Social Security Fairness Act 2025 and DAC Benefits: What the WEP/GPO Repeal Means

For decades, families connected to public employment had to account for the Windfall Elimination Provision and the Government Pension Offset when assessing possible Social Security benefits. Teachers in PSRS, police officers, firefighters, and state workers with pensions from non-covered employment were among the people who needed to review how those federal rules affected their records.

That changed on January 5, 2025, when the Social Security Fairness Act (H.R. 82) repealed both WEP and GPO. The impact on Disabled Adult Child (DAC) benefits is significant and immediate.

What WEP and GPO Were Doing

The Windfall Elimination Provision and Government Pension Offset were federal provisions that affected certain Social Security calculations for people with pensions from employment not covered by Social Security. They no longer apply to benefits payable after December 2023.

Both provisions created uncertainty for disabled adult children and their families. DAC benefits are calculated as a percentage of the parent's primary insurance amount (PIA). The Social Security Fairness Act now requires benefits payable after December 2023 to be calculated without WEP and GPO; previously affected beneficiaries should verify the SSA adjustment and retroactive pay.

In Missouri, families of PSRS and PEERS participants should review affected Social Security records after the repeal. Missouri public school teachers and education support staff participate in the Public School and Education Employee Retirement Systems, which are not covered by Social Security.

What Changed

The Social Security Fairness Act repealed both provisions for benefits payable after December 2023. The SSA began paying retroactive adjustments in February 2025, and implementation is complete.

For DAC beneficiaries, this means:

Higher monthly payments going forward. For previously affected beneficiaries, the SSA adjustment removes the WEP/GPO offsets. The child's DAC benefit — up to 50% of a living parent's PIA or 75% of a deceased parent's PIA — is then calculated under the current rules.

Retroactive back pay. Previously affected beneficiaries should verify any difference between what they received and what they should have received for benefits payable from January 2024 through the adjustment date. For some families, this retroactive payment is substantial.

New eligibility. People who never applied because of the offsets must file a new claim; eligibility is not automatic. If your family was told "you don't qualify" before 2025, ask SSA whether a new claim is appropriate.

The Lump Sum Warning

Retroactive payments create an asset-management issue. An unspent retroactive Title II payment is excluded from SSI resources for nine months following the month of receipt if it remains identifiable, but Missouri MO HealthNet may apply separate resource rules that should be checked with FSD.

After that exclusion expires — or if the funds are no longer identifiable — SSI suspension and possible Medicaid disruption can become issues.

The fix must happen before or immediately upon receiving the payment:

• MO ABLE account: The first $100,000 in a MO ABLE account is excluded from SSI's resource count. Transfer the lump sum into the ABLE account promptly. Annual contribution limits apply ($20,000 for 2026), so a large lump sum may need to be spread across calendar years.
• Special needs trust: A first-party special needs trust can receive the individual's own funds without a contribution cap. The trade-off is a Medicaid payback provision — remaining trust funds reimburse Medicaid upon the beneficiary's death.
• Pooled trust: The Midwest Special Needs Trust accepts deposits with a $750 enrollment fee and $500 minimum, offering a lower-cost option than a custom trust.

For SSI, keep the retroactive payment identifiable and track the nine-month exclusion. Do not assume the same exclusion applies to MO HealthNet; verify the payment's treatment with FSD.

Tax Implications

Retroactive lump-sum payments are reported on a 1099-SSA in the year received. They are taxable income. However, the IRS allows a lump-sum election method under IRC Section 86 — you can attribute the income back to the years it should have been paid, which may reduce the tax liability if those years had lower income.

Consult a tax professional before filing. The lump-sum election is beneficial in most cases but requires careful calculation.

What to Do Now

If your family includes a disabled adult child and a parent who worked in Missouri public education (PSRS/PEERS), state government, law enforcement, or fire service:

1. Check the current DAC benefit amount. Log in to my Social Security (ssa.gov) or call 1-800-772-1213. Verify whether the SSA adjustment has been applied.
2. Verify retroactive payment. If you believe an adjustment or retroactive payment is missing, ask the SSA to review the record.
3. Prepare for the asset spike. Have a MO ABLE account or trust ready before the lump sum hits the bank.
4. Recalculate MO HealthNet eligibility. A higher monthly DAC benefit may push countable income above the $1,131 spenddown threshold, requiring a monthly premium payment.
5. File a new claim if needed. If the family never applied because of GPO, file a new claim; eligibility is not automatic.

The Missouri SSI at 18 & Adult Disability Benefits Guide includes a DAC-SSDI coordination worksheet that calculates the post-repeal benefit amount, the SSI offset, and the MO HealthNet spenddown impact in one place.

See more Missouri guides →