. A key
03:42difference is that WEP could not completely eliminate a person's benefits, whereas GPO could. With the removal
03:49of the GPO in January 2025, eligible individuals previously affected by this offset will now see their social
03:56security spousal and survivor benefits calculated without this specific reduction. We will continue to
04:03follow the implications of this and other social security updates. That's our report for tonight.
04:09money expo-
04:09money expo-

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