Republican presidential candidate Jeb Bush is proposing significant changes to Social Security and Medicare to keep the costly federal entitlement programs on solid financial footing.
Bush outlined his proposals on the website Medium.com on Tuesday, the day before the third Republican presidential debate, in Colorado.
Bush said he wants to gradually raise the retirement age for full benefits, adding one month each year, beginning in 2022 when the retirement age becomes 67 under current law. By 2034, the retirement age under his plan would be 68; by 2046 it would be 69. Currently, it's 66.
To encourage retirees to continue working, he would reduce benefits to those who want to retire early and increase benefits to those who work past their retirement age. He seeks to eliminate the $15,720 limit on income for working seniors already receiving Social Security. For those working beyond age 67, he proposes eliminating the 6.2 percent payroll tax.
Bush also said he would change the formula used to determine benefits by lowering monthly retirement checks to wealthier recipients. At the same time, he would increase to about $15,000 the minimum Social Security payment for people employed at least 30 years.
He also would lift the 10 percent limit employers can withhold from workers contributing to a 401(k) plan and help small businesses create those plans for employees.
"If we do not have an honest conversation about what it will take to protect Medicare and Social Security, we fail seniors and we fail the next generation of Americans," writes Bush.
On Medicare, Bush proposes a similar plan pushed by Wisconsin GOP Rep. Paul Ryan, expected to replace outgoing House Speaker John Boehner.
Bush proposes a "Medicare premium support" program to provide seniors with a fixed amount to pay for "guaranteed coverage options" to obtain traditional Medicare or purchase a private health insurance plan. Seniors could also choose a specialized insurance plan that targets medical conditions like diabetes or Alzheimer's.
Under his plan, Bush said he would increase "means-testing" to calculate premiums, lowering subsidies to wealthier retirees. A senior, for example, earning $160,000 a year would receive a 35 percent federal subsidy as compared with the current 50 percent subsidy.
He said the federal government would base its premium on the average price of private plans, and predicts it would lower premium costs by an average of 6 percent annually. He also would allow seniors to keep contributing to their tax-free Health Savings Accounts to cover out-of-pocket expenses.
Other GOP candidates, including New Jersey Gov. Chris Christie, have outlined changes to the expensive federal entitlement programs.
Social Security's retirement trust fund has enough money to pay full benefits until 2035. Medicare's giant trust fund for inpatient care won't be exhausted until 2030.
Nearly 60 million people receive Social Security benefits, including 42 million retired workers and dependents, 11 million disabled workers and 6 million survivors of deceased workers. Total enrollment is rising each year as baby boomers reach retirement age. About 55 million retirees and disabled people get Medicare.