Bipartisan Retirement Security Act of 2005 - Amends title II (Old Age, Survivors and Disability Insurance) of the Social Security Act (SSA) to add a new part B (Individual Security System) under which the Commissioner of Social Security shall establish in the Individual Security Fund (created under this Act) an individual security account that is federally administered and funded by employee and employer Social Security payroll deductions available for investment for each eligible individual born after December 31, 1949. Makes an individual eligible, in specified circumstances, to designate a privately-administered individual security account to serve in lieu of the individual's federally administered individual security account.
Establishes in the Treasury the Individual Security Fund, and in the Social Security Administration an Individual Security Fund Board. Prohibits an individual at any time from concurrently maintaining: (1) a privately administered individual security account with each of two or more certified institutions; or (2) a privately administered and a federally administered individual security account.
Amends the Internal Revenue Code to: (1) entitle each part B eligible individual to a credit, based on annual wages, self-employment income, or earned income credit, for use only for an individual security account; and (2) provide for the tax treatment of such accounts, excluding from gross income any amounts voluntarily contributed to them, together with earnings.
Amends SSA title II to establish the minimum monthly insurance benefit of a qualified individual who initially becomes eligible for old-age or disability insurance benefits, or dies (before becoming eligible for such benefits), for a month beginning after December 31, 2009, and who (if ineligible for old-age insurance benefits) has quarters of coverage greater in number than the number of such individual's elapsed years.
Amends SSA title V to establish a mechanism for remedying unforeseen deterioration in social security solvency.
Increases widow's and widower's insurance benefits.
Limits the benefits of a married couple to the level of maximum worker benefits.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 440 Introduced in House (IH)]
109th CONGRESS
1st Session
H. R. 440
To amend title II of the Social Security Act to provide for individual
security accounts funded by employee and employer Social Security
payroll deductions, to extend the solvency of the old-age, survivors,
and disability insurance program, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 1, 2005
Mr. Kolbe (for himself and Mr. Boyd) introduced the following bill;
which was referred to the Committee on Ways and Means, and in addition
to the Committee on Rules, for a period to be subsequently determined
by the Speaker, in each case for consideration of such provisions as
fall within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To amend title II of the Social Security Act to provide for individual
security accounts funded by employee and employer Social Security
payroll deductions, to extend the solvency of the old-age, survivors,
and disability insurance program, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Bipartisan
Retirement Security Act of 2005''.
(b) Table of Contents.--The table of contents is as follows:
Sec. 1. Short title and table of contents.
Sec. 2. Individual security accounts.
Sec. 3. Minimum social security benefit.
Sec. 4. Reduction in the amount of certain transfers to medicare trust
fund.
Sec. 5. Revised formula for average indexed monthly earnings.
Sec. 6. Actuarial adjustment for retirement.
Sec. 7. Corrections for CPI overstatement in cost-of-living indexation.
Sec. 8. Adjustments to bend points in determining primary insurance
amounts.
Sec. 9. Adjustment to benefit formula factors.
Sec. 10. Modification to PIA formula to reflect changes to life
expectancy.
Sec. 11. Treatment of disabled beneficiaries.
Sec. 12. Maintenance of benefit and contribution base.
Sec. 13. Acceleration of increase in social security eligibility age.
Sec. 14. Mechanism for remedying unforeseen deterioration in social
security solvency.
Sec. 15. Increase in widow's and widower's insurance benefits.
Sec. 16. Limitation on benefits of married couple to level of maximum
worker benefits.
SEC. 2. INDIVIDUAL SECURITY ACCOUNTS.
(a) Establishment and Maintenance of Individual Security
Accounts.--
(1) In general.--Title II of the Social Security Act (42
U.S.C. 401 et seq.) is amended--
(A) by inserting before section 201 the following:
``Part A--Insurance Benefits''; and
(B) by adding at the end the following:
``Part B--Individual Security System
``Subpart 1--Individual Security Accounts
``federally-administered individual security account
``Sec. 251. (a) Establishment.--
``(1) In general.--Within 30 days after crediting the first
contribution under subsection (b) with respect to an eligible
individual, the Commissioner of Social Security shall establish
an individual security account for such individual in the
Individual Security Fund. Each account shall be identified to
its account holder by means of the account holder's social
security account number.
``(2) Eligible individual.--For purposes of this part, the
term `eligible individual' means any individual born after
December 31, 1949.
``(b) Contributions.--
``(1) In general.--The Secretary of the Treasury shall
transfer from the Federal Old-Age and Survivors Insurance Trust
Fund, for crediting by the Commissioner of Social Security to
the individual security account of an eligible individual, an
amount equal to the sum of any amount received by such
Secretary on behalf of such individual under section 3101(a)(2)
or 1401(a)(2) of the Internal Revenue Code of 1986.
``(2) Other contributions.--For provisions relating to
additional contributions credited to individual security
accounts, see sections 54(d) and 6402(l) of the Internal
Revenue Code of 1986.
``(c) Crediting Requirements.--Except as otherwise provided in
section 252, contributions under subsection (b) on behalf of an
eligible individual shall be credited--
``(1) to the individual security account established for
such individual under subsection (a); and
``(2) in accordance with the allocation in effect with
respect to such individual under subsection (d).
``(d) Allocation and Other Designations.--
``(1) In general.--The Commissioner of Social Security
shall prescribe regulations in accordance with which any
eligible individual who is employed or self-employed may
designate--
``(A) in the event that 2 or more investment
options are available in the Individual Security Fund--
``(i) the option or options to which such
individual wishes to have such individual's
contributions under subsection (b) credited;
and
``(ii) if such individual designates more
than 1 option under clause (i), how such
individual wishes for those contributions to be
allocated; and
``(B) the amount of wages or self-employment income
such individual wishes to designate for purposes of
section 3101(a)(2)(C) or 1401(a)(2)(C) of the Internal
Revenue Code of 1986 (as applicable), if any.
``(2) Default allocation.--In the absence of a required
designation under paragraph (1)(A), contributions on behalf of
the individual involved shall be allocated in such manner as
the Commissioner of Social Security shall prescribe, taking
into account the competing objectives of maximizing returns on
investments and minimizing the risk involved with such
investments.
``(3) Form of designation.--Any designation under paragraph
(1) shall be made in such manner and at such intervals as the
Commissioner of Social Security may prescribe in order to
ensure ease of administration and to avoid creating an undue
burden on employers.
``(4) Special rule for 2007.--Not later than December 31,
2007, any eligible individual who is employed or self-employed
as of such date shall execute all designations required under
paragraph (1).
``(e) Periodic Statements to Account Holder.--
``(1) In general.--The Individual Security Fund Board shall
prescribe regulations under which each individual for whom an
individual security account is maintained under this section
shall be furnished with--
``(A) a periodic statement relating to the
individual's account, including, for any reporting
period as of the end of which the individual's account
balance is at least equal to the minimum balance amount
(within the meaning of section 252), clear and
conspicuous notice to that effect;
``(B) a summary description of any investment
options or other choices which may be available to such
individual under this section or under section 252 (as
applicable); and
``(C) any forms and information necessary to make a
designation under subsection (d) or section 252 (as
applicable).
``(2) Informed decisionmaking.--All information, materials,
and other matter furnished under this subsection shall be
furnished to the account holder at such times and in such
manner as the Board considers appropriate in order to permit
informed decisionmaking.
``privately-administered individual security account
``Sec. 252. (a) Definitions.--For purposes of this part--
``(1) Minimum deposit amount.--
``(A) In general.--The term `minimum deposit
amount' means an amount equal to $7,500, as adjusted
under subparagraph (B).
``(B) Adjustment.--The Secretary of the Treasury
shall adjust annually (effective for periods beginning
after December 2006) the dollar amount set forth in
subparagraph (A) under procedures providing for
adjustments in the same manner and to the same extent
as adjustments are provided for under the procedures
used to adjust benefit amounts under section
215(i)(2)(A), except that any amount so adjusted that
is not a multiple of $10 shall be rounded to the
nearest multiple of $10.
``(2) Federally-administered individual security account.--
The term `Federally-administered individual security account'
means an individual security account maintained, in accordance
with applicable provisions of this part, in the Individual
Security Fund.
``(3) Privately-administered individual security account.--
The term `privately-administered individual security account'
means an individual security account maintained, in accordance
with applicable provisions of this part, by a certified
institution.
``(4) Certified institution.--The term `certified
institution' refers to an investment firm, credit union,
insurance company, or other certified institution under subpart
3.
``(b) Option to Designate a Privately-Administered Individual
Security Account.--
``(1) In general.--Under regulations prescribed by the
Individual Security Fund Board, whenever the balance in an
individual's Federally-administered individual security account
is at least equal to the minimum deposit amount, such
individual shall be eligible to designate a privately-
administered individual security account (established and
maintained on such individual's behalf) to serve as such
individual's individual security account under this part, in
lieu of such individual's Federally-administered individual
security account.
``(2) Effect of designation.--If an individual makes a
designation under paragraph (1)--
``(A) the entire balance in the individual's
Federally-administered individual security account
shall be promptly transferred to the privately-
administered individual security account specified by
such individual in such designation; and
``(B) that privately-administered individual
security account shall, for all purposes, be treated as
the electing individual's individual security account,
subject to paragraph (4).
``(3) Regulatory management of private investment.--A
designation under this subsection shall not be effective unless
it is made in such time, form, and manner as the Individual
Security Fund Board prescribes. The Individual Security Fund
Board shall--
``(A) maintain individual account records, and
``(B) combine account transactions with certified
institutions maintaining privately-administered
individual security accounts in aggregate amounts,
in the same manner as is applicable with respect to records and
account transactions with respect to Federally administered
individual security accounts.
``(4) Subsequent designations.--The Individual Security
Fund Board shall provide by regulation opportunity for
subsequent designation, from time to time, of another
individual security account in lieu of the account previously
designated under this section, subject to the following:
``(A) Options available.--The account designated
under this paragraph may be either within--
``(i) another certified institution,
subject to subparagraph (B); or
``(ii) the Individual Security Fund.
``(B) Minimum balance.--In order to make a
designation referred to in subparagraph (A)(i), the
balance in the individual's individual security account
must be at least equal to the minimum deposit amount.
No minimum balance requirement under this subparagraph
shall apply in the case of a designation referred to in
subparagraph (A)(ii).
``(C) Only 1 account permitted at any time.--An
individual may not, at any time, concurrently
maintain--
``(i) a privately-administered individual
security account with each of 2 or more
certified institutions; or
``(ii) a privately-administered and a
Federally-administered individual security
account.
``(D) Effect.--A designation under this paragraph
has (with respect to the individual's respective
accounts, before and after such designation) the same
effect as results following a designation under
paragraph (2) (with respect to the Federally-
administered and privately-administered accounts
involved).
``distributions from individual security accounts
``Sec. 253. (a) Date of Earliest Distribution.--Except as provided
in subsection (c), distributions may not be made from the Federally-
administered or privately-administered individual security account of
an eligible individual (as the case may be) before the earlier of--
``(1) the date the eligible individual attains normal
retirement age, as determined under section 216 (or early
retirement age, as so determined, if elected by such
individual), or
``(2) the date on which funds in the eligible individual's
account are sufficient to provide a monthly payment over the
life expectancy of the eligible individual (determined under
reasonable actuarial assumptions) which, when added to the
eligible individual's monthly benefit under part A (if any), is
at least equal to an amount equal to \1/12\ of 185 percent of
the poverty line (as defined in section 673(2) of the Community
Services Block Grant Act (42 U.S.C. 9902(2)) as in effect on
such date for an individual) and adjusted annually thereafter
by the CPI increase percentage determined under section 215(i).
``(b) Forms of Distribution.--
``(1) Required monthly payments.--Except as provided in
paragraph (2), beginning as of the date distributions begin to
be made in accordance with subsection (a), the balance in the
individual security account available to provide monthly
payments not in excess of the amount described in subsection
(a)(2) shall be paid, as elected by the account holder (in such
form and manner as shall be prescribed in regulations of the
Individual Security Fund Board or the Securities and Exchange
Commission, as applicable), by means of the purchase of
annuities or equal monthly payments over the life expectancy of
the eligible individual (determined under reasonable actuarial
assumptions) in accordance with requirements (which shall be
provided in regulations of the Board or Commission, as
applicable) similar to the requirements applicable to payments
of benefits under subchapter III of chapter 84 of title 5,
United States Code.
``(2) Payment of excess funds.--To the extent funds remain
in an eligible individual's Federally-administered or
privately-administered individual security account (as the case
may be) after the application of paragraph (1) and to the
extent not inconsistent with the provisions of subchapter III
of chapter 84 of title 5, United States Code, such funds shall
be payable to the eligible individual in such manner and in
such amounts as determined by the eligible individual.
``(c) Distribution in the Event of Death Before the Date of Initial
Distribution.--If the eligible individual dies before the date
determined under subsection (a), the balance in such individual's
individual security account shall be distributed to the individual's
heirs under rules established by the Individual Security Fund Board or
the Securities and Exchange Commission, as applicable.
``Subpart 2--Individual Security Fund; Individual Security Fund Board
``individual security fund
``Sec. 261. There shall be established and maintained in the
Treasury of the United States an Individual Security Fund in the same
manner as the Thrift Savings Fund under sections 8437 (excluding
paragraphs (4) and (5) of subsection (c) thereof), 8438, and 8439 of
title 5, United States Code.
``individual security fund board
``Sec. 262. (a) Establishment.--There shall be established and
maintained in the Social Security Administration an Individual Security
Fund Board in the same manner as the Federal Retirement Thrift
Investment Board under subchapter VII of chapter 84 of title 5, United
States Code.
``(b) Specific Investment and Reporting Duties.--The Individual
Security Fund Board shall manage and report on the activities of the
Individual Security Fund and on Federally-administered individual
security accounts in the same manner as the Federal Retirement Thrift
Investment Board manages and reports on the Thrift Savings Fund and the
individual accounts of such Fund under subchapter VII of chapter 84 of
title 5, United States Code.
``(c) Budgetary Treatment of Individual Security Fund and
Accounts.--The receipts and disbursements of the Individual Security
Fund and any accounts within such Fund shall not be included in the
totals of the budget of the United States Government as submitted by
the President or of the congressional budget and shall be exempt from
any general budget limitation imposed by statute on expenditures and
net lending (budget outlays) of the United States Government.
``(d) Executive Director.--The Board shall appoint an Executive
Director, without regard to the provisions of law governing
appointments in the competitive service. The Executive Director shall
receive the same compensation, and shall have, with respect to the
Individual Security Fund and accounts within such Fund, the same duties
and responsibilities, as does the Executive Director (appointed under
section 8474(a) of title 5, United States Code) with respect to the
Thrift Savings Fund and accounts within such Fund.
``Subpart 3--Certified Institutions
``certification of institutions by securities and exchange commission
``Sec. 271. (a) In General.--For purposes of this part, any
institution that is engaged, in a fiduciary capacity, in the business
of maintaining accounts for individuals for purposes of investment may
apply to the Securities and Exchange Commission (in such form and
manner as the Commission shall by regulation require) for certification
under this subpart.
``(b) Review Requirements.--In reviewing any application for
certification under this subpart and determining whether to approve the
application for certification, the Commission shall consider the
following factors:
``(1) The financial history and condition of the
institution.
``(2) The adequacy of the institution's capital structure.
``(3) The future earnings prospects of the institution.
``(4) The general character and fitness of the management
of the institution.
``(5) The convenience and needs of individuals who are
account holders with respect to personal retirement accounts
for which the institution is to serve as trustee.
``(6) Whether the institution's corporate powers are
consistent with the purposes of this part.
``(7) The institution's disclosure policies, including with
respect to its administrative fees, investment policies, and
investment activities.
``(8) The appropriateness of--
``(A) the fund or funds that such institution
proposes to offer for purposes of this part, and
``(B) the criteria by which such institution will
make future decisions regarding the selection of new
funds or the making of any other modifications in the
investment options offered by such institution for
purposes of this part, as determined based on
guidelines established by the Commission for purposes
of this paragraph.
``(c) Notice of Denial of Application for Certification.--If the
Commission votes to deny any application for certification by any
institution, the Commission shall promptly notify the institution of
the denial of such application, giving specific reasons in writing for
the Commission's determination with reference to the factors described
in subsection (b).
``(d) Nondelegation Requirement.--The authority of the Commission
to make any determination to deny any application under this section
may not be delegated by the Commission.
``revocation of certification
``Sec. 272. (a) In General.--The Securities and Exchange Commission
shall prescribe regulations in accordance with which the certified
status of an institution may be voluntarily or involuntarily revoked.
``(b) Judicial Review.--Any party to any involuntary revocation
proceeding under this section to which an institution is a party may
obtain a review of any order served pursuant to this section by the
filing in the court of appeals of the United States for the circuit in
which the home office of the institution is located, or in the United
States Court of Appeals for the District of Columbia Circuit, within 30
days after the date of service of such order, a written petition
praying that the order of the Commission be modified, terminated, or
set aside. A copy of such petition shall be forthwith transmitted by
the clerk of the court to the Commission, and thereupon the Commission
shall file in the court the record in the proceeding, as provided in
section 2112 of title 28, United States Code. Upon the filing of such
petition, such court shall have jurisdiction, which upon the filing of
the record shall be exclusive, to affirm, modify, terminate, or set
aside, in whole or in part, the order of the Commission. Review of such
proceedings shall be had as provided in chapter 7 of title 5, United
States Code. The judgment and decree of the court shall be final,
except that the judgment and decree shall be subject to review by the
Supreme Court upon certiorari, as provided in section 1254 of title 28,
United States Code. The commencement of proceedings for judicial review
under this subsection shall not, unless specifically ordered by the
court, operate as a stay of any order issued by the Commission.
``fiduciary duties
``Sec. 273. (a) In General.--In the case of a privately-
administered individual security account which does not form part of an
individual account plan covered under part 4 of subtitle B of title I
of the Employee Retirement Income Security Act of 1974, rules similar
to the rules of such part 4 applicable to individual account plans
covered under such part 4 shall apply with respect to a privately-
administered individual security account and the terms of any
arrangement under which such account is maintained.
``(b) General Requirements.--In applying under subsection (a) the
rules of part 4 of subtitle B of title I of the Employee Retirement
Income Security Act of 1974 in the case of a privately-administered
individual security account, references in such part to the Secretary
of Labor shall be deemed to be references to the Securities and
Exchange Commission, references in such part to a participants or
beneficiary in connection with an individual account plan covered under
such part shall be deemed to be references to the account holder with
respect to the privately-administered individual security account, and
references in such part to the plan administrator or plan sponsor in
connection with an individual account plan covered under such part
shall be deemed to be references to the trustee of the privately-
administered individual security account.
``(c) Limitation on Liability.--Any account holder who issues an
instruction to the trustee of the account directing an investment of
funds held in the account shall sign an acknowledgement prescribed by
the Securities and Exchange Commission which states that the account
holder understands that an investment of any amount in the account is
made at the account holder's risk, that the account holder is not
protected by the Government or by the trustee against any loss on such
investment, and that a return on such investment is not guaranteed by
the Government or by the trustee. Notwithstanding the preceding
provisions of this section and any other provision of Federal or State
law, the trustee of a privately-administered individual security
account shall not be liable for losses suffered in connection with any
investment of assets held in the account unless it is shown by clear
and convincing evidence that the trustee did not act in the manner in
which a reasonable trustee would act under the circumstances then
prevailing in evaluating the risk and reward properties of the
investment option involved.
``Subpart 4--Enforcement
``cause of action
``Sec. 281. The account holder with respect to a privately-
administered individual security account who is adversely affected by
an act or practice of any party (other than the Securities and Exchange
Commission, the Social Security Administration, the Department of the
Treasury, or any officer or employee of any of the foregoing) in
violation of any provision of this part, may bring an action--
``(1) to enjoin such act or practice, or
``(2) to obtain other appropriate equitable relief (A) to
redress such violation or (B) to enforce such provision.
``jurisdiction and venue
``Sec. 282. Civil actions under this subpart may be brought in the
district courts of the United States in the district where the
privately-administered individual security account is administered,
where the violation took place, or where a defendant resides or may be
found, and process may be served in any district where a defendant
resides or may be found. The district courts of the United State shall
have jurisdiction, without regard to the amount in controversy or the
citizenship of the parties, to grant the relief provided for in section
281 in any action.
``right of securities and exchange commission to intervene
``Sec. 283. A copy of the complaint or notice of appeal in any
action under this subpart shall be served upon the Securities and
Exchange Commission by certified mail. The Commission shall each have
the right to intervene in any action.
``awards of costs and expenses
``Sec. 284. In any action brought under this subpart, the court in
its discretion may award all or a portion of the costs and expenses
incurred in connection with such action, including reasonable
attorney's fees, to any party who prevails or substantially prevails in
such action.
``limitation on actions
``Sec. 285. (a) In General.--Except as provided in subsection (c),
an action under this subpart may not be brought after the later of--
``(1) 6 years after the date on which the cause of action
arose, or
``(2) 3 years after the applicable date specified in
subsection (b).
``(b) Applicable Date.--The applicable date specified in this
subsection is the earliest date on which the plaintiff acquired or
should have acquired actual knowledge of the existence of such cause of
action.
``(c) Cases of Fraud or Concealment.--In the case of fraud or
concealment, the period described in subsection (a)(2) shall be
extended to 6 years after the applicable date specified in subsection
(b).
``penalty for failure to timely provide required information
``Sec. 286. The Securities and Exchange Commission may assess a
penalty, payable to it, against any person who fails to provide any
notice or other material information required under this part or any
regulations prescribed under this part within the applicable time limit
specified therein. Such penalty shall not exceed $1,000 for each day
for which such failure continues.
``actions by securities and exchange commission
``Sec. 287. If any person is assessed under this subpart and fails
to pay the assessment when due, or any person otherwise fails to meet
any requirement of this part, the Securities and Exchange Commission
may bring a civil action in any district court of the United States
within the jurisdiction of which such person's assets are located or in
which such person resides or is found for the recovery of the amount of
the assessment or for appropriate equitable relief to redress the
violation or enforce the provisions of this part, and process may be
served in any other district. The district courts of the United States
shall have jurisdiction over actions brought under this section by the
Commission without regard to the amount in controversy.
``criminal penalty for fraud or intentional misrepresentation in
connection with investment options
``Sec. 288. Any person who makes, or causes to be made, a statement
or representation of a material fact for use in selecting an investment
option that the person knows or should know is false or misleading or
knows or should know omits a material fact or makes such a statement
with knowing disregard for the truth shall upon conviction be fined not
more than $500,000 or imprisoned for not more than 5 years, or both.''.
(2) Authorization for funding of initial costs.--There are
authorized to be appropriated to the Individual Security Fund
Board, for each of fiscal years 2006 and 2007, such sums as may
be necessary to pay for the expenses incurred during such
fiscal year in the administration of part B of title II of the
Social Security Act during such fiscal year.
(b) Modification of FICA Rates.--
(1) Employees.--Section 3101(a) of the Internal Revenue
Code of 1986 (relating to tax on employees) is amended to read
as follows:
``(a) Old-Age, Survivors, and Disability Insurance.--
``(1) In general.--
``(A) Individuals covered under part a of title ii
of the social security act.--In addition to other
taxes, there is hereby imposed on the income of every
individual who is not a part B eligible individual a
tax equal to 6.2 percent of the wages received by him
with respect to employment.
``(B) Individuals covered under part b of title ii
of the social security act.--
``(i) In general.--In addition to other
taxes, there is hereby imposed on the income of
every part B eligible individual a tax equal to
the applicable percentage of the wages received
by such individual with respect to employment.
``(ii) Applicable percentage.--For purposes
of clause (i), the term `applicable percentage'
means the excess of 6.2 percent, over
``(I) 3 percent, in the case of the
first $10,000 of such wages received in
the calendar year, and
``(II) 2 percent, in the case of
any additional such wages received in
the calendar year.
``(2) Contribution of oasdi tax reduction to individual
security accounts.--In addition to other taxes, there is hereby
imposed on the income of every part B eligible individual for
the calendar year an individual security account contribution
equal to the sum of--
``(A) 3 percent of so much of the wages as does not
exceed the first $10,000 received in such calendar year
by such individual with respect to employment,
``(B) 2 percent of the excess of--
``(i) such wages, over
``(ii) the wages taken into account under
subparagraph (A), plus
``(C) so much of such wages (not to exceed $5,000)
as is designated by the individual in the same manner
as described in section 251(d) of the Social Security
Act.
``(3) Inflation adjustments.--
``(A) In general.--In the case of any calendar year
beginning after 2006, the $10,000 amount in paragraphs
(1) and (2) shall be increased by an amount equal to--
``(i) such dollar amount, multiplied by
``(ii) the wage increase percentage (if
any) for such year.
``(B) Designated contributions.--In the case of any
calendar year beginning after 2006, the $5,000 amount
in paragraph (2)(C) shall be increased by an amount
equal to--
``(i) such dollar amount, multiplied by
``(ii) the percentage increase (if any) for
such year determined under section 215(i) of
the Social Security Act.
``(C) Rounding.--If any dollar amount after being
increased under subparagraph (A) or (B) is not a
multiple of $10, such dollar amount shall be rounded to
the nearest multiple of $10.
``(4) Definitions.--For purposes of this subsection--
``(A) Wages.--The term `wages' shall have the
meaning given to such term by section 3121(a).
``(B) Employment.--The term `employment' shall have
the meaning given to such term by section 3121(b).
``(C) Wage increase percentage.--The term `wage
increase percentage', with respect to a calendar year,
means the percentage increase which would become
effective under section 215(i)(2) of the Social
Security Act for such year if such increase were
determined as described in section 215(i)(5)(A)(i) of
such Act.''.
(2) Self-employed.--Section 1401(a) of the Internal Revenue
Code of 1986 (relating to tax on self-employment income) is
amended to read as follows:
``(a) Old-Age, Survivors, and Disability Insurance.--
``(1) In general.--
``(A) Individuals covered under part a of the
social security act.--In addition to other taxes, there
shall be imposed for each taxable year, on the self-
employment income of every individual who is not a part
B eligible individual for the calendar year ending with
or during such taxable year, a tax equal to 12.40
percent of the amount of the self-employment income for
such taxable year.
``(B) Individuals covered under part b of title ii
of the social security act.--
``(i) In general.--In addition to other
taxes, there is hereby imposed for each taxable
year, on the self-employment income of every
part B eligible individual, a tax equal to the
applicable percentage of the amount of the
self-employment income for such taxable year.
``(ii) Applicable percentage.--For purposes
of clause (i), the term `applicable percentage'
means the excess of 12.4 percent, over
``(I) 3 percent, in the case of the
first $10,000 of self-employment income
received in the calendar year, and
``(II) 2 percent, in the case of
any additional self-employment income
received in the calendar year.
``(2) Contribution of oasdi tax reduction to individual
security accounts.--In addition to other taxes, there is hereby
imposed for each taxable year, on the self-employment income of
every part B eligible individual for the calendar year, an
individual security account contribution equal to the sum of--
``(A) 3 percent of self-employment income as does
not exceed the first $10,000 of such income derived
during the taxable year by such individual,
``(B) 2 percent of self-employment income in the
case of any additional self-employment income derived
by such individual during the taxable year, and
``(C) so much of such self-employment income (not
to exceed $5,000) as is designated by the individual in
the same manner as described in section 251(d) of the
Social Security Act.
``(3) Inflation adjustments.--
``(A) In general.--In the case of any calendar year
beginning after 2006, the $10,000 amount in paragraphs
(1) and (2) shall be increased by an amount equal to--
``(i) such dollar amount, multiplied by
``(ii) the wage increase percentage (if
any) for such year,
``(B) Designated contributions.--In the case of any
calendar year beginning after 2006, the $5,000 amount
in paragraph (2)(C) shall be increased by an amount
equal to--
``(i) such dollar amount, multiplied by
``(ii) the percentage increase (if any) for
such year determined under section 215(i) of
the Social Security Act.
``(C) Rounding.--If any dollar amount after being
increased under subparagraph (A) or (B) is not a
multiple of $10, such dollar amount shall be rounded to
the nearest multiple of $10.
``(4) Definition.--For purposes of this subsection, the
term `wage increase percentage', with respect to a calendar
year, means the percentage increase which would become
effective under section 215(i)(2) of the Social Security Act in
such year if such increase were determined as described in
section 215(i)(5)(A)(i) of such Act.''.
(3) Part b eligible individual.--
(A) Taxes on employees.--Section 3121 of such Code
(relating to definitions) is amended by inserting after
subsection (s) the following new subsection:
``(t) Part B Eligible Individual.--For purposes of this chapter,
the term `part B eligible individual' means, for any calendar year, an
individual who is an eligible individual (as defined in section
251(a)(2) of the Social Security Act) for such calendar year.''.
(B) Self-employment tax.--Section 1402 of such Code
(relating to definitions) is amended by adding at the
end the following new subsection:
``(l) Part B Eligible Individual.--The term `part B eligible
individual' means, for any calendar year, an individual who is an
eligible individual (as defined in section 251(a)(2) of the Social
Security Act) for such calendar year.''.
(4) Effective dates.--
(A) Employees.--The amendments made by paragraphs
(1) and (3)(A) apply to remuneration paid after
December 31, 2005.
(B) Self-employed individuals.--The amendments made
by paragraphs (2) and (3)(B) apply to taxable years
beginning after December 31, 2005.
(c) Matching Contributions.--
(1) In general.--Part IV of subchapter A of chapter 1 of
the Internal Revenue Code of 1986 (relating to credits against
tax) is amended by adding at the end the following new subpart:
``Subpart H--Individual Security Account Credits
``Sec. 54. Individual security account credit.
``SEC. 54. INDIVIDUAL SECURITY ACCOUNT CREDIT.
``(a) Allowance of Credit.--Each part B eligible individual is
entitled to a credit for the taxable year in an amount equal to the sum
of--
``(1) $150,
``(2) 50 percent of the designated wages of such individual
for the taxable year,
``(3) 50 percent of the designated self-employment income
of such individual for the taxable year, plus
``(4) 50 percent of the designated earned income credit.
``(b) Limitations.--
``(1) Amount.--The amount determined under paragraphs (2)
and (3) of subsection (a) with respect to such individual for
any taxable year may not exceed the excess (if any) of--
``(A) $600, over
``(B) the sum of the amounts received by the
Secretary on behalf of such individual under
subparagraphs (A) and (B) of section 3101(a)(2) and
subparagraphs (A) and (B) of 1401(a)(2) for the taxable
year.
``(2) Failure to make voluntary contributions.--In the case
of a part B eligible individual with respect to whom the amount
of wages designated under section 3101(a)(2)(C) plus the amount
self-employment income designated under section 1401(a)(2)(C)
for the taxable year is zero, the credit to which such
individual is entitled under this section shall be equal to
zero.
``(c) Definitions.--For purposes of this section--
``(1) Part b eligible individual.--The term `part B
eligible individual' means, for any calendar year, an
individual who is an eligible individual (as defined in section
251(a)(2) of the Social Security Act) for such calendar year.
``(2) Designated wages.--The term `designated wages' means
with respect to any taxable year the amount designated under
section 3101(a)(2)(C).
``(3) Designated self-employment income.--The term
`designated self-employment income' means with respect to any
taxable year the amount designated under section 1401(a)(2)(C)
for such taxable year.
``(4) Designated earned income credit.--The term
`designated earned income credit' means the amount of the
credit allowed under section 32 for the taxable year that is
designated by the part B eligible individual in the same manner
as described in section 251(d) of the Social Security Act.
``(d) Credit Used Only for Individual Security Account.--For
purposes of this title, the credit allowed under this section with
respect to any part B eligible individual--
``(1) shall not be treated as a credit allowed under this
part, but
``(2) shall be treated as an overpayment of tax under
section 6401(b)(3) which may, in accordance with section
6402(l), only be transferred to an individual security account
established under part B of title II of the Social Security Act
with respect to such individual.''.
(2) Contribution of eitc amounts to individual security
accounts.--Section 32 of such Code (relating to earned income)
is amended by adding at the end the following new subsection:
``(n) Contribution to Individual Security Account.--
``(1) In general.--An eligible part B individual who is
allowed a credit under this section may designate all or a
portion of such credit as a contribution to the individual
security account established on behalf of such individual.
``(2) Credit used only for individual security account.--
For purposes of this title, the amount designated under
paragraph (1) with respect to any part B individual--
``(A) shall not be treated as a credit allowed
under this section, but
``(B) shall be treated as an overpayment of tax
under section 6401(b)(3) which may, in accordance with
section 6402(l), only be transferred to an individual
security account established under part B of title II
of the Social Security Act with respect to such
individual.''.
(3) Contribution of credited amounts to individual security
account.--
(A) Credited amounts treated as overpayment of
tax.--Subsection (b) of section 6401 (relating to
excessive credits) is amended by adding at the end the
following new paragraph:
``(3) Special rule for credit under sections 32 and 54.--
Subject to the provisions of section 6402(l), the following sum
shall be considered an overpayment--
``(A) Section 54 credit.--The amount of any credit
allowed under section 54 for any taxable year, plus
``(B) Section 32 designated earned income credit
contribution.--The amount of the earned income credit
designated as a contribution to an individual security
account under section 32(n) for the taxable year.''.
(B) Transfer of credit amount to individual
security account.--Section 6402 of such Code (relating
to authority to make credits or refunds) is amended by
adding at the end the following new subsection:
``(l) Overpayments Attributable to Individual Security Account
Credit.--In the case of any overpayment described in section 6401(b)(3)
with respect to any individual, the Secretary shall transfer for
crediting by the Commissioner of Social Security to the individual
security account of an such individual, an amount equal to the amount
of such overpayment.''.
(4) Notice to eitc recipients of matching contributions to
individual security accounts.--In connection with information
and tax forms relating to the credit allowed under section 32
of the Internal Revenue Code of 1986, the Secretary of the
Treasury shall provide notice of the availability of matching
contributions pursuant to section 54 of such Code (as added by
subsection (a) of this section) to individual security accounts
under part B of title II of the Social Security Act.
(5) Conforming amendments.--
(A) Section 1324(b)(2) of title 31, United States
Code, is amended by inserting before the period at the
end ``, or enacted by the Bipartisan Retirement
Security Act of 2005''.
(B) The table of subparts for part IV of subchapter
A of chapter 1 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new item:
``Subpart H. Individual security account credits.''
(6) Effective date.--The amendments made by this subsection
shall apply to refunds payable after December 31, 2005.
(d) Tax Treatment of Individual Security Accounts.--
(1) In general.--Subchapter F of chapter 1 of the Internal
Revenue Code of 1986 (relating to exempt organizations) is
amended by adding at the end the following new part:
``PART IX--INDIVIDUAL SECURITY SYSTEM
``Sec. 530A. Individual security fund.
``Sec. 530B. Individual security accounts.
``SEC. 530A. INDIVIDUAL SECURITY FUND AND FEDERALLY-ADMINISTERED
INDIVIDUAL SECURITY ACCOUNTS.
``The Individual Security Fund established under section 261 of the
Social Security Act shall be exempt from taxation under this subtitle.
``SEC. 530B. INDIVIDUAL SECURITY ACCOUNTS.
``(a) In General.--For purposes of this section, the term
`individual security account' means a Federally-administered individual
security account and a privately-administered security account.
``(b) Individual Security Accounts Defined.--For purposes of
subsection (a)--
``(1) Federally-administered security account.--The term
`Federally-administered individual security account' means the
account established under section 251 of the Social Security
Act.
``(2) Privately-administered security account.--The term
`privately-administered individual security account' means a
trust created or organized in the United States exclusively for
the benefit of an individual or his beneficiaries, but only if
the written governing instrument creating the trust meets the
following requirements:
``(A) Except in the case of rollover contributions
from another individual security account of such
individual--
``(i) no contribution will be accepted
unless it is in cash,
``(ii) contributions will not be accepted
for the taxable year in excess of the sum of--
``(I) the amounts collected with
respect to such beneficiary under
sections 3101(a)(2) and 1401(a)(2), and
``(II) the amounts transferred to
such account under section 6402(l), and
``(iii) any contributions with respect to
an account holder which are not accepted
pursuant to this paragraph are promptly
refunded directly to the account holder.
``(B) The trustee is an institution which is
certified under subpart 3 of part B of title II of the
Social Security Act.
``(C) No part of the trust funds will be invested
in life insurance contracts.
``(D) The interest of an individual in the balance
in his account is nonforfeitable.
``(E) The assets of the trust will not be
commingled with other property except in a common trust
fund or common investment fund.
``(c) Contributions.--
``(1) In general.--No deduction shall be allowed for
contributions credited to an individual security account under
part B of title II of the Social Security Act or amounts
transferred to such account under section 6402(l).
``(2) Rollovers.--
``(A) Rollover from privately-administered
individual security account.--The entire balance of an
individual security account of the account holder may
be rolled over to another individual security account
of the account holder.
``(B) Rollover of inheritance.--Any portion of a
distribution to an heir from an individual security
account made by reason of the death of the beneficiary
of such account may be rolled over to the individual
security account of the heir.
``(d) Tax Treatment of Accounts.--
``(1) Exemption from tax.--An individual security account
is exempt from taxation under this subtitle unless such account
has ceased to be an individual security account by reason of
paragraph (2). Notwithstanding the preceding sentence, any such
account is subject to the taxes imposed by section 511
(relating to imposition of tax on unrelated business income of
charitable, etc. organizations).
``(2) Account terminations.--Rules similar to the rules of
paragraphs (2) and (4) of section 408(e) shall apply to
privately-administered individual security accounts, and any
amount treated as distributed under such rules shall be
includible in gross income and shall not be treated as a social
security benefit for purposes of section 86.
``(3) Rollover contribution.--An amount is described in
this paragraph as a rollover contribution if it meets the
requirements of subparagraphs (A) and (B).
``(A) In general.--The requirements of this
subparagraph are met with respect to an amount paid or
distributed from an individual security account to the
account holder only if the entire amount in such
account is received by the account holder and is paid
into another individual security account for the
benefit of such holder not later than the 60th day
after the day on which the holder receives the payment
or distribution.
``(B) Limitation.--This paragraph shall not apply
to any amount described in subparagraph (A) received by
an individual from a privately-administered individual
security account if, at any time during the 1-year
period ending on the day of such receipt, such
individual received on 3 other occasions any other
amount described in subparagraph (A) from an individual
security account which was not includible in the
individual's gross income because of the application of
this paragraph.
``(e) Distributions.--
``(1) In general.--The portion of any distribution from an
individual security account under section 253 of the Social
Security Act which is attributable to amounts contributed to
such account under section 3101(a)(2) (other than subparagraph
(C) thereof) and section 1401(a)(2) (other than subparagraph
(C) thereof), together with earnings thereon, shall be
includible in gross income as a social security benefit for
purposes of section 86.
``(2) Voluntary contributions.--The portion of any
distribution from an individual security account under section
253 of the Social Security Act which is attributable to amounts
contributed to such account under section 3101(a)(2)(C),
section 1401(a)(2)(C), and section 6402(l), together with
earnings thereon, shall not be includible in gross income.
``(3) Period in which distributions must be made from
account of decedent.--In the case of amounts remaining in an
individual security account from which distributions began
before the death of the beneficiary, rules similar to the rules
of section 401(a)(9)(B) shall apply to distributions of such
remaining amounts.
``(4) Rollovers.--Paragraph (1) shall not apply to amounts
rolled over under subsection (c)(2) in a direct transfer by the
Commissioner of Social Security, under regulations which the
Commissioner shall prescribe.
``(f) Account Beneficiary.--For purposes of this section, the
account beneficiary is the individual for whose benefit the individual
security account is established.''.
(2) Clerical amendment.--The table of parts for subchapter
F of chapter 1 of the Internal Revenue Code of 1986 is amended
by adding after the item relating to part VIII the following
new item:
``Part IX. Individual security system''.
(3) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after December 31, 2005.
SEC. 3. MINIMUM SOCIAL SECURITY BENEFIT.
Section 215 of the Social Security Act (42 U.S.C. 415) is amended
by adding at the end the following:
``Minimum Monthly Insurance Benefit
``(j)(1) Notwithstanding the preceding provisions of this section--
``(A) the primary insurance amount of a qualified
individual shall be equal to the greater of--
``(i) the primary insurance amount determined under
this section (without regard to this subsection), or
``(ii) \1/12\ of the applicable percentage of the
applicable amount, and
rounded, if not a multiple of $0.10, to the next lower multiple
of $0.10, and thereafter increased as provided in subsection
(i), and
``(B) any recomputation of the primary insurance amount of
a qualified individual shall not result in a primary insurance
amount less than the primary insurance amount as in effect
immediately prior to such recomputation.
``(2) For purposes of this subsection--
``(A) The term `qualified individual' means an individual--
``(i) who initially becomes eligible for old-age or
disability insurance benefits, or dies (before becoming
eligible for such benefits) for a month beginning after
December 31, 2009, and
``(ii) who, in the case of any such individual
other than an individual eligible for old-age insurance
benefits, has quarters of coverage greater in number
than the number of such individual's elapsed years (as
defined in subsection (a)(1)(C)(ii)).
``(B) The term `applicable amount' means, in connection
with an individual--
``(i) in any case in which the year of such
individual's initial eligibility is prior to 2014,
$8,825, adjusted annually, for each year after 2003 and
before the earlier of--
``(I) the year of the individual's initial
eligibility, or
``(II) 2014,
by the CPI increase percentage determined under section
215(i) for such year, or
``(ii) in any case in which the year of such
individual's initial eligibility is after 2013, the
dollar amount determined under clause (i) for 2013,
multiplied by the percentage (rounded to the nearest
one-tenth of 1 percent) by which the national average
wage index (as defined in section 209(k)(1)) for the
second year prior to the year of such individual's
initial eligibility exceeds such index for 2011.
``(C)(i) In the case of a qualified individual described in
subparagraph (A)(i), the term `applicable percentage' means the
sum of--
``(I) the product derived by multiplying
2.0 percent by the number of such individual's
quarters of coverage in excess of 40, to the
extent that the number of such quarters of
coverage does not exceed 80, and
``(II) the product derived by multiplying
0.5 percent by the number of such individual's
quarters of coverage, to the extent that the
number of such quarters of coverage is in
excess of 80 but does not exceed 160.
``(ii) In the case of a qualified individual described in
subparagraph (A)(ii), the term `applicable percentage' means
the sum of--
``(I) the product derived by multiplying the higher
pro-rated percentage increment by the number of such
individual's quarters of coverage, to the extent that
the number of such quarters of coverage exceeds the
number of such individual's elapsed years (as defined
in subsection (a)(10(C)(ii)) but does not exceed twice
the number of such elapsed years, and
``(II) the product derived by multiplying the lower
pro-rated percentage increment by the number of such
individual's quarters of coverage, to the extent that
the number of such quarters of coverage exceeds twice
the number of such elapsed years but does not exceed 4
times the number of such elapsed years.
``(iii) For purposes of clause (ii)--
``(I) the higher pro-rated percentage increment, in
connection with the qualified individual, is the
quotient obtained by dividing 80 percent by the number
of the individual's elapsed years, and
``(II) the lower pro-rated percentage increment, in
connection with the qualified individual, is the
quotient obtained by dividing 40 percent by twice the
number of the individual's elapsed years,
each of which is rounded, if a multiple of 0.05 percent and not
of 0.10 percent, to the next higher multiple of 0.10 percent,
and in any other case to the next higher multiple of 0.10
percent.
``(3) In the case of a qualified individual who becomes eligible
for old-age or disability insurance benefits, or who dies (before
becoming eligible to such benefits) in a year prior to 2014, in lieu of
the amount otherwise determined under paragraph (1)(A)(ii), the amount
provided under paragraph (1)(A)(ii) shall be deemed to be equal to the
the product derived by multiplying such amount otherwise determined by
the percentage set forth in the following table in connection with such
year, rounded, if not a multiple of $0.10, to the next lower multiple
of $0.10.
The applicable
``If the year is: percentage is:
2010................................................... 20
2011................................................... 40
2012................................................... 60
2013................................................... 80.''.
SEC. 4. REDUCTION IN THE AMOUNT OF CERTAIN TRANSFERS TO MEDICARE TRUST
FUND.
Subparagraph (A) of section 121(e)(1) of the Social Security
Amendments of 1983 (42 U.S.C. 401 note), as amended by section
13215(c)(1) of the Omnibus Budget Reconciliation Act of 1993, is
amended--
(1) in clause (ii), by striking ``the amounts'' and
inserting ``the applicable percentage of the amounts''; and
(2) by adding at the end the following: ``For purposes of
clause (ii), the applicable percentage for a year is equal to
100 percent, reduced (but not below zero) by 10 percentage
points for each year after 2010.''.
SEC. 5. REVISED FORMULA FOR AVERAGE INDEXED MONTHLY EARNINGS.
(a) In General.--So much of subsection (b) of section 215 of the
Social Security Act (42 U.S.C. 415) as precedes paragraph (3) is
amended to read as follows:
``Average Indexed Monthly Earnings; Average Monthly Wage
``(b)(1)(A) In the case of an individual who is entitled to old-age
insurance benefits (except as provided in paragraph (2)(C)), or who has
died (before becoming eligible for such benefits or disability
insurance benefits), such individual's average indexed monthly earnings
shall be equal to the quotient obtained by dividing--
``(i) the total (after adjustment under paragraph
(3)) of his wages paid in and self-employment income
credited to his computation base years (determined
under subparagraph (C)(i)), by
``(ii) the product derived by multiplying--
``(I) the number of such individual's
elapsed years (determined under subparagraph
(C)(ii)), by
``(II) 12.
``(B)(i) For purposes of clause (i) of subparagraph (A), in the
case of an individual who becomes eligible for old-age insurance
benefits, or dies (before becoming eligible for such benefits or
disability insurance benefits), in any calendar year after 2004 and
before 2013, if the number of such individual's computation base years
exceed in number the maximum number for such calendar year, those
computation base years referred to in such clause shall consist only of
those computation base years, equal in number to such maximum number,
for which the total of such individual's wages and self-employment
income, after adjustment under paragraph (3), is the largest. For
purposes of this clause, the maximum number for a calendar year is the
maximum number set forth in connection with such calendar year in the
following table:
The maximum
``If the calendar year is: number of years is:
2005 or 2006........................................... 37
2007 or 2008........................................... 39
2009 or 2010........................................... 41
2011 or 2012........................................... 43.
``(ii) For purposes of subclause (I) of subparagraph (A)(ii), in
the case of an individual who becomes eligible for old-age insurance
benefits, or dies (before becoming eligible for such benefits or
disability insurance benefits), in any calendar year after 2004, if the
number of such individual's elapsed years exceed in number the maximum
number for such calendar year, the number of elapsed years referred to
in such subclause shall be deemed equal to such maximum number. For
purposes of this clause, the maximum number for a calendar year is the
maximum number set forth in connection with such calendar year in the
following table:
The maximum
``If the calendar year is: number of years is:
2005 or 2006........................................... 36
2007 or 2008........................................... 37
2009 or 2010........................................... 38
2011 or 2012........................................... 39
after 2012............................................. 40.
``(C) For purposes of this subsection with respect to any
individual--
``(i) the term `computation base year' means any calendar
year after 1950 and before--
``(I) in the case of an individual entitled to old-
age insurance benefits or disability insurance
benefits, the year in which occurred (whether by reason
of section 202(j)(1) or otherwise) the first month of
that entitlement, or
``(II) in the case of an individual who has died
(without having become entitled to old-age insurance
benefits), the year succeeding the year of his death,
except that such term excludes any calendar year entirely
included in a period of disability, and
``(ii) the term `elapsed year' means (except as otherwise
provided by section 104(j)(2) of the Social Security Amendments
of 1972) a calendar year--
``(I) after 1950 (or, if later, the year in which
the individual attained age 21), and
``(II) before the year in which the individual
died, or, if it occurred earlier (but after 1960), the
year in which he attained age 62;
except that such term excludes any calendar year any part of
which is included in a period of disability.
``(2)(A) In the case of an individual who is entitled to disability
insurance benefits, such individual's average indexed monthly earnings
shall be equal to the quotient obtained by dividing--
``(i) the total (after adjustment under paragraph (3)) of
his wages paid in, and self-employment income credited to,
those of his computation base years (determined under paragraph
(1)(C)(i)) which--
``(I) are elapsed years (determined under paragraph
(1)(C)(ii)),
``(II) occurred prior to his current period of
disability, and
``(III) are equal in number to the reduced number
determined under subparagraph (B),
for which the total of such individual's wages and self-
employment income, after adjustment under paragraph (3), is the
largest, by
``(ii) the product derived by multiplying--
``(I) the number of the individual's elapsed years,
by
``(II) 12.
``(B) The reduced number of an individual's elapsed years,
determined under this subparagraph for purposes of subparagraph
(A)(i)(III), is the number of such elapsed years, reduced by the number
of years equal to one-fifth of such number of elapsed years
(disregarding any resulting fractional part of a year), but not by more
than 5 years.
``(C)(i) This paragraph, once applicable with respect to any
individual, shall continue to apply for purposes of determining such
individual's primary insurance amount for purposes of any subsequent
eligibility for disability or old-age insurance benefits, unless, prior
to the month in which such eligibility begins, there occurs a period of
at least 12 consecutive months for which he was not entitled to a
disability or an old-age insurance benefit.
``(ii) If an individual to which this paragraph applies is living
with a child (of such individual or his or her spouse) under the age of
3 in any calendar year which is included in such individual's elapsed
years, but which is not disregarded pursuant to subparagraphs (A)(i)
and (B) by reason of the reduction in the number of such individual's
elapsed years under subparagraph (B), the number by which the number of
such elapsed years is reduced under subparagraph (B) shall be increased
by one (up to a combined total not exceeding 3) for each such calendar
year, except that--
``(I) no calendar year shall be disregarded by reason of
this clause (in determining elapsed years to be taken into
account under subparagraph (A)(i)) unless the individual was
living with such child substantially throughout the period in
which the child was alive and under the age of 3 in such year
and the individual had no earnings as described in section
203(f)(5) in such year,
``(II) the particular calendar years to be disregarded
under this clause (in determining such elapsed years) shall be
those years (not otherwise disregarded under subparagraph (B))
which, before the application of section 215(f), meet the
conditions of subclause (I), and
``(III) this clause shall apply only to the extent that its
application would not result in a lower primary insurance
amount.
``(D) The reduction in the number of elapsed years taken into
account under subparagraph (A)(i) resulting from the application of
subparagraphs (B) and (C) shall not in any case reduce the number of
elapsed years taken into account under subparagraph (A)(i) to less than
2.''.
(b) Conforming Amendment.--Section 215(b)(3)(A) of such Act (42
U.S.C. 415(b)(3)(A)) is amended by striking ``for purposes of the
selection therefrom of benefit computation years under paragraph (2)''
and inserting ``for purposes of paragraphs (1)(B)(i) and (2)(A)(i)''.
(c) Effective Date.--The amendment made by subsection (a) shall
apply with respect to individuals initially becoming eligible for old-
age or disability insurance benefits, or dying (before becoming
eligible for such benefits), in any calendar year after 2008. For
purposes of this subsection, and individual shall be deemed eligible
for a benefit for a month if, upon filing application therefor in such
month, such individual would be entitled to such benefit for such
month.
SEC. 6. ACTUARIAL ADJUSTMENT FOR RETIREMENT.
(a) Early Retirement.--
(1) In general.--Section 202(q) of the Social Security Act
(42 U.S.C. 402(q)) is amended--
(A) in paragraph (1)(A), by striking ``\5/9\'' and
inserting ``the applicable old-age benefit fraction
(determined under paragraph (12)(A))'', and by striking
``\25/36\'' and inserting ``the applicable spousal
benefit fraction (determined under paragraph
(12)(B))''; and
(B) by adding at the end the following:
``(12) For purposes of paragraph (1)(A)--
``(A) the `applicable old-age benefit fraction' for an
individual who attains the age of 62 in--
``(i) any year before 2006, is \5/9\;
``(ii) 2006, is \7/12\;
``(iii) 2007, is \11/18\;
``(iv) 2008, is \23/36\;
``(v) 2009, is \2/3\; and
``(vi) 2010 or any succeeding year, is \25/36\; and
``(B) the `applicable spousal benefit fraction' for an
individual who becomes eligible for wife's or husband's
insurance benefits in--
``(i) any year before 2006, is \25/36\;
``(ii) 2006, is \35/48\;
``(iii) 2007, is \55/72\;
``(iv) 2008, is \115/144\;
``(v) 2009, is \5/6\; and
``(vi) 2010 or any succeeding year, is \125/
144\.''.
(2) Months beyond first 36 months.--Section 202(q) of such
Act (42 U.S.C. 402(q)(9)) (as amended by paragraph (1)) is
amended--
(A) in paragraph (9)(A), by striking ``five-
twelfths'' and inserting ``the applicable fraction
(determined under paragraph (13))''; and
(B) by adding at the end the following:
``(13) For purposes of paragraph (9)(A), the `applicable fraction'
for an individual who becomes eligible for old-age, wife's, or
husband's insurance benefits in--
``(A) any year before 2006, is \5/12\;
``(B) 2006, is \16/36\;
``(C) 2007, is \16/36\;
``(D) 2008, is \17/36\;
``(E) 2009, is \17/36\; and
``(F) 2010 or any succeeding year, is \1/2\.''.
(3) Eligibility.--Section 202(q) of such Act (as amended by
the preceding provisions of this subsection) is amended further
by adding at the end the following new paragraph:
``(14) For purposes of this subsection, an individual shall be
deemed eligible for a benefit for a month if, upon filing application
therefor in such month, such individual would be entitled to such
benefit for such month.''.
(4) Effective date.--The amendments made by this subsection
shall apply to individuals who, in connection with old-age,
wife's, and husband's insurance benefits under title II of the
Social Security Act, become eligible for such benefits (within
the meaning of section 202(q)(14) of such Act (as amended by
this subsection) in years after 2005.
(b) Delayed Retirement.--Section 202(w)(6) of the Social Security
Act (42 U.S.C. 402(w)(6)) is amended--
(1) in subparagraph (C), by striking ``and'' at the end;
(2) in subparagraph (D), by striking ``2004.'' and
inserting ``2004 and before 2009;''; and
(3) by adding at the end the following:
``(E) \17/24\ of 1 percent in the case of an individual who
attains the age of 62 in a calendar year after 2008 and before
2011;
``(F) \3/4\ of 1 percent in the case of an individual who
attains the age of 62 in a calendar year after 2010 and before
2013;
``(G) \19/24\ of 1 percent in the case of an individual who
attains the age of 62 in a calendar year after 2012 and before
2015; and
``(H) \5/6\ of 1 percent in the case of an individual who
attains the age of 62 in a calendar year after 2014.''.
SEC. 7. CORRECTIONS FOR CPI OVERSTATEMENT IN COST-OF-LIVING INDEXATION.
(a) Modifications to Cost-of-Living Indexation of Social Security
Benefits.--
(1) In general.--Section 215(i)(1)(D) of the Social
Security Act (42 U.S.C. 415(i)(1)(D)) is amended to read as
follows:
``(D) the term `CPI increase percentage', with respect to a
base quarter or cost-of-living computation quarter in any
calendar year, means the percentage (rounded to the nearest
one-tenth of 1 percent) by which the Chained Consumer Price
Index for All Urban Consumers (published by the Bureau of Labor
Statistics of the Department of Labor) for the such base
quarter or cost-of-living computation quarter exceeds such
index for the later of--
``(i) the most recent calendar quarter (prior to
such base quarter or cost-of-living computation
quarter) which was a base quarter under subparagraph
(A)(ii), or
``(ii) the most recent cost-of-living computation
quarter under subparagraph (B);''.
(2) Definitions.--Section 215(i)(1)(G) of such Act (42
U.S.C. 415(i)(1)(G)) is amended to read as follows:
``(G) the Chained Consumer Price Index for All Urban
Consumers for a base quarter, a cost-of-living computation
quarter, or any other calendar quarter shall be the
arithmetical mean of such index (published by the Bureau of
Labor Statistics of the Department of Labor as of the end of
such quarter) for the 3 months in such quarter.''.
(3) Effective date.--The amendments made by this subsection
shall apply with respect to increases under section 215(i) of
the Social Security Act effective with the month of December of
years after 2004.
(b) Consumer Price Index Adjustments Applicable to the Internal
Revenue Code Provisions.--
(1) In general.--Paragraph (3) of section 1(f) of the
Internal Revenue Code of 1986 (defining Consumer Price Index)
is amended to read as follows:
``(3) Cost-of-living adjustment.--
``(A) In general.--For purposes of paragraph (2),
the cost-of-living adjustment for any calendar year is
the product of--
``(i) the CPI fraction for calendar years
before 2006, multiplied by
``(ii) the Chained CPI fraction for
calendar years after 2005,
reduced by 1.
``(B) CPI fraction for calendar years before
2006.--The CPI fraction for calendar years before 2006
is the fraction--
``(i) the numerator of which is the CPI for
the calendar year 2004, and
``(ii) the denominator of which is the CPI
for the calendar year 1992.
``(C) Chained cpi fraction for calendar years after
2005.--The Chained CPI fraction for calendar years
after 2005 is the fraction--
``(i) the numerator of which is the Chained
CPI for the preceding calendar year, and
``(ii) the denominator of which is the
Chained CPI for the calendar year 2004.''.
(2) Conforming amendments.--
(A) Paragraph (4) of section 1(f) of such Code is
amended to read as follows:
``(4) CPI and chained cpi for any calendar year.--For
purposes of paragraph (3)--
``(A) CPI.--The CPI for any calendar year is the
average of the Consumer Price Index as of the close of
the 12-month period ending on August 31 of such
calendar year.
``(B) Chained cpi.--The Chained CPI for any
calendar year is the average of the Chained Consumer
Price Index as of the close of the 12-month period
ending on August 31 of such calendar year.''.
(B) Paragraph (5) of section 1(f) of such Code is
amended to read as follows:
``(5) Consumer price index and chained consumer price
index.--For purposes of paragraph (4)--
``(A) Consumer price index.--The term `Consumer
Price Index' means the last Consumer Price Index for
all-urban consumers published by the Department of
Labor. For purposes of the preceding sentence, the
revision of the Consumer Price Index which is most
consistent with the Consumer Price Index for calendar
year 1986 shall be used.
``(B) Chained consumer price index.--The term
`Chained Consumer Price Index' means the initial
Chained Consumer Price Index for all-urban consumers
published by the Department of Labor.''.
(3) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after December 31, 2005.
(c) Cost-of-Living Adjustments Under Other Provisions Utilizing
the Consumer Price Index.--
(1) In general.--Except as provided in paragraph (2), for
purposes of determining the amount of any cost-of-living
increase which takes effect for benefits payable after December
31, 2005, with respect to any benefit described in paragraph
(4), any such increase for the period for which the percentage
change is determined shall be deemed to be, in lieu of the
increase otherwise determined under applicable law in
connection with such benefits, the increase determined under
such applicable law by substituting the Chained CPI for any
month for the CPI for such month.
(2) Increases determined from a constant base year.--
(A) In general.--In any case in which the amount of
the cost-of-living increase which takes effect for
benefits payable after December 31, 2005, with respect
to any benefit described in paragraph (4) is determined
under applicable law by reference to a change in the
CPI over a period which is determined by reference to a
base period which remains constant from year to year,
any such increase for any period shall be deemed to be,
in lieu of the increase otherwise determined under
applicable law in connection with such benefits, the
increase, expressed as a percentage increase, equal to
the product of--
(i) the CPI fraction prior to 2006,
multiplied by
(ii) the Chained CPI fraction after 2005,
reduced by 1.
(B) CPI fraction prior to 2006.--The CPI fraction
prior to 2006 is the fraction--
(i) the numerator of which is the CPI for
the period, ending with or during 2004, which
corresponds to the base period, and
(ii) the denominator of which is the CPI
for the base period.
(C) Chained cpi fraction after 2005.--The Chained
CPI fraction after 2005 is the fraction--
(i) the numerator of which is the Chained
CPI for the period, ending with or during the
year preceding the year in which the
determination takes effect, which corresponds
to the base period, and
(ii) the denominator of which is the
Chained CPI for the period, ending with or
during 2004, which corresponds to the base
period.
(3) CPI and chained cpi.--For purposes of paragraph (1)--
(A) CPI.--The CPI for any period means, in
connection with any benefit described in paragraph (4),
the average monthly Consumer Price Index for such
period, as determined under the applicable law in
connection with such benefit (without regard to this
subsection).
(B) Chained cpi.--The Chained CPI for any period
means, in connection with any benefit described in
paragraph (4), the average monthly Chained Consumer
Price Index for all urban consumers (published by the
Bureau of Labor Statistics of the Department of Labor)
for such period, determined under applicable law in the
same manner as the CPI for such period would be
determined.
(4) Rules to apply only to computation of benefit
amounts.--The preceding provisions of this subsection shall
apply only for purposes of determining the amount of benefits
and not for purposes of determining--
(A) whether a threshold increase in the Consumer
Price Index has been met, or
(B) increases in amounts under other provisions of
law not described in paragraph (5) which operate by
reference to increases in such benefits.
(5) Benefits to which subsection applies.--For purposes of
this subsection, the benefits described in this paragraph are--
(A) retired and retainer pay subject to adjustment
under section 1401a of title 10, United States Code;
(B) civil service retirement benefits under section
8340 of title 5, United States Code, foreign service
retirement benefits under section 826 of the Foreign
Service Act of 1980, Central Intelligence Agency
retirement benefits under part J of the Central
Intelligence Agency Retirement Act of 1964 for certain
employees, and any other benefits under any similar
provision under any retirement system for employees of
the government of the United States;
(C) Federal workers' compensation under section
8146a of title 5, United States Code;
(D) benefits under section 3(a), 4(a), or 4(f) of
the Railroad Retirement Act of 1974; and
(E) benefits and expenditure limits under title
XVIII or XIX of the Social Security Act.
(6) Benefit.--For purposes of this section, the term
``benefit'' includes a payment.
(d) Recapture to Federal Old-Age and Survivors Insurance Trust
Fund.--Section 201 of the Social Security Act (42 U.S.C. 401) is
amended by adding at the end the following new subsection:
``(o) On July 1 of each calendar year specified in the following
table, the Secretary of the Treasury shall transfer, from the general
fund of the Treasury to the Federal Old-Age and Survivors Insurance
Trust Fund, an amount equal to the applicable percentage for such year,
specified in such table, of the total wages paid in and self-employment
income credited to such year.
``For the following The applicable
calendar years: percentage is:
After 2006 and before 2008............................. 0.02
After 2007 and before 2009............................. 0.04
After 2008 and before 2010............................. 0.10
After 2009 and before 2011............................. 0.12
After 2010 and before 2012............................. 0.13
After 2011 and before 2013............................. 0.20
After 2012 and before 2014............................. 0.24
After 2013 and before 2015............................. 0.29
After 2014 and before 2021............................. 0.33
After 2020 and before 2045............................. 0.39
After 2044 and before 2065............................. 0.47
After 2064.............................................0.57.''.
SEC. 8. ADJUSTMENTS TO BEND POINTS IN DETERMINING PRIMARY INSURANCE
AMOUNTS.
(a) Additional Bend Point.--Section 215(a)(1)(A) of the Social
Security Act (42 U.S.C. 415(a)(1)(A)) is amended to read as follows:
``(a)(1)(A)(i) Subject to clause (ii), the primary insurance amount
of an individual shall (except as otherwise provided in this section)
be equal to the sum of--
``(I) 90 percent of the individual's average indexed
monthly earnings (determined under subsection (b)) to the
extent that such earnings do not exceed the amount established
for purposes of this subclause by subparagraph (B),
``(II) 70 percent of the individual's average indexed
monthly earnings to the extent that such earnings exceed the
amount established for purposes of subclause (I) but do not
exceed the amount established for purposes of this subclause by
subparagraph (B),
``(III) 20 percent of the individual's average indexed
monthly earnings to the extent that such earnings exceed the
amount established for purposes of subclause (II) but do not
exceed the amount established for purposes of this subclause by
subparagraph (B), and
``(IV) 10 percent of the individual's average indexed
monthly earnings to the extent that such earnings exceed the
amount established for purposes of this clause by subparagraph
(B).
``(ii) In the case of individuals becoming eligible for old-age or
disability insurance benefits, or dying (before becoming eligible for
such benefits), in any calendar year after 2005 and before 2016--
``(I) In lieu of the percentage specified in subclause (II)
of clause (i), the applicable percentage set forth in the
following table in connection with such calendar year shall
apply:
The applicable
``If the calendar year is: percentage is:
2006................................................... 35.8
2007................................................... 39.6
2008................................................... 43.4
2009................................................... 47.2
2010................................................... 51.0
2011................................................... 54.8
2012................................................... 58.6
2013................................................... 62.4
2014................................................... 66.2.
``(II) In lieu of the percentage specified in subclause
(III) of clause (i), the applicable percentage set forth in the
following table in connection with such calendar year shall
apply:
The applicable
``If the calendar year is: percentage is:
2006................................................... 30.8
2007................................................... 29.6
2008................................................... 28.4
2009................................................... 27.2
2010................................................... 26.0
2011................................................... 24.8
2012................................................... 23.6
2013................................................... 22.4
2014................................................... 21.2.
``(III) In lieu of the percentage specified in subclause
(IV) of clause (i), the applicable percentage set forth in the
following table in connection with such calendar year shall
apply:
The applicable
``If the calendar year is: percentage is:
2006................................................... 14.5
2007................................................... 14.0
2008................................................... 13.5
2009................................................... 13.0
2010................................................... 12.5
2011................................................... 12.0
2012................................................... 11.5
2013................................................... 11.0
2014...................................................10.5.''.
(b) Initial Level of Additional Bend Point.--Section 215(a)(1)(B)
of such Act (42 U.S.C. 415(a)(1)(B)) is amended--
(1) in clause (i), by inserting ``(as then in effect)''
after ``subparagraph (A)'', and by adding at the end the
following new sentence: ``For individuals who initially become
eligible for old-age or disability insurance benefits, or who
die (before becoming eligible for such benefits) after 2005,
such dollar amounts shall be deemed to have been so established
in 1979 for purposes of subclauses (I) and (III) of
subparagraph (A)(i), respectively, as in effect with respect to
such individuals.'';
(2) by redesignating clause (iii) as clause (iv);
(3) by inserting after clause (ii) the following new
clause:
``(iii) For individuals who initially become eligible for old-age
or disability insurance benefits, or who die (before becoming eligible
for such benefits), in any calendar year after 2005, the amount
established for purposes of clause (ii) of subparagraph (A) for such
calendar year after 2005 shall be 183.8 percent of the amount
established for purposes of clause (i) for such calendar year.''; and
(4) in clause (iv) (as redesignated by paragraph (1)), by
striking ``clause (ii)'' and inserting ``clauses (ii) and
(iii)''.
(c) Effective Date.--The amendments made by this section shall
apply with respect to individuals becoming eligible for old-age
insurance benefits or disability insurance benefits, or dying (before
becoming eligible for such benefits), after 2005.
SEC. 9. ADJUSTMENT TO BENEFIT FORMULA FACTORS.
Section 215(a)(1)(B) of the Social Security Act (42 U.S.C.
415(a)(1)(B)) (as amended by section 8) is amended further--
(1) by redesignating clause (iv) as clause (vii); and
(2) by inserting after clause (iii) the following:
``(iv) For an individual who initially becomes eligible for old-age
insurance benefits, or who dies (before becoming eligible for such
benefits or disability insurance benefits), in any calendar year after
2011, each of the amounts otherwise established for purposes of
subclauses (I), (II), (III), and (IV) of subparagraph (A)(i) under this
subparagraph shall be substituted with the product derived by
successively multiplying, once for each year of the factoring period
for such individual--
``(I) such amount (after applying this clause for earlier
years of the factoring period), by
``(II) the designated factor for such year.
``(v) For purposes of clause (iii), the term `factoring period'
means, for an individual, the period beginning with 2012 and ending
with the earlier of--
``(I) the year of the individual's initial eligibility or
death, or
``(II) 2060.
``(vi) For purposes of clause (iii), the term `designated factor'
means--
``(I) for a year prior to 2031, 0.975, except that, for any
such year, such factor shall be 1.000 with respect to amounts
otherwise established for purposes of subclause (I) of
subparagraph (A)(i) under this subparagraph, and
``(II) for a year after 2030, 0.985.''.
SEC. 10. MODIFICATION TO PIA FORMULA TO REFLECT CHANGES TO LIFE
EXPECTANCY.
(a) In General.--Section 215(a)(1) of the Social Security Act (42
U.S.C. 415(a)(1)(B)) is amended by redesignating subparagraph (C) and
(D) as subparagraphs (D) and (E), respectively, and by inserting after
subparagraph (B) the following new subparagraph:
``(C)(i) For individuals who initially become eligible for old-age
insurance benefits (or who die before becoming eligible for such
benefits) in any calendar year after 2011, the primary insurance amount
computed under this paragraph shall be the product derived by
multiplying such amount as computed under the preceding subparagraphs
of this paragraph by the life expectancy ratio for such calendar year.
``(ii) The Commissioner of Social Security, using generally
accepted actuarial principles, shall determine and publish in the
Federal Register on or before November 1 of each calendar year the life
expectancy ratio for the following calendar year.
``(iii) For purposes of clause (ii), the life expectancy ratio for
any calendar year is the ratio of--
``(I) the period life expectancy of an individual attaining
age 62 on January 1, 2008, to
``(II) the period life expectancy of an individual
attaining age 62 on January 1 of the third calendar year
preceding the calendar year in which the determination under
clause (ii) is made.''.
(b) Study of the Effect of Increases in Life Expectancy.--
(1) Study plan.--Not later than December 15, 2006, the
Commissioner of Social Security shall submit to Congress a
detailed study plan for evaluating the effects of increases in
life expectancy on the expected level of retirement income from
social security, pensions, and other sources. The study plan
shall include a description of the methodology, data, and
funding that will be required in order to provide to the
Congress not later than February 15, 2008--
(A) an evaluation of trends in mortality and their
relationship to trends in health status, among
individuals approaching eligibility for old-age
insurance benefits under title II of the Social
Security Act;
(B) an evaluation of trends in labor force
participation among individuals approaching eligibility
for such benefits and among individuals receiving such
benefits, and of the factors that influence the choice
between retirement and participation in the labor
force;
(C) an evaluation of changes, if any, in the
disability insurance program under title II of the
Social Security Act that would reduce the impact of
changes in the retirement income of workers in poor
health or physically demanding occupations;
(D) an evaluation of the methodology used to
develop projections for trends in mortality, health
status, and labor force participation among individuals
approaching eligibility for old-age insurance benefits
and among individuals receiving such benefits; and
(E) an evaluation of such other matters as the
Commissioner deems appropriate for evaluating the
effects of increases in life expectancy.
(2) Report on results of study.--Not later than February
15, 2008, the Commissioner of Social Security shall provide to
the Congress an evaluation of the implications of the trends
studied under paragraph (1), along with recommendations, if
any, of the extent to which the conclusions of such evaluations
indicate that projected increases in life expectancy require
modification in the disability insurance program under title II
of the Social Security Act and other income support programs.
SEC. 11. TREATMENT OF DISABLED BENEFICIARIES.
Section 215(a) of the Social Security Act (42 U.S.C. 415(a)) is
amended by adding at the end the following new paragraph:
``(8)(A) Notwithstanding the preceding provisions of this
subsection, in the case of an individual who has or has had a period of
disability and becomes entitled to old-age insurance benefits under
section 202(a) (or dies) in or after 2006, the primary insurance amount
of such individual shall be the sum of--
``(i) the amount determined under subparagraph (B), and
``(ii) the product derived by multiplying--
``(I) the excess of the amount determined under
subparagraph (C) over the amount determined under
subparagraph (B), by
``(II) the adjustment factor for such individual
determined under subparagraph (D).
``(B) The amount determined under this subparagraph is the amount
of such individual's primary insurance amount as determined under this
section without regard to this paragraph.
``(C) The amount determined under this subparagraph is the amount
of such individual's primary insurance amount as determined under this
section as in effect with respect to individuals becoming eligible for
old-age or disability insurance benefits under section 202(a) in 2004.
``(D)(i) Subject to clause (ii), the adjustment factor determined
under this subparagraph for any individual is the ratio (not greater
than 1) of--
``(I) the number of months, ending after the date on which
such individual has attained age 22 and preceding the earlier
of such individual's first month of entitlement to old-age
insurance benefits under section 202(a) or the month of such
individual's death, which occurred during a period of
disability of such individual, to
``(II) 480.
``(ii) In the case of an individual who has attained age 22 as of
the date of the enactment of the Bipartisan Retirement Security Act of
2005, the adjustment factor determined under this subparagraph for such
individual is the product derived by multiplying the ratio determined
under clause (i) by the ratio (not greater than 1) of--
``(I) the number of calendar years for which contributions
have been made to such individual's individual security account
pursuant to section 251(b)(1), to
``(II) 40.''.
SEC. 12. MAINTENANCE OF BENEFIT AND CONTRIBUTION BASE.
(a) In General.--So much of section 230 of the Social Security Act
(42 U.S.C. 430) as precedes subsection (d) is amended to read as
follows:
``maintenance of benefit and contribution base
``Sec. 230. (a) Not later than November 1 of each calendar year
(beginning with or after 2005), the Commissioner shall determine and
publish in the Federal Register the contribution and benefit base
determined under subsections (b) and (c) which shall be effective with
respect to remuneration paid after such calendar year and taxable years
beginning after such year.
``(b) For purposes of this section, and for purposes of determining
wages and self-employment income under sections 209, 211, 213, and 215
of this Act and sections 54, 1402, 3121, 3122, 3125, 6413, and 6654 of
the Internal Revenue Code of 1986--
``(1) the `contribution and benefit base' with respect to
remuneration paid (and taxable years beginning)--
``(A) in 2006 shall be $97,500,
``(B) in 2007 shall be $106,800,
``(C) in 2008 shall be $117,000,
``(D) in 2009 shall be $129,000, and
``(E) in 2010 shall be $142,500; and
``(2) the `contribution and benefit base' with respect to
remuneration paid (and taxable years beginning) in any calendar
year after 2010 shall be equal to the dollar amount equal to
the lowest amount which, if applied under this title as the
benefit and contribution base for the preceding year, would
have caused the total untaxed covered remuneration for such
year to constitute no more than 13 percent of the total amount
of wages paid, and self-employment income derived, in such year
by all individuals.
Each contribution and benefit base determined under paragraph (2) shall
(if not a multiple of $25) be rounded to the nearest multiple of $25.
``(c) For purposes of this section, the term `total untaxed covered
remuneration' for a calendar year means the total amount of wages paid
to, and self-employment income derived by, all individuals in such
calendar year, which was, with respect to each individual paid such
wages and deriving such self-employment income, in excess of the
contribution and benefit base for that calendar year.''.
(b) Effective Date.--The amendment made by this section shall apply
to remuneration paid in (and taxable years beginning in) any calendar
year after 2005.
SEC. 13. ACCELERATION OF INCREASE IN SOCIAL SECURITY ELIGIBILITY AGE.
Section 216(l) of the Social Security Act (42 U.S.C. 416(l) is
amended--
(1) in paragraph (1), by striking subparagraphs (A), (B),
(C), (D), and (E) and inserting the following:
``(A) with respect to an individual who attains early
retirement age (as defined in paragraph (2)) before January 1,
2000, 65 years of age; and
``(B) with respect to an individual who attains early
retirement age after December 31, 1999, and before January 1,
2012, 65 years of age plus \2/12\ of the number of months in
the period beginning with January 2000 and ending with December
of the year in which the individual attains early retirement
age; and
``(C) with respect to an individual who attains early
retirement age after December 31, 2011, 67 years of age.''; and
(2) by striking paragraph (3).
SEC. 14. MECHANISM FOR REMEDYING UNFORESEEN DETERIORATION IN SOCIAL
SECURITY SOLVENCY.
(a) In General.--Section 709 of the Social Security Act (42 U.S.C.
910) is amended--
(1) by redesignating subsection (b) as subsection (c); and
(2) by striking ``Sec. 709. (a) If the Board of Trustees''
and all that follows through ``any such Trust Fund'' and
inserting the following:
``Sec. 709. (a)(1)(A) If the Board of Trustees of the Federal Old-
Age and Survivors Insurance Trust Fund and the Federal Disability
Insurance Trust Fund determines at any time, using intermediate
actuarial assumptions, that the balance ratio of either such Trust Fund
for any calendar year during the succeeding period of 75 calendar years
will be zero, the Board shall promptly submit to each House of the
Congress and to the President a report setting forth its
recommendations for statutory adjustments affecting the receipts and
disbursements of such Trust Fund necessary to maintain the balance
ratio of such Trust Fund at not less than 20 percent, with due regard
to the economic conditions which created such inadequacy in the balance
ratio and the amount of time necessary to alleviate such inadequacy in
a prudent manner. The report shall set forth specifically the extent to
which benefits would have to be reduced, taxes under section 1401,
3101, or 3111 of the Internal Revenue Code of 1986 would have to be
increased, or a combination thereof, in order to obtain the objectives
referred to in the preceding sentence.
``(B) In addition to any reports under subparagraph (A), the Board
shall, not later than May 30, 2006, prepare and submit to Congress and
the President recommendations for statutory adjustments to the
disability insurance program under title II of this Act to modify the
changes in disability benefits under the Bipartisan Retirement Security
Act of 2005 without reducing the balance ratio of the Federal
Disability Insurance Trust Fund. The Board shall develop such
recommendations in consultation with the National Council on
Disability, taking into consideration the adequacy of benefits under
the program, the relationship of such program with old age benefits
under such title, and changes in the process for determining initial
eligibility and reviewing continued eligibility for benefits under such
program.
``(2)(A) The President shall, no later than 30 days after the
submission of the report to the President, transmit to the Board and to
the Congress a report containing the President's approval or
disapproval of the Board's recommendations.
``(B) If the President approves all the recommendations of the
Board, the President shall transmit a copy of such recommendations to
the Congress as the President's recommendations, together with a
certification of the President's adoption of such recommendations.
``(C) If the President disapproves the recommendations of the
Board, in whole or in part, the President shall transmit to the Board
and the Congress the reasons for that disapproval. The Board shall then
transmit to the Congress and the President, no later than 60 days after
the date of the submission of the original report to the President, a
revised list of recommendations.
``(D) If the President approves all of the revised recommendations
of the Board transmitted to the President under subparagraph (C), the
President shall transmit a copy of such revised recommendations to the
Congress as the President's recommendations, together with a
certification of the President's adoption of such recommendations.
``(E) If the President disapproves the revised recommendations of
the Board, in whole or in part, the President shall transmit to the
Board and the Congress the reasons for that disapproval, together with
such revisions to such recommendations as the President determines are
necessary to bring such recommendations within the President's
approval. The President shall transmit a copy of such recommendations,
as so revised, to the Board and the Congress as the President's
recommendations, together with a certification of the President's
adoption of such recommendations.
``(3)(A) This paragraph is enacted by Congress--
``(i) as an exercise of the rulemaking power of the Senate
and the House of Representatives, respectively, and as such it
is deemed a part of the rules of each House, respectively, but
applicable only to the extent that it is inconsistent with such
rules; and
``(ii) with full recognition of the constitutional right of
either House to change the rules (so far as relating to the
procedure of that House) at any time, in the same manner, and
to the same extent as in the case of any other rule of that
House.
``(B) For purposes of this paragraph, the term `joint resolution'
means only a joint resolution which is introduced within the 10-day
period beginning on the date on which the President transmits the
President's recommendations, together with the President's
certification, to the Congress under subparagraph (B), (D), or (E) of
paragraph (2), and--
``(i) which does not have a preamble;
``(ii) the matter after the resolving clause of which is as
follows: `That the Congress approves the recommendations of the
President as transmitted on ______ pursuant to section 709(a)
of the Social Security Act, as follows:________', the first
blank space being filled in with the appropriate date and the
second blank space being filled in with the statutory
adjustments contained in the recommendations; and
``(iii) the title of which is as follows: `Joint resolution
approving the recommendations of the President regarding social
security.'
``(C) A joint resolution described in subparagraph (B) that is
introduced in the House of Representatives shall be referred to the
Committee on Ways and Means of the House of Representatives. A joint
resolution described in subparagraph (B) introduced in the Senate shall
be referred to the Committee on Finance of the Senate.
``(D) If the committee to which a joint resolution described in
subparagraph (B) is referred has not reported such joint resolution (or
an identical joint resolution) by the end of the 20-day period
beginning on the date on which the President transmits the
recommendation to the Congress under paragraph (2), such committee
shall be, at the end of such period, discharged from further
consideration of such joint resolution, and such joint resolution shall
be placed on the appropriate calendar of the House involved.
``(E)(i) On or after the third day after the date on which the
committee to which such a joint resolution is referred has reported, or
has been discharged (under subparagraph (D)) from further consideration
of, such a joint resolution, it is in order (even though a previous
motion to the same effect has been disagreed to) for any Member of the
respective House to move to proceed to the consideration of the joint
resolution. A Member may make the motion only on the day after the
calendar day on which the Member announces to the House concerned the
Member's intention to make the motion, except that, in the case of the
House of Representatives, the motion may be made without such prior
announcement if the motion is made by direction of the committee to
which the joint resolution was referred. All points of order against
the joint resolution (and against consideration of the joint
resolution) are waived. The motion is highly privileged in the House of
Representatives and is privileged in the Senate and is not debatable.
The motion is not subject to amendment, or to a motion to postpone, or
to a motion to proceed to the consideration of other business. A motion
to reconsider the vote by which the motion is agreed to or disagreed to
shall not be in order. If a motion to proceed to the consideration of
the joint resolution is agreed to, the respective House shall
immediately proceed to consideration of the joint resolution without
intervening motion, order, or other business, and the joint resolution
shall remain the unfinished business of the respective House until
disposed of.
``(ii) Debate on the joint resolution, and on all debatable motions
and appeals in connection therewith, shall be limited to not more than
2 hours, which shall be divided equally between those favoring and
those opposing the joint resolution. An amendment to the joint
resolution is not in order. A motion further to limit debate is in
order and not debatable. A motion to postpone, or a motion to proceed
to the consideration of other business, or a motion to recommit the
joint resolution is not in order. A motion to reconsider the vote by
which the joint resolution is agreed to or disagreed to is not in
order.
``(iii) Immediately following the conclusion of the debate on a
joint resolution described in subparagraph (B) and a single quorum call
at the conclusion of the debate if requested in accordance with the
rules of the appropriate House, the vote on final passage of the joint
resolution shall occur.
``(iv) Appeals from the decisions of the Chair relating to the
application of the rules of the Senate or the House of Representatives,
as the case may be, to the procedure relating to a joint resolution
described in subparagraph (B) shall be decided without debate.
``(F)(i) If, before the passage by one House of a joint resolution
of that House described in subparagraph (B), that House receives from
the other House a joint resolution described in subparagraph (B), then
the following procedures shall apply:
``(I) The joint resolution of the other House shall not be
referred to a committee and may not be considered in the House
receiving it except in the case of final passage as provided in
subclause (II).
``(II) With respect to a joint resolution described in
subparagraph (B) of the House receiving the joint resolution,
the procedure in that House shall be the same as if no joint
resolution had been received from the other House, but the vote
on final passage shall be on the joint resolution of the other
House.
``(ii) Upon disposition of the joint resolution received from the
other House, it shall no longer be in order to consider the joint
resolution that originated in the receiving House.
``(b) If the Board of Trustees of the Federal Hospital Insurance
Trust Fund or the Federal Supplementary Medical Insurance Trust Fund
determines at any time that the balance ratio of either such Trust
Fund''.
(b) Conforming Amendments.--
(1) Section 709(b) of such Act (as amended by subsection
(a) of this section) is amended by striking ``any such'' and
inserting ``either such''.
(2) Section 709(c) of such Act (as redesignated by
subsection (a) of this section) is amended by inserting ``or
(b)'' after ``subsection (a)''.
SEC. 15. INCREASE IN WIDOW'S AND WIDOWER'S INSURANCE BENEFITS.
(a) Widow's Insurance Benefits.--Section 202(e) of the Social
Security Act (42 U.S.C. 402(e)) is amended by adding at the end the
following new paragraph:
``(9)(A) In any case in which the amount of a widow's insurance
benefit (as determined under the preceding paragraphs of this
subsection) for the entitlement month of the widow (or surviving
divorced wife) is less than the minimum benefit amount for such month
determined under subparagraph (C), the amount of such benefit for such
month and each succeeding month shall be increased to such minimum
benefit amount (or the amount most recently established in lieu thereof
under section 215(i)).
``(B) For purposes of this paragraph, the term `entitlement month'
of a widow (or surviving divorced wife) means, in connection with her
benefit under this subsection, the first month of her entitlement to
such benefit.
``(C) For purposes of subparagraph (A), the minimum benefit amount
determined under this subparagraph for the entitlement month of the
widow (or surviving divorced wife) is an amount equal to the lesser
of--
``(i) 75 percent of the sum of--
``(I) the imputed deceased individual's benefit for
such month, as determined under subparagraph (D) or (E)
(as applicable), and
``(II) the imputed survivor benefit for such month,
as determined under subparagraph (F), or
``(ii) the increased benefit cap determined under
subparagraph (G) for such month.
``(D)(i) For purposes of subparagraph (C)(i)(I), if the deceased
individual died in a month for which he was not entitled to any benefit
under this title based on his wages or self-employment income or the
wages and self-employment income of the widow (or surviving divorced
wife), the imputed deceased individual's benefit for the entitlement
month of the widow (or surviving divorced wife) is the sum of--
``(I) the imputed old-age insurance benefit (determined
under clause (ii)) of the deceased individual for her
entitlement month (if any), and
``(II) the imputed husband's insurance benefit (determined
under clause (iii)) of the deceased individual for her
entitlement month (if any).
``(ii) The amount of the imputed old-age insurance benefit of the
deceased individual for the entitlement month of the widow (or
surviving divorced wife) is the amount of the old-age insurance benefit
to which he would have been entitled for such month--
``(I) determined, in the case of such a deceased individual
who had attained age 62 as of the date of his death, as if he
had applied for such benefit in the month of his death and had
survived throughout the subsequent period ending with her
entitlement month, or
``(II) determined, in the case of such a deceased
individual who died before attaining age 62 but would have
attained age 62 before the end of her entitlement month, as if
he had survived throughout the subsequent period ending with
her entitlement month, and had applied for such benefit during
the first month for which he would have been eligible for such
benefit (assuming a primary insurance amount for the deceased
individual determined under paragraph (2)(B) of this
subsection).
For purposes of determining the deceased individual's imputed old-age
insurance benefit under this clause, the determination of whether the
deceased individual was a fully-insured individual (as defined in
section 214(a)) shall be made as of the date of his death. In any case
in which the deceased individual died before attaining age 62 and would
not have attained age 62 before the end of the entitlement month of the
widow (or surviving divorced wife), the deceased individual's imputed
old-age insurance benefit shall be deemed to be zero.
``(iii) The amount of the imputed husband's insurance benefit of
the deceased individual for the entitlement month of the widow (or
surviving divorced wife) is the amount of the husband's insurance
benefit under subsection (c) to which he would have been entitled for
such month (assuming, for purposes of reduction under subsection
(k)(3)(A), the entitlement to an old-age insurance benefit for such
month, if any, as described in clause (ii))--
``(I) determined, in the case of such a deceased individual
who had attained age 62 as of the date of his death, as if he
had applied for such benefit in the month of his death and had
survived throughout the subsequent period ending with her
entitlement month, or
``(II) determined, in the case of such a deceased
individual who died before attaining age 62 but would have
attained age 62 before the end of her entitlement month, as if
he had survived throughout the subsequent period ending with
her entitlement month and had applied for such benefit during
the first month for which he would have been eligible for such
benefit.
In any case in which the deceased individual died before he attained
age 62 and would not have attained age 62 before the end of the
entitlement month of the widow (or surviving divorced spouse), the
deceased individual's imputed husband's insurance benefit shall be
deemed to be zero.
``(E)(i) For purposes of subparagraph (C), if the deceased
individual died during a month for which he otherwise would have been
entitled (but for his death) to an old-age insurance benefit under
subsection (a) or a disability insurance benefit under section 223, or
to a husband's insurance benefit under subsection (c) based on the
wages and self-employment income of the widow (or surviving divorced
wife), the imputed deceased individual's benefit for the entitlement
month of the widow (or surviving divorced wife) is the sum of--
``(I) the amount of the old-age or disability insurance
benefit (if any) to which he would have been entitled for her
entitlement month if he had survived throughout the period
subsequent to his death and ending with such month, and
``(II) the amount of the husband's insurance benefit (if
any) to which he would have been entitled for her entitlement
month based on her wages and self-employment income if he had
survived throughout the period subsequent to his death and
ending with such month (assuming, for purposes of reduction
under subsection (k)(3)(A), the entitlement to an old-age or
disability insurance benefit for such month, if any, as
described in subclause (I)).
``(ii) If the deceased individual otherwise would have been
entitled (but for his death) to a disability insurance benefit under
section 223 for the month in which he died, the amount determined under
clause (i) shall be determined as if he had survived throughout the
period commencing with the month of his death and ending with the
entitlement month of the widow (or surviving divorced wife) and he had
remained entitled to disability insurance benefits throughout such
period (or until becoming entitled to old-age insurance benefits under
subsection (a) during such period).
``(F) For purposes of subparagraph (C)(i)(II)--
``(i) In the case of a widow (or surviving divorced wife)
who is entitled for her entitlement month to an old-age
insurance benefit under subsection (a) or a disability
insurance benefit under section 223, or otherwise would have
been entitled (but for the deceased individual's death) to a
wife's insurance benefit under subsection (b) for such month,
the amount of her imputed survivor benefit for such month is
the sum of--
``(I) the amount of such old-age or disability
insurance benefit (if any), and
``(II) the amount of such wife's insurance benefit
(if any), assuming, for purposes of reduction under
subsection (k)(3)(A), the entitlement to an old-age
insurance or disability insurance benefit for such
month (if any), as described in subclause (I).
``(ii) In the case of a widow (or surviving divorced wife)
who is not described in clause (i) but has attained (or would
attain) age 62 as of the end of her entitlement month, the
amount of her imputed survivor benefit is the sum of--
``(I) the amount of the old-age insurance benefit
under subsection (a) to which she would be entitled for
such month if she filed application for such benefit
during such month, and
``(II) the amount to which she otherwise would have
been entitled (but for the deceased individual's death)
as a wife's insurance benefit under subsection (b) for
such month, based on the deceased individual's wages
and self-employment income, if she had filed
application for such benefit during such month
(assuming a primary insurance amount for the deceased
individual determined under paragraph (2)(B) of this
subsection and assuming, for purposes of reduction
under subsection (k)(3)(A), the entitlement to an old-
age insurance benefit for such month, if any, as
described in subclause (I)).
In any case in which the widow (or surviving divorced wife) would not
attain age 62 before the end of the her entitlement month, her imputed
survivor benefit shall be deemed to be zero.
``(G) The increased benefit cap determined under this subparagraph
for the entitlement month of the widow (or surviving divorced wife) is
the amount which would be the amount of a theoretical individual's old-
age insurance benefit under subsection (a) (reduced as provided in
subsection (q)) if--
``(i) such theoretical individual's primary insurance
amount for the first month of entitlement were equal to the
average of the primary insurance amounts upon which old-age
insurance benefits under subsection (a) are payable for--
``(I) in any case in which the entitlement month of
the widow (or surviving divorced wife) is the month of
December, such month, or
``(II) in any other case, the latest month of
December preceding such entitlement month,
``(ii) such first month of such theoretical individual's
entitlement to such old-age insurance benefit were the
entitlement month of the widow (or surviving divorced spouse),
and
``(iii) the month in which the theoretical individual
attained or would attain retirement age (as defined in section
216(l)) were the month in which the widow (or surviving
divorced wife) attained or would attain retirement age (as so
defined).
``(H) If, in determining the amount of the benefit under this
section pursuant to this paragraph, the imputed old-age insurance
benefit or imputed husband's insurance benefit of the deceased
individual was deemed to be zero pursuant to the last sentence of
clause (ii) or (iii) of subparagraph (D), or the imputed survivor
benefit of the widow (or surviving divorced wife) was deemed to be zero
pursuant to the last sentence of subparagraph (F), effective for any
month after the entitlement month of the widow (or surviving divorced
wife) in which the deceased individual would have attained age 62 or
she attains age 62, the Commissioner shall recompute the amount of the
benefit under this paragraph by substituting a reference to such later
month for each reference in the preceding provisions of this paragraph
to her entitlement month.
``(I)(i) Any reference in this paragraph to the widow's insurance
benefit (as determined under the preceding paragraphs of this
subsection) shall be deemed a reference to such benefit, taking into
account all applicable reductions and deductions under this title.
``(ii) Any reference in this paragraph to the imputed old-age
insurance benefit or imputed husband's insurance benefit described in
subparagraph (D), the old-age insurance benefit, disability insurance
benefit, or husband's insurance benefit described in subparagraph (E),
or the old-age insurance benefit, disability insurance benefit, or
wife's insurance benefit described in subparagraph (F) shall be deemed
a reference to such benefit, taking into account applicable reductions
under this section but disregarding reductions or deductions otherwise
applicable under this title.
``(iii) A widow's insurance benefit which has been increased under
this paragraph shall be subject to all reductions and deductions
otherwise applicable to widow's insurance benefits under this title,
except that such benefit shall not be subject to any reduction
otherwise applicable under subsection (q)(1).''.
(b) Widower's Insurance Benefits.--Section 202(f) of such Act (42
U.S.C. 402(f)) is amended by adding at the end the following new
paragraph:
``(9)(A) In any case in which the amount of a widower's insurance
benefit (as determined under the preceding paragraphs of this
subsection) for the entitlement month of the widower (or surviving
divorced husband) is less than the minimum benefit amount for such
month determined under subparagraph (C), the amount of such benefit for
such month and each succeeding month shall be increased to such minimum
benefit amount (or the amount most recently established in lieu thereof
under section 215(i)).
``(B) For purposes of this paragraph, the term `entitlement month'
of a widower (or surviving divorced husband) means, in connection with
his benefit under this subsection, the first month of his entitlement
to such benefit.
``(C) For purposes of subparagraph (A), the minimum benefit amount
determined under this subparagraph for the entitlement month of the
widower (or surviving divorced husband) is an amount equal to the
lesser of--
``(i) 75 percent of the sum of--
``(I) the imputed deceased individual's benefit for
such month, as determined under subparagraph (D) or (E)
(as applicable), and
``(II) the imputed survivor benefit for such month,
as determined under subparagraph (F), or
``(ii) the increased benefit cap determined under
subparagraph (G) for such month.
``(D)(i) For purposes of subparagraph (C)(i)(I), if the deceased
individual died in a month for which she was not entitled to any
benefit under this title based on her wages or self-employment income
or the wages and self-employment income of the widower (or surviving
divorced husband), the imputed deceased individual's benefit for the
entitlement month of the widower (or surviving divorced husband) is the
sum of--
``(I) the imputed old-age insurance benefit (determined
under clause (ii)) of the deceased individual for his
entitlement month (if any), and
``(II) the imputed wife's insurance benefit (determined
under clause (iii)) of the deceased individual for his
entitlement month (if any).
``(ii) The amount of the imputed old-age insurance benefit of the
deceased individual for the entitlement month of the widower (or
surviving divorced husband) is the amount of the old-age insurance
benefit to which she would have been entitled for such month--
``(I) determined, in the case of such a deceased individual
who had attained age 62 as of the date of her death, as if she
had applied for such benefit in the month of her death and had
survived throughout the subsequent period ending with his
entitlement month, or
``(II) determined, in the case of such a deceased
individual who died before attaining age 62 but would have
attained age 62 before the end of his entitlement month, as if
she had survived throughout the subsequent period ending with
his entitlement month, and had applied for such benefit during
the first month for which she would have been eligible for such
benefit (assuming a primary insurance amount for the deceased
individual determined under paragraph (2)(B) of this
subsection).
For purposes of determining the deceased individual's imputed old-age
insurance benefit under this clause, the determination of whether the
deceased individual was a fully-insured individual (as defined in
section 214(a)) shall be made as of the date of her death. In any case
in which the deceased individual died before attaining age 62 and would
not have attained age 62 before the end of the entitlement month of the
widower (or surviving divorced husband), the deceased individual's
imputed old-age insurance benefit shall be deemed to be zero.
``(iii) The amount of the imputed wife's insurance benefit of the
deceased individual for the entitlement month of the widower (or
surviving divorced husband) is the amount of the wife's insurance
benefit under subsection (b) to which she would have been entitled for
such month (assuming, for purposes of reduction under subsection
(k)(3)(A), the entitlement to an old-age insurance benefit for such
month, if any, as described in clause (ii))--
``(I) determined, in the case of such a deceased individual
who had attained age 62 as of the date of her death, as if she
had applied for such benefit in the month of her death and had
survived throughout the subsequent period ending with his
entitlement month, or
``(II) determined, in the case of such a deceased
individual who died before attaining age 62 but would have
attained age 62 before the end of his entitlement month, as if
she had survived throughout the subsequent period ending with
his entitlement month and had applied for such benefit during
the first month for which she would have been eligible for such
benefit.
In any case in which the deceased individual died before she attained
age 62 and would not have attained age 62 before the end of the
entitlement month of the widower (or surviving divorced husband), the
deceased individual's imputed husband's insurance benefit shall be
deemed to be zero.
``(E)(i) For purposes of subparagraph (C), if the deceased
individual died during a month for which she otherwise would have been
entitled (but for her death) to an old-age insurance benefit under
subsection (a) or a disability insurance benefit under section 223, or
to a wife's insurance benefit under subsection (b) based on the wages
and self-employment income of the widower (or surviving divorced
husband), the imputed deceased individual's benefit for the entitlement
month of the widower (or surviving divorced husband) is the sum of--
``(I) the amount of the old-age or disability insurance
benefit (if any) to which she would have been entitled for his
entitlement month if she had survived throughout the period
subsequent to her death and ending with such month, and
``(II) the amount of the wife's insurance benefit (if any)
to which she would have been entitled for his entitlement month
based on his wages and self-employment income if she had
survived throughout the period subsequent to her death and
ending with such month (assuming, for purposes of reduction
under subsection (k)(3)(A), the entitlement to an old-age or
disability insurance benefit for such month, if any, as
described in subclause (I)).
``(ii) If the deceased individual otherwise would have been
entitled (but for her death) to a disability insurance benefit under
section 223 for the month in which she died, the amount determined
under clause (i) shall be determined as if she had survived throughout
the period commencing with the month of her death and ending with the
entitlement month of the widower (or surviving divorced husband) and
she had remained entitled to disability insurance benefits throughout
such period (or until becoming entitled to old-age insurance benefits
under subsection (a) during such period).
``(F) For purposes of subparagraph (C)(i)(II)--
``(i) In the case of a widower (or surviving divorced
husband) who is entitled for his entitlement month to an old-
age insurance benefit under subsection (a) or a disability
insurance benefit under section 223, or otherwise would have
been entitled (but for the deceased individual's death) to a
husband's insurance benefit under subsection (c) for such
month, the amount of her imputed survivor benefit for such
month is the sum of--
``(I) the amount of such old-age or disability
insurance benefit (if any), and
``(II) the amount of such husband's insurance
benefit (if any), assuming, for purposes of reduction
under subsection (k)(3)(A), the entitlement to an old-
age insurance or disability insurance benefit for such
month (if any), as described in subclause (I).
``(ii) In the case of a widower (or surviving divorced
husband) who is not described in clause (i) but has attained
(or would attain) age 62 as of the end of his entitlement
month, the amount of his imputed survivor benefit is the sum
of--
``(I) the amount of the old-age insurance benefit
under subsection (a) to which he would be entitled for
such month if he filed application for such benefit
during such month, and
``(II) the amount to which he otherwise would have
been entitled (but for the deceased individual's death)
as a husband's insurance benefit under subsection (c)
for such month, based on the deceased individual's
wages and self-employment income, if he had filed
application for such benefit during such month
(assuming a primary insurance amount for the deceased
individual determined under paragraph (2)(B) of this
subsection and assuming, for purposes of reduction
under subsection (k)(3)(A), the entitlement to an old-
age insurance benefit for such month, if any, as
described in subclause (I)).
In any case in which the widower (or surviving divorced husband) would
not attain age 62 before the end of the his entitlement month, his
imputed survivor benefit shall be deemed to be zero.
``(G) The increased benefit cap determined under this subparagraph
for the entitlement month of the widower (or surviving divorced
husband) is the amount which would be the amount of a theoretical
individual's old-age insurance benefit under subsection (a) (reduced as
provided in subsection (q)) if--
``(i) such theoretical individual's primary insurance
amount for the first month of entitlement were equal to the
average of the primary insurance amounts upon which old-age
insurance benefits under subsection (a) are payable for--
``(I) in any case in which the entitlement month of
the widower (or surviving divorced husband) is the
month of December, such month, or
``(II) in any other case, the latest month of
December preceding such entitlement month,
``(ii) such first month of such theoretical individual's
entitlement to such old-age insurance benefit were the
entitlement month of the widower (or surviving divorced
husband), and
``(iii) the month in which the theoretical individual
attained or would attain retirement age (as defined in section
216(l)) were the month in which the widower (or surviving
divorced husband) attained or would attain retirement age (as
so defined).
``(H) If, in determining the amount of the benefit under this
section pursuant to this paragraph, the imputed old-age insurance
benefit or imputed wife's insurance benefit of the deceased individual
was deemed to be zero pursuant to the last sentence of clause (ii) or
(iii) of subparagraph (D), or the imputed survivor benefit of the
widower (or surviving divorced husband) was deemed to be zero pursuant
to the last sentence of subparagraph (F), effective for any month after
the entitlement month of the widower (or surviving divorced husband) in
which the deceased individual would have attained age 62 or he attains
age 62, the Commissioner shall recompute the amount of the benefit
under this paragraph by substituting a reference to such later month
for each reference in the preceding provisions of this paragraph to her
entitlement month.
``(I)(i) Any reference in this paragraph to the widower's insurance
benefit (as determined under the preceding paragraphs of this
subsection) shall be deemed a reference to such benefit, taking into
account all applicable reductions and deductions under this title.
``(ii) Any reference in this paragraph to the imputed old-age
insurance benefit or imputed wife's insurance benefit described in
subparagraph (D), the old-age insurance benefit, disability insurance
benefit, or wife's insurance benefit described in subparagraph (E), or
the old-age insurance benefit, disability insurance benefit, or
husband's insurance benefit described in subparagraph (F) shall be
deemed a reference to such benefit, taking into account applicable
reductions under this section but disregarding reductions or deductions
otherwise applicable under this title.
``(iii) A widower's insurance benefit which has been increased
under this paragraph shall be subject to all reductions and deductions
otherwise applicable to widower's insurance benefits under this title,
except that such benefit shall not be subject to any reduction
otherwise applicable under subsection (q)(1).''.
(c) Cost-of-Living Adjustments to Guaranteed Widow's and Widower's
Insurance Benefits.--Section 215(i)(2)(A)(ii) of such Act (42 U.S.C.
415(i)(2)(A)(ii)) is amended--
(1) in subclause (II), by striking ``and'' at the end;
(2) in subclause (III), by striking ``1978.'' and inserting
``1979, and'';
(3) by adding at the end the following new subclause:
``(IV) the benefit amount to which an individual is
entitled for that month under subsection (e) or (f) of section
202 if such benefit amount has been increased under paragraph
(10) of such subsection.''; and
(4) in the matter following subclause (IV) (added by
paragraph (3)), by striking ``(I), (II), and (III)'' and
inserting ``(I), (II), (III), and (IV)''.
(d) Effective Date.--The amendments made by this section shall
apply with respect to widow's and widower's insurance benefits for
which applications are filed in months after November 2005.
SEC. 16. LIMITATION ON BENEFITS OF MARRIED COUPLE TO LEVEL OF MAXIMUM
WORKER BENEFITS.
(a) Wife's Insurance Benefits.--Section 202(b)(2) of the Social
Security Act (42 U.S.C. 402(b)(2)) is amended to read as follows:
``(2) Except as provided in subsections (k)(5) and (q), such wife's
insurance benefit for each month shall be equal to the excess (not less
than zero) of--
``(A) the lesser of--
``(i) 150 percent of her husband's primary
insurance amount, or
``(ii) the primary insurance amount for such month
of a hypothetical individual--
``(I) who is entitled to old-age insurance
insurance benefits for such month,
``(II) who became entitled to such benefit
upon attaining age 62 during the month in which
her husband became entitled to old-age
insurance benefits, and
``(III) 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 maximum amount includible
under this title as wages and self-employment
income for such year, over
``(B) the primary insurance amount of her husband.''.
(b) Husband's Insurance Benefits.--Section 202(c)(2) of such Act
(42 U.S.C. 402(c)(2)) is amended to read as follows:
``(2) Except as provided in subsections (k)(5) and (q), such
husband's insurance benefit for each month shall be equal to the excess
(not less than zero) of--
``(A) the lesser of--
``(i) 150 percent of his wife's primary insurance
amount, or
``(ii) the primary insurance amount for such month
of a hypothetical individual--
``(I) who is entitled to old-age insurance
insurance benefits for such month,
``(II) who became entitled to such benefit
upon attaining age 62 during the month in which
his wife became entitled to old-age insurance
benefits, and
``(III) 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 maximum amount includible
under this title as wages and self-employment
income for such year, over
``(B) the primary insurance amount of his wife.''.
(c) Application of Family Maximum.--Section 203(a) of such Act (42
U.S.C. 403(a)) is amended by adding at the end the following:
``(11) For purposes of determining under this subsection the amount
of reduction in total monthly benefits to which beneficiaries may be
entitled for a month on the basis of the wages and self-employment
income of an individual, the amount of a wife's insurance benefit or a
husband's insurance benefit for each month based on such wages and
self-employment income shall be deemed to be equal to one-half of the
primary insurance amount of the individual for such month (subject to
subsections (k)(5) and (q) of section 202).''.
(d) Effective Date.--The amendments made by this section shall
apply with respect to wife's insurance benefits and husband's insurance
benefits in cases in which the spouse becomes eligible for old-age
insurance benefits or disability insurance benefits in any calendar
year after 2005.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Ways and Means, and in addition to the Committee on Rules, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Ways and Means, and in addition to the Committee on Rules, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Ways and Means, and in addition to the Committee on Rules, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Subcommittee on Social Security.
Sponsor introductory remarks on measure. (CR H931-932, H932-933, H933, H933-934, H934, H935, H935-936, H937)
Sponsor introductory remarks on measure. (CR H2140-2141)
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