Sec. 3. Modification of primary insurance amount formula; inclusion of surplus earnings
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Section 215(a)(1)(A) of the Social Security Act ( 42 U.S.C. 415(a)(1)(A) ) is amended— in clauses (i), (ii), and (iii), by inserting basic before average indexed monthly earnings each place it appears; in clause (ii), by striking and at the end; in clause (iii), by inserting and at the end; and by inserting after clause
(iii)the following: 2.5 percent of the individual’s surplus average indexed monthly earnings. . Section 215(b)(1) of such Act ( 42 U.S.C. 415(b)(1) ) is amended— by inserting basic before average ; and in subparagraph (A), by striking paragraph
(3)and inserting paragraph (3)(A) and by inserting before the comma the following: to the extent such total does not exceed the amount established for purposes of this clause by paragraph
(4). Section 215(b)(1) of such Act (as amended by paragraph (1)) is amended— by redesignating subparagraphs
(A)and
(B)as clauses
(i)and (ii), respectively; by inserting
(A)after (b)(1) ; and by adding at the end the following new subparagraph: An individual’s surplus average indexed monthly earnings shall be equal to the quotient obtained by dividing— 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 the number of months in those years. 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))— exceeds the amount established for purposes of subparagraph (A)(i) by paragraph (4), and does not exceed the contribution and benefit base for such year. . The heading for section 215(b) of such Act is amended by striking Average Indexed Monthly Earnings and inserting Basic Average Indexed Monthly Earnings; Surplus Average Indexed Monthly Earnings . Section 215(b)(3) of such Act ( 42 U.S.C. 415(b)(3) ) is amended— in subparagraph (A), by striking subparagraph
(B)and inserting subparagraph
(C)and by inserting and determination of basic average indexed monthly income after paragraph
(2); by redesignating subparagraph
(B)as subparagraph (C); and by inserting after subparagraph
(A)the following new subparagraph: 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— the individual’s surplus earnings for such year (as determined without regard to this subparagraph), and the quotient described in subparagraph (A)(ii). . Section 215(b) of such Act ( 42 U.S.C. 415(b) ) is amended— by redesignating paragraph
(4)as paragraph (5); and by inserting after paragraph
(3)the following: The amount established for purposes of paragraph (1)(A)(i) shall be— 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 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— 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 the national average wage index (as so defined) for 2015. . Section 215(a)(1)(A)(iii) of the Social Security Act ( 42 U.S.C. 415(a)(1)(A)(iii) ) is amended by striking 15 percent and inserting 5 percent . 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 for computations and recomputations made in the following calendar years: for calendar year 2017, by substituting 13 percent ; for calendar year 2018, by substituting 11 percent ; for calendar year 2019, by substituting 9 percent ; and for calendar year 2020, by substituting 7 percent . 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.
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Sec. 3
Modification of primary insurance amount formula; inclusion of surplus earnings
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