[House Report 104-786]
[From the U.S. Government Publishing Office]



104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     104-786
_______________________________________________________________________


 
          SOCIAL SECURITY MISCELLANEOUS AMENDMENTS ACT OF 1996

                                _______
                                

 September 16, 1996.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

_______________________________________________________________________


    Mr. Archer, from the Committee on Ways and Means, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 4039]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 4039) to make technical and clarifying amendments to 
recently enacted provisions relating to titles II and XVI of 
the Social Security Act and to provide for a temporary 
extension of demonstration project authority in the Social 
Security Administration, having considered the same, report 
favorably thereon without amendment and recommend that the bill 
do pass.

                                CONTENTS

                                                                   Page
 I. Introduction......................................................2
        A. Purpose and Summary...................................     2
        B. Background and Need for Legislation...................     2
        C. Legislative History...................................     2
II. Explanation of Provisions.........................................3
        A. Section 1. Short Title................................     3
        B. Section 2. Technical Amendments Relating to Drug 
            Addicts and Alcoholics...............................     3
        C. Section 3. Clarification Regarding Review of 
            Determinations By State Disability Determination 
            Services.............................................     4
        D. Section 4. Extension of Disability Insurance Program 
            Demonstration Project Authority......................     5
        E. Section 5. Perfecting Amendments Related to 
            Withholding from Social Security Benefits............     5
        F. Section 6. Treatment of Prisoners.....................     6
III.Votes of the Committee............................................8

IV. Budget Effects of the Bill........................................9
        A. Committee Estimate of Budgetary Effects...............     9
        B. Statement Regarding New Budget Authority and Tax 
            Expenditures.........................................     9
        C. Cost Estimate Prepared by the Congressional Budget 
            Office...............................................     9
 V. Other Matters Required To Be Discussed Under the Rules of the Hou15
        A. Committee Oversight Findings and Recommendations......    15
        B. Summary of Findings and Recommendations of the 
            Government Reform and Oversight Committee............    15
        C. Inflationary Impact Statement.........................    15
VI. Changes in Existing Law Made by the Bill, as Reported............15

                            I. INTRODUCTION

                         A. Purpose and Summary

    The ``Social Security Miscellaneous Amendments Act of 
1996'' (H.R. 4039) is based on legislative language submitted 
by the Social Security Administration (SSA) making a number of 
technical and perfecting amendments to provisions regarding 
denial of benefits to drug addicts and alcoholics, 
clarification regarding review of determinations by State 
Disability Determination Services, extension of disability 
insurance program demonstration project authority, and 
withholding of taxes from Social Security benefits.
    Also included are provisions further barring payment of 
Social Security retirement, survivors, and disability insurance 
benefits to prisoners that are similar to those included in the 
House-passed version of the ``Personal Responsibility and Work 
Opportunity Reconciliation Act of 1996,'' which became law 
(P.L. 104-193) on August 22, 1996. The provisions barring 
payment of Social Security benefits to prisoners were not 
included in the conference report on the legislation because of 
the Senate's interpretation of procedural rules against 
including Social Security provisions in a reconciliation bill.

                 B. Background and Need for Legislation

    In May 1996, Commissioner of Social Security Shirley Chater 
submitted to Congress for consideration a draft bill to amend 
the Social Security Act to extend and amend demonstration 
project authority, make perfecting amendments related to tax 
withholding from Social Security benefits, make a technical 
clarification in the effective date of the denial of disability 
benefits to drug addicts and alcoholics, and make 
administrative improvements with respect to reports by prisons 
and certain other institutions. The Commissioner cited the 
time-sensitivity of the provisions, either because they were 
needed to meet statutory deadlines, or they warranted prompt 
consideration because they were critical to SSA's efforts to 
ensure that benefits are paid only to properly qualified 
individuals. Furthermore, a May 1996 audit by the SSA Office of 
Inspector General on ``Effectiveness in Obtaining Records to 
Identify Prisoners'' found that SSA had achieved only limited 
success in obtaining the prisoner information needed to suspend 
benefit payments, and recommended legislative action to enable 
SSA to more efficiently suspend benefits.

                         C. Legislative History

    On July 25, 1996, the Subcommittee on Social Security 
ordered favorably reported to the Full Committee, by a voice 
vote, with a quorum present, draft legislation entitled the 
``Social Security Miscellaneous Amendments Act of 1996.''
    On September 11, 1996, the Full Committee ordered favorably 
reported, H.R. 4039, the ``Social Security Miscellaneous 
Amendments Act of 1996,'' by voice vote with a quorum present.

                     II. EXPLANATION OF PROVISIONS

                       A. Section 1. Short Title

    The short title of the bill is the ``Social Security 
Miscellaneous Amendments Act of 1996.''

    B. Section 2. Technical Amendments Relating to Drug Addicts and 
                               Alcoholics

Present law

    The ``Contract With America Advancement Act of 1996'' (P.L. 
104-121) included amendments to the Social Security and 
Supplemental Security Income (SSI) disability programs 
providing that no individual could be considered to be disabled 
if alcoholism or drug addiction would otherwise be a 
contributing factor material to the determination of 
disability. The effective date for all new and pending 
applications was the date of enactment. For those whose claim 
had been finally adjudicated before the date of enactment, the 
amendments would apply commencing with benefits for months 
beginning on or after January 1, 1997.
    Public Law 104-121 provided for the appointment of 
representative payees for recipients allowed benefits due to 
another impairment who also have drug addiction or alcoholism 
conditions, and the referral of those individuals for 
treatment.
    ``The Social Security Independence and Program Improvements 
Act of 1994'' (P.L. 103-296) contained requirements that the 
Commissioner of Social Security report to the Committees on 
Ways and Means and Finance by December 31, 1996, on activities 
related to the monitoring and testing of Social Security 
beneficiaries on the basis of drug addiction or alcoholism and 
who are required to undergo treatment as a condition for 
receipt of benefits.

Explanation of provision

    The provision clarifies the meaning of the term ``final 
adjudication.'' A claim may not be considered to be finally 
adjudicated if there is a pending request for administrative or 
judicial review or a pending readjudication pursuant to class 
action or court remand.
    The amendment ensures that the requirement to appoint a 
representative payee, and refer beneficiaries for treatment, 
apply to beneficiaries who are allowed benefits (due to another 
impairment) based on a new application filed before enactment, 
and who continue to get benefits based on a successful 
redetermination filed before July 1, 1996.
    The amendment would repeal the reporting requirements on 
activities related to the monitoring and testing of Social 
Security beneficiaries on the basis of drug addiction or 
alcoholism and who are required to undergo treatment as a 
condition for receipt of benefits.

Reason for change

    The provision clearly defines ``final adjudication'' to 
avoid any misinterpretation by the courts. At least one court 
has already concluded that it can award benefits through 
January 1, 1997, because the Commissioner's decision denying 
benefits was issued before March 29, 1996.
    As written, current law creates an anomaly, whereby all 
those allowed benefits (due to another impairment) before March 
29, 1996, and redetermined before July 1, 1996, are excluded 
from the requirement that a representative payee be appointed 
and that they be referred for treatment. The provision corrects 
this anomaly.
    Since Public Law 104-121 contained amendments that 
eliminated payment of benefits on the basis of drug addiction 
or alcoholism and the treatment and monitoring requirements, 
the requirement to report on the monitoring and testing 
activities is obsolete.

Effective date

    The amendments would be effective as though they had been 
included in the enactment of Section 105 of Public Law 104-121. 
The repeal of the obsolete reporting requirement would be 
effective as of the date of enactment.

C. Section 3. Clarification Regarding Review of Determinations by State 
                   Disability Determination Services

Present law

    The Social Security Act provides that any claimant 
dissatisfied with a disability determination made by a State 
disability determination service (DDS) is entitled to a hearing 
by the Commissioner and to judicial review of the 
Commissioner's final decision on the claimant's disability 
claim.

Explanation of provision

    The provision clarifies existing law to state that 
jurisdiction to challenge DDS determinations under the Social 
Security Act would lie only against the Commissioner. This 
provision would apply to all cases in which there is not a 
final judgment.

Reason for change

    Notwithstanding current law, the United States Court of 
Appeals for the Eighth Circuit held in Schoolcraft v. Sullivan, 
971 F. 2d 81 (1992), that claimants could seek review of the 
actions of State DDS employees through civil actions alleging 
violations of the Civil Rights Act of 1871 (42 U.S.C. 1983). As 
a result, there are now ten pending or threatened class action 
law suits against DDSs.
    SSA is the appropriate defendant where State agency 
practices are challenged since it is SSA's responsibility to 
ensure that standards for making its disability determinations 
are followed. In addition, these law suits have a chilling 
effect on the Federal/State relationship, increasing the 
liability of State officials, forcing States to question SSA 
policy, and creating an extensive administrative burden on the 
affected States in the form of depositions, discovery, lengthy 
court hearings, etc.


Effective date

    The amendments would be effective as of the date of 
enactment.

 D. Section 4. Extension of Disability Insurance Program Demonstration 
                           Project Authority

Present law

    Under authority which expired on June 9, 1996, the 
Commissioner may initiate experiments and demonstration 
projects to test ways to encourage Social Security disability 
insurance (SSDI) beneficiaries to return to work, and may waive 
compliance with certain benefit requirements in connection with 
these projects. Current law also provides the Commissioner with 
permanent authority to conduct experimental, pilot, or 
demonstration projects that are likely to promote the 
objectives or facilitate the administration of the SSI program.

Explanation of provision

    This provision extends the demonstration authority 
expiration date to June 10, 1997, and includes authority for 
SSA to conduct demonstration projects involving SSDI applicants 
as well as recipients.

Reason for change

    The provision enables SSA to initiate new demonstration 
projects involving SSDI applicants and beneficiaries over the 
next year.

Effective date

    The amendment would be effective as of the date of 
enactment.

E. Section 5. Perfecting Amendments Related to Withholding from Social 
                           Security Benefits

Present law

    The ``Uruguay Round Agreements Act'' (P.L. 103-465) 
includes revenue provisions requiring that U.S. taxpayers who 
receive specified Federal payments (including Social Security 
benefits) be given the option of requesting that the Federal 
agency making the payments withhold Federal income taxes from 
payments made after December 31, 1996.
    Section 207 of the Social Security Act prohibits 
withholding or assignment of Social Security benefits to any 
party or entity other than the beneficiary.

Explanation of provision

    The provision amends the Social Security Act anti-
assignment section to allow the withholding of taxes from any 
benefit pursuant to the Internal Revenue Code of 1986. It also 
allocates funding for SSA to administer the tax-withholding 
provision.

Reason for change

    These provisions amend the Social Security Act so that the 
provisions in the tax code may be implemented, as originally 
intended, and funding may be allocated for SSA to administer 
the tax-withholding provision.

Effective date

    The amendments would be effective as of the date of 
enactment.

                  F. Section 6. Treatment of Prisoners

 1. Implementation of Prohibition Against Payment of Title II Benefits 
                              to Prisoners

Present law

    Current law prohibits prisoners from receiving Old Age, 
Survivors, and Disability (OASDI) benefits while incarcerated 
if they are convicted of any crime punishable by imprisonment 
of more than one year. Federal, State, county, or local prisons 
are required to make available, upon written request, the name 
and Social Security account number of any individual so 
convicted who is confined in a penal institution or 
correctional facility.
    The ``Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996,'' (P.L. 104-193) requires the 
Commissioner to make agreements with any interested State or 
local institution to provide monthly the names, Social Security 
account numbers, confinement dates, dates of birth, and other 
identifying information of residents who are Supplemental 
Security Income (SSI) recipients. The Commissioner is required 
to pay the institution $400 for each SSI recipient who becomes 
ineligible as a result, if the information is provided within 
30 days of incarceration, and $200 if the information is 
furnished after 30 days but within 90 days. Computer matching 
agreement requirements are simplified to facilitate the 
exchange of information between the correctional institutions 
and SSA.
    The Commissioner is authorized to provide, on a 
reimbursable basis, information obtained pursuant to these 
agreements to any Federal or federally-assisted cash, food, or 
medical assistance program, for the purpose of determining 
program eligibility.

Explanation of provision

    The provision amends prisoner provisions in P.L. 104-193 to 
include Old Age, Survivors, and Disability Insurance (OASDI) 
benefits.
    The Commissioner would enter into an agreement with any 
interested State or local correctional institution to provide 
monthly the names, Social Security account numbers, confinement 
dates, dates of birth, and other identifying information 
regarding prisoners who receive OASDI benefits. For each 
eligible individual who becomes ineligible as a result, the 
Commissioner would pay the institution an amount up to $400 if 
the information is provided within 30 days of incarceration, 
and up to $200 if provided after 30 days but within 90 days. 
Computer matching agreement requirements are simplified to 
facilitate the exchange of information between the correctional 
institutions and SSA.
    The Commissioner would be authorized to provide, on a 
reimbursable basis, information obtained pursuant to these 
agreements to any Federal or federally-assisted cash, food, or 
medical assistance program for the purpose of determining 
program eligibility.
    Payments to correctional institutions would be reduced by 
50 percent for multiple reports on the same individual who 
receives both SSI and OASDI benefits. Payments made to the 
correctional institution would be made from OASI or DI Trust 
Funds, as appropriate.

Reason for change

    The provision applies the prohibitions against payment of 
benefits to OASDI in the same manner that they apply to SSI 
benefits. Both SSI and OASDI prisoner provisions were included 
in the House-passed version of Public Law 104-193. OASDI 
provisions were not included in the conference report on the 
legislation because of Senate interpretation of procedural 
rules. This language restores the OASDI provisions.
    These provisions provide new financial incentives for State 
and local correctional institutions to report information on 
inmates to the Social Security Administration (SSA) so that 
payment of OASDI benefits to prisoners being supported at 
taxpayer expense are stopped promptly.
    The provision allows SSA to share, and be reimbursed for, 
any information obtained through these agreements that would 
assist other Federal agencies in administering their programs.
    Payments would be restricted to $400, even if the prisoner 
is entitled to both SSI and OASDI benefits.

Effective Date

    These amendments would apply as if included in the 
enactment of section 203(a) of the "Personal Responsibility and 
Work Opportunity Reconciliation Act of 1996."

2. Elimination of Title II Requirement that Confinement Stem from Crime 
            Punishable by Imprisonment for More Than 1 Year

Present law

    The Social Security Act bars payment of OASDI benefits to 
prisoners convicted of any crime punishable by imprisonment of 
more than a year and to those who are institutionalized because 
they are found guilty but insane.

Explanation of provision

    This provision would further bar payment of Social Security 
benefits to prisoners, and is similar to the provisions barring 
payment of SSI benefits to prisoners that were included in the 
House-passed version of Public Law 104-193. Social Security 
benefits would be prohibited to prisoners convicted of any 
criminal offense (formerly limited to an offense punishable by 
imprisonment of one year or more), or to those who are found 
guilty but insane, and who are incarcerated or 
institutionalized throughout a month.

Reason for Change

    An audit conducted by the SSA Office of Inspector General 
determined that the language in existing law required that for 
each prisoner eligible for benefits, the duration of 
incarceration be determined on a case-by-case basis, based on 
data that can only be obtained from the courts. This was a 
costly, labor-intensive process that impeded timely suspension 
of benefits. As a matter of fairness, benefits would also be 
barred to persons who commit a criminal offense but are found 
guilty by reason of insanity.

Effective date

    Effective for benefits payable for months after February 
1997.

   3. Inclusion of Title II Issues in Study and Report Requirements 
                         Relating to Prisoners

Present law

    The ``Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996'' requires the Commissioner to study 
the desirability, feasibility, and cost of establishing a 
system for courts to directly furnish SSA with information 
regarding court orders affecting SSI recipients, and requiring 
State and local jails, prisons, and other institutions to enter 
into contracts with the Commissioner by means of an electronic 
or similar data exchange system.
    The Commissioner is also required to provide to the 
Committees of jurisdiction a list of institutions that are and 
are not providing information in accordance with these 
provisions regarding prisoners receiving SSI benefits.

Explanation of provision

    These provisions would broaden the study and the list of 
compliant institutions to include prisoners receiving OASDI 
benefits.

Reason for Change

    SSA must find better ways to exchange data with courts and 
State and local jails, prisons, and other institutions so that 
prisoners who are being supported at taxpayer expense do not 
also receive Federal benefits.
    The Committee believes that conducting such a study, and 
reporting its findings to Congress, will serve as an incentive 
for correctional institutions to enter into reporting 
agreements.

Effective date

    These amendments would apply as if included in sections 203 
(b) and (c) of the ``Personal Responsibility and Work 
Opportunity Reconciliation Act of 1996.''

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 2(l)(2)(B) of rule XI of the 
Rules of the House of Representatives, the following statement 
is made:
    The bill, H.R. 4039, was ordered favorably reported to the 
House of Representatives on September 11, 1996, by voice vote, 
with a quorum present.

                     IV. BUDGET EFFECTS OF THE BILL

               A. Committee Estimate of Budgetary Effects

    In compliance with clause 7(a) of rule XIII of the Rules of 
the House of Representatives, the following statement is made:
    The Committee agrees with the estimate prepared by the 
Congressional Budget Office (CBO) which is included below.

    B. Statement Regarding New Budget Authority and Tax Expenditures

    In compliance with clause 2(l)(3)(B) of rule XI of the 
Rules of the House of Representatives, the Committee states the 
Committee bill results in net decreased budget authority for 
direct spending programs relative to current law, and no new or 
increased due tax expenditures.

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with clause 2(l)(3)(C) of rule XI of the 
Rules of the House of Representatives requiring a cost estimate 
prepared by the Congressional Budget Office, the following 
report prepared by CBO is provided:

                                     U.S. Congress,
                               Congressional Budget Office,
                                Washington, DC, September 12, 1996.
Hon. Bill Archer,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4039, the Social 
Security Miscellaneous Amendments Act of 1996, as ordered 
reported by the Committee on Ways and Means on September 11, 
1996.
    The bill would affect direct spending and thus would be 
subject to pay-as-you-go procedures under Section 252 of the 
Balanced Budget Emergency Deficit Control Act of 1985.
    If you wish further details, we will be pleased to provide 
them.
            Sincerely,
                                              James L. Blum
                                   (For June E. O'Neill, Director).
    Attachment.

               congressional budget office cost estimate

    1. Bill number: H.R. 4039.
    2. Bill title: Social Security Miscellaneous Amendments Act 
of 1996.
    3. Bill status: As ordered reported by the Committee on 
Ways and Means on September 11, 1996.
    4. Bill purpose: The bill would clarify the provisions of 
several previously enacted laws affecting the Social Security 
and Supplemental Security Income (SSI) programs to ensure that 
they work as originally planned; extend for one year the Social 
Security Administration's authority to waive certain provisions 
of law for purposes of research and demonstration projects; and 
curtail the ability of some denied applicants to appeal 
directly to federal courts. In addition, it would further 
restrict the payment of Social Security benefits to prisoners 
by adopting changes like those recently enacted in the SSI 
program.
    5. Estimated cost to the Federal Government: CBO estimates 
that, over the six-year period between 1997 and 2002, enactment 
of the bill would save $65 million in direct spending. Of that 
amount, $28 million is off-budget (Social Security) and $37 
million on-budget (Supplemental Security Income). In addition, 
the bill would also entail additional administrative expenses 
for the Social Security Administration (SSA) amounting to an 
estimated $39 million over six years; those funds would be 
subject to future appropriations.
    The following table summarizes the effects of the bill on 
direct spending. Table I (attached) provides details on the 
components of the estimate. Table II displays the Social 
Security scorecard that is used by the House of 
Representatives.

                                    [By fiscal years, in millions of dollars]                                   
----------------------------------------------------------------------------------------------------------------
                                                                                                         7-year 
                                    1996      1997      1998      1999      2000      2001      2002      total 
----------------------------------------------------------------------------------------------------------------
                                 PROJECTED DIRECT SPENDING UNDER CURRENT LAW \1\                                
                                                                                                                
Old-Age, Survivors, and                                                                                         
 Disability Insurance...........   348,186   365,398   383,392   402,336   422,397   444,061   466,747          
Supplemental Security Income....    24,017    27,111    26,684    28,296    33,171    30,171    35,390          
                                 ----------------------------------------------------------------------         
      Total.....................   372,203   392,509   410,076   430,632   455,568   474,232   502,137          
                                 ======================================================================         
                                                PROPOSED CHANGES                                                
                                                                                                                
Old-Age, Survivors, and                                                                                         
 Disability Insurance...........         0         3         2        -6       -11        -6       -10       -28
Supplemental Security Income....         0        -5        -4        -4        -5        -9       -10       -37
                                 -------------------------------------------------------------------------------
      Total.....................         0        -2        -2       -10       -16       -15       -20       -65
                                 -------------------------------------------------------------------------------
                                    PROJECTED DIRECT SPENDING UNDER PROPOSAL                                    
                                                                                                                
Old-Age, Survivors, and                                                                                         
 Disability Insurance...........   348,186   365,401   383,394   402,330   422,386   444,055   466,737          
Supplemental Security Income....    24,017    27,106    26,680    28,292    33,166    30,162    35,380          
                                 ----------------------------------------------------------------------         
      Total.....................   372,203   392,507   410,074   430,622   455,552   474,217   502,117          
----------------------------------------------------------------------------------------------------------------
\1\ Estimates are from the CBO March 1996 baseline, adjusted for enactment of P.L. 104-193 (the Personal        
  Responsibility and Work Opportunity Act of 1996).                                                             

    6. Basis of estimate: CBO's estimate assumes that the bill 
would be enacted on October 1, 1996.

Direct spending

    Section 2--Drug addicts and alcoholics. The bill would 
clarify certain provisions of Public Law 104-121, enacted in 
March 1996, which ended the eligibility of many drug addicts 
and alcoholics (DA&As) for Social Security and SSI benefits. 
That law provided that recipients already on the rolls in March 
1996 would lost their benefits on January 1, 1997, if they fell 
into the affected group. DA&A applicants whose cases had not 
yet been ``finally adjudicated'' were not to be awarded 
benefits at all.
    This bill would clarify the meaning of ``final 
adjudication.'' One court has held that an applicant whose 
initial claim was denied before March 29, 1996, but who had an 
appeal outstanding that would have qualified under the old law, 
could get benefits until January 1997. This bill reiterates 
that applicants in similar circumstances are not deemed to be 
``finally adjudicated'' and hence are not eligible for any 
benefits. The clarification would confirm the Congress' and 
CBO's original understanding of the provision.
    If that one court's ruling were to prevail nationwide--a 
highly speculative outcome--CBO estimates that up to $20 
million in extra benefits not contemplated in Public Law 104-
121 might be paid out. Nevertheless, CBO does not attribute any 
savings to this correction because those savings were already 
credited to P.L. 104-121, and it would be inappropriate to give 
credit twice.
    Other corrections in this section have no budgetary 
implications.
    Section 3--Immunity of DDS employees. This bill would 
change the appeals process for denied applicants in certain 
cases. The Social Security Administration relies on disability 
determination services (DDSs), run by the states, to perform 
initial evaluations of disability in the Social Security and 
SSI programs. Applicants who are denied benefits by the DDSs 
may seek a reconsideration, then pursue several levels of 
appeal at SSA, and then go to federal court.
    A few denied applicants, however, go straight from the DDSs 
to federal court. Such cases generally allege violations of the 
plaintiffs' civil rights by the DDS. This bill would require 
that denied applicants must exhaust the SSA appeals process 
before turning to federal court. CBO assigns no budgetary 
effects to this provision.
    Section 4--Research and demonstration projects. The SSA has 
authority to conduct certain research and demonstration (R&D) 
projects that occasionally require waivers of provisions of 
Title II of the Social Security Act. That waiver authority 
expired on June 10, 1996. This bill would extend it for one 
year, until June 10, 1997. This would be the fifth extension 
since the waiver authority was enacted in 1980.
    When the waiver authority has been in effect, SSA has 
generally spent between $2 million and $7 million annually on 
the affected R&D projects. CBO estimates that a one-year 
extension of the authority would lead to outlays of $7 million, 
chiefly in fiscal year 1998.
    Section 5--Withholding of income taxes. Public Law 103-465, 
enacted in December 1994, permitted voluntary withholding of 
income taxes from Social Security checks starting in 1997. At 
that time, the provision was estimated by the Joint Committee 
on Taxation to raise about $180 million in 1997 and about $20 
million a year thereafter, chiefly by accelerating the receipt 
of taxes that would have been collected eventually in any case.
    That law, however, failed to override a provision of the 
Social Security Act that prohibits the assignment of benefits 
to anyone other than the entitled individual. That provision 
has been interpreted to bar withholding. This bill would remedy 
that omission and permit withholding to take effect as planned. 
The Joint Committee on Taxation advises CBO that, since the 
extra taxes resulting from the 1994 law are already included in 
the baseline, no further revenue gains should be ascribed to 
this correction.
    Section 6--Treatment of prisoners. Current law sets strict 
limits on payment of SSI benefits to incarcerated people, and 
somewhat milder limits on such payments in the Old-Age, 
Survivors, and Disability Insurance (OASDI) program. SSI 
recipients who are in prison for a full month--regardless of 
whether they are convicted--are to have their benefits 
suspended. OASDI recipients who have been convicted of an 
offense carrying a maximum sentence of 1 year or more are to 
have their benefits suspended. Those who are convicted of 
lesser crimes, and those who are in jail awaiting trial, may 
still collect OASDI benefits. Currently, those provisions are 
enforced chiefly by an exchange of computerized data between 
the Social Security Administration and the Federal Bureau of 
Prisons, state prisons, and some county jails. Those agreements 
are voluntary and, until recently, involved no payments to the 
institutions.
    The welfare reform bill (Public Law 104-193) enacted in 
August changed that arrangement by directing SSA to pay penal 
institutions for reporting information that led to the 
identification of ineligible SSI recipients. The payment is 
$400 if the institution reports information within 30 days of 
confinement and $200 if the report is made within 30 to 90 days 
after confinement. The bill also exempted matching agreements 
between SSA and correctional institutions from certain 
provisions of the Privacy Act. CBO assumed that these 
provisions would spur more institutions to share data with SSA, 
and would induce institutions that already provide such data to 
renew those agreements more promptly rather than letting them 
lapse.
    This bill proposes analogous arrangements in the OASDI 
program. It would also drop the requirement that OASDI be 
suspended only if the maximum sentence for the offense is 1 
year or more. (A conviction would still be required; inmates 
who are in jail while they are awaiting trial could continue to 
collect benefits.) CBO estimated the effects of this provision, 
like its predecessor in the welfare reform bill, by analyzing 
data from several sources that suggest about 4 percent to 5 
percent of prisoners were receiving Social Security, SSI, or 
both before incarceration, together with recent reports from 
SSA's Inspector General suggesting that some of those prisoners 
are overlooked under current matching arrangement because their 
institution has not signed an agreement or has not renewed one 
promptly. CBO estimates that, over the 1997-2002 period, the 
provision would lead to payments of $45 million to correctional 
institutions out of the OASDI trust funds and benefit savings 
of $80 million, for a net saving of $35 million. CBO also 
assumes that the broader arrangement would encourage more 
correctional institutions to participate in the reporting 
program, and would lead to spillover savings in the SSI 
program. Both the payments and the savings in benefits would 
occur automatically, without the need for appropriation. The 
cost to SSA of administering the provision, in contrast, would 
be subject to appropriation and is estimated at $39 million 
over six years.

Amounts subject to appropriation

    As noted on Table I, CBO estimates that the bill would 
cause SSA to incur greater administrative costs. The expansion 
of arrangements to pay correctional institutions for 
information about ineligible recipients is expected to cost SSA 
$39 million over six years. CBO assumed that information about 
prison inmates--even if submitted in computerized form--would 
ultimately have to be processed by hand before leading to a 
suspension; that such investigations would cost about $300 
each; and that--because jails are higher-turnover 
institutions--only about one out of five investigations would 
result in a suspension.
    7. Pay-as-you-go considerations: Section 252 of the 
Balanced Budget and Emergency Deficit Control Act of 1985 sets 
up pay-as-you-go procedures for legislation affecting direct 
spending or receipts through 1998. Changes in Social Security 
outlays and revenues are exempt from pay-as-you-go procedures, 
but are constrained under separate limitations in each house of 
the Congress. The Social Security scorecard for the House of 
Representatives is displayed in the attached Table II. (For 
convenience, that table also shows the effects of two laws 
already passed in this Congressional session.) The pay-as-you-
go effects of the bill are as follows:

                [By fiscal years, in millions of dollars]               
------------------------------------------------------------------------
                                            1996       1997       1998  
------------------------------------------------------------------------
Chane in outlays.......................          0         -5         -4
Change in revenues.....................          0          0          0
------------------------------------------------------------------------

    8. Estimated impact on State, local, and tribal 
governments: In accordance with the Unfunded Mandates Reform 
Act of 1995 (Public Law 104-4), CBO has determined that this 
bill contains no intergovernmental mandates and would impose no 
costs on state, local, or tribal governments.
    9. Estimated impact on the private sector: In accordance 
with Public Law 104-4, CBO has determined that this bill would 
impose no private-sector mandates.
    10. Previous CBO estimate: None.
    11. Estimate prepared by: Federal estimate: Kathy Ruffing; 
State, local, and tribal estimate: John Patterson; private 
sector estimate: Daniel Mont.
    12. Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.

 TABLE I.--BUDGETARY IMPACTS OF H.R. 4039, THE SOCIAL SECURITY MISCELLANEOUS AMENDMENTS ACT OF 1996, BY SECTION 
                                    [By fiscal years, in millions of dollars]                                   
----------------------------------------------------------------------------------------------------------------
                                                                                                          7-year
                     Section                       1996    1997    1998    1999    2000    2001    2002    total
----------------------------------------------------------------------------------------------------------------
                                                 DIRECT SPENDING                                                
                                                                                                                
Section 2:                                                                                                      
    Technical Amendments Relating to Drug                                                                       
     Addicts and Alcoholics:                                                                                    
        OASDI benefit outlays...................       0       0       0       0       0       0       0       0
        SSI benefit outlays.....................       0       0       0       0       0       0       0       0
                                                 ---------------------------------------------------------------
          Subtotal, provision...................       0       0       0       0       0       0       0       0
                                                 ===============================================================
Section 3:                                                                                                      
    Immunity of State Disability Determination                                                                  
     Services from Certain Suits................       0       0       0       0       0       0       0       0
Section 4:                                                                                                      
    Extension of DI Demonstration Project                                                                       
     Authority:                                                                                                 
        DI outlays..............................       0   (\1\)       6       1   (\1\)       0       0       7
Section 5:                                                                                                      
    Perfecting Amendments Relating to                                                                           
     Withholding of Income Taxes from Social                                                                    
     Security Benefits..........................       0       0       0       0       0       0       0       0
Section 6:                                                                                                      
    Provisions Regarding Payment of Benefits to                                                                 
     Prisoners:                                                                                                 
        Payments to prison officials, OASDI.....       0       3       6       8       9       9      10      45
        Payments to prison officials, SSI.......       0   (\1\)       1       1   (\1\)       1   (\1\)       3
        Savings in benefits, OASDI..............       0   (\1\)     -10     -15     -20     -15     -20     -80
        Savings in benefits, SSI................       0      -5      -5      -5      -5     -10     -10     -40
                                                 ---------------------------------------------------------------
          Subtotal, provision...................       0      -2      -8     -11     -16     -15     -20     -72
                                                 ===============================================================
    Total direct spending:                             0      -2      -2     -10     -16     -15     -20     -65
                                                 ---------------------------------------------------------------
        On-budget...............................       0      -5      -4      -4      -5      -9     -10     -37
        Off-budget..............................       0       3       2      -6     -11      -6     -10     -28
                                                                                                                
                                        Amounts Subject to Appropriation                                        
                                                                                                                
Section 6:                                                                                                      
    Provisions Regarding Payments of Benefits to                                                                
     Prisoners..................................       0       2       9       9       8       5       6      39
----------------------------------------------------------------------------------------------------------------
\1\ denotes less than $500,000.                                                                                 
                                                                                                                
Estimates assume an enactment date of October 1, 1996. Details may not add to total due to rounding.            
                                                                                                                
OASDI=Old-Age, Survivors, and Disability Insurance; DI=Disability Insurance; SSI=Supplemental Security Income.  


 TABLE II.--CBO ESTIMATE OF EFFECTS ON SOCIAL SECURITY SCORECARD OF H.R. 4039, THE SOCIAL SECURITY MISCELLANEOUS
                                             AMENDMENTS ACT OF 1996                                             
                                    [By fiscal years, in millions of dollars]                                   
----------------------------------------------------------------------------------------------------------------
             12-Sep-96                  1996       1997       1998       1999       2000       2001    Five-year
----------------------------------------------------------------------------------------------------------------
Scoreboard before Contract with                                                                                 
 America Advancement Act:                                                                                       
    OASDI taxes....................         55         58        146         80          0  .........        339
    OASDI benefits.................        -62        -40        -57       -109          0  .........       -268
                                    ----------------------------------------------------------------------------
      Net effect...................        117         98        203        189          0  .........        607
                                    ============================================================================
Contract with America Advancement                                                                               
 Act (P.L. 104-121):                                                                                            
    OASDI taxes....................          0          0          0          0          0  .........          0
    OASDI benefits.................         -5        120        -10         10         90  .........        205
                                    ----------------------------------------------------------------------------
      Net effect...................          5       -120         10        -10        -90  .........       -205
                                    ============================================================================
Personal Responsibility and Work                                                                                
 Opportunity Reconciliation Act of                                                                              
 1996 (P.L. 104-193):                                                                                           
    OASDI taxes....................          0          0          0          0          0  .........          0
    OASDI benefits.................          0         -5        -10        -15        -15  .........        -45
                                    ----------------------------------------------------------------------------
      Net effect...................          0          5         10         15         15  .........         45
                                    ============================================================================
Current scorecard:                                                                                              
    OASDI taxes....................         55         58        146         80          0  .........        339
    OASDI benefits.................        -67         75        -77       -114         75  .........       -108
                                    ----------------------------------------------------------------------------
      Net effect...................        122        -17        223        194        -75  .........        447
                                    ============================================================================
CBO estimate of Miscellaneous                                                                                   
 Social Security Amendments Act of                                                                              
 1996 (H.R. 4039):                                                                                              
    OASDI taxes....................         na          0          0          0          0          0          0
    OASDI benefits.................         na          0        -10        -15         20         15         60
                                    ----------------------------------------------------------------------------
      Net effect...................         na          0         10         15         20         15         60
                                    ============================================================================
Scorecard assuming enactment of                                                                                 
 H.R. 4039:                                                                                                     
    OASDI taxes....................         na         58        146         80          0          0        284
    OASDI benefits.................         na         75        -87       -129         55        -15       -101
                                    ----------------------------------------------------------------------------
      Net effect...................         na        -17        233        209        -55         15       385 
----------------------------------------------------------------------------------------------------------------
Estimates of H.R. 4039 assume enactment on October 1, 1996.                                                     
                                                                                                                
Note.--The Social Security scorecard used by the House of Representatives reflects Social Security taxes and    
  benefits only. It does not include outlays of the OASI or DI trust funds for purposes other than benefit      
  payments. Therefore, the scorecard omits OASDI trust fund costs or savings such as those associated with      
  ending contracts with referral and monitoring agencies (a provision of the Contract with America Advancement  
  Act), and with extending DI demonstration project authority, permitting reimbursement to the Treasury for     
  expenses associated with income tax withholding, and requiring payments to penal institutions that provide    
  information about ineligible OASDI recipients (in H.R. 4039).                                                 

 V. OTHER MATTERS REQUIRED TO BE DISCUSSED UNDER THE RULES OF THE HOUSE

          A. Committee Oversight Findings and Recommendations

    In compliance with clause 2(l)(3)(A) of rule XI of the 
Rules of the House of Representatives, the Committee reports 
that the need for this legislation was confirmed through its 
ongoing oversight of the Social Security Administration and the 
Social Security programs.

B. Summary of Findings and Recommendations of the Government Reform and 
                          Oversight Committee

    In compliance with clause 2(l)(3)(D) of rule XI of the 
Rules of the House of Representatives, the Committee states 
that no oversight findings and recommendations have been 
submitted to this Committee by the Committee on Government 
Reform and Oversight with respect to the provisions contained 
in this bill.

                    C. Inflationary Impact Statement

    In compliance with clause 2(l)(4) of rule XI of the Rules 
of the House of Representatives, the Committee states that the 
provisions of the bill are not expected to have any 
inflationary impact on the economy.

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

  In compliance with clause 3 of rule XIII of the Rules of the 
House of Representatives, changes in existing law made by the 
bill, as reported, are shown as follows (existing law proposed 
to be omitted is enclosed in black brackets, new matter is 
printed in italic, existing law in which no change is proposed 
is shown in roman):

    SECTION 105 OF THE CONTRACT WITH AMERICA ADVANCEMENT ACT OF 1996

SEC. 105. DENIAL OF DISABILITY BENEFITS TO DRUG ADDICTS AND ALCOHOLICS.

  (a) Amendments Relating to Title II Disability Benefits.--
          (1) * * *
          * * * * * * *
          (5) Effective dates.--
                  (A) The amendments made by paragraphs (1) and 
                (4) shall apply to any individual who applies 
                for, or whose claim is finally adjudicated [by 
                the Commissioner of Social Security] with 
                respect to, benefits under title II of the 
                Social Security Act based on disability on or 
                after the date of the enactment of this Act, 
                and, in the case of any individual who has 
                applied for, and whose claim has been finally 
                adjudicated [by the Commissioner] with respect 
                to, such benefits before such date of 
                enactment, such amendments shall apply only 
                with respect to such benefits for months 
                beginning on or after January 1, 1997.
                  [(B) The amendments made by paragraphs (2) 
                and (3) shall apply with respect to benefits 
                for which applications are filed after the 
                third month following the month in which this 
                Act is enacted.]
                  (B) The amendments made by paragraphs (2) and 
                (3) shall take effect on July 1, 1996, with 
                respect to any individual--
                          (i) whose claim for benefits is 
                        finally adjudicated on or after the 
                        date of the enactment of this Act, or
                          (ii) whose entitlement to benefits is 
                        based upon an entitlement 
                        redetermination made pursuant to 
                        subparagraph (C).
          * * * * * * *
                  (D) For purposes of this paragraph, an 
                individual's claim, with respect to 
                supplemental security income benefits under 
                title XVI of the Social Security Act based on 
                disability, which has been denied in whole 
                before the date of the enactment of this Act, 
                may not be considered to be finally adjudicated 
                before such date if, on or after such date--
                          (i) there is pending a request for 
                        either administrative or judicial 
                        review with respect to such claim, or
                          (ii) there is pending, with respect 
                        to such claim, a readjudication by the 
                        Commissioner of Social Security 
                        pursuant to relief in a class action or 
                        implementation by the Commissioner of a 
                        court remand order.

  (b) Amendments Relating to SSI Benefits.--
          (1) * * *
          * * * * * * *
          (5) Effective dates.--
                  (A) The amendments made by paragraphs (1) and 
                (4) shall apply to any individual who applies 
                for, or whose claim is finally adjudicated [by 
                the Commissioner of Social Security] with 
                respect to, supplemental security income 
                benefits under title XVI of the Social Security 
                Act based on disability on or after the date of 
                the enactment of this Act, and, in the case of 
                any individual who has applied for, and whose 
                claim has been finally adjudicated [by the 
                Commissioner] with respect to, such benefits 
                before such date of enactment, such amendments 
                shall apply only with respect to such benefits 
                for months beginning on or after January 1, 
                1997.
                  [(B) The amendments made by paragraphs (2) 
                and (3) shall apply with respect to 
                supplemental security income benefits under 
                title XVI of the Social Security Act for which 
                applications are filed after the third month 
                following the month in which this Act is 
                enacted.]
                  (B) The amendments made by paragraphs (2) and 
                (3) shall take effect on July 1, 1996, with 
                respect to any individual--
                          (i) whose claim for benefits is 
                        finally adjudicated on or after the 
                        date of the enactment of this Act, or
                          (ii) whose eligibility for benefits 
                        is based upon an eligibility 
                        redetermination made pursuant to 
                        subparagraph (C).
          * * * * * * *
                  (D) For purposes of this paragraph, an 
                individual's claim, with respect to 
                supplemental security income benefits under 
                title XVI of the Social Security Act based on 
                disability, which has been denied in whole 
                before the date of the enactment of this Act, 
                may not be considered to be finally adjudicated 
                before such date if, on or after such date--
                          (i) there is pending a request for 
                        either administrative or judicial 
                        review with respect to such claim, or
                          (ii) there is pending, with respect 
                        to such claim, a readjudication by the 
                        Commissioner of Social Security 
                        pursuant to relief in a class action or 
                        implementation by the Commissioner of a 
                        court remand order.
          * * * * * * *
                              ----------                              


      SECTION 201 OF THE SOCIAL SECURITY INDEPENDENCE AND PROGRAM 
                        IMPROVEMENTS ACT OF 1994

SEC. 201. RESTRICTIONS ON PAYMENT OF BENEFITS BASED ON DISABILITY TO 
                    SUBSTANCE ABUSERS.

  (a) Amendments Relating to Benefits Based on Disability Under 
Title II of the Social Security Act.--
          (1) * * *
          * * * * * * *
          (3) Nonpayment or termination of benefits.--
                  (A) * * *
                  [(B) Report.--Not later than December 31, 
                1996, the Secretary shall submit to the 
                Committee on Ways and Means of the House of 
                Representatives and the Committee on Finance of 
                the Senate a full and complete report on the 
                Secretary's activities under paragraph (5) of 
                section 225(c) of the Social Security Act (as 
                amended by subparagraph (A)). Such report shall 
                include the number and percentage of 
                individuals referred to in such paragraph who 
                have not received regular drug testing since 
                the effective date of such paragraph.]
          * * * * * * *
  (b) Amendments Relating to Supplemental Security Income 
Benefits Under Title XVI of the Social Security Act.--
          (1) * * *
          * * * * * * *
          (3) Nonpayment or termination of benefits.--
                  (A) * * *
                  (B) Referral, monitoring, and treatment.--
                          (i) * * *
                          [(ii) Report.--Not later than 
                        December 31, 1996, the Secretary shall 
                        submit to the Committee on Ways and 
                        Means of the House of Representatives 
                        and the Committee on Finance of the 
                        Senate a full and complete report on 
                        the Secretary's activities under 
                        section 1611(e)(3)(B) of the Social 
                        Security Act. The report shall include 
                        the number and percentage of 
                        individuals referred to in such 
                        paragraph who have not received regular 
                        drug testing since the effective date 
                        of the amendments made by clause (i) of 
                        this subparagraph.]
          * * * * * * *
                              ----------                              


                          SOCIAL SECURITY ACT

          * * * * * * *

TITLE II--FEDERAL OLD-AGE, SURVIVORS, AND DISABILITY INSURANCE BENEFITS

          * * * * * * *

    federal old-age and survivors insurance trust fund and federal 
                    disability insurance trust fund

  Sec. 201. (a) * * *
          * * * * * * *
  (g)(1)(A) The Managing Trustee of the Trust Funds (which for 
purposes of this paragraph shall include also the Federal 
Hospital Insurance Trust Fund and the Federal Supplementary 
Medical Insurance Trust Fund established by title XVIII) is 
directed to pay from the Trust Funds into the Treasury--
          (i) * * *
          (ii) the amounts estimated (pursuant to the 
        applicable method prescribed under paragraph (4) of 
        this subsection) by the Commissioner of Social Security 
        which will be expended, out of moneys made available 
        for expenditures from the Trust Funds, during such 
        three-month period to cover the cost of carrying out 
        the functions of the Social Security Administration, 
        specified in section 232, which relate to the 
        administration of provisions of the Internal Revenue 
        Code of 1986 other than those referred to in clause (i) 
        and the functions of the Social Security Administration 
        in connection with the withholding of taxes from 
        benefits, as described in section 207(c), pursuant to 
        requests by person entitled to such benefits.
Such payments shall be carried into the Treasury as the net 
amount of repayments due the general fund account for 
reimbursement of expenses incurred in connection with the 
administration of titles II and XVIII of this Act and chapters 
2 and 21 of the Internal Revenue Code of 1986. A final 
accounting of such payments for any fiscal year shall be made 
at the earliest practicable date after the close thereof. There 
are hereby authorized to be made available for expenditure, out 
of any or all of the Trust Funds, such amounts as the Congress 
may deem appropriate to pay the costs of the part of the 
administration of this title, title XVI, and title XVIII for 
which the Commissioner of Social Security is responsible, the 
costs of title XVIII for which the Secretary of Health and 
Human Services is responsible, and the costs of carrying out 
the functions of the Social Security Administration, specified 
in section 232, which relate to the administration of 
provisions of the Internal Revenue Code of 1986 other than 
those referred to in clause (i) of the first sentence of this 
subparagraph. Of the amounts authorized to be made available 
out of the Federal Old-Age and Survivors Insurance Trust Fund 
and the Federal Disability Insurance Trust Fund under the 
preceding sentence, there are hereby authorized to be made 
available from either or both of such Trust Funds for 
continuing disability reviews--
          (i) for fiscal year 1996, $260,000,000;
          (ii) for fiscal year 1997, $360,000,000;
          (iii) for fiscal year 1998, $570,000,000;
          (iv) for fiscal year 1999, $720,000,000;
          (v) for fiscal year 2000, $720,000,000;
          (vi) for fiscal year 2001, $720,000,000; and
          (vii) for fiscal year 2002, $720,000,000.
For purposes of this subparagraph, the term ``continuing 
disability review'' means a review conducted pursuant to 
section 221(i) and a review or disability eligibility 
redetermination conducted to determine the continuing 
disability and eligibility of a recipient of benefits under the 
supplemental security income program under title XVI, including 
any review or redetermination conducted pursuant to section 207 
or 208 of the Social Security Independence and program 
Improvements Act of 1994 (Public Law 103-296) and the functions 
of the Social Security Administration in connection with the 
withholding of taxes from benefits, as described in section 
207(c), pursuant to requests by persons entitled to such 
benefits.
  (B) After the close of each fiscal year--
          (i) the Commissioner of Social Security shall 
        determine--
                  (I) the portion of the costs, incurred during 
                such fiscal year, of administration of this 
                title, title XVI, and title XVIII for which the 
                Commissioner is responsible and of carrying out 
                the functions of the Social Security 
                Administration, specified in section 232, which 
                relate to the administration of provisions of 
                the Internal Revenue Code of 1986 (other than 
                those referred to in clause (i) of the first 
                sentence of [subparagraph (A)),] subparagraph 
                (A)) and the functions of the Social Security 
                Administration in connection with the 
                withholding of taxes from benefits, as 
                described in section 207(c), pursuant to 
                requests by persons entitled to such benefits, 
                which should have been borne by the general 
                fund of the Treasury.
          * * * * * * *
  (C) After the determinations under subparagraph (B) have been 
made for any fiscal year, the Commissioner of Social Security 
and the Secretary shall each certify to the Managing Trustee 
the amounts, if any, which should be transferred from one to 
any of the other such Trust Funds and the amounts, if any, 
which should be transferred between the Trust Funds (or one of 
the Trust Funds) and the general fund of the Treasury, in order 
to ensure that each of the Trust Funds and the general fund of 
the Treasury have borne their proper share of the costs, 
incurred during such fiscal year, for--
          (i) the parts of the administration of this title, 
        title XVI, and title XVIII for which the Commissioner 
        of Social Security is responsible,
          (ii) the parts of the administration of title XVIII 
        for which the Secretary is responsible, and
          (iii) carrying out the functions of the Social 
        Security Administration, specified in section 232, 
        which relate to the administration of provisions of the 
        Internal Revenue Code of 1986 (other than those 
        referred to in clause (i) of the first sentence of 
        subparagraph (A)) and the functions of the Social 
        Security Administration in connection with the 
        withholding of taxes from benefits, as described in 
        section 207(c), pursuant to requests by persons 
        entitled to such benefits.
The Managing Trustee shall transfer any such amounts in 
accordance with any certification so made.
  (D) The determinations required under subclauses (IV) and (V) 
of subparagraph (B)(i) shall be made in accordance with the 
cost allocation methodology in existence on the date of the 
enactment of the Social Security Independence and Program 
Improvements Act of 1994, until such time as the methodology 
for making the determinations required under such subclauses is 
revised by agreement of the Commissioner and the Secretary, 
except that the determination of the amounts to be borne by the 
general fund of the Treasury with respect to expenditures 
incurred in carrying out the functions of the Social Security 
Administration specified in section 232 and the functions of 
the Social Security Administration in connection with the 
withholding of taxes from benefits as described in section 
207(c) shall be made pursuant to the applicable method 
prescribed under paragraph (4).
          * * * * * * *
  (4) The Commissioner of Social Security shall utilize the 
method prescribed pursuant to this paragraph, as in effect 
immediately before the date of the enactment of the Social 
Security Independence and Program Improvements Act of 1994, for 
determining the costs which should be borne by the general fund 
of the Treasury of carrying out the functions of the 
Commissioner, specified in section 232, which relate to the 
administration of provisions of the Internal Revenue Code of 
1986 (other than those referred to in clause (i) of the first 
sentence of paragraph (1)(A)). The Boards of Trustees of such 
Trust Funds shall prescribe before January 1, 1997, the method 
of determining the costs which should be borne by the general 
fund in the Treasury of carrying out the functions of the 
Social Security Administration in connection with the 
withholding of taxes from benefits, as described in section 
207(c), pursuant to requests by persons entitled to such 
benefits. If at any time or times thereafter the Boards of 
Trustees of such Trust Funds consider such action advisable, 
they may modify the method of determining such costs.
          * * * * * * *

            old-age and survivors insurance benefit payments

                       Old-Age Insurance Benefits

  Sec. 202. (a)  * * *
          * * * * * * *

   Limitation on Payments to Prisoners and Certain Other Inmates of 
                      Publicly Funded Institutions

  (x)(1)(A) Notwithstanding any other provision of this title, 
no monthly benefits shall be paid under this section or under 
section 223 to any individual for any month [during] throughout 
which such individual--
          (i) is confined in a jail, prison, or other penal 
        institution or correctional facility pursuant to his 
        conviction of [an offense punishable by imprisonment 
        for more than 1 year (regardless of the actual sentence 
        imposed)] a criminal offense, or
          (ii) is confined by court order in an institution at 
        public expense in connection with--
                  (I) a verdict or finding that the individual 
                is guilty but insane, with respect to [an 
                offense punishable by imprisonment for more 
                than 1 year] a criminal offense,
          * * * * * * *
  (3)(A) Notwithstanding the provisions of section 552a of 
title 5, United States Code, or any other provision of Federal 
or State law, any agency of the United States Government or of 
any State (or political subdivision thereof) shall make 
available to the Commissioner of Social Security, upon written 
request, the name and social security account number of any 
individual who is confined as described in paragraph (1) if the 
confinement is under the jurisdiction of such agency and the 
Commissioner of Social Security requires such information to 
carry out the provisions of this section.
          * * * * * * *
  (B)(i) The Commissioner shall enter into an agreement, with 
any interested State or local institution comprising a jail, 
prison, penal institution, correctional facility, or other 
institution a purpose of which is to confine individuals as 
described in paragraph (1)(A), under which--
          (I) the institution shall provide to the 
        Commissioner, on a monthly basis and in a manner 
        specified by the Commissioner, the names, social 
        security account numbers, dates of birth, confinement 
        commencement dates, and, to the extent available to the 
        institution, such other identifying information 
        concerning the individuals confined in the institution 
        as the Commissioner may require for the purpose of 
        carrying out paragraph (1); and
          (II) except as provided in clause (ii), the 
        Commissioner shall pay to the institution, with respect 
        to information described in subclause (I) concerning 
        each individual who is confined therein as described in 
        paragraph (1)(A), to whom a benefit under this title is 
        payable for the month preceding the first month of such 
        confinement, and whose benefit under this title ceases 
        to be payable as a result of the application of this 
        subsection, $400 (subject to reduction under clause 
        (iii)) if the institution furnishes the information to 
        the Commissioner within 30 days after the date such 
        individual's confinement in such institution begins, or 
        $200 (subject to reduction under clause (iii)) if the 
        institution furnishes the information after 30 days 
        after such date but within 90 days after such date.
  (ii) No amount shall be payable to an institution with 
respect to information concerning an individual under an 
agreement entered into under clause (i) if, prior to the 
Commissioner's receipt of the information, the Commissioner has 
determined that benefits under this title are no longer payable 
to such individual as a result of the application of this 
subsection.
  (iii) The dollar amounts specified in clause (i)(II) shall be 
reduced by 50 percent if the Commissioner is also required to 
make a payment to the institution with respect to the same 
individual under an agreement entered into under section 
1611(e)(1)(I).
  (iv) There shall be transferred from the Federal Old-Age and 
Survivors Insurance Trust Fund and the Federal Disability 
Insurance Trust Fund, as appropriate, such sums as may be 
necessary to enable the Commissioner to make payments to 
institutions required by clause (i)(II). Sums so transferred 
shall be treated as direct spending for purposes of the 
Balanced Budget and Emergency Deficit Control Act of 1985 and 
excluded from budget totals in accordance with section 13301 of 
the Budget Enforcement Act of 1990.
  (v) The Commissioner is authorized to provide, on a 
reimbursable basis, information obtained pursuant to agreements 
entered into under clause (i) to any Federal or federally-
assisted cash, food, or medical assistance program for 
eligibility purposes.
          * * * * * * *

                               assignment

  Sec. 207. (a)  * * *
          * * * * * * *
  (c) Nothing in this section shall be construed to prohibit 
withholding taxes from any benefit under this title, if such 
withholding is done pursuant to a request made in accordance 
with section 3402(p)(1) of the Internal Revenue Code of 1986 by 
the person entitled to such benefit.
          * * * * * * *

                       disability determinations

  Sec. 221. (a)  * * *
          * * * * * * *
  (d)(1) Any individual dissatisfied with any determination 
under subsection (a), (b), (c), or (g) shall be entitled to a 
hearing thereon by the Commissioner of Social Security to the 
same extent as is provided in section 205(b) with respect to 
decisions of the Commissioner of Social Security, and to 
judicial review of the Commissioner's final decision after such 
hearing as is provided in section 205(g).
  (2) No determination under this section shall be reviewed by 
any person, tribunal, or governmental agency, except as 
provided in paragraph (1).
          * * * * * * *

   TITLE XVI--SUPPLEMENTAL SECURITY INCOME FOR THE AGED, BLIND, AND 
                                DISABLED

          * * * * * * *

                   Part A--Determination of Benefits

                 ELIGIBILITY FOR AND AMOUNT OF BENEFITS

                   Definition of Eligible Individual

  Sec. 1611. (a) * * *
          * * * * * * *
  (e)(1)(A) * * *
          * * * * * * *
  (I)(i) The Commissioner shall enter into an agreement, with 
any interested State or local [institution described in clause 
(i) or (ii) of section 202(x)(1)(A) the primary purpose of 
which is to confine individuals as described in section 
202(x)(1)(A),] institution comprising a jail, prison, penal 
institution, or correctional facility, or with any other 
interested State or local institution a purpose of which is to 
confine individuals as described in section 202(x)(1)(A)(ii), 
under which--
          (I) the institution shall provide to the 
        Commissioner, on a monthly basis and in a manner 
        specified by the Commissioner, the names, social 
        security account numbers, dates of birth, confinement 
        commencement dates, and, to the extent available to the 
        institution, such other identifying information 
        concerning the inmates of the institution as the 
        Commissioner may require for the purpose of carrying 
        out paragraph (1); and
          (II) except as provided in clause (ii), the 
        Commissioner shall pay to any such institution, with 
        respect to each [inmate of the institution who is 
        eligible for a benefit under this title for the month 
        preceding the first month throughout which such inmate 
        is in such institution and] individual who is eligible 
        for a benefit under this title for the month preceding 
        the first month throughout which the individual is an 
        inmate of the jail, prison, penal institution, or 
        correctional facility, or is confined in the 
        institution as described in section 202(x)(1)(A)(ii), 
        and who becomes ineligible for such benefit as a result 
        of the application of this [subparagraph] paragraph, 
        $400 (subject to reduction under clause (iii)) if the 
        institution furnishes the information described in 
        subclause (I) to the Commissioner within 30 days after 
        the date such individual becomes an inmate of such 
        institution, or $200 (subject to reduction under clause 
        (iii)) if the institution furnishes such information 
        after 30 days after such date but within 90 days after 
        such date.
  (ii) No amount shall be payable to an institution with 
respect to information concerning an inmate under an agreement 
entered into under clause (i) if, prior to the Commissioner's 
receipt of the information, the Commissioner has determined 
that the inmate is no longer an eligible individual or eligible 
spouse for purposes of this title as a result of the 
application of this paragraph.
  (iii) The dollar amounts specified in clause (i)(II) shall be 
reduced by 50 percent if the Commissioner is also required to 
make a payment to the institution with respect to the same 
individual under an agreement entered into under section 
202(x)(3)(B).
  [(ii)(I) The provisions of section 552a of title 5, United 
States Code, shall not apply to any agreement entered into 
under clause (i) or to information exchanged pursuant to such 
agreement.
  [(II) The Commissioner] (iv) The Commissioner is authorized 
to provide, on a reimbursable basis, information obtained 
pursuant to agreements entered into under clause (i) to any 
Federal or federally-assisted cash, food, or medical assistance 
program for eligibility purposes.
  [(iii)] (v) Payments to institutions required by clause 
(i)(II) shall be made from funds otherwise available for the 
payment of benefits under this title and shall be treated as 
direct spending for purposes of the Balanced Budget and 
Emergency Deficit Control Act of 1985.
          * * * * * * *
                              ----------                              


    SECTION 505 OF THE SOCIAL SECURITY DISABILITY AMENDMENTS OF 1980

                  authority for demonstration projects

  Sec. 505. (a)(1) The Commissioner of Social Security shall 
develop and carry out experiments and demonstration projects 
designed to determine the relative advantages and disadvantages 
of (A) various alternative methods of treating the work 
activity of disabled beneficiaries under the old-age, 
survivors, and disability insurance program, including such 
methods as a reduction in benefits based on earnings, designed 
to encourage the return to work of disabled beneficiaries and 
(B) altering other limitations and conditions applicable to 
such disabled beneficiaries (including, but not limited to, 
lengthening the trial work period, altering the 24-month 
waiting period for medicare benefits, altering the manner in 
which such program is administered, earlier referral of 
beneficiaries for rehabilitation, and greater use of employers 
and others to develop, perform, and otherwise stimulate new 
forms of rehabilitation), to the end that savings will accrue 
to the Trust Funds, or to otherwise promote the objectives or 
facilitate the administration of title II of the Social 
Security Act. The Commissioner may expand the scope of any such 
experiment or demonstration project to include any group of 
applicants for benefits under such program with impairments 
which may reasonably be presumed to be disabling for purposes 
of such experiment or demonstration project, and may limit any 
such experiment or demonstration project to any such group of 
applicants, subject to the terms of such experiment or 
demonstration project which shall define the extent of any such 
presumption.
          * * * * * * *
  (3) In the case of any experiment or demonstration project 
under paragraph (1) which is initiated before June 10, [1996] 
1997, the Commissioner may waive compliance with the benefit 
requirements of title II of the Social Security Act, and the 
Secretary of Health and Human Services may (upon the request of 
the Commissioner) waive compliance with the benefits 
requirements of title XVIII of such Act, insofar as is 
necessary for a thorough evaluation of the alternative methods 
under consideration. No such experiment or project shall be 
actually placed in operation unless at least ninety days prior 
thereto a written report, prepared for purposes of notification 
and information only and containing a full and complete 
description thereof, has been transmitted by the Commissioner 
to the Committee on Ways and Means of the House of 
Representatives and to the Committee on Finance of the Senate. 
Periodic reports on the progress of such experiments and 
demonstration projects shall be submitted by the Commissioner 
to such committees. When appropriate, such reports shall 
include detailed recommendations for changes in administration 
or law, or both, to carry out the objectives states in 
paragraph (1).
  (4) On or before June 9 in 1986 and each of the succeeding 
fiscal years through 1995, and on or before October 1, 1996, 
the Commissioner shall submit an interim report on the progress 
of the experiments and demonstration projects carried out under 
this subsection together with any related data and materials 
which the Commissioner may consider appropriate.
          * * * * * * *
  (c) The Commissioner shall submit to the Congress a final 
report with respect to all experiments and demonstration 
projects carried out under this section (other than 
demonstration projects conducted under section 5120 of the 
Omnibus Budget Reconciliation Act of 1990) no later than 
October 1, [1996] 1997.
          * * * * * * *
                              ----------                              


    SECTION 203 OF THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY 
                       RECONCILIATION ACT OF 1996

SEC. 203. TREATMENT OF PRISONERS.

  (a) * * *
          * * * * * * *
  (b) Study of Other Potential Improvements in the Collection 
of Information Respecting Public Inmates.--
          (1) Study.--The Commissioner of Social Security shall 
        conduct a study of the desirability, feasibility, and 
        cost of--
                  (A) establishing a system under which 
                Federal, State, and local courts would furnish 
                to the Commissioner such information respecting 
                court orders by which individuals are confined 
                in jails, prisons, or other public penal, 
                correctional, or medical facilities as the 
                Commissioner may require for the purpose of 
                carrying out [section 1611(e)(1)] sections 
                202(x) and 1611(e)(1) of the Social Security 
                Act; and
                  (B) requiring that State and local jails, 
                prisons, and other institutions that enter into 
                agreements with the Commissioner under [section 
                1611(e)(1)(I)] section 202(x)(3)(B) or 
                1611(e)(1)(I) of the Social Security Act 
                furnish the information required by such 
                agreements to the Commissioner by means of an 
                electronic or other sophisticated data exchange 
                system.
          * * * * * * *
  (c) Additional Report to Congress.--Not later than October 1, 
1998, the Commissioner of Social Security shall provide to the 
Committee on Finance of the Senate and the Committee on Ways 
and Means of the House of Representatives a list of the 
institutions that are and are not providing information to the 
Commissioner under [section 1611(e)(1)(I) of the Social 
Security Act (as added by this section).] sections 202(x)(3)(B) 
and 1611(e)(1)(I) of the Social Security Act.
          * * * * * * *
                              ----------                              


              SECTION 552a OF TITLE 5, UNITED STATES CODE

Sec. 552a. Records maintained on individuals

  (a) Definitions.--For purposes of this section--
          (1) * * *
          * * * * * * *
          (8) the term ``matching program''--
                  (A) * * *
                  (B) but does not include--
                          (i) * * *
          * * * * * * *
                          (vi) matches performed for foreign 
                        counterintelligence purposes or to 
                        produce background checks for security 
                        clearances of Federal personnel or 
                        Federal contractor personnel; [or]
                          (vii) matches performed pursuant to 
                        section 6103(l)(12) of the Internal 
                        Revenue Code of 1986 and section 1144 
                        of the Social Security Act; or
                          (viii) matches performed pursuant to 
                        section 202(x) or 1611(e)(1) of the 
                        Social Security Act;
          * * * * * * *