S.O.S. Act of 2016

To amend title II of the Social Security Act to improve solvency and stability for future generations. 1. Short title This Act may be cited as the S.O.S. Act of 2016 2. Increase in contribution and benefit base (a) In general Section 230 of the Social Security Act ( 42 U.S.C. 430 (1) in subsection (a), by striking subsection (b) or (c) this section (2) in subsection (b), by inserting with respect to remuneration paid (and taxable years beginning) in each calendar year before 2017 shall (subject to subsection (c)) (3) by redesignating subsection (d) as subsection (f); and (4) by inserting after subsection (c) the following: (d) (1) The amount of such contribution and benefit base with respect to remuneration paid (and taxable years beginning) in each calendar year after 2016 shall (subject to subsection (e)) be determined by the Commissioner (using projections made in advance of such year by the Chief Actuary of the Social Security Administration based on the most recent annual report of the Board of Trustees) such that the percentage of the total earnings for all workers that are taxable under sections 1401 or 3101 of the Internal Revenue Code of 1986 is equal to 90 percent for each such calendar year. (2) In making the determination under paragraph (1), the Commissioner may enter into agreements with the Secretary of Labor and the Commissioner of Internal Revenue to share any information necessary to carry out such paragraph. (e) For purposes of this section, and for purposes of determining wages and self-employment income under sections 209, 211, 213, and 215 of this Act and sections 1402, 3121, 3122, 3125, 6413, and 6654 of the Internal Revenue Code of 1986, the contribution and benefit base (1) in 2017 shall be $156,550; (2) in 2018 shall be $194,600; (3) in 2019 shall be $232,650; (4) in 2020 shall be $270,700; and (5) in 2021 shall be $308,750. For purposes of determining under subsection (b) the contribution and benefit base . (b) Effective date The amendments made by subsection (a) shall apply to determinations made with respect to the contribution and benefit base for calendar years after 2016. 3. Modification of primary insurance amount formula; inclusion of surplus earnings (a) Inclusion of surplus average indexed monthly earnings in determination of primary insurance amounts (1) In general Section 215(a)(1)(A) of the Social Security Act ( 42 U.S.C. 415(a)(1)(A) (A) in clauses (i), (ii), and (iii), by inserting basic average indexed monthly earnings (B) in clause (ii), by striking and (C) in clause (iii), by inserting and (D) by inserting after clause (iii) the following: (iv) 2.5 percent of the individual’s surplus average indexed monthly earnings. . (b) Basic AIME and surplus AIME (1) Basic AIME Section 215(b)(1) of such Act ( 42 U.S.C. 415(b)(1) (A) by inserting basic average (B) in subparagraph (A), by striking paragraph (3) paragraph (3)(A) to the extent such total does not exceed the amount established for purposes of this clause by paragraph (4) (2) Surplus AIME (A) In general Section 215(b)(1) of such Act (as amended by paragraph (1)) is amended— (i) by redesignating subparagraphs (A) and (B) as clauses (i) and (ii), respectively; (ii) by inserting (A) (b)(1) (iii) by adding at the end the following new subparagraph: (B) (i) An individual’s surplus average indexed monthly earnings shall be equal to the quotient obtained by dividing— (I) the total (after adjustment under paragraph (3)(B)) of such individual’s surplus earnings (determined under clause (ii)) for such individual’s benefit computation years (determined under paragraph (2)), by (II) the number of months in those years. (ii) For purposes of clause (i) and paragraph (3)(B), an individual’s surplus earnings for a benefit computation year are the total of such individual’s wages paid in and self-employment income credited to such benefit computation year, to the extent such total (before adjustment under paragraph (3)(B))— (I) exceeds the amount established for purposes of subparagraph (A)(i) by paragraph (4), and (II) does not exceed the contribution and benefit base for such year. . (B) Conforming amendment The heading for section 215(b) of such Act is amended by striking Average Indexed Monthly Earnings Basic Average Indexed Monthly Earnings; Surplus Average Indexed Monthly Earnings (3) Adjustment of surplus earnings for purposes of determining surplus AIME Section 215(b)(3) of such Act ( 42 U.S.C. 415(b)(3) (A) in subparagraph (A), by striking subparagraph (B) subparagraph (C) and determination of basic average indexed monthly income paragraph (2) (B) by redesignating subparagraph (B) as subparagraph (C); and (C) by inserting after subparagraph (A) the following new subparagraph: (B) For purposes of determining under paragraph (1)(B) an individual’s surplus average indexed monthly earnings, the individual’s surplus earnings (described in paragraph (2)(B)(ii)) for a benefit computation year shall be deemed to be equal to the product of— (i) the individual’s surplus earnings for such year (as determined without regard to this subparagraph), and (ii) the quotient described in subparagraph (A)(ii). . (4) Wage indexing in determination of surplus earnings Section 215(b) of such Act ( 42 U.S.C. 415(b) (A) by redesignating paragraph (4) as paragraph (5); and (B) by inserting after paragraph (3) the following: (4) The amount established for purposes of paragraph (1)(A)(i) shall be— (A) for individuals who initially become eligible for old-age or disability insurance benefits, or who die (before becoming so eligible), in calendar year 2017, $118,500, and (B) for individuals who initially become eligible for old-age or disability insurance benefits, or who die (before becoming so eligible), in any calendar year after 2017, the product of $118,500 and the quotient obtained by dividing— (i) the national average wage index (as defined in section 209(k)(1)) for the second calendar year preceding the calendar year for which the determination is made, by (ii) the national average wage index (as so defined) for 2015. . (c) Reduction of third bend point factor (1) In general Section 215(a)(1)(A)(iii) of the Social Security Act ( 42 U.S.C. 415(a)(1)(A)(iii) 15 percent 5 percent (2) Effective date; application rule The amendment made by paragraph (1) shall apply with respect to computations or recomputations of primary insurance amounts made on or after January 1, 2017, except that section 215(a)(1)(A)(iii) of the Social Security Act shall be applied by making the following substitutions for 5 percent (A) for calendar year 2017, by substituting 13 percent (B) for calendar year 2018, by substituting 11 percent (C) for calendar year 2019, by substituting 9 percent (D) for calendar year 2020, by substituting 7 percent (d) Effective date The amendments made by this section shall apply with respect to individuals who initially become eligible for old-age or disability insurance benefits under title II of the Social Security Act, or who die (before becoming eligible for such benefits), in any calendar year after 2016. 4. Increase in retirement age (a) In general Section 216(l) of the Social Security Act ( 42 U.S.C. 416(l) (1) in paragraph (1)— (A) in subparagraph (D), by striking and (B) in subparagraph (E), by striking , 67 years of age. and before January 1, 2023, 67 years of age; (C) by adding at the end the following: (F) with respect to an individual who attains early retirement age after December 31, 2022, and before January 1, 2035, 67 years of age plus the number of months in the age increase factor (as determined under paragraph (3)) for the calendar year in which such individual attains early retirement age; (G) with respect to an individual who attains early retirement age in any calendar year after 2034, the longevity indexed retirement age applicable for individuals who attain early retirement age in such calendar year (as determined under paragraph (4)). ; and (2) in paragraph (3)— (A) by striking subparagraph (B) or (D) subparagraph (B), (D), or (F) (B) by adding at the end the following: (C) With respect to an individual who attains early retirement age in the 12-year period consisting of the calendar years 2023 through 2034, the age increase factor shall be equal to two-twelfths of the number of months in the period beginning with January 2023 and ending with December of the year in which the individual attains early retirement age. ; (3) by adding at the end the following: (4) (A) The longevity indexed retirement age applicable for individuals who attain early retirement age in a calendar year after 2034 is— (i) in the case of calendar years 2035 through 2044, 69 years of age plus one twenty-fourth of the number of months in the period beginning with January 2035 and ending with December of the year in which the individual attains early retirement age, rounded down to the nearest month; and (ii) in the case of a calendar year after 2044, the appropriate number of years of age (including any fraction rounded to the nearest month) determined by the Commissioner such that the ratio of— (I) the number of months by which the average number of years (including any fraction rounded to the nearest month) in life expectancy for an individual attaining early retirement age in such calendar year (as determined under subparagraph (C)) exceeds such appropriate number of years of age, to (II) the number of months by which such appropriate number of years of age exceeds 20 years of age, is equal to the baseline retirement-to-employment ratio (described in subparagraph (B)). (B) For purposes of subparagraph (A), the baseline retirement-to-employment ratio is equal to the ratio of— (i) the number of months by which the average number of years (including any fraction rounded to the nearest month) in life expectancy for an individual attaining early retirement age in 2044 (as determined under subparagraph (C)) exceeds 69 years of age and 5 months, to (ii) 49 years of age and 5 months. (C) At the beginning of each 10-year period beginning with the 10-year period that begins on January 1, 2044, the Commissioner of Social Security shall determine (using generally accepted actuarial principles and based on the intermediate assumptions in the most recent Trustees Report and such other data as the Commissioner determines appropriate) and publish in the Federal Register— (i) an estimate of the average number of years (including any fraction rounded to the nearest month) in life expectancy for an individual attaining early retirement age in each year of such 10-year period; and (ii) the longevity indexed retirement age applicable for individuals who attain early retirement age in each year (after 2044) of such 10-year period (as determined under subparagraph (A)). . (b) Extension of maximum age for entitlement to delayed retirement credit Section 202(w)(2)(A) of such Act ( 42 U.S.C. 402(w)(2)(A) (1) by striking prior to the month in which such individual attained age 70, and prior to the later of— (2) by adding at the end the following: (i) the month in which such individual would attain age 70, or (ii) the month which ends 36 months after the end of the month in which such individual attained retirement age (as defined in section 216(l)), and . (c) Extension of maximum age for voluntary suspension of benefits Section 202(z)(1)(A)(ii) of such Act ( 42 U.S.C. 402(z)(1)(A)(ii) the month in which the individual attains the age of 70 the later of the month in which the individual attains the age of 70 or the month which ends 36 months after the end of the month in which such individual attained retirement age (as defined in section 216(l)) 5. Cost-of-living adjustments (a) Change in consumer price index (1) Computation of cost-of-living adjustments Section 215(i)(1) of the Social Security Act ( 42 U.S.C. 415(i)(1) (A) in subparagraph (G), by striking the period at the end and inserting ; and (B) by adding at the end the following new subparagraph: (H) the term Consumer Price Index . (2) Conforming amendment Section 215(i)(4) of such Act ( 42 U.S.C. 415(i)(4) and by section 4 of the S.O.S. Act of 2016 1986 (3) Application to pre-1979 law Section 215(i)(1) of the Social Security Act, as in effect in December 1978 and as applied in certain cases under the provisions of such Act as in effect after December 1978, is amended— (A) in subparagraph (B), by striking and (B) in subparagraph (C), by striking the period at the end and inserting ; and (C) by adding at the end the following new subparagraph: (D) the term Consumer Price Index . (b) No effect on adjustments under other laws Section 215(i) of such Act ( 42 U.S.C. 415(i) (7) Any provision of law (other than in this title) which provides for adjustment of an amount based on a change in benefit amounts resulting from a determination made under this subsection shall be applied and administered without regard to the amendments made by section 4 of the S.O.S. Act of 2016 . (c) Effective date The amendments made by this section shall apply to determinations made with respect to cost-of-living computation quarters ending on or after September 30, 2017. 6. Minimum social security benefit (a) In general Section 215 of the Social Security Act 42 U.S.C. 415 (j) Minimum monthly insurance benefit (1) Notwithstanding the preceding provisions of this section— (A) subject to paragraphs (4), (8), and (9), the primary insurance amount of any individual who is credited with greater than 10 years of coverage and who initially becomes eligible for old-age or disability insurance benefits or dies (before becoming eligible for such benefits) for a month beginning after December 31, 2016 (in this subsection referred to as a qualified individual (i) the primary insurance amount determined under this section (without regard to this subsection), or (ii) the minimum monthly insurance benefit determined under paragraph (2), and (B) any recomputation of the primary insurance amount of a qualified individual shall not result in a primary insurance amount less than the primary insurance amount as in effect immediately prior to such recomputation. (2) For purposes of this subsection, the term minimum monthly insurance benefit 1/12 (3) For purposes of this subsection, subject to paragraph (4), the applicable percentage shall be equal to— (A) for a qualified individual who has 20 years of coverage or less, 100 percent reduced by 10 percentage points for each year of coverage less than 20; (B) for a qualified individual who has more than 20 years of coverage but less than 40 years of coverage, 125 percent reduced by 1.25 percentage points for each year of coverage less than 40; and (C) for a qualified individual who has 40 years of coverage or greater, 125 percent. (4) (A) In the case of an individual who initially becomes eligible for disability insurance benefits under section 223 before attaining age 62, or who dies before attaining age 62, in a month beginning after December 31, 2016, and who is credited with at least 5 years of coverage, the individual shall be treated as a qualified individual and the applicable percentage shall be 125 reduced by the number of percentage points determined under subparagraph (B) for each year of coverage of the qualified individual less than the number as determined under subparagraph (C). (B) The number of percentage points under this subparagraph shall be determined by— (i) dividing the number of the qualifying individual’s elapsed years (as defined in subsection (b)(2)(B)(iii)) by 40; (ii) multiplying the result under clause (i) by 20; and (iii) dividing 125 by the result under clause (ii) and rounding to the nearest one hundredth of 1 percentage point. (C) The number of years of coverage under this subparagraph shall be determined by multiplying the ratio determined under subparagraph (B)(i) by 30 and rounding to the next lower whole number. (5) For purposes of this subsection, a year of coverage is a calendar year for which an individual is credited with 4 quarters of coverage. (6) For purposes of this subsection— (A) for individuals who initially become eligible for old-age or disability insurance benefits or die (before becoming eligible for such benefits) in either 2017 or 2018, the term adjusted minimum benefit level (i) the weighted average of the Federal poverty threshold applicable to a family of 1 for the year before such year (as determined by the Bureau of the Census); and (ii) the applicable phase-in factor for such calendar year (as determined under paragraph (7)); and (B) for individuals who initially become eligible for old-age or disability insurance benefits or die (before becoming eligible for such benefits) in a year after 2018, the term adjusted minimum benefit level (i) the amount determined under subparagraph (A) for calendar year 2018, multiplied by the quotient described in subsection (b)(3)(A)(ii), except that the reference to the computation base year for which the determination is made 2016 (ii) the applicable phase-in factor for such calendar year (as determined under paragraph (7)). (7) For purposes of paragraph (6), the applicable phase-in factor shall be equal to— (A) for calendar year 2017, 40 percent; (B) for each calendar year during the period between 2018 through 2022, the applicable phase-in factor under this paragraph for the preceding year increased by 10 percentage points; and (C) for calendar year 2023 and each succeeding year, 100 percent. (8) The amount of the minimum monthly insurance benefit of any individual under this subsection shall be reduced (but not below zero) by an amount equal to any periodic benefit payable to such individual for such month under a pension, annuity, retirement, or similar fund or system which is based upon such individual's earnings for any service described in paragraphs (1) through (21) of section 210(a). (9) The provisions of this subsection shall not apply in the case of an individual— (A) whose primary insurance amount would otherwise be computed under subsection (a)(7); or (B) whose wife's insurance benefit or husband's insurance benefit under subsection (b) or (c) of section 202 is determined pursuant to subsection (b)(2)(A)(i)(II) or (c)(2)(A)(i)(II) of such section. . (b) Conforming amendment Section 202(a) of such Act ( 42 U.S.C. 402(a) section 215(a) section 215 7. Establishment of an increased benefit for beneficiaries on account of long-term eligibility (a) In general Section 202 of the Social Security Act ( 42 U.S.C. 402 (z) Increase in benefit amounts on account of long-Term eligibility (1) In the case of an individual who is a qualified beneficiary for a calendar year after 2016, the amount of any monthly insurance benefit of such qualified beneficiary under this section or section 223 for any month in such calendar year shall be increased in accordance with paragraph (3). (2) (A) For purposes of this subsection, the term qualified beneficiary (B) For purposes of this subsection, the applicable date of eligibility for an individual is the date on which the individual initially became eligible for monthly insurance benefits under subsection (a) or section 223. (3) (A) The increase required under paragraph (1) with respect to the monthly insurance benefit of an individual who is a qualified beneficiary for a calendar year shall be equal to the applicable percentage (specified for such benefit in subparagraph (B)) of the full increase amount for such calendar year (determined under subparagraph (C)). (B) The applicable percentage specified for a monthly insurance benefit under this subparagraph for a calendar year is the percentage specified, in connection with the number of years ending after the applicable date of eligibility for such individual and before such calendar year, in the following table: If the number of years is: The applicable percentage is: 20 20 percent 21 40 percent 22 60 percent 23 80 percent 24 or more 100 percent. (C) (i) Except as provided in clauses (ii) and (iii), the full increase amount determined under this subparagraph for a calendar year in connection with the monthly insurance benefit of a qualified beneficiary is a dollar amount equal to 5 percent of the amount of the old-age insurance benefit that would apply to a hypothetical individual if— (I) on January 1 of the calendar year in which occurred the applicable eligibility date with respect to such individual, such hypothetical individual were fully insured, attained retirement age (as defined in section 216(l)(2)) and were otherwise eligible for, and applied for, old-age insurance benefits; and (II) such hypothetical individual had earnings equal to the national average wage index (as described in section 209(k)(1)) for each year beginning with the year in which the individual attained the age of 22 through the year in which the individual attained the age of 62. (ii) (I) In the case of a monthly insurance benefit under subsection (b) or (c), the full increase amount determined under this subparagraph shall be one-half the amount determined under clause (i). (II) In the case of a monthly insurance benefit under subsection (d), (g), or (h), the full increase amount determined under this subparagraph shall be the percentage of the amount determined under clause (i) equal to the ratio which the amount of such benefit bears to the primary insurance amount (before the application of section 203(a)) of the individual on whose wages and self-employment income the monthly insurance benefit is based. (4) In the case of a qualified beneficiary who is entitled to two or more monthly insurance benefits under this title for the same month— (A) the earliest applicable date of eligibility for such beneficiary with respect to such benefits shall be treated as the applicable date of eligibility for such beneficiary for the purposes of this subsection; and (B) such beneficiary shall be entitled to an increase with respect only to one such benefit. (5) This subsection shall be applied to monthly insurance benefits after any increase under subsection (w) and any applicable reductions and deductions under this title. (6) For purposes of this subsection, in the case of any individual who would otherwise have attained the status of a qualified beneficiary prior to January 1, 2017, such individual shall be treated as having attained such status on such date. . (b) Effective date The amendments made by this section shall apply to benefits payable for months beginning after December 31, 2016. 8. Increase in benefit computation years (a) In general Section 215(b)(2) of the Social Security Act 42 U.S.C. 415(b)(2)(A)(I) (1) in subparagraph (A)(i), by striking 5 years the applicable number of years specified in subparagraph (C)(i) (2) in subparagraph (A)(ii)— (A) by striking one-fifth the applicable fraction specified in subparagraph (C)(ii) (B) by striking 5 years. the applicable number of years specified in subparagraph (C)(i). (3) by adding at the end of paragraph (2) the following new subparagraph: (C) (i) For purposes of clauses (i) and (ii) of subparagraph (A), the applicable number of years is the number of years set forth in the following table: If the calendar year in which the individual becomes eligible for the benefit involved, or dies (before becoming eligible for such benefit) is: The applicable number of years is: Before 2017 5 2017 4 2018 3 After 2018 2. (ii) For purposes of clause (ii) of subparagraph (A), the applicable fraction is the fraction set forth in the following table: If the calendar year in which the individual becomes eligible for disability insurance benefits is: The applicable fraction is: Before 2017 1/5 2017 1/6 2018 1/8 After 2018 1/12. . (b) Effective date The amendments made by subsection (a) shall apply with respect to individuals who become eligible for monthly insurance benefits (or who die before becoming so eligible) in any calendar year after 2016. 9. Protection of Social Security Trust Funds (a) Protection of Social Security Title III of the Congressional Budget Act of 1974 is amended by adding at the end the following new section: 316. Lock-Box for Social Security (a) Lock-Box for Social Security (1) Concurrent resolutions on the budget (A) In general It shall not be in order in the House of Representatives or the Senate to consider any concurrent resolution on the budget, or an amendment thereto or conference report thereon, that would set forth totals for any fiscal year with respect to the Social Security Trust Funds that are less than the totals of the Social Security Trust Funds for that fiscal year as calculated in accordance with a current services baseline. (B) Exception (i) Subparagraph (A) shall not apply to the extent that a violation of such subparagraph would result from an assumption in the resolution, amendment, or conference report, as applicable, of an increase in outlays or a decrease in revenues and disbursements relative to the baseline underlying that resolution for social security reform legislation for any such fiscal year. (ii) If a concurrent resolution on the budget, or an amendment thereto or conference report thereon, would be in violation of subparagraph (A) because of an assumption of an increase in outlays or a decrease in revenue relative to the baseline underlying that resolution for social security reform legislation for any such fiscal year, then that resolution shall include a statement identifying any such increase in outlays or decrease in revenues and disbursements. (2) Spending and tax legislation (A) In general It shall not be in order in the House of Representatives or the Senate to consider any bill, joint resolution, amendment, motion, or conference report if— (i) the enactment of that bill or resolution, as reported; (ii) the adoption and enactment of that amendment; or (iii) the enactment of that bill or resolution in the form recommended in that conference report, would cause the totals for any fiscal year covered by the most recently agreed to concurrent resolution on the budget with respect to the Social Security Trust Funds to be less than the totals of the Social Security Trust Funds for that fiscal year as calculated in accordance with the current services baseline. (B) Exception Subparagraph (A) shall not apply to social security reform legislation. (b) Enforcement For purposes of enforcing any point of order under subsection (a), the totals of the Social Security Trust Funds for a fiscal year shall be the levels set forth in the later of the report accompanying the concurrent resolution on the budget (or, in the absence of such a report, placed in the Congressional Record prior to the consideration of such resolution) or in the joint explanatory statement of managers accompanying such resolution. (c) Additional Content of Reports Accompanying Budget Resolutions and of Joint Explanatory Statements The report accompanying any concurrent resolution on the budget and the joint explanatory statement accompanying the conference report on each such resolution shall include the levels of the totals in the budget for each fiscal year set forth in such resolution and of the revenues and disbursements in the Social Security Trust Funds. (d) Definitions As used in this section, the term social security reform legislation For purposes of section 316(a) of the Congressional Budget Act of 1974, this Act constitutes social security reform legislation. (e) Waiver and Appeal Subsection (a) may be waived or suspended in the Senate only by an affirmative vote of three-fifths of the Members, duly chosen and sworn. An affirmative vote of three-fifths of the Members of the Senate, duly chosen and sworn, shall be required in the Senate to sustain an appeal of the ruling of the Chair on a point of order raised under this section. (f) Effective Date This section shall cease to have any force or effect upon the enactment of social security reform legislation. . (b) President’s budget (1) Protection of Social Security If the budget of the United States Government submitted by the President under section 1105(a) of title 31, United States Code, recommends totals for any fiscal year with respect to the Social Security Trust Funds that are less than the totals of the Social Security Trust Funds for that fiscal year as calculated in accordance with current services baseline, then it shall include a detailed proposal for social security reform legislation. (2) Effective Date Subsection (a) shall cease to have any force or effect upon the enactment of social security reform legislation as defined by section 316(d) of the Congressional Budget Act of 1974. (c) Conforming Amendment The table of contents set forth in section 1(b) of the Congressional Budget and Impoundment Control Act of 1974 is amended by adding after the item for section 315 the following: Sec. 316. Lock-box for social security. .

Summary: S.O.S. Act of 2016 This bill amends title II (Old Age, Survivors and Disability Insurance) (OASDI) of the Social Security Act to increase the contribution and benefit base for 2017 through 2019. The bill revises the computation of primary insurance amounts to include surplus average indexed monthly earnings (AIME) in determining them, adjust surplus earnings for purposes of determining the surplus AIME, and reduce the third bend point factor. The retirement age shall increase past 67 years by certain formulae. Cost-of-living adjustments shall involve the Chained Consumer Price Index for all Urban Consumers published by the Bureau of Labor Statistics of the Department of Labor. The bill formulates a minimum monthly insurance benefit, and establishes an increased benefit for beneficiaries on account of long-term eligibility, starting 20 years after they become eligible for monthly OASDI benefits. The bill revises a certain formula to increase benefit computation years for purposes of calculating primary OASDI insurance amounts. This bill amends the Congressional Budget Act of 1974 to make it out of order in the House of Representatives or the Senate to consider any: budget resolution that sets forth totals for any fiscal year regarding the Social Security Trust Funds that are less than the totals of the Social Security Trust Funds for that fiscal year as calculated in accordance with a current services baseline, or spending or tax legislation that would cause any totals to be less than the Funds totals for the covered fiscal year. The bill declares that this latter point of order shall not apply to Social Security reform legislation.