HR4968-119

202. Inclusion of surplus earnings in Social Security benefit formula 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; and by inserting after clause (iii) the following new clauses: 3 percent of the individual’s surplus average indexed monthly earnings to the extent such surplus average indexed monthly earnings do not exceed the excess of the amount established for purposes of this clause by subparagraph (B) over 1/12 of the contribution and benefit base for the last of such individual’s computation base years, and 0.25 percent of the sum of the individual’s surplus average indexed monthly earnings plus 1/12 of the contribution and benefit base for the last of such individual’s computation base years, to the extent such sum exceeds the amount established for purposes of clause (iv) by subparagraph (B). Section 215(a)(1)(B) of such Act (42 U.S.C. 415(a)(1)(B)) is amended— in clause (ii), by striking the amounts so established and inserting the amounts established for purposes of clauses (i) and (ii) of subparagraph (A); by redesignating clause (iii) as clause (v); in clause (v) (as redesignated), by inserting or (iv) after clause (ii); and by inserting after clause (ii) the following new clauses: For 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 2026, the amount established for purposes of clause (iv) of subparagraph (A) shall be $8,933. For individuals who initially become eligible for old-age or disability insurance benefits, or who die (before becoming eligible for such benefits), in any calendar year after 2026, the amount established for purposes of clause (iv) of subparagraph (A) shall equal the product of the amount established with respect to the calendar year 2026 under clause (iii) of this subparagraph 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, or if higher (and if such second calendar year is after 2026), the highest national average wage index (as so defined) for any calendar year before such second calendar year, by the national average wage index (as so defined) for 2024. 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 contribution and benefit base for the applicable year. 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 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). The amendments made by this section shall apply with respect to individuals who initially become eligible (within the meaning of section 215(a)(3)(B) of the Social Security Act) 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 2025. (iv)3 percent of the individual’s surplus average indexed monthly earnings to the extent such surplus average indexed monthly earnings do not exceed the excess of the amount established for purposes of this clause by subparagraph (B) over 1/12 of the contribution and benefit base for the last of such individual’s computation base years, and (v)0.25 percent of the sum of the individual’s surplus average indexed monthly earnings plus 1/12 of the contribution and benefit base for the last of such individual’s computation base years, to the extent such sum exceeds the amount established for purposes of clause (iv) by subparagraph (B).. (iii)For 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 2026, the amount established for purposes of clause (iv) of subparagraph (A) shall be $8,933. (iv)For individuals who initially become eligible for old-age or disability insurance benefits, or who die (before becoming eligible for such benefits), in any calendar year after 2026, the amount established for purposes of clause (iv) of subparagraph (A) shall equal the product of the amount established with respect to the calendar year 2026 under clause (iii) of this subparagraph and the quotient obtained by dividing— (I) (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, or (bb)if higher (and if such second calendar year is after 2026), the highest national average wage index (as so defined) for any calendar year before such second calendar year, by (II)the national average wage index (as so defined) for 2024.. (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)) exceeds the contribution and benefit base for such year.. (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)..