Bill Would Increase Certain Social Security Payments

The bill would increase Social Security payments for divorced spouses, enhance benefits for widows and widowers, and extend eligibility for children of retired, disabled or deceased workers. The additional benefits included in the RAISE Act would be offset by the application of a 2% payroll tax rate on annual earnings over $400,000—an offset that means Social Security will continue to be fully funded, according to a news release by Senator Mark Begich (D-Arkansas), who introduced the bill along with Senator Patty Murray (D-Washington).

“The RAISE Act would ensure that our Social Security system reflects the realities of today’s work force, and would strengthen benefits for struggling seniors—most commonly women—as well as disabled individuals and young adults who have faced serious hardship in their immediate families. At the same time, the RAISE Act would shore up the Social Security Trust fund to help make sure it is there for future generations of seniors, using an approach that protects middle class families and asks those who can most afford it to pay their fair share,” Murray said in a blog on her website.

Specifically, the RAISE Act:

• Enhances benefits for divorced spouses.  Under current law, the divorced spouse is only entitled to receive benefits under the former spouse’s earnings if she or he was married for 10 years. Beginning in 2016, the RAISE Act would allow those with less than 10 years of marriage to be eligible for benefits under the former spouse’s earnings. Eligibility would be phased in, so that those married less than 10 years would receive less than 100% of the spousal benefit. These partial benefits would gradually decrease in increments of 10% and phased out for those with less than five years of marriage. For example, those with nine years of marriage would receive 90%. The same formula will apply to survivors’ benefits for divorced spouses.

• Enhances benefits for widows and widowers. The RAISE Act would establish an alternative benefit for a surviving spouse where both husband and wife established insured status as retired workers. For the surviving spouse, the alternative benefit would equal 75% of the sum of the survivor’s own worker benefit and the Primary Insurance Amount (PIA) of the deceased spouse. The alternative benefit would be paid only if more than the current law benefit. This benefit would be available to surviving spouses on the rolls at the beginning of 2016 and those becoming eligible after 2016.

• Extends benefit eligibility for children of retired, disabled or deceased workers. This provision of the RAISE Act applies if the child is in high school, college, or vocational school. Under current law, minor children younger than 18, and high school students younger than 19 are entitled to benefits if they are the child of a retired, disabled or deceased worker. Beginning in 2016, this provision extends benefits for full-time students until the age of 23 if they are a child of a retired, disabled or deceased worker.

• Asks those who can most afford it to pay their fair share towards strengthening and shoring up the Social Security Trust Fund. Beginning in 2015, the RAISE Act would apply a 2% payroll tax rate on earnings greater than $400,000, with the threshold wage-indexed after 2015. The bill provides a corresponding credit for earnings in a secondary average indexed monthly earnings (AIME) formula for benefit computation.

The RAISE Act extends the life of the Social Security Trust Fund from 2033 to 2034, according to Murray.

Witnesses at a recent Senate hearing included benefit changes as Social Security reforms that could boost potential retirement income for workers (see “Reforming Social Security to Increase Workers’ Retirement Income”).

The Social Security Administration has released a report of estimates of the financial effects of the RAISE Act on Social Security Trust Funds. More information about the RAISE Act is here.