La Follette School Professor Pam Herd presented her winning proposal in AARP’s Policy Innovation Challenge during a forum convened by the National Academy of Social Insurance and AARP on October 19. The day-long event in Washington, D.C., explored new ideas in Social Security policy.
Herd, principal investigator of the Wisconsin Longitudinal Study, collaborated with La Follette School Professor Tim Smeeding, Melissa Favreault of the Urban Institute, and Professor Madonna Harrington Meyer of Syracuse University on A Targeted Minimum Benefit Plan: A New Proposal to Reduce Poverty among the Elderly.
Their minimum benefit plan (MBP)—modeled after the Canadian minimum benefit for the elderly and the United States’ Earned Income Tax Credit – has four key features:
- Eligibility based on income adjusted for marital status as linked to poverty income thresholds
- A minimum benefit guarantee of 100 percent of the poverty line and a general income exclusion of $125 per month for all other income sources (earnings, pensions, property income)
- Combined payments with the Old-Age and Survivors Insurance Trust Fund, and automatic annual eligibility determination through the income tax system
- No automatic passport to Medicaid as with Social Security, and no impact on Medicaid eligibility
The MBP, payable at full retirement age (66 or 67), would be available to those workers with at least 20 years of U.S. residency and 10 years of payroll tax contributions whose income fell below 100 percent of the poverty level.
Herd spoke during a session on improving benefits for low-lifetime earners with Kenneth Couch of the University of Connecticut and Elizabeth Johns of the University of Maine. Other sessions addressed retirement security in an era of increasing and disparate longevity, providing retirement security to caregivers and to workers in a changing workforce, and ensuring adequate revenue for Social Security.
The National Academy of Social Insurance is a nonprofit, nonpartisan organization made up of the nation’s leading experts on social insurance. Its mission is to advance solutions to challenges facing the nation by increasing public understanding of how social insurance contributes to economic security.