NJC Administrative of Social Security Fairness Act of 2021 SSFA MEMO

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Congress has recently passed the Social Security Fairness Act (SSFA), which provides that, effective immediately, all social security benefits will be means tested. Congress has charged the Social Security Administration (SSA) to implement the Act (assume the Act meets the intelligible principle test).

The Act provides the following schedule for means testing, but allows the SSA to make exceptions provided that “good cause” is shown:

Adjusted Gross Income Percentage of Scheduled Benefits to be Paid

0 – 50,000 100%

50,001 – 100,000 75%

100,001 – 150,000 50%

150,001 – 200,000 25%

$200,001+ 0%

To implement the SSFA, the SSA issues a regulation that adjusts the Act’s scale according to where the beneficiary resides – a cost of living adjustment. For example, the scale is adjusted upward for places like New York City (high cost of living) and adjusted downward for those beneficiaries living in a small town in Montana (lower cost of living).

Leona recently applied for social security benefits under the new SSFA. Her adjusted gross income is $75,000, putting him in the 75% bracket. However, the SSA determined that Leona belongs in the 25% bracket because she currently has an Investment Retirement Account in the amount of $100,000. The SSA’s reasoning is that it is fair to include Leona’s IRA in the means test calculation because, at any time, Leona can cash out the IRA to pay for living expenses. Currently, the Internal Revenue Service does not consider amounts in IRA accounts as part of determining an individual’s adjusted gross income, unless the individual withdraws from the account. Angry with the SSA’s initial decision, Leona immediately seeks to appeal the decision with the applicable Court of Appeals.

Your supervising attorney has asked you to prepare a memo that identifies and discusses all issues relative to administrative law.

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