[Senate Report 108-176]
[From the U.S. Government Publishing Office]
Calendar No. 349
108th Congress Report
SENATE
1st Session 108-176
======================================================================
SOCIAL SECURITY PROTECTION ACT OF 2003
_______
October 29, 2003.--Ordered to be printed
_______
Mr. Grassley, from the Committee on Finance, submitted the following
R E P O R T
[To accompany H.R. 743]
together with
ADDITIONAL VIEWS
[Including cost estimate of the Congressional Budget Office]
The Committee on Finance, to which was referred the bill
(H.R. 743) to amend the Social Security Act and the Internal
Revenue Code of 1986 to provide additional safeguards for
Social Security and Supplemental Security Income beneficiaries
with representative payees, to enhance program protections, and
for other purposes, reports favorably thereon with an amendment
in the nature of a substitute and recommends that the bill, as
amended, to pass.
CONTENTS
Page
I. Summary, Background and Legislative History.....................3
A. Summary............................................. 3
B. Background and Need for Legislation................. 5
C. Legislative History................................. 8
II. Explanation of the Bill.........................................8
Title I--Protection of Beneficiaries.............................8
Subtitle A--Representative Payees...................... 8
Sec. 101. Authority to reissue benefits misused by
organizational representative payees........... 8
Sec. 102. Oversight of representative payees....... 9
Sec. 103. Disqualification from service as
representative payees of persons convicted of
offenses resulting in imprisonment for more
than 1 year or fleeing prosecution, custody, or
confinement.................................... 10
Sec. 104. Fee forfeiture in case of benefit misuse
by representative payees....................... 11
Sec. 105. Liability of representative payees for
misused benefits............................... 11
Sec. 106. Authority to redirect delivery of benefit
payments when a representative payee fails to
provide required accounting.................... 12
Sec. 107. Survey of use of payments by
representative payees.......................... 12
Subtitle B--Enforcement................................ 13
Sec. 111. Civil monetary penalty authority with
respect to wrongful conversions by
representative payees.......................... 13
Title II--Program Protections...................................13
Sec. 201. Civil monetary penalty authority with
respect to withholding of material facts....... 13
Sec. 202. Issuance by Commissioner of Social
Security of receipts to acknowledge submission
of reports of changes in work or earnings
status of disabled beneficiaries............... 14
Sec. 203. Denial of title II benefits to persons
fleeing prosecution, custody, or confinement,
and to persons violating probation or parole... 15
Sec. 204. Requirements relating to offers to
provide for a fee a product or service
available without charge from the Social
Security Administration........................ 16
Sec. 205. Refusal to recognize certain individuals
as claimant representatives.................... 17
Sec. 206. Penalty for corrupt or forcible
interference with administration of Social
Security Act................................... 17
Sec. 207. Use of symbols, emblems, or names in
reference to social security or medicare....... 18
Sec. 208. Disqualification from payment during
trial work period upon conviction of fraudulent
concealment of work activity................... 19
Sec. 209. Authority for judicial orders of
restitution.................................... 20
Sec. 210. Information for the administration of
provisions related to non-covered employment... 21
Sec. 211. Authority for cross-program recovery of
benefit overpayments........................... 22
Sec. 212. Prohibition of payment of title II
benefits to persons not authorized to work in
the United States.............................. 23
Title III--Attorney Representative Fee Payment System Improvemen24
Sec. 301. Cap on attorney assessments.............. 24
Sec. 302. GAO study of fee payment process for
claimant representatives....................... 25
Title IV--Miscellaneous and Technical Amendments................26
Subtitle A--Amendments Relating to the Ticket to Work
and Work Incentives Improvement Act of 1999........ 26
Sec. 401. Elimination of demonstration authority
sunset date.................................... 26
Sec. 402. Expansion of waiver authority available
in connection with demonstration projects
providing for reductions in disability
insurance benefits based on earnings........... 26
Sec. 403. Funding of demonstration projects
providing for reductions in disability
insurance benefits based on earnings........... 27
Sec. 404. Availability of Federal and State work
incentive services to additional individuals... 27
Sec. 405. Technical amendment clarifying treatment
of referrals under the Ticket to Work and Self-
Sufficiency Program............................ 28
Sec. 406. GAO study of Ticket to Work and Self-
Sufficiency Program............................ 29
Subtitle B--Miscellaneous Amendments................... 30
Sec. 411. Elimination of transcript requirement in
remand cases fully favorable to the claimant... 30
Sec. 412. Nonpayment of benefits upon removal from
the United States.............................. 30
Sec. 413. Reinstatement of certain reporting
requirements................................... 31
Sec. 414. Clarification of definitions regarding
certain survivor benefits...................... 31
Sec. 415. Clarification respecting the FICA and
SECA tax exemptions for an individual whose
earnings are subject to the laws of a
totalization agreement partner................. 32
Sec. 416. Coverage under divided retirement system
for public employees........................... 32
Sec. 417. Compensation for the Social Security
Advisory Board................................. 33
Sec. 418. 60-month employment requirement for
government pension offset exemption............ 34
Sec. 419. Post-1956 Military Wage Credits.......... 35
Subtitle C--Technical Amendments....................... 35
Sec. 421. Technical correction relating to
responsible agency head........................ 35
Sec. 422. Technical correction relating to
retirement benefits of ministers............... 36
Sec. 423. Technical corrections relating to
domestic employment............................ 36
Sec. 424. Technical corrections of outdated
references..................................... 37
Sec. 425. Technical correction respecting self-
employment income in community property States. 37
Sec. 426. Technical changes to the Railroad
Retirement and Survivors Improvement Act of
2001........................................... 38
Subtitle D--Amendments Related to Title XVI............ 39
Sec. 430. Exclusion from income for certain
infrequent or irregular income and certain
interest or dividend income.................... 39
Sec. 431. Uniform 9-month resource exclusion
periods........................................ 41
Sec. 432. Modification of dedicated account
requirements................................... 41
Sec. 433. Elimination of certain restrictions on
the application of the student earned income
exclusion...................................... 42
Sec. 434. Exclusion of Americorps and other
volunteer benefits for purposes of determining
supplemental security income eligibility and
benefit amounts and social security disability
insurance entitlement.......................... 43
Sec. 435. Exception to retrospective monthly
accounting for nonrecurring income............. 43
Sec. 436. Removal of restriction on payment of
benefits to children who are born or who become
blind or disabled after their military parents
are stationed overseas......................... 44
Sec. 437. Treatment of education-related income and
resources...................................... 45
Sec. 438. Monthly treatment of uniformed service
compensation................................... 45
Sec. 439. Update of resource limits................ 46
Sec. 440. Review of State agency blindness and
disability determinations...................... 47
III. Budget Effects of the Bill.....................................47
IV. Votes of the Committee.........................................65
A. Motion to Report the Bill........................... 66
V. Regulatory Impact and Other Matters............................66
A. Regulatory Impact................................... 66
B. Information Relating to Unfunded Mandates........... 66
C. Tax Complexity Analysis............................. 66
VI. Changes in Existing Law Made by the Bill as Reported...........66
VII. Additional Views...............................................67
I. Summary, Background, and Legislative History
A. SUMMARY
The ``Social Security Protection Act of 2003,'' H.R. 743,
as amended by the Committee on Finance of the U.S. Senate,
provides the Social Security Administration (SSA) with
important new tools to fight waste, fraud, and abuse in the
Social Security and Supplemental Security Income programs,
increases the ability of disability beneficiaries to return to
work, and improves the equity and efficiency of both programs.
Passage of the bill would improve the Representative Payee
program operated by the Social Security Administration.
Representative Payees are individuals or organizations who
manage the monthly Social Security or Supplemental Security
Income (SSI) payments for beneficiaries who need help managing
their financial affairs. The bill would impose stricter
standards on individuals and organizations that serve as
representative payees for Social Security and SSI recipients.
The bill would make non-governmental representative payees
liable for misused funds and subject them to civil monetary
penalties. The bill also contains funds for the Inspector
General of the Social Security Administration to conduct a
survey that would for the first time produce statistically
significant measures of the degree to which benefit payments
managed by representative payees are not being used for the
welfare of beneficiaries.
The bill would help disability beneficiaries return to
work. The bill would enhance provisions of the Ticket to Work
program that would better enable SSA to test ways of helping
individuals with disabilities return to employment. The bill
would provide more individuals access to support and services
that can help them work. The bill would also encourage more
employers to hire individuals with disabilities by expanding
eligibility for the Work Opportunity Tax Credit.
The bill would improve representation for claimants of
disability benefits in the Social Security and SSI programs.
The bill would tighten restrictions on attorneys who represent
Social Security and SSI disability claimants, as well as limit
the processing fee that SSA charges attorneys who elect to have
their representative fee paid directly to them by SSA. The bill
would also require the General Accounting Office to survey
current claimant representation by attorneys and non-attorneys
and assess the advantages and disadvantages of extending the
current attorney fee withholding process in the Social Security
program to the SSI program, and of extending fee withholding to
non-attorney representatives in both programs.
The bill would expand and improve important provisions in
the current SSI program that deny benefits to fugitive felons
and allow SSA to cooperate with law enforcement in order to
apprehend these and other felons. The bill would expand the
denial of benefits payable to fugitive felons and probation and
parole violators to include Social Security benefits, and would
provide important technical clarifications as to how the
provision would operate for both Social Security and SSI
benefits.
The bill would make more equitable the Social Security
benefits paid to beneficiaries who receive pensions based on
work that was not covered by Social Security. The bill would
close the ``last day'' loophole in the application of the
Government Pension Offset. The bill would also require State
and local pension plans to report to the Internal Revenue
Service whether an individual's pension is based on employment
not covered by Social Security. This information would then be
shared with the Social Security Administration for the
administration of provisions related to pensions based on non-
covered employment.
The bill would help stop waste, fraud, and abuse within the
Social Security and SSI programs and help SSA to recoup
monetary damages from waste, fraud, and abuse. The bill would
create new penalties to prevent persons from misrepresenting
themselves when they offer Social Security-related services,
prohibit disabled individuals who fraudulently conceal work
activity from being eligible for a trial work period, and allow
the Federal courts to order individuals who break Social
Security law to make restitution to the Social Security Trust
Funds or the U.S. Treasury's general fund.
The bill would give SSA more flexibility to recover
overpayments in one program from underpayments made in another
program, with protections for low-income beneficiaries. The
bill would also require non-citizens to have work authorization
at the time of application for benefits, or to have had work
authorization at some point in the past, in order to be
eligible to receive Social Security benefits. The bill would
also protect Social Security employees from harm while
conducting their duties.
The bill would improve benefits and simplify administration
of the SSI program. The bill would make the income reporting
process less cumbersome, establish greater uniformity of
eligibility, increase the asset limit for eligibility, and make
other improvements and simplifications in the program.
Finally, passage of the bill would correct, clarify, or
modify various technical aspects of current law in the Social
Security, SSI, and Railroad Retirement programs.
The Congressional Budget Office estimates that H.R. 743, as
reported by the Committee on Finance, would result in net 10-
year savings of $595 million.
B. BACKGROUND
The Social Security and SSI programs touch the lives of
nearly every American and represented close to one-fourth of
all Federal outlays in 2003. Last year, the Federal Government
paid nearly $500 billion in Social Security and SSI benefits to
about 50 million retired and disabled workers and their
families or survivors, and disabled, blind, and aged low-income
individuals. Given the programs' size and extensive influence
over the economic well-being of American workers and their
families, it is important to eliminate inadequate protections
for beneficiaries, to improve the ability of disabled
beneficiaries to return to work, improve the equity of the
application of current law, and fight activities that drain
resources from Social Security and thereby undermine the
financial security of beneficiaries.
Nearly 7 million Social Security and SSI beneficiaries
cannot, for physical or mental reasons, manage their own
financial affairs. In these cases, the SSA appoints an
individual or organization, called a ``representative payee,''
to manage these beneficiaries' benefits. While most
representative payees are conscientious and honest, some
violate the trust placed in them. In a report issued in June
2002, ``Analysis of Information Concerning Representative Payee
Misuse of Beneficiaries' Payments,'' the SSA Inspector General
stated that SSA found that more than 2,400 individuals who
served as representative payees misused $12 million in benefits
between January 1997 and December 1999. The SSA and the SSA
Inspector General have recommended legislation to raise the
standards for persons and organizations serving as
representative payees and to impose stricter regulation and
monetary penalties on those who mismanage benefits.
In addition to protecting the financial security of
vulnerable beneficiaries, this bill would also expand and
improve the policy adopted in P.L. 104-193, the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996
(PRWORA), denying benefit payments to fugitive felons and
individuals who violate their probation or parole and allowing
SSA to cooperate with law enforcement in order to apprehend
such felons. The 1996 legislation applied to SSI benefits to
such individuals; however, no such prohibition exists for
Social Security benefits. The Congressional Budget Office
estimates that Social Security will pay $525 million in
benefits over the next 10 years to Social Security
beneficiaries who are fugitives or probation or parole
violators. In an August 2000 report, ``Old-Age, Survivors and
Disability Insurance Benefits Paid to Fugitives,'' the SSA
Inspector General estimated that about 17,000 fugitives
received Social Security benefits between PRWORA's enactment
and 1999, and recommended legislation similar to the SSI
provisions which would prohibit payment of Social Security
benefits to fugitive felons and probation or parole violators,
and would allow SSA to cooperate with law enforcement in order
to apprehend these individuals as well as others seeking to
avoid arrest.
The bill would also incorporate recommendations by the SSA
Inspector General to provide SSA with new authority to further
safeguard Social Security programs, help shield SSA employees
from harm while conducting their duties, subject perpetrators
of fraud to new civil monetary penalties, and prevent persons
from misrepresenting themselves as they provide Social
Security-related services.
The bill would assist individuals who are applying for
disability benefits by improving the oversight of the attorneys
who represent them before the Social Security Administration.
Under present law, attorneys disbarred in one jurisdiction, but
licensed to practice in another jurisdiction, must be
recognized as a claimant's representative. The bill would
authorize the Commissioner of Social Security to refuse to
recognize as a representative, or disqualify as a
representative, an attorney who has been disbarred or suspended
from any court or bar, or who has been disqualified from
participating in or appearing before any Federal program or
agency.
Advocates for disability claimants and attorney
representatives have testified that the SSA's processing fee
for withholding attorney fees from past-due benefits is
excessive and limits the pool of attorneys willing to help
disability claimants. The advocates recommend limiting the fee
in order to increase the availability of attorney
representation.
Besides encouraging representation of claimants seeking
benefits, advocates for individuals with disabilities have
discussed the need to improve and clarify provisions of the
Ticket to Work program by enhancing demonstration projects,
making work incentive services available to more individuals,
and expanding eligibility for the Work Opportunity Tax Credit.
These recommendations are intended to encourage more disabled
beneficiaries to return to work or to maintain work effort.
The bill also contains two provisions highlighted by the
Social Security Advisory Board (SSAB). The first provision
would allow the SSA to collect outstanding Supplemental
Security Income overpayments by offsetting the full amount owed
against any lump-sum retroactive Social Security benefit to
which the beneficiary may be entitled. The second provision
would provide for better information sharing between
governmental entities to improve the administration of the
Social Security program with regard to the treatment of public
employee pensions. Both of these provisions are expected to
provide substantial savings to the Social Security programs.
The bill contains numerous provisions aimed at correcting
inequities in the application of current law. One of these
provisions, which relates to State and local workers who are
not covered by Social Security, resulted from an August 2002
General Accounting Office (GAO) report, ``Social Security
Administration: Revision to the Government Pension Offset
Exemption Should Be Considered.'' The GAO found that teachers
in Texas, and to a lesser extent in Georgia, who were not
previously covered by Social Security, were using a loophole in
the law to receive higher spousal or survivor benefits from
Social Security. In effect, teachers contributed to Social
Security for as little as one day (an average of $3 in payroll
taxes) and could qualify for over $100,000 in spousal or
survivor benefits over a lifetime, whereas similar workers who
were covered by Social Security throughout their careers
received little or no spousal or survivor benefits. The GAO
indicated that more State and local workers were likely to use
this loophole in the future. The GAO recommended amending the
law to treat State and local workers the same as Federal
workers in applying the exemption.
Since September 11, 2001, and with the renewed interest in
the enforcement of U.S. immigration laws, Members of Congress
and the Social Security Inspector General have raised concerns
that individuals who were never legally permitted to work in
the United States are permitted to collect Social Security
(Title II) benefits on the basis of their unauthorized
earnings. The 1996 welfare reform legislation limited the
payment of benefits to U.S. citizens, nationals, and aliens who
are lawfully present in the United States. But, this provision
only affects the payment of benefits to individuals within the
United States; it does not affect their eligibility
(entitlement) to that benefit. Thus, a non-citizen who is not
lawfully present in the United States can often receive a
benefit by simply moving to another country. The bill would
expand on the 1996 welfare reform provision by prohibiting the
payment of Title II benefits to any person, regardless of the
person's place of residence, unless he or she was legally
permitted to engage in employment in the United States at any
time prior to (and including) the time he or she applies for
benefits. It would also prohibit the payment of benefits to the
spouses, dependents, or survivors of these ineligible workers.
For many years, SSA has asked the Congress to enact several
provisions to simplify the administration of the Supplemental
Security Income (SSI) program. Additionally, the President's
Fiscal Year 2003 and Fiscal Year 2004 budgets proposed to
expand one of the quality review processes that currently apply
to the Social Security disability insurance program to the SSI
program. That change is expected to produce savings in the SSI
program of $1.5 billion over 10 years. In addition, many of the
eligibility rules for the SSI program have not been modified
since the program's inception in 1972, due to the associated
costs to the Federal budget. In order to allow SSI
beneficiaries to keep more of their resources, the bill uses
the savings from the proposal in the President's budget to
increase the asset limit for SSI eligibility. The bill also
includes many of the program simplification provisions
requested by SSA for the SSI program.
C. LEGISLATIVE HISTORY
Last Congress, the House of Representatives passed H.R.
4070, ``The Social Security Program Protection Act'' on June
26, 2002, by a vote of 425-0. The Senate Finance Committee pre-
conferenced the bill with the House Ways and Means Committee.
The bill was changed to reflect the pre-conference agreement.
The bill was taken up on the Senate floor and passed by
unanimous consent on November 18, 2002, and a report on the
bill was placed in the Congressional Record. The House of
Representatives did not act on the Senate passed bill before
adjourning.
The strong support for H.R. 4070 in the 107th Congress, led
to the introduction of H.R. 743, the ``Social Security
Protection Act of 2003'' in the 108th Congress. On March 5, the
House of Representatives considered H.R. 743, as amended, under
suspension of the rules; it failed by a vote of 249-180 (a two-
thirds vote being required). On March 13, 2003, the Committee
on Ways and Means ordered favorably reported H.R. 743, the
``Social Security Protection Act of 2003,'' as amended, by a
rollcall vote of 35-2. The House of Representatives passed H.R.
743 on April 2, 2003, by a vote of 396-28.
The Senate Committee on Finance marked up H.R. 743 and
approved the bill, as modified, on September 17, 2003, by a
voice vote with a quorum present.
II. Explanation of the Bill
TITLE I. PROTECTION OF BENEFICIARIES
SUBTITLE A. REPRESENTATIVE PAYEES
Section 101. Authority To Reissue Benefits Misused by Organizational
Representative Payees
Present Law
The Social Security Act requires the re-issuance of
benefits misused by any representative payee when the
Commissioner finds that the Social Security Administration
(SSA) negligently failed to investigate and monitor the payee.
Explanation of Provision
The new provision eliminates the requirement that benefits
be reissued only upon a finding of SSA negligence. Thus, the
Commissioner would re-issue benefits under Titles II, VIII and
XVI in any case in which a beneficiary's funds are misused by
an organizational payee or an individual payee representing 15
or more beneficiaries.
The new provision defines misuse as any case in which a
representative payee converts the benefits entrusted to his or
her care for purposes other than the ``use and benefit'' of the
beneficiary, and authorizes the Commissioner to define ``use
and benefit'' in regulation.
Reason for Change
There have been a number of highly publicized cases
involving organizational representative payees that have
misused large sums of monies paid to them on behalf of the
Social Security and Supplemental Security Income (SSI)
beneficiaries they represented. In most instances, these
organizations operated ascriminal enterprises, bent not only on
stealing funds from beneficiaries, but also on carefully concealing the
evidence of their wrongdoing. These illegal activities went undetected
until large sums had been stolen. If the SSA is not shown to be
negligent for failing to investigate and monitor the payee, affected
beneficiaries may never be repaid or may be repaid only when the
representative payee committing misuse makes restitution to the SSA.
Requiring the SSA to reissue benefit payments to these victims of
benefit misuse provides essential protection from financial hardship.
Effective Date
This provision applies to benefit misuse by a
representative payee as determined by the Commissioner on or
after January 1, 1995.
Section 102. Oversight of Representative Payees
Present Law
Present law requires community-based nonprofit
organizational representative payees to be licensed or bonded.
Periodic on-site reviews of representative payees by the Social
Security Administration are authorized, but not required.
Explanation of Provision
The new provision requires community-based nonprofit
organizational representative payees to be both licensed and
bonded (provided that licensing is available in the State). In
addition, such representative payees must submit yearly proof
of bonding and licensing, as well as copies of any available
independent audits that were performed on the payee in the past
year.
The new provision also requires the Commissioner of Social
Security to conduct periodic onsite reviews of: (1) a person
who serves as a representative payee to 15 or more
beneficiaries, (2) non-governmental fee-for-service
representative payees (as defined in Titles II and XVI), and
(3) any agency that serves as the representative payee to 50 or
more beneficiaries. In addition, the Commissioner is required
to submit an annual report to the Committee on Ways and Means
of the House of Representatives and the Committee on Finance of
the Senate on the reviews conducted in the prior fiscal year.
Reason for Change
Strengthening the bonding and licensing requirements for
community-based nonprofit social service agencies would add
further safeguards to protect beneficiaries' funds. State
licensing provides for some oversight by the State into the
organization's business practices, and bonding provides some
assurances that a surety company has investigated the
organization and approved it for the level of risk associated
with the bond. Requiring annual certification as to the
licensing and bonding of the payee, as well as submission of
audits performed, should help prevent a payee from dropping
their licensing or bonding subsequent to the SSA approving them
as payee.
Effective Date
The bonding, licensing, and audit provisions are effective
on the first day of the 13th month following enactment of the
legislation. The periodic on-site review provision is effective
upon enactment.
Section 103. Disqualification From Service as Representative Payee of
Persons Convicted of Offenses Resulting in Imprisonment for
More Than One Year, of Persons Fleeing Prosecution, Custody or
Confinement, and of Persons Violating Probation or Parole
Present Law
Individuals convicted of fraud under the Social Security
Act are disqualified from being representative payees.
Explanation of Provision
The new provision expands the scope of disqualification to
prohibit an individual from serving as a representative payee
if he or she: (1) has been convicted of any offense resulting
in imprisonment for more than 1 year; (2) is fleeing to avoid
prosecution, or custody or confinement after conviction; or (3)
violated a condition of probation or parole. An exception
applies if the Commissioner of Social Security determines that
a person who has been convicted of any offense resulting in
imprisonment for more than 1 year would, notwithstanding such
conviction, be an appropriate representative payee.
The new provision requires the Commissioner to submit a
report to the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the Senate
evaluating procedures and reviews conducted for representative
payees to determine whether they are sufficient to protect
benefits from being misused.
Reason for Change
Prohibiting persons convicted of offenses resulting in
imprisonment for more than 1 year and persons fleeing
prosecution, custody or confinement for a felony from serving
as representative payees decreases the likelihood of
mismanagement or abuse of beneficiaries' funds. Also, allowing
such persons to serve as representative payees could raise
serious questions about the SSA's stewardship of taxpayer
funds. The agency's report will assist Congress in its
oversight of the representative payee program.
Effective Date
This provision is effective on the first day of the 13th
month beginning after the date of enactment, except that the
report to Congress is due no later than 270 days after the date
of enactment.
Section 104. Fee Forfeiture in Case of Benefit Misuse by Representative
Payees
Present Law
Certain organizational representative payees are authorized
to collect a fee for their services. The fee, which is
determined by a statutory formula, is deducted from the
beneficiary's benefit payments.
Explanation of Provision
The new provision requires representative payees to forfeit
the fee for those months during which the representative payee
misused funds, as determined by the Commissioner of Social
Security or a court of competent jurisdiction.
Reason for Change
Payees who misuse their clients' funds are not properly
performing the service for which the fee was paid; therefore,
they should forfeit such fees. Permitting the payee to retain
the fees is tantamount to rewarding the payee for violating his
or her responsibility to use the benefits for the individual's
needs.
Effective Date
This provision applies to any month involving benefit
misuse by a representative payee as determined by the
Commissioner or a court of competent jurisdiction after 180
days after the date of enactment.
Section 105. Liabilities of Representative Payees for Misused Benefits
Present Law
Although the SSA has been provided with expanded authority
to recover overpayments (such as the use of tax refund offsets,
referral to contract collection agencies, notification of
credit bureaus, and administrative offsets of future Federal
benefits payments), these tools cannot be used to recoup
benefits misused by a representative payee.
Explanation of Provision
The new provision treats benefits misused by a non-
governmental representative payee (including all individual
representative payees) as an overpayment to the representative
payee, rather than the beneficiary, thus subjecting the
representative payee to current overpayment recovery
authorities. Any recovered benefits not already reissued to the
beneficiary pursuant to section 101 of this legislation would
be reissued to either the beneficiary or their alternate
representative payee, up to the total amount misused.
Reason for Change
Treating misused benefits as overpayments to the
representative payee would provide the SSA with additional
means for recovering misused payments.
Effective Date
Applies to benefit misuse by a representative payee in any
case where the Commissioner of Social Security or a court of
competent jurisdiction makes a determination of misuse after
180 days after the date of enactment.
Section 106. Authority to Redirect Delivery of Benefit Payments When a
Representative Payee Fails to Provide Required Accounting
Present Law
The Social Security Act requires representative payees to
submit accounting reports to the Commissioner of Social
Security detailing how a beneficiary's benefit payments were
used. A report is required at least annually, but may be
requested by the Commissioner at any time if the Commissioner
has reason to believe the representative payee is misusing
benefits.
Explanation of Provision
The new provision authorizes the Commissioner of Social
Security to require a representative payee to receive any
benefits under Titles II, VIII, and XVI in person at a Social
Security field office if the representative payee fails to
provide an annual accounting of benefits report. The
Commissioner would be required to provide proper notice and the
opportunity for a hearing prior to redirecting benefits to the
field office.
Reason for Change
Accounting reports are an important means of monitoring the
activities of representative payees to prevent misuse of
benefits. Redirecting benefit payments to the field office
would enable the agency to promptly address the failure of the
representative payee to file a report.
Effective Date
This provision is effective 180 days after the date of
enactment.
Section 107. Survey of Use of Payments to Representative Payees
Present Law
The Social Security Act authorizes the appointment of
representative payees to receive and manage Title II (OASDI)
and Title XVI (SSI) benefits on behalf of beneficiaries who
cannot manage their own finances because of mental or physical
impairments. A representative payee may be an individual or an
organization, including non-profits, State or local government
agencies.
Explanation of Provision
This provision would authorize and appropriate $17.8
million to the Inspector General of the Social Security
Administration for Fiscal Year 2004 to conduct a statistically
significant survey to determine how the payments made to each
category of representative payee are being used on behalf of
beneficiaries. The study is to be completed by February 1,
2005.
Reason for Change
When all of the categories of representative payees are
considered, there are a total of about 5.3 million payees. In
the aggregate, these payees receive and manage about $44
billion of payments on behalf of about 6.7 million Social
Security beneficiaries. The payees are supposed to use these
payments to meet the needs of the beneficiaries. However, to
date, there has not been a statistically significant national
survey to estimate the number of payments provided to each type
of payee that are not being properly used on behalf of
beneficiaries. The Inspector General has proposed that such a
survey be conducted in Fiscal Year 2004 at a cost of $17.8
million. This section provides the funds for such a study.
Effective Date
Upon enactment.
SUBTITLE B: ENFORCEMENT
Section 111. Civil Monetary Penalty Authority With Respect to Wrongful
Conversions by Representative Payees
Present Law
The Social Security Act authorizes the Commissioner to
impose a civil monetary penalty (of up to $5,000 for each
violation) along with an assessment (of up to twice the amount
wrongly paid) upon any person who knowingly uses false
information or knowingly omits information to wrongly obtain
Title II, VIII or XVI benefits.
Explanation of Provision
The new provision expands the application of civil monetary
penalties to include misuse of Title II, VIII or XVI benefits
by representative payees. A civil monetary penalty of up to
$5,000 may be imposed for each violation, along with an
assessment of up to twice the amount of misused benefits.
Reason for Change
Providing authority for SSA to impose civil monetary
penalties along with an assessment of up to twice the amount of
misused benefits would provide the SSA with an additional means
to address benefit misuse by representative payees.
Effective Date
This provision applies to violations occurring after the
date of enactment.
TITLE II. PROGRAM PROTECTIONS
Sec. 201. Civil Monetary Penalty Authority With Respect to Withholding
Material Facts
Present Law
The Social Security Act authorizes the Commissioner of
Social Security to impose civil monetary penalties and
assessments on any person who makes a statement or
representation of a material fact for use in determining
initial or continuing rights to Title II, VIII, or XVI benefits
that the person knows or should know omits a material fact or
is false or misleading. In order for the penalty or assessment
to be imposed, the law requires an affirmative act on the part
of the individual of making (or causing to be made) a statement
that omits a material fact or is false or misleading.
Explanation of Provision
This provision authorizes civil monetary penalties and
assessments and sanctions for the failure to come forward and
notify the SSA of changed circumstances that affect eligibility
or benefit amount when that person knows or should know that
the failure to come forward is misleading.
Reason for Change
Currently the SSA cannot impose civil monetary penalties
and assessments on a person who should have come forward to
notify the SSA of changed circumstances that affect eligibility
or benefit amount, but did not. This amendment is intended to
close this loophole in the current law, but is not intended to
expand Section 1129 and 1129A to include those individuals
whose failure to come forward to notify the SSA was not done
for the purpose of improperly obtaining or continuing to
receive benefits. For instance, it is not intended that the
expanded authority be used against individuals who do not have
the capacity to understand that their failure to come forward
is misleading.
Examples of the types of individuals intended to be covered
under this amendment to Section 1129 and 1129A include (but are
not limited to): (1) an individual who has a joint bank account
with a beneficiary in which the SSA direct deposited the
beneficiary's Social Security checks; upon the death of the
beneficiary, this individual fails to advise the SSA of the
beneficiary's death, instead spending the proceeds from the
deceased beneficiary's Social Security checks; and (2) an
individual who is receiving benefits under one SSN while
working under another SSN.
Effective Date
Applies to violations committed after the date on which the
Commissioner implements the centralized computer file described
in Section 202.
Section 202. Issuance by Commissioner of Social Security of Receipts to
Acknowledge Submission of Reports of Changes in Work or
Earnings Status
Present Law
Changes in employment or earnings can affect an
individual's continued entitlement to disability benefits under
Title II or Title XVI. Beneficiaries are required to report
such changes, but the SSA has not implemented a system to
acknowledge that beneficiaries have properly fulfilled their
obligation.
Explanation of Provision
The new provision requires the Commissioner to issue a
receipt to a disabled beneficiary (or representative of a
beneficiary) who reports a change in his or her work or
earnings status. The Commissioner is required to continue
issuing such receipts until the Commissioner has implemented a
centralized computer file that would record the date on which
the disabled beneficiary (or representative) reported the
change in work or earnings status.
Reason for Change
SSA does not currently have an effective system in place
for processing and recording Title II and Title XVI disability
beneficiaries' reports of changes in work and earnings status.
Issuing receipts to disabled beneficiaries who make such
reports would provide them with proof that they had properly
fulfilled their obligation to report these changes.
Effective Date
This provision requires the Commissioner to begin issuing
receipts as soon as possible, but no later than 1 year after
the date of enactment.
Section 203. Denial of Title II Benefits to Persons Fleeing
Prosecution, Custody, or Confinement, and to Persons Violating
Probation or Parole
Present Law
The Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (P.L. 104-193) included provisions
making persons ineligible to receive Social Security benefits
under Title XVI (SSI) during any month in which they are
fleeing to avoid prosecution for a felony, or to avoid custody
or confinement after conviction for a felony, or are in
violation of a condition of probation or parole. However, the
same prohibition does not apply to Social Security benefits
under Title II (OASDI).
Explanation of Provision
This provision makes persons ineligible to receive Social
Security benefits under Title II for months in which they are
fleeing to avoid prosecution for a felony, or to avoid custody
or confinement after conviction for a felony, or are in
violation of a condition of probation or parole. The provision
gives the Commissioner of Social Security the authority to pay
Title II or Title XVI benefits, if there is ``good cause.'' The
provision also requires the Commissioner, upon written request
by law enforcement officials, to assist such officials in
apprehending fugitives by providing them with an address,
Social Security number, and if available, a photograph.
The provision clarifies that in order for an individual to
be considered ``fleeing,'' law enforcement must be pursuing the
individual. Thus, the provision provides that benefits under
Title II or Title XVI will be withheld or suspended only in
those cases in which the relevant law enforcement agency
notifies SSA that it intends to pursue the individual by
seeking arrest, extradition, prosecution, or the revocation of
probation or parole.
Reason for Change
Although the fugitive felon provision applies to Title XVI
(SSI), it does not apply to Title II (OASDI). This section of
the bill would extend this provision to Title II.
The fugitive felon provision was intended to deny benefits
to those seeking to avoid arrest or prosecution, not to deny
benefits to those no longer sought by law enforcement. The
Committee has been made aware of numerous cases in which law
enforcement agencies have chosen not to pursue individuals
identified through the current Title XVI fugitive felon
program. Such cases often involve minor offenses that may be
decades old and will never be prosecuted. As a result, the only
effect of the individual's illegal actions isthe denial of SSI
benefits. The Committee does not believe the Social Security
Administration should become the law enforcement agency of last resort.
Therefore, this section of the bill provides that benefits under Title
II or Title XVI will be withheld or suspended only in those cases in
which the relevant law enforcement agency notifies SSA that it intends
to pursue the individual by seeking arrest, extradition, prosecution,
or the revocation of probation or parole. Moreover, the good cause
exception will provide the SSA with the ability to pay benefits under
circumstances in which the Commissioner deems withholding of benefits
to be inappropriate--for example, but not limited to, situations where
beneficiaries are found to be victims of identity theft.
Effective Date
This provision is effective on the first day of the first
month that begins on or after the date that is 9 months after
the date of enactment.
Section 204. Requirements Relating to Offers to Provide for a Fee a
Product or Service Available Without Charge From the Social
Security Administration
Present Law
The Social Security Act prohibits or restricts various
activities involving the use of Social Security and Medicare
symbols, emblems, or references which give a false impression
that an item is approved, endorsed, or authorized by the Social
Security Administration, the Health Care Financing
Administration, or the Department of Health and Human Services.
It also provides for the imposition of civil monetary penalties
with respect to violations of the section.
Explanation of Provision
The new provision requires persons or companies charging a
fee for services available for free from SSA to include in
their solicitations a statement that the services they provide
for a fee are available directly from SSA free of charge. The
statements would be required to comply with standards
promulgated through regulation by the Commissioner of Social
Security with respect to their content, placement, visibility,
and legibility.
Reason for Change
Several individuals and companies offer Social Security
services for a fee even though the same services are available
directly from the SSA free of charge. For example, the SSA's
Inspector General has encountered business entities that have
offered assistance to individuals in changing their names (upon
marriage) or in obtaining a Social Security number (upon the
birth of a child) for a fee, even though these services are
directly available from the SSA for free. The offer from the
business entities either did not state at all, or did not
clearly state, that these services were available from the SSA
for free. These practices can mislead and deceive senior
citizens, newlyweds, new parents, and other individuals seeking
services or products, who may not be aware that the SSA
provides these services for free.
Effective Date
Applies to offers of assistance made after the sixth month
following the issuance of these standards. Requires the
Commissioner to promulgate regulations within 1 year after the
date of enactment.
Section 205. Refusal to Recognize Certain Individuals as Claimant
Representatives
Present Law
An attorney in good standing is entitled to represent
claimants before the Commissioner of Social Security. The
Commissioner may prescribe rules and regulations governing the
recognition of persons other than attorneys representing
claimants before the Commissioner. Under present law, attorneys
disbarred in one jurisdiction, but licensed to practice in
another jurisdiction, must be recognized as a claimant's
representative.
Explanation of Provision
The new provision authorizes the Commissioner to refuse to
recognize as a representative, or disqualify as a
representative, an attorney who has been disbarred or suspended
from any court or bar, or who has been disqualified from
participating in or appearing before any Federal program or
agency. Due process (i.e., notice and an opportunity for a
hearing) would be required before taking such action. Also, if
a representative has been disqualified or suspended as a result
of collecting an unauthorized fee, full restitution is required
before reinstatement can be considered.
Reason for Change
This provision could potentially provide additional
protections for beneficiaries who may rely on representatives
during all phases of their benefit application process.
However, the Committee remains concerned that the SSA does not
yet have any system in place to verify whether or not a person
seeking appointment as a claimant representative is in fact an
attorney. Moreover, SSA has no system to determine whether or
not an attorney who seeks appointment has been disbarred.
Effective Date
Upon enactment.
Section 206. Penalty for Corrupt or Forcible Interference with
Administration of the Social Security Act
Present Law
No provision.
Explanation of Provision
The new provision imposes a fine of not more than $5,000,
and imprisonment of not more than 3 years, or both, for
attempting to intimidate or impede--corruptly or by using force
or threats of force--any Social Security Administration
officer, employee or contractor (including State employees of
disability determination services and any individuals
designated by the Commissioner) while they are acting in their
official capacities under the Social Security Act. If the
offense is committed only by threats of force, however, the
offender is subject to a fine of not more than $3,000 and/or no
more than 1 year in prison.
Reason for Change
This provision extends to SSA employees the same
protections provided to employees of the Internal Revenue
Service under the Internal Revenue Code of 1954. These
protections will allow SSA employees to perform their work with
more confidence that they will be safe from harm.
The Committee expects that judgment will be used in
enforcing this section. Social Security and SSI disability
claimants and beneficiaries are frequently subject to multiple,
severe life stressors, which may include severe physical,
psychological, or financial difficulties. In addition,
disability claimants or beneficiaries who encounter delays in
approval of initial benefit applications or in post-entitlement
actions may incur additional stress, particularly if they have
no other source of income. Under such circumstances, claimants
or beneficiaries may at times express frustration in an angry
manner, without truly intending to threaten or intimidate SSA
employees. In addition, approximately 25 percent of Social
Security disability beneficiaries and 35 percent of disabled
SSI recipients have mental impairments, and such individuals
maybe less able to control emotional outbursts. These factors
should be taken into account in enforcing this provision.
Effective Date
Upon enactment.
Section 207. Use of Symbols, Emblems or Names in Reference to Social
Security or Medicare
Present Law
The Social Security Act prohibits (subject to civil
penalties) the use of Social Security or Medicare symbols,
emblems and references on any item in a manner that conveys the
false impression that such item is approved, endorsed or
authorized by the Social Security Administration, the Health
Care Financing Administration, or the Department of Health and
Human Services.
Explanation of Provision
The new provision expands the prohibition in present law to
several other references to Social Security and Medicare,
including the Centers for Medicare and Medicaid Services.
Reason for Change
The SSA Inspector General has found these phrases appearing
in mailings, solicitations, or flyers, which, when used with
the SSA's words, symbols, emblems, and references may be
particularly misleading and more likely to convey the false
impression that such item is approved, endorsed, or authorized
by the SSA, the Health Care Financing Administration (now the
Centers for Medicare and Medicaid Services), or the Department
of Health and Human Services. Expansion of this list helps to
ensure that individuals receiving any type of mail,
solicitations or flyers bearing symbols, emblems or names in
reference to Social Security or Medicare are not misled into
believing that these agencies approved or endorsed the services
or products depicted.
Effective Date
Applies to items sent after 180 days after the date of
enactment.
Section 208. Disqualification From Payment During Trial Work Period
Upon Conviction of Fraudulent Concealment of Work Activity
Present Law
An individual entitled to disability benefits under Title
II (OASDI) is entitled to a ``trial work period'' to test his
or her ability to work. The trial work period allows
beneficiaries to work with earnings above the substantial
gainful activity level for up to 9 months (which need not be
consecutive), within any 60-month period, without any loss of
benefits. A month counts as a trial work period month if the
individual earns above a level established by regulation (this
amount is $570 a month in 2003).
SSA's Inspector General has pursued criminal prosecution of
Title II disability beneficiaries who fraudulently conceal work
activity. As benefits received during the trial work period are
not included in the dollar-loss totals, the dollar loss to the
government may fall below the thresholds set by the U.S.
Attorneys in determining which fraud cases to prosecute.
Explanation of Provision
Under the new provision, an individual who is convicted of
fraudulently concealing work activity during the trial work
period would not be entitled to receive a disability benefit
for trial work period months that occur prior to the conviction
but within the same period of disability. If the individual had
already been paid benefits for these months, he or she would be
liable for repayment of these benefits, in addition to any
restitution, penalties, fines, or assessments that were
otherwise due.
In order to be considered to be fraudulently concealing
work activity under this provision, the individual must have:
(1) provided false information to SSA about his or her earnings
during that period; (2) worked under another identity,
including under the Social Security number of another person or
a false Social Security number; or (3) taken other actions to
conceal work activity with the intent to fraudulently receive
benefits that he or she was not entitled to.
Reason for Change
Under current law, if an individual is convicted of
fraudulently concealing work activity, the dollar loss to the
government is calculated based on the benefits that the
individual would have received had he or she not concealed the
work activity. During the trial work period, disability
beneficiaries continue to receive their monthly benefit amount
regardless of their work activity. Therefore, the SSA does not
include benefits paid during a trial work period in calculating
the total dollar loss to the government, even if the individual
fraudulently concealed work activity during that period. As a
result, the dollars lost to the government may fall below the
thresholds set by the U.S. Attorneys in cases involving
fraudulent concealment of work by Title II disability
beneficiaries. In such situations, the case would not be
prosecuted, even if the evidence of fraud was very clear.
This provision rectifies the situation by establishing that
individuals convicted of fraudulently concealing work activity
during the trial work period are not entitled to receive any
disability benefits for trial work period months prior to the
conviction (but within the same period of disability).
Effective Date
Effective with respect to work activity performed after the
date of enactment.
Sec. 209. Authority for Judicial Orders of Restitution
Present Law
A court may order restitution when sentencing a defendant
convicted of various offenses. However, violations of the
Social Security Act are not included among those for which the
court may order restitution.
Explanation of Provision
This provision amends the Social Security Act to allow a
Federal court to order restitution to the Social Security
Administration for violations of the Social Security Act.
Restitution in connection with benefit misuse by a
representative payee would be credited to the Social Security
Trust Funds for cases involving OASDI recipients and to the
general fund for cases involving Supplemental Security Income
and Special Veterans benefits. Other restitution funds,
credited to a special fund established in the Treasury, would
be available to defray expenses incurred in implementing Title
II, Title VIII, and Title XVI. If the court does not order
restitution, or only orders partial restitution, the court must
state the reason on the record.
Reason for Change
This provision would enhance a judge's ability to
compensate the programs and punish persons convicted of
violations including, but not limited to, improper receipt of
Social Security payments and misuse of Social Security numbers.
Effective Date
Effective with respect to violations occurring on or after
the date of enactment.
Sec. 210. Information for the Administration of Provisions Related to
Non-covered Employment
Present Law
There are approximately 6.6 million workers who do not pay
taxes into the Social Security system. The majority of these
workers are State and local government employees. Many of these
government workers may eventually qualify for Social Security
as the result of other employment, or as the spouse or survivor
of a worker covered by Social Security. The Government Pension
Offset (GPO) and the Windfall Elimination Provision (WEP) were
enacted--in 1977 and 1983, respectively--to reduce the
advantage these government workers may have when they apply for
Social Security benefits.
However, the Social Security Administration (SSA) has had
difficulty implementing these provisions due to the lack of
data. State and local governments provide annual reports of
pension benefits to the IRS on Form 1099R, but the current form
does not indicate whether the pension was based on employment
covered by Social Security. Moreover, the SSA does not have
access to this IRS data.
Explanation of Provision
This provision would require State and local government
pension paying entities to indicate on their Form 1099R report
whether the pension is based in whole or in part on earnings
not covered by Social Security. This proposal would also allow
the IRS to share these reports with SSA for the purpose of
equitably administering the GPO and WEP.
Reason for Change
This change would make the application of these provisions
more equitable because it would improve SSA's ability to
identify persons receiving State and local government pensions
based on non-covered work in a manner comparable to SSA's
present ability to identify persons receiving Federal pensions
based on non-covered work.
SSA has an ongoing computer-matching program with the
Federal Office of Personnel Management (OPM) that matches
persons receiving Social Security benefits with persons
receiving a pension from the Federal government based on non-
covered employment. However, SSA does not have any similar
program to identify Social Security beneficiaries who are
receiving pensions based on non-covered work for a State or
local government.
A previous study by the General Accounting Office (GAO)
found that there are many beneficiaries who are not subjected
to the GPO or WEP because the SSA does not know they are
receiving pensions based on non-covered employment.
This provision would allow the SSA to obtain data on
pensions based on non-covered work in a more timely and
consistent manner, reducing incorrect Social Security benefit
payments. In cases where the person begins to receive the
pension before filing for Social Security benefits, SSA could
annotate the person's record so that this information would be
available at the time the person applies for Social Security
benefits. The proposal would thereby improve SSA's stewardship
over the Social Security program and its trust funds.
Organizations representing State and local employees report
their members are often unaware of these provisions until they
apply for retirement benefits. The Committee believes the
Social Security Administration should utilize the annual
earnings statement mailed to every employee over the age of 25
to more explicitly inform State and local employees about the
GPO and WEP. These employees should also be informed about
their options to avoid these provisions by electing coverage
under the Social Security program.
Effective Date
Taxable years beginning after December 31, 2003.
Sec. 211. Authorize Cross-Program Recovery for Benefit Overpayments
Present Law
The Social Security Administration has the authority to
recover SSI overpayments from subsequent SSI monthly benefits
and OASDI overpayments from subsequent OASDI monthly benefits.
But, recovery efforts may be blocked when the beneficiary's
eligibility changes from one program to another. The SSA has
authority to collect prior SSI overpayments from Title II or
Title VIII, but this authority is limited to 10% of the
benefits paid.
Explanation of Provision
This provision would allow the Social Security
Administration to more fully recover overpayments paid under
Title II, Title VIII, or Title XVI from the benefits paid under
any of these programs. It would provide for withholding up to
100 percent of any lump-sum underpayment. Any recovery from any
continuing monthly benefit under Title II or Title VII would be
limited to 10 percent. Recovery under Title XVI would be
limited to the lesser of 100 percent of the monthly benefit or
10 percent of individual's total monthly income.
Reason for Change
The amount of outstanding, uncollected overpayments is
large and continues to grow. Allowing the withholding of
underpayments and monthly benefits between programs will
greatly enhance the SSA's ability to recover overpayments.
Without these changes, it would be difficult or impossible to
recover overpayments, particularly when individuals are no
longer eligible for ongoing monthly benefits.
Effective Date
Upon enactment.
Sec. 212. Prohibit Benefits to Persons Not Authorized to Work in the
United States
Present Law
Under current law, non-citizens who work illegally in the
United States can receive Title II benefits based on the
earnings from their illegal work. In addition, although current
law prohibits the payment of benefits to persons who are not
lawfully present in the United States, such persons can
generally receive their benefits outside the United States--
with the exception of certain countries, such as Cuba and North
Korea. Benefit payments may, in some but not all cases, be
limited to a period of 6 months for persons living in other
countries. In addition, benefits for dependents or survivors
may be limited to 6 months unless they lived in the United
States for at least 5 years in the family relationship on which
the benefits are based.
Explanation of Provision
This provision would prohibit the payment of Title II
benefits to any person who was not legally permitted to engage
in employment in the United States prior to (or including) the
time he or she applies for Title II benefits. It would also
prohibit the payment of benefits to the spouses, survivors, or
dependents of illegal workers.
Prior to the enactment of P.L. 92-603 on October 30, 1972,
SSA records did not reflect whether an individual was
authorized to work when his or her Social Security account
number (SSN) was issued. Thus, the Committee expects that all
SSNs issued prior to July 1974--when the 1972 provision was
first implemented by SSA--shall be deemed to comply with the
new requirement, unless the SSA has evidence to the contrary.
The Committee also recognizes that some individuals who are
issued a non-work SSN may later become a U.S. citizen or
receive authorization to work. Although such individuals are
supposed to report these changes to SSA, not all do. In such
cases, SSA would not be aware of the change, and would deny
benefits, unless the individual maintained records to document
the change. To reduce the number of potential denials and the
need to rely on documents maintained by the individual, SSA
should take two steps. First, SSA should utilize the annual
notices it sends to all employees for whom there is a
discrepancy between the name and SSN submitted by their
employer and the data in SSA's records. SSA should use these
mailings to notify employees that their wages are being
reported on a non-work SSN, and recommend that these workers
report any change in their work status to SSA. Second, SSA
should use the annual earnings and benefit statements it sends
to all workers over age 25 to notify these workers that their
wages are being reported on a non-work SSN. Again, SSA should
recommend that these workers report any change in their work
status to SSA.
Reason for Change
Individuals who were never legally permitted to work in the
United States should not be able to collect Social Security
benefits on the basis of their illegal earnings. The Social
Security program should not reward those who violate our
immigration laws. This provision would begin to address this
issue by limiting benefits to those who were authorized to work
in the United States at some point in time.
This provision does not fully address this issue as
individuals who begin working illegally and later obtain legal
status could still use their illegal earnings to qualify for
Social Security benefits. However, the Commissioner of Social
Security has raised concerns about SSA's ability to administer
a more comprehensive approach. The Committee believes the
proposal in the bill is the best approach to this issue at this
time, but the Committee will continue to consider ways to more
fully address this issue in the future.
Effective Date
Benefit applications filed on or after January 1, 2004.
TITLE III.--ATTORNEY REPRESENTATIVE FEE PAYMENT SYSTEM IMPROVEMENTS
Section 301. Cap on Attorney Representative Assessments
Present Law
The Social Security Act allows the fees of claimant
representatives who are attorneys to be paid by the SSA
directly to the attorney out of the claimant's past-due
benefits for Title II claims. The SSA is authorized to charge
an assessment at a rate not to exceed 6.3 percent of approved
attorney fees for the costs of determining, processing,
withholding and distributing attorney representative fees for
Title II claims.
Explanation of Provision
The new provision imposes a cap of $75 on the 6.3 percent
assessment on approved attorney representative fees for Title
II claims, and this cap is indexed for inflation.
Reason for Change
The Ticket to Work and Work Incentives Improvement Act of
1999 (P.L. 106-170) which created the 6.3 percent assessment
also required the General Accounting Office (GAO) to examine
the costs incurred by the SSA in administering attorney fees;
identify efficiencies that the SSA could implement to reduce
such costs; and determine whether the assessment impairs access
to legal representation for claimants.
The GAO concluded that inadequate data made a precise
estimate of the administrative cost of attorney fees impossible
to calculate. It further concluded that the SSA could take
additional steps to automate the attorney fee process and
thereby achieve significant administrative savings. Finally,
GAO concluded that access to legal representation had been
largely unaffected by the fee assessment.
Given the uncertainty regarding the true cost of the
administering the attorney fee process, dissatisfaction with
continued delays in processing attorney fees, and lack of
progress in further automating the fee process, the Committee
decided to cap the fee. This fee cap attempts to balance the
competing goals of having attorneys pay the legitimate costs of
fee withholding while at the same time encouraging the SSA to
reduce these costs to the greatest extent possible.
Effective Date
After 180 days after the date of enactment.
Sec. 302. GAO Study of Fee Payment Process for Claimant Representatives
Present Law
An individual applying for Title II or Title XVI disability
benefits may seek the assistance of another person. The person
assisting the applicant may not charge or receive a fee unless
it is first approved by the Social Security Administration
(SSA). If the person assisting the individual is an attorney
and the individual is awarded past-due benefits under Title II,
the SSA will deduct the attorney's fee from the individual's
benefits and pay the attorney directly--minus a fee to cover
the SSA's administrative costs.
Explanation of Provision
This provision would require the General Accounting Office
to conduct a study of the fee-withholding payment process for
claimant representatives. The study would include a
statistically significant survey of the characteristics of the
current fee withholding system. The report would also include
an analysis of the costs and benefits of the current system. In
addition, the study would also assess the advantages and
disadvantages of extending the current fee withholding system
for attorneys to SSI cases. Finally, the report would assess
the advantages and disadvantages of extending the fee
withholding system to non-attorney representatives of both
Social Security and SSI claimants.
Reason for Change
The Senate Finance Committee has received letters,
testimony, and communications about the effects of the current
fee-withholding process on claimants from disability advocates,
the Social Security Administration, the Social Security
Advisory Board, and attorney and non-attorney representatives
of claimants. Among these materials, there is a difference of
opinion about whether the current system is helpful or harmful
to the claimants. Moreover, in these materials, some people
believe that the current fee-withholding system should be
extended to attorneys representing SSI disability claimants,
while other people believe that the current fee-withholding
system should not be extended to SSI claimants or should be
eliminated. Furthermore, in the materials, some people believe
that the current fee-withholding system should be extended to
non-attorney representatives of both Social Security and SSI
disability claimants, while others argue against such an
extension. Based on these conflicting views and disagreements,
the Committee decided that the best way to proceed at this time
is to obtain a detailed report on these issues from the General
Accounting Office.
Effective Date
The report would be due 24 months after the date of
enactment.
TITLE IV.--MISCELLANEOUS AND TECHNICAL AMENDMENTS
SUBTITLE A: AMENDMENTS RELATING TO THE TICKET TO WORK AND WORK
INCENTIVES IMPROVEMENT ACT OF 1999
Section 401. Eliminate Demonstration Authority Sunset Date
Present Law
The Commissioner of Social Security may waive compliance
with the benefit requirements of Title II as necessary for a
thorough evaluation of experiments and demonstration projects
designed to encourage the disabled to return to work. This
authority expires on December 17, 2004.
Explanation of Provision
This provision would eliminate the expiration date, thus
providing permanent authority for the Commissioner to waive
compliance with the benefit requirements under Title II.
Reason for Change
This change would conform the Social Security demonstration
project authority with the SSI demonstration authority. The
removal of the limitation on authority is warranted because
demonstration projects are structured to protect beneficiaries,
usually have very minimal costs, and often help to improve the
program for both beneficiaries and administrators.
Effective Date
Upon enactment.
Section 402. Expansion of Waiver Authority Available in Connection with
Demonstration Projects Providing for Reductions in Disability
Insurance Benefits Based on Earnings
Present Law
The Ticket to Work and Work Incentives Improvement Act of
1999 (P.L. 106-170) directs the Commissioner to conduct
demonstration projects for the purpose of evaluating a program
for Title II disability beneficiaries under which benefits are
reduced by $1 for each $2 of the beneficiary's earnings above a
level determined by the Commissioner. To permit a thorough
evaluation of alternative methods, the Ticket to Work Act
allows the Commissioner to waive compliance with the benefit
provisions of Title II and allows the Secretary of Health and
Human Services to waive compliance with the benefit
requirements of Title XVIII.
Explanation of Provision
This provision allows the Commissioner to also waive
requirements in Section 1148 of the Social Security Act,
related to outcome payments provided to employment networks
participating in the Ticket to Work Program.
Reason for Change
Under the $1-for-$2 benefit offset demonstration project,
earnings of many beneficiaries may not be sufficient to
completely eliminate their benefits. However, benefits must be
completely eliminated before employment networks participating
in the Ticket to Work program are eligible to receive outcome
payments. Therefore, employment networks may be reluctant to
accept tickets from beneficiaries participating in the $1-for-
$2 benefit offset demonstration, making it impossible for the
SSA to effectively test this mandated project.
Effective Date
Upon enactment.
Section 403. Funding of Demonstration Projects Providing for Reductions
in Disability Insurance Benefits Based on Earnings
Present Law
The Ticket to Work Act provides that the benefits and
administrative expenses of conducting the $1-for-$2
demonstration projects will be paid out of the Old-Age,
Survivors, and Disability Insurance (OASDI) and Federal
Hospital Insurance and Federal Supplementary Medical Insurance
(HI/SMI) trust funds, to the extent provided in advance in
appropriations acts.
Explanation of Provision
The new provision establishes that administrative expenses
for the $1-for-$2 demonstration project will be paid out of
otherwise available annually-appropriated funds, and that
benefits associated with the demonstration project will be paid
from the OASDI or HI/SMI trust funds.
Reason for Change
Administrative costs for demonstration projects conducted
under the broader Title II demonstration project authority are
paid out of otherwise available annually appropriated funds,
and benefits associated with the demonstration projects are
paid from the OASDI or HI/SMI Trust Funds. This provision would
make funding sources for the $1-for-$2 demonstration project
under the Ticket to Work Act consistent with funding sources
for other Title II demonstration projects.
Effective Date
Upon enactment.
Section 404. Availability of Federal and State Work Incentive Services
to Additional Individuals
Present Law
The Ticket to Work Act directs SSA to establish a
community-based program to provide benefit planning and
assistance to disabled beneficiaries. To establish this
program, SSA is required to award cooperative agreements (or
grants or contracts) to State or private entities. In
fulfillment of this requirement, SSA has established the
Benefits Planning, Assistance, and Outreach (BPAO) program. The
Act also authorizes SSA to award grants to State protection and
advocacy (P&A) systems so that they can provide protection and
advocacy services to disabled beneficiaries. SSA has
established the Protection and Advocacy to Beneficiaries of
Social Security (PABSS) Program pursuant to this authorization.
To be eligible for services under either the BPAO or PABSS
programs, an individual must be entitled to Title II (OASDI) or
Title XVI (SSI) benefits based on disability or blindness.
Explanation of Provision
The new provision expands eligibility for the BPAO and
PABSS programs to include individuals who (1) are no longer
eligible for SSI benefits because of an increase in earnings,
but remain eligible for Medicaid; (2) receive only a State
Supplementary payment (a payment that some States provide as a
supplement to theFederal SSI benefit); or (3) are in an
extended period of Medicare eligibility under Title XVIII after a
period of Title II disability has ended.
This provision also expands the current PABSS assistance
(which is available for securing and regaining employment) to
include maintaining employment.
Reason for Change
Although disabled beneficiaries may have progressed beyond
eligibility for Federal cash benefits, but may still need
information about the effects of work on their medical or State
benefits, or they may need advocacy or other services to help
them maintain or regain employment. Extending eligibility for
the BPAO and PABSS programs to beneficiaries who are no longer
eligible for Federal cash benefits will help to prevent these
beneficiaries from returning to the Federal cash benefit rolls
and help them to reach their optimum level of employment.
By extending the current PABSS assistance to maintaining
employment, this provision would ensure that disabled
individuals would not face a situation in which they would have
to wait until they lost their employment in order to once again
be eligible to receive PABSS services.
The Committee intends this provision to provide a
continuity of services for disabled individuals throughout the
process of initially securing employment, the course of their
employment and, if needed, their efforts to regain employment.
Effective Date
The amendment to the BPAO program is effective with respect
to grants, cooperative agreements or contracts entered into on
or after the date of enactment. The amendment to the PABSS
program is effective for payments provided after the date of
enactment.
Sec. 405. Technical Amendment Clarifying Treatment of Referrals Under
the Ticket to Work and Self-Sufficiency Program
Present Law
Employers may claim a Work Opportunity Tax Credit (WOTC)
for newly hired employees with disabilities who have been
referred by a State vocational rehabilitation (VR) agency. The
WOTC is equal to 40 percent of the first $6,000 of wages paid
to newly hired employees during their first year of employment
when the employee is retained for at least 400 work hours. A
lesser credit rate of 25 percent is provided to employers when
the employee remains on the job for 120-399 hours.
The Ticket to Work Act provides a ``ticket'' to eligible
Title II (OASDI) and Title XVI (SSI) beneficiaries that allows
them to obtain employment and other support services from an
approved ``employment network'' of their choice. Employment
networks may include State, local, or private entities that can
provide directly, or arrange for other organizations or
entities to provide, employment services, VR services, or other
support services.
Under current law, an employer hiring a disabled individual
referred by an employment network does not qualify for the WOTC
unless the employment network is a State VR agency.
Explanation of Provision
The new provision allows employers who hire disabled
workers through referrals by any employment network approved
under the Ticket to Work Act to qualify for the WOTC.
Reason for Change
The Ticket to Work program was designed to increase choice
available to beneficiaries when they select providers of
employment services. Employers hiring individuals with
disabilities should be able to qualify for the WOTC regardless
of whether the employment referral is made by a public or
private service provider. This amendment updates eligibility
criteria for the WOTC to conform to the expansion of employment
services and the increase in number and range of VR providers
as a result of the enactment of the Ticket to Work Act.
Effective Date
This provision is effective as if it were included in
section 505 of the Ticket to Work Act.
Sec. 406. GAO Study of Ticket to Work and Self-Sufficiency Program
Present Law
The Ticket to Work and Work Incentives Improvement Act of
1999 (P.L. 106-170) was designed to help disabled beneficiaries
who are seeking employment services, vocational rehabilitation
services, and other support services to assist them in
obtaining, regaining, and maintaining self-supporting
employment.
The Ticket to Work Program is being phased in the over a 3-
year period. During the first phase which began in February
2002, the program was available in 13 States. In the second
phase which began in November 2002, it was expanded to 20
additional States, as well as to the District of Columbia. In
the third and final phase beginning in November 2003, SSA will
expand the program to the remaining 17 States, as well as to
American Samoa, Guam, the Northern Mariana Islands, Puerto
Rico, and the Virgin Islands
By implementing the Ticket to Work program in phases, the
SSA will have the opportunity to evaluate the program and make
any necessary improvements before the program is fully
implemented nationwide.
Explanation of Provision
This provision would require the General Accounting Office
to provide an interim assessment of the Ticket to Work program.
Reason for Change
Current law requires numerous annual and interim reports
analyzing various aspects of the Ticket to Work program, as
well as a final report by the Advisory Panel 8 years after the
date of enactment. However, no one has compiled all of the
information available so far in order to assess how well the
Ticket to Work program is working and whether any additional
legislative or administrative changes are needed.
Effective Date
The report would be due 12 months after the date of
enactment.
SUBTITLE B. MISCELLANEOUS AMENDMENTS
Section 411. Elimination of Transcript Requirement in Remand Cases
Fully Favorable to the Claimant
Present Law
The Social Security Act requires SSA to file a hearing
transcript with the District Court for any SSA hearing that
follows a court remand of an SSA decision.
Explanation of Provision
The new provision clarifies that SSA is not required to
file a transcript with the court when SSA, on remand, issues a
decision fully favorable to the claimant.
Reason for Change
A claimant whose benefits have been denied is provided a
transcript of a hearing to be used when the claimant appeals
his case in Federal District court. If the Administrative Law
Judge issues a fully favorable decision, then transcribing the
hearing is unnecessary since the claimant would not appeal this
decision.
Effective Date
Upon enactment.
Section 412. Nonpayment of Benefits Upon Removal From the United States
Present Law
In most cases, the Social Security Act prohibits the
payment of Social Security benefits to non-citizens who are
deported from the United States. However, the Act does not
prohibit the payment of Social Security benefits to non-
citizens who are deported for smuggling other non-citizens into
the United States.
Explanation of Provision
The new provision requires SSA to suspend benefits of
beneficiaries who are removed from the United States, pursuant
to a removal notice from the Attorney General or the Secretary
of Homeland Security, for smuggling aliens.
Reason for Change
Individuals who are removed from the United States for
smuggling aliens have committed an act that should prohibit
them from receiving Social Security benefits.
Effective Date
Upon enactment.
Section 413. Reinstatement of Certain Reporting Requirements
Present Law
The Federal Reports Elimination and Sunset Act of 1995
``sunsetted'' most annual or periodic reports from agencies to
Congress that were listed in a 1993 House inventory of
congressional reports.
Explanation of Provision
The new provision reinstates the requirements for several
periodic reports to Congress that were subject to the 1995
``sunset'' Act, including annual reports on the financial
solvency of the Social Security and Medicare programs (the
Board of Trustees' reports on the OASDI, HI, and SMI trust
funds) and annual reports on certain aspects of the
administration of the Title II disability program (the SSA
Commissioner's reports on pre-effectuation reviews of
disability determinations and continuing disability reviews).
Reason for Change
The reports to be reinstated provide Congress with
important information needed to evaluate and oversee the Social
Security and Medicare programs.
Effective Date
Upon enactment.
Section 414. Clarification of Definitions Regarding Certain Survivor
Benefits
Present Law
Under the definitions of ``widow'' and ``widower'' in
Section 216 of the Social Security Act, a widow or widower must
have been married to the deceased spouse for at least 9 months
before his or her death in order to be eligible for survivor
benefits.
Explanation of Provision
The new provision creates an exception to the 9-month
requirement for cases in which the Commissioner finds that the
claimant and the deceased spouse would have been married for
longer than 9 months but for the fact that the deceased spouse
was legally prohibited from divorcing a prior spouse who was in
a mental institution.
Reason for Change
This provision allows the Commissioner to issue benefits in
certain unusual cases in which the duration of marriage
requirement could not be met due to a legal impediment over
which the individual had no control and the individual would
have met the legal requirements were it not for the legal
impediment.
Effective Date
Effective for benefit applications filed after the date of
enactment.
Section 415. Clarification Respecting the FICA and SECA Tax Exemptions
for an Individual Whose Earnings are Subject to the Laws of a
Totalization Agreement Partner
Present Law
In cases where there is a totalization agreement with a
foreign country, a worker's earnings are exempt from U.S.
Social Security payroll taxes when those earnings are subject
to the foreign country's retirement system.
Explanation of Provision
The new provision clarifies the legal authority to exempt a
worker's earnings from U.S. Social Security tax in cases where
the earnings were subject to a foreign country's retirement
system in accordance with a U.S. totalization agreement, but
the foreign country's law does not require compulsory
contributions on those earnings. The provision establishes that
such earnings are exempt from U.S. Social Security tax whether
or not the worker elected to make contributions to the foreign
country's retirement system.
Reason for Change
In U.S. totalization agreements, a person's work is
generally subject to the Social Security laws of the country in
which the work is performed. In most cases, the worker (whether
subject to the laws of the United States or the other country)
is compulsorily covered and required to pay contributions in
accordance with the laws of that country. In some instances,
however, work that would be compulsorily covered in the United
States is excluded from compulsory coverage in the other
country (such as Germany). In such cases, the IRS has
questioned the exemption from U.S. Social Security tax for
workers who elect not to make contributions to the foreign
country's retirement system. This provision would remove any
questionregarding the exemption and would be consistent with
the general philosophy behind the coverage rules of totalization
agreements.
Effective Date
Upon enactment.
Section 416. Coverage Under Divided Retirement System for Public
Employees
Present Law
Social Security coverage for State and local employees
covered under a public pension plan is established through an
agreement between the States and the Federal government. Every
State and local government has the option of electing Social
Security coverage for its employees by a majority vote in a
referendum. In certain States, however, there is an alternative
method known as a divided retirement system. Under this system,
employees voting in the referendum may individually choose
whether they want Social Security coverage, provided that all
newly hired employees are required to participate in Social
Security.
Explanation of Provision
This provision would extend the authority to operate a
divided retirement system to all States.
Reason for Change
In the past, Congress has provided 21 States with the
authority to operate divided retirement systems. This authority
has generally been granted as a result of a merger between two
political subdivisions. Without this authority, a majority vote
would determine whether or not every employee would participate
in Social Security. As the number of non-covered employees
often exceeds the number of Social Security-covered employees
in the new merged political subdivision, those employees
currently covered by Social Security could lose that coverage.
This provision was originally proposed in February 2002 to
address the proposed merger between the governments of the city
of Louisville and Jefferson County, in the State of Kentucky.
Enactment of this provision would allow other States to operate
a divided system in the future as the need arises.
Effective Date
Upon enactment.
Section 417. Compensation for the Social Security Advisory Board
Present Law
The Social Security Advisory Board is an independent,
bipartisan Board established by the Congress under the Social
Security Act. The seven-member Board is appointed by the
President and the Congress to advise the President, the
Congress and the Commissioner of Social Security on matters
related to the Social Security and Supplemental Security Income
programs. Members of the Board serve without compensation,
except that while engaged in Board business away from their
homes or regular places of business members may be allowed
reimbursement for travel expenses, including per diem in lieu
of subsistence.
Explanation of Provision
The new provision establishes that compensation for Social
Security Advisory Board members will be provided, at the daily
rate of basic pay for level IV of the Executive Schedule, for
each day (including travel time) during which the member is
engaging in the business of the Board.
Reason for Change
Other government advisory boards--such as the Employee
Retirement Income Security Act Advisory Council, the Pension
Benefit Guaranty Corporation Advisory Committee and the Thrift
Savings Plan Board--provide compensation for their members.
This provision allows for similar treatment of Social Security
Advisory Board members with respect to compensation.
Effective Date
January 1, 2003.
Section 418. 60-Month Period of Employment Requirement for Government
Pension Offset Exemption
Present Law
The ``dual entitlement'' rule reduces a spouse's or
survivor's Social Security benefit $1-for-$1 by his or her own
Social Security retirement or disability benefit. For
government workers who are not covered by Social Security, the
Government Pension Offset (GPO) reduces their Social Security
spouse's or survivor's benefit by an amount equal to two-thirds
of their public pension. However, under the ``last day rule,''
State and local government workers are exempt from the GPO if
they are covered by both a government pension and Social
Security on their last day of government employment.
Explanation of Provision
This provision requires that State and local government
workers covered by a public pension who subsequently elect
coverage under Social Security (pursuant to a referendum
approved under Section 218 of the Social Security Act) must be
covered by Social Security for at least the last 5 years of
their government employment in order to be exempt from the GPO.
Reason for Change
The GPO was enacted in 1977 to equalize the treatment of
workers covered by Social Security and those with government
pensions not covered by Social Security. However, current law
effectively provides an unintended exemption when State or
local government workers are covered by both Social Security
and their government pension on their last day of employment.
In such cases, the GPO does not apply.
Although individuals could have used this exemption since
1977, knowledge of this ``last-day'' loophole did not become
widespread until recent years. According to the General
Accounting Office (GAO), nearly all of the cases they
identified in which individuals took advantage of this loophole
occurred in the last several years.
For example, the GAO reported one-fourth (3,521) of all
Texas public education retirees took advantage of this loophole
in 2002. In most cases, teachers typically worked a single day
in a non-teaching position (clerical, food service, or
maintenance). Most of these employees paid about $3 in Social
Security payroll taxes. The average spousal benefit resulting
from these last-day loophole jobs would be an additional $5,200
a year.
The 5-year rule adopted in this provision has precedent in
1987 legislation allowing Federal employees covered by the old
Civil Service Retirement System (CSRS) to elect coverage under
Social Security as part of the transition to the new Federal
Employees Retirement System (FERS). That legislation required
Federal employees who transferred from CSRS to FERS and Social
Security to work for at least 5 years before retirement in
order to be exempt from the GPO.
This change will establish uniform application of the GPO
exemption for all Federal, State, and local government workers
who elect to join Social Security through the referendum
process provided under current law.
Effective Date
The provision is effective for applications filed after the
month of enactment. However, the provision would not apply to
individuals whose last day of employment for the State or local
governmental entity was covered by Social Security and occurs
on or before December 31, 2003.
Sec. 419. Post-1956 Military Wage Credits
Present Law
Prior to January 1, 2002, members of the uniformed services
were deemed to be paid amounts greater than their actual
taxable wages. These deemed wages were designed to increase
Social Security benefits for persons with military service by
giving them credit for various tax-free benefits such as in-
kind food and housing allowances. The Social Security trust
funds (and later the Medicare HI trust fund) have received
various transfers from general funds over the years (most
recently from DoD appropriations) designed to offset the cost
of these additional benefits. The FY 2002 Department of Defense
Appropriations Act (Public Law 107-117) eliminated deemed wage
credits for all years after calendar year 2001. However, the
amount owed for 2000 and 2001 remains outstanding.
Explanation of Provision
This provision would transfer from general funds to the
Social Security and Medicare trust funds the remaining balance
owed for 2000 and 2001, and make conforming amendments to
reflect the termination of deemed military wage credits.
Reason for Change
This provision would constitute a full and final accounting
of the amount owed to the trust funds for deemed military wage
credits.
Effective Date
Upon enactment.
SUBTITLE C. TECHNICAL AMENDMENTS
Section 421. Technical Correction Relating to Responsible Agency Head
Present Law
The Social Security Act directs ``the Secretary of Health
and Human Services'' to send periodic Social Security
Statements to individuals.
Security Statements to individuals.
Explanation of Provision
The new provision makes a technical correction by inserting
a reference to the Commissioner of Social Security in place of
the Secretary of Health and Human Services.
Reason for Change
The ``Social Security Independence and Program Improvements
Act of 1994'' (P.L. 103-296) made the Social Security
Administration an independent agency separate from the
Department of Health and Human Services. This provision updates
Section 1143 to reflect that change.
Effective Date
Upon enactment.
Section 422. Technical Correction Relating to Retirement Benefits of
Ministers
Present Law
The ``Small Business Job Protection Act of 1996'' (P.L.
104-188) established that certain retirement benefits received
by ministers and members of religious orders (such as the
rental value of a parsonage or parsonage allowance) are not
subject to Social Security payroll taxes. However, these
retirement benefits are treated as net earnings from self-
employment for the purpose of acquiring insured status and
calculating Social Security benefit amounts.
Explanation of Provision
The new provision makes a conforming change to exclude
these benefits received by retired clergy from Social Security-
covered earnings for the purpose of acquiring insured status
and calculating Social Security benefit amounts.
Reason for Change
P.L. 104-188 provided that certain retirement benefits
received by ministers and members of religious orders are not
subject to payroll taxes. However, a conforming change was not
made to the Social Security Act to exclude these benefits from
being counted as wages for the purpose of acquiring insured
status and calculating Social Security benefit amounts. This
income is therefore not treated in a uniform manner. This
provision would conform the Social Security Act to the Internal
Revenue Code with respect to such income.
Effective Date
Effective for years beginning before, on, or after December
31, 1994 which is the same Section 1456 of P.L. 104-188.
Section 423. Technical Correction Relating to Domestic Employment
Present Law
Present law is ambiguous concerning the Social Security
coverage and tax treatment of domestic service performed on a
farm. Domestic employment on a farm appears to be subject to
two separate coverage thresholds (one for agricultural labor
and another for domestic employees).
Explanation of Provision
The new provision clarifies that domestic service on a farm
is treated as domestic employment, rather than agricultural
labor, for Social Security coverage and tax purposes.
Reason for Change
Prior to 1994, domestic service on a farm was treated as
agricultural labor and was subject to the coverage threshold
for agricultural labor. According to the SSA, in 1994, when
Congress amended the law with respect to domestic employment,
the intent was that domestic employment on a farm would be
subject to the coverage threshold for domestic employees
instead of the threshold for agricultural labor. However, the
current language is unclear, making it appear as if farm
domestics are subject to both thresholds.
Effective Date
Upon enactment.
Section 424. Technical Correction of Outdated References
Present Law
The Social Security Act and the Internal Revenue Code of
1986 each contain a number of outdated references that relate
to the Social Security program.
Explanation of Provision
The new provision corrects outdated references in the
Social Security Act and the Internal Revenue Code by correcting
a citation respecting a tax deduction related to health
insurance costs of self-employed individuals, and eliminating a
reference to an obsolete 20-day agricultural work test.
Reason for Change
Over the years, provisions in the Social Security Act, the
Internal Revenue Code and other related laws have been deleted,
re-designated or amended. However, necessary conforming changes
have not always been made. Consequently, the Social Security
law and the Internal Revenue Code contain some outdated
references.
Effective Date
Upon enactment.
Section 425. Technical Correction Respecting Self-Employment Income in
Community Property States
Present Law
The Social Security Act and the Internal Revenue Code
provide that, in the absence of a partnership, all self-
employment income from a trade or business operated by a
married person in a community property State is deemed to be
the husband's unless the wife exercises substantially all of
the management and control of the trade or business.
Explanation of Provision
Under the new provision, self-employment income from a
trade or business that is not a partnership, and that is
operated by a married person in a community property State, is
taxed and credited to the spouse who is carrying on the trade
or business. If the trade or business is jointly operated, the
self-employment income is taxed and credited to each spouse
based on his or her distributive share of gross earnings.
Reason for Change
Present law was found to be unconstitutional in several
court cases in 1980. Since then, income from a trade or
business that is not a partnership in a community property
State has been treated the same as income from a trade or
business that is not a partnership in a non-community property
State--it is taxed and credited to the spouse who is found to
be carrying on the business.
This change will conform the provisions in the Social
Security Act and the Internal Revenue Code to current practice
in both community property and non-community property States.
Effective Date
Upon enactment.
Section 426. Technical Changes to the Railroad Retirement and
Survivors' Improvement Act of 2001
Present Law
The ``Railroad Retirement and Survivors'' Improvement Act
of 2001'' (Public Law 107-90) established the Railroad
Retirement Investment Trust to invest the assets of the
railroad retirement program in a special trust fund created
outside of the general fund of the U.S. Treasury. An
independent Board of Trustees was appointed to administer the
Trust. The Trustees are responsible for establishing investment
guidelines for the prudent management of trust fund assets and
for selecting outside investment advisors and managers to
implement investment policies.
Explanation of Provisions
Quorum Rules--Clarifies that a vacancy on the Board of the
Trust does not preclude the Board from making changes in the
Investment Guidelines with the unanimous vote of all remaining
Trustees.
Certain Transfers--Clarifies that the Railroad Retirement
Board can require the Trust to transfer amounts to the Railroad
Retirement Account (RRA), and that excess Social Security
Equivalent Benefits Account assets can be transferred to the
RRA until used to pay benefits.
Investment of Assets--Clarifies that the Trust may invest
the assets in accordance with its investment guidelines either
directly or through the retention of outside investment
managers.
Clerical Changes--Makes a number of grammatical and
typographical changes.
Other Board Powers--Consolidates the Board's administrative
powers and specifies that such powers include the ability to
execute necessary business functions such as entering into
contracts and taking all other necessary steps to make and
secure trust investments in a prudent manner.
State and Local Taxes--Clarifies that the Trust is exempt
from income, sales and use taxes imposed or levied by a State,
political subdivision, or local taxing authority.
Funding of Administrative Expenses--Deletes a redundant
paragraph regarding the Trust's authority to pay its
administrative expenses.
Investment in Federal Securities in Non-Governmental
Accounts--Clarifies that the Trust may purchase qualifying
Federal obligations for investment of assets transferred from
the SSEB Account either directly or through a commingled
account that is invested only in such qualifying federal
obligations, and reinvest earnings on such Federal obligations
in the same manner.
Quarterly Transfers to RRB--Clarifies that the Trust may
transfer amounts to the RRB for the payment of benefits on a
quarterly basis (or on such other basis upon which the RRB and
Trust may agree).
Reason for Change
All nine changes are technical in nature and are needed to
promote the efficient implementation of the Railroad Retirement
and Survivors' Improvement Act of 2001.
Effective Date
Upon enactment.
SUBTITLE D. AMENDMENTS RELATED TO TITLE XVI
Section 430. Exclusion From Income for Certain Infrequent or Irregular
Income and Certain Interest or Dividend Income
Present Law
An individual who has no countable income, and who meets
all other SSI eligibility criteria, is eligible to receive
Federal Supplemental Security Income (SSI) benefits equal to
the amount of the Federal Benefit Rate (FBR), which is $552 a
month for an individual or $829 a month for a couple in 2003.
If the individual has countable income (i.e., total income
minus applicable exclusions), the payment amount is reduced by
$1 for each $1 of countable income, whether earned or unearned.
An individual with countable income greater than the FBR is not
eligible for a federal cash benefit.
Several exclusions apply to the calculation of countable
earned and unearned income. One such provision is for the
exclusion of infrequent or irregular income. Under current law,
an individual can receive up to $20 of infrequent or irregular
unearned income per month and up to $10 of infrequent or
irregular earned income per month. Income is considered to be
infrequent if it is received no more than once in a calendar
quarter from a single source. Income is considered to be
irregular if the recipient could not reasonably expect to
receive the income. Both exclusions are ``all or nothing.''
That is, if either the ``infrequent or irregular'' earned
income or ``infrequent or irregular'' unearned income exceeds
their respective monthly limits, none of the income in that
category can be excluded.
In order to be eligible for SSI, recipients must have
countable resources of no more than $2,000 for individuals or
$3,000 for couples. If an SSI recipient receives interest or
dividend income on these countable resources, this income is
excluded as infrequent or irregular income only if it is
credited on a quarterly basis. Interest or dividend income
received on a monthly basis is countable as unearned income.
Explanation of Provision
This provision changes the calculation of infrequent and
irregular income from a monthly to a quarterly basis.
Therefore, individuals could exclude $60 per quarter of
unearned income and $30 per quarter of earned income that is
received irregularly and infrequently. This provision also
excludes from the determination of an individual's income all
interest and dividend income earned on countable resources.
Reason for Change
The original SSI legislation enacted in 1972 contained a
provision excluding infrequent and irregular unearned income of
$60 per quarter and earned income of $30 per quarter. The
intent in excluding these amounts was to simplify
administration of the SSI program by allowing SSA to ignore
occasional small gifts and small amounts of earnings. However,
the ``Omnibus Budget Reconciliation Act of 1981'' changed the
amount of the exclusion to $20 a month for unearned and $10 a
month for earned income to conform with the change from a
quarterly to a monthly accounting system. This change
unintentionally disadvantaged some SSI beneficiaries by
lowering the cap on the amount of infrequent or irregular
income that could be excluded at one time.
The provision restores the exclusion for infrequent or
irregular income to its original quarterly basis. This change
will permit an individual to receive small gifts, or payment
for infrequent jobs such as babysitting, without worrying that
fairly insignificant amounts of income would adversely affect
his or her benefits. For example, under current law, a $25 cash
birthday gift would be counted as income to the individual.
Under this proposal, such a relatively insignificant gift would
not be counted as income if the income did not exceed the
quarterly limit. The change will also simplify program
administration by reducing the need to make benefit adjustments
due to small amounts of infrequently-received income.
The exclusion from countable income of all interest and
dividend income earned on countable resources under this
provision would simplify the administration of the program by
eliminating the need to track small interest or dividend
payments (which would generally amount to only a few dollars a
month because they would be earned on resources currently
limited to a maximum value of $2,000 or $3,000) and the need to
adjust benefit amounts and pursue the recovery of overpayments
arising from to minor fluctuations in interest and dividend
income.
Effective Date
The change is effective with respect to benefits payable
for months that begin more than 90 days after the date of
enactment.
Section 431. Uniform 9-Month Resource Exclusion Periods
Present Law
The SSI program limits the amount of resources
beneficiaries may have to $2,000 for individuals and $3,000 for
couples. Resources consist of cash, other liquid assets, or
property that an individual owns and could convert to cash.
Certain types of cash payments are excluded from resources for
specific periods of time. Currently, State and local crime
victim's assistance and State and local relocation assistance
payments are excluded for 9 months after the month of receipt;
retroactive Social Security and SSI payments are excluded for 6
months after the month of receipt; and Earned Income Tax Credit
(EITC) and Child Tax Credit (CTC) payments are excluded for 1
month after the month of receipt. After the expiration of the
time period, any remaining value of the payment becomes a
countable resource for purposes of determining SSI eligibility.
Explanation of Provision
This provision increases to 9 months and makes uniform the
time period for excluding from resources amounts attributable
to payments of past-due Social Security and SSI benefits, EITC
payments, and CTC payments.
Reason for Change
The resource exclusion periods are intended to allow
beneficiaries who receive significant sums of money sufficient
time to meet outstanding obligations or needs before the sums
become countable as assets, which could result in SSI
ineligibility. The legislative history of these provisions
provides no rationale for the differing exclusion time periods
permitted for excluding various types of payments. Uniformity
simplifies SSI administration and improves the public's
understanding of the SSI program. Moreover, increasing the
length of the exclusion period for some of these payments
allows beneficiaries more time to meet outstanding obligations
or needs and reduces current incentives to spend payments
rapidly, and perhaps imprudently, to avoid exceeding resource
limits.
Effective Date
The change is effective for benefits payable on or after
the date of enactment.
Section 432. Modification of the Dedicated Account Requirement
Present Law
The SSI program requires that past-due benefits to a
disabled child that are greater than six times the maximum
monthly SSI benefit be deposited in a special account and be
used by the child's parents or representative payee only for
certain specified purposes related to the impairment (or
combination of impairments) of the beneficiary.
Explanation of Provision
This provision modifies the dedicated account requirement
by allowing the funds in the account to be used for
reimbursement of past expenditures incurred by the child's
parent or representative payee that were forthe good of the
beneficiary. The modification also clarifies that funds from the
dedicated account can be used for any purpose that is for the good of
the beneficiary, not just for certain specified purposes related to the
impairment of the beneficiary.
Reason for Change
Field office employees of the Social Security
Administration have remarked that the current law rules and
regulations for dedicated accounts are overly intrusive, very
cumbersome administratively, and lead to unsatisfactory results
for some families trying to meet the needs of a disabled child
in their family. The change will allow more flexibility in the
administration of dedicated accounts by clearly allowing any
expenses that are for the good of the beneficiary to be drawn
from the account. This change to the SSI program will also make
the treatment of funds in these accounts consistent with the
requirements placed on representative payees, including
parents, who receive payments on behalf of children who do not
have dedicated accounts, and those children who are survivors
or dependents under Title II.
Effective Date
The provision would be effective on January 1, 2004 and
apply with respect to expenditures of funds from dedicated
accounts on or after that date, or accounts established on or
after that date.
Section 433. Elimination of Certain Restrictions on the Application of
the Student Earned Income Exclusion
Present Law
The earned income of a beneficiary who is a child and who
is determined to be a student is excluded subject to limits
prescribed by SSA. Currently, the program excludes up to $1,340
a month, but no more than $5,410 a year. To be eligible for the
exclusion, an individual must be a child--defined as an
unmarried individual under age 22 who is not the head of a
household--and must also be a student regularly attending a
school, college, university, or a course of vocational or
technical training designed to prepare him or her for gainful
employment.
Explanation of Provision
This provision permits the student earned income exclusion
to apply to any individual under age 22 who is a student.
Therefore, students under age 22 who are married or heads of
households will now be eligible for the exclusion.
Reason for Change
The intent of the original student earned income exclusion
was to help a student to finance school attendance, to
recognize the special expenses that many students with
disabilities incur to attend school, and to provide tangible
incentives to encourage work and education. Because the
definition of the term ``child'' under SSI rules includes the
requirement that an individual be neither married nor the head
of a household, young married and single parent students do not
have the incentive from an earned income exclusion that is
available to other students. It is not reasonable or equitable
to deny married individuals or heads of households an exclusion
which may make the difference in their ability to attend school
and progress toward self-sufficiency.
Effective Date
The change is effective for benefits payable for months
that begin 1 year after the date of enactment.
Section 434. Exclusion of Americorps and Other Volunteer Benefits for
Purposes of Determining Supplemental Security Income
Eligibility and Benefit Amounts and Social Security Disability
Insurance Entitlement
Present Law
Americorps volunteers receive a living allowance during
their participation in the program, and may also receive an
educational award. For volunteers in the Americorps VISTA
programs, these payments are categorically excluded from income
in the SSI program and are not counted as earnings for trial
work period (TWP) and substantial gainful activity (SGA)
purposes in the Title II disability program. However,
Americorps volunteers who are not in the VISTA program have
these payments counted as earnings both for the SSI program and
for TWP and SGA purposes in the Title II disability program. In
addition, current SSI rules count room and board provided for
non-VISTA volunteers under the Americorps program as in-kind
support and maintenance.
Explanation of Provision
This provision excludes all payments and benefits to all
Americorps volunteers, both cash and in-kind, for the purpose
of determining SSI eligibility and benefit amounts, and for the
purpose of determining initial and continuing eligibility for
Social Security disability insurance benefits.
Reason for Change
This provision eliminates the disparate treatment in the
SSI and Title II disability programs between payments to
volunteers in the Americorps VISTA program and payments to
other Americorps volunteers, and between payments in cash and
in-kind. This change removes current disincentives that may
prevent young people with disabilities from participating in
the Americorps program.
Effective Date
The change is effective for benefits payable for months
that begin 60 days after the date of enactment.
Section 435. Exception to Retrospective Monthly Accounting for
Nonrecurring Income
Present Law
SSI benefit amounts are determined under a system known as
``retrospective monthly accounting'' (RMA). Under RMA, the SSI
benefit payment for the current month is based on a recipient's
circumstances in the second prior month. For example, countable
income received in October determines the SSI payment for
December. For individuals newly eligible for SSI, however,
there is a transition to RMA during the first 3 months of
eligibility for payment. During this transition period,
countable income received in the first month determines the
payment amount for the first month and also for each of the
following 2 months. For example, if the first month of payment
eligibility is October, countable income received in October
determines the payment amounts for October, November and
December.
Explanation of Provision
Under this provision, one-time, nonrecurring income is
counted only for the month that the income is received, and not
for any other month in the transition to RMA during the first 3
months of an individual's SSI eligibility. This exception would
not apply to income that is ongoing but the amounts of which
fluctuate.
Reason for Change
In some cases in which an individual has non-recurring
income in the first month of SSI payment eligibility, the
application of RMA during the first 3 months of such
eligibility can result in more income being counted than is
actually received. In such cases during the 3-month period, SSI
benefits may be reduced by $3 for each $1 of income received,
instead of by the normal and equitable $1 for each $1 ofincome
received. This provision would eliminate the triple counting of one-
time, nonrecurring income, thereby more accurately and fairly
reflecting an individual's financial means.
Effective Date
The provision is effective for benefits payable for months
that begin on or after 1 year following the date of enactment.
Section 436. Removal of Restriction on Payment of Benefits to Children
Who Are Born or Who Become Blind or Disabled After Their
Military Parents Are Stationed Overseas
Present Law
An individual must generally be a U.S. resident and present
in the United States to receive SSI benefits. An exception is
made for blind and disabled children of U.S. military personnel
stationed overseas. These children are eligible for SSI
benefits if the child received SSI benefits in the month before
the parents reported overseas. Those children of U.S. military
personnel who are born, who become blind or disabled, or who
first apply for SSI benefits while overseas are not eligible
for SSI benefits.
Explanation of Provision
This provision extends the current law eligibility for SSI
for blind and disabled children of military personnel overseas
to blind and disabled children of military personnel who were
born overseas, who became blind or disabled while overseas, or
who first applied for SSI benefits overseas.
Reason for Change
This amendment would eliminate the disparate treatment with
regard to SSI eligibility between blind and disabled children
of military personnel overseas who were eligible for SSI before
they went overseas and those children who were born, became
blind or disabled, or first applied for SSI benefits after
going overseas. This provision would be a reasonable change in
the law to protect a specific, limited group of children who
reside outside the United States only because their parents are
serving their country by being stationed overseas.
Effective Date
The provision is effective for benefits payable for months
beginning after enactment but only on the basis of an
application filed after enactment.
Section 437. Treatment of Education-Related Income and Resources
Present Law
Income from grants, scholarships or fellowships used to pay
for tuition or educational fees is excluded in determining SSI
eligibility and benefit amounts. However, monetary gifts to an
SSI recipient are counted as unearned income even if the money
is used to pay for tuition or educational fees.
Explanation of Provision
This provision excludes from the determination of income
any gift to an individual for use in paying tuition or
educational fees, just as grants, scholarships and fellowships
for such use are currently excluded from the determination of
income. The provision also excludes grants, scholarships,
fellowships, or gifts to be used for tuition or education fees
from an individual's countable resources for 9 months after the
month of receipt.
Reason for Change
Permitting the exclusion of such gifts when determining SSI
eligibility and benefit amounts could permit and encourage
familial and community support of an individual's education and
thus increase the chances that such an individual might become
self-sufficient and leave the SSI rolls.
Effective Date
The change is effective for benefits payable for months
that begin more than 90 days after the date of enactment.
Section 438. Monthly Treatment of Uniformed Service Compensation
Present Law
Members of the uniformed services are paid on the first day
of the month for work performed in the previous calendar month,
and are paid at mid-month as partial payment of the amount due
for the current calendar month. Earnings statements are issued
monthly, reflecting monthly compensation earned in 1 month, but
paid in two installments in two different months. For example,
a leave and earnings statement dated February 1 shows the
compensation for January in one sum, which includes payments
received on January 15 and February 1 (the date of the
statement). Therefore, SSA field office personnel must have two
monthly leave and earnings statements to determine 1 month's
income, and the income reported on each statement must be
broken down to determine how much was received in each month.
Explanation of Provision
This provision would count cash military compensation as
reported on a monthly leave and earnings statement issued by
the military, which reflects compensation earned in the prior
month, as received in the prior month.
Reason for Change
The provision would simplify the determination of countable
income in SSA field offices by making it unnecessary to view
earnings statements for two months to determine one month's
earnings.
Effective Date
The change is effective for benefits payable for months
beginning at least 90 days after the date of enactment.
Section 439. Update for Resource Limit
Present Law
The SSI program limits the amount of resources
beneficiaries may own and still be eligible for benefits. These
limits are $2,000 for individuals and $3,000 for couples. The
resource limits were last updated by The Deficit Reduction Act
of 1984 (PL 98-369), with the last installment of the update
taking place in 1989.
Explanation of Provision
This provision changes the resource limits to $3,000 for
individuals and $4,500 for couples, and subsequently indexes
the amounts for inflation in the same manner as the maximum SSI
benefit amount is indexed.
Reason for Change
If the resource limits for SSI had been indexed for
inflation since the enactment of the program in 1972, the
limits would currently be roughly $6,000 for an individual and
$9,000 for a couple. This provision to update the resource
limits will allow SSI beneficiaries to save more of their
resources to cover costs of an urgent nature or of significant
size--such as health emergencies, storm damage, home repairs,
or winter utility bills--that because of their size or
immediacy could not be covered by the monthly benefit payment
that the recipient uses to pay for ongoing basic needs such as
food, clothing and shelter. In addition, the change will allow
some individuals who are elderly or disabled and have very low
incomes to apply for and receive SSI while holding onto a
slightly larger amount of resources for these types of future
``rainy day'' needs. The Committee recognizes that the change
to the resource limits will increase Federal expenditures by
$3.8 billion over 10 years. Therefore, the Committee has
included in this legislation several provisions that will
produce an equal amount of budgetary savings. The Committee
believes that savings in the SSI program should be used to
improve the benefits in the SSI program.
Effective Date
The increase to $3,000 and $4,500 is effective for benefits
payable for January 2004. Indexing the resource limits is
effective January 1, 2005.
Section 440. Review of State Agency Blindness and Disability
Determinations
Present Law
State agencies are required to conduct blindness and
disability determinations to establish an individual's
eligibility for: (1) Title II (Federal Old-Age, Survivors, and
Disability Insurance (OASDI) benefits); and (2) Title XVI
(Supplemental Security Income (SSI)). Disability determinations
are made in accordance with disability criteria defined in
statute as well as standards promulgated under regulations or
other guidance.
Under current law, the Commissioner of Social Security is
required to review the State agencies' Title II blindness and
disability determinations in advance of awarding or continuing
payment to individuals. This requirement for review is met
when: (1) at least 50 percent of all initial allowances have
been reviewed, and (2) other such determinations have been
reviewed as necessary to ensure a high level of accuracy.
Explanation of Provision
After a 1-year phase-in, the bill aligns disability and
blindness review requirements for Title XVI with those
currently required under Title II. As under Title II, the
Commissioner of Social Security would be required to review
initial Title XVI blindness and disability determinations made
by State agencies in advance of awarding payments. For FY2004,
the review would be required for at least 25 percent of all
State-determined allowances made after March 2004. In FY2005
and thereafter, review would be required for at least 50
percent of State-determined allowances. To the extent feasible,
the bill requires the Commissioner to select for review those
State agency determinations that are most likely to be
incorrect.
Reason for Change
The provision will improve the integrity of the
Supplemental Security Income program.
Effective Date
The proposal is effective January 1, 2004.
III. Budget Effects of the Bill
In compliance with sections 308 and 403 of the
Congressional Budget Act of 1974, and paragraph 11(a) of rule
XXVI of the Standing Rules of the Senate, the following letter
has been received from the Congressional Budget Office on the
budgetary impact of the legislation:
U.S. Congress,
Congressional Budget Office,
Washington, DC, October 28, 2003.
Hon. Charles E. Grassley,
Chairman, Committee on Finance,
U.S. Senate, Washington, DC.
Dear Chairman: The Congressional Budget Office has prepared
the enclosed revised cost estimate for H.R. 743, the Social
Security Protection Act of 2003. We have made minor
clarifications in the text of an estimate that we sent you on
October 24. The estimated budgetary effects, however, are
unchanged.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Kathy
Ruffing.
Sincerely,
Elizabeth M. Robinson
(For Douglas Holtz-Eakin, Director).
Enclosure.
Congressional Budget Office Cost Estimate
H.R. 743--Social Security Protection Act of 2003
Summary: H.R. 743 would:
Strengthen the Social Security Administration's
(SSA's) oversight of representative payees (people who handle
benefit checks for others, such as children or mentally
impaired adults);
Bar fugitives from receiving Social Security
benefits;
Enhance SSA's ability to enforce rules that limit
Social Security benefits for people with pensions from
noncovered work in state and local government, and close a
loophole that now enables some to skirt those restrictions by
switching jobs briefly;
Broaden the agency's ability to recover past
overpayments in the Supplemental Security Income (SSI) program
from Social Security benefits and vice versa;
Reduce how much SSA may charge attorneys when it
remits their fee directly from accrued benefits of successful
claimants;
Expand eligibility of people with some resources
for SSI and, consequently, Medicaid; and
Step up federal review of SSI awards made by state
agencies.
On balance, enacting H.R. 743 would lead to small net costs
in 2004 and 2005 and net savings thereafter. In total, CBO
estimates that H.R. 743 would reduce direct spending and boost
revenue by $0.6 billion over the 2004-2013 period. The federal
budget classifies the Social Security portion of that figure
(-$3.3 billion) as ``off budget'' and the rest ($2.7 billion)
as ``on-budget.'' (One provision would transfer $0.7 billion
from the on- to the off-budget side of the ledger, which swells
both figures but does not affect the total.)
H.R. 743 would also affect discretionary spending. CBO
estimates that implementing the bill would cost SSA about $20
million to $30 million annually for extra enforcement and
processing activities.
The Joint Committee on Taxation has reviewed the tax
provisions of H.R. 743 and determined those provisions contain
no intergovernmental or private-sector mandates as defined in
the Unfunded Mandates Reform Act (UMRA). CBO reviewed the rest
of the act for mandates. Section 4 of UMRA excludes from the
provisions of that act any provision in a bill or act that
relates to the Old-Age, Survivors, and Disability Insurance
program (OASDI) under title II of the Social Security Act. The
provisions of H.R. 743 that amend title II of the Social
Security Act would fall within that exclusion. Other provisions
would preempt certain state laws; the costs resulting from
those mandates, if any, would be significantly below the
threshold established in UMRA ($60 million in 2004, adjusted
annually for inflation). Changes to the SSI program would lead
to additional state spending for Medicaid, but those changes
would not result in mandates as defined in UMRA. The act does
contain one private-sector mandate, but CBO estimates that its
cost would not exceed the UMRA threshold ($120 million in 2004,
adjusted annually for inflation).
Estimated cost to the Federal Government: The estimated
budgetary effects of H.R. 743 are shown in Table 1. The costs
of the legislation fall within budget functions 550 (health),
570 (Medicare), 600 (income security), and 650 (Social
Security).
Basis of estimate: About a dozen of H.R. 743's provisions
account for its estimated budgetary effects. They are listed in
Table 2. For this estimate, CBO assumes that H.R. 743 will be
enacted this fall.
TABLE 1.--ESTIMATED EFFECTS OF H.R. 743, THE SOCIAL SECURITY PROTECTION ACT OF 2003, BY TITLE
--------------------------------------------------------------------------------------------------------------------------------------------------------
By Fiscal Year, in Millions of Dollars
-----------------------------------------------------------------------------------------
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING (OUTLAYS)
Title I: Protection of Beneficiaries.......................... 7 9 5 * * * * * * *
Title II: Program Protections................................. -59 -116 -226 -279 -328 -390 -424 -413 -415 -420
Title III: Attorney Fee Payment System Improvements........... 12 24 25 27 28 29 31 32 33 34
Title IV: Miscellaneous and Technical Amendments:............. 49 116 183 226 268 285 288 277 269 243
Total Direct Spending:
On-budget............................................. 735 40 130 187 241 263 270 269 283 284
Off-budget............................................ -727 -8 -143 -213 -273 -338 -376 -372 -395 -427
-----------------------------------------------------------------------------------------
Total............................................. 9 32 -12 -26 -32 -75 -105 -104 -113 -143
CHANGES IN REVENUES
Title IV: Miscellaneous and Technical Amendments:
On-budget................................................. -2 * * * * * * * * *
Off-budget................................................ 1 1 2 2 3 3 3 4 4 5
-----------------------------------------------------------------------------------------
Total................................................. -1 1 2 2 3 3 3 4 4 5
NET CHANGES IN DIRECT SPENDING AND REVENUES (EFFECT ON DEFICITS)
Direct Spending and Revenues (Net):
On-budget............................................. 737 40 130 187 241 263 270 269 283 284
Off-budget............................................ -727 -9 -144 -215 -276 -341 -379 -376 -400 -432
-----------------------------------------------------------------------------------------
Total............................................. 10 31 -14 -28 -34 -78 -109 -108 -117 -148
CHANGES IN SPENDING SUBJECT TO APPROPRIATION (OUTLAYS)
Spending Subject to Appropriation
On-budget................................................. 14 16 15 16 17 17 18 18 18 19
Off-budget................................................ 5 4 11 7 8 8 8 6 7 7
-----------------------------------------------------------------------------------------
Total................................................. 19 20 26 23 25 25 26 24 26 26
--------------------------------------------------------------------------------------------------------------------------------------------------------
NOTES: Details may not add to totals because of rounding.
The Congressional Budget Act labels revenues and outlays of the Social Security trust funds ``off-budget.''
* = Less than $500,000.
TABLE 2.--ESTIMATED EFFECTS OF H.R. 743, THE SOCIAL SECURITY PROTECTION ACT OF 2003, BY MAJOR PROVISION
--------------------------------------------------------------------------------------------------------------------------------------------------------
By Fiscal Year, in Millions of Dollars
-----------------------------------------------------------------------------------------
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING (OUTLAYS)
Title 1: Protection of Beneficiaries
Authority to Reissue Certain Misused Benefits:
OASDIa.................................................... 2 * * * * * * * * *
SSI....................................................... 1 * * * * * * * * *
Survey of Use of Payments by Representative Payees............ 4 9 5 * * * * * * *
-----------------------------------------------------------------------------------------
Subtotal, Title I..................................... 7 9 5 * * * * * * *
Title II: Program Protections
Denial of Title II Benefits to Fugitives:
OASDIa.................................................... -10 -30 -44 -55 -59 -61 -63 -66 -68 -70
Medicare.................................................. -1 -4 -11 -15 -19 -22 -23 -25 -25 -27
Infomation on Pensions from Noncovered Employment............. 0 * -125 -185 -240 -300 -330 -315 -315 -315
Cross-program Recovery of Overpayments:
OASDIa.................................................... -1 -3 -3 -3 -3 -3 -3 -3 -2 -2
SSI................................................... -48 -79 -43 -21 -7 -4 -5 -5 -5 -6
-----------------------------------------------------------------------------------------
Subtotal, Title II.................................... -59 -116 -226 -279 -328 -390 -424 -413 -415 -420
Title III: Attorney Fee Payment System Improvements:
Cap on Attorney Assessments Offsetting Receipts, OASDIa... 12 24 25 27 28 29 31 32 33 34
Title IV: Miscellaneous and Technical Amendments
Demonstration Authority Sunset Date:
OASDIa.................................................... * 2 5 5 5 5 5 5 5 5
Coverage under Divided Retirement Systems:
OASDIa.................................................... * * * * * * * * * 1
60-month Employment Requirement for Exemption from GPO:
OASDIa.................................................... * * -1 -2 -4 -8 -15 -26 -49 -80
Post-1956 Military Wage Credits:
Payments to Trust Funds................................... 903 0 0 0 0 0 0 0 0 0
Offsetting Receipt, OASDIa................................ -730 0 0 0 0 0 0 0 0 0
Offsetting receipt, HI.................................... -173 0 0 0 0 0 0 0 0 0
Amendments related to SSI (Subtitle D)
Update for Resource Limit:
SSI....................................................... 6 14 19 18 21 22 23 26 23 26
Medicaid.................................................. 45 110 185 240 290 335 370 405 440 485
Medicare.................................................. 5 20 35 55 80 90 100 105 115 120
Review of State Agency Determinations:
SSI....................................................... -3 -11 -20 -28 -39 -48 -57 -71 -67 -81
Medicaid.................................................. -4 -19 -40 -62 -85 -111 -138 -167 -198 -233
Other SSI Provisions.......................................... * * * * * * * * * *
-----------------------------------------------------------------------------------------
Subtotal, Title IV.................................... 49 116 183 226 268 285 288 277 269 243
Total Changes in Direct Spending:
On-budget................................................. 735 40 130 187 241 263 270 269 283 284
Off-budget................................................ -727 -8 -143 -213 -273 -338 -376 -372 -395 -427
-----------------------------------------------------------------------------------------
Total................................................. 9 32 -12 -26 -32 -75 -105 -104 -113 -143
CHANGES IN REVENUES
Title IV: Miscellaneous and Technical Amendments
Coverage under Divided Retirement Systems:
OASDI Revenues a.......................................... 1 1 2 2 3 3 3 4 4 5
Other Revenues............................................ * * * * * * * * * *
Clarification of Tax Treatment of Individual Work Plans....... -2 * * * * * * * * *
Total Changes in Revenues:
On-budget................................................. -2 * * * * * * * * *
Off-budget................................................ 1 1 2 2 3 3 3 4 4 5
-----------------------------------------------------------------------------------------
Total................................................. -1 1 2 2 3 3 3 4 4 5
CHANGES IN SPENDING SUBJECT TO APPROPRIATION (OUTLAYS)
OASDI Administrative Expenses a............................... 5 4 11 7 8 8 8 6 7 7
SSI Administrative Expenses................................... 14 16 15 16 17 17 18 18 19 19
-----------------------------------------------------------------------------------------
Total Changes........................................... 19 20 26 23 25 25 26 24 26 26
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Details may not add to totals because of rounding.
OASDI=Old-Age, Survivors, and Disability Insurance (title II of Social Security Act); SSI=Supplemental Security Income (title XVI); GPO=government
pension offset; HI=Hospital Insurance (title XVIII).
*= Less than $500,000.
a Off-budget.
Direct-Spending and Revenues
Title I--Protection of Beneficiaries. Nearly seven million
people--three million adults and four million children--who get
Social Security, SSI, or both have their checks sent to a
representative payee who helps manage their finances. The payee
must use the money to meet the beneficiary's needs and report
certain events, such as changes in the beneficiary's income or
school attendance, to SSA. In most cases, a family member
serves as a representative payee. But attorneys, guardians, and
other nonrelatives, social service agencies, institutions, and
organizations also serve as payees, especially for disabled
adults. About 45,000 organizations serve as representative
payees for about 750,000 clients. SSA approves representative
payees, requires annual reports from them, and conducts on-site
reviews every three years of certain payees who serve a large
number of beneficiaries.
H.R. 743 would direct SSA to certify annually that social
service agencies meet licensing and bonding requirements and to
conduct periodic on-site inspections of more representative
payees. This would enhance SSA's ability to recover misused
funds and to impose civil monetary penalties.
Most of the provisions would have negligible effects on
benefit payments or recoveries. One section, however, would
require SSA to pay beneficiaries any amounts that had been
misused by an organizational representative payee. (Currently,
such claimants must show negligence by SSA.) ``Misuse'' means
converting funds to the payee's own use or any purpose other
than the use and benefit of the client. The provision would be
retroactive to January 1, 1995.
According to SSA, representative payees misuse about $3
million in benefits each year. Although SSA's Inspector General
(IG) has found weaknesses in internal controls of some
organizational payees, few of the resulting errors would
constitute misuse. Because organizations handle about 12
percent of the dollars flowing through representative payees,
CBO estimates that reimbursing nine years' worth of misused
benefits would cost $3 million in 2004. Extra costs in 2005
through 2013 would be negligible.
The IG has issued many audits of representative payees, but
most have focused on particular organizations and make it
difficult to draw conclusions about nationwide patterns. H.R.
743 would direct the IG to conduct a national, statistically
representative study of all types of payees--relatives,
nonrelatives, institutions, local government agencies, and
organizations. The legislation would provide $17.8 million for
that study from SSA's section 1110 research budget, normally
reserved for research performed outside SSA under grants or
contracts. CBO assumes that those funds would be spent in 2004
through 2006.
Title II--Program Protection. This title would add to SSA's
tools for avoiding or recovering erroneous payments and would
bar payment of Social Security benefits to fugitives from the
law.
Fugitive Provisions. In 1996, Congress barred SSI benefits
to people with outstanding arrest warrants, whether they were
convicted felons or people avoiding prosecution. H.R. 743 would
extend that policy to Social Security. CBO estimates the
provision would reduce Social Security spending by $10 million
in 2004 and $525 million over the 2004-2013 period. CBO also
estimates that the policy would save $172 million in Medicare
over the 10 years.
CBO used data reported by SSA's IG to estimate those
savings. The IG generalized from a sample of about 400 cases in
10 states to estimate that fugitives received between $40
million and $180 million in Social Security benefits in 1999.
The midpoint of that range ($110 million) reflected an
estimated 15,000 fugitives with an average benefit of almost
$600 per month. Assuming that their number and average benefits
keep pace with the overall program, CBO extrapolated that total
to $130 million in 2004 and $175 million in 2013.
CBO expects, however, that savings would fall short of
those figures. First, large-scale enforcement poses challenges.
By tapping the National Crime Information Center (NCIC) and
obtaining data directly from some states that do not report
fully to the NCIC, SSA already has automated access to more
than 80 percent of fugitive warrants. But the SSI experience
shows that some records lack key information, such as full name
and Social Security number, for an accurate match; some
subjects are incarcerated (and have their benefits suspended
under other provisions of law); some are even victims of
identity theft. Verification, when successful, takes about two
months, so that even a swift suspension almost inevitably
involves some overpayments that are difficult to recover. Based
on those hurdles, CBO assumes that about 60 percent of the
savings identified by the IG are attainable.
Second, some people spotted when checking fugitive lists
clear their records when their benefits stop, resulting in
little or no long-term savings. Law-enforcement authorities
focus on the most-serious offenders (either pursuing them
aggressively or arresting them on new offenses) but rarely
clear other warrants from the books. Thus, remaining warrants
are disproportionately older--about 15 percent of state
warrants, for example, are more than 10 years old--and usually
cite nonviolent offenses such as drug possession and probation
or parole violation. In such cases, ``fugitives'' with no
subsequent convictions typically face nothing worse than a
suspended sentence or probation. Some will take that calculated
risk and voluntarily contact authorities. In a new study of the
SSI provisions, the Inspector General found that one-third of
people suspended under the fugitive provisions sometime during
the 1996-2002 period were receiving SSI in February 2003,
having satisfied their warrants. CBO thus subtracted another
one-third from the potential savings, bringing the result to 40
percent of the IG's figure. CBO assumes those savings are
attainable about two years after enactment. Early savings are
more modest, as SSA signs data-sharing agreements with more
states, writes regulations, and follows its verification and
notice practices.
CBO assumes that 80 percent of fugitives who would be
affected by this provision are disabled beneficiaries who
qualify for Medicare. If they lost their health benefits too,
extra savings in 2013 (when their average Medicare benefits--
about $9,600--almost match their assumed Social Security
benefits, $9,900) could reach $54 million. However, their
Social Security benefits would be suspended, not terminated.
Suspension does not interrupt Medicare eligibility. Some
Medicare savings would probably occur simply because
beneficiaries fail to realize they remain eligible, fear using
their Medicare card, or stop paying the premium (which is
usually withheld from Social Security checks) for Part B
coverage. CBO estimates that the resulting drop in use of
Medicare benefits would save about half as much as an outright
ban, or about $27 million in 2013.
Information on Pensions from Noncovered Employment. State
and local governments have been permitted to join Social
Security since the 1950s. The Census Bureau counts 14 million
active members and 6 million beneficiaries in 2,200 state and
local government retirement plan. About one-quarter are not
covered by Social Security. Most are clustered in a few states:
California, Colorado, Georgia, Illinois, Louisiana, Maine,
Massachusetts, Missouri, Ohio, and Texas. Elsewhere, exempt
employees (if any) are usually police officers or firefighters.
A retiree with a pension from noncovered state or local
employment, or from the federal system that covers civil
servants hired before 1984, may have his or her Social Security
benefit reduced or eliminated by two provisions of current law:
the Windfall Elimination Provision (WEP) and the Government
Pension Offset (GPO). CBO estimates that the GPO and WEP, as
currently administered, will save Social Security $56 billion
over the 2004-2013 period and that H.R. 743 would boost that by
$2.1 billion. Because the GPO and WEP provisions also are
discussed later, here is a brief description.
Since 1986, the WEP has trimmed benefits for
noncovered annuitants with ``split careers''--those who also
worked long enough in covered employment to qualify for Social
Security (primary beneficiaries, in the program's lexicon). It
removes the tilt in favor of lower earners from their benefit
formula. Social Security benefits depend on lifetime earnings,
usually averaged over 35 years. Low average earnings, however,
could result just as well from 25 years of well-paid noncovered
work and 10 yearsunder Social Security as from decades of
covered employment at modest earnings. The Congress enacted the WEP, a
slimmed-down formula that applies when workers also have an annuity
from noncovered work, to make that distinction.\1\
---------------------------------------------------------------------------
\1\ All Social Security benefits are based on a Primary Insurance
Amount (PIA), which in turn depends on Average Indexed Monthly Earnings
(AIME). For a retired worker, AIME is calculated by adjusting past
earnings to current values, then averaging the top 35 years--
essentially, ages 22 through 61, with the lowest 5 years dropped. For
someone who reaches 62 in 2003, the PIA equals 90 percent times the
first $606 of AIME, 32 percent times the next $3,047, and 15 percent
times AIME over $3,653, if any. (Those ``bend points'' rise with
average wages.) The WEP formula generally uses 40 percent in place of
the 90 percent factor. It makes exceptions for annuitants with at least
20 years of covered work and those with very small pensions.
---------------------------------------------------------------------------
The GPO reduces Social Security benefits when the
annuitant qualifies for benefits as a spouse or widow(er)--that
is, as secondary beneficiaries. The GPO's drafters likened it
to Social Security's rules for other two-earner couples. A
wife, for example, collects on her husband's record only if the
resulting benefit (about half of his) exceeds her own retired-
worker benefit. She cannot combine the two amounts.
Specifically, the GPO trims the Social Security benefit by $2
for every $3 of the noncovered pension--often erasing it
entirely. The Congress acted quickly to enact the GPO after the
Supreme Court held in 1977 that Social Security programs could
no longer discriminate on the basis of gender.
For federal civil service retirees, SSA enforces the GPO
and WEP provisions by matching data from the Office of
Personnel Management. Otherwise, it must rely on claimants'
reports and alert employees to spot potential GPO and WEP
cases. (SSA staff ask about government pensions and are trained
to notice gaps in earnings histories that may suggest
noncovered employment.) H.R. 743 would direct the Internal
Revenue Service (IRS) to require administrators of state and
local pension plans to add coverage status to payment reports,
presumably the 1099-R forms sent to participants and to the
IRS, and share that information with SSA.
Studies in the mid-1990s by the General Accounting Office
(GAO) and SSA of Illinois and Ohio pensioners, respectively,
found that SSA had missed about 9 percent of people who ought
to have been subject to GPO or WEP. State and local annuitants
make up almost exactly half of people affected by the
provisions. If the Illinois and Ohio patterns are typical, that
suggests about 4.5 percent of potential cases avoid the GPO and
WEP reductions. In fact, CBO assumed that figure had improved
since the mid-1990s, through greater staff experience plus
enhanced data on earnings in noncovered employment after 1977
(when the government switched from quarterly to annual
crediting of wages). Thus, CBO substituted a 4 percent error
rate.
CBO assumed that SSA would gain access to IRS data from the
biggest noncovered plans even as IRS and SSA work out what
changes, if any, to require in future 1099-R reports. By
targeting in that way, CBO assumes that SSA could use some
reports of pension income in 2004, which will be filed in 2005,
to target the first batch of cases for suspension or reduction
in 2006. SSA would also launch efforts to recover past
overpayments to those beneficiaries. Although a few
overpayments would stretch back 20 years, the average would be
roughly 6 years. Some would not be recovered; SSA's most
effective tool is to withhold them from regular monthly
benefits, but the GPO--unlike the WEP--often erases the entire
benefit. CBO assumed one-third of the overpayments would not be
recovered and that SSA would recoup the bulk of the rest within
the 4 years after discovery. As SSA matches with more pension
plans' reports each year, annual savings would mount to an
estimated $300 million in 2009, peak at $330 million in 2010,
then stabilize as recoveries fade in importance.
Cross-program Recovery of Overpayments. As noted above,
SSA's best tool for recovering overpayments is to subtract them
from regular monthly checks. Current law permits SSA to do that
under both titles II (Social Security) and XVI (SSI) of the
Social Security Act, although deductions may not exceed 10
percent of monthly income in SSI.
Special rules apply when SSI recipients qualify for Social
Security. If an SSI beneficiary receives a Social Security
award that includes retroactive benefits, all of his or her SSI
benefits for the same months are withheld from that lump-sum
check. And if he or she has stopped receiving SSI but gets
monthly Social Security checks, past SSI overpayments can be
withheld, within limits.
Almost one-third of disabled adults on SSI get Social
Security, and some title II beneficiaries formerly received
SSI. As a means-tested program, SSI permits recipients to keep
$20 a month of unearned income (which includes Social Security)
and offsets the rest.
In 2001, SSA found 130,000 people who were getting SSI when
they should have received Social Security in addition or
instead. Further digging by SSA boosted that number to about
300,000. (Some are no longer receiving benefits.) Labeled
``special-workload'' cases, those people are entitled to a
lump-sum payment for the months they should have received
Social Security. Because of the programs' interactions, that
lump-sum check will be split: for example, of a retroactive
check for $300 a month for five years, $1,200 will go to the
individual and $16,800 will go from the trust funds to the
general fund of the Treasury as a recovered overpayment. SSA
anticipates that about $4 billion of the lump-sum payments to
special-workload cases will be sent to the Treasury under that
rule.
The law, though, limits SSA's powers of ``cross-program
recovery'' in certain narrow situations. Most immediately, it
fails to cover some special-workload cases with SSI
overpayments unrelated to the months covered by the Social
Security award. If the two periods do not match exactly, SSA
must withhold those unrelated overpayments chiefly from future
Social Security benefits, not from the lump-sum check. H.R. 743
would authorize SSA to deduct them from the lump-sum. It also
would authorize cross-program recovery in the rare cases where
an SSI-only beneficiary has outstanding title II overpayments.
(Current law has no provision for recovering Social Security
overpayments from SSI benefits.)
Based on information from SSA, CBO estimates that enhanced
tools for cross-program recovery would increase SSI recoveries
by $223 million over 10 years and Social Security recoveries by
$26 million. The SSI savings largely come from speeding up
recoveries that SSA would have achieved eventually. Thus, most
of the savings occur in 2004 through 2007 as SSA finishes
processing the special workload.
Denial of Title II Benefits to Aliens Not Authorized to Be
Employed in the United States. Section 212 of H.R. 743 would
stipulate that, effective in January 2004, noncitizens who
claim Social Security benefits must have been issued a Social
Security number (SSN) ``consistent with the requirements of
subclause (I) or (III) of section 205(c)(2)(B)(I) [of the
Social Security Act].'' Those subclauses spell out the rules
for assigning SSNs to aliens who are authorized to work in the
United States: those admitted as legal permanent residents, and
those who enter in another category (such as student or
tourist, or ``legal temporary resident'' under the 1986
amnesty) and later change their status to legal permanent
resident. The huge majority of native-born citizens, in
contrast, receive SSNs soon after birth.
Subclause II of the same section governs the issuance of
special numbers for nonwork purposes--specifically, when
individuals seek benefits from federal, state, or local
programs that require an SSN. Although there are no documented
cases where an individual received Social Security benefits
solely on a nonwork SSN, there are hypothetical situations
where benefits might be paid.
In CBO's judgment, H.R. 743 essentially reiterates the
current-law link between Social Security benefits and valid
SSNs, and thus would lead to little or no savings.
Title III--Attorney Representative Fee Payment System
Improvements. Many Social Security claimants, especially
disability applicants who win benefits on appeal, are
represented by attorneys. A standard fee agreement between
attorney and client pledges that the attorney will receive 25
percent of any past-due benefits up to a cap of $5,300. (That
cap stood at $4,000 for more than a decade until SSA raised it
in 2002.) When SSA awardsOASDI benefits in such cases, it pays
the attorney fee directly from the past-due amounts. In contrast, when
SSA awards SSI benefits only, or denies all benefits, the attorney must
seek his or her fee from the client. Processing attorney fees is a
labor-intensive chore, and in 1999 the Congress permitted SSA to
withhold up to 6.3 percent of the amounts paid to offset some of those
costs.
SSA pays attorney fees in about 200,000 OASDI cases and
concurrent (OASDI and SSI) cases a year. The average fee, still
dampened by the $4,000 lid, is now about $2,700, and the
average processing charge about $170. By 2013, CBO expects that
annual volume will be about 240,000, the average fee about
$3,600, and hence the average charge about $225. H.R. 743
proposes to cap the charge at $75 with future adjustments for
inflation. That would erase more than half of expected
receipts, a loss of $34 million in 2013. CBO estimates that
over the 2004-2013 period the proposed fee cap would cost $275
million.
Title IV--Miscellaneous and Technical Amendments. This
title contains a variety of provisions with significant
budgetary effects.
Demonstration Projects. H.R. 743 would amend sections of
the Ticket to Work and Work Incentives Improvement Act of 1999
(Public Law 106-170) that govern SSA's research and
demonstration projects. It would permanently authorize SSA to
waive certain provisions of law, when appropriate, for
demonstration projects. Currently such waivers expire in
December 2004, even for projects already launched. The Congress
first adopted the waiver language in 1980 and has extended it
four times since then. In the near term, SSA does not plan to
use such waivers extensively other than for the $1-for-$2
demonstrations (see below). In the longer term, because SSA has
no specific pipeline of projects, CBO estimates spending on
such projects of about $5 million a year, a typical level for
the 1990-2002 period (adjusted for inflation).
Disability Insurance (DI) beneficiaries face limits on
their earnings. Applicants who earn more than $800 a month
(labeled substantial gainful activity, or SGA) in 2003 cannot
qualify for DI; beneficiaries who make more than that for a
nine-month trial work period and three-month grace period lose
their entire check, although they retain Medicare and some
other privileges. The 1999 law directed SSA to conduct
demonstrations in which checks would be reduced by $1 for each
$2 of earnings over certain thresholds. But that law left
unclear how the projects would be funded. H.R. 743 clarifies
that SSA would pay benefits from the trust fund and other costs
for the demonstrations from its appropriation for
administrative expenses.
Permission to Operate Divided Retirement Systems. Under
section 218 of the Social Security Act, 21 states are allowed
to operate retirement systems in which some but not all
employees are covered under Social Security. In divided
systems, new employees must pay Social Security tax, but
employees already on the payroll may choose their coverage. H.R
743 would extend that to all states.
A planned merger of two Louisville-area fire and police
departments spurs this provision. That merger involves about
1,300 employees. CBO assumes that 200 of them would choose
Social Security, and 60 or so new hires each year would add to
their ranks. Extra Social Security taxes would grow from $1
million in 2004 to $5 million in 2013. Workers who switch
coverage can avoid or soften the GPO and the WEP. Only a few of
the newly covered employees, though, would qualify for Social
Security in the next 10 years, and CBO estimates extra benefits
of $1 million in 2013 (with effects of less than $500,000 a
year before then).
Extending divided-retirement authority to all states would
avoid the need for piecemeal legislation in the future. CBO and
SSA have not found widespread interest elsewhere, although
isolated situations like Louisville's may occur. Noncovered
states have resisted mandatory coverage, and no state has been
added to the divided-retirement list since 1977. (In fact,
Congress acted in 1983 to bar states that already had coverage
agreements from ending them.) Therefore, CBO assumes negligible
effects aside from the Louisville merger.
60-month Employment Requirement for Exemption from
Government Pension Offset. H.R. 743 would limit a tactic that
some public employees are using to skirt the GPO. The GPO
applies to state and local retirees whose last day of
employment under their pension plan was not covered under
Social Security. The General Accounting Office reports that
some workers discovered that by switching jobs for a short
time--sometimes just one day--they can avoid a lifetime of GPO-
related reductions. Specifically, GAO found 4,800 such
transfers through June 2002; nearly all were in Texas. H.R. 743
would replace the ``last-day'' rule with a 60-month
requirement--the same rule that applies to federal civil
servants.
CBO had to estimate how the job-switching detected by GAO
might evolve over time. Of the 4,800 transfers that GAO found,
3,500 occurred in 2002 alone, where they amounted to a quarter
of retirements in the Teachers' Retirement System of Texas. GAO
found only a handful of cases outside Texas but voiced concern
that the practice would spread.
To gauge that possibility, CBO looked at retirement plans
in other states with large noncovered sectors. CBO concluded
that conditions in Texas are uniquely favorable to ``last-day''
switches. Texas combines a huge noncovered sector, a small
covered sector, and a statewide plan that recognizes service in
both. Elsewhere, employees who sought a covered job would have
to change occupations (for example, from law enforcement to
teacher) and give up some advantages of their original plan; in
some states, such as Ohio and Massachusetts, no covered
positions exist. California, with its mix of covered and
noncovered jurisdictions, bears the closest resemblance to
Texas but has a much smaller noncovered sector and thus fewer
employees with an incentive to switch. If the ``last-day'' rule
remains intact, states may face pressure from employees to
amend their plans to accommodate such transfers. But amending a
plan, especially when the state legislature must approve, is
complex and time-consuming.
Under current law, CBO assumes that annual transfers
spurred by the ``last-day'' rule will climb to 7,000 in 2004--
twice the number in 2002, enough to accommodate further growth
in Texas (where the practice clearly had not peaked) and some
spillover to other states. Under H.R 743, significant savings
in Social Security would follow in about seven years. That lag
stems from the programs' contrasting rules for eligibility: a
typical retiree under the Texas teachers' plan qualifies for a
pension at age 55 and (if the GPO does not erase it) for Social
Security at age 62. Thus, the first batch of 7,000 annuitants
who retire in calendar 2004 would reach 62 in 2011. Spouses and
widow(er)s affected by the GPO in December 2002 saw their
Social Security reduced by an average of $325 and $505,
respectively, or about $400 overall. Adjusting those figures
for inflation and for the age and sex of the affected group led
CBO to estimate those 7,000 would lose an average of $475, or
$4 million in December 2011. By December 2013, three cohorts of
retirees push the monthly savings up to $10 million; savings in
fiscal year 2013 equal $80 million.
Real-life cases would be more varied than these simple
examples. Some annuitants retire after 55 (and reach 62 years
old before 2011); some are widowed (and qualify for Social
Security at age 60, not at age 62); and others must wait for a
younger spouse to reach 62 years old. But these typical cases
illustrate why CBO estimates small savings through 2010 and
rapidly growing amounts after that.
Military Wage Credits. The original Social Security Act of
1935 did not cover members of the armed services. The 1950 Act
provided them with free wage credits of $160 a month for 1940
through 1947. Later acts kept those ``deemed'' credits even
after Social Security began to cover members' basic pay in
1956. The 1967 amendments set deemed credits at $300 a quarter,
where they remained until 2002. The credits were an ad hoc way
to acknowledge the noncash allowances--for food, housing, and
so forth--that supplemented basic pay. Until 1983, the services
reimbursed Social Security intermittently for the estimated
cost of the resulting benefits. The Congress then amended the
law to require annual payments, which amounted to about $300
million a year in the 1980s and 1990s--about $10 million
annually from small agencies (the Coast Guard, Public Health
Service, and National Oceanic and Atmospheric Administration)
and the rest from the Department of Defense.
The Congress repealed deemed military credits in the 2002
defense appropriation bill. By then, however, the Defense
Department had failed to pay amounts owed for 2000 and 2001.
(The smaller agencies had kept up their contributions.)
H.R. 743 would transfer $903 million--the Social Security
actuaries' estimate of arrears plus interest--from the Treasury
to the trust funds. Intragovemmental transfers do not affect
total outlays or the deficit. Here, however, they would have
one peculiar effect: the entire $903 million payment would
count as an on-budget outlay, as would the receipt by Hospital
Insurance ($173 million), but the rest ($730 million) would be
credited to Social Security as an off budget receipt.
Other Provisions Affecting Social Security. H.R. 743 would
broaden the Work Opportunity Tax Credit to cover people who use
a ticket for vocational rehabilitation (VR) under the 1999 law.
That credit, which expires after December 2003, allows
employers to subtract up to 40 percent of the first $6,000 of
wages from income tax when they hire members of targeted
groups. People referred by state VR agencies are one such
group; H.R. 743 would add DI and SSI beneficiaries who choose
other VR providers, such as private firms or nonprofit
organizations. The first tickets were distributed in 2002 and
nationwide implementation will take three years. The Joint
Committee on Taxation estimates that broadening eligibility for
the tax credit would reduce revenues by $2 million in 2004.
Title IV would expand eligibility for widows' and widowers'
benefits in narrow circumstances. To collect Social Security on
a deceased worker's record, a widow or widower must either have
been married to the worker for nine months or be actively
caring for the worker's child. Lawmakers recently learned about
an unusual case in which a worker could not marry his longtime
companion because state law forbade him from divorcing his
wife, who was in a mental institution. When his wife's death
finally permitted him to remarry, he was already terminally ill
and died a few months later. H.R. 743 would waive the duration-
of-marriage requirement in those rare circumstances. Only one
such case has come to light and CBO expects that the provision
would have little cost.
Increase Resource Limits in SSI H.R. 743 would increase the
amount of countable resources that an individual or couple may
own and still qualify for SSI. Under current law, to be
eligible for SSI, an individual can have countable resources
valued at up to $2,000, while couples can have resources of up
to $3,000. (Besides the applicant's own resources, SSA counts
resources belonging to others in some situations--to parents of
disabled children, and to sponsors of immigrants.) Those
ceilings have not changed since 1989. Countable resources
include cash, liquid assets, and real or personal property that
could be converted to cash. Some items--including the value of
a primary residence, an automobile, medical equipment, and
certain household goods--are not counted. Resources are only
used to determine whether someone is eligible for SSI; they do
not determine benefit amounts.
The legislation would increase the resource limits to
$3,000 for individuals and $4,500 for couples beginning in
January 2004. After 2004, the limits would rise by the annual
cost-of-living adjustment granted to SSI recipients. By
increasing the resource limits, the act would allow more people
to become eligible for the program and reduce the amount of
time it takes some applicants to ``spend down'' their assets to
become eligible, It also would affect some current
beneficiaries who lose benefits, either temporarily or
permanently, when their countable resources grow.
CBO estimates the provision would gradually increase SSI
enrollment up to about 18,000 additional people in 2006 and
about 21,000 in 2013. CBO based its estimate on information
from SSA about the characteristics of applicants and
beneficiaries who would be affected and assumptions about how
long the current limits bar them from the program. Applicants
who are rejected for excess resources are older, on average,
than the current SSI caseload; are more likely to have other
income that would trim their SSI benefit; and, CBO assumes,
might prevail on a second or third application even under
current law as they draw down their resources for living
expenses.
In most states, SSI eligibility automatically confers
entitlement to Medicaid benefits. For these predominantly adult
cases, CBO assumes that the average Medicaid cost would greatly
exceed the SSI benefit. We estimate that H.R. 743 would
increase spending on SSI by $6 million in 2004, $78 million
over the 2004-2008 period, and $198 million over the 2004-2013
period. We also estimate that it would increase federal
Medicaid outlays by $45 million in 2004, $870 million over the
2004-2008 period, and $2.9 billion over the 2004-2013 period.
Part of that effect comes from additional participants in
the Qualified Medicare Beneficiary (QMB) and Specified Low-
Income Medicare Beneficiary (SLMB) programs, who do not
necessarily receive SSI. Under those programs, Medicaid pays
some or all of the premiums and cost-sharing under Parts A and
B of Medicare for enrollees who have incomes below 120 percent
of the federal poverty level and countable assets up to two
times the resource limit used in the SSI program. By raising
and indexing the resource limit in SSI, H.R. 743 would set that
threshold at about $7,500 in 2013, compared with $4,000 under
current law.
Based on current participation in the programs, CBO
estimates that the act would eventually increase the number of
QMB and SLMB beneficiaries by about 225,000. That effect would
occur gradually, with most of the cost in the second half of
CBO's 10-year horizon. The extra participants would increase
federal Medicaid spending for the QMB and SLMB programs by $10
million in 2004, $380 million over the 2004-2008 period, and
$1.5 billion over the 2004-2013 period. (Those amounts are a
subset of the Medicaid totals cited above.)
CBO estimates that additional participation in the QMB
program would increase Medicare spending as well. That program
covers all Medicare cost-sharing for enrollees with incomes
below the federal poverty level and limited assets. CBO
anticipates that new QMB participants would use more Medicare
services than under current law because they would no longer
have to pay anything for them. As a result, CBO estimates extra
Medicare spending (net of premiums) of $5 million in 2004, $195
million over the 2004-2008 period, and $725 million over the
2004-2013 period.
Review of State Agency SSI Awards. H.R. 743 would require
SSA to conduct reviews of initial decisions to award SSI
benefits to certain disabled adults. The legislation would
direct SSA to review at least 25 percent of all favorable
adult-disability determinations made by the states' Disability
Determination Service (DDS) offices in 2004. The agency would
have to review at least half of the adult-disability awards
made by DDS offices in 2005 and beyond.
CBO anticipates that state DDS offices will approve between
350,000 and 400,000 SSI claims from disabled adults annually
between 2004 and 2013. Based on similar reviews in the Social
Security Disability Insurance program, CBO projects that by
2013 the extra reviews would ultimately overturn more than
20,000 of those awards, leading to lower outlays for SSI and
Medicaid. CBO estimates that the provision would reduce SSI
benefits by $3 million and Medicaid outlays by $4 million in
2004. Over the 2004-2013 period, CBO estimates the savings at
$425 million in SSI and $1.1 billion in Medicaid.
Other SSI Provisions. H.R. 743 would make a limited
exception to SSI's retrospective monthly accounting when a
claimant has certain nonrecurring income. An SSI check may
fluctuate depending on a recipient's other income.
Retrospective monthly accounting is used to determine those
benefit amounts. When someone first qualifies for SSI, the
amount of countable income in the first month determines
benefits for the first three months of eligibility. Thus,
nonrecurring income in that first month can shrink benefits in
the next two months. H.R. 743 would permit SSA to exclude
certain nonrecurring income when calculating SSI benefits for
the second and third (but not the first) month. Based on data
provided by SSA, CBO estimates the provision would increase
benefits by an average of $160 per month for around 1,000
beneficiaries in 2004. Although costs in any single year would
not reach $500,000, the provision would increase outlays by a
total of $1 million over the 2004-2008 period, and $2 million
over the 2004-2013 period.
H.R. 743 also would enable some blind or disabled children
of U.S. military personnel stationed overseas to receive SSI.
Under current law, those children may continue to collect SSI
only if they were already eligible when the family moved
overseas. The legislation would allow them to qualify overseas
even if they did not previously receive SSI. Based on
information from SSA, CBO expects the provision would add fewer
than a dozen children,some of them infants born overseas, to
the SSI rolls at an average benefit of about $500 a month. Extra costs
would not reach $500,000 in any year but would total about $1 million
over the 2004-2013 period.
Finally, H.R. 743 proposes several liberalizations to the
SSI program that, in CBO's estimate, each would cost less than
$500,000 over the 2004-2013 period. They include:
Expanding the exclusions for certain
infrequent or irregular income;
Making the 9-month resource exclusion
periods uniform;
Modifying the dedicated account requirement;
Eliminating certain restrictions on student
earned income;
Excluding AmeriCorps and other volunteer
benefits from income;
Changing the treatment of education-related
income and resources; and
Altering the monthly treatment of uniformed
service compensation.
Spending Subject to Appropriation
H.R. 743 would increase SSA's administrative cost by
increasing standards for certain program integrity activities
and by slightly increasing program caseloads. These costs are
subject to annual appropriation and are thus classified as
discretionary spending. CBO estimates added costs would be $19
million in 2004, $113 million over the 2004-2008 period and
$240 million through 2013. About two-thirds would be for SSI
administration with the remainder for the OASDI program.
Title I. H.R. 743 would require SSA to monitor
representative payees more stringently. Currently, SSA conducts
on-site inspections every three years for high-volume payees--
organizations serving more than 100 beneficiaries and
individuals (such as attorneys) serving more than 20; the
legislation would lower those thresholds to 50 and 15
beneficiaries, respectively. That would permanently add about
$4 million a year to SSA's costs. H.R. 743 also would require
SSA to enforce bonding and licensing requirements, redirect
benefit checks when a representative payee fails to file an
annual accounting, and compensate beneficiaries for any funds
misused by organizational payees since 1995. Those costs would
be largest in the early years of implementation, pushing SSA's
required funding for title I to an estimated $8 million in 2004
and $6 million in 2005. Social Security and SSI would each
account for about half of those amounts.
Title II. Provisions of title II to bar fugitives from
receiving Social Security benefits and to enforce the GPO and
WEP using IRS information also would entail administrative
costs, especially in the early phases. Obtaining the IRS data
is just the first step; SSA must match to its records and
follow-up potential cases manually, at an estimated cost of
$250 each. Some investigations will lead nowhere; some people
will be exempt because they collect a survivor payment (not a
retirement annuity) from state or local government, or
qualified before the GPO or WEP took effect. CBO assumes that
SSA will track down 3 cases for every 2 ultimately affected.
Once SSA finds them, however, annual costs are more modest,
chiefly to verify the pension amount in case of cost-of-living
adjustments or other changes. CBO assumes that using 1099-R
reports of pension income to help enforce the GPO and WEP
provisions would ultimately boost the number of GPO and WEP
cases by about 4 percent, or 60,000 people by 2013. To get
there, CBO assumes that SSA would detect more than 300,000
apparent matches, weed out 200,000 based on information already
in its records, and investigate the remaining 100,000
intensively. Costs would peak at $8 million in 2006, as SSA
uses the first batch of IRS information, before subsiding.
Enforcing the fugitive provision would cost SSA $1 million to
$2 million annually, chiefly because SSA already screens
fugitive lists to enforce the ban in SSI.
Title IV. Title IV would increase SSA's costs of
administering the SSI program. Lifting the resource limit would
increase the number of beneficiaries. Most of the new
beneficiaries, however, would apply and be rejected under
current law; changing these denials to allowances would not
involve significant costs. The new reviews of state agency
allowances--roughly 125,000 cases annually when fully phased-
in--would cost $145 million over the 2004-2013 period. On top
of the reviews, which are estimated to cost about $100 each (in
2004 dollars), SSA estimates some additional start-up costs in
the first year. Thus, the estimated annual costs would rise
from $9 million in 2004 to $17 million in 2013.
Intergovernmental and private-sector impact: The Joint
Committee on Taxation has reviewed the tax provisions of the
act and determined that those provisions contain no
intergovernmental or private-sector mandates as defined in
UMRA.
Section 4 of UMRA excludes from that law's requirements any
provision in a bill or act that relates to the OASDI programs
under title II of the Social Security Act. The provisions of
H.R. 743 that amend title II of the Social Security Act fall
within that exclusion.
Other provisions of H.R. 743, however, contain mandates as
defined in UMRA. The act would preempt state laws that might
otherwise prohibit the exchange of information betweenSSA and
state and local law enforcement officers conducting background checks
on representative payees. That preemption could limit the application
of state privacy laws in some cases, but it would impose no duty on
state or local governments that would result in additional spending.
H.R. 743 also would exempt the Railroad Retirement
Investment Trust from state and local taxes. The Trust was
created in 2002 to invest most of the funds of the government's
Railroad Retirement program. CBO has found no state that has
attempted to collect or plans to collect any type of tax from
the Trust. Consequently, CBO estimates that this preemption of
state taxing authority, while an intergovernmental mandate as
defined in UMRA, would result in no significant revenue losses
to state or local governments, and any potential losses would
be far below the threshold established in UMRA ($60 million in
2004, adjusted annually for inflation).
Finally, the act would alter income and eligibility
requirements in the SSI program. Because SSI beneficiaries are
eligible for Medicaid, CBO estimates that state spending for
Medicaid would increase by about $2.2 billion over the 2004-
2013 period. However, states have significant flexibility in
Medicaid to alter their programmatic responsibilities, so this
additional spending would not be the result of a mandate as
defined in UMRA.
H.R. 743 contains one private-sector mandate as defined in
UMRA, It would prohibit private entities from charging a fee
for products and services that are available for free from SSA,
unless they disclose that alternative when they make the offer.
CBO estimates that the resulting cost to the private sector
would not exceed the threshold established in UMRA ($120
million in 2004, adjusted annually for inflation).
Previous CBO Estimate: On March 20, 2003, CBO transmitted a
cost estimate for H.R. 743 as ordered reported by the House
Committee on Ways and Means on March 13, 2003. We estimated
that version of H.R. 743 would lead to a combined $655 million
in direct spending reductions and revenue increases over the
2004-2013 period. This version totals $594 million over the
same period. Provisions that differ significantly between the
two versions, and their effects on the 10-year totals, are:
The nationwide study of representative
payees (at a cost of $18 million);
A provision of the House version, dropped by
the Senate, that would temporarily extend the attorney-
fee program to SSI (forgoing receipts of $26 million);
New provisions to enforce the GPO and WEP
using IRS information (saving $2.1 billion) and to
allow additional cross-program recovery (saving $249
million);
Permanent authority for SSA to grant waivers
in demonstration projects involving Social Security
disability beneficiaries (at an estimated cost of $42
million); and
All of the SSI provisions in title IV,
subtitle D of the Senate version (net cost of $2.3
billion).
Estimate prepared by: Federal Spending: Social Security-
Kathy Ruffing; SSI-Geoffrey Gerhardt; Medicaid Eric Rollins.
Federal revenues. Edward Harris and Annabelle Bartsch;
Impact on state, local, and tribal governments: Leo Lex; Impact
on the private sector: Ralph Smith.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.
IV. Votes of the Committee
In compliance with paragraph 7(b) of rule XXVI of the
Standing Rules of the Senate, the following statements are made
concerning the votes of the Committee on Finance in
consideration of the bill, H.R. 743.
A. MOTION TO REPORT THE BILL
The bill, H.R. 743, as amended, was ordered favorably
reported by a voice vote (with a quorum being present).
V. Regulatory Impact and Other Matters
A. REGULATORY IMPACT
Pursuant to paragraph 11(b) of rule XXVI of the Standing
Rules of the Senate, the Committee states that the legislation
will not significantly increase regulation of any individuals
or businesses; will not adversely impact the personal privacy
of individuals; and will result in no significant additional
paperwork.
For further discussion of the impact of the bill on tax
complexity, see section C. below.
B. INFORMATION RELATING TO UNFUNDED MANDATES
This information is provided in accordance with section 423
of the Unfunded Mandates Act of 1995 (P.L. 104-4).
The Committee has determined that the bill does not contain
Federal mandates on the private sector. The Committee has
determined that the bill does not impose a Federal
intergovernmental mandate on State, local, or tribal
governments.
C. TAX COMPLEXITY ANALYSIS
Section 4022(b) of the Internal Revenue Service Reform and
Restructuring Act of 1998 (the ``IRS Reform Act'') requires the
Joint Committee on Taxation (in consultation with the Internal
Revenue Service and the Department of the Treasury) to provide
a tax complexity analysis. The complexity analysis is required
for all legislation reported by the House Committee on Ways and
Means, the Senate Committee on Finance, or any committee of
conference if the legislation includes a provision that
directly or indirectly amends the Internal Revenue Code and has
widespread applicability to individuals or small businesses.
The staff of the Joint Committee on Taxation has determined
that a complexity analysis is not required under section
4022(b) of the IRS Reform Act because the bill contains no
provisions that amend the Internal Revenue Code and that have
widespread applicability to individuals or small businesses.
VI. Changes to Existing Law Made by the Bill as Reported
In the opinion of the Committee, it is necessary, in order
to expedite the business of the Senate, to dispense with the
requirements of paragraph 12 of rule XXVI of the Standing Rules
of the Senate, relating to changes in existing law made by the
bill reported by the Committee.
VII. Additional Views
I write to express my concerns about an effect of a
proposal in Section 210 of this bill that came to light after
the Committee ordered the bill reported. I am concerned that
the inclusion in this bill of a proposal from the President's
budget could require some retirees of State and local
governments to repay the Federal government thousands or tens
of thousands of dollars of Social Security benefit
overpayments. I plan to work to change this provision as the
bill moves through the legislative process to prevent this
outcome.
Under current law, some State and local government workers
do not participate in the Social Security program, but instead
are covered by separate pensions administered by these
governments. At some point these workers may also receive
Social Security benefits as a widow, widower, or spouse of a
worker who did participate in Social Security. Under the
Government Pension Offset (GPO)--a longstanding provision of
the Social Security program--these widow's, widower's, and
spousal monthly Social Security benefits are reduced by an
amount equal to two-thirds of the monthly amounts of the State
and local government pensions they receive. The Social Security
Administration is not aware, however, that some of these
widows, widowers, and spouses are receiving State and local
government pensions. Therefore, the GPO is not applied to the
Social Security benefits of the individuals in these cases.
Pension-issuing entities--including State and local
governments' pension-issuing agencies--must submit to the IRS
each year Form 1099R, which indicate the amount of pension
payments issued to retirees. The President's budget included a
proposal to require these State and local government agencies
to also include indicators on these Form 1099R that denote
whether or not these pension recipients were covered by Social
Security as workers. The proposal also included a provision
that would allow the IRS to share this Form 1099R information
with the Social Security Administration (SSA) on a confidential
basis. SSA would use this information to help determine whether
the current widow's, widower's, or spousal Social Security
benefits of these pension recipients would be subject to the
GPO. If so, these monthly Social Security benefits of current
beneficiaries would henceforth be reduced or eliminated
according to current law. In addition, the monthly benefits of
all future beneficiaries would also be reduced or eliminated.
Moreover, if the information on these Form 1099Rs had been
known by SSA at the time that current Social Security
beneficiaries first began drawing benefits, the current
beneficiaries would have received smaller benefits than what
they actually received in each of the months dating back to
their first monthly benefit. The total of such ``overpayments''
could amount to thousands or tens of thousands of dollars.
Subsequent to the time that H.R. 743 was reported by the
Senate Finance Committee, it became apparent, however, that
there were two different views of how these overpayments could
be treated. One view of the language in the ``Chairman's Mark''
would result in SSA working with the individual to have him or
her repay these overpayments over time. Another view of the
language in the ``Chairman's Mark'' would only result in
prospective benefit payments being reduced or eliminated.
By allowing SSA to recover these overpayments, current
beneficiaries would face the necessity of repayment just as
their monthly Social Security benefits would be eliminated or
significantly reduced by the GPO. This could leave these
beneficiaries--including widows and widowers--in severe
financial straits. This is unacceptable to me. Therefore, I
will work to see that the language of this provision is changed
as it moves through the legislative process, so that the
receipt of the information contained in the modified Form
1099Rs by SSA would not cause these Social Security
beneficiaries to have to repay any overpayments.
Max Baucus