II

105TH CONGRESS

2D SESSION S. 2003

To amend title II of the Social Security Act to allow workers who attain

age 65 after 1981 and before 1992 to choose either lump sum payments

over four years totalling $5,000 or an improved benefit computation

formula under a new 10-year rule governing the transition to the changes

in benefit computation rules enacted in the Social Security Amendments

of 1977, and for other purposes.

IN THE SENATE OF THE UNITED STATES

APRIL 29, 1998

Mr. REID introduced the following bill; which was read twice and referred to

the Committee on Finance

A BILL

To amend title II of the Social Security Act to allow workers

who attain age 65 after 1981 and before 1992 to choose

either lump sum payments over four years totalling

$5,000 or an improved benefit computation formula

under a new 10-year rule governing the transition to

the changes in benefit computation rules enacted in the

Social Security Amendments of 1977, and for other purposes.

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

2 This Act may be cited as the ‘‘Notch Fairness Act

3 of 1998’’.

4 SEC. 2. NEW GUARANTEED MINIMUM PRIMARY INSURANCE

5 AMOUNT WHERE ELIGIBILITY ARISES DUR6 ING TRANSITIONAL PERIOD.

7 (a) IN GENERAL.—Section 215(a) of the Social Secu8 rity Act is amended—

9 (1) in paragraph (4)(B), by inserting ‘‘(with or

10 without the application of paragraph (8))’’ after

11 ‘‘would be made’’, and by striking ‘‘1984’’ in clause

12 (i) and inserting ‘‘1989’’; and

13 (2) by adding at the end the following:

14 ‘‘(8)(A) In the case of an individual described in

15 paragraph (4)(B) (subject to subparagraphs (F) and (G)

16 of this paragraph), the amount of the individual’s primary

17 insurance amount as computed or recomputed under para18 graph (1) shall be deemed equal to the sum of—

19 ‘‘(i) such amount, and

20 ‘‘(ii) the applicable transitional increase amount

21 (if any).

22 ‘‘(B) For purposes of subparagraph (A)(ii), the term

23 ‘applicable transitional increase amount’ means, in the

24 case of any individual, the product derived by multiply25 ing—

26 ‘‘(i) the excess under former law, by
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1 ‘‘(ii) the applicable percentage in relation to the

2 year in which the individual becomes eligible for old3 age insurance benefits, as determined by the follow4 ing table:

‘‘If the individual

becomes eligible for The applicable

such benefits in: percentage is:

1979 ....................................................................... 55 percent

1980 ....................................................................... 45 percent

1981 ....................................................................... 35 percent

1982 ....................................................................... 32 percent

1983 ....................................................................... 25 percent

1984 ....................................................................... 20 percent

1985 ....................................................................... 16 percent

1986 ....................................................................... 10 percent

1987 ....................................................................... 3 percent

1988 ....................................................................... 5 percent.

5 ‘‘(C) For purposes of subparagraph (B), the term ‘ex6 cess under former law’ means, in the case of any individ7 ual, the excess of—

8 ‘‘(i) the applicable former law primary insur9 ance amount, over

10 ‘‘(ii) the amount which would be such individ11 ual’s primary insurance amount if computed or re12 computed under this section without regard to this

13 paragraph and paragraphs (4), (5), and (6).

14 ‘‘(D) For purposes of subparagraph (C)(i), the term

15 ‘applicable former law primary insurance amount’ means,

16 in the case of any individual, the amount which would be

17 such individual’s primary insurance amount if it were—
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1 ‘‘(i) computed or recomputed (pursuant to

2 paragraph (4)(B)(i)) under section 215(a) as in ef3 fect in December 1978, or

4 ‘‘(ii) computed or recomputed (pursuant to

5 paragraph (4)(B)(ii)) as provided by subsection (d),

6 (as applicable) and modified as provided by subparagraph

7 (E).

8 ‘‘(E) In determining the amount which would be an

9 individual’s primary insurance amount as provided in sub10 paragraph (D)—

11 ‘‘(i) subsection (b)(4) shall not apply;

12 ‘‘(ii) section 215(b) as in effect in December

13 1978 shall apply, except that section 215(b)(2)(C)

14 (as then in effect) shall be deemed to provide that

15 an individual’s ‘computation base years’ may include

16 only calendar years in the period after 1950 (or

17 1936 if applicable) and ending with the calendar

18 year in which such individual attains age 61, plus

19 the 3 calendar years after such period for which the

20 total of such individual’s wages and self-employment

21 income is the largest; and

22 ‘‘(iii) subdivision (I) in the last sentence of

23 paragraph (4) shall be applied as though the words

24 ‘without regard to any increases in that table’ in
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1 such subdivision read ‘including any increases in

2 that table’.

3 ‘‘(F) This paragraph shall apply in the case of any

4 individual only if such application results in a primary in5 surance amount for such individual that is greater than

6 it would be if computed or recomputed under paragraph

7 (4)(B) without regard to this paragraph.

8 ‘‘(G)(i) This paragraph shall apply in the case of any

9 individual subject to any timely election to receive lump

10 sum payments under this subparagraph.

11 ‘‘(ii) A written election to receive lump sum payments

12 under this subparagraph, in lieu of the application of this

13 paragraph to the computation of the primary insurance

14 amount of an individual described in paragraph (4)(B),

15 may be filed with the Commissioner of Social Security in

16 such form and manner as shall be prescribed in regula17 tions of the Commissioner. Any such election may be filed

18 by such individual or, in the event of such individual’s

19 death before any such election is filed by such individual,

20 by any other beneficiary entitled to benefits under section

21 202 on the basis of such individual’s wages and self-em22 ployment income. Any such election filed after December

23 31, 1998, shall be null and void and of no effect.
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1 ‘‘(iii) Upon receipt by the Commissioner of a timely

2 election filed by the individual described in paragraph

3 (4)(B) in accordance with clause (ii)—

4 ‘‘(I) the Commissioner shall certify receipt of

5 such election to the Secretary of the Treasury, and

6 the Secretary of the Treasury, after receipt of such

7 certification, shall pay such individual, from

8 amounts in the Federal Old-Age and Survivors In9 surance Trust Fund, a total amount equal to

10 $5,000, in 4 annual lump sum installments of

11 $1,250, the first of which shall be made during fis12 cal year 1999 not later than July 1, 1999, and

13 ‘‘(II) subparagraph (A) shall not apply in deter14 mining such individual’s primary insurance amount.

15 ‘‘(iv) Upon receipt by the Commissioner as of Decem16 ber 31, 1998, of a timely election filed in accordance with

17 clause (ii) by at least one beneficiary entitled to benefits

18 on the basis of the wages and self-employment income of

19 a deceased individual described in paragraph (4)(B), if

20 such deceased individual has filed no timely election in ac21 cordance with clause (ii)—

22 ‘‘(I) the Commissioner shall certify receipt of all

23 such elections received as of such date to the Sec24 retary of the Treasury, and the Secretary of the

25 Treasury, after receipt of such certification, shall
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1 pay each beneficiary filing such a timely election,

2 from amounts in the Federal Old-Age and Survivors

3 Insurance Trust Fund, a total amount equal to

4 $5,000 (or, in the case of 2 or more such bene5 ficiaries, such amount distributed evenly among such

6 beneficiaries), in 4 equal annual lump sum install7 ments, the first of which shall be made during fiscal

8 year 1999 not later than July 1, 1999, and

9 ‘‘(II) solely for purposes of determining the

10 amount of such beneficiary’s benefits, subparagraph

11 (A) shall be deemed not to apply in determining the

12 deceased individual’s primary insurance amount.’’.

13 (b) EFFECTIVE DATE AND RELATED RULES.—

14 (1) APPLICABILITY OF AMENDMENTS.—

15 (A) IN GENERAL.—Except as provided in

16 paragraph (2), the amendments made by this

17 Act shall be effective as though they had been

18 included or reflected in section 201 of the So19 cial Security Amendments of 1977.

20 (B) APPLICABILITY.—No monthly benefit

21 or primary insurance amount under title II of

22 the Social Security Act shall be increased by

23 reason of such amendments for any month be24 fore July 1999. The amendments made this

25 section shall apply with respect to benefits pay-
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1 able in months in any fiscal year after fiscal

2 year 2002 only if the corresponding decrease in

3 adjusted discretionary spending limits for budg4 et authority and outlays under section 3 of this

5 Act for fiscal years prior to fiscal year 2003 is

6 extended by Federal law to such fiscal year

7 after fiscal year 2002.

8 (2) RECOMPUTATION TO REFLECT BENEFIT IN9 CREASES.—In any case in which an individual is en10 titled to monthly insurance benefits under title II of

11 the Social Security Act for June 1999, if such bene12 fits are based on a primary insurance amount com13 puted—

14 (A) under section 215 of such Act as in ef15 fect (by reason of the Social Security Amend16 ments of 1977) after December 1978, or

17 (B) under section 215 of such Act as in ef18 fect prior to January 1979 by reason of sub19 section (a)(4)(B) of such section (as amended

20 by the Social Security Amendments of 1977),

21 the Commissioner of Social Security (notwithstand22 ing section 215(f)(1) of the Social Security Act)

23 shall recompute such primary insurance amount so

24 as to take into account the amendments made by

25 this Act.
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1 SEC. 3. OFFSET PROVIDED BY PROJECTED FEDERAL BUDG2 ET SURPLUSES.

3 Amounts offset by this Act shall not be counted as

4 direct spending for purposes of the budgetary limits pro5 vided in the Congressional Budget Act of 1974 and the

6 Balanced Budget and Emergency Deficit Control Act of

7 1985.

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