I

103D CONGRESS

2D SESSION H. R. 5308

To amend title II of the Social Security Act to provide for a limitation

on payment during any year of old-age, wife’s, and husband’s insurance

benefits, based on the work record of an individual with higher levels

of income for such year, if total payments of such benefits have exceeded

prior contributions plus interest, and to adjust the gradual increase

in retirement age so as to commence with calendar year 1996 and

to reach age 68 for those who would attain age 65 in or after calendar

year 2031.

IN THE HOUSE OF REPRESENTATIVES

NOVEMBER 29, 1994

Mr. SMITH of Michigan introduced the following bill; which was referred to

the Committee on Ways and Means

A BILL

To amend title II of the Social Security Act to provide

for a limitation on payment during any year of oldage, wife’s, and husband’s insurance benefits, based on

the work record of an individual with higher levels of

income for such year, if total payments of such benefits

have exceeded prior contributions plus interest, and to

adjust the gradual increase in retirement age so as to

commence with calendar year 1996 and to reach age

68 for those who would attain age 65 in or after calendar

year 2031.
2

•HR 5308 IH

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Social Security Pay5 ment Equity Act of 1994’’.

6 SEC. 2. LIMITATION ON PAYMENT OF CERTAIN BENEFITS

7 IN EXCESS OF CONTRIBUTIONS DURING

8 YEARS OF HIGHER INCOME.

9 (a) IN GENERAL.—Section 202 of the Social Security

10 Act (42 U.S.C. 402) is amended by adding at the end the

11 following new subsection:

12 ‘‘Limitation on Payment of Certain Benefits in Excess of

13 Contributions During Years of Higher Income

14 ‘‘(y)(1) Notwithstanding any other provision of this

15 title, if, with respect to any year of higher income for an

16 individual—

17 ‘‘(A) the total amount of the adjusted values of

18 all benefits under subsections (a), (b), and (c) paid

19 in months prior to such year based on the wages and

20 self-employment income of such individual exceed

21 ‘‘(B) the total amount of the adjusted values of

22 all OASDI taxes paid with respect to the wages and

23 self-employment income of such individual, deter24 mined as of the beginning of such year of higher in25 come,
3

•HR 5308 IH

1 then the monthly benefits under subsections (a), (b), and

2 (c) based on the wages and self-employment income of

3 such individual paid for any month in such year shall be

4 reduced (after all other deductions and reductions applica5 ble under this title) by the percentage reduction specified

6 under paragraph (2). Benefits, as reduced under this

7 paragraph, if not a multiple of $1, shall be increased to

8 the next higher multiple of $1.

9 ‘‘(2)(A) In the case of an individual who is not mar10 ried as of the beginning of such individual’s taxable year,

11 the percentage reduction is the percentage specified in the

12 following table:

‘‘If such individual’s adjusted

gross income for the taxable year is:

The percentage is:

Over $50,000 but not over $52,000 ........................................ 10 percent.

Over $52,000 but not over $54,000 ........................................ 20 percent.

Over $54,000 but not over $56,000 ........................................ 30 percent.

Over $56,000 but not over $58,000 ........................................ 40 percent.

Over $58,000 but not over $60,000 ........................................ 50 percent.

Over $60,000 but not over $62,000 ........................................ 60 percent.

Over $62,000 but not over $64,000 ........................................ 70 percent.

Over $64,000 but not over $66,000 ........................................ 80 percent.

Over $66,000 but not over $68,000 ........................................ 90 percent.

Over $68,000 ........................................................................... 100 percent.

13 ‘‘(B) In the case of an individual who is married as

14 of the beginning of such individual’s taxable year, the per15 centage reduction is the percentage specified in the follow16 ing table:

‘‘If the total adjusted gross

income of such individual

and such individual’s

spouse for the taxable

year is:

The percentage is:

Over $100,000 but not over $104,000 .................................... 10 percent.
4

•HR 5308 IH

‘‘If the total adjusted gross

income of such individual

and such individual’s

spouse for the taxable

year is:

The percentage is:

Over $104,000 but not over $108,000 .................................... 20 percent.

Over $108,000 but not over $112,000 .................................... 30 percent.

Over $112,000 but not over $116,000 .................................... 40 percent.

Over $116,000 but not over $120,000 .................................... 50 percent.

Over $120,000 but not over $124,000 .................................... 60 percent.

Over $124,000 but not over $128,000 .................................... 70 percent.

Over $128,000 but not over $132,000 .................................... 80 percent.

Over $132,000 but not over $136,000 .................................... 90 percent.

Over $136,000 ......................................................................... 100 percent.

1 ‘‘(3) For purposes of this subsection:

2 ‘‘(A) The term ‘year of higher income’ for an

3 individual means any taxable year—

4 ‘‘(I) if, in the case of an individual who is

5 not married as of the beginning of such taxable

6 year, the adjusted gross income of such individ7 ual for such taxable year exceeds $50,000, or

8 ‘‘(II) if, in the case of an individual who is

9 married as of the beginning of such taxable

10 year, the total adjusted gross income of such in11 dividual and such individual’s spouse for such

12 taxable year exceeds $100,000.

13 ‘‘(B) The term ‘adjusted gross income’ has the

14 meaning provided in section 62 of the Internal Reve15 nue Code of 1986.

16 ‘‘(C) The term ‘adjusted value’ of an amount

17 means such amount, plus interest on such amount

18 computed at a rate equal to 2 percent, compounded

19 annually.
5

•HR 5308 IH

1 ‘‘(D) The term ‘OASDI taxes’ means the taxes

2 imposed under sections 1401(a), 3101(a), and

3 3111(a) of the Internal Revenue Code of 1986.

4 ‘‘(4) The Commissioner of Social Security shall pro5 vide by regulation for the maintenance of such records,

6 relating to individuals on the basis of whose wages and

7 self-employment income benefits under subsection (a), (b),

8 and (c) are otherwise payable under this section, of total

9 benefits paid and OASDI taxes paid, as is necessary to

10 preclude, to the maximum extent practicable, overpay11 ments and underpayments of benefits resulting from the

12 operation of this subsection. The Commissioner and the

13 Secretary of the Treasury shall enter into such arrange14 ments as are necessary to ensure that such records main15 tained by the Commissioner are currently accurate at all

16 times.

17 ‘‘(5)(A) In any case in which a taxable year of an

18 individual is a year of higher income for such individual,

19 if a benefit under subsection (a), (b), or (c) has been paid

20 for any month in such year on the basis of such individ21 ual’s wages and self-employment income, such individual

22 (or the individual who is in receipt of such benefit on his

23 behalf) shall make a report to the Commissioner of Social

24 Security of his adjusted gross income, and (if he is mar25 ried) the adjusted gross income of his spouse, for such
6

•HR 5308 IH

1 taxable year. Such report shall be made on or before the

2 fifteenth day of the fourth month following the close of

3 such year, and shall contain such information and be made

4 in such manner as the Commissioner may by regulations

5 prescribe. The Commissioner may grant a reasonable ex6 tension of time for making such report if he finds that

7 there is valid reason for a delay, but in no case may the

8 period be extended more than three months.

9 ‘‘(B) If an individual fails to make a report required

10 under subparagraph (A), within the time prescribed by or

11 in accordance with such subparagraph, for any taxable

12 year and a benefit based on such individual’s wages and

13 self-employment income is paid for any month in such tax14 able year or the next following taxable year which is in

15 excess of the amount payable by reason of this subsection,

16 he shall be deemed to have been overpaid for such month

17 an additional amount as follows:

18 ‘‘(i) in the case of the first such month for

19 which a benefit is paid in excess of the amount pay20 able by reason of this subsection, the additional

21 amount shall be equal to the amount of such excess;

22 ‘‘(ii) in the case of the second such month for

23 which a benefit is paid in excess of the amount pay24 able by reason of this subsection, the additional
7

•HR 5308 IH

1 amount shall be equal to two times the amount of

2 such excess; and

3 ‘‘(iii) in the case of the third or a subsequent

4 such month for which a benefit is paid in excess of

5 the amount payable by reason of this subsection, the

6 additional amount shall be equal to three times the

7 amount of such excess;

8 except that additional amounts of overpayment deter9 mined under this paragraph shall be determined only for

10 months for which the benefit in excess of the amount pay11 able was received and accepted.

12 ‘‘(C)(i)(I) If the Commissioner of Social Security de13 termines, on the basis of information obtained by or sub14 mitted to him, that it may reasonably be expected that

15 benefits under subsection (a), (b), or (c) based on an indi16 vidual’s wages and self-employment income will not be

17 payable (in whole or in part) for any month in a taxable

18 year of such individual by reason of this subsection, the

19 Commissioner may, before the close of such taxable year,

20 suspend the payment (in whole or in part) for each month

21 in such year (or for only such months as the Commissioner

22 may specify) of such benefits. Such suspension shall re23 main in effect with respect to the benefits for any month

24 until the Commissioner has determined the extent to

25 which benefits are payable under this subsection.
8

•HR 5308 IH

1 ‘‘(II) The Commissioner of Social Security may, be2 fore the close of the taxable year of an individual on whose

3 wages and self-employment income benefits are otherwise

4 payable during such year, request of such individual that

5 he make, at such time or times as the Commissioner may

6 specify, a declaration of his estimated adjusted gross in7 come (or the estimated total adjusted gross income for

8 him and his spouse) for the taxable year and that he fur9 nish to the Commissioner such other information with re10 spect to such income as the Commissioner may specify.

11 A failure by such individual to comply with any such re12 quest shall in itself constitute justification for a deter13 mination under subclause (I) that it may reasonably be

14 expected that such benefits are not payable (in whole or

15 in part) by reason of this subsection.

16 ‘‘(III) If the payment of benefits under subsection

17 (a), (b), or (c) based on the wages and self-employment

18 income of an individual have been suspended (in whole or

19 in part) for all months in any taxable year of such individ20 ual under subclause (I), no payment of such unpaid bene21 fits shall be made for any such month in such taxable year

22 after the expiration of the period of three years, three

23 months, and fifteen days following the close of such tax24 able year unless within such period the individual, or some

25 other person entitled to benefits under this title on the
9

•HR 5308 IH

1 basis of the same wages and self-employment income, files

2 with the Commissioner of Social Security information

3 showing that the unpaid portion of a benefit for such

4 month is payable to such individual.

5 ‘‘(ii) If, after the close of a taxable year of an individ6 ual on whose wages and self-employment income benefits

7 under subsection (a), (b), or (c) were otherwise payable

8 for months in such year, the Commissioner of Social Secu9 rity requests such individual to furnish a report of his ad10 justed gross income (or the total adjusted gross income

11 of him and his spouse) for such taxable year or any other

12 information with respect to such income which the Com13 missioner may specify, and the individual fails to comply

14 with such request, such failure shall in itself constitute

15 justification for a determination that such benefits were

16 not payable (in whole or in part) for each month in such

17 taxable year (or only for such months thereof as the Com18 missioner may specify) by reason of this subsection.

19 ‘‘(D) The Commissioner of Social Security shall de20 velop and implement procedures in accordance with this

21 paragraph to avoid paying more than the correct amount

22 of benefits under subsection (a), (b), or (c) as a result

23 of the failure of the individual on whose wages and self24 employment income such benefits are based to file a cor25 rect report or estimate of adjusted gross income. Such
10

•HR 5308 IH

1 procedures may include identifying categories of individ2 uals on the basis of whose wages and self-employment in3 come benefits which are not payable (in whole or in part)

4 under this subsection are likely to be paid and requesting

5 that they estimate their adjusted gross income (or the

6 total adjusted gross income of them and their spouses)

7 more frequently than other persons subject to this sub8 section.

9 ‘‘(6) Benefits which would, but for the provisions of

10 paragraph (1), be payable under this title, on the basis

11 of the wages and self-employment income of the individual

12 referred to in paragraph (1), to any other individual (other

13 than the individuals to whom benefits based on such wages

14 and self-employment income are not payable by reason of

15 paragraph (1)) shall be payable as though such individuals

16 were receiving such benefits.’’.

17 (b) EFFECTIVE DATE.—The amendments made by

18 this section shall apply with respect to benefits otherwise

19 payable in taxable years ending after December 31, 1995.

20 SEC. 3. INFORMATION RELATING TO BENEFIT LIMITATIONS

21 PROVIDED IN SOCIAL SECURITY ACCOUNT

22 STATEMENTS.

23 (a) IN GENERAL.—Section 1143 of the Social Secu24 rity Act (42 U.S.C. 1320b–13) is amended—
11

•HR 5308 IH

1 (1) in the heading for subsection (a), by strik2 ing ‘‘Upon Request’’ and inserting ‘‘of Annual

3 Statements’’;

4 (2) in subsection (a)(1), by striking ‘‘Begin5 ning’’ and all that follows and inserting the follow6 ing: ‘‘Not later than October 1 of each year, the

7 Commissioner of Social Security shall provide an an8 nual social security account statement (hereinafter

9 in this section referred to as the ‘statement’) to each

10 eligible individual for whom a mailing address can be

11 determined through such methods as the Commis12 sioner determines to be appropriate.’’;

13 (3) in subsection (a)(2)(A), by striking ‘‘at the

14 date of the request’’;

15 (4) in subsection (a)(2)(B), by striking ‘‘on the

16 date of the request’’;

17 (5) in subsection (a)(2)(C), by striking ‘‘on the

18 date of the request’’ and by striking ‘‘and’’ at the

19 end;

20 (6) in subsection (a)(2)(D), by inserting ‘‘in the

21 case of individuals not receiving benefits,’’ after

22 ‘‘(D)’’, and by striking ‘‘title XVIII.’’ and inserting

23 ‘‘title XVIII; and’’;

24 (7) by adding after subparagraph (D) the fol25 lowing:
12

•HR 5308 IH

1 ‘‘(E) a table setting forth an estimate, in rela2 tion to 1980 and every 10th year thereafter through

3 2030, of the following information:

4 ‘‘(i) the total amount of the adjusted val5 ues of all employee, employer, and self-employ6 ment contributions made with respect to the

7 wages and self-employment income of the aver8 age earner retiring at retirement age in each

9 such year;

10 ‘‘(ii) the total amount of the adjusted val11 ues of the monthly benefits paid under sub12 sections (a), (b), and (c) of section 202, as of

13 the date of the statement, on the basis of the

14 wages and self-employment income of the aver15 age earner retiring at retirement age in each

16 such year; and

17 ‘‘(iii) the total amount of the adjusted val18 ues of the monthly benefits which will have

19 been paid under such subsections, as of the

20 time of the death of the average earner retiring

21 at retirement age in each such year, on the

22 basis of his or her wages and self-employment

23 income, determined under generally accepted

24 actuarial assumptions.
13

•HR 5308 IH

1 For purposes of subparagraph (E), the term ‘ad2 justed value’ of an amount means such amount, plus

3 interest on such amount computed at a rate equal

4 to 2 percent, compounded annually.’’;

5 (8) by striking subsection (b);

6 (9) in subsection (c)—

7 (A) by striking the heading and inserting

8 the following:

9 ‘‘Required Estimates of Benefits’’;

10 (B) by striking ‘‘(c)(1) By not later’’ and

11 all that follows through ‘‘With respect to’’ in

12 paragraph (2) and inserting ‘‘(b) With respect

13 to’’; and

14 (C) by adding at the end the following new

15 sentence: ‘‘The Commissioner shall provide such

16 estimates of retirement benefit amounts to eligi17 ble individuals who have not attained age 50

18 upon request.’’; and

19 (10) by adding at the end the following new

20 subsection:

21 ‘‘Inclusion of Statements to Retirees with Other Mailings

22 ‘‘(c) The Commissioner of Social Security shall en23 sure that statements provided to eligible individuals who

24 are receiving benefits under title II are included to the

25 maximum extent practicable with mailings otherwise made
14

•HR 5308 IH

1 to such individuals. The Commissioner shall consult with

2 the Secretary of the Treasury in carrying out the require3 ment of this subsection and such Secretary shall provide

4 such appropriate assistance to the Commissioner as is nec5 essary to carry out such requirements.’’.

6 (b) EFFECTIVE DATE.—The amendments made by

7 subsection (a) shall apply with respect to statements pro8 vided on or after October 1, 1995.

9 SEC. 4. GRADUAL INCREASE IN RETIREMENT AGE COM10 MENCING WITH CALENDAR YEAR 1996 AND

11 REACHING AGE 68 FOR THOSE ATTAINING

12 AGE 65 IN OR AFTER CALENDAR YEAR 2031.

13 (a) IN GENERAL.—Section 216(l)(1) of the Social Se14 curity Act (42 U.S.C. 416(l)(1)) is amended by striking

15 subparagraphs (A) through (E) and inserting the follow16 ing:

17 ‘‘(A) with respect to an individual who attains

18 early retirement age (as defined in paragraph (2))

19 before January 1, 1993, 65 years of age;

20 ‘‘(B) with respect to an individual who attains

21 early retirement age after December 31, 1992, and

22 before January 1, 2028, 65 years of age plus the

23 number of months in the age increase factor (as de24 termined under paragraph (3)) for the calendar year
15

•HR 5308 IH

1 in which such individual attains early retirement

2 age; and

3 ‘‘(C) with respect to an individual who attains

4 early retirement age after December 31, 2027, 68

5 years of age.’’.

6 (b) CONFORMING AMENDMENT.—Section 216(l)(3)

7 of such Act (42 U.S.C. 416(l)(3)) is amended to read as

8 follows:

9 ‘‘(3) The age increase factor for any individual who

10 attains early retirement age in the 35-year period consist11 ing of calendar years 1993 through 2027 shall be equal

to 1 12 ⁄12 of the number of months in the period beginning

13 with January 1993 and ending with the last month of the

14 calendar year in which the individual attains early retire15 ment age.’’.

16 (c) EFFECTIVE DATE.—

17 (1) IN GENERAL.—The amendments made by

18 this section shall apply with respect to benefits for

19 months after the date of the enactment of this Act.

20 (2) TRANSITION RULE.—In any case in which

21 an individual is entitled to a benefit under title II

22 of the Social Security Act for the month in which

23 this Act is enacted, the amount of any benefit of

24 such individual under such title II for any subse25 quent month (based on the primary insurance
16

•HR 5308 IH

1 amount of the individual on whose primary insur2 ance amount such benefit for the month in which

3 this Act is enacted is based) shall not be reduced,

4 solely by reason of the amendments made by this

5 section, below the amount of such benefit for the

6 month in which this Act is enacted.

Æ

HR 5308 IH——2