Protecting and Preserving Social Security Act

Key Points

• The bill creates a new Consumer Price Index for Elderly Consumers (CPI-E) to calculate Social Security cost-of-living adjustments. This index tracks spending patterns of Americans 62 and older, which tends to weight healthcare and housing more heavily, likely resulting in slightly larger annual benefit increases for retirees and disability recipients.
• The bill phases out the Social Security tax cap over seven years (2026-2032). Currently, workers only pay Social Security taxes on roughly the first $170,000 of earnings. Under this bill, more and more of high earners' income above the cap would be taxed each year, until by 2032 there is no cap at all.
• High earners who pay more in Social Security taxes would eventually earn slightly higher benefits through a new "surplus earnings" formula. However, the benefit rate on these surplus earnings is very low (3% and 0.25%), meaning wealthy workers get much less back per dollar than lower-income workers do.
• The bill protects people on Supplemental Security Income (SSI) and Medicaid from losing eligibility because of the higher Social Security payments. Any increase in monthly benefits caused by using the CPI-E will not count as income or resources when determining SSI or Medicaid eligibility.