I

104TH CONGRESS

2D SESSION H. R. 3758 To amend title II of the Social Security Act and the Internal Revenue Code of 1986 to provide prospectively for personal retirement savings accounts to allow for more control by individuals over their Social Secu- rity retirement income, to provide for a limitation on payment of benefits payable from the Federal Old-Age and Survivors Insurance Trust Fund with respect to individuals with higher levels of income once payments of such benefits have exceeded prior contributions plus interest, and

to provide other reforms relating to benefits under such title II.

IN THE HOUSE OF REPRESENTATIVES

JULY 9, 1996 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 and the Internal Revenue Code of 1986 to provide prospectively for personal retirement savings accounts to allow for more control by individuals over their Social Security retirement

income, to provide for a limitation on payment of benefits

payable from the Federal Old-Age and Survivors Insurance Trust Fund with respect to individuals with higher

levels of income once payments of such benefits have

exceeded prior contributions plus interest, and to provide

other reforms relating to benefits under such title II.
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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 AND TABLE OF CONTENTS.

4 This Act may be cited as the ‘‘Social Security Sol5 vency Act of 1996’’.

TABLE OF CONTENTS

Sec. 1. Short title. Sec. 2. Findings and purposes. TITLE I—INDIVIDUAL RETIREMENT SECURITY PROGRAM

Sec. 101. Reduction in Social Security trust fund contributions. Sec. 102. Individual retirement program and personal retirement savings ac- counts. Sec. 103. Adjustments to primary insurance amounts under part A of title II of the Social Security Act. Sec. 104. Tax treatment of personal retirement savings accounts. Sec. 105. Revenues from increases in income tax on Social Security benefits de- posited in OASDI trust funds. TITLE II—SOCIAL SECURITY BENEFIT REFORMS

Sec. 201. Limitation on payment of certain benefits in excess of contributions during years of higher income. Sec. 202. Gradual increase in retirement age and early retirement age. Sec. 203. Adjustments to bend points in determining primary insurance amounts. Sec. 204. Information relating to benefit limitations provided in Social Security account statements. Sec. 205. Coverage of newly hired State and local employees. Sec. 206. Phased reduction in spousal benefits other than survivor’s benefits to 33 percent of primary insurance amount.

6 SEC. 2. FINDINGS AND PURPOSES.

7 (a) FINDINGS.—The Congress makes the following

8 findings:

9 (1) America’s most popular Government pro10 gram, Social Security, is in jeopardy. The 1996

11 Board of Trustee’s report states that the current
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1 system faces a actuarial deficit of 2.19 percent of

2 taxable payroll.

3 (2) The Social Security system was designed in

4 1935 as a pay-as-you-go system, in which current

5 workers support current retirees. This design worked

6 when America had 42 workers per beneficiary in

7 1945, but that ratio has fallen over time. In 1995

8 there are only 3.3 workers per beneficiary, and by

9 2060 the ratio is projected to fall to 1.8 workers per

10 beneficiary. To pay benefits to the rising number of

11 retirees, the Government has levied increasing FICA

12 taxes on a shrinking portion of the population.

13 These taxes have been increased 33 times since

14 1970.

15 (3) Life expectancy has risen substantially since

16 the creation of the Social Security system in 1935.

17 The original retirement age for Social Security was

18 65, but life expectancy at birth in 1935 was 61. Life

19 expectancy today is now 76, and it is projected to

20 grow to 81 over the next 75 years. The normal re21 tirement age today remains at 65, and is scheduled

22 for only a slight increase to 67 under current law.

23 (4) In 1983, the Congress and President

24 Reagan formed the bipartisan Greenspan Commis25 sion which agreed on historic legislation to ‘‘save So-
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1 cial Security.’’ At that time, the Social Security Ad2 ministration actuaries warned that the System had

3 an unfunded liability equal to 1.82 percent of tax4 able payroll. The 1983 law eliminated this liability

5 temporarily. However, the actuaries now say that

6 the unfunded liability is 2.19 percent, worse than in

7 1983.

8 (5) According to The 1996 Board of Trustee’s

9 report the Social Security trust fund will be ex10 hausted by 2029. However, starting in 2012 benefits

11 will exceed income (excluding interest), and the trust

12 fund nonnegotiable IOUs will have to be tapped. The

13 Federal Government must then decide if it can pay

14 back those IOUs through tax increases, more bor15 rowing, cuts in Government programs, or cuts in So16 cial Security benefits.

17 (b) PURPOSES.—This Act is passed for the following

18 purposes:

19 (1) To restore the solvency of the Social Secu20 rity program in perpetuity, protecting the livelihoods

21 of millions of U.S. workers and retirees.

22 (2) To gradually replace the current ‘‘pay-as23 you-go’’ Social Security financing system with a true

24 retirement savings program over the next 75 to 100

25 years.
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1 (3) To give workers and retirees more control

2 over and responsibility for their retirement savings

3 by allowing them to decide how their money is in4 vested.

5 (4) To increase retirement benefits and improve

6 the living standards of American seniors by allowing

7 them to take advantage of safe investment opportu8 nities that earn higher returns than those realized

9 under the current Social Security system.

10 (5) To stimulate the American economy by in11 creasing savings and investment. This will lead to

12 higher productivity, more jobs, and better wages.

13 (6) To protect the Social Security system for

14 the benefit of future generations of Americans.

15 TITLE I—INDIVIDUAL RETIRE16 MENT SECURITY PROGRAM

17 SEC. 101. REDUCTION IN SOCIAL SECURITY TRUST FUND

18 CONTRIBUTIONS.

19 (a) ANNUAL DECLARATION OF REALLOCATION PER20 CENTAGE.—Section 201 of the Social Security Act (42

21 U.S.C. 401) is amended by adding at the end the following

22 new subsection:

23 ‘‘Annual Declaration of Reallocation Percentage

24 ‘‘(n)(1) The Commissioner of Social Security shall

25 declare and publish in the Federal Register on or before
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1 August 1 of each calendar year the reallocation percentage

2 for amounts otherwise appropriated for the following fiscal

3 year to the Federal Old-Age and Survivors Insurance

4 Trust Fund and the Federal Disability Insurance Trust

5 Fund under paragraphs (3) and (4) of subsection (a) and

6 under paragraphs (1) and (2) of subsection (b).

7 ‘‘(2) For purposes of this title—

8 ‘‘(A) The term ‘reallocation percentage’ for any

9 fiscal year means the Commissioner’s best estimate

10 of the maximum percentage by which the amounts

11 described in paragraph (1) for such fiscal year may

12 be reduced—

13 ‘‘(i) in any case in which such fiscal year

14 precedes fiscal year 2012, so as to maintain a

15 linear annual reduction in the trust funds per16 formance ratio from the amount of such ratio

17 for the fiscal year preceding such fiscal year to

18 an amount of such ratio for 2012 equal to 1.00,

19 and

20 ‘‘(ii) in any case in which such fiscal year

21 is a fiscal year after fiscal year 2011, so as to

22 maintain a trust funds performance ratio for

23 such fiscal year of 1.00.

24 In making the estimate under this paragraph, the

25 Commissioner shall utilize the intermediate actuarial
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1 assumptions utilized by the Board of Trustees of the

2 Trust Funds for its most recent annual report is3 sued under subsection (c).

4 ‘‘(B) The term ‘‘trust funds performance ratio’’

5 means, for any fiscal year, the ratio of—

6 ‘‘(i) the total amount which (as estimated

7 by the Commissioner of Social Security) will be

8 paid into the Federal Old-Age and Survivors

9 Insurance Trust Fund and the Federal Disabil10 ity Insurance Trust Fund during such fiscal

11 year—

12 ‘‘(I) including the taxes transferred

13 under subsection (a) at any time during

14 such year,

15 ‘‘(II) disregarding loans (and interest

16 thereon) made to either such Trust Fund

17 from the Federal Hospital Insurance Trust

18 Fund under subsection (l),

19 ‘‘(III) disregarding any transfer pay20 ments between such Trust Funds, and

21 ‘‘(IV) reducing the amount of any

22 transfers into either such Trust Fund from

23 the Railroad Retirement Account by the

24 amount of any transfers from either such

25 Trust Fund to such Account,
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1 to

2 ‘‘(ii) the total amount which (as estimated

3 by the Commissioner of Social Security) will be

4 paid from the Federal Old-Age and Survivors

5 Insurance Trust Fund and the Federal Disabil6 ity Insurance Trust Fund during such fiscal

7 year for all purposes authorized by this sec8 tion—

9 ‘‘(I) disregarding payments of interest

10 on (and repayments of) loans from the

11 Federal Hospital Insurance Trust Fund

12 under subsection (l),

13 ‘‘(II) disregarding any transfer pay14 ments between such Trust Funds, and

15 ‘‘(III) reducing the amount of any

16 transfers to the Railroad Retirement Ac17 count by the amount of any transfers into

18 either such Trust Fund from that Ac19 count.’’.

20 (b) REDUCTION IN TRUST FUND CONTRIBUTIONS.—

21 Section 201 of such Act (as amended by subsection (a))

22 is amended further by adding at the end the following new

23 subsection:
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1 ‘‘Reduction in Trust Fund Contributions

2 ‘‘(o) Under regulations prescribed by the Commis3 sioner of Social Security (in consultation with the Sec4 retary of the Treasury) to carry out this subsection, in

5 any case in which a covered employee or a covered self6 employed individual has elected to enter into elective re7 tirement status under section 251(a), the amounts appro8 priated for any fiscal year under paragraphs (3) and (4)

9 of subsection (a) and under paragraphs (1) and (2) of sub10 section (b), to the extent attributable to taxes paid with

11 respect to such employee or individual during such fiscal

12 year, shall be reduced by the reallocation percentage for

13 such fiscal year.’’.

14 SEC. 102. INDIVIDUAL RETIREMENT PROGRAM AND PER15 SONAL RETIREMENT SAVINGS ACCOUNTS.

16 (a) IN GENERAL.—Title II of the Social Security Act

17 is amended—

18 (1) by inserting before section 201 the follow19 ing:

20 ‘‘PART A—INSURANCE BENEFITS’’;

21 and

22 (2) by adding at the end the following new part:
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1 ‘‘PART B—INDIVIDUAL RETIREMENT SECURITY

2 PROGRAM

3 ‘‘ELECTIVE RETIREMENT STATUS

4 ‘‘SEC. 251. (a) ELECTION.—

5 ‘‘(1) IN GENERAL.—Under regulations pre6 scribed by the Commissioner of Social Security, an

7 individual who is a covered employee or a covered

8 self-employed individual may elect, in writing filed

9 with the Commissioner, to enter into elective retire10 ment status, if—

11 ‘‘(A) the election designates, in such form

12 and manner as may be prescribed in such regu13 lations, one or more personal retirement savings

14 accounts to which contributions with respect to

15 the individual are to be made under subsection

16 (b),

17 ‘‘(B) the election sets forth or is accom18 panied by the individual’s consent to the adjust19 ment to his primary insurance amount under

20 section 215(j), and

21 ‘‘(C) no benefit or other payment under

22 part A this title or under title XVIII on the

23 basis of the individual’s wages and self-employ24 ment income has become payable at or before

25 the date of the election.
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1 The individual may designate other personal retire2 ment savings accounts in lieu of or in addition to ac3 counts previously designated, in accordance with reg4 ulations of the Secretary of the Treasury.

5 ‘‘(2) ADDITIONAL RULES.—Reductions pursu6 ant to an election under this subsection shall apply

7 with respect to calendar years after the calendar

8 year in which the application for the election is filed.

9 Any election made under paragraph (1) shall take

10 effect only if the election is made during the period

11 beginning October 1 and ending November 30 pre12 ceding the first calendar year for which it is effec13 tive. Any election under this subsection shall be ir14 revocable.

15 ‘‘(3) ELECTIVE RETIREMENT STATUS.—For

16 purposes of this part—

17 ‘‘(A) COVERED EMPLOYEES.—A covered

18 employee is in ‘elective retirement status’ for a

19 calendar year if, as of January 1 of such cal20 endar year, such employee has made an effec21 tive election under this subsection.

22 ‘‘(B) COVERED SELF-EMPLOYED INDIVID23 UALS.—A covered self-employed individual is in

24 ‘elective retirement status’ for a taxable year if,

25 as of the first day of such taxable year, such in-
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1 dividual has made an effective election under

2 this subsection.

3 ‘‘(b) DEPOSITS INTO PERSONAL RETIREMENT SAV4 INGS ACCOUNTS.—Within 10 business days after receipt

5 during any fiscal year of taxes paid under sections 3101(a)

6 and 3111(a) of the Internal Revenue Code of 1986 with

7 respect to a covered employee in elective retirement status,

8 and within 10 business days after receipt during any fiscal

9 year of taxes paid under section 1401(a) of such Code with

10 respect to a covered self-employed individual in elective re11 tirement status, the Secretary of the Treasury, from

12 amounts otherwise available in the general fund of the

13 Treasury, shall deposit, into such personal retirement sav14 ings accounts as are designated under subsection (a), a

15 total amount equal to the product derived by multiplying

16 the amount of such taxes by the reallocation percentage

17 declared for such fiscal year under section 201(n).

18 ‘‘DESIGNATION OF ACCOUNTS OF SURVIVING SPOUSES

19 AND SURVIVING DIVORCED SPOUSES

20 ‘‘SEC. 252. (a) IN GENERAL.—Except as provided in

21 subsection (b), in the case of a deceased individual with

22 respect to whom a personal retirement savings account

23 was established and maintained pursuant to section

24 251(b), the trustee of such account shall transfer the bal25 ance in such account to a personal retirement savings ac26 count maintained by an eligible survivor if such account
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1 is designated by the eligible survivor to the trustee not

2 later than 20 business days after the date of such individ3 ual’s death. Any such designation shall be made in such

4 form and manner as may be prescribed in regulations of

5 the Commissioner of Social Security, in consultation with

6 the Secretary of the Treasury.

7 ‘‘(b) DESIGNATION IN ABSENCE OF TIMELY DES8 IGNATION BY ELIGIBLE SURVIVOR.—In any case in which,

9 upon the expiration of such 20-day period, there is an eli10 gible survivor but no timely designation of a personal re11 tirement savings account is made by the eligible survivor

12 under subsection (a), the trustee shall make the designa13 tion of the personal retirement savings account under sub14 section (a) on behalf of such eligible survivor, in accord15 ance with regulations of the Commissioner of Social Secu16 rity prescribed in consultation with the Secretary of the

17 Treasury.

18 ‘‘(c) DISPOSITION OF ACCOUNT BALANCE WHERE

19 NO ELIGIBLE SURVIVOR EXISTS.—In any case in which,

20 upon the expiration of such 20-day period no timely des21 ignation under subsection (b) has been made and there

22 is no eligible survivor, the trustee of the deceased individ23 ual’s account shall transfer the balance in such account

24 to the deceased individual’s estate within the period of 20
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1 business days following the expiration of such 20-day pe2 riod.

3 ‘‘QUARTERLY REPORTS BY TRUSTEES

4 ‘‘SEC. 253. (a) IN GENERAL.—The trustee of a per5 sonal retirement savings account shall make quarterly re6 ports concerning the status of the account. Each quarterly

7 report shall be furnished to the account holder on or be8 fore the 30th day following the calendar quarter for which

9 the report is required.

10 ‘‘(b) INFORMATION REQUIRED TO BE INCLUDED.—

11 The quarterly report shall contain the following informa12 tion for transactions occurring during the calendar quar13 ter for which the report is required:

14 ‘‘(1) The balance in the account.

15 ‘‘(2) The amount of elective retirement con16 tributions.

17 ‘‘(3) The amount of distributions.

18 ‘‘(4) The name and address of the trustee.

19 ‘‘(5) Commission fees and fees for administra20 tive expenses charged in connection with the ac21 count.

22 The language of the report shall be written in a form so

23 as to be understood by the average covered employee.

24 ‘‘(c) REPORTS TO COMMISSIONER.—The Commis25 sioner of Social Security may require the quarterly report

26 to be filed with the Social Security Administration at such
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1 time as the Commissioner may specify in regulations

2 under this section.

3 ‘‘DEFINITIONS

4 ‘‘SEC. 254. For purposes of this part—

5 ‘‘(1) PERSONAL RETIREMENT SAVINGS AC6 COUNT.—The term ‘personal retirement savings ac7 count’ has the meaning provided in section 408A(b)

8 of the Internal Revenue Code of 1986.

9 ‘‘(2) COVERED EMPLOYER.—The term ‘covered

10 employer’ means, for any calendar year, any person

11 on whom an excise tax is imposed under section

12 3111 of the Internal Revenue Code of 1986 with re13 spect to having an individual in his employ to whom

14 wages are paid by such person during such calendar

15 year.

16 ‘‘(3) COVERED EMPLOYEE.—The term ‘covered

17 employee’ means, for any calendar year, any individ18 ual with respect to whose employment by a covered

19 employer during such calendar year there is imposed

20 an excise tax under section 3111 of the Internal

21 Revenue Code of 1986.

22 ‘‘(4) COVERED SELF-EMPLOYED INDIVIDUAL.—

23 The term ‘covered self-employed individual’ means

24 any individual on whose self-employment income for

25 a taxable year there is imposed a tax under section

26 1401(a) of the Internal Revenue Code of 1986.
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1 ‘‘(5) ELECTIVE RETIREMENT CONTRIBUTION.—

2 The term ‘elective retirement contribution’ means,

3 with respect to any employee or other individual in

4 elective retirement status, an amount deposited with

5 respect to such employee or other individual into a

6 personal retirement savings account pursuant to sec7 tion 251(b).

8 ‘‘(6) ELIGIBLE SURVIVOR.—The term ‘eligible

9 survivor’ of a deceased individual means such indi10 vidual’s widow or, if there is no such widow, such in11 dividual’s last surviving divorced wife or surviving

12 divorced husband. Such term shall not include any

13 such surviving divorced wife or surviving divorced

14 husband who is married on the date of the deceased

15 individual’s death.

16 ‘‘(7) BUSINESS DAY.—The term ‘business day’

17 means any day other than a Saturday, Sunday, or

18 legal holiday in the area involved.

19 ‘‘PENALTIES

20 ‘‘SEC. 256. (a) FAILURE BY TRUSTEE TO MAKE

21 TIMELY TRANSFERS.—If the balance in the personal re22 tirement savings account of a deceased individual is not

23 transferred by the trustee within the time prescribed by

24 section 253—
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1 ‘‘(1) the trustee shall be subject to a civil pen2 alty of not to exceed 50 percent of the amount of

3 the balance, and

4 ‘‘(2) shall be liable—

5 ‘‘(A) in the case of a transfer required to

6 be made to another personal retirement savings

7 account, to the widow or the surviving divorced

8 wife or surviving divorced husband (as the case

9 may be), or

10 ‘‘(B) in the case of a transfer required to

11 be made to the Federal Old-Age and Survivors

12 Insurance Trust Fund, to such Trust Fund,

13 for interest on the balance at the underpayment rate

14 determined under section 6621 of the Internal Reve15 nue Code of 1986 from the last day by which such

16 balance was required to be so transferred to the date

17 on which such balance is transferred to the des18 ignated personal retirement savings account.

19 ‘‘(b) FAILURE BY TRUSTEE TO MAKE TIMELY QUAR20 TERLY REPORTS.—The trustee of a personal retirement

21 savings account shall be subject to a civil penalty of not

22 to exceed $100 a day from the date of such trustee’s fail23 ure or refusal to furnish the quarterly report required to

24 be furnished by the trustee under section 254 until the

25 date on which such report is furnished.
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1 ‘‘(c) RULES FOR APPLICATION OF SECTION.—

2 ‘‘(1) PENALTIES ASSESSED BY COMMIS3 SIONER.—Any civil penalty assessed by this section

4 shall be imposed by the Commissioner of Social Se5 curity and collected in a civil action.

6 ‘‘(2) COMPROMISES.—The Commissioner may

7 compromise the amount of any civil penalty imposed

8 by this section.

9 ‘‘(3) AUTHORITY TO WAIVE PENALTY IN CER10 TAIN CASES.—The Commissioner may waive the ap11 plication of this section with respect to any failure

12 if the Commissioner determines that such failure is

13 due to reasonable cause and not to intentional dis14 regard of rules and regulations.’’

15 (b) EFFECTIVE DATE AND NOTICE REQUIRE16 MENTS.—

17 (1) EFFECTIVE DATE.—The amendments made

18 by subsection (a) shall apply with respect to wages

19 paid after December 31, 1997, for pay periods end20 ing after such date and self-employment income for

21 taxable years beginning after such date.

22 (2) NOTICE REQUIREMENTS.—

23 (A) IN GENERAL.—Not later than October

24 1, 1997, the Commissioner of Social Security

25 shall—
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1 (i) send to the last known address of

2 each eligible individual a description of the

3 program established by the amendments

4 made by this Act, which shall be written in

5 the form of a pamphlet in language which

6 may be readily understood by the average

7 worker,

8 (ii) provide for toll-free access by tele9 phone from all localities in the United

10 States to the Social Security Administra11 tion through which individuals may obtain

12 information and answers to questions re13 garding such program, and

14 (iii) provide information to the media

15 in all localities of the United States about

16 such program and such toll-free access by

17 telephone.

18 (B) ELIGIBLE INDIVIDUAL.—For purposes

19 of this paragraph, the term ‘‘eligible individual’’

20 means an individual who, as of the date of the

21 pamphlet sent pursuant to subparagraph (A), is

22 indicated within the records of the Social Secu23 rity Administration as—

24 (i) not having attained age 65, and
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1 (ii) being credited with one or more

2 quarters of coverage under section 213 of

3 the Social Security Act.

4 (C) MATTERS TO BE INCLUDED.—The

5 Commissioner shall include with the pamphlet

6 sent to each eligible individual pursuant to sub7 paragraph (A)—

8 (i) a statement of the number of quar9 ters of coverage indicated in the records of

10 the Social Security Administration as of

11 the date of the description as credited to

12 such individual under section 213 of the

13 Social Security Act and the date as of

14 which such records may be considered ac15 curate, and

16 (ii) the number for toll-free access by

17 telephone established by the Commissioner

18 pursuant to subparagraph (A).

19 SEC. 103. ADJUSTMENTS TO PRIMARY INSURANCE

20 AMOUNTS UNDER PART A OF TITLE II OF THE

21 SOCIAL SECURITY ACT.

22 (a) IN GENERAL.—Section 215 of the Social Security

23 Act (42 U.S.C. 415) is amended by adding at the end the

24 following new subsection:
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1 ‘‘Adjustment of Primary Insurance Amount of Covered

2 Employees and Covered Self-Employed Individuals

3 in Elective Retirement Status Under Part B

4 ‘‘(j)(1) Except as provided in paragraph (2), in the

5 case of an individual who is a covered employee (as defined

6 under section 254(3)) or a covered self-employed individ7 ual (as defined under section 254(4)) and who is in elec8 tive retirement status (as defined in section 251(a)(3)),

9 such individual’s primary insurance amount as determined

10 in accordance with this section (before adjustments made

11 under subsection (i)) shall be equal to the excess (if any)

12 of—

13 ‘‘(A) the amount which would be so determined

14 if this subsection did not apply, over

15 ‘‘(B) the actuarial present value, as of the date

16 of the determination of such amount, of the total

17 amount of the elective retirement contributions paid

18 or payable under section 251 with respect to such

19 individual, assuming an interest rate, compounded

20 annually, at 4.3 percent.

21 ‘‘(2)(A) In the case of an individual described in

22 paragraph (1) who becomes entitled to disability insurance

23 benefits under section 223, such individual’s primary in24 surance amount shall be determined without regard to

25 paragraph (1).
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1 ‘‘(B) For any month ending after an individual de2 scribed in subparagraph (A) has attained age 60, such in3 dividual’s primary insurance amount as determined in ac4 cordance with this section (before subsequent adjustments

5 made under subsection (i)) shall be equal the product de6 rived by multiplying—

7 ‘‘(i) the amount which would be so determined

8 if this subsection did not apply, by

9 ‘‘(ii) the applicable percentage determined

10 under the following table:

‘‘If the number of such individual’s quarters of coverage (within the meaning of section 213(a)(2)) as of the end of such month in which

he or she attains age 60 (or, if later, the first month of The applicable

entitlement) is: percentage is: Less than 9 ............................................................... 100 percent. More than 8 but less than 21 ................................... 90 percent. More than 20 but less than 61 ................................. 80 percent. More than 60 but less than 101 ............................... 70 percent. More than 100 but less than 141 ............................. 60 percent. More than 140 ........................................................... 50 percent.’’

11 (b) CONFORMING AMENDMENT TO RAILROAD RE12 TIREMENT ACT OF 1974.—Section 1 of the Railroad Re13 tirement Act of 1974 (45 U.S.C. 231) is amended by add14 ing at the end the following:

15 ‘‘(s) In applying applicable provisions of the Social

16 Security Act for purposes of determining the amount of

17 the annuity to which an individual is entitled under this

18 Act, such individual shall not be treated as in ‘elective re-
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1 tirement status’ as defined in section 251(a)(3) of the So2 cial Security Act.’’

3 (c) EFFECTIVE DATE.—The amendments made by

4 this section shall apply with respect to months after De5 cember 1997.

6 SEC. 104. TAX TREATMENT OF PERSONAL RETIREMENT

7 SAVINGS ACCOUNTS.

8 (a) IN GENERAL.—Subpart A of part I of subchapter

9 D of chapter 1 of the Internal Revenue Code of 1986 (re10 lating to pension, profit-sharing, stock bonus plans, etc.)

11 is amended by inserting after section 408 the following

12 new section:

13 ‘‘SEC. 408A. PERSONAL RETIREMENT SAVINGS ACCOUNTS.

14 ‘‘(a) GENERAL RULE.—Gross income shall not in15 clude any amount deposited in a personal retirement sav16 ings account under section 251 or 252 of the Social Secu17 rity Act.

18 ‘‘(b) PERSONAL RETIREMENT SAVINGS ACCOUNT.—

19 For purposes of this title, the term ‘personal retirement

20 savings account’ means a trust created or organized in the

21 United States for the exclusive benefit of an individual or

22 his beneficiaries, but only if the written governing instru23 ment creating the trust meets the following requirements:
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1 ‘‘(1) No contribution will be accepted other

2 than under sections 251 and 252 of the Social Secu3 rity Act.

4 ‘‘(2) No amount may be paid or distributed

5 from such trust before the date on which the ac6 count holder attains age 60, becomes entitled to dis7 ability insurance benefits under section 223 of the

8 Social Security Act, or dies.

9 ‘‘(3) The trustee is a bank (as defined in sec10 tion 408(n)) or such other person who demonstrates

11 to the satisfaction of the Secretary that the manner

12 in which such other person will administer the trust

13 will be consistent with the requirements of this sec14 tion.

15 ‘‘(4) No part of the trust fund is invested in life

16 insurance contracts.

17 ‘‘(5) The interest of an individual in the bal18 ance in his account is nonforfeitable.

19 ‘‘(6) The assets of the trust will not be commin20 gled with other property except in a common trust

21 fund or common investment fund.

22 ‘‘(7) Under the terms governing the account,

23 contributions will be accepted irrespective of the

24 amount of the contribution.
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1 ‘‘(8) The same requirements as are applicable

2 with respect to trusts under paragraph (11) of sec3 tion 401(a) are met with respect to the account (dis4 regarding subparagraph (B) thereof), as if the annu5 ity starting date with respect to the account holder

6 is the day on which the account holder attains age

7 60 or becomes entitled to disability insurance bene8 fits under section 223 of the Social Security Act.

9 Paragraphs (1), (2), and (8) shall not apply to direct

10 trustee-to-trustee transfers between personal retirement

11 savings accounts of the same individual.

12 ‘‘(c) INVESTMENT REQUIREMENTS.—Amounts held

13 in an individual’s account shall be invested in the manner

14 described in paragraph (1), (2), or (3), or in a manner

15 consisting of any combination thereof.

16 ‘‘(1) Investments under this paragraph may be

17 in the form of securities of the United States Gov18 ernment.

19 ‘‘(2) Investments under this paragraph may be

20 in the form of—

21 ‘‘(A) insurance contracts,

22 ‘‘(B) certificates of deposit, or

23 ‘‘(C) other instruments or obligations se24 lected by qualified professional asset managers,
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1 which return the amount invested and pay interest,

2 at a specified rate or rates, on that amount during

3 a specified period of time.

4 ‘‘(3) Investments under this paragraph may be

5 in the form of a portfolio of common stock designed

6 to replicate the performance of an index which shall

7 be selected by the trustee, under standards which

8 shall be prescribed in regulations of the Secretary

9 applying for purposes of this paragraph the same

10 principles as are applicable under section 8438(b)(2)

11 of title 5, United States Code. Such index must be

12 a commonly recognized index comprised of common

13 stock the aggregate market value of which is a rea14 sonably complete representation of the United States

15 equity markets. The portfolio shall be designed such

16 that, to the extent practicable, the percentage of the

17 total amount invested in the manner described in

18 this paragraph that is invested in each stock is the

19 same as the percentage determined by dividing the

20 aggregate market value of all shares of that stock

21 by the aggregate market value of all shares of all

22 stocks included in such index.

23 ‘‘(d) ACCOUNT EXEMPT FROM TAX.—

24 ‘‘(1) GENERAL RULE.—Except as provided in

25 paragraph (2), any personal retirement savings ac-
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1 count is exempt from taxation under this subtitle.

2 Notwithstanding the preceding sentence, any such

3 account is subject to the taxes imposed by section

4 511 (relating to imposition of tax on unrelated busi5 ness income of charitable, etc. organizations).

6 ‘‘(2) APPLICATION OF PROHIBITED TRANS7 ACTIONS RULES, ETC.—Rules similar to the rules of

8 paragraphs (2), (3), and (4) of section 408(e) shall

9 apply to personal retirement savings accounts.

10 ‘‘(e) DISTRIBUTIONS TAXED AS IF SOCIAL SECURITY

11 BENEFITS.—

12 ‘‘(1) GENERAL RULE.—Amounts paid or dis13 tributed from a personal retirement savings account

14 shall be includible in gross income only if so includ15 ible under section 86, determined by treating such

16 amounts as Social Security benefits (as defined in

17 such section).

18 ‘‘(2) TRUSTEE-TO-TRUSTEE TRANSFERS.—No

19 amount shall be includible in gross income by reason

20 of a direct trustee-to-trustee transfer between per21 sonal retirement savings accounts of the same indi22 vidual.

23 ‘‘(f) CERTAIN OTHER RULES TO APPLY.—The fol24 lowing rules shall apply to personal retirement savings ac-
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1 counts in the same manner that such rules apply to indi2 vidual retirement accounts:

3 ‘‘(1) Section 408(h) (relating to custodial ac4 counts)

5 ‘‘(2) Sections 408(i) and 6693 (relating to re6 ports).

7 ‘‘(3) Section 4975 (relating to prohibited trans8 actions).’’

9 (b) CLERICAL AMENDMENT.—The table of sections

10 for such subpart A is amended by inserting after the item

11 relating to section 408 the following new item:

‘‘Sec. 408A. Personal retirement savings accounts.’’

12 (c) EFFECTIVE DATE.—The amendments made by

13 this section shall apply to taxable years beginning after

14 December 31, 1997.

15 SEC. 105. REVENUES FROM INCREASES IN INCOME TAX ON

16 SOCIAL SECURITY BENEFITS DEPOSITED IN

17 OASDI TRUST FUNDS.

18 Subparagraph (B) of section 121(e)(1) of the Social

19 Security Amendments of 1983 (Public Law 98–21, 42

20 U.S.C. 401 note) is amended to read as follows:

21 ‘‘(B)(i) There are hereby appropriated to

22 the hospital insurance trust fund amounts equal

23 to the increase in tax liabilities described in

24 subparagraph (A)(ii) with respect to taxable

25 years beginning before January 1, 1998.
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1 ‘‘(ii) There are hereby appropriated to

2 each payor fund amounts equal to the increase

3 in tax liabilities described in subparagraph

4 (A)(ii), with respect to taxable years beginning

5 after December 31, 1997, which is attributable

6 to the application of sections 86 and 871(a)(3)

7 of such Code to payments from such payor

8 fund.

9 ‘‘(iii) Such appropriated amounts shall be

10 transferred from the general fund of the Treas11 ury on the basis of estimates of such tax liabil12 ities made by the Secretary of the Treasury.

13 Transfers shall be made pursuant to a schedule

14 made by the Secretary of the Treasury that

15 takes into account estimated timing of collec16 tion of such liabilities.’’

17 TITLE II—SOCIAL SECURITY

18 BENEFIT REFORMS

19 SEC. 201. LIMITATION ON PAYMENT OF CERTAIN BENEFITS

20 IN EXCESS OF CONTRIBUTIONS DURING

21 YEARS OF HIGHER INCOME.

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

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

24 following new subsection:
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1 ‘‘LIMITATION ON PAYMENT OF CERTAIN BENEFITS IN EX2 CESS OF CONTRIBUTIONS DURING YEARS OF HIGHER

3 INCOME

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

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

6 individual—

7 ‘‘(A) the total amount of the current adjusted

8 values of all of such individual’s social security old9 age or survivors benefits in prior months, deter10 mined as of the beginning of such year, exceed

11 ‘‘(B) the total amount of the current adjusted

12 values of all OASDI taxes paid with respect to the

13 wages and self-employment income on which such

14 benefits are based, determined as of the beginning

15 of such year,

16 then such individual’s social security old-age or survivors

17 benefits for any month in such year shall be reduced (after

18 all other deductions and reductions applicable under this

19 title) by the percentage reduction determined under para20 graph (2) for such year. Benefits, as reduced under this

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

22 the next higher multiple of $1.

23 ‘‘(2)(A) The percentage reduction determined under

24 this paragraph for an individual’s taxable year is the prod25 uct derived by multiplying—
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1 ‘‘(i) 1 percent, by

2 ‘‘(ii) the applicable income-based factor of the

3 individual for the taxable year.

4 ‘‘(B)(i) For purposes of subparagraph (A), in the

5 case of an individual who is not married as of the begin6 ning of the taxable year, the applicable income-based fac7 tor of the individual for the taxable year is the quotient

8 (not greater than 100) derived by dividing—

9 ‘‘(I) the individual’s excess income for the tax10 able year, by

11 ‘‘(II) $300,

12 rounded (if not a whole number) to the next lower whole

13 number.

14 ‘‘(ii) For purposes of clause (i), an individual’s excess

15 income for a taxable year is the excess of—

16 ‘‘(I) the adjusted gross income of such individ17 ual for such taxable year, over

18 ‘‘(II) $50,000.

19 ‘‘(C)(i) For purposes of subparagraph (A), in the

20 case of an individual who is married as of the beginning

21 of the taxable year, the applicable income-based factor of

22 the individual for the taxable year is the quotient (not

23 greater than 100) derived by dividing—

24 ‘‘(I) the excess joint income of the individual

25 and the individual’s spouse for the taxable year, by
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1 ‘‘(II) $600,

2 rounded (if not a whole number) to the next lower whole

3 number.

4 ‘‘(ii) For purposes of clause (i), the excess joint in5 come of an individual and the individual’s spouse for a

6 taxable year is the excess of—

7 ‘‘(I) the total adjusted gross income of such in8 dividual and such individual’s spouse for such tax9 able year, over

10 ‘‘(II) $100,000.

11 ‘‘(D)(i) For taxable years ending after December 31,

12 1998, the dollar amounts referred to in subparagraphs (B)

13 and (C) shall each be adjusted as provided in this subpara14 graph. The Commissioner of Social Security shall, on or

15 before November 1 of 1998 and every year thereafter, de16 termine and publish in the Federal Register the dollar

17 amounts referred to in subparagraphs (B) and (C) as ad18 justed under this subparagraph for taxable years ending

19 after December 31 of such year.

20 ‘‘(ii) The amount of each such dollar amount as ad21 justed under this subparagraph shall be the larger of—

22 ‘‘(I) the dollar amount in effect for the taxable

23 year ending in or with the calendar year in which

24 the determination under this subparagraph is made,

25 or
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1 ‘‘(II) the product of such dollar amount and the

2 ratio of the national average wage index (as defined

3 in section 209(k)(1)) for the calendar year preceding

4 the calendar year in which the determination under

5 this subparagraph is made to the national average

6 wage index (as so defined) for 1996,

7 with such product, if not a multiple of $10, being rounded

8 to the next higher multiple of $10 where such amount is

9 a multiple of $5 but not of $10 and to the nearest multiple

10 of $10 in any other case.

11 ‘‘(3) For purposes of this subsection—

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

13 individual means any taxable year—

14 ‘‘(i) if, in the case of an individual who is

15 not married as of the beginning of such taxable

16 year, the adjusted gross income of such individ17 ual for such taxable year (disregarding distribu18 tions from personal retirement savings accounts

19 (as defined in section 254(1)) exceeds $50,000,

20 or

21 ‘‘(ii) if, in the case of an individual who is

22 married as of the beginning of such taxable

23 year, the total adjusted gross income of such in24 dividual and such individual’s spouse for such

25 taxable year (disregarding distributions from
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1 personal retirement savings accounts (as de2 fined in section 254(1)) exceeds $100,000.

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

4 meaning provided in section 62 of the Internal Reve5 nue Code of 1986.

6 ‘‘(C)(i) The term ‘current adjusted value’ of an

7 amount, determined as of the beginning of any cal8 endar year, means the original amount, plus interest

9 on such amount, compounded annually through the

10 end of the preceding calendar year at the trust fund

11 interest rate as in effect from year to year.

12 ‘‘(ii) The term ‘trust fund interest rate’ in ef13 fect for any year means the average rate of interest

14 earned during the fiscal year ending in such year

15 on investments of amounts in the Federal Old-Age

16 and Survivors Insurance Trust Fund and the Fed17 eral Disability Insurance Trust Fund, as determined

18 by the Managing Trustee of such Trust Funds.

19 ‘‘(D) The term ‘social security old-age or survi20 vors benefit’ of an individual means a monthly insur21 ance benefit under this title based on the wages and

22 self-employment income of such individual and paid

23 or payable from the Federal Old-Age and Survivors

24 Insurance Trust Fund.
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1 ‘‘(E) 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 to whom social security old-age or

7 survivors benefits are otherwise payable under this section,

8 of total benefits paid and OASDI taxes paid, as is nec9 essary to preclude, to the maximum extent practicable,

10 overpayments and underpayments of benefits resulting

11 from the operation of this subsection. The Commissioner

12 and the Secretary of the Treasury shall enter into such

13 arrangements as are necessary to ensure that such records

14 maintained by the Commissioner are currently accurate at

15 all times.

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

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

18 if a social security old-age or survivors benefit has been

19 paid to such individual for any month in such year, such

20 individual (or the individual who is in receipt of such bene21 fit on his behalf) shall make a report to the Commissioner

22 of Social Security of his adjusted gross income, and (if

23 he is married) the adjusted gross income of his spouse,

24 for such taxable year. Such report shall be made on or

25 before the fifteenth day of the fourth month following the
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•HR 3758 IH

1 close of such year, and shall contain such information and

2 be made in such manner as the Commissioner may by reg3 ulations prescribe. The Commissioner may grant a reason4 able extension of time for making such report if he finds

5 that there is valid reason for a delay, but in no case may

6 the period be extended more than three months.

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

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

9 in accordance with such subparagraph, for any taxable

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

11 self-employment income is paid for any month in such tax12 able year or the next following taxable year which is in

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

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

15 an additional amount as follows:

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

17 which a benefit is paid in excess of the amount pay18 able by reason of this subsection, the additional

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

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

21 which a benefit is paid in excess of the amount pay22 able by reason of this subsection, the additional

23 amount shall be equal to two times the amount of

24 such excess; and
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•HR 3758 IH

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

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

3 the amount payable by reason of this subsection, the

4 additional amount shall be equal to three times the

5 amount of such excess;

6 except that additional amounts of overpayment deter7 mined under this paragraph shall be determined only for

8 months for which the benefit in excess of the amount pay9 able was received and accepted.

10 ‘‘(C)(i)(I) If the Commissioner of Social Security de11 termines, on the basis of information obtained by or sub12 mitted to him, that it may reasonably be expected that

13 an individual’s social security old-age or survivors benefits

14 will not be payable (in whole or in part) for any month

15 in a taxable year of such individual by reason of this sub16 section, the Commissioner may, before the close of such

17 taxable year, suspend the payment (in whole or in part)

18 for each month in such year (or for only such months as

19 the Commissioner may specify) of such benefits. Such sus20 pension shall remain in effect with respect to the benefits

21 for any month until the Commissioner has determined the

22 extent to which benefits are payable under this subsection.

23 ‘‘(II) The Commissioner of Social Security may, be24 fore the close of the taxable year of an individual on whose

25 wages and self-employment income benefits are otherwise
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•HR 3758 IH

1 payable during such year, request of such individual that

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

3 specify, a declaration of his estimated adjusted gross in4 come (or the estimated total adjusted gross income for

5 him and his spouse) for the taxable year and that he fur6 nish to the Commissioner such other information with re7 spect to such income as the Commissioner may specify.

8 A failure by such individual to comply with any such re9 quest shall in itself constitute justification for a deter10 mination under subclause (I) that it may reasonably be

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

12 in part) by reason of this subsection.

13 ‘‘(III) If the payment of an individual’s social security

14 old-age or survivors benefits have been suspended (in

15 whole or in part) for all months in any taxable year of

16 such individual under subclause (I), no payment of such

17 unpaid benefits shall be made for any such month in such

18 taxable year after the expiration of the period of three

19 years, three months, and fifteen days following the close

20 of such taxable year unless within such period the individ21 ual, or some other person entitled to benefits under this

22 title on the basis of the same wages and self-employment

23 income, files with the Commissioner of Social Security in24 formation showing that the unpaid portion of a benefit

25 for such month is payable to such individual.
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1 ‘‘(ii) If, after the close of a taxable year of an individ2 ual to whom social security old-age or survivors benefits

3 were otherwise payable for months in such year, the Com4 missioner of Social Security requests such individual to

5 furnish a report of his adjusted gross income (or the total

6 adjusted gross income of him and his spouse) for such tax7 able year or any other information with respect to such

8 income which the Commissioner may specify, and the indi9 vidual fails to comply with such request, such failure shall

10 in itself constitute justification for a determination that

11 such benefits were not payable (in whole or in part) for

12 each month in such taxable year (or only for such months

13 thereof as the Commissioner may specify) by reason of

14 this subsection.

15 ‘‘(D) The Commissioner of Social Security shall de16 velop and implement procedures in accordance with this

17 paragraph to avoid paying more than the correct amount

18 of an individual’s social security old-age or survivors bene19 fits as a result of the failure of the individual to file a

20 correct report or estimate of adjusted gross income. Such

21 procedures may include identifying categories of individ22 uals whose social security old-age or survivors benefits

23 which are not payable (in whole or in part) under this

24 subsection are likely to be paid and requesting that they

25 estimate their adjusted gross income (or the total adjusted
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1 gross income of them and their spouses) more frequently

2 than other persons subject to this subsection.

3 ‘‘(6) Benefits of any individual (other than an indi4 vidual described in paragraph (1)) based on the wages and

5 self-employment income of any other individual to whom

6 benefits are not payable by reason of paragraph (1) shall

7 be payable as though such other individual were receiving

8 such benefits.’’.

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

10 this section shall apply with respect to benefits otherwise

11 payable in taxable years ending after December 31, 1997.

12 SEC. 202. GRADUAL INCREASE IN RETIREMENT AGE AND

13 EARLY RETIREMENT AGE.

14 (a) RETIREMENT AGE.—Section 216(l)(1) of the So15 cial Security Act (42 U.S.C. 416(l)(1)) is amended to read

16 as follows:

17 ‘‘(l)(1) The term ‘retirement age’ means—

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

19 age 62 before January 1, 2000, 65 years of age,

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

21 age 62 after December 31, 1999, and before January 1, 2015, 65 years of age plus 3 22 ⁄12 of the number

23 of months in the period beginning with January

24 2000 and ending with the last month of the calendar

25 year in which the individual attains age 62,
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1 ‘‘(C) with respect to an individual who attains

2 age 62 after December 31, 2014, and before Janu3 ary 1, 2016, 69 years of age, and

4 ‘‘(D) with respect to an individual who attains

5 age 62 in any year after December 31, 2015, the

6 projected retirement age (as determined by the Com7 missioner under paragraph (3)) for the year in

8 which such individual attains age 62.’’.

9 (b) EARLY RETIREMENT AGE.—Section 216(l)(2) of

10 such Act (42 U.S.C. 416(l)(2)) is amended to read as fol11 lows:

12 ‘‘(2) The term ‘early retirement age’ means—

13 ‘‘(A) except as otherwise provided in this para14 graph—

15 ‘‘(i) age 62, in the case of an old-age,

16 wife’s, or husband’s insurance benefit, or

17 ‘‘(ii) age 60, in the case of a widow’s or

18 widower’s insurance benefit,

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

20 early retirement age (as defined in subparagraph

21 (A)) after December 31, 1999, and before January

22 1, 2011, the applicable retirement age (as defined in

23 paragraph (1)), minus—

24 ‘‘(i) 3 years, in the case of an old-age,

25 wife’s, or husband’s insurance benefit, or
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1 ‘‘(ii) 5 years, in the case of a widow’s or

2 widower’s insurance benefit,

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

4 early retirement age (as defined in subparagraph

5 (A)) after December 31, 2010, and before January

6 1, 2016—

7 ‘‘(i) age 65, in the case of an old-age,

8 wife’s, or husband’s insurance benefit, or

9 ‘‘(ii) age 63, in the case of a widow’s or

10 widower’s insurance benefit, and

11 ‘‘(D) with respect to an individual who attains

12 early retirement age (as defined in subparagraph

13 (A)) after December 31, 2015, the applicable retire14 ment age (as defined in paragraph (1)), minus—

15 ‘‘(i) 4 years, in the case of an old-age,

16 wife’s, or husband’s insurance benefit, or

17 ‘‘(ii) 6 years, in the case of a widow’s or

18 widower’s insurance benefit.’’.

19 (c) PROJECTED RETIREMENT AGE.—Section

20 216(l)(3) of such Act (42 U.S.C. 416(l)(3)) is amended

21 to read as follows:

22 ‘‘(3)(A) Not later than October 1 of each year after

23 2014, the Commissioner of Social Security shall deter24 mine, and publish in the Federal Register, the projected

25 retirement age for the year following such October 1.
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1 ‘‘(B) For purposes of this paragraph—

2 ‘‘(i) The ‘projected retirement age’ for any year

3 means the age (rounded, if not otherwise expressible

4 as a whole number of months, to the next lower

5 whole number of months) which, if such age were

6 the retirement age (as defined in this subsection) in

7 effect for individuals who attain age 62 in such year

8 (and are credited under this title with wages or self9 employment income), would cause the ratio of the

10 projected post-retirement lifetime for such individ11 uals to the potential working lifetime for such indi12 viduals to be equal to the ratio of the projected post13 retirement lifetime for all individuals who attain age

14 62 in 2015 (and are credited under this title with

15 wages or self-employment income) to the potential

16 working lifetime for such individuals attaining age

17 62 in 2015.

18 ‘‘(ii) The ‘projected post-retirement lifetime’ for

19 individuals attaining age 62 in any year means the

20 average projected lifetime (rounded, if not otherwise

21 expressible as a whole number of months, to the

22 next lower whole number of months) of such individ23 uals commencing with the month following the

24 month in which the applicable retirement age is at25 tained, as determined by the Commissioner of Social
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1 Security, utilizing the intermediate actuarial as2 sumptions utilized by the Board of Trustees of the

3 Federal Old-Age and Survivors Insurance Trust

4 Fund for its most recent annual report issued under

5 section 201(c).

6 ‘‘(iii) The ‘potential working lifetime’ for indi7 viduals attaining age 62 in any year means the num8 ber of calendar months during the period beginning

9 with January of the year following the year in which

10 age 20 is attained by such individuals and ending

11 with the month in which the applicable retirement

12 age is attained by such individuals.’’.

13 (d) DEFINITION OF ELAPSED YEARS FOR PURPOSES

14 OF DETERMINING BENEFIT COMPUTATION YEARS.—Sec15 tion 215(b)(2)(B)(iii) of such Act (42 U.S.C.

16 415(b)(2)(B)(iii)) is amended—

17 (1) by striking ‘‘the year in which he attained

18 age 62’’ and all that follows and inserting ‘‘the year

19 in which he attained—’’; and

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

21 ‘‘(I) early retirement age (as defined in

22 section 216(l)(2) in the case of old-age, wife’s,

23 and husband’s insurance benefits), in the case

24 of an individual who attained age 62 before

25 January 1, 2012,
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‘‘(II) age 65 plus 3 1 ⁄12 of the number of

2 months in the period beginning with January

3 2012 and ending with the last month of the cal4 endar year in which the individual attained age

5 62, in the case of an individual who attained

6 age 62 after December 31, 2011, and before

7 January 1, 2015, or

8 ‘‘(III) one year greater than early retire9 ment age (as so defined), in the case of an indi10 vidual who attained age 62 after December 31,

11 2014;

12 except that such term excludes any calendar year

13 any part of which is included in a period of disabil14 ity.’’.

15 SEC. 203. ADJUSTMENTS TO BEND POINTS IN DETERMIN16 ING PRIMARY INSURANCE AMOUNTS.

17 (a) ADDITIONAL BEND POINT.—Section

18 215(a)(1)(A) of the Social Security Act (42 U.S.C.

19 415(a)(1)(A)) is amended—

20 (1) in clause (ii), by striking ‘‘and’’ at the end;

21 (2) in clause (iii), by striking ‘‘clause (ii),’’ and

22 inserting the following: ‘‘clause (ii) but do not exceed

23 the amount established for purposes of this clause

24 by subparagraph (B), and’’; and
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1 (3) by inserting after clause (iii) the following

2 new clause:

3 ‘‘(iv) 5 percent of the individual’s average in4 dexed monthly earnings to the extent that such

5 earnings exceed the amount established for purposes

6 of clause (iii),’’.

7 (b) INITIAL LEVEL OF ADDITIONAL BEND POINT.—

8 Section 215(a)(1)(B)(i) of such Act (42 U.S.C.

9 415(a)(1)(B)(i)) is amended by adding at the end the fol10 lowing new sentence: ‘‘For individuals who initially become

11 eligible for old-age or disability insurance benefits, or who

12 die (before becoming eligible for such benefit), in the cal13 endar year 1998, the amount established for purposes of

14 clause (iii) of subparagraph (A) shall be $3,391.’’.

15 (c) USE OF CPI IN DETERMINING COST-OF-LIVING

16 INCREASES IN HIGHEST 2 BEND POINTS.—

17 (1) IN GENERAL.—Section 215(i)(2)(A)(ii) of

18 such Act (42 U.S.C. 415(i)(2)(A)(ii)) is amended by

19 striking the sentence after and below subdivision

20 (III) and inserting the following new sentences:

21 ‘‘If the Commissioner, effective with December of any

22 year, increases the amounts described in subdivisions (I),

23 (II), and (III), the Commissioner shall also, effective for

24 the following calendar year, increase the amounts estab25 lished under subsection (a)(1)(B) for purposes of clauses
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1 (ii) and (iii) of subsection (a)(1)(A). The increases in the

2 amounts described in subdivisions (I), (II), and (III) shall

3 be derived by multiplying each of the amounts (including

4 each of those amounts as previously increased under this

5 subparagraph) by the applicable increase percentage. The

6 increase in the amounts established under subsection

7 (a)(1)(B) for purposes of clauses (ii) and (iii) of sub8 section (a)(1)(A) shall be derived by multiplying each of

9 the amounts (including each of those amounts as pre10 viously increased under this subparagraph) by the excess

11 (if any) of the wage increase percentage over 1.3 percent12 age points. Any amount so increased that is not a multiple

13 of $0.10 shall be decreased to the next lower multiple of

14 $0.10.’’.

15 (2) CONFORMING AMENDMENT.—Section

16 215(a)(1)(B)(ii) of such Act (42 U.S.C.

17 415(a)(1)(B)(ii)) is amended by striking ‘‘each of

18 the amounts so established’’ and inserting ‘‘the

19 amount so established for purposes of subparagraph

20 (A)(i)’’.

21 (3) EFFECTIVE DATE.—The amendments made

22 by this subsection shall apply with respect to

23 amounts effective for calendar years after 1997.
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1 SEC. 204. INFORMATION RELATING TO BENEFIT LIMITA2 TIONS PROVIDED IN SOCIAL SECURITY AC3 COUNT STATEMENTS.

4 (a) IN GENERAL.—Section 1143 of the Social Secu5 rity Act (42 U.S.C. 1320b–13) is amended—

6 (1) in the heading for subsection (a), by strik7 ing ‘‘Upon Request’’ and inserting ‘‘of Annual

8 Statements’’;

9 (2) in subsection (a)(1), by striking ‘‘Begin10 ning’’ and all that follows and inserting the follow11 ing: ‘‘Not later than October 1 of each year, the

12 Commissioner of Social Security shall provide an an13 nual social security account statement (hereinafter

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

15 eligible individual for whom a mailing address can be

16 determined through such methods as the Commis17 sioner determines to be appropriate.’’;

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

19 date of the request’’;

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

21 date of the request’’;

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

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

24 end;

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

26 case of individuals not receiving benefits,’’ after
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1 ‘‘(D)’’, and by striking ‘‘title XVIII.’’ and inserting

2 ‘‘title XVIII;’’;

3 (7) by adding after subparagraph (D) the fol4 lowing:

5 ‘‘(E) a table setting forth an estimate, in rela6 tion to 1980 and every 10th year thereafter through

7 2030, of the following information:

8 ‘‘(i) the total amount of the current ad9 justed values of all employee, employer, and

10 self-employment contributions made with re11 spect to the wages and self-employment income

12 of the average earner retiring at retirement age

13 in each such year;

14 ‘‘(ii) the total amount of the current ad15 justed values of the social security old-age or

16 survivors benefits (as defined in section

17 202(y)(3)(D)) paid for all prior months on the

18 basis of the wages and self-employment income

19 of the average earner retiring at retirement age

20 in each such year; and

21 ‘‘(iii) the total amount of the current ad22 justed values of the monthly benefits which will

23 have been paid under such subsections, as of

24 the time of the death of the average earner re25 tiring at retirement age in each such year, on
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1 the basis of his or her wages and self-employ2 ment income, as projected under the intermedi3 ate actuarial assumptions utilized by the Board

4 of Trustees of the Federal Old-Age and Survi5 vors Insurance Trust Fund for its most recent

6 annual report issued under section 201(c); and

7 ‘‘(F) the year for which the annual rate of

8 outgo from the Federal Old-Age and Survivors In9 surance Trust Fund will first exceed the annual rate

10 of deposits to such Trust Fund (excluding any re11 turn of obligations held by such Trust Fund), as

12 projected under the intermediate actuarial assump13 tions utilized by the Board of Trustees of the Fed14 eral Old-Age and Survivors Insurance Trust Fund

15 for its most recent annual report issued under sec16 tion 201(c).

17 For purposes of subparagraph (E), the term ‘current ad18 justed value’ has the meaning provided in section

19 202(y)(3)(C).’’;

20 (8) by striking subsection (b);

21 (9) in subsection (c)—

22 (A) by striking the heading and inserting

23 the following:
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•HR 3758 IH

1 ‘‘Required Estimates of Benefits’’;

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

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

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

5 to’’; and

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

7 sentence: ‘‘The Commissioner shall provide such

8 estimates of retirement benefit amounts to eligi9 ble individuals who have not attained age 50

10 upon request.’’; and

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

12 subsection:

13 ‘‘Inclusion of Statements to Retirees with Other Mailings

14 ‘‘(c) The Commissioner of Social Security shall en15 sure that statements provided to eligible individuals who

16 are receiving benefits under title II are included to the

17 maximum extent practicable with mailings otherwise made

18 to such individuals. The Commissioner shall consult with

19 the Secretary of the Treasury in carrying out the require20 ment of this subsection and such Secretary shall provide

21 such appropriate assistance to the Commissioner as is nec22 essary to carry out such requirements.’’.

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

24 subsection (a) shall apply with respect to statements pro25 vided on or after October 1, 1996.
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1 SEC. 205. COVERAGE OF NEWLY HIRED STATE AND LOCAL

2 EMPLOYEES.

3 (a) AMENDMENTS TO THE SOCIAL SECURITY ACT.—

4 (1) IN GENERAL.—Paragraph (7) of section

5 210(a) of the Social Security Act (42 U.S.C.

6 410(a)(7)) is amended to read as follows:

7 ‘‘(7) Excluded State or local government em8 ployment (as defined in subsection (s));’’.

9 (2) EXCLUDED STATE OR LOCAL GOVERNMENT

10 EMPLOYMENT.—

11 (A) IN GENERAL.—Section 210 of such

12 Act (42 U.S.C. 410) is amended by adding at

13 the end the following new subsection:

14 ‘‘Excluded State or Local Government Employment

15 ‘‘(s)(1) IN GENERAL.—The term ‘excluded State or

16 local government employment’ means any service per17 formed in the employ of a State, of any political subdivi18 sion thereof, or of any instrumentality of any one or more

19 of the foregoing which is wholly owned thereby, if—

20 ‘‘(A)(i) such service would be excluded from the

21 term ‘employment’ for purposes of this title if the

22 preceding provisions of this section as in effect in

23 March 1997 had remained in effect, and (ii) the re24 quirements of paragraph (2) are met with respect to

25 such service, or
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•HR 3758 IH

1 ‘‘(B) the requirements of paragraph (3) are met

2 with respect to such service.

3 ‘‘(2) EXCEPTION FOR CURRENT EMPLOYMENT WHICH

4 CONTINUES.—

5 ‘‘(A) IN GENERAL.—The requirements of this

6 paragraph are met with respect to service for any

7 employer if—

8 ‘‘(i) such service is performed by an indi9 vidual—

10 ‘‘(I) who was performing substantial

11 and regular service for remuneration for

12 that employer before January 1, 1998,

13 ‘‘(II) who is a bona fide employee of

14 that employer on December 31, 1997, and

15 ‘‘(III) whose employment relationship

16 with that employer was not entered into

17 for purposes of meeting the requirements

18 of this subparagraph, and

19 ‘‘(ii) the employment relationship with that

20 employer has not been terminated after Decem21 ber 31, 1997.

22 ‘‘(B) TREATMENT OF MULTIPLE AGENCIES AND

23 INSTRUMENTALITIES.—For purposes of subpara24 graph (A), under regulations (consistent with regula-
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•HR 3758 IH

1 tions established under section 3121(t)(2)(B) of the

2 Internal Revenue Code of 1986)—

3 ‘‘(i) all agencies and instrumentalities of a

4 State (as defined in section 218(b)) or of the

5 District of Columbia shall be treated as a single

6 employer, and

7 ‘‘(ii) all agencies and instrumentalities of a

8 political subdivision of a State (as so defined)

9 shall be treated as a single employer and shall

10 not be treated as described in clause (i).

11 ‘‘(3) EXCEPTION FOR CERTAIN SERVICES.—

12 ‘‘(A) IN GENERAL.—The requirements of this

13 paragraph are met with respect to service if such

14 service is performed—

15 ‘‘(i) by an individual who is employed by a

16 State or political subdivision thereof to relieve

17 such individual from unemployment,

18 ‘‘(ii) in a hospital, home, or other institu19 tion by a patient or inmate thereof as an em20 ployee of a State or political subdivision thereof

21 or of the District of Columbia,

22 ‘‘(iii) by an individual, as an employee of

23 a State or political subdivision thereof or of the

24 District of Columbia, serving on a temporary
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•HR 3758 IH

1 basis in case of fire, storm, snow, earthquake,

2 flood, or other similar emergency,

3 ‘‘(iv) by any individual as an employee in4 cluded under section 5351(2) of title 5, United

5 States Code (relating to certain interns, student

6 nurses, and other student employees of hos7 pitals of the District of Columbia Government),

8 other than as a medical or dental intern or a

9 medical or dental resident in training,

10 ‘‘(v) by an election official or election

11 worker if the remuneration paid in a calendar

12 year for such service is less than $1,000 with

13 respect to service performed during 1998, and

14 the adjusted amount determined under sub15 paragraph (C) for any subsequent year with re16 spect to service performed during such subse17 quent year, except to the extent that service by

18 such election official or election worker is in19 cluded in employment under an agreement

20 under section 218, or

21 ‘‘(vi) by an employee in a position com22 pensated solely on a fee basis which is treated

23 pursuant to section 211(c)(2)(E) as a trade or

24 business for purposes of inclusion of such fees

25 in net earnings from self-employment.
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•HR 3758 IH

1 ‘‘(B) DEFINITIONS.—As used in this para2 graph, the terms ‘State’ and ‘political subdivision’

3 have the meanings given those terms in section

4 218(b).

5 ‘‘(C) ADJUSTMENTS TO DOLLAR AMOUNT FOR

6 ELECTION OFFICIALS AND ELECTION WORKERS.—

7 For each year after 1998, the Commissioner of So8 cial Security shall adjust the amount referred to in

9 subparagraph (A)(v) at the same time and in the

10 same manner as is provided under section

11 215(a)(1)(B)(ii) with respect to the amounts re12 ferred to in section 215(a)(1)(B)(i), except that—

13 ‘‘(i) for purposes of this subparagraph,

14 1995 shall be substituted for the calendar year

15 referred to in section 215(a)(1)(B)(ii)(II), and

16 ‘‘(ii) such amount as so adjusted, if not a

17 multiple of $100, shall be rounded to the next

18 higher multiple of $100 where such amount is

19 a multiple of $50 and to the nearest multiple

20 of $100 in any other case.

21 The Commissioner of Social Security shall determine

22 and publish in the Federal Register each adjusted

23 amount determined under this subparagraph not

24 later than November 1 preceding the year for which

25 the adjustment is made.’’.
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1 (B) CONFORMING AMENDMENTS.—

2 (i) Subsection (k) of section 210 of

3 such Act (42 U.S.C. 410(k)) (relating to

4 covered transportation service) is repealed.

5 (ii) Section 210(p) of such Act (42

6 U.S.C. 410(p)) is amended—

7 (I) in paragraph (2), by striking

8 ‘‘service is performed’’ and all that

9 follows and inserting ‘‘service is serv10 ice described in subsection (s)(3)(A).’’;

11 and

12 (II) in paragraph (3)(A), by in13 serting ‘‘under subsection (a)(7) as in

14 effect in December 1997’’ after ‘‘sec15 tion’’.

16 (iii) Section 218(c)(6) of such Act (42

17 U.S.C. 418(c)(6)) is amended—

18 (I) by striking subparagraph (C);

19 (II) by redesignating subpara20 graphs (D) and (E) as subparagraphs

21 (C) and (D), respectively; and

22 (III) by striking subparagraph

23 (F) and inserting the following:

24 ‘‘(E) service which is included as employment

25 under section 210(a).’’
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•HR 3758 IH

1 (b) AMENDMENTS TO THE INTERNAL REVENUE

2 CODE OF 1986.—

3 (1) IN GENERAL.—Paragraph (7) of section

4 3121(b) of the Internal Revenue Code of 1986 (re5 lating to employment) is amended to read as follows:

6 ‘‘(7) excluded State or local government em7 ployment (as defined in subsection (t));’’.

8 (2) EXCLUDED STATE OR LOCAL GOVERNMENT

9 EMPLOYMENT.—Section 3121 of such Code is

10 amended by inserting after subsection (s) the follow11 ing new subsection:

12 ‘‘(t) EXCLUDED STATE OR LOCAL GOVERNMENT EM13 PLOYMENT.—

14 ‘‘(1) IN GENERAL.—For purposes of this chap15 ter, the term ‘excluded State or local government

16 employment’ means any service performed in the

17 employ of a State, of any political subdivision there18 of, or of any instrumentality of any one or more of

19 the foregoing which is wholly owned thereby, if—

20 ‘‘(A)(i) such service would be excluded

21 from the term ‘employment’ for purposes of this

22 chapter if the provisions of subsection (b)(7) as

23 in effect in December 1997 had remained in ef24 fect, and (ii) the requirements of paragraph (2)

25 are met with respect to such service, or
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1 ‘‘(B) the requirements of paragraph (3)

2 are met with respect to such service.

3 ‘‘(2) EXCEPTION FOR CURRENT EMPLOYMENT

4 WHICH CONTINUES.—

5 ‘‘(A) IN GENERAL.—The requirements of

6 this paragraph are met with respect to service

7 for any employer if—

8 ‘‘(i) such service is performed by an

9 individual—

10 ‘‘(I) who was performing sub11 stantial and regular service for remu12 neration for that employer before Jan13 uary 1, 1998,

14 ‘‘(II) who is a bona fide employee

15 of that employer on December 31,

16 1997, and

17 ‘‘(III) whose employment rela18 tionship with that employer was not

19 entered into for purposes of meeting

20 the requirements of this subpara21 graph, and

22 ‘‘(ii) the employment relationship with

23 that employer has not been terminated

24 after December 31, 1997.
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1 ‘‘(B) TREATMENT OF MULTIPLE AGENCIES

2 AND INSTRUMENTALITIES.—For purposes of

3 subparagraph (A), under regulations—

4 ‘‘(i) all agencies and instrumentalities

5 of a State (as defined in section 218(b) of

6 the Social Security Act) or of the District

7 of Columbia shall be treated as a single

8 employer, and

9 ‘‘(ii) all agencies and instrumentalities

10 of a political subdivision of a State (as so

11 defined) shall be treated as a single em12 ployer and shall not be treated as de13 scribed in clause (i).

14 ‘‘(3) EXCEPTION FOR CERTAIN SERVICES.—

15 ‘‘(A) IN GENERAL.—The requirements of

16 this paragraph are met with respect to service

17 if such service is performed—

18 ‘‘(i) by an individual who is employed

19 by a State or political subdivision thereof

20 to relieve such individual from unemploy21 ment,

22 ‘‘(ii) in a hospital, home, or other in23 stitution by a patient or inmate thereof as

24 an employee of a State or political subdivi25 sion thereof or of the District of Columbia,
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1 ‘‘(iii) by an individual, as an employee

2 of a State or political subdivision thereof

3 or of the District of Columbia, serving on

4 a temporary basis in case of fire, storm,

5 snow, earthquake, flood, or other similar

6 emergency,

7 ‘‘(iv) by any individual as an employee

8 included under section 5351(2) of title 5,

9 United States Code (relating to certain in10 terns, student nurses, and other student

11 employees of hospitals of the District of

12 Columbia Government), other than as a

13 medical or dental intern or a medical or

14 dental resident in training,

15 ‘‘(v) by an election official or election

16 worker if the remuneration paid in a cal17 endar year for such service is less than

18 $1,000 with respect to service performed

19 during 1998, and the adjusted amount de20 termined under section 210(s)(3)(C) of the

21 Social Security Act for any subsequent

22 year with respect to service performed dur23 ing such subsequent year, except to the ex24 tent that service by such election official or

25 election worker is included in employment
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1 under an agreement under section 218 of

2 the Social Security Act, or

3 ‘‘(vi) by an employee in a position

4 compensated solely on a fee basis which is

5 treated pursuant to section 1402(c)(2)(E)

6 as a trade or business for purposes of in7 clusion of such fees in net earnings from

8 self-employment.

9 ‘‘(B) DEFINITIONS.—As used in this para10 graph, the terms ‘State’ and ‘political subdivi11 sion’ have the meanings given those terms in

12 section 218(b) of the Social Security Act.’’.

13 (3) CONFORMING AMENDMENTS.—

14 (A) Subsection (j) of such section 3121

15 (relating to covered transportation service) is

16 repealed.

17 (B) Paragraph (2) of section 3121(u) of

18 such Code (relating to application of hospital

19 insurance tax to Federal, State, and local em20 ployment) is amended—

21 (i) in subparagraph (B), by striking

22 ‘‘service is performed’’ in clause (ii) and all

23 that follows through the end of such sub24 paragraph and inserting ‘‘service is service

25 described in subsection (t)(3)(A).’’; and
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•HR 3758 IH

1 (ii) in subparagraph (C)(i), by insert2 ing ‘‘under subsection (b)(7) as in effect in

3 December 1996’’ after ‘‘chapter’’.

4 (c) EFFECTIVE DATE.—Except as otherwise provided

5 in this section, the amendments made by this section shall

6 apply with respect to service performed after December

7 31, 1997.

8 SEC. 206. PHASED REDUCTION IN SPOUSAL BENEFITS

9 OTHER THAN SURVIVOR’S BENEFITS TO 33

10 PERCENT OF PRIMARY INSURANCE AMOUNT.

11 (a) WIFE’S INSURANCE BENEFITS.—Section

12 202(b)(2) of the Social Security Act (42 U.S.C. 402(b)(2))

13 is amended to read as follows:

14 ‘‘(2)(A) Except as provided in subsection (q) and

15 paragraph (4) of this subsection, such wife’s insurance

16 benefit for each month shall be equal to the applicable per17 centage of the primary insurance amount of her husband

18 (or, in the case of a divorced wife, her former husband)

19 in connection with the calendar year in which such individ20 ual becomes eligible for such benefit, as specified in the

21 following table:

‘‘If the calendar year in which the individual be- comes eligible is:The applicable percentage shall be: Before calendar year 2000 ................................................ 50 percent Calendar year 2000 ........................................................... 49 percent Calendar year 2001 ........................................................... 48 percent Calendar year 2002 ........................................................... 47 percent Calendar year 2003 ........................................................... 46 percent Calendar year 2004 ........................................................... 45 percent
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‘‘If the calendar year in which the individual be- comes eligible is:The applicable percentage shall be:

Calendar year 2005 ........................................................... 44 percent Calendar year 2006 ........................................................... 43 percent Calendar year 2007 ........................................................... 42 percent Calendar year 2008 ........................................................... 41 percent Calendar year 2009 ........................................................... 40 percent Calendar year 2010 ........................................................... 39 percent Calendar year 2011 ........................................................... 38 percent Calendar year 2012 ........................................................... 37 percent Calendar year 2013 ........................................................... 36 percent Calendar year 2014 ........................................................... 35 percent Calendar year 2015 ........................................................... 34 percent After calendar year 2015 .................................................. 33 percent.’’.

1 ‘‘(B) For purposes of subparagraph (A)—

2 ‘‘(i) an individual shall be treated as eligible for

3 a wife’s insurance benefit if such individual meets

4 the requirements of subparagraphs (B), (C), and

5 (D) of paragraph (1), and

6 ‘‘(ii) in determining when an individual becomes

7 eligible for a wife’s insurance benefit, any break in

8 eligibility of less than 12 consecutive months shall

9 not be taken into account.’’.

10 (b) HUSBAND’S INSURANCE BENEFITS.—Section

11 202(c)(3) of such Act (42 U.S.C. 402(c)(3)) is amended

12 to read as follows:

13 ‘‘(3)(A) Except as provided in subsection (q) and

14 paragraph (2) of this subsection, such husband’s insur15 ance benefit for each month shall be equal to the applica16 ble percentage of the primary insurance amount of his wife

17 (or, in the case of a divorced husband, his former wife)

18 in connection with the calendar year in which such individ-
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1 ual becomes eligible for such benefit, as specified in the

2 following table:

‘‘If the calendar year in which the individual be- comes eligible is:The applicable percentage shall be: Before calendar year 2000 ................................................ 50 percent Calendar year 2000 ........................................................... 49 percent Calendar year 2001 ........................................................... 48 percent Calendar year 2002 ........................................................... 47 percent Calendar year 2003 ........................................................... 46 percent Calendar year 2004 ........................................................... 45 percent Calendar year 2005 ........................................................... 44 percent Calendar year 2006 ........................................................... 43 percent Calendar year 2007 ........................................................... 42 percent Calendar year 2008 ........................................................... 41 percent Calendar year 2009 ........................................................... 40 percent Calendar year 2010 ........................................................... 39 percent Calendar year 2011 ........................................................... 38 percent Calendar year 2012 ........................................................... 37 percent Calendar year 2013 ........................................................... 36 percent Calendar year 2014 ........................................................... 35 percent Calendar year 2015 ........................................................... 34 percent After calendar year 2015 .................................................. 33 percent.’’.

3 ‘‘(B) For purposes of subparagraph (A)—

4 ‘‘(i) an individual shall be treated as eligible for

5 a husband’s insurance benefit if such individual

6 meets the requirements of subparagraphs (B), (C),

7 and (D) of paragraph (1), and

8 ‘‘(ii) in determining when an individual becomes

9 eligible for a husband’s insurance benefit, any break

10 in eligibility of less than 12 consecutive months shall

11 not be taken into account.’’.

Æ