[Congressional Record (Bound Edition), Volume 148 (2002), Part 17]
[Senate]
[Pages 22923-22931]
[From the U.S. Government Publishing Office, www.gpo.gov]




             SOCIAL SECURITY PROGRAM PROTECTION ACT OF 2002

  Mr. REID. Mr. President, I ask unanimous consent that the Finance 
Committee be discharged from further consideration and the Senate 
proceed to the consideration of H.R. 4070.
  The PRESIDING OFFICER. Without objection, it is so ordered. The clerk 
will report the bill by title.

       A bill (H.R. 4070) 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.

  There being no objection, the Senate proceeded to consider the bill.
  Mr. BAUCUS. Mr. President, I rise today to urge my colleagues to 
support the Senate version of H.R. 4070, the ``Social Security Program 
Protection Act of 2002.'' H.R. 4070 is bipartisan legislation developed 
by Ways and Means Social Security Subcommittee Chairman Shaw and 
ranking member Matsui. H.R. 4070 passed the House unanimously by a vote 
of 425 to 0. In keeping with the bipartisan tradition of the Senate 
Finance Committee and with the bipartisan origins of this legislation, 
Senator Grassley and I have worked together to further refine this 
legislation for Senate consideration.
  The House-passed version of H.R. 4070 makes a number of important 
changes to the Social Security and Supplemental Security Income, SSI, 
programs. These changes will accomplish a number of important goals: 
they will enhance the financial security of some of the most vulnerable 
beneficiaries of these programs, increase protections to seniors from 
deceptive practices by individuals in the private sector, improve 
program integrity, thereby saving money for the Social Security and 
Medicare Trust Funds and taxpayers, and reduce disincentives to 
employment for disabled individuals.
  One of the most important results of this legislation will be to 
enhance the financial security of the almost 7 million Social Security 
and SSI beneficiaries who are not capable of managing their own 
financial affairs due to advanced age or disability. The Social 
Security Administration, SSA, currently appoints individuals or 
organizations to act as ``representative payees'' for such 
beneficiaries. Most of these representative payees perform their roles 
conscientiously. However, some do not. Indeed, there have even been 
instances of terrible abuse in this program.
  It is imperative that Congress take action to guard vulnerable 
seniors and disabled individuals from such abuse. This legislation 
increases requirements for SSA to provide restitution to beneficiaries 
when representative payees defraud the beneficiaries of their benefits. 
The legislation also tightens the qualifications for representative 
payees, increases oversight of the program, and imposes stricter 
penalties on those who violate their responsibilities.
  The legislation expands the protection to seniors and disabled 
individuals by increasing the list of references to Social Security, 
Medicare and Medicaid which cannot be used by private-sector 
individuals, companies and organizations to give a false impression of 
Federal endorsement. The legislation also protects seniors from those 
who deceptively attempt to charge them for services that the seniors 
could receive for free from SSA.
  H.R. 4070 improves program integrity by expanding the current 
prohibition against paying benefits to fugitive felons. As part of the 
1996 welfare reform law, Congress banned the payment of SSI benefits to 
these individuals. However, under current law, fugitive felons can 
still receive Social Security benefits under title II. This legislation 
prohibits the payment of title II Social Security benefits to fugitive 
felons.
  H.R. 4070 also includes technical amendments to improve the 
effectiveness of the Ticket to Work and Work Incentives Improvement 
Act, legislation passed in 1999 to help beneficiaries with disabilities 
become employed and move toward self-sufficiency.
  To these House-passed provisions, Senator Grassley and I have added 
some new provisions that we feel are very important.
  First, we added a program integrity provision which will give the SSA 
Inspector General additional tools to pursue individuals who commit 
fraud by concealing work activity while they are receiving disability 
benefits.
  Second, we included a provision to make uniform an exemption to the 
Government Pension Offset. The Government Pension Offset, GPO, was 
enacted in order to equalize the treatment of workers in jobs not 
covered by Social Security and workers in jobs covered by Social 
Security, with respect to spousal and survivors benefits. The GPO 
reduces the Social Security spousal or survivors benefit by an amount 
equal to two-thirds of the government pension. However, as a recent GAO 
report highlighted, State and local government workers are exempt from 
the GPO if their job on their last day of employment was covered by 
Social Security. In contrast, Federal workers who switched from the 
Civil Service Retirement System, CSRS, a system that is not covered by 
Social Security, to the Federal Employee Retirement System, FERS, a 
system that is covered by Social Security, must work for 5 years under 
FERS in order to be exempt from the GPO. Our Senate version of H.R. 
4070 makes the exemption to the Government Pension Offset the same for 
State and local government workers as for Federal Government workers.

[[Page 22924]]

  Finally, we added four technical refinements to the Railroad 
Retirement and Survivors' Improvement Act of 2001. These changes will 
help to promote the efficient implementation of that important 
legislation which became law last year.
  I believe that each of the provisions of H.R. 4070, as passed by the 
House, and each of the provisions that Senator Grassley and I have 
added deserve the support of the Senate. Moreover, in an attempt to 
expedite congressional passage of this legislation, the changes that 
Senator Grassley and I want to make to the House-passed bill have 
already been worked out with both the chairman and the ranking member 
of the Social Security Subcommittee of the House Ways and Means 
Committee. Indeed, I have a statement that has been agreed to by the 
chairman and the ranking member of the Social Security Subcommittee, as 
well as by the chairman and ranking member of the Senate Finance 
Committee. This statement provides details about each of the provisions 
of the legislation, as well as the rationale behind each provision. I 
am submitting this full statement for the record.
  I would also like to point out that the legislation as a whole has 
net savings of more than $500 million over ten years for taxpayers, 
according to the non-partisan Congressional Budget Office. As a result, 
the Social Security and Medicare Trust Fund balances will increase by 
more than $500 million over that period, excluding increases from 
increased interest income. Moreover, over the next 75 years, this 
legislation will decrease--not increase--the long-run actuarial deficit 
for the Social Security Trust Funds, although by a negligible amount. 
This information comes from Office of the Independent Chief Actuary for 
the Social Security Administration. I am submitting the estimate from 
the office of the Chief Actuary of the Social Security Administration 
for the Record. I will submit the official written estimate from the 
Congressional Budget Office for the Record as soon as I receive it.
  This legislation contains the types of improvements we can all agree 
on, as demonstrated by the overwhelming bipartisan vote in the House, 
and the bipartisan, bicameral agreement of the chairman and ranking 
members of the committees of jurisdiction. I wholeheartedly urge my 
colleagues in the Senate to approve these sensible and important 
changes.
  Mr. President, I ask unanimous consent that a summary of the bill and 
a memorandum from the Social Security Administration be printed in the 
Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

     ``The Social Security Program Protection Act of 2002'' Summary

                  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 in the case 
     of misuse by an organizational payee or an individual payee 
     representing 15 or more beneficiaries. 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.
       In crafting a regulatory definition for ``use and 
     benefit,'' the Commissioner should take special care to 
     distinguish between the situation in which the representative 
     payee violates his or her trust responsibility by converting 
     the benefits to further the payee's own self interest, and 
     the situation in which the payee faithfully serves the 
     beneficiary by using the benefits in a way that principally 
     aids the beneficiary but which also incidentally aids the 
     payee or another individual. For instance, cases in which a 
     representative payee uses the benefits entrusted to his or 
     her care to help pay the rent on an apartment that he or she 
     and the beneficiary share should not be considered misuse.
       This provision applies to benefit misuse by a 
     representative payee as determined by the Commissioner on or 
     after January 1, 1995.

                           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 as criminal 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 Social Security Administration 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 SSA.
       Requiring the SSA to reissue benefit payments to the 
     victims of misuse by organizational payees or individual 
     payees serving 15 or more beneficiaries protects 
     beneficiaries who are among the most vulnerable because they 
     may have no family members or friends who are willing or able 
     to manage their benefits for them. With respect to individual 
     representative payees, the provision applies only to 
     representative payees serving 15 or more beneficiaries. As 
     with many cases involving organizational representative 
     payees, these are cases which may be the hardest to detect. 
     Moreover, extending the provision to cases involving 
     individual payees serving fewer beneficiaries may lead to 
     fraudulent claims of misuse. These claims, which often turn 
     on information available only from close family members, 
     would be difficult to assess. Similarly, extension of this 
     provision to these cases could potentially encourage misuse 
     or poor money management by these individual representative 
     payees if they believed that the beneficiary could eventually 
     be paid a second time by SSA.
       The effective date would protect the interests of 
     beneficiaries affected by these cases of egregious misuse 
     that have been identified in recent years.


            Section 102. Oversight of Representative Payees

                              Present law

       Present law requires non-governmental fee-for-service 
     organizational representative payees to be licensed or 
     bonded. Periodic on-site reviews of representative payees by 
     SSA is not required.

                        Explanation of provision

       The new provision requires non-governmental fee-for-service 
     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.
       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.

                           Reason for change

       Strengthening the bonding and licensing requirements for 
     representative payees would add further safeguards to protect 
     beneficiaries' funds. State licensing provides for some 
     oversight by the State into the fee-for-service 
     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 for community-based non-profit social service 
     agencies serving as representative payees.
       On-site periodic visits should be conducted regularly to 
     reduce misuse of funds. To the degree possible, appropriate 
     auditing and accounting standards should be utilized in 
     conducting such reviews.

[[Page 22925]]




 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

       Sections 205, 807, and 1631 of the Social Security Act 
     disqualify individuals from being representative payees if 
     they have been convicted of fraud under the Social Security 
     Act.

                        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 imprisonment for more 
     than one year; (2) is fleeing to avoid prosecution, or 
     custody or confinement after conviction; or (3) violated a 
     condiction 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 one 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 existing procedures and reviews conducted for 
     representative payees to determine whether they are 
     sufficient to protect benefits from being misused.
       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.

                           Reason for change

       Prohibiting 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 from serving as representative payees, 
     not just prohibiting those convicted of fraud under the 
     Social Security Act, decreases the likelihood of 
     mismanagement or abuse of beneficiaries' funds. Also, 
     allowing such person to serve as representative payees places 
     beneficiary payments in potential jeopardy and could raise 
     serious questions about the SSA's stewardship of taxpayer 
     funds. The agency's report to Congress will assist the 
     committees of jurisdiction in both the House and Senate in 
     their oversight of the representative payee program.
       The criminal background information provided by those who 
     apply to be representative payees should be the same as the 
     information considered by the Commissioner to implement this 
     provision.


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. This 
     provision applies to any month involving benefit misuse by a 
     representative payee as determined by the Commissioner after 
     December 31, 2002.

                           Reason for change

       Payees who misuse their clients' funds are not properly 
     performing the service for which the fee was paid and 
     therefore such fees should be forfeited. 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.


 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. This provision applies to benefit misuse by a 
     representative payee in any case where the Commissioner of 
     Social Security makes a determination of misuse after 
     December 31, 2002.

                           Reason for change

       Although the SSA has been provided with expanded authority 
     to recover overpayments, these tools cannot be used to recoup 
     benefits misused by a representative payee. Treating benefits 
     misused by non-governmental organization representative 
     payees and all individual payees as overpayments to the 
     representative payee would provide the SSA with additional 
     means for recovering misused payments.


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. This provision is effective 180 days 
     after the date of enactment.

                           Reason for change

       Accounting reports are an important means of monitoring the 
     activities of representative payees to prevent fraud and 
     abuse. Redirecting benefit payments to the field office would 
     enable the agency to promptly address the failure of the 
     representative payee to file a report.

                        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. 
     This provision applies to violations occurring after the date 
     of enactment.

                           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, in addition to the SSA's present 
     authority permitting recovery of misused funds, would provide 
     the SSA with an additional means of addressing misuse by 
     representative payees.

                     TITLE II. PROGRAM PROTECTIONS


Section 201. Issuance by Commissioner of Social Security of Receipts to 
Acknowledge Submission of Reports of Changes in Work or Earnings Status

                              Present law

       Changes in work or earnings status can affect a Title II 
     disability beneficiary's right to continued entitlement to 
     disability benefits. Changes in the amount of earned income 
     can also affect an SSI recipient's continued eligibility for 
     SSI benefits or his or her monthly benefit amount.
       The Commissioner has promulgated regulations that require 
     Title II disability beneficiaries to report changes in work 
     or earnings status (20 CFR, 404.1588), and regulations that 
     require SSI recipients (or their representative payees) to 
     report any increase or decrease in income (20 CFR, 416.704--
     416.714).

                        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.
       This provision requires the Commissioner to begin issuing 
     receipts as soon as possible, but no later than one year 
     after the date of enactment. The Committees with jurisdiction 
     over the Social Security Administration, the House Committee 
     on Ways and Means and the Senate Committee on Finance (the 
     Committees), are aware that SSA has developed software known 
     as the Modernized Return to Work System (MRTW). This software 
     will assist SSA employees in recording information about 
     changes in work and earnings status and in making 
     determinations of whether such changes affect continuing 
     entitlement to disability benefits. The software

[[Page 22926]]

     also has the capability of automatically issuing receipts. 
     SSA has informed the Committees that this software is already 
     in use in some of the agency's approximately 1300 local field 
     offices, and that SSA expects to put it into operation in the 
     remainder of the field offices over the next year. The 
     Committees expect that SSA field offices that are already 
     using the MRTW system will immediately begin issuing receipts 
     to disabled beneficiaries who report changes in work or 
     earnings status, and that SSA will require the other field 
     offices to begin issuing receipts as these offices begin 
     using the MRTW system over the next year. For disabled Title 
     XVI beneficiaries, if SSA issues a notice to the beneficiary 
     immediately following the report of earnings that details the 
     effect of the change in income on the monthly benefit amount, 
     this notice would serve as a receipt.

                           Reason for change

       Witnesses have testified before the Social Security 
     Subcommittee and the Human Resources Subcommittee of the 
     House Ways and Means Committee that 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.


      Section 202. Denial of Title II Benefits to Persons Fleeing 
    Prosecution, Custody, or Confinement, and to Persons Violating 
                          Probation or Parole

                              Present law

       The welfare reform law (``Personal Responsibility and Work 
     Opportunity Reconciliation Act of 1996,'' P.L. 104-193) 
     included provisions making persons ineligible to receive SSI 
     benefits 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.

                        Explanation of provision

       The new provision makes persons ineligible to receive 
     Social Security benefits under Title II 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 Commissioner may, for good cause, pay 
     withheld benefits to persons fleeing to avoid prosecution for 
     a felony or to avoid custody or confinement after conviction 
     for a felony. Finally, the Commissioner, upon written request 
     by law enforcement officials, shall assist such officials in 
     apprehending fugitives by providing them with the address, 
     Social Security number, and, if available to SSA, a 
     photograph of the fugitive.
       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.

                           Reason for change

       The Inspector General has estimated that persons fleeing to 
     avoid prosecution for a felony or to avoid custody or 
     confinement after conviction for a felony, or in violation of 
     a condition of probation or parole, receive at least $39 
     million in Title II Social Security benefits annually. The 
     Inspector General has recommended that the law be changed to 
     prohibit these individuals from receiving such benefits.
       Under this provision, the Commissioner would be required to 
     develop regulations within one year of the date of enactment 
     with regard to the use of the ``good cause'' exception to 
     withholding Title II benefits from persons fleeing to avoid 
     prosecution for a felony or to avoid custody or confinement 
     after conviction for a felony. The good cause exception will 
     provide the Commissioner with the ability to pay benefits 
     under unusual circumstances in which the Commissioner deems 
     the withholding of benefits to be inappropriate. The 
     Committees expect that one of the uses to be made by the 
     Commissioner of this discretionary authority will be to deal 
     with situations that arise when Social Security beneficiaries 
     are found to be in flight from a warrant relating to a crime 
     for which the beneficiary is ultimately not convicted. In 
     such circumstances, it is expected that the absence of a 
     conviction should serve as a basis for paying any benefits 
     withheld from the beneficiary during a period of flight.
       The Committees have been made aware of situations in which 
     the violation of a condition of probation or parole could 
     involve mitigating circumstances that may warrant further 
     examination regarding the denial of benefits created by this 
     section. The Committees plan to work with the Commissioner of 
     Social Security to further examine such situations in order 
     to evaluate whether the current good faith exception is 
     sufficient.


  Section 203. Requirements Relating to Offers to Provide for a Fee a 
 Product or Service Available Without Charge from the Social Security 
                             Administration

                              Present law

       Section 1140 of 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 (now the Centers for 
     Medicare and Medicaid Services), 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

       Several individuals and companies offer Social Security 
     services for a fee even though the same services are 
     available directly from SSA free of charge. The new provision 
     requires persons or companies offering such services to 
     include in their solicitations a statement that the services 
     which 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. The amendment 
     applies to solicitations made after the 6th month following 
     the issuance of these standards. The new provision requires 
     that the Commissioner promulgate regulations within 1 year 
     after the date of enactment.

                           Reason for change

       Several individuals and companies offer Social Security 
     services for a fee even though the same services are 
     available directly from SSA free of charge. For example, 
     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. These practices 
     can mislead and deceive senior citizens, newlyweds, new 
     parents, and other individuals seeking services who may not 
     be aware that SSA provides these services for free.


   Section 204. 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. This 
     provision is effective upon the date of enactment.

                           Reason for change

       This provision would provide additional protections for 
     beneficiaries who may rely on representatives during all 
     phases of their benefit application process. As part their 
     ongoing oversight of claimant representatives, the Committees 
     intend to review whether options to establish protections for 
     claimants represented by non-attorneys should be considered.


    Section 205. 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 
     (SSA) 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 one year in prison. This provision 
     is effective upon enactment.

                           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 Internal Revenue Manual defines the term ``corruptly'' 
     as follows: ``'Corruptly' characterizes an attempt to 
     influence any official in his or her official capacity under 
     this title by any improper inducement. For example, an offer 
     of a bribe or a passing of a bribe to an Internal Revenue 
     employee for the purpose of influencing him or her in the

[[Page 22927]]

     performance of his or her official duties is corrupt 
     interference with the administration of federal laws.'' 
     (Internal Revenue Manual, [9.5] 11.3.2.2, 4-09-1999).
       The Committees expect that judgment will be used in 
     enforcing this section. Social Security and SSI disability 
     claimants and beneficiaries, in particular, 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% of Social Security disability 
     beneficiaries and 35% of disabled SSI recipients have mental 
     impairments, and such individuals may be less able to control 
     emotional outbursts. These factors should be taken into 
     account in enforcing this provision.


 Section 206. Use of Symbols, Emblems or Names in Reference to Social 
                          Security or Medicare

                              Present law

       Section 1140 of 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 (now the Centers for 
     Medicare and Medicaid Services) 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. 
     This provision applies to items sent after 180 days after the 
     date of enactment.

                           Reason for change

       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 in the 
     solicitations.


  Section 207. 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 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) 
     without any loss of benefits. A month counts as a trial work 
     period month if the individual earns above a level 
     established by regulation (in 2002, this amount is $560 a 
     month). If the individual does not use the full 9 months 
     within a 60 month period, he or she is entitled to another 9 
     month trial work period.
       SSA's Inspector General has pursued prosecution of Title II 
     disability beneficiaries who fraudulently conceal work 
     activity by applying several criminal statutes, including 
     section 208(a) of the Social Security Act and sections 371 
     and 641 of Title 18 of the United States Code (Crimes and 
     Criminal Procedures).

                        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.
       This provision is effective with respect to work activity 
     performed after the date of enactment.

                           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 no matter how much they earn. Therefore, benefits 
     received during the trial work period are not included in 
     calculating the total dollar loss to the government.
       Many United States Attorneys set dollar-loss thresholds 
     that they use in determining which fraud cases to prosecute. 
     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 United 
     States 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 this situation by establishing 
     that individuals convicted of fraudulently concealing work 
     activity during the trial work period are not entitled to 
     receive a benefit for trial work period months prior to the 
     conviction (but within the same period of disability). As a 
     result, in such cases the total dollar loss to the government 
     that is calculated will be greater and more likely to meet 
     the United States Attorneys' thresholds for prosecution.

   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, by law, is permitted 
     to charge an assessment at a rate not to exceed 6.3% 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% 
     assessment on approved attorney representative fees for Title 
     II claims, and this cap is indexed for inflation. This 
     provision is effective 180 days after the date of enactment.

                           Reason for change

       Testimony was given at a House oversight hearing in May 
     2001 on Social Security's processing of attorney 
     representative's fees that the amount of the fee assessment 
     is unfair to these attorneys, who provide an important 
     service to claimants. The attorneys who receive fee payments 
     from the agency have their gross revenue reduced by 6.3%, 
     which is about a 20% reduction in the net revenue for most 
     attorneys. As a result of this revenue loss and the time it 
     takes for the SSA to issue the fee payments to attorneys, a 
     number of attorneys have decided to take fewer or none of 
     these cases. The cap on the amount of the assessment would 
     help ensure that enough attorneys remain available to 
     represent claimants before the Social Security 
     Administration.
       The Committees continue to be concerned about the agency's 
     processing time for attorney representative fee payments and 
     expect the SSA to further automate the payment process as 
     soon as possible.
       The Committee on Ways and Means of the House of 
     Representatives and the Committee on Finance of the Senate 
     will request the General Accounting Office to conduct a study 
     of claimant representation in the Social Security and 
     Supplemental Security Income programs. The study will include 
     an evaluation of the potential advantages and disadvantages 
     of extending the fee withholding process to non-attorney 
     representatives.

            TITLE IV: MISCELLANEOUS AND TECHNICAL AMENDMENTS

    Subtitle A: Amendments Relating to the Ticket to Work and Work 
                   Incentives Improvement Act of 1999


Section 401. Application of Demonstration Authority Sunset Date to New 
                                Projects

                              Present law

       Section 234 of the Social Security Act provides the 
     Commissioner with general authority to conduct demonstration 
     projects for the disability insurance program. These projects 
     can test: (1) alternative methods of treating work activity 
     of individuals entitled to disability benefits; (2) the 
     alteration of other limitations and conditions that apply to 
     such individuals (such as an increase in the length of the 
     trial work period); and (3) implementation of sliding scale 
     benefit offsets. To conduct the projects, the Commissioner 
     may waive compliance with the benefit requirements of Title 
     II and Section 1148, and the HHS Secretary may waive the 
     benefit requirements of Title XVIII. The Commissioner's 
     authority to conduct demonstration projects terminates on 
     December 17, 2004, five years after its enactment in the 
     ``Ticket to Work and Work Incentives Improvement Act of 
     1999''(P.L. 106-170, ``Ticket to Work Act'').

                        Explanation of provision

       The new provision clarifies that the Commissioner is 
     authorized to conduct demonstration projects that extend 
     beyond December 17, 2004, if such projects are initiated on 
     or before that date (i.e., initiated within the five-year 
     window after enactment of the Ticket to Work Act). This 
     provision is effective upon enactment.

                           Reason for change

       The current five-year limitation on waiver authority 
     restricts the options that may be tested to improve work 
     incentives and return to work initiatives, as several 
     potential

[[Page 22928]]

     options the Commissioner may test would extend past the 
     current five-year limit. As developing a well-designed 
     demonstration project can require several years, the current 
     five-year authority may in some cases not allow sufficient 
     time to both design the project and to conduct it long enough 
     to obtain reliable data.


Section 402. Expansion of Waiver Authority Available in Connection with 
Demonstration Projects Providing for Reductions in Disability Insurance 
                       Benefits Based on Earnings

                              Present law

       Section 234 of the Social Security Act provides the 
     Commissioner with general authority to conduct demonstration 
     projects for the disability insurance program. In addition, 
     the Ticket to Work Act specifically 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, section 302 of 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

       The new provision allows the Commissioner to also waive 
     requirements in Section 1148 of the Social Security Act, 
     which governs the Ticket to Work and Self-Sufficiency Program 
     (Ticket to Work Program), as they relate to Title II. This 
     provision is effective upon enactment.

                           Reason for change

       This additional waiver authority is needed to allow the 
     Commissioner to effectively test the $1-for-$2 benefit offset 
     in combination with return to work services under the Ticket 
     to Work Program. Under the $1-for-$2 benefit offset, earnings 
     of many beneficiaries may not be sufficient to completely 
     eliminate benefits. However, under section 1148 of the Social 
     Security Act, benefits must be completely eliminated before 
     employment networks participating in the Ticket to Work 
     Program are eligible to receive outcome payments. Therefore, 
     employment networks are likely to be reluctant to accept 
     tickets from beneficiaries participating in the $1-for-$2 
     benefit offset demonstration, making it impossible for SSA to 
     effectively test the combination of the benefit offset and 
     these return to work services. Additionally, section 1148 
     waiver authority was provided for the broad Title II 
     disability demonstration authority under section 234 of the 
     Social Security Act, but not for this mandated project.


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. This provision is 
     effective upon enactment.

                           Reason for change

       For demonstration projects conducted under the broader 
     Title II demonstration project authority under section 234 of 
     the Social Security Act, administrative costs 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.


Section 404. Availability of Federal and State Work Incentive Services 
                       to Additional Individuals

                              Present law

       Section 1149 of the Social Security Act (the Act), as added 
     by the Ticket to Work Act, directs SSA to establish a 
     community-based work incentives planning and assistance 
     program to provide benefits 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. BPAO projects now 
     exist in every state.
       Section 1150 of the Act 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. Under this section, services provided by 
     participating P&A systems may include: (1) information and 
     advice about obtaining vocational rehabilitation (VR) and 
     employment services; and (2) advocacy or other services that 
     a disabled beneficiary may need to secure or regain 
     employment. 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 a ``disabled beneficiary'' as 
     defined under section 1148(k) of the Act. Section 1148(k) 
     defines a disabled beneficiary as an individual entitled to 
     Title II benefits based on disability or an individual who is 
     eligible for federal Supplemental Security Income (SSI) cash 
     benefits under Title XVI based on disability or blindness.

                        Explanation of provision

       The new provision expands eligibility for the BPAO and 
     PABSS programs under section 1149 and 1150 of the Act to 
     include not just individuals who are ``disabled 
     beneficiaries'' under section 1148(k) of the Act, but also 
     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 the 
     federal SSI benefit); or (3) are in an extended period of 
     Medicare eligibility under Title XVIII after a period of 
     Title II disability has ended. The new provision also expands 
     the types of services a P&A system may provide under section 
     1150 of the Act. Currently P&A systems may provide ``advocacy 
     or other services that a disabled beneficiary may need to 
     secure or regain employment,'' while the new provision allows 
     them to provide ``advocacy or other services that a disabled 
     beneficiary may need to secure, maintain, or regain 
     employment.''
       The amendment to section 1149, which affects the BPAO 
     program, is effective with respect to grants, cooperative 
     agreements or contracts entered into on or after the date of 
     enactment. The amendments to section 1150, which affect the 
     PABSS program, are effective for payments provided after the 
     date of the enactment.

                           Reason for change

       The Committees recognize that Social Security and SSI 
     beneficiaries with disabilities face a variety of barriers 
     and disincentives to becoming employed and staying in their 
     jobs. The intent of this provision, as with the Ticket to 
     Work Act, is to encourage disabled individuals to work.
       The definition of ``disabled beneficiary'' under 
     section1148(k) of the Act does not include several groups of 
     beneficiaries, including individuals who are no longer 
     eligible for SSI benefits because of an earnings increase but 
     remain eligible for Medicaid; individuals receiving only a 
     State Supplementary payment; and individuals who are in an 
     extended period of Medicare eligibility. The Committees 
     believe that BPAO and PABSS services should be available to 
     all of these disabled beneficiaries regardless of Title II or 
     SSI payment status. Beneficiaries may have progressed beyond 
     eligibility for federal cash benefits but still be in need of 
     information about the effects of work on their benefits, or 
     in need of advocacy or other services to help them maintain 
     or regain employment. Extending eligibility for the BPAO and 
     PABSS programs to beneficiaries who are receiving State 
     Supplemental payments or are still eligible for Medicare or 
     Medicaid, but 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.
       The Committees also intend that PABSS services be available 
     to provide assistance to beneficiaries who have successfully 
     obtained employment but who continue to encounter job-related 
     difficulties. Therefore, the new provision extends the 
     current PABSS assistance (which is available for securing and 
     regaining employment) to maintaining employment--thus 
     providing a continuity of services for disabled individuals 
     throughout the process of initially securing employment, the 
     course of their being employed and, if needed, their efforts 
     to regain 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 PABBS services. Payments 
     for services to maintain employment would be subject to 
     Section 1150(c) of the Social Security Act. The Committees 
     will continue to monitor the implementation of PABSS programs 
     to ensure that assistance is directed to all areas in which 
     beneficiaries face obstacles in securing, maintaining, or 
     regaining work.


   Section 405. Technical Amendment Clarifying Treatment for Certain 
  Purposes of Individual Work Plans Under the Ticket to Work and Self-
                          Sufficiency Program

                              Present law

       Under section 52 of the Internal Revenue Code (IRC), 
     employers may claim a Work Opportunity Tax Credit (WOTC) if 
     they hire, among other individuals, individuals with 
     disabilities who have been referred by a State vocational 
     rehabilitation (VR) agency.

[[Page 22929]]

     For an individual to qualify as a vocational rehabilitation 
     referral under section 51(d)(6)(B) of the IRC, the individual 
     must be receiving or have completed vocational rehabilitation 
     services pursuant to: (i) ``an individualized written plan 
     for employment under a State plan for vocational 
     rehabilitation services approved under the Rehabilitation Act 
     of 1973;'' or (ii) ``a program of vocational rehabilitation 
     carried out under chapter 31 of title 38, United States 
     Code.'' (IRC, section 51(d)(6)(B).
       The WOTC is equal to 40% 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. As such, the maximum credit per employee is 
     $2,400, but the credit may be less depending on the 
     employer's tax bracket. A lesser credit rate of 25% is 
     provided to employers when the employee remains on the job 
     for 120-399 hours. The amount of the credit reduces the 
     company's deduction for the employee's wages.
       The Ticket to Work Act established the Ticket to Work and 
     Self-Sufficiency Program (Ticket to Work Program) under 
     section 1148 of the Social Security Act. Under this program, 
     SSA provides a ``ticket'' to eligible Social Security 
     Disability Insurance beneficiaries and Supplemental Security 
     Income beneficiaries with disabilities 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. State VR agencies have the option of 
     participating in the Ticket to Work Program as employment 
     networks. Employment networks must work with each beneficiary 
     they serve to develop an individual work plan (IWP) for that 
     beneficiary that outlines his or her vocational goals, and 
     the services needed to achieve those goals. For VR agencies 
     that participate in the Ticket to Work Program, the 
     individualized written plan for employment (as specified 
     under (i) in paragraph one above) serves in lieu of the IWP.
       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 employment networks under 
     section 1148 of the Social Security Act to qualify for the 
     WOTC. Specifically, it provides that, for purposes of section 
     51(d)(6)(B)(i) of the IRC of 1986, an IWP under section 1148 
     of the Social Security Act shall be treated as an 
     individualized written plan for employment under a State plan 
     for vocational rehabilitation services approved under the 
     Rehabilitation Act of 1973.
       This provision is effective as if it were included in 
     section 505 of the Ticket to Work Act.

                           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.

                  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. This provision is 
     effective upon enactment.

                           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.


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 for 
     smuggling aliens. This provision applies to individuals for 
     whom the Commissioner receives a removal notice from the 
     Attorney General after the date of enactment.

                           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.


      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). 
     The provision is effective upon enactment.

                           Reason for change

       The reports to be reinstated provide Congress with 
     important information needed to evaluate and oversee the 
     Social Security and Medicare programs.


 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 
     nine 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 nine-month 
     requirement for cases in which the Commissioner finds that 
     the claimant and the deceased spouse would have been married 
     for longer than nine months but for the fact that the 
     deceased spouse was legally prohibited from divorcing a prior 
     spouse who was in a mental institution. The provision is 
     effective for benefit applications filed after the date of 
     enactment.

                           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.


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 an agreement with a foreign country 
     (i.e., a totalization agreement), a worker's earnings are 
     exempt from United States 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 United States 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 United States 
     Social Security tax whether or not the worker elected to make 
     contributions to the foreign country's retirement system.
       The provision is effective upon enactment.

                           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 U.S. 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 question regarding the exemption and would be 
     consistent with the general philosophy behind the coverage 
     rules of totalization agreements.


   Section 416. Coverage Under Divided Retirement System for Public 
                         Employees in Kentucky

                              Present law

       Under Section 218 of the Social Security Act, a State may 
     choose whether or not its

[[Page 22930]]

     State and local government employees who are covered by an 
     employer-sponsored pension plan may also participate in the 
     Social Security Old-Age, Survivors, and Disability Insurance 
     program. (In this context, the term ``employer-sponsored 
     pension plan'' refers to a pension, annuity, retirement, or 
     similar fund or system established by a State or a political 
     subdivision of a State such as a town. Under current law, 
     State or local government employees not covered by an 
     employer-sponsored pension plan already are, with a few 
     exceptions, mandatorily covered by Social Security.)
       Social Security coverage for employees covered under a 
     State or local government employer-sponsored pension plan is 
     established through an agreement between the State and the 
     federal government. In most States, before the agreement can 
     be made, employees who are members of the employer-sponsored 
     pension plan must agree to Social Security coverage by 
     majority vote in referendum. If the majority vote is in favor 
     of Social Security coverage, then the entire group, including 
     those voting against such coverage, will be covered by Social 
     Security. If the majority vote is against Social Security 
     coverage, then the entire group, including those voting in 
     favor of such coverage and employees hired after the 
     referendum, will not be covered by Social Security.
       In certain States, however, if employees who already are 
     covered in an employer-sponsored pension plan are not in 
     agreement about whether to participate in the Social Security 
     system, coverage can be extended only to those who choose it, 
     provided that all newly hired employees of the system are 
     mandatorily covered under Social Security. To establish such 
     a divided retirement system, the state must conduct a 
     referendum among members of the employer-sponsored pension 
     plan. After the referendum, the retirement system is divided 
     into two groups, one composed of members who elected Social 
     Security coverage and those hired after the referendum, and 
     the other composed of the remaining members of the employer-
     sponsored pension plan. Under Section 218(d)(6)(c) of the 
     Social Security Act, 21 states currently have authority to 
     operate a divided retirement system.

                        Explanation of provision

       The new provision permits the state of Kentucky to join the 
     21 other states in being able to offer a divided retirement 
     system. This system would permit current state and local 
     government workers in an employer-sponsored pension plan to 
     elect Social Security coverage on an individual basis. Those 
     who do not wish to be covered by Social Security would 
     continue to participate exclusively in the employer-sponsored 
     pension plan.
       The governments of the City of Louisville and Jefferson 
     County will be merged in January 2003 and a new retirement 
     system will be formed. Under the new provision, each employee 
     under the new system could choose whether or not to 
     participate in the Social Security system in addition to 
     their employer-sponsored pension plan. As under current law, 
     all employees newly hired to the system after the divided 
     system is in place would be covered automatically under 
     Social Security.
       This provision is effective on January 1, 2003.

                           Reason for change

       The governments of the City of Louisville and Jefferson 
     County, Kentucky will merge in January, 2003. Currently, some 
     officers and firefighters in employer-sponsored pension plans 
     provided by these governments are covered by Social Security, 
     while others are not. In order to provide fair and equitable 
     coverage to all officers and firefighters, a divided 
     retirement system, such as that currently authorized in 21 
     other states, was seen as the best solution. Otherwise, upon 
     creation of the new retirement system, a referendum would be 
     held to determine by majority vote whether or not the group 
     would participate in Social Security. As the number of non-
     covered employees will exceed the number of Social Security-
     covered employees under the new retirement system, in the 
     absence of this new provision, those employees covered by 
     Social Security could lose that coverage. The Kentucky 
     General Assembly has adopted a bill that will allow the new 
     divided retirement system to go forward following enactment 
     of this provision.


    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 section 
     703 of the Social Security Act. The 7-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. Section 703(f) of the 
     Social Security Act provides that 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 travel expenses, including per diem in 
     lieu of subsistence, as authorized by section 5703 of title 
     5, United States Code for persons in the Government who are 
     employed intermittently.

                        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 engaged in performing a function of the Board. 
     This provision is effective on January 1, 2002.

                           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.


Section 418. 60-Month Period of Employment Requirement for Application 
                 of Government Pension Offset Exemption

                              Present law

       The Government Pension Offset (GPO) was enacted in order to 
     equalize treatment of workers in jobs not covered by Social 
     Security and workers in jobs covered by Social Security, with 
     respect to spousal and survivors benefits. The GPO reduces 
     the Social Security spousal or survivors benefit by two-
     thirds of the government pension.
       However, under what's known as the ``last day rule,'' State 
     and local government workers are exempt from the GPO if their 
     job on their last day of employment was covered by Social 
     Security. In contrast, Federal workers who switched from the 
     Civil Service Retirement System (CSRS), a system that is not 
     covered by Social Security, to the Federal Employee 
     Retirement System (FERS), a system that is covered by Social 
     Security, must work for 5 years under FERS in order to be 
     exempt from the GPO.

                        Explanation of provision

       The new provision requires that State and local government 
     workers be covered by Social Security during their last 5 
     years of employment in order to be exempt from the GPO. 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 June 30, 2003, provided that such period 
     of covered employment began on or before December 31, 2002.

                           Reason for change

       The change will establish uniform application of the GPO 
     exemption for all local, State, and federal government 
     workers.

                    Subtitle C. Technical Amendments


 Section 421. Technical Correction Relating to Responsible Agency Head

                              Present law

       Section 1143 of the Social Security Act directs ``the 
     Secretary of Health and Human Services'' to send periodic 
     Social Security Statements to individuals.

                        Explanation of provision

       The new provision makes a technical correction to this 
     section by inserting a reference to the Commissioner of 
     Social Security in place of the reference to the Secretary of 
     Health and Human Services. This provision is effective upon 
     enactment.

                           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.


 Section 422. Technical Correction Relating to Retirement Benefits of 
                               Ministers

                              Present law

       Section 1456 of 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 
     under the Internal Revenue Code. However, under Section 211 
     of the Social Security Act, 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. This provision is effective for years beginning 
     before, on, or after December 31, 1994. This effective date 
     is the same as the effective date of Section 1456 of P.L. 
     104-188.

                           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

[[Page 22931]]

     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.


   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. This 
     provision is effective upon enactment.

                           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 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.


        Section 424. Technical Correction of Outdated References

                              Present law

       Section 202(n) and 211(a)(15) of the Social Security Act 
     and Section 3102(a) of the Internal Revenue Code of 1986 each 
     contain 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: (1) in 
     Section 202(n) of the Social Security Act, updating 
     references respecting removal from the United States; (2) in 
     Section 211(a)(15) of the Social Security Act, correcting a 
     citation respecting a tax deduction related to health 
     insurance costs of self-employed individuals; and (3) in 
     Section 3102(a) of the Internal Revenue Code of 1986, 
     eliminating a reference to an obsolete 20-day agricultural 
     work test. This provision is effective upon enactment.

                           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, 
     Social Security law contains some outdated references.


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 their distributive share of gross 
     earnings. This provision is effective upon enactment.

                           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.


     Section 426. Technical Changes to the Railroad Retirement and 
                   Survivors' Improvement Act of 2001

                              Present law

       See Public Law 107-90.

                       Explanation of provisions

     Quorum rules
       This technical change clarifies that, under Section 105 of 
     the Act, a vacancy on the Board of National Railroad 
     Retirement Investment Trust (NRRIT) does not preclude the 
     Board from making changes in the Investment Guidelines with 
     the unanimous vote of all remaining Trustees.
     Transfers
       This technical change clarifies that under Section 107 of 
     the Act, the Railroad Retirement Board (RRB) can require the 
     NRRIT to transfer amounts necessary to pay benefits to the 
     Railroad Retirement Account (RRA) and that excess Social 
     Security Equivalent Benefits (SSEB) Account assets can be 
     transferred to the RRA for investment in federal securities 
     until used to pay benefits.
     Investment authority
       This technical change clarifies that, under Section 105 of 
     the Act, the Board of the NRRIT has the authority to invest 
     the assets with the assistance of its own professional staff 
     or by retaining outside advisors and managers.

                            Clerical changes

       This provision makes a number of grammatical and 
     typographical corrections to the Act.

                           Reason for change

       All four changes are purely technical in nature and are 
     needed to promote the efficient implementation of the 
     Railroad Retirement and Survivors' Improvement Act of 2001.
                                  ____


                            Social Security


                               memorandum

     Date: November 18, 2002
     To: Stephen C. Goss, Chief Actuary
     From: Chris Chaplain, Actuary, Alice H. Wade, Deputy Chief 
         Actuary
     Subject: Estimated Long-Range OASDI Financial Effects of the 
         Social Security Program Protection Act of 2002, as 
         Amended by the Senate Finance Committee--Information.
       This memorandum provides long-range estimates of the 
     financial effect on the Social Security (OASDI) program for 
     enactment of the Social Security Program Protection Act of 
     2002 (H.R. 4070), as passed by the House on June 26, 2002 and 
     amended by the Senate Finance Committee. This legislation 
     contains 35 provisions, including the following:
       Provide additional safeguards for Social Security 
     beneficiaries with representative payees, such as requiring 
     periodic onsite reviews, holding payees liable or assessing 
     penalties for misused benefits.
       Grant the authority to assess civil monetary penalties for 
     corrupt or forcible interference with the administration of 
     the Social Security Act, and wrongful conversion by 
     representative payees.
       Deny title II benefits to fugitive felons, persons fleeing 
     prosecution, and probation or parole violators.
       Limit the amount of attorney fee assessments to the lower 
     of 6.3% of the fee or $75. The $75 threshold would be indexed 
     annually by cumulative changes in the Social Security cost-
     of-living adjustment (COLA), but future threshold amounts 
     would be rounded to the next lower multiple of $10. However, 
     the threshold amount would never go below $75.
       Make several amendments to demonstration projects under the 
     Ticket to Work Act.
       Extend the right to have a divided retirement system for 
     public employees in the state of Kentucky.
       Replace the ``last day'' requirement for exemption from the 
     Government Pension Offset with a ``last 5 years'' 
     requirement--that is, the beneficiary would have to work in a 
     position covered by Social Security and by the government 
     pension plan for the last 5 years of such employment, rather 
     than the last day.
       Make miscellaneous technical amendments.
       The estimated long-range OASDI financial effect of each 
     provision of the legislation is either no change or a change 
     in the actuarial balance that is negligible (less than 0.0005 
     percent of taxable payroll). Taken as a whole, the 
     legislation would result in an increase in the OASDI 
     actuarial balance that is estimated to be negligible. In 
     addition, enactment of this legislation would change neither 
     the first year that annual costs are expected to exceed tax 
     income (2017) nor the year that the combined OASI and DI 
     Trust Funds are expected to become exhausted (2041). The 
     provisions in the legislation are generally effective with 
     the date of enactment of the legislation, which we assume to 
     be January 1, 2003. All estimates included in this memorandum 
     are based on the intermediate assumptions of the 2002 
     Trustees Report.
  Mr. REID. I ask unanimous consent that the substitute amendment be 
agreed to; the bill, as amended, be read three times, passed, and the 
motion to reconsider be laid upon the table, with no intervening action 
or debate, and that any statements relating thereto be printed in the 
Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment (No. 4967) was agreed to.
  (The amendment is printed in today's Record under ``Text of 
Amendments.'')
  The bill (H.R. 4070), as amended, was read the third time and passed.

                          ____________________