Overview
Title
To improve the retirement security of American families by increasing Social Security benefits for current and future beneficiaries while making Social Security stronger for future generations.
ELI5 AI
The bill S. 5017 wants to give older people in America more money when they stop working by changing the rules on how much they get and getting money from a new tax. It also tries to make sure this extra money doesn't take away their other help like healthcare, but some parts of the plan are a bit tricky and might need more explanation to understand.
Summary AI
The bill, S. 5017, aims to improve the retirement security of American families by increasing Social Security benefits. It proposes adjustments to the way benefits are calculated, lifts the minimum benefits for long-term low earners, and eliminates waiting periods for disability benefits. Additionally, the bill introduces a new tax on investment gains to help fund these enhancements and ensures that the increased benefits do not affect eligibility for programs like Supplemental Security Income (SSI), Medicaid, and the Children's Health Insurance Program (CHIP).
Published
Keywords AI
Sources
Bill Statistics
Size
Language
Complexity
AnalysisAI
General Summary of the Bill
The proposed bill, titled the "Safeguarding American Families and Expanding Social Security Act of 2024," seeks to enhance the retirement security of American families. It aims to increase Social Security benefits for both current and future beneficiaries while making the Social Security system stronger for future generations. The bill introduces several key changes, including adjustments to the taxable income limits, updates to the formula for calculating benefits, increases for long-term beneficiaries, provisions for caregivers, and modifications to tax structures.
Summary of Significant Issues
Among the notable issues inherent in this bill is the introduction of the Consumer Price Index for Elderly Consumers. While promising better alignment of benefit increases with the actual cost of living for retirees, the move lacks a detailed fiscal analysis, potentially impacting federal budgets significantly. Additionally, the complexity in defining terms such as "long-term eligible individuals" and "qualifying months" for caregivers could result in confusion, restricting accessibility to benefits intended for older caregivers and those who provide extensive care to dependents.
Raising the tax rate on investment gains from 3.8% to 6.8% is another major aspect. Not only does this lack clear reasoning, but it may also impact taxpayers significantly and alter investment behaviors, influencing the broader economy. The complexity surrounding the recalculation of benefits could likewise challenge beneficiaries' understanding of entitlements, particularly due to potential exclusions and intricate formulas for primary insurance amounts.
Broad Public Impact
For the general public, ensuring more robust and reliable Social Security benefits is crucial, especially as the cost of living continues to rise. This bill attempts to align benefits more closely with the specific needs of the elderly population, potentially providing better financial stability for retirees. By addressing caregivers' contributions, the bill also acknowledges the indirect economic value provided by those caring for dependents without compensation.
However, the complicated nature of some provisions might pose challenges. The increased complexity surrounding taxable income determinations and insurance calculations could lead to confusion and potential compliance difficulties for individuals and employers alike. Furthermore, the potential strain on budgets due to increased cost-of-living adjustments and higher Social Security benefits may eventually necessitate policy revisions or adjustments.
Specific Stakeholder Impact
For retirees and beneficiaries, the bill offers potential for increased financial support. The introduction of deemed wages for caregivers acknowledges their invaluable role, potentially bolstering their Social Security benefits. Nevertheless, the intricacies in eligibility definitions may have unintended negative consequences, making it difficult for stakeholders to navigate and fully benefit from the provisions.
Taxpayers and investors are likely to experience the effects of increased taxes on investment gains. While this could lead to greater revenues for Social Security funding, it may also discourage investment, impacting economic growth. Employers and businesses might also face challenges adapting to new taxable income determinations, potentially influencing labor costs and workforce strategies.
Overall, while the bill is well-intentioned and aimed at fortifying the Social Security system, its success depends on careful implementation and the ability to clearly communicate and manage its complexities to prevent any adverse effects on the populace.
Financial Assessment
The proposed bill S. 5017 introduces a range of financial mechanisms aimed at enhancing the Social Security system. The financial implications of the bill are varied, affecting both the benefits being provided to individuals and the manner in which these benefits are funded.
Adjustments to Benefit Calculations
One of the significant financial changes proposed is the adjustment of the primary insurance amount formula to include a 5 percent increase of surplus average indexed monthly earnings. This aims to increase the benefits for certain retirees. However, as noted in the issues, such modifications can lead to misunderstandings about how benefits are calculated, posing long-term financial implications if not communicated effectively. The complexity stems from the introduction of new terms like "surplus average indexed monthly earnings," which could confuse beneficiaries struggling to understand their entitlements.
Minimum Benefits Increase
The bill proposes to increase minimum benefits for lifetime low earners. The benefits are based on a scale determined by the number of years worked, starting at 6.25 percent for 11 years of work, escalating to 125 percent for 30 or more years. This aims to reward long-term low earners by lifting them above the poverty threshold. The calculated benefits are dependent on the annual poverty guideline for each year, adjusted by the national wage index, which could lead to administrative complexities as noted in the issues.
Cost-of-Living Adjustments
The introduction of a new measure, the "Consumer Price Index for Elderly Consumers," is intended to manage cost-of-living adjustments (COLAs). This index is designed to more accurately reflect the spending patterns of the elderly, potentially increasing benefits more than standard indices would. Issues arise with the potential for increased government spending, and as highlighted, these adjustments lack a precise fiscal impact analysis which could lead to budgetary challenges.
Tax on Investment Gains
To support these enhancements, the bill proposes increasing the tax on investment gains from 3.8 percent to 6.8 percent. This is intended to generate additional revenue to fund the expanded benefits. However, such an increase could affect investment behaviors and overall economic activity. It raises concerns about the economic impact, especially without a clear rationale presented for why this specific rate was chosen.
Support for Caregivers
The bill also acknowledges the unpaid contributions of caregivers by ensuring they receive deemed wages. Caregivers providing unpaid care to dependent relatives will receive credit for a deemed wage, which is 50 percent or 100 percent of the national average wage index, based on the dependency level of the relative. This mechanism is essential for enhancing future Social Security benefits for caregivers, but the complexity of the deemed wages criteria and required documentation presents potential barriers and compliance burdens.
Administrative and Implementation Costs
Several sections of the bill, including those related to COLAs and recalibrations of insurance benefits, imply a need for administrative recalibration. The open-ended appropriations authorized for implementing the new Consumer Price Index for Elderly Consumers underscore the potential for unchecked federal spending, as identified in the issues. Without a defined budget cap, expenditures related to the development and maintenance of this index could escalate.
In summary, while the financial allocations in the bill are designed to enhance Social Security benefits and address various deficiencies in the current system, they introduce complexities and potential challenges related to budgetary impacts and administrative execution. The effectiveness of these changes will largely depend on clear communication, efficient implementation, and a careful balancing of the fiscal implications.
Issues
The bill mandates significant changes in the cost-of-living adjustments for Social Security benefits by introducing a new Consumer Price Index for Elderly Consumers, which may increase spending but lacks precise fiscal impact analysis and could significantly impact federal budgets. (Section 5)
The inclusion and exclusion criteria for deemed wages and 'qualifying months' for caregivers of dependent relatives might complicate understanding for ordinary caregivers and potentially limit benefits for older caregivers. This complexity also raises concerns about fraud and burden due to documentation requirements. (Section 6)
The significant increase in tax rate on investment gains from 3.8% to 6.8% could heavily impact taxpayers and investment behavior, raising potential concerns about economic effects and lack of clear rationale for this increase. (Section 9)
The bill proposes an increase in Social Security benefits for individuals with a long-term eligibility, but the complex definition of 'long-term eligible individual' based on age or benefits months might cause confusion about eligibility and timing, potentially delaying needed benefits. (Section 4)
The adjustments to the primary insurance amount formula, especially the complex inclusion of surplus earnings, could lead to misunderstandings about how benefits are calculated and have long-term financial implications without clear communication of outcomes. (Section 3)
Eliminating the waiting period for disability and surviving spouse benefits is technically challenging to understand and lacks a financial impact analysis, which might lead to concerns about possible unfunded liabilities. (Section 8)
Determining taxable wages and self-employment income above the contribution and benefit base involves a complicated percentage reduction schedule that could be difficult to understand, potentially leading to compliance challenges for individuals and employers. (Section 2)
The bill authorizes open-ended appropriations for the implementation of the Consumer Price Index for Elderly Consumers, which could lead to unchecked expenditures without a defined budget cap. (Section 5)
There is a potential for administrative complexity in recomputing insurance amounts for beneficiaries before November 2024, without a clear indication of administrative costs or beneficiary impacts. (Section 7)
Holding SSI, Medicaid, and CHIP beneficiaries harmless involves referencing multiple Social Security Act titles without context, which may be unclear and confusing for those unfamiliar with these references. (Section 10)
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title; table of contents Read Opens in new tab
Summary AI
The "Safeguarding American Families and Expanding Social Security Act of 2024" lays out various sections aimed at modifying Social Security, including adjusting taxable income caps, benefit calculations, providing increases for long-term beneficiaries, and ensuring protections for low earners and caregivers. It also addresses areas like eliminating the waiting period for certain disability benefits and taxing investment gains.
2. Determination of taxable wages and self-employment income above contribution and benefit base after 2024 Read Opens in new tab
Summary AI
The section outlines amendments to the Internal Revenue Code and the Social Security Act to determine the taxable wages and self-employment income above certain thresholds after 2024. Starting in 2025, the applicable percentage of this income that is taxable begins at 80% and decreases by 20 percentage points each year until it reaches 0% from 2029 onwards.
3. Adjustments to primary insurance amount formula and inclusion of surplus earnings for benefit determinations Read Opens in new tab
Summary AI
This section outlines changes to the Social Security Act's formula for calculating primary insurance amounts by increasing the percentage used to calculate benefits for lower earnings, adding a calculation for surplus earnings, and adjusting bend points. It also introduces new rules for recalculating existing benefits and defines terms related to basic and surplus average indexed monthly earnings, with these changes taking effect for new beneficiaries after 2029.
Money References
- â (1) IN GENERAL.âSection 215(a)(1)(A) of the Social Security Act (42 U.S.C. 415(a)(1)(A)) is amendedâ (A) in clauses (i), (ii), and (iii), by inserting âbasicâ before âaverage indexed monthly earningsâ each place it appears; (B) in clause (ii), by striking âandâ at the end; (C) in clause (iii), by adding âandâ at the end; and (D) by inserting after clause (iii) the following new clause: â(iv) 5 percent of the individualâs surplus average indexed monthly earnings,â. (2) BEND POINT ADJUSTMENTS.âSection 215(a)(1)(B) of such Act (42 U.S.C. 415(a)(1)(B)) is amendedâ (A) in clause (i), by inserting âFor individuals who initially become eligible for old-age or disability insurance benefits, or who die (before becoming eligible for such benefits), in the calendar year 2025, the amount established for purposes of clause (ii) of subparagraph (A) shall be $6,300.â
- (C) Each amount determined under subparagraph (B) shall be rounded to the nearest $1, except that any amount so established which is a multiple of $0.50 but not of $1 shall be rounded to the next higher $1.
4. Increase in benefit amounts for long-term eligible individuals Read Opens in new tab
Summary AI
The section amends the Social Security Act to increase monthly benefits by 5% for individuals who are long-term eligible, defined as those who are 82 years old or have received benefits for 240 months. It also outlines conditions for what counts as a benefit month and specifies exclusions, with the change applying to benefits after 2029.
5. Computation of cost-of-living increases for Social Security benefits; consumer price index for elderly consumers Read Opens in new tab
Summary AI
The bill amends the Social Security Act to adjust benefits for seniors using a new measurement called the "Consumer Price Index for Elderly Consumers," which reflects spending by those of retirement age. It mandates that this index be used to calculate cost-of-living increases in Social Security benefits starting in 2025 and authorizes funding for its implementation.
6. Deemed wages for caregivers of dependent relatives Read Opens in new tab
Summary AI
The bill introduces a provision amending the Social Security Act, allowing caregivers who provide at least 80 hours of unpaid care per month to dependent relatives, such as young children or chronically dependent adults, to receive deemed wages to boost their Social Security benefits. This applies after the enactment of the Safeguarding American Families and Expanding Social Security Act of 2024, and certain regulations and application procedures will be established by the Social Security Commissioner to ensure the proper administration of these benefits.
235. Deemed wages for caregivers of dependent relatives Read Opens in new tab
Summary AI
This section establishes how caregivers of dependent relatives, who provide care without being paid, can receive deemed wages for their caregiving months for Social Security purposes. It includes definitions of key terms like "qualifying month," "dependent relative," and "chronically dependent individual," as well as specifying how much deemed wage an individual could be credited per month based on their caregiving situation and other employment.
7. Increase in minimum benefit for lifetime low earners based on years in the workforce Read Opens in new tab
Summary AI
This section of the bill aims to increase the minimum Social Security benefits for people who have spent a long time in the workforce. It proposes that starting in 2025, if someone has worked for more than 10 years, their benefits should not be below the poverty level calculated for 2024, adjusted based on the national average wage index, with specific percentages applied based on the number of years they have worked.
Money References
- (a) In general.âSection 215(a)(1) of the Social Security Act (42 U.S.C. 415(a)(1)) is amendedâ (1) by redesignating subparagraph (D) as subparagraph (E); and (2) by inserting after subparagraph (C) the following new subparagraph: â(D)(i) Effective with respect to the benefits of individuals who become eligible for old-age insurance benefits or disability insurance benefits (or die before becoming so eligible) after 2024, no primary insurance amount computed under subparagraph (A) may be less than the greater ofâ â(I) the minimum monthly amount computed under subparagraph (C); or â(II) in the case of an individual who has more than 10 years of work (as defined in clause (iv)(I)), the alternative minimum amount determined under clause (ii). â(ii)(I) The alternative minimum amount determined under this clause is the applicable percentage of 1â12 of the annual dollar amount determined under clause (iii) for the year in which the amount is determined. â(II) For purposes of subclause (I), the applicable percentage is the percentage specified in connection with the number of years of work, as set forth in the following table:âIf the number of yearsThe applicable of work is:percentage is:116.25 percent1212.50 percent1318.75 percent1425.00 percent1531.25 percent1637.50 percent1743.75 percent1850.00 percent1956.25 percent2062.50 percent2168.75 percent2275.00 percent2381.25 percent2487.50 percent2593.75 percent26100.00 percent27106.25 percent28112.50 percent29118.75 percent30 or more125.00 percent.
- â(iii) The annual dollar amount determined under this clause isâ â(I) for calendar year 2025, the poverty guideline for 2024; and â(II) for any calendar year after 2025, the annual dollar amount for 2025 multiplied by the ratio ofâ â(aa) 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, to â(bb) the national average wage index (as so defined) for 2023. â(iv) For purposes of this subparagraphâ â(I) the term âyear of workâ means, with respect to an individual, a year to which 4 quarters of coverage have been credited based on such individualâs wages and self-employment income; and â(II) the term âpoverty guideline for 2023â means the annual poverty guideline for 2023 (as updated annually in the Federal Register by the Department of Health and Human Services under the authority of section 673(2) of the Omnibus Budget Reconciliation Act of 1981) as applicable to a single individual.â.
8. Elimination of disability waiting period for disability insurance benefits and surviving spouse benefits Read Opens in new tab
Summary AI
The bill eliminates the waiting period for receiving disability insurance benefits and benefits for surviving spouses under the Social Security Act. These changes apply to applications filed after the enactment of this law.
9. Tax on investment gain Read Opens in new tab
Summary AI
The section proposes to increase the tax on investment gains from 3.8% to 6.8%, update the heading of a tax chapter to include âSocial Security,â amend wording in the Social Security Act by changing âclauseâ to âparagraph,â and allocate a portion of these taxes to the Federal Old-Age and Survivors Insurance Trust Fund, with changes beginning in the year 2025.
10. Holding SSI, Medicaid, and CHIP beneficiaries harmless Read Opens in new tab
Summary AI
The section ensures that individuals receiving Supplemental Security Income (SSI), Medicaid, or Children's Health Insurance Program (CHIP) benefits are not negatively affected by changes. It does this by keeping their Social Security benefit calculations at levels that existed before the new law was enacted.