Social Security Reform Bill Before House

A bill that seeks to reform Social Security has been introduced in the House of Representatives.

H.R. 5392, the Social Security Enhancement and Protection Act of 2019, was introduced on Dec. 11, 2019 by Rep. Gwen Moore (D-WI). The text of the legislation is not yet available on the Congress.gov website; it is now before the House Ways & Means Committee awaiting its action.

On the day that Moore introduced the bill, the Social Security Administration (SSA) sent her a letter responding to a request she had sent it requesting estimates of the financial effects of the bill on Social Security. The estimates reflect the intermediate assumptions and baseline projections of the 2019 Trustees Report.

The SSA tells Moore that the six provisions on the cost, income and combined Social Security Trust Fund reserves for the Old Age, Survivors, and Disability Insurance (OASDI) program, as well as estimated effects on retired worker benefit levels for selected hypothetical workers and effects on payroll tax levels, would extend full solvency of the OASDI program for an additional 34 years. It says that the projected depletion of combined OASI and DI Trust Fund reserves, which it expects to happen in 2035 under current law, would be delayed until 2069.

These provisions include:

Section 2: Increase the special minimum primary insurance amount (PIA), beginning for workers who become newly eligible for retirement or disability benefits or die after 2019. The minimum PIA for workers becoming newly eligible or dying in 2020 with 30 or more years of work (YOWs) is 100% of the annual HHS poverty level for the prior year, divided by 12. The percentage would be reduced by 3 and 1/3 percentage points for each YOW less than 30 years, with no minimum benefit for 10 or fewer YOWs. A worker’s number of YOWs would be determined as the number of earned quarters of coverage divided by 4 (ignoring any fraction), plus up to five years providing care for a child under age 6 who was living with the worker. For workers becoming newly eligible or dying after 2020, the minimum PIA is indexed to the year of their initial benefit eligibility by changes in the national average wage index (AWI). The minimum PIA is increased by the COLA after the year of initial eligibility.
 
Section 3: Provide a uniform PIA increase starting with the 16th calendar year after the year of initial eligibility. The PIA increase is a specified percent of the PIA of a worker with the same year of initial eligibility having career-average earnings equal to the AWI in years through the year before initial eligibility. The benefit increase would phase in at 1% per year beginning with the 16th calendar year after the year of initial benefit eligibility, and would be fully phased in at 5% beginning with the 20th calendar year after the year of initial benefit eligibility. Early retirement factors continue to apply to the PIA increases for retired workers who started receiving benefits before full retirement age. This provision would be effective in 2020 and later years.

Section 4: Extend benefit eligibility for children of retired, disabled, or deceased workers until they attain age 26, beginning in 2020. This provision applies if the child is a full-time student.

Sections 5 and 6: Eliminate the taxable maximum, and provide benefit credit for additional earnings taxed, fully effective in 2029. The bill would phase in the elimination over 10 years by taxing all earnings above the current-law taxable maximum at a rate of 1.24% in 2020, 2.48% in 2021, and 12.40% in 2029 and later. The PIA formula would be changed by: (1) adding a new bend point at the current-law taxable maximum (without regard to this provision) for the second year before initial eligibility, divided by 12, and (2) applying a 3% PIA factor to average indexed monthly earnings (AIME) above the new bend point.

Section 7: Increase the combined OASDI payroll tax rate to 13.0%, fully effective for 2025 and later. The combined rate would be increased by 0.1 percentage point each year starting in 2020, reaching the ultimate 13% rate for 2025 and later.