Section 1 Short title
This Act may be cited as the “Strengthening Social Security Act of 2018”.
Strengthening Social Security Act of 2018
A BILL
To improve the retirement security of American families by strengthening Social Security.
Sec. 2 Determination of taxable wages and self-employment income above contribution and benefit base after 2018
Determination of taxable wages above contribution and benefit base after 2018—
Amendments to the Internal Revenue Code of 1986— Section 3121 of the Internal Revenue Code of 1986 is amended—
in subsection (a)(1), by inserting “the applicable percentage (determined under subsection (c)(1)) of” before “that part of the remuneration”; and
in subsection (c), by striking “(c) Included and excluded service.—For purposes of this chapter, if” and inserting the following:
“(c) Special rules for wages and employment
“(1) Applicable percentage of remuneration in determining taxable wages—For purposes of subsection (a)(1), the applicable percentage for a calendar year shall be equal to—
“(A) for 2019, 80 percent,
“(B) for 2020 through 2022, the applicable percentage under this paragraph for the previous year, decreased by 20 percentage points, and
“(C) for 2023 and each year thereafter, 0 percent.
“(2) Included and excluded service—For purposes of this chapter, if”
Amendments to the Social Security Act— Section 209 of the Social Security Act (42 U.S.C. 409) is amended—
in subsection (a)(1)(I)—
by inserting “and before 2019” after “1974”; and
by inserting “and” after the semicolon;
in subsection (a)(1), by adding at the end the following new subparagraph:
“(J) The applicable percentage (determined under subsection (l)) of that part of remuneration which, after remuneration (other than remuneration referred to in the succeeding subsections of this section) equal to the contribution and benefit base (determined under section 230) with respect to employment has been paid to an individual during any calendar year after 2018 with respect to which such contribution and benefit base is effective, is paid to such individual during such calendar year;”
by adding at the end the following new subsection:
“(l) For purposes of subsection (a)(1)(J), the applicable percentage for a calendar year shall be equal to—
“(1) for 2019, 80 percent,
“(2) for 2020 through 2022, the applicable percentage under this subsection for the previous year, decreased by 20 percentage points, and
“(3) for 2023 and each year thereafter, 0 percent.”
Effective date— The amendments made by this subsection shall apply with respect to remuneration paid in calendar years after 2018.
Determination of taxable self-Employment income above contribution and benefit base after 2018—
Amendments to the Internal Revenue Code of 1986— Section 1402 of the Internal Revenue Code of 1986 is amended—
in subsection (b)(1), by striking “that part of the net earnings” and all that follows through “minus” and inserting the following: “an amount equal to the applicable percentage (as determined under subsection (d)(2)) of that part of the net earnings from self-employment which is in excess of the difference (not to be less than zero) between (i) an amount equal to the contribution and benefit base (as determined under section 230 of the Social Security Act) which is effective for the calendar year in which such taxable year begins, and”; and
in subsection (d)—
by striking “(d) Employee and wages.—The term” and inserting the following:
“(d) Rules and definitions
“(1) Employee and wages—The term”
by adding at the end the following:
“(2) Applicable percentage of net earnings from self-employment in determining taxable self-employment income—For purposes of subsection (b)(1), the applicable percentage for a taxable year beginning in any calendar year referred to in such paragraph shall be equal to—
“(A) for 2019, 80 percent,
“(B) for 2020 through 2022, the applicable percentage under this paragraph for the previous year, decreased by 20 percentage points, and
“(C) for 2023 and each year thereafter, 0 percent.”
Amendments to the Social Security Act— Section 211 of the Social Security Act (42 U.S.C. 411) is amended—
in subsection (b)—
in paragraph (1)(I)—
by striking “or” after the semicolon; and
by inserting “and before 2019” after “1974”;
by redesignating paragraph (2) as paragraph (3); and
by inserting after paragraph (1) the following:
“(2) For any taxable year beginning in any calendar year after 2018, an amount equal to the applicable percentage (as determined under subsection (l)) of that part of net earnings from self-employment which is in excess of the difference (not to be less than zero) between—
“(A) an amount equal to the contribution and benefit base (as determined under section 230) that is effective for such calendar year, and
“(B) the amount of the wages paid to such individual during such taxable year, or”
by adding at the end the following:
“(l) For purposes of subsection (b)(2), the applicable percentage for a taxable year beginning in any calendar year referred to in such paragraph shall be equal to—
“(1) for 2019, 80 percent,
“(2) for 2020 through 2022, the applicable percentage under this subsection for the previous year, decreased by 20 percentage points, and
“(3) for 2023 and each year thereafter, 0 percent.”
Effective date— The amendments made by this subsection shall apply with respect to taxable years beginning during or after calendar year 2019.
Sec. 3 Adjustments to bend points in determining primary insurance amount and inclusion of surplus earnings for benefit determinations
Adjustments relating to first bend point—
Increase in first bend point factor—
In general— Section 215(a)(1)(A)(i) of the Social Security Act (42 U.S.C. 415(a)(1)(A)(i)) is amended by striking “90 percent” and inserting “95 percent”.
Effective date; application rule— The amendment made by subparagraph (A) shall apply with respect to computations or recomputations of primary insurance amounts made on or after January 1, 2023, except that section 215(a)(1)(A)(i) of the Social Security Act shall be applied by making the following substitutions for “95 percent” for computations and recomputations made in the following calendar years:
for calendar year 2023, by substituting “91 percent”;
for calendar year 2024, by substituting “92 percent”;
for calendar year 2025, by substituting “93 percent”; and
for calendar year 2026, by substituting “94 percent”.
by redesignating clause (iii) as clause (iv); and
by inserting after clause (ii) the following new clause:
“(iii) With respect to computations or recomputations of primary insurance amounts made on or after January 1, 2023, the amount determined under clause (i) of this subparagraph for purposes of subparagraph (A)(i) for such calendar year shall be increased by—
“(I) for calendar year 2024, 1 percent,
“(II) for each of calendar years 2025 through 2037, the percent determined under this clause for the preceding year increased by 1 percentage point, and
“(III) for calendar year 2038 and each year thereafter, 15 percent.”
Application of increase; recomputations— The amendments made by this subsection shall apply with respect to every individual who becomes entitled to old-age or disability insurance benefits under title II of the Social Security Act, or who dies (before becoming so entitled), in any calendar year. Notwithstanding section 215(f)(1) of the Social Security Act, the Commissioner of Social Security shall recompute the primary insurance amount of each such individual on the first day of each calendar year during the period beginning with calendar year 2023 and ending with calendar year 2038 to the extent necessary to carry out the amendments made by this section.
Inclusion of surplus average indexed monthly earnings in determination of primary insurance amounts— Section 215(a)(1)(A) of the Social Security Act (42 U.S.C. 415(a)(1)(A)) is amended—
in clauses (i), (ii), and (iii), by inserting “basic” before “average indexed monthly earnings” each place it appears;
in clause (ii), by striking “and” at the end;
in clause (iii), by adding “and” at the end; and
by inserting after clause (iii) the following new clause:
“(iv) 5 percent of the individual’s surplus average indexed monthly earnings,”
Basic AIME and surplus AIME—
by inserting “basic” before “average”; and
in subparagraph (A), by striking “paragraph (3)” and inserting “paragraph (3)(A)” and by inserting before the comma the following: “to the extent such total does not exceed the contribution and benefit base for the applicable year”.
Surplus AIME—
In general— Section 215(b)(1) of such Act (as amended by paragraph (1)) is amended—
by redesignating subparagraphs (A) and (B) as clauses (i) and (ii), respectively;
by inserting “(A)” after “(b)(1)”; and
by adding at the end the following new subparagraph:
“(B)
“(i) An individual’s surplus average indexed monthly earnings shall be equal to the quotient obtained by dividing—
“(I) the total (after adjustment under paragraph (3)(B)) of such individual’s surplus earnings (determined under clause (ii)) for such individual’s benefit computation years (determined under paragraph (2)), by
“(II) the number of months in those years.
“(ii) For purposes of clause (i) and paragraph (3)(B), an individual’s surplus earnings for a benefit computation year are the total of such individual’s wages paid in and self-employment income credited to such benefit computation year, to the extent such total (before adjustment under paragraph (3)(B)) exceeds the contribution and benefit base for such year.”
Conforming amendment— The heading for section 215(b) of such Act is amended by striking “Average Indexed Monthly Earnings” and inserting “Basic Average Indexed Monthly Earnings; Surplus Average Indexed Monthly Earnings”.
Adjustment of surplus earnings for purposes of determining surplus AIME— Section 215(b)(3) of such Act (42 U.S.C. 415(b)(3)) is amended—
in subparagraph (A), by striking “subparagraph (B)” and inserting “subparagraph (C)” and by inserting “and determination of basic average indexed monthly income” after “paragraph (2)”;
by redesignating subparagraph (B) as subparagraph (C); and
by inserting after subparagraph (A) the following new subparagraph:
“(B) For purposes of determining under paragraph (1)(B) an individual’s surplus average indexed monthly earnings, the individual’s surplus earnings (described in paragraph (2)(B)(ii)) for a benefit computation year shall be deemed to be equal to the product of—
“(i) the individual’s surplus earnings for such year (as determined without regard to this subparagraph), and
“(ii) the quotient described in subparagraph (A)(ii).”
Effective date— The amendments made by subsections (b) and (c) shall apply with respect to individuals who initially become eligible (within the meaning of section 215(a)(3)(B) of the Social Security Act) for old-age or disability insurance benefits under title II of the Social Security Act, or who die (before becoming eligible for such benefits), in any calendar year after 2023.
Sec. 4 Consumer Price Index for Elderly Consumers
In general— The Bureau of Labor Statistics of the Department of Labor shall prepare and publish an index for each calendar month to be known as the Consumer Price Index for Elderly Consumers that indicates changes over time in expenditures for consumption which are typical for individuals in the United States who have attained early retirement age (as defined under section 216(l)(2) of the Social Security Act (42 U.S.C. 416(l)(2)) for purposes of an old-age, wife's, or husband's insurance benefit).
Effective date— Subsection (a) shall apply with respect to calendar months ending on or after June 30 of the calendar year in which this Act is enacted.
Authorization of appropriations— There are authorized to be appropriated such sums as are necessary to carry out the provisions of this section.
Sec. 5 Computation of cost-of-living increases for Social Security benefits
in paragraph (1)(G), by inserting before the period the following: “, and, with respect to any monthly insurance benefit payable under this title, effective for adjustments under this subsection to the primary insurance amount on which such benefit is based (or to any such benefit under section 227 or 228), the applicable Consumer Price Index shall be deemed to be the Consumer Price Index for Elderly Consumers and such primary insurance amount shall be deemed adjusted under this subsection using such Index”; and
in paragraph (4), by striking “and by section 9001” and inserting “, by section 9001”, and by inserting after “1986,” the following: “and by section 5(a) of the Strengthening Social Security Act of 2018,”.
Conforming amendments in applicable former law— Section 215(i)(1)(C) of the Social Security Act, as in effect in December 1978 and applied in certain cases under the provisions of such Act in effect after December 1978, is amended by inserting before the period the following: “, and, with respect to any monthly insurance benefit payable under this title, effective for adjustments under this subsection to the primary insurance amount on which such benefit is based (or to any such benefit under section 227 or 228), the applicable Consumer Price Index shall be deemed to be the Consumer Price Index for Elderly Consumers and such primary insurance amount shall be deemed adjusted under this subsection using such Index”.
Effective date— The amendments made by this section shall apply to determinations made by the Commissioner of Social Security under section 215(i)(2) of the Social Security Act (42 U.S.C. 415(i)(2)) with respect to cost-of-living computation quarters ending on or after September 30, 2018.
Sec. 6 Improving social security benefits for widows and widowers in two-income households
In general—
in paragraph (1)—
in subparagraph (B), by inserting “and” at the end;
in subparagraph (C)(iii), by striking “and” at the end;
by striking subparagraph (D);
by redesignating subparagraphs (E) and (F) as subparagraphs (D) and (E), respectively; and
in the flush matter following subparagraph (E)(ii), as so redesignated, by striking “or becomes entitled to an old-age insurance benefit” and all that follows through “such deceased individual,”;
by striking subparagraph (A) in paragraph (2) and inserting the following:
“(2)
“(A) Except as provided in subsection (k)(5), subsection (q), and subparagraph (D) of this paragraph, such widow’s insurance benefit for each month shall be equal to the greater of—
“(i) subject to paragraph (9), the primary insurance amount (as determined for purposes of this subsection after application of subparagraphs (B) and (C)) of such deceased individual, or
“(ii) subject to paragraphs (9) and (10), in the case of a fully insured widow or surviving divorced wife, 75 percent of the sum of any old-age or disability insurance benefit for which the widow or the surviving divorced wife is entitled for such month and the primary insurance amount (as determined for purposes of this subsection after application of subparagraphs (B) and (C)) of such deceased individual.”
in paragraph (5)—
in subparagraph (A), by striking “paragraph (1)(F)” and inserting “paragraph (1)(E)”; and
in subparagraph (B), by striking “paragraph (1)(F)(i)” and inserting “paragraph (1)(E)(i)”; and
by adding at the end the following new paragraphs:
“(9) For purposes of clauses (i) and (ii) of paragraph (2)(A), in the case of a surviving divorced wife, the amount determined under either such clause (and, for purposes of clause (ii) of paragraph (2)(A), as determined after application of paragraph (10)) shall be equal to the applicable percentage (as determined under section 202(b)(2)(B)) of such amount (as determined before application of this paragraph but after application of subsection (k)(3)).
“(10) For purposes of paragraph (2)(A)(ii), the amount determined under such paragraph shall not exceed the primary insurance amount for such month of a hypothetical individual—
“(A) who became entitled to old-age insurance benefits upon attaining early retirement age during the month in which the deceased individual referred to in paragraph (1) became entitled to old-age or disability insurance benefits, or died (before becoming entitled to such benefits), and
“(B) to whom wages and self-employment income were credited in each of such hypothetical individual’s elapsed years (within the meaning of section 215(b)(2)(B)(iii)) in an amount equal to the national average wage index (as described in section 209(k)(1)) for each such year.”
in paragraph (1)—
in subparagraph (B), by inserting “and” at the end;
in subparagraph (C)(iii), by striking “and” at the end;
by striking subparagraph (D);
by redesignating subparagraphs (E) and (F) as subparagraphs (D) and (E), respectively; and
in the flush matter following subparagraph (E)(ii), as so redesignated, by striking “or becomes entitled to an old-age insurance benefit” and all that follows through “such deceased individual,”;
by striking subparagraph (A) in paragraph (2) and inserting the following:
“(2)
“(A) Except as provided in subsection (k)(5), subsection (q), and subparagraph (D) of this paragraph, such widower’s insurance benefit for each month shall be equal to the greater of—
“(i) subject to paragraph (9), the primary insurance amount (as determined for purposes of this subsection after application of subparagraphs (B) and (C)) of such deceased individual, or
“(ii) subject to paragraphs (9) and (10), in the case of a fully insured widower or surviving divorced husband, 75 percent of the sum of any old-age or disability insurance benefit for which the widower or the surviving divorced husband is entitled for such month and the primary insurance amount (as determined for purposes of this subsection after application of subparagraphs (B) and (C)) of such deceased individual.”
in paragraph (5)—
in subparagraph (A), by striking “paragraph (1)(F)” and inserting “paragraph (1)(E)”; and
in subparagraph (B), by striking “paragraph (1)(F)(i)” and inserting “paragraph (1)(E)(i)”; and
by adding at the end the following new paragraphs:
“(9) For purposes of clauses (i) and (ii) of paragraph (2)(A), in the case of a surviving divorced husband, the amount determined under either such clause (and, for purposes of clause (ii) of paragraph (2)(A), as determined after application of paragraph (10)) shall be equal to the applicable percentage (as determined under section 202(c)(2)(B)) of such amount (as determined before application of this paragraph but after application of subsection (k)(3)).
“(10) For purposes of paragraph (2)(A)(ii), the amount determined under such paragraph shall not exceed the primary insurance amount for such month of a hypothetical individual—
“(A) who became entitled to old-age insurance benefits upon attaining early retirement age during the month in which the deceased individual referred to in paragraph (1) became entitled to old-age or disability insurance benefits, or died (before becoming entitled to such benefits), and
“(B) to whom wages and self-employment income were credited in each of such hypothetical individual’s elapsed years (within the meaning of section 215(b)(2)(B)(iii)) in an amount equal to the national average wage index (as described in section 209(k)(1)) for each such year.”
Effective date— The amendments made by this section shall apply with respect to widow’s and widower’s insurance benefits payable for months after December 2018.
Sec. 7 Holding SSI beneficiaries harmless
For purposes of determining the income of an individual to establish eligibility for, and the amount of, benefits payable under title XVI of the Social Security Act, the amount of any benefit to which the individual is entitled under title II of such Act shall be deemed not to exceed the amount of the benefit that would be determined for such individual under such title as in effect on the day before the date of the enactment of this Act.