Voluntary Suspension

Voluntary suspension is the procedure at 42 U.S.C. 402(z), whose subsection heading is literally "Voluntary suspension", under which "any individual who has attained retirement age ... and is entitled to old-age insurance benefits may request that payment of such benefits be suspended". The suspension begins with the month after the request reaches the Commissioner and ends when the person asks for benefits to resume, or at age 70, whichever comes first. Because delayed retirement credits accrue for months in which a benefit is payable but not paid, suspending has the effect of raising the eventual monthly amount. Suspension is not the same as withdrawing an application: the claim stays in place, nothing has to be repaid, and there is no once-per-lifetime limit.

The rule changed in 2015, and everything written before that describes a different program. Section 831(b) of the Bipartisan Budget Act of 2015 rewrote voluntary suspension, and by its own terms applies "with respect to requests for benefit suspension submitted beginning at least 180 days after the date of the enactment", which the agency implements as April 30, 2016. Social Security's manual sets out the current rules in four lines: an individual may not receive benefits for the period of suspension; no auxiliary benefits, other than a divorced spouse's, may be paid on the record of a worker who suspends; the worker cannot receive benefits on another record during the suspension; and the suspension ends at the earlier of a reinstatement request or age 70.

The third of those four is the one nothing else in the corpus carries. 42 U.S.C. 402(z)(3)(C) says that during a suspension "no monthly benefit shall be payable to such individual on the basis of another individual's wages and self-employment income". So a worker who suspends is not merely giving up their own check and their family's checks on their record; they also cannot collect a spousal or survivor benefit on someone else's record while the suspension runs.

Suspension is prospective only, and cannot be undone retroactively. The statute starts the suspension with the month following receipt of the request, and 402(z)(3)(A) bars retroactive benefits for the suspended period. Under current rules, reinstatement before 70 also runs forward: the agency's manual says reinstatement "can be no earlier than the month after the month of the reinstatement request", and gives the example of a September request producing an October reinstatement. Someone who suspends and then needs the money back is therefore waiting at least a month.

Four events bar or end a suspension. 42 U.S.C. 402(z)(2) lists them: mandatory suspension of benefits under subsection (x), termination under subsection (n), a nonpayment penalty under 42 U.S.C. 1320a-8a, and any other statutory withholding used to recover a debt. A suspension is a privilege extended to a benefit that is otherwise in good standing.

Benefits resume automatically at 70. For requests received on or after April 30, 2016, the agency deems a beneficiary to have submitted a reinstatement request the month before they reach 70, and credits all the accumulated delayed retirement credits at that point. Nobody has to remember to restart the benefit. The statute and the agency's manual describe the final month of the suspension one month apart from each other, which does not change the outcome because reinstatement is automatic either way, so the honest statement is that the benefit restarts at 70 rather than a month-precise one.

A practical consequence for Medicare. Part B premiums are normally deducted from the monthly Social Security payment, and 42 CFR 408.40(a)(1) says enrollees receiving monthly benefits "do not have the option of paying by direct remittance to avoid deduction". During a suspension there is no payment to deduct from, and 42 CFR 408.60(a) requires that premiums not deducted from monthly benefits be paid by direct remittance to the Centers for Medicare and Medicaid Services. Someone who suspends should expect to be billed for Part B rather than to have it quietly withheld.

A worker who has reached full retirement age asks the agency to suspend payments. The suspension starts the following month. Delayed retirement credits accrue for each suspended month up to the month before age 70, and the higher benefit begins when payments resume, either on request or automatically at 70. Credits earned during a year are ordinarily applied the following January, and any remaining credits are applied in full when benefits are reinstated at 70.

A hypothetical example, with invented figures. Dolores has a primary insurance amount of $2,000 and claimed at her full retirement age of 67, so her benefit is $2,000 a month. At 68 she suspends for 24 months. Delayed retirement credits accrue at two-thirds of one percent per month, so 24 months adds 16%, and her benefit at 70 is $2,000 multiplied by 1.16, or $2,320 a month. The cost of the increase is the payments she skipped: 24 months at $2,000 is $48,000. The gain is $320 a month. Dividing $48,000 by $320 gives 150 months, or twelve and a half years, before the larger benefit has made up the forgone payments. Any auxiliary benefits her family was receiving on her record stop for those 24 months as well, which adds to the cost and does not appear in the $48,000.

Pros

• It raises the monthly benefit permanently, and the increase carries into a survivor benefit after the worker dies.
• Nothing has to be repaid, unlike a withdrawal of application, and there is no once-per-lifetime limit.
• Reinstatement at 70 is automatic, so no further action is needed to end it.
• It is a way to stop benefits that were started for a reason that has since gone away, such as a job that resumed.

Cons

• It stops benefits to everyone else on your record, except a divorced spouse, which can cost a household more than the worker's own check.
• You also cannot collect on anyone else's record while suspended.
• It is prospective only: the suspension starts the following month, and reinstatement before 70 also takes effect the month after the request.
• Recovering the forgone payments takes many years of the higher benefit, so it rewards longevity and penalizes an early death.
• Medicare Part B premiums that were being deducted from the payment have to be paid by direct billing instead.