[Senate Report 106-37]
[From the U.S. Government Publishing Office]
Calendar No. 80
106th Congress Report
1st Session SENATE 106-37
=======================================================================
WORK INCENTIVES IMPROVEMENT ACT OF 1999
_______
March 26, 1999.--Ordered to be printed
Filed, under authority of the order of the Senate of March 25, 1999
_______
Mr. Roth, from the Committee on Finance, submitted the following
R E P O R T
[To accompany S. 331]
[Including cost estimate of the Congressional Budget Office]
The Committee on Finance, to which was referred the bill
(S. 331) to expand the availability of health care services for
workers with disabilities and create a Ticket to Work and Self-
Sufficiency Program, having considered the same, reports
favorably thereon as amended by the Committee, and recommends
that the bill do pass.
CONTENTS
Page
I. Summary and Background....................................... 1
A. Summary................................................... 1
B. Background and Reasons for Legislation.................... 1
C. Legislative History....................................... 3
II. Explanation of the Bill...................................... 3
A. Short Title............................................... 3
B. Purposes.................................................. 3
C. Title I--Expanded Availability of Health Care Services.... 4
1. Expanding Options Under Medicaid for Workers With
Disabilities........................................... 4
2. Continuation of Medicare Coverage for Working
Individuals With
Disabilities......................................... 6
3. Grants to Develop and Establish State Infrastructures
to Support
Working Individuals with Disabilities................ 7
4. Demonstration of Coverage of Workers With Potentially
Severe
Disabilities......................................... 8
D. Title II--Ticket to Work and Self-Sufficiency and Related
Provisions................................................. 9
1. Subtitle A. Ticket to Work and Self-Sufficiency....... 9
a. Establishment of the Ticket to Work and Self-
Sufficiency
Program.......................................... 9
2. Subtitle B. Elimination of Work Disincentives......... 12
a. Work Activity Standard as a Basis for Review of an
Indi-
vidual's Disabled Status......................... 12
b. Expedited Reinstatement of Benefits............... 13
3. Subtitle C. Work Incentives Planning, Assistance, and
Outreach............................................... 14
a. Work Incentives Outreach Program.................. 14
b. State Grants for Work Incentives Assistance to
Disabled
Beneficiaries.................................... 15
E. Title III--Demonstration Projects and Studies............. 16
1. Extension of Disability Insurance Program
Demonstration
Authority............................................ 16
2. Demonstration Projects Providing for Reductions in
Disability
Insurance Benefits Based on Earnings................. 17
3. Studies and Reports................................... 18
F. Title IV--Technical Amendments............................ 19
1. Technical Amendments Relating to Drug Addicts and
Alcoholics............................................. 19
2. Treatment of Prisoners................................ 20
3. Revocation by Members of the Clergy of Exemption From
Social
Security Coverage.................................... 22
4. Additional Technical Amendment Relating to Cooperative
Research or Demonstration Projects Under Titles II
and XVI............................................ 22
5. Authorization for States to Permit Annual Wages
Reports................................................ 23
G. Title V--Revenue Offsets.................................. 23
1. Modifications to Foreign Tax Credit Carryover Rules... 23
2. Limit Use of Non-Accrual Experience Method of
Accounting to Amounts to be Received for the
Performance of Qualified Personal Services.......... 24
3. Extension of IRS User Fees............................ 26
III.Budget Effects of the Bill................................... 26
A. Committee Estimates....................................... 26
B. Budget Authority and Tax Expenditures..................... 28
C. Consultation With Congressional Budget Office............. 28
IV. Vote of the Committee........................................ 50
V. Regulatory Impact and Other Matters.......................... 50
A. Regulatory Impact......................................... 50
B. Unfunded Mandates Statement............................... 50
C. Complexity Analysis....................................... 51
VI. Changes in Existing Law Made by the Bill, as Reported........ 51
I. SUMMARY AND BACKGROUND
A. Summary
S. 331, as reported by the Committee on Finance, expands
new options to States under the Medicaid program for workers
with disabilities; continues Medicare coverage for working
individuals with disabilities; and establishes a Ticket to Work
and Self-Sufficiency Program.
B. Background and Reasons for Legislation
The goal of the bill is to help individuals with
disabilities go to work if they so choose. The bill takes
significant steps toward reforming Federal disability programs;
improving access to needed services, including health care and
employment assistance; and removing barriers to work.
Many persons with disabilities who currently receive
Federal disability benefits, such as Social Security Disability
Insurance (SSDI) and Supplemental Security Income (SSI), want
to work. However, less than one-half of 1 percent of these
beneficiaries leave the disability rolls and become self-
sufficient. If disabled individuals try to work and increase
their income, they lose their disability cash benefits and,
subsequently, lose their health care coverage. The threat of
losing health benefits is a powerful disincentive for disabled
beneficiaries who want to work.
The unemployment rate among working-age adults with severe
disabilities is nearly 75 percent. Today, more than 7.5 million
disabled Americans receive cash benefits from SSI and SSDI.
Disability benefit spending for SSI and SSDI total $73 billion
a year, making these disability programs the fourth largest
entitlement expenditure in the Federal Government. If only 1
percent--or 75,000--of the 7.5 million disabled adults were to
become employed, Federal savings in disability benefits would
total $3.5 billion over the worklife of the beneficiaries.
Removing barriers to work is a major benefit to disabled
Americans in their pursuit of self-sufficiency and
independence, and it also contributes to preserving the Social
Security Trust Fund.
C. Legislative History
The Finance Committee's first hearing on removing barriers
to work for individuals with disabilities was held on July 29,
1998. At this hearing, and at a subsequent hearing on February
4, 1999, a total of 11 witnesses including disability services
consumers, providers, and advocates testified about barriers to
employment that currently exist in Federal disability and
health care programs. The witnesses particularly singled out
lack of access to health insurance as a primary obstacle to
employment.
On January 28, 1999, Senator Jeffords, on behalf of
himself, Senator Kennedy, Senator Roth and Senator Moynihan,
introduced S. 331, the Work Incentives Improvement Act of 1999,
a bill designed to remove barriers to employment for
individuals with disabilities. At the February 4 hearing, S.
331 was specifically endorsed by Senator Bob Dole as well as
representatives of the disability community.
On March 4, 1999, the Finance Committee ordered reported
favorably, as amended by the Committee, S. 331, the Work
Incentives Improvement Act of 1999, by a recorded vote of 11 to
1, with an additional 5 proxy votes in favor of the bill and
with 1 proxy voted no.
II. EXPLANATION OF THE BILL
A. Section 1. Short Title
The short title of the bill is the ``Work Incentives
Improvement Act of 1999.''
B. Section 2. Purposes
The Chairman's mark is based on S. 331 and has four primary
purposes as set forth in the bill. First, the mark provides
health care and employment preparation and placement services
to individuals with disabilities to support efforts to return
to work and to reduce dependency on cash assistance. Second,
the mark creates new options for States to allow individuals
with disabilities to purchase Medicaid coverage. Third, the
mark lengthens the current period of extended eligibility for
Medicare coverage for disabled beneficiaries who are leaving
cash benefits for work. Finally, the mark establishes a return
to work ``ticket'' program that will allow beneficiaries to
seek the services necessary to obtain and retain employment and
reduce their dependency on cash benefit programs.
C. TITLE I--EXPANDED AVAILABILITY OF HEALTH CARE SERVICES
1. Section 101. Expanding Options Under Medicaid for Workers With
Disabilities
Present law
Current law requires most States to provide Medicaid
coverage for disabled individuals who are eligible for
Supplemental Security Income (SSI). Individuals are considered
disabled if they are unable to engage in substantial gainful
activity (defined in Federal regulations as earnings of $500
per month) due to a medically determinable physical or mental
impairment which is expected to result in death, or which has
lasted or can be expected to last for at least 12 months.
Eleven States link Medicaid eligibility to 209(b) disability
definitions which may be more restrictive than SSI criteria.
Eligibility for SSI is determined by certain federally-
established income and resource standards. Individuals are
eligible for SSI if their ``countable'' income falls below the
Federal maximum monthly SSI benefit ($500 for an individual,
and $751 for couples in 1999). Not all income is counted for
SSI purposes. Excluded from income are the first $20 of any
monthly income (i.e., either unearned, such as social security
and other pension benefits, or earned) and the first $65 of
earned income plus one-half of the remaining earnings. The
Federal limit on resources is $2,000 for an individual, and
$3,000 for couples. Certain resources are not counted,
including an individual's home, and the first $4,500 of the
current market value of an automobile.
In addition, States must provide Medicaid coverage for
certain disabled and blind individuals who no longer receive
SSI because they work and their earnings cause them to exceed
SSI income eligibility thresholds. SSI cash benefits phase down
until their earnings reach the current threshold of $1,085 per
month. Medicaid coverage continues for those with incomes
rising above this threshold until earnings reach a level that
takes into account amounts needed to cover health care costs
and living expenses. That earnings level varies by State. For
1998, that level ranges from $34,125 annually or $2,844 per
month to $13,792 annually or $1,149 per month. This eligibility
status applies as long as the beneficiary:
(1) continues to be blind or have a disabling
impairment;
(2) except for earnings, continues to meet all the
other requirements for SSI eligibility;
(3) would be seriously inhibited from continuing or
obtaining employment if Medicaid eligibility were to
end; and
(4) has earnings that are not sufficient to provide a
reasonable equivalent of benefits from SSI, State
supplemental payments (if provided by the State),
Medicaid, and publicly funded attendant care that would
have been available in the absence of those earnings.
Recent law allowed States to increase the income limit for
Medicaid coverage of disabled individuals. The Balanced Budget
Act of 1997 (P.L. 105-33) allowed States to elect to provide
Medicaid coverage to disabled persons who otherwise meet SSI
eligibility criteria but have income up to 250 percent of the
Federal poverty guidelines. Beneficiaries under the more
liberal income limit may ``buy into'' Medicaid by paying
premium costs. Premiums are set on a sliding scale based on an
individual's income as established by the State.
Explanation of provision
Under the proposal, States would have the option to
establish one or two new Medicaid eligibility categories:
First, States would have the option to cover persons
with disabilities whose income would make them
ineligible for SSI. In addition, States may establish
limits on resources and income that differ from the SSI
requirements. This means that income levels set by the
State could exceed 250 percent of the Federal poverty
level and resources levels could exceed $2,000 for
individuals, and $3,000 for couples, and the $20
exclusion or disregard of monthly unearned income could
be increased.
Second, if States provide Medicaid coverage to
individuals described above, they may also opt to
continue to provide coverage to individuals, aged 16-
64, who cease to be eligible for Medicaid under the
previous option because of medical improvement, but who
still have a severe medically determinable impairment,
and who are employed. Individuals covered by Medicaid
through other disability options (such as 1619b or the
Balanced Budget Act of 1997 option) would continue
Medicaid if eligibility ceases because of medical
improvement. States may establish limits on resources
and income that differ from the Federal requirements.
Individuals would be considered to be employed if they
earn at least the Federal minimum wage, and work at
least 40 hours per month, or are engaged in work that
meets criteria for work hours, wages, or other measures
established by the State and approved by the Secretary
of the Department of Health and Human Services (HHS).
Individuals covered under these options could ``buy into''
Medicaid coverage by paying premiums or other cost-sharing
charges on a sliding fee scale based on an individual's income,
as established by the State. (Premium and cost-sharing changes
do not apply to existing Medicaid mandatory or optional
groups.) The State would be required to make premium or other
cost-sharing charges the same for both these two new
eligibility groups. In addition, a State may require
individuals with income above 250 percent of the Federal
poverty level to pay the full premium cost.
Federal funds paid to a State for Medicaid coverage of
these new eligibility groups must be used to supplement State
funds used for their existing programs that assist disabled
individuals to work. In order to receive Federal funds, States
are required to maintain their current level of effort for
these groups.
Reason for change
These new Medicaid options are designed to make it possible
for States to remove a significant barrier to employment
confronting individuals with disabilities--the reality that
increased earnings can result in the loss of health insurance
coverage. The new options would provide access to Medicaid
coverage for working disabled individuals without requiring
them to first receive cash benefits to qualify.
Effective date
The proposal would be effective on or after October 1,
1999.
2. Section 102. Continuation of Medicare Coverage for Working
Individuals With Disabilities
Present law
Disabled beneficiaries are provided with an extended period
of time to test their ability to work without losing their
entitlement to Social Security Disability Insurance (SSDI) and
Medicare Part A benefits. The period consists of:
(1) a trial work period during which disabled
beneficiaries can work for up to 9 months (within a 5-
year period) with no effect on their cash disability or
Medicare benefits; and
(2) after a 3-month grace period, Medicare Part A
coverage continues for a 36-month extended period of
eligibility, while cash benefits are suspended for any
month in which the individual is engaged in substantial
gainful activity ($500 in monthly earnings).
When the Medicare entitlement ends because of the
individual's work activity, if the individual is still
medically disabled, Medicare coverage can be purchased by the
individual through the payment of monthly premiums (currently
$309 per month for Part A, and $45.50 per month for Part B).
Explanation of provision
The proposal would extend Medicare Part A coverage for
working SSDI beneficiaries engaged in substantial gainful
activity for the 10-year period following enactment of this
subsection of the bill without requiring beneficiaries to pay
the Medicare Part A premium. In addition, Medicare Part A
coverage could continue after the termination of the 10-year
period for any individual who is enrolled in the Medicare Part
A program for the month that ends the initial 10-year period,
without requiring the beneficiaries to pay the premium.
The proposal would require the Comptroller General of the
United States to submit a report to Congress no later than 8
years after enactment that would examine the effectiveness and
cost of extending Medicare Part A coverage to working disabled
beneficiaries without charging them a premium. The report would
be required to recommend whether the Medicare coverage
extension should continue beyond the initial 10-year period set
forth in the bill.
Reason for change
Fear of losing Medicare coverage, or being required to make
premium payments totaling $309 per month, has contributed
significantly to the very low rate of SSDI beneficiaries
returning to work (only 1 percent of SSDI beneficiaries move
through the extended period of eligibility and ultimately leave
the program). This provision would lengthen the current
extended period of eligibility to remove a real barrier to
employment.
Many individuals with disabilities who join the workforce
do not initially secure positions that offer health insurance
benefits. However, if private sector coverage is offered,
current law related to when Medicare is primary rather than
secondary payer is unchanged.
Effective date
The proposal would be effective on or after the date of
enactment of the bill.
3. Section 103. Grants to Develop and Establish State Infrastructures
to Support Working Individuals With Disabilities
Present law
No provision.
Explanation of provision
Infrastructure grants.--The proposal would require the
Secretary of HHS to award grants to States to design, establish
and operate infrastructures that provide items and services to
support working individuals with disabilities, and to conduct
outreach campaigns to inform them about the infrastructures.
States would be eligible for these grants under the following
conditions:
(1) they must provide Medicaid coverage to the first
new eligibility category described above; and
(2) they must provide personal assistance services to
assist individuals eligible under the proposal to
remain employed (that is, earn at least the Federal
minimum wage and work at least 40 hours per month, or
engage in work that meets criteria for work hours,
wages, or other measures established by the State and
approved by the Secretary of HHS).
``Personal assistance services'' refers to a range of
services, provided by one or more persons, to assist
individuals with disabilities to perform daily activities on
and off the job. These services would be designed to increase
individuals' control in life and ability to perform daily
activities on or off the job.
Formula for allocation of demonstration funds and award
amounts.--The Secretary of HHS would be required to develop a
formula for the award of infrastructure grants. The formula
must provide special consideration to States that extend
Medicaid coverage to persons who cease to be eligible for SSDI
and SSI because of an improvement in their medical condition,
but who have a severe medically determinable impairment, and
who are employed.
Grant amounts to States must be a minimum of $500,000 per
year. They may be up to a maximum amount of 15 percent of
Federal and State Medicaid expenditures in a given fiscal year
for individuals eligible under one or both of the new
eligibility groups described above, whichever is greater.
Annual report. States would be required to submit an annual
report to the Secretary on the use of the grant funds. In
addition, the report must indicate the percent increase in the
number of SSDI and SSI beneficiaries who return to work.
Funding. The proposal would authorize the following
amounts:
FY2000, $20 million;
FY2001, $25 million;
FY2002, $30 million;
FY2003, $35 million;
FY2004, $40 million; and
FY2005-FY2010, the amount of appropriations for the
preceding fiscal year plus the percent increase in the
CPI for All Urban Consumers for the preceding fiscal
year.
The Secretary of HHS, in consultation with the Work
Incentives Advisory Panel established by the bill, would be
required to make a recommendation, by October 1, 2009, to the
Committee on Commerce in the House and the Committee on Finance
in the Senate, whether the grant program should be continued
after FY2010.
Reason for change
The grant program would provide limited financial support
to States committed to developing new systems of care for
working disabled individuals.
Effective date
This provision would be effective October 1, 1999.
4. Section 104. Demonstration of Coverage of Workers With Potentially
Severe Disabilities
Present law
No provision.
Explanation of provision
The Secretary would be required to establish a State
demonstration program that would provide medical assistance
equal to that provided under Medicaid for disabled persons age
16-64 who are ``workers with a potentially severe disability.''
These are individuals who meet a State's definition of physical
or mental impairment, who are employed, and who are reasonably
expected to meet SSI's definition of blindness or disability if
they did not receive Medicaid services.
The Secretary is required to approve demonstration programs
if the State meets the following requirements:
(1) the State has elected to take up the first new
Medicaid option to cover working persons with
disabilities with incomes in excess of current limits;
(2) Federal funds are used to supplement State funds
used for workers with potentially severe disabilities
at the time the demonstration is approved; and
(3) the State conducts an independent evaluation of
the demonstration program. The proposal would allow the
Secretary to approve demonstration programs that
operate on a sub-State basis.
For purposes of the demonstration, individuals would be
considered to be employed if they earn at least the Federal
minimum wage and work at least 40 hours per month, or are
engaged in work that meets threshold criteria for work hours,
wages, or other measures as defined by the demonstration
project and approved by the Secretary.
Funding. The proposal would authorize the following
amounts:
FY2000, $70 million;
FY2001, $73 million;
FY2002, $77 million; and
FY2003, $80 million.
Payments to States. Payments under this demonstration
program could not exceed, in the aggregate, $300 million.
Payments may be provided to States only through FY2005. The
Secretary is required to allocate funds to States based on
their applications and the availability of funds. Funds awarded
to States would equal their Federal medical assistance
percentage (FMAP) of expenditures for medical assistance to
workers with a potentially severe disability.
The Secretary of HHS would be required to make a
recommendation, by October 1, 2002, to the Committee on
Commerce in the House and the Committee on Finance in the
Senate, whether the grant program should be continued after
FY2003.
Reason for change
The demonstration would test whether providing individuals
with potentially severe disabilities early access to insurance
coverage can delay or prevent the onset of a fully disabling
condition. Also, the demonstration would test whether access to
insurance would make it possible for these individuals to
remain in the work force longer, rather than moving on to the
cash assistance rolls.
Effective date
This provision would be effective October 1, 1999.
D. TITLE II--TICKET TO WORK AND SELF-SUFFICIENCY AND RELATED PROVISIONS
1. Subtitle A. Ticket to Work and Self-Sufficiency
a. Section 201. Establishment of the Ticket to Work and Self-
Sufficiency Program
Present law
The Commissioner is required to promptly refer individuals
applying for Social Security disability insurance (SSDI) or
Supplemental Security Income (SSI) benefits for necessary
vocational rehabilitation (VR) services to State vocational
rehabilitation (VR) agencies. State VR agencies are established
pursuant to Title I of the Rehabilitation Act of 1973, as
amended. A State VR agency is reimbursed for the costs of VR
services to SSDI and SSI beneficiaries with a single payment
after the beneficiary performs ``substantial gainful activity''
(i.e., had earnings in excess of $500 per month) for a
continuous period of at least 9 months. The Social Security
Administration (SSA) has also established an ``alternate
participant program'' in regulation where private or other
public agencies are eligible to receive reimbursement from SSA
for providing VR and related services to SSDI and SSI
beneficiaries. To participate in the alternate participant
program, a beneficiary must first be referred to, and declined
by, a State VR agency. Such private and public agencies are
reimbursed according to the same procedures as State VR
agencies.
Explanation of provision
The Committee provision would direct the Commissioner of
Social Security to establish a ``Ticket to Work and Self-
Sufficiency Program'' under Title XI of the Social Security
Act. Each eligible SSI or SSDI beneficiary would receive a
``ticket'' which may be used to obtain employment services, VR
services, and other support services (e.g., assistive
technology) from a participating provider (termed ``employment
networks'') of his or her choice. The Commissioner is expected
to issue regulations regarding eligibility for participation in
the program.
Employment networks may include both State VR agencies and
private and other public providers. Employment networks would
be prohibited from seeking additional compensation from
beneficiaries. Any disabled beneficiary who is enrolled with an
employment network is otherwise ineligible for services from a
State VR agency unless the employment network has entered into
an agreement with that State VR agency.
The Committee provision would direct the Commissioner to
contract with one or more private or public entities with
expertise and experience in the field of vocational
rehabilitation and employment services to serve as a ``program
manager'' to assist the Commissioner in administering the
program. Program managers would be selected through a
competitive bidding process. Such assistance would include
recruiting and monitoring employment networks; ensuring the
availability of adequate services in the geographic area
covered by the program manager; providing information to
beneficiaries about available employment networks; and ensuring
that any beneficiary may change employment networks for good
cause. Program managers are ineligible to serve as employment
networks, or have a financial interest in an employment
network, in the geographic area served by the program manager.
Employment networks (i.e., providers of services) would
consist of a single provider (public or private) or an
association of providers, and may include a one-stop delivery
system established under Title I of the Workforce Investment
Act of 1998. Employment networks would be required to
demonstrate relevant expertise and experience; meet certain
financial reporting requirements; and prepare annual
performance reports that would be provided to beneficiaries and
to the public. Employment networks and beneficiaries would
together develop an individual work plan in such a way that the
beneficiary can exercise informed choices in selecting an
employment goal and specific services need to achieve that
goal. A beneficiary's written plan would take effect upon
written approval by the beneficiary or beneficiary's
representative. The Commissioner would not initiate a
continuing disability review for beneficiaries enrolled in the
program.
Each employment network (i.e., providers) would elect to be
paid according to one of two payment systems:
(1) an outcome payment system, or
(2) an outcome milestone payment system. However, a
participating State VR program also retains the option
of seeking reimbursement for services to any
beneficiary under the current law payment system. Under
the outcome payment system, each month that a
beneficiary is not receiving cash benefits the
beneficiary's employment network would receive an
amount not to exceed 40 percent of the average SSDI or
SSI monthly payment (as applicable to the beneficiary)
in the previous calendar year. Such payments would not
continue for more than 60 months.
Note: In 1997, the average monthly SSDI benefit payment was
$722; the average monthly SSI benefit payment was $389.
Under the outcome milestone payment system, employment
networks may receive payment when one or more milestones (as
determined by the Commissioner) are achieved leading to the
goal of permanent employment. The payment schedule of the
outcome milestone payment system would be designed so that the
total of the payments with respect to any beneficiary is less
than (on a net present value basis) the total amount of
payments to which the employment network would be entitled
under the outcome payment system.
The Commissioner would periodically review both payment
systems, and if necessary, alter the percentages, milestones,
or payment periods to ensure that networks have adequate
assistance to assist beneficiaries into the workforce.
The Committee provision provides for graduated
implementation of the program nationwide. Implementation would
commence no later than 1 year after enactment of the
legislation, and full implementation would be completed within
3 additional years.
The Committee provision would authorize transfers from the
Social Security Trust Funds for reimbursement of employment
networks, and authorize amounts to be appropriated to the
Social Security Administration for SSI recipients. The
Committee provision would also authorize appropriations for the
administrative expenses of the program.
The Committee provision provides for reauthorization of the
program 5 years after the Commissioner commences implementation
of the program. However, payment for any beneficiary who is
enrolled in the program would continue for the period otherwise
provided regardless of whether the program is reauthorized in a
timely manner.
The Commissioner is directed to conduct an evaluation of
the program. Evaluation reports would be transmitted to the
Senate Finance Committee and the House Ways and Means Committee
at the end of the third, fifth, and seventh year of program
operation.
The Committee provision would also establish within the
Social Security Administration a ``Work Incentives Advisory
Panel.'' The panel would consist of 12 members, whose duties
would include advising the Commissioner of Social Security and
other cabinet officials on implementation of the Ticket to Work
program; on demonstration programs relating to work incentives,
and on any other issues related to work incentives planning
relating to Social Security disability insurance (SSDI),
Supplemental Security Income (SSI), Medicaid, and Medicare.
Reason for change
Currently, few Social Security disability insurance (SSDI)
or Supplemental Security Income (SSI) beneficiaries are
referred for vocational rehabilitation (VR) services, and fewer
actually return to work because of VR services. The
Congressional Budget Office (CBO) has estimated that about 10
to 15 percent of new SSDI and SSI beneficiaries are referred to
State VR agencies, and that about 10 percent of those referred
are accepted for services. According to the Social Security
Administration (SSA), in 1998, 9,950 SSDI or SSI beneficiaries
graduated from the disability benefit rolls to employment
because of VR services paid for by SSA. During that time, about
4.8 million disabled workers received SSDI benefits each month,
and about 3.6 million disabled individuals (ages 18-64), SSI
benefits. The General Accounting Office (GAO), as well as
public and private commissions, have recommended major changes
in SSA's approach to employment assistance.
The Committee provision is intended to improve not only VR
services but actual employment outcomes by permitting nearly
any SSDI or SSI beneficiary who desires VR services to receive
them; by permitting beneficiaries to choose from a variety of
providers in addition to State VR agencies, and by improving
the payment for services by stretching out reimbursements to VR
providers for up to 5 years, contingent on their clients'
sustained employment. By maintaining a link between payments
and successful job outcomes, the program is intended to reward
employment and not simply the provision of VR services. Given
SSA's limited experience in administering employment and
vocational rehabilitation services, the Committee provision
would provide for program managers to assist in recruiting
employment networks and handling the nuts-and-bolts of
administration of the program.
The Committee provision is based on H.R. 3433, the ``Ticket
to Work and Self-Sufficiency Act of 1998,'' as passed by the
House of Representatives on June 4, 1998.
Effective date
Generally 1 year after enactment.
2. Subtitle B. Elimination of Work Disincentives
a. Section 211. Work Activity Standard As A Basis for Review of An
Individual's Disabled Status
Present law
Eligibility for Social Security disability insurance (SSDI)
cash benefits requires an applicant to meet certain criteria,
including the presence of a disability that renders the
individual unable to engage in substantial gainful activity.
Substantial gainful activity is defined as work that results in
earnings that exceeds an amount set in regulation, currently
$500 per month. Continuing disability reviews (CDRs) are
conducted by the Social Security Administration to determine
whether an individual remains disabled and thus eligible for
continued benefits. CDRs may be triggered by evidence of
recovery from disability, including, for example, return to
work. The Social Security Administration is also required to
conduct periodic CDRs--every 3 years for any beneficiary who is
determined to be nonpermanently disabled, and at times
determined by the Commissioner for beneficiaries with a
permanent disability.
Explanation of provision
The Committee provision would establish that the standard
for work-related CDRs for long-term SSDI beneficiaries (i.e.,
individuals who have been receiving disability benefits for at
least 24 months) would be limited to those triggered by
employment that results in earnings that exceed substantial
gainful activity, or to periodic continuing disability reviews.
Reason for change
The Committee provision is intended to encourage long-term
SSDI beneficiaries to return to work by ensuring that a small
amount of work activity would not trigger a continuing
disability review. However, like all beneficiaries, long-term
beneficiaries would have benefits suspended if earnings exceed
the substantial gainful activity level, and would be subject to
periodic continuing disability reviews.
Effective date
On enactment.
b. Section 212. Expedited Reinstatement of Benefits
Present law
Individuals entitled to Social Security disability
insurance (SSDI) benefits may receive expedited reinstatement
of benefits following termination of benefits because of work
activity any time during a 36-month extended period of
eligibility (EPE). That is, benefits may be reinstated without
the need for a new application and disability determination.
Individuals eligible for Supplemental Security Income (SSI)
benefits whose benefits have been terminated because of work
may receive expedited reinstatement at any time until benefits
have been suspended for 12 consecutive months because of work.
Otherwise, the Commissioner of Social Security must make a new
determination of disability before a claimant can reestablish
reentitlement to disability benefits.
Explanation of provision
The Committee provision would provide that an individual:
(1) whose entitlement to Social Security disability
insurance (SSDI) benefits had been terminated on the
basis of work activity following completion of an
extended period of eligibility (EPE); or
(2) whose eligibility for Supplemental Security
Income (SSI) benefits (including special SSI
eligibility status under section 1619(b) of the Social
Security Act) had been terminated following suspension
of those benefits for 12 consecutive months on account
of excess income resulting from work activity, may
request reinstatement of those benefits without filing
a new application.
The individual must have become unable to continue working on
the basis of his or her medical condition and must file a
reinstatement request within the 60-month period following the
month of such termination.
While the Commissioner is making a determination of a
reinstatement request, the individual will be eligible for
provisional benefits (cash benefits and Medicare or Medicaid,
as appropriate) for a period of not more than 6 months. If the
Commissioner makes a favorable determination, such individual's
prior entitlement to benefits would be reinstated, as would be
the prior benefits of his or her dependents who continue to
meet the entitlement criteria.
Reason for change
The Committee provision is intended to encourage SSDI and
SSI beneficiaries to return to work by providing assurance that
cash and health benefits could be restored in a timely fashion
if an individual must discontinue employment and continues to
meet standards for disability set by the Social Security
Administration.
Effective date
One year after enactment.
3. Subtitle C. Work Incentives Planning, Assistance, and Outreach
a. Section 221. Work Incentives Outreach Program
Present law
The Social Security Administration prepares and distributes
educational materials on work incentives for individuals
receiving Social Security disability insurance (SSDI) and
Supplemental Security Income (SSI) benefits, including on the
Internet. Social Security personnel in its 1,300 field offices
are available to answer questions about work incentives. Work
incentives currently include: exclusions for impairment-related
work expenses; trial work periods during which an individual
may continue to receive cash benefits; a 36-month extended
eligibility period during which cash benefits can be reinstated
at any time; continued eligibility for Medicaid and Medicare;
continued payment of benefits while a beneficiary is enrolled
in vocational rehabilitation program; and plans for achieving
self-support (PASS).
Explanation of provision
The Commissioner of Social Security is directed to
establish a community-based work incentives planning and
assistance program for the purpose of disseminating accurate
information to individuals on work incentives. Under this
program, the Commissioner would:
(1) establish a program of grants, cooperative
agreements, or contracts to provide benefits planning
and assistance, including protection and advocacy
services, to individuals with disabilities, and
outreach to individuals with disabilities who are
potentially eligible for work incentive programs; and
(2) establish a corps of work incentive specialists
located within the Social Security Administration.
The Commissioner would determine the qualifications of
agencies eligible for award of a grant, cooperative agreement,
or contract. Social Security Administration field offices and
State Medicaid agencies are deemed ineligible. Eligible
organizations may include Centers for Independent Living,
protection and advocacy organizations, and client assistance
programs (established in accordance with the Rehabilitation Act
of 1973, as amended); State Developmental Disabilities Councils
(established in accordance with the Developmental Disabilities
Assistance and Bill of Rights Act); and State welfare agencies
(funded under Title IV-A of the Social Security Act).
Annual appropriations for this program would not to exceed
$23 million. The grant amount in each State would be based on
the number of beneficiaries in a State, subject to certain
limits.
Reason for change
The Committee provision is intended to improve information
about, and encourage the use of, work incentives by, Social
Security disability insurance (SSDI) and Supplemental Security
Income (SSI) beneficiaries. Disabled beneficiaries and
advocates report that the work incentives for SSI and SSI
beneficiaries are complex, difficult to understand, and
information and assistance from the Social Security
Administration is frequently not helpful. The Committee
provision would improve both community-based sources of
information through a grant program, and expertise within the
Social Security Administration with a corps of work incentives
specialists. Since some beneficiaries attempt to work without
receiving rehabilitation services, work incentive information
services would be available to all beneficiaries, not just
those participating in the Ticket program.
Effective date
Fiscal year 2000.
b. Section 222. State Grants for Work Incentives Assistance to Disabled
Beneficiaries
Present law
Grants to States to provide assistance to individuals with
disabilities are authorized under the Developmental
Disabilities Assistance and Bill of Rights Act (42 U.S.C. 6041
et seq.). Such assistance includes information on and referral
to programs and services; and legal, administrative, and other
appropriate remedies to ensure access to services.
Explanation of provision
The Commissioner of Social Security would be authorized to
make grants to existing protection and advocacy programs
authorized by the States under the Developmental Disabilities
Assistance and Bill of Rights Act. Services would include
information and advice about obtaining vocational
rehabilitation and employment services, and advocacy and other
services a Social Security disability insurance (SSDI) or
Supplemental Security Income (SSI) beneficiary may need to
secure or regain gainful employment, including applying for and
receiving work incentives.
Appropriations for this program would not to exceed $7
million for fiscal year 2000, and such sums as needed
thereafter. Individual grant amounts would be based on the
number of beneficiaries in a State, subject to certain limits.
Reason for change
The Committee provision is intended to improve direct
assistance and supports to Social Security disability insurance
(SSDI) and Supplemental Security Income (SSI) beneficiaries in
making use of vocational rehabilitation, work incentives, and
any related assistance or supports that would help a
beneficiary to go to work or maintain employment. Disabled
beneficiaries and advocates report that the work incentives for
SSI and SSDI beneficiaries are complex, difficult to
understand, and information and assistance from the Social
Security Administration is frequently not helpful. The
Committee provision would improve ``hands on'' assistance to
people with disabilities in obtaining access to employment
assistance and work incentives by providing grants to existing
State-authorized entities with expertise in working with people
with disabilities. Since some beneficiaries attempt to work
without receiving rehabilitation services, work incentive
information services would be available to all beneficiaries,
not just those participating in the Ticket program.
Effective date
Fiscal year 2000.
E. TITLE III--DEMONSTRATION PROJECTS AND STUDIES
1. Section 301. Extension of Disability Insurance Program Demonstration
Authority
Present law
Section 505 of the Social Security Disability Amendments of
1980, as amended (42 U.S.C. 1310) provides the Commissioner of
Social Security authority to conduct certain demonstration
projects. 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. This
demonstration authority has expired.
Explanation of provision
The Committee provision would permanently authorize section
505 of the Social Security Disability Amendments of 1980, and
provide new authority to:
(1) conduct demonstrations related to sliding scale
benefit offsets using variations in the amount of the
offset as a proportion of earned income; and
(2) conduct demonstration projects with presumptively
eligible applicants.
Reason for change
Current demonstration authority has expired.
Effective date
Date of enactment.
2. Section 302. Demonstration Projects Providing for Reductions in
Disability Insurance Benefits Based on Earnings
Present law
No provision.
Explanation of provision
The Committee provision would require the Commissioner of
Social Security to conduct a demonstration project under which
payments to Social Security disability insurance (SSDI)
beneficiaries would be reduced $1 for every $2 of beneficiary
earnings. The Commissioner would be required to annually report
to the Congress on the progress of this demonstration project;
the first report is due June 9, 2000.
Reason for change
SSDI beneficiaries lose all cash benefits when they work
and earn more than the substantial gainful activity limit
(currently $500 a month), after participating in the 9-month
trial work period. Because of the $500 ``earnings cliff,'' many
SSDI beneficiaries view remaining on the rolls as financially
more attractive than risking the uncertainties of competitive
employment, especially when low-wage jobs are the likely
outcome.
To determine whether changes in this earnings-cliff hurdle
would in fact encourage SSDI beneficiaries to return to work,
the Committee provision would require SSA to test a gradual
offset of SSDI cash benefits by reducing benefits $1 for every
$2 in earnings over a determined level. A reduction in benefits
based on earnings would lessen the total loss of benefits to
beneficiaries who attempt work. However, some experts assert
that the results of a permanent provision allowing a SSDI
benefit offset of $1 for every $2 earned over a determined
level would result in large costs to the Social Security Trust
Funds because it would encourage disabled individuals who
currently work despite their impairments to apply for benefits.
The Committee provision would examine these several effects.
Effective date
On enactment.
3. Section 304. Studies and Reports
Present law
No provision.
Explanation of provision
1. Study by GAO of Existing Disability-Related Employment
Incentives.--The Committee provision would direct the General
Accounting Office (GAO) to assess the value of existing tax
credits and disability-related employment initiatives under the
Americans with Disabilities Act and other Federal laws. The
report is to be submitted within 3 years to the Senate
Committee on Finance and the House Committee on Ways and Means.
2. Study by GAO of Existing Coordination of the DI and SSI
Programs as They Relate to Individuals Entering or Leaving
Concurrent Entitlement.--The Committee provision would direct
the General Accounting Office (GAO) to evaluate the
coordination under current law of work incentives for
individuals eligible for both Social Security disability
insurance (SSDI) and Supplemental Security Income (SSI). The
report is to be submitted within 3 years to the Senate
Committee on Finance and the House Committee on Ways and Means.
3. Study by GAO on the Impact of the Substantial Gainful
Activity Limit on Return to Work.--The Committee provision
would direct the General Accounting Office (GAO) to examine
substantial gainful activity limit as a disincentive for return
to work. The report is to be submitted within 2 years to the
Senate Committee on Finance and the House Committee on Ways and
Means.
4. Report on Disregards Under the DI and SSI Programs.--The
Committee provision would direct the Commissioner of Social
Security to identify all income disregards under the Social
Security disability insurance (SSDI) and Supplemental Security
Income (SSI) programs; to specify the most recent statutory or
regulatory change in each disregard; the estimated current
value of any disregard if the disregard had been indexed for
inflation; recommend any further changes; and to report certain
additional information and recommendations on disregards
related to grants, scholarships, or fellowships used in
attending any educational institution. The report is to be
submitted within 90 days to the Senate Committee on Finance and
the House Committee on Ways and Means.
Reason for change
These reports would provide new information to evaluate or
improve employment and related assistance to SSDI and SSI
beneficiaries.
Effective date
On enactment.
F. TITLE IV--TECHNICAL AMENDMENTS
1. Section 401. Technical Amendments Relating to Drug Addicts and
Alcoholics
Present law
Public Law 104-121 included amendments to the Social
Security disability insurance (SSDI) and Supplemental Security
Income (SSI) 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
individuals whose claims 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.
Individuals receiving benefits due to drug addiction or
alcoholism can reapply for benefits based on another
impairment. If the individual applied within 120 days after the
date of enactment, the Commissioner is required to complete the
entitlement redetermination by January 1, 1997.
Public Law 104-121 provided for the appointment of
representative payees for recipients allowed benefits due to
another impairment but who were also determined to have a drug
addiction or alcoholism condition, and the referral of those
individuals for treatment effective with applications and
reapplications filed after July 1, 1996.
Explanation of provision
The Committee provision clarifies that the meaning of the
term ``final adjudication'' includes a pending request for
administrative or judicial review or a pending readjudication
pursuant to class action or court remand. The provision also
clarifies that if the Commissioner does not perform the
entitlement redetermination before January 1, 1997, that
entitlement redetermination must be performed in lieu of a
continuing disability review.
The Committee provision also corrects an anomaly that
currently excludes all those allowed benefits (due to another
impairment) before March 29, 1996, and redetermined before July
1, 1996, from the requirement that a representative payee be
appointed and that the recipient be referred for treatment.
Reason for change
The provision clearly defines ``final adjudication'' to
avoid any misinterpretation by the courts. One court has
concluded that the court 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 Committee
provision corrects this anomaly.
Effective date
The amendments would be effective as though they had been
included in the enactment of Section 105 of Public Law 104-121
(March 29, 1996).
2. Section 402. Treatment of Prisoners
Implementation of Prohibition Against Payment of Title II Benefits to
Prisoners
Present law
Current law prohibits prisoners from receiving Old Age,
Survivors and Disability Insurance (OASDI) benefits while
incarcerated if they are convicted of any crime punishable by
imprisonment of more than 1 year (regardless of actual sentence
imposed). Federal, State, county or local prisons are required
to make available, upon written request, the name and Social
Security number (SSNs) of any individual so convicted who is
confined in a penal institution or correctional facility.
Explanation of provision
The Committee provision requires the Commissioner to make
agreements with any interested State or local institution to
provide monthly the names, Social Security numbers (SSNs),
confinement dates, dates of birth, and other identifying
information of residents. The Commissioner is required to pay
the institution $400 for each Social Security recipient who
becomes ineligible for benefits as a result of such a report,
if the information is provided within 30 days of incarceration,
and $200 if the information is furnished after 30 days but
within 90 days. Payments to correctional institutions would be
reduced by 50 percent for multiple reports on the same
individual who receives both SSI and OASDI benefits. 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.
Reason for change
The Committee provision provides new financial incentives
for State and local correctional institutions to report
information on inmates to the Social Security Administration
(SSA) so that payment of Social Security benefits to prisoners
being supported at taxpayer expense are discontinued promptly.
Moreover, the Committee provision provides identical incentives
now available to report identical information that leads to
termination of Supplemental Security Income (SSI) benefits.
Under current law, the Commissioner of Social Security already
pays institutions $400 for each Supplemental Security Income
(SSI) recipient who becomes ineligible for benefits as a result
of such a report, if the information is provided within 30 days
of incarceration, and $200 if the information is furnished
after 30 days but within 90 days.
Effective date
Three months after the date of enactment.
Elimination of Title II Requirement That Confinement Stem From Crime
Punishable by Imprisonment for More Than 1 Year
Present law
Title II of the Social Security Act bars payment of Old
Age, Survivors, or Disability Insurance (OASDI) benefits to
prisoners convicted of, or who are institutionalized because
they are found guilty but insane, not guilty by reason of
insanity, incompetent to stand trial, or the subject of a
similar verdict or finding based on a mental disease, a mental
defect, or mental incompetence with respect to, any crime
punishable by imprisonment of more than a year (regardless of
the actual sentence imposed).
Explanation of provision
This provision would bar payment of OASDI benefits to
prisoners and other individuals convicted of a criminal offense
and confined, throughout a month, to:
(1) a penal institution; or
(2) other institution if found guilty but insane,
regardless of the total duration of the confinement.
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 is a
costly, labor-intensive process that impedes timely suspension
of benefits. As a matter of fairness, benefits would also be
barred to persons who commit serious crimes but are found
guilty by reason of insanity, regardless of the total duration
of the institutionalization.
Effective date
Three months after enactment.
Continued Denial of Benefits to Sex Offenders Remaining Confined to
Public Institutions Upon Completion of Prison Term
Present law
No provision.
Explanation of provision
The amendment would prohibit Old Age, Survivors, or
Disability Insurance (OASDI) benefits to sex offenders who, on
completion of a prison term, remain confined in a public
institution pursuant to a court finding that they continue to
be sexually dangerous to others.
Reason for change
The denial of benefits is extended in the case of sex
offenders who remain confined after completing their prison
terms.
Effective date
On enactment.
3. Section 403. Revocation by Members of the Clergy of Exemption From
Social Security Coverage
Present law
Practicing members of the clergy are automatically covered
by Social Security as self-employed workers unless they file an
application for an exemption from Social Security coverage; the
application must be filed within a period ending with the due
date of the tax return for the second taxable year (not
necessarily consecutive) in which they receive remuneration for
their ministerial services and must include a statement of the
applicants' objection to the acceptance of Social Security
benefits on religious principles. Applicants must also inform
the ordaining, commissioning, and licensing body of their
church or order about their objection. If granted, this
exemption is irrevocable.
Explanation of provision
The proposal would provide a 2-year ``open season,''
beginning December 31, 1999, for members of the clergy who want
to revoke their exemption from Social Security, i.e., wish to
join Social Security. This decision to join Social Security
would be irrevocable. A member of the clergy choosing such
coverage would become subject to self-employment taxes and his
or her subsequent earnings would be credited for Social
Security (and Medicare) benefit purposes.
Reason for change
Some members of the clergy elected not to participate in
Social Security (and Medicare) early in their careers, before
they fully understood the ramifications of doing so. Because
the election is irrevocable, there is no way for them to gain
access to the program under current law. Clergy typically have
modest earnings throughout their working life times and would
be among those most likely to rely on Social Security (and
Medicare) for much of their basic health care and living
expenses in retirement. This proposal gives them a limited
opportunity to enroll in the system, similar to those provided
by Congress in 1977 and 1986.
Effective date
The proposal would be effective with respect to service
performed in taxable years beginning after December 31, 1999,
for a period of 2 years, and with respect to monthly benefits
in or after the calendar year the individual's application for
revocation is effective.
4. Section 404. Additional Technical Amendment Relating to Cooperative
Research or Demonstration Projects Under Titles II and XVI
Present law
Current law authorizes Title XVI funding for making grants
to States and public and other organizations for paying part of
the cost of cooperative research or demonstration projects.
Explanation of provision
Clarifies current law to include agreements or grants
concerning title II of the Social Security Act.
Reason for change
Corrects an omission of intended Title II authority.
Effective date
August 4, 1994.
5. Section 405. Authorization for States to Permit Annual Wages Reports
Present law
The Social Security Domestic Employment Reform Act of 1994
(P.L. 103-387) changed certain Social Security and Medicare tax
rules. Specifically, the Act provided that domestic service
employers (that is, individuals employing maids, gardeners,
babysitters, and the like) would no longer owe taxes for any
domestic employee who earned less than $1,000 per year from the
employer. In addition, the Act simplified certain reporting
requirements. Domestic employers were no longer required to
file quarterly returns regarding Social Security and Medicare
taxes, nor the annual Federal Unemployment Tax Act (FUTA)
return. Instead, all Federal reporting was consolidated on an
annual Schedule H filed at the same time as the employer's
personal income tax return.
Explanation of provision
The Committee provision would permit States the option of
permitting domestic service employers to file annual rather
than quarterly wage reports pursuant to section 1137 of the
Social Security Act, which provides for an income and
eligibility verification system for certain public benefits.
Reason for change
The Committee provision provides for consistency of certain
State wage reporting with revised Federal requirements.
Effective date
On enactment.
G. TITLE V--REVENUE OFFSETS
1. Section 501 of the Bill and Section 901 of the Code. Modifications
to Foreign Tax Credit Carryover Rules
Present law
U.S. persons may credit foreign taxes against U.S. tax on
foreign-source income. The amount of foreign tax credits that
can be claimed in a year is subject to a limitation that
prevents taxpayers from using foreign tax credits to offset
U.S. tax on U.S.-source income. Separate foreign tax credit
limitations are applied to specific categories of income.
The amount of creditable taxes paid or accrued (or deemed
paid) in any taxable year which exceeds the foreign tax credit
limitation is permitted to be carried back 2 years and forward
5 years. The amount carried over may be used as a credit in a
carryover year to the extent the taxpayer otherwise has excess
foreign tax credit limitation for such year. The separate
foreign tax credit limitations apply for purposes of the
carryover rules.
Explanation of provision
The bill reduces the carryback period for excess foreign
tax credits from 2 years to 1 year. The bill also extends the
excess foreign tax credit carryforward period from 5 years to 7
years.
Reason for change
The Committee believes that reducing the carryback period
for foreign tax credits to 1 year and increasing the
carryforward period to 7 years will reduce some of the
complexity associated with carrybacks while continuing to
address the timing difference between U.S. and foreign tax
rules.
Effective date
The provision applies to foreign tax credits arising in
taxable years beginning after December 31, 2001.
2. Section 502 of the Bill and Section 448 of the Code. Limit Use of
Non-Accrual Experience Method of Accounting to Amounts to be Received
for the Performance of Qualified Personal Services
Present law
An accrual method taxpayer generally must recognize income
when all the events have occurred that fix the right to receive
the income and the amount of the income can be determined with
reasonable accuracy. An accrual method taxpayer may deduct the
amount of any receivable that was previously included in income
that becomes worthless during the year.
Accrual method taxpayers are not required to include in
income amounts to be received for the performance of services
which, on the basis of experience, will not be collected (the
``non-accrual experience method''). The availability of this
method is conditioned on the taxpayer not charging interest or
a penalty for failure to timely pay the amount charged.
A cash method taxpayer is not required to include an amount
in income until it is received. A taxpayer may not use the cash
method if purchase, production, or sale of merchandise is a
material income producing factor. Such taxpayers are generally
required to keep inventories and use the accrual method of
accounting. In addition, corporations (and partnerships with
corporate partners) generally may not use the cash method of
accounting if their average annual gross receipts exceed $5
million. An exception to this $5 million rule is provided for
qualified personal service corporations, corporations:
(1) substantially all of whose activities involve the
performance of services in the fields of health, law,
engineering, architecture, accounting, actuarial
science, performing arts or consulting; and
(2) substantially all of the stock of which is owned
by current or former employees performing such
services, their estates or heirs. Qualified personal
service corporations are allowed to use the cash method
without regard to whether their average annual gross
receipts exceed $5 million.
Explanation of provision
The bill provides that the non-accrual experience method
will be available only for amounts to be received for the
performance of qualified personal services. Amounts to be
received for the performance of all other services will be
subject to the general rule regarding inclusion in income.
Qualified personal services are personal services in the fields
of health, law, engineering, architecture, accounting,
actuarial science, performing arts or consulting. As under
present law, the availability of the method is conditioned on
the taxpayer not charging interest or a penalty for failure to
timely pay the amount.
Reason for change
The Committee understands that the use of the non-accrual
experience method provides the equivalent of a bad debt
reserve, which generally is not available to taxpayers using
the accrual method of accounting. The Committee believes that
accrual method taxpayers should be treated similarly, unless
there is a strong indication that different treatment is
necessary to clearly reflect income or to address a particular
competitive situation.
The Committee understands that accrual basis providers of
qualified personal services (services in the fields of health,
law, engineering, architecture, accounting, actuarial science,
performing arts or consulting) compete on a regular basis and
on an even footing with competitors using the cash method of
accounting. The Committee believes that this competitive
situation justifies the continued availability of the non-
accrual experience method with respect to amounts to be
received for the performance of qualified personal services.
The Committee believes that it is important to avoid the
disparity of treatment between competing cash and accrual
method providers of qualified personal services that could
result if the non-accrual experience method were eliminated
with regard to amounts to be received for such services.
Effective date
The provision is effective for taxable years ending after
the date of enactment. Any change in the taxpayer's method of
accounting necessitated as a result of the proposal will be
treated as a voluntary change initiated by the taxpayer with
the consent of the Secretary of the Treasury. Any required
section 481(a) adjustment is to be taken into account over a
period not to exceed 4 years under principles consistent with
those in Rev. Proc. 98-60.\1\
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\1\ 1998-51 I.R.B. 16.
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3. Section 503 of the Bill and New Section 7527 of the Code. Extension
of IRS User Fees
Present law
The IRS provides written responses to questions of
individuals, corporations, and organizations relating to their
tax status or the effects of particular transactions for tax
purposes. The IRS generally charges a fee for requests for a
letter ruling, determination letter, opinion letter, or other
similar ruling or determination. Public Law 104-117 \2\
extended the statutory authorization for these user fees \3\
through September 30, 2003.
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\2\ An Act to provide that members of the Armed Forces performing
services for the peacekeeping efforts in Bosnia and Herzegovina,
Croatia, and Macedonia shall be entitled to tax benefits in the same
manner as if such services were performed in a combat zone, and for
other purposes (March 20, 1996).
\3\ These user fees were originally enacted in section 10511 of the
Revenue Act of 1987 (Public Law 100-203, December 22, 1987).
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Explanation of provision
The bill extends the statutory authorization for these user
fees through September 30, 2006. The bill also moves the
statutory authorization for these fees into the Internal
Revenue Code.
Reason for change
The Committee believes that it is appropriate to extend the
statutory authorization for these user fees for an additional 3
years.
Effective date
The provision is effective on the date of enactment.
III. BUDGET EFFECTS OF THE BILL
A. Committee Estimates
In compliance with paragraph 11(a) of Rule XXVI of the
Standing Rules of the Senate, the following table is presented
concerning the estimated budget effects of S. 331 as reported.
B. Budget Authority and Tax Expenditures
Budget Authority
In compliance with section 308(a)(1) of the Budget Act, the
Committee states that Titles I-IV of the bill involve net
budget outlays (budget authority) of $3,239 million over fiscal
years 1999-2008. (See table in A., above.)
Tax Expenditures
In compliance with section 308(a)(2) of the Budget Act, the
Committee states that bill section 502 involves a reduction in
tax expenditures of $286 million over fiscal years 1999-2008.
C. Consultation With Congressional Budget Office
In accordance with section 403 of the Budget Act, the
Committee advises that the Congressional Budget Office
submitted the following statement on S. 331, as amended by the
Committee.
U.S. Congress,
Congressional Budget Office,
Washington, DC, March 19, 1999.
Hon. William V. Roth, Jr.,
Chairman, Committee on Finance, U.S. Senate,
Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 331, the Work
Incentives Improvement Act of 1999.
Sincerely,
Barry B. Anderson,
for
Dan L. Crippen, Director.
Enclosure.
congressional budget office cost estimate
S. 331--Work Incentives Improvement Act
(As ordered reported by the Senate Committee on Finance on March 4,
1999)
SUMMARY
S. 331, the Work Incentives Improvement Act of 1999, would
alter cash and health-care benefits for people with
disabilities. Title I would provide States with options to
extend Medicaid coverage to certain disabled workers, enhance
Medicare for certain former recipients of Social Security
Disability Insurance (DI), and establish grants and
demonstration projects for States to assist disabled workers.
Title II would revamp the system under which people collecting
benefits from DI and Supplemental Security Income (SSI) receive
vocational rehabilitation (VR) services and would make it
easier for working beneficiaries to retain or regain cash
benefits. Titles III and IV would require several demonstration
projects, give certain members of the clergy another
opportunity to enroll in the Social Security system, and
tighten restrictions on the payment of Social Security benefits
to prisoners. To offset the costs of the bill, Title V would
increase certain revenues. CBO estimates that the bill would
add to the total Federal surplus by $0.7 billion over the 2000-
2004 period; of that amount, $0.1 billion would represent a
reduction in the off-budget Social Security surplus, and the
remaining $0.8 billion an improvement in the on-budget surplus.
Section 4 of the Unfunded Mandates Reform Act (UMRA)
excludes from the application of that act any legislative
provisions that relate to the old-age, survivors, and
disability insurance program under title II of the Social
Security Act, including tax provisions in the Internal Revenue
Code. CBO has determined that Subtitles A and B in Title II and
Titles III and IV of this bill fall within that exclusion. The
remainder of the bill contains no intergovernmental mandates as
defined in UMRA. However, the optional programs would result in
greater State spending if they chose to participate.
The Joint Committee on Taxation has determined that two
provisions in the revenue section of the bill constitute
private-sector mandates. The direct cost of those provisions
would exceed the statutory threshold specified in 2002 through
2004.
Estimated Cost to the Federal Government
The estimated budgetary impact of S. 331 on direct spending
and revenues is summarized in Table 1. The costs of this
legislation fall within budget functions 550 (Health), 570
(Medicare), 600 (Income Security), 650 (Social Security), and
800 (General Government).
Basis of Estimate
For purposes of estimating the budgetary effects of S. 331,
CBO assumes enactment by September 1999.
Current Law
About 8 million people between the ages of 18 and 64 now
collect cash benefits under DI, SSI, or both. In both programs,
applicants must show that they are incapable of substantial
work in order to be awarded benefits. Nevertheless, the
programs have several provisions that are meant to smooth
beneficiaries' return to work. The law permits DI recipients to
earn unlimited amounts for a nine-month period (known as the
trial work period, or TWP) and a subsequent three-month grace
period before suspending benefits. During the three years after
the TWP--a period known as the extended period of eligibility,
or EPE--those beneficiaries may automatically return to the DI
rolls if their earnings sink below substantial gainful activity
(SGA, now defined in regulation as $500 per month and soon to
increase to $700). Furthermore, Medicare benefits (for which DI
beneficiaries qualify after two years on the rolls) also
continue for three years even if cash benefits are suspended.
Medicare coverage then stops unless the worker pays a steep
premium (up to $309 a month in 1999).
The SSI disability program is restricted to people with low
income and few resources. Although applicants for SSI benefits
must meet the same disability criteria as in the DI program,
the SSI program's subsequent treatment of earnings differs
somewhat. SSI recipients who work get a reduced benefit
(essentially, losing $1 of benefits for each $2 of earnings
over $85 a month) but do not give up their benefit entirely. If
their earnings top SGA but they are still medically disabled,
they move into section 1619(a) status (and still collect a
small cash benefit). If their earnings rise further, they enter
1619(b) status (where they collect no cash benefit but retain
Medicaid). If their incomes are too high even for the 1619(b)
program, they may still enroll in Medicaid if their State
offers a buy-in program permitted by the Balanced Budget Act of
1997 (BBA).
Both DI and SSI recipients are evaluated at the time of
award for their potential to go back to work. Sketchy data
suggest that a minority are referred to VR providers, chiefly
State agencies, and only a minority of those referred are
served. If the beneficiary successfully completes nine months
of employment at SGA, the VR
provider is reimbursed by the Social Security Administration
(SSA). In 1996, SSA began recruiting alternate providers under
the Referral System for Vocational Rehabilitation Providers
(RSVP) program. Candidates for this program must first be
referred to and rejected by the State VR agencies, and the
alternate providers face the same reimbursement system (that
is, a single payment after nine months of substantial work).
Thus, VR for DI and SSI recipients remains fundamentally a
State program.
In both the DI and SSI programs, recipients are reviewed
periodically to verify that they are still disabled. These
Continuing Disability Reviews (CDRs) are scheduled according to
the recipient's perceived likelihood of improvement. If medical
improvement is deemed possible, the cycle calls for a review
every three years. (Those beneficiaries thought likely to
improve are reviewed more often, and those unlikely to improve
less often.) If the CDR results in a finding that the
beneficiary is no longer disabled, cash and medical benefits
stop. A CDR can also be triggered by a report of earnings.
Expanded Availability of Health Care Services (Title I)
Title I of S. 331 would increase Federal spending by about
$0.7 billion over the 2000-2004 period and by about $2 billion
over the 2000-2009 period through policies that would expand
the availability of health care services. It would expand
existing State options for covering the working disabled under
Medicaid and would extend Medicare coverage for DI recipients
who return to work. Title I would also provide States with
grants to develop infrastructure to assist the working disabled
and establish demonstration projects for States to provide
Medicaid benefits to workers with severe impairments who are
likely to become disabled.
State Option to Eliminate Income, Resource, and Asset
Limitations for Medicaid Buy In. Section 101 of S. 331 would
amend Medicaid law to allow States the option to raise certain
income, asset, and resource limitations for workers with
disabilities who buy into Medicaid. This policy, combined with
the incentives created by grants and demonstration projects
(discussed below), would induce some States to expand Medicaid
to include the working disabled and would marginally increase
enrollment in those States that would otherwise have expanded
Medicaid to include this group, resulting in an increase in
spending of about $100 million over five years (see Table 2).
Under current law, States have the option of extending
Medicaid coverage to certain workers with disabilities with
incomes under 250 percent of poverty. This option was created
in the Balanced Budget Act of 1997 and to date, only one State
has an approved State plan amendment to implement it. Based on
discussions with State officials, CBO assumes that States with
one-quarter of eligible people will develop small expansion
programs under this option
over the next few years. Some of those States are likely to use
current authority under the Medicaid program to disregard some
income of people applying under this option, thus effectively
enrolling persons with incomes slightly higher than 250 percent
of poverty. Other States may develop income cut-offs at or
below that level. Based on figures from SSA of the number of
people who graduate from the 1619(b) program due to earnings,
CBO calculates that about 1,000 working disabled will be
enrolled in Medicaid on an average annual basis under current
law.
Under S. 331, CBO assumes that about half of the States
adopting the current law option would revise their plans to
raise certain income, asset and resource limitations beyond the
250 percent limit. Taking up the option would allow those
States access to incentive grants and demonstration funds made
available under the bill and would relieve States of
administering complex eligibility determinations in instances
where States would otherwise have disregarded income. A
possible effect of S. 331 in those States would be that more
people would seek out the benefit if States made higher income
limits explicit. As a result, there would be a small increase
in the number of people enrolled under that option.
CBO also assumes that several additional States would
exercise the option to buy-in the working disabled under S. 331
to gain access to incentive grants and demonstration funds made
available under the bill. In total, CBO assumes that States
with half the potential eligibles would pursue the option under
S. 331, increasing Medicaid enrollment by about 2,500 people on
an average annual basis.
The estimated Federal share of Medicaid benefits for the
working disabled population is about $6,500 per capita in
fiscal year 2000 and about $9,000 per capita in 2004. States
would incur administrative costs for expanding the program to
include the working disabled population. Beneficiaries would
also pay cost-sharing amounting to an estimated 5 percent of
the total cost of the benefits. The resulting net increase in
Federal spending attributable to this policy would be about
$100 million over five years and $250 million over 10 years.
CBO's estimate takes into account a range of assumptions
about State participation and about the eligibility limits that
States would establish. Based on discussions with State
officials developing or implementing policies in this area, CBO
assumes that States would be likely to proceed cautiously, so
as to limit financial exposure. If several large States were to
participate in this program, new program enrollment could
potentially be twice CBO's estimate; conversely, fewer
participating States would decrease the estimate. If all States
were to take up the option and have no ability to restrict or
limit the benefits to all qualified working disabled people
meeting the Federal definition of disability regardless of any
income, assets and resources, Federal costs could be
substantially higher than the estimate. At the same time,
States could maintain current limits or set eligibility limits
to target a narrow subset of eligibles, thus resulting in a
smaller increase in costs.
State Option to Continue Medicaid Buy-In for Participants
Whose DI or SSI Benefits are Terminated After a CDR. Section
101 would also provide States the option to continue Medicaid
coverage for persons enrolled under the buy-in option for the
working disabled if those persons lose SSI or DI due to medical
improvement, as established at a regularly scheduled CDR, yet
still have conditions that qualify as a ``severe medically
determinable impairment.'' Under current law, an estimated 5
percent of the buy-in population will have medical improvements
each year that will result in the loss of their disability
status, and thus eligibility for the Medicaid buy-in.
Continuing coverage for those people would raise Federal
Medicaid spending by $15 million over five years and $60
million over 10 years, assuming that most States choosing the
Medicaid buy-in option would take up this option. If all States
took up this option, Federal Medicaid costs would be $20
million over five years and $80 million over 10 years.
Extension of Medicare with No HI Premium to Former DI
Beneficiaries Who Exhaust Their Current Law EPE. Section 102 of
S. 331 would allow graduates of the EPE in the next 10 years to
continue to receive Medicare benefits indefinitely without
having to pay any Part A premium. The Federal cost of this
provision is estimated at $10 million in 2000 and about $250
million over five years.
About 15,000 people start an EPE each year, and about 6,000
finish one. The bill would provide Medicare coverage to people
who otherwise would have lost it at the end of the EPE. CBO
estimates that an extra 27,000 people would continue to be
eligible for Medicare in 2004, the fifth year of the provision,
growing to 60,000 in 2009. CBO assumes that the per capita cost
for those beneficiaries is about one-half the cost of the
average disabled beneficiary, reflecting the likelihood that
they are somewhat healthier than other disabled beneficiaries,
and the possibility that some beneficiaries would gain
employer-sponsored insurance and rely on Medicare as a
secondary payor.
Grants to States to Provide Infrastructure to Support
Working Individuals with Disabilities. To States that choose at
least the first of the two Medicaid buy-in options, section 103
of the bill would make available grants to develop and
establish State capacity for providing items and services to
workers with disabilities. The bill would appropriate $20
million in 2000, $25 million in 2001, $30 million in 2002, $35
million in 2003, and $40 million in 2004. The amount would be
indexed to the consumer price index (CPI-U) through 2010. Each
State's grant would be limited in each year to 15 percent of
the estimated total Federal and State spending on the more
costly of the two State options in the bill. Based on CBO's
estimate of the State option to expand the Medicaid buy-in, the
limitation would hold spending levels to about $10 million
annually; five-year costs would be $40 million and 10-year
costs would be $100 million. Funds not allocated would remain
available for allocation to States in future years. Funds
allocated to States would be available until expended.
Demonstration Project for States Covering Workers with
Potentially Severe Disabilities. Under section 104 of S. 331,
States electing the first option under section 101 would also
be eligible for grants to pay for demonstration projects that
provide Medicaid to working persons with physical or mental
impairments who could potentially become blind or disabled
without Medicaid benefits. Those people would be ineligible for
Medicaid benefits under current law because they do not have
conditions that meet the DI or SSI definition of disability.
The bill would appropriate $70 million in 2000, $73 million in
2001, $77 million in 2002, and $80 million in 2003. Funds would
remain available until expended, except that no payment could
be made by the Federal Government after fiscal year 2005. CBO
estimates that the costs of the provision would total $300
million over the 2000-2004 period.
Ticket to Work and Self-Sufficiency Program and Related Provisions
(Title II)
Ticket to Work and Self-Sufficiency Program. Title II would
temporarily change the way that VR services are provided to
recipients of DI and SSI benefits. The budgetary effects of the
proposed tickets program comprise several components, which are
detailed in Table 3.
The current VR program serves a fraction of DI and SSI
recipients. Approximately 10 percent to 15 percent of new DI
and SSI recipients are referred to State VR agencies; although
SSA does not track what happens to them next, scattered clues
suggest that about 10 percent of those referred are accepted.
Recently, SSA has made approximately 650,000 DI awards a year;
therefore, around 7,000 to 8,000 probably received VR services.
SSA pays about 6,000 claims per year for VR services provided
to DI recipients. SSA also pays about 6,000 claims for VR
services to SSI recipients. Since about 3,000 claims are for
people who collect benefits under both programs, total claims
reimbursed are about 9,000 a year.
Some DI and SSI recipients return to work without the help
of VR agencies. Research suggests that only 10 percent to 20
percent of DI recipients ever work after they start collecting
benefits, and only 2 percent to 3 percent eventually have
benefits withheld because of earnings. In contrast, SSA
reimburses claims for VR services for about I percent of
recipients. Thus, for each VR success, one or two other DI
recipients go back to work and are suspended from the rolls
without VR.
S. 331 would revamp the VR system by permitting nearly any
recipient who desires VR to receive it, by allowing clients to
choose from a variety of providers in addition to State VR
agencies, and by stretching out reimbursements to providers for
up to five years, contingent on their clients' sustained
absence from the rolls.
Under S. 331, SSA would issue tickets to DI and SSI
beneficiaries that they could assign to approved VR providers,
whether State, private for-profit, or nonprofit. The bill would
grant wide latitude to SSA in deciding the terms and conditions
of the tickets; SSA tentatively plans to issue tickets to new
beneficiaries at the time of award, unless they are deemed
likely to recover, and to current beneficiaries after a CDR. By
accepting a ticket, providers--labeled ``networks'' in the
bill--would agree to supply services, such as training,
assistive technology, physical therapy, or placement. A program
manager, selected by SSA, would aid in recruiting providers and
handling the nuts-and-bolts administration of the program.
Providers could choose between two forms of reimbursement
from SSA. One system would be based solely on outcomes; the
provider would receive 40 percent of the average DI or SSI
benefit for up to five years, so long as the client stayed off
the rolls. Some providers fear, though, that they would
experience acute cash-flow problems under such a system. To
address that concern, the bill also offers a blended system,
dubbed the ``milestones-outcome'' system. Under that system,
SSA would make some payments earlier, but would trim subsequent
payments to ensure that the overall cost (calculated on a net
present value basis) did not exceed the cost of a pure outcomes
system.
The new program would be phased in gradually but last only
five years. S. 331 calls for it to start in selected areas a
year after enactment, and to operate nationwide 3 years after
that. The last tickets would be issued five years after the
start of implementation. Because the program would then end
unless reauthorized, potential providers may hesitate to
enlarge their capacity to serve DI and SSI clients.
CBO estimates that about 7 percent of newly-awarded
beneficiaries would seek VR services if they were readily
available, versus only about 1 percent who receive them under
current law. Both the Transitional Employment Demonstration
(TED, a demonstration conducted in the mid-1980s and confined
to mentally retarded recipients) and Project Network (a
demonstration begun in 1992 and open to both DI and SSI
beneficiaries) suggested that about 5 percent of beneficiaries
would enroll in VR if given the chance. CBO judged that the
level of interest ultimately would slightly exceed 5 percent
for two reasons. First, intake under Project Network developed
bottlenecks, which may have discouraged some potential
participants. Second, Project Network barred any recipients who
were employed or self-employed from enrolling; no such bar
would be in place under S. 331, however, and those recipients
would probably be interested in receiving services and would be
attractive to providers.
Research suggests that getting VR raises the propensity to
work, and thus the chances for an earnings-related suspension.
But raw figures can easily exaggerate the effectiveness of VR.
The handful of beneficiaries who would sign up for VR are
probably the most motivated, and many would have worked anyway.
In fact, CBO assumes that one effect of S. 331 would be to
enable providers to be reimbursed for providing services for
many people who would have worked anyway.
These expected effects can be illustrated by following the
experiences of one hypothetical cohort of 650,000 new DI
beneficiaries. Under current law, about 7,800 might be served
under the State VR programs; 6,100 of them would eventually
generate a reimbursement by SSA and would be suspended for at
least a month. Another 8,300 would be suspended due to
earnings, for at least one month, without any reimbursement to
VR. Thus, total suspensions would be about 14,400, or about 2
percent of the cohort, under current law. CBO estimates that,
if those beneficiaries could freely enroll in VR using a
``ticket,'' about 7 percent or 47,000 would get VR services.
Most of those VR clients would work, and many (about 13,400)
would be suspended for at least one month, an increase of 7,300
in VR-reimbursed cases. However, CBO estimates that about 5,900
of these workers would have gone back to work unaided. Thus,
for this cohort, net suspensions would be about 1,400 higher.
In estimating S. 331, CBO adjusted those hypothetical
figures for its caseload projections and timing factors. First,
CBO projects that the volume of disabled-worker awards
gradually climbs from 625,000 in 1999 to about 780,000 in 2005.
That increase reflects the aging of the baby-boom generation
into its high-disability years and the scheduled increases in
Social Security's normal retirement age. Second, CBO assumed
that some extra rehabilitations would occur among the nearly 5
million people now on the DI rolls, not just among new awards,
although current beneficiaries are generally poorer candidates
for VR than new applicants with more recent work experience.
Third, CBO adjusted the numbers for the gradual phase-in of the
new system. Under the bill's schedule, assuming enactment by
September 1999, the first services would be rendered at a
handful of sites in fiscal year 2001. If those clients engaged
in trial work in 2002, the first extra suspensions would occur
in 2003. The last tickets would be issued in 2005, and the last
extra suspensions would occur in 2007.
Specifically, CBO estimates that the number of net
additional suspensions in DI--that is, suspensions that would
not occur in the absence of the new program--would equal 500 in
2003, 2,200 in 2004, and an average of 4,600 annually between
2005 and 2007. Gross suspensions that involve reimbursement to
a VR provider would climb gradually from 6,000 to 8,000 a year
under current law, but would be markedly higher--about 15,000
in 2007, almost double the current-law estimate--under the
proposal. And the number of suspensions involving no
reimbursement to VR would fall.
CBO also had to make assumptions about recidivism. Many
studies have documented that DI recipients who leave the rolls
often return. It is not clear whether recipients of VR services
are more or less likely to return to the rolls than others;
some evidence suggests that the extra boost provided by VR
fades over time. Because S. 331 proposes to pay providers for
up to five years, but only if the recipient stays off the
rolls, assumptions about recidivism are critical. Based on a
variety of sources, CBO assumes that recipients suspended from
the rolls have about a two-thirds chance of still being
suspended one year later, about a one-half chance three years
later (when, technically, their DI entitlement is terminated),
and a 40 percent chance after five years.
Effects of the Tickets Program in DI. The budgetary
consequences of S. 331, from the standpoint of the DI program,
would consist of seven effects:
Payments to the program manager. SSA would hire a
program manager to coordinate issuance of tickets, the
recruitment of providers, and other tasks. Based on a
similar arrangement in the RSVP program, CBO assumes
that payments to the program manager would amount to
just a few million dollars a year.
Milestone payments to providers. As explained
earlier, the bill would give providers a choice between
a pure outcome-based system (in which providers would
get periodic payments only during the period of
suspension) and a blended outcome-milestone system (in
which they could get some money earlier). CBO assumes
that most providers would opt for the blended system,
which CBO assumes to consist of a $500 payment after
several months of work and a $1,000 bonus on the date
of suspension. Placements would be considerably easier
for providers to achieve than suspensions. The first
milestone payments would be made in 2002 but would be
very small. They would peak at $26 million in 2006: an
estimated $15 million for 30,000 gross placements,
mostly from ticketholders served in 2005, and another
$11 million for 11,000 suspensions, mostly from
ticketholders served in 2004 (and who spent 2005 in
trial work).
Incentive payments to providers. The incentive
payments would occur over a period of up to five years
if the beneficiary remained off the rolls. Therefore,
they would continue throughout CBO's 10-year horizon
even though the last tickets would be issued in 2005.
In the pure outcomes system, incentive payments would
be 40 percent of average benefits. CBO assumes that
most providers would opt for the blended payment
system, under which--in return for getting some earlier
milestone payments--they would accept incentive
payments of 30 percent. Again, outlays would be very
small in the early years. Incentive payments would peak
at $81 million in 2007. That is the year in which the
last batch of VR clients, who got their tickets in
2005, would be suspended (under the assumption that
they got services in 2005 and engaged in trial work in
2006). By 2007, gross suspensions of ticketholders over
the preceding five years are assumed to be about
35,000. Some of those would have returned to the rolls,
but 25,000 would remain suspended. Incentive payments
would equal 25,000 times 30 percent of the previous
year's average DI benefit (about $900 a month), or $81
million. By 2009, under CBO's assumptions about
recidivism, only 17,000 of those 25,000 would still be
off the rolls, and the 2,000 who were first suspended
in 2003 and 2004 would no longer be in the five-year
period for incentive payments. Thus, incentive payments
in that year would be $49 million.
Partial repeal of current VR system. CBO assumes
that, under current law, the DI trust fund would
reimburse about 6,000 claims for VR services at present
(at an average cost of about $11,000) and about 7,300
in 2007 (at an average cost of about $14,000). The new
program would partially displace the current system for
five years. Specifically, if tickets were issued in
2001 through 2005, they would partially divert clients
who would otherwise have generated reimbursements to VR
providers (at the end of trial work) in 2003 through
2007. In 2007, $50 million in reduced payments would
result.
S. 331 would grant State VR agencies the option of
remaining in the current reimbursement system--that is,
charging SSA for the full amount of costs incurred
after the client has worked for nine months. Because
the new program would expire after five years, many
State agencies might choose not to undergo the
disruption of a switch.
Benefits avoided. The various payments to providers
discussed above all depend on the number of gross
rehabilitations. The savings in DI benefits, in
contrast, depend on the number of net or extra
rehabilitations. That distinction is important: when
providers serve clients who would have worked and
eventually been suspended anyway, they do not generate
savings in DI benefits. Over the 2003-2007 period, CBO
estimates that there would be a total of 35,000 gross
rehabilitations of ticket holders, of which only 17,000
would represent extra rehabilitations. Under CBO's
assumptions about recidivism, about 11,000 of those
17,000 would still be off the rolls in 2007; at an
average benefit of about $900, $122 million in benefit
savings would result. That year marks the peak savings,
because no more tickets would be issued after 2005. By
2009, the 11,000 would have shrunk further to 8,000,
and $89 million in benefit savings would be realized.
Extra benefits paid. Some people might file for DI
benefits in order to get VR services. They may even be
encouraged to do so by prospective providers (for
example, by an insurance company that helps to run
their employer's private disability or workers'
compensation coverage). For those induced filers, the
entire benefit cost (for any time they spend on the
rolls) and the VR cost (if they do eventually get
suspended) would be a net cost to the DI program.
To some extent, SSA could minimize this problem by
setting the terms and conditions under which it would
issue tickets--for example, by denying them to
beneficiaries who are expected to recover medically.
But some such filers might still seep through. CBO
assumes that a few hundred such filers would be
attracted to DI during the five years of the tickets
program, and some would remain on the rolls, leading to
extra benefit costs of up to $5 million annually.
Resulting Medicare savings. DI recipients who return
to work continue to receive Medicare coverage for three
years after their suspension from DI. By leading to the
rehabilitation and suspension of more DI recipients,
the Ticket to Work and Self Sufficiency Act would
generate some savings in Medicare. DI beneficiaries who
are capable of working are probably healthier than
other beneficiaries, and their per capita Medicare cost
therefore less than average.
Under CBO's assumption that the first services would be
rendered in 2001 and the first resulting suspensions in
2003, small Medicare savings would begin in 2006. By
2009, 13,000 extra suspensions are assumed to have
occurred over the 2003-2006 period (the group for whom
the three-year EPE would have expired); 5,700 would
still be off the rolls; and $35 million in Medicare
savings would result.
Although these Medicare savings would result if the
Ticket to Work and Self-Sufficiency Act were enacted in
isolation, elsewhere S. 331 proposes to give continued
Medicare coverage to all beneficiaries who complete an
EPE. Therefore, these Medicare savings would be
rendered moot by the cost (shown in Title I) of that
proposal.
Small costs--estimated by CBO to be between $1 million
and $4 million a year--would result from the induced
filers who remain on DI long enough (two years) to
qualify for Medicare.
On balance, over the 1999-2003 period, CBO estimates a
small net cost in the DI program from the proposed tickets,
mainly because there would be few extra rehabilitations but
there would be some startup costs and small payments to induced
filers. Later, CBO foresees small net savings, chiefly because
the DI benefit savings from extra suspensions slightly outweigh
the costs of paying for VR services rendered by an expanded
pool of providers.
Effects of the Tickets Program in SSI. S. 331 would also
bring SSI participants into the new tickets to work program.
CBO estimated the effects on the SSI program in a manner
similar to its estimates for DI. There are a few notable
differences.
The number of SSI recipients affected by the bill is
generally estimated to be only half as many as in DI. Under
current law, SSA pays for about 9,000 rehabilitations a year--
6,000 in DI and 6,000 in SSI, of which 3,000 are concurrent.
Under the bill, services rendered by providers to concurrent
beneficiaries would essentially be compensated under the DI
rules. Thus, to avoid double-counting concurrent beneficiaries,
CBO generally assumed only half as many cases in its SSI
estimates as in the analogous DI estimates.
Average benefits for disabled SSI beneficiaries are also
only about half as large as in the DI program--in 2003, for
example, about $425 in SSI versus $825 in DI. Therefore, all
payments under the proposed system that are pegged to the
average benefit, such as the incentive payments to providers,
would be smaller in SSI. In fact, that provision has aroused
concern that providers would be less willing to provide
services to the SSI population. CBO implicitly assumes that
providers would serve this group, perhaps emphasizing cheaper
services with repeated interventions if necessary.
Because SSI is limited to beneficiaries with low income and
few resources, CBO assumed that there would be few induced
filers. CBO also assumed that most SSI beneficiaries affected
by the bill would retain Medicaid coverage through section
1619(b).
The upshot of S. 331 in the SSI program is a pattern that
resembles that for DI: small early costs, giving way to small
savings after 2003.
Ban on Work CDRs for Certain DI Beneficiaries With
Earnings. The bill would bar so-called work CDRs if the
beneficiary has been on the rolls for more than 24 months. Work
CDRs are triggered by a report of earnings. Beneficiaries would
still be subject to regularly scheduled periodic CDRs.
SSA conducts approximately 80,000 work CDRs a year. CBO
estimates that about 1,500 people whose benefits would
otherwise be terminated would benefit from this provision.
Assuming that they are, on average, halfway between periodic
CDRs scheduled at three-year intervals, they would get an extra
18 months of benefits. When fully effective, the provision is
expected to lead to annual DI costs of about $25 million and
Medicare costs of about $ 10 million.
Expedited Reinstatement of DI Benefits Within 60 Months of
Termination. The bill would provide for expedited reinstatement
of benefits for former DI recipients whose benefits were
terminated because of earnings in the last 60 months. Under
current law, those beneficiaries have the usual five-month
waiting period waived if they seek benefits; but their
application is judged no differently from one filed by someone
who has never been on the rolls. S. 331 would alter that by
stipulating that benefits must be awarded unless SSA can
demonstrate that the applicant's medical condition has
improved. S. 331 would also provide for automatic payment of up
to five months of provisional benefits while the request for
reinstatement is under consideration. Generally, those
provisional payments would not be subject to recoupment even if
the request is ultimately denied. CBO estimates that these
liberalized procedures would tip the balance in up to a hundred
cases each year, ultimately costing about $6 million in DI and
$3 million in Medicare by 2009.
CBO does not estimate that either of these two provisions
would lead to additional suspensions from the DI rolls as a
result of earnings, because there are no firm empirical data on
which to base such an assumption.
Demonstration Projects and Studies (Title III)
Permanent Extension of DI Demonstration Project Authority.
SSA has had the authority to conduct certain research and
demonstration 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
permanently. This extension would be the fifth since the waiver
authority was enacted in 1980. This general waiver authority
should not be confused with the so-called $1-for-$2
demonstrations in the next section; those demonstrations are
costlier and longer-lasting than the modest projects that SSA
would likely conduct on its own initiative.
When the waiver authority has been in effect, SSA has
generally spent between $2 million and $4 million annually on
the affected projects. CBO judges that the proposed extension
would lead to extra outlays of $3 million in 2000 and $5
million a year thereafter.
$1-for-$2 Demonstration Projects. Under current law, after
completing the TWP and the three-month grace period during
which earnings are disregarded, a disabled worker gives up his
or her entire benefit in any month that earnings exceed SGA.
Both anecdotal and statistical evidence suggest that many
beneficiaries balk at that, instead quitting work or holding
their earnings just below the threshold. Some advocates favor,
instead, cutting benefits by $1 for every $2 of earnings over
SGA. More modestly, some favor a treatment of earnings more
like the SSI program's--a cut of $1 in benefits for every $2 of
earnings over $85 a month.
Such proposals would probably encourage more people who are
already on the DI rolls to work. Although fewer beneficiaries
would be suspended (i.e., have their benefit reduced to zero),
many might have their benefit substantially reduced. A major
concern about such proposals, though, is that they would
encourage an unknown number of people to file for benefits.
Survey data suggest that there are millions of severely
impaired people who are nevertheless working and not collecting
DI. Filing for benefits, and working part-time, might actually
improve their standards of living. That incentive would be much
stronger if the DI program liberalized its treatment of
earnings. The SSA Office of the Actuary in 1994 estimated that
applying a $1-for-$2 policy for earnings above $500 would cost
$5 billion in extra DI benefits over a five-year period and
that setting the threshold at $85 would cost $2 billion.
S. 331 would require SSA to conduct demonstrations to test
the effects of a $1 reduction in benefits for each $2 of
earnings. It would require that SSA conduct the demonstrations
on a wide enough scale, and for a long enough period, to permit
valid analysis of the results. CBO assumed that, to meet those
criteria, the demonstrations would have to include perhaps half
a dozen small States, that the intake phase of the project
would have to last three or four years to permit observation of
induced filers, and that the incentives themselves would have
to be promised to the beneficiaries for an indefinite period.
Because the demonstrations would pose formidable issues of
design and administration, CBO assumes they would not get under
way until 2002. CBO also assumes that the demonstration would
be conducted in areas with and without the tickets to work and
self-sufficiency, to enable the effect of the incentives to be
isolated from the effects of the new VR program. Even a
relatively small-scale demonstration might thereby apply to
approximately 2 percent to 3 percent of the nation. Multiplying
that percentage times the DI benefit costs suggested by the
Actuaries' 1994 memo suggests that the demonstration would,
after intake is complete, cost almost $20 million in extra DI
benefits a year. It would also lead to slightly higher Medicare
costs, since the induced filers would qualify for Medicare
after two years on the DI rolls. Finally, CBO assumes that
running the demonstrations and collecting and analyzing data
would be handled by an expert contractor, at a cost of several
million dollars a year. In sum, the $1-for-$2 demonstration
projects proposed by the bill are estimated to cost $190
million over the 2002-2009 period.
Technical Amendments (Title IV)
Title IV contains technical corrections and clarifications
to the Social Security Act. Two sections do have budgetary
effects.
Provisions Affecting Prisoners. S. 331 would tighten
restrictions on the payment of Social Security benefits to
prisoners. Current law sets strict limits on the payment of SSI
benefits to incarcerated people and somewhat milder limits on
payments of OASDI. SSI recipients who are in prison for a full
month--regardless of whether they are convicted--have their
benefits suspended while they are incarcerated. OASDI
recipients who have been convicted of an offense carrying a
maximum sentence of one year or more have their benefits
suspended. Those who are convicted of lesser crimes, and those
who are in jail awaiting trial, may still collect OASDI
benefits. 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 Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 changed that arrangement by
directing SSA to pay 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 30
to 90 days after confinement. The law also exempts matching
agreements between SSA and correctional institutions from
certain provisions of the Privacy Act.
This bill would establish analogous arrangements for the
OASDI program. It would also drop the requirement that OASDI
benefits be suspended only if the maximum sentence for the
offense is one year or more. (A conviction would still be
required; inmates who are in jail while they await trial could
continue to collect benefits.) CBO estimated the effects of
this provision, like its predecessor in the welfare reform law,
by analyzing data from several sources that suggest about 4
percent to 5 percent of prisoners were receiving Social
Security, SSI benefits, or both before incarceration. Reports
from SSA's Inspector General showed that some of those
prisoners were overlooked under matching arrangements either
because their institution had not signed an agreement, had not
renewed it promptly, or did not submit data on schedule.
CBO estimates that, over the 2000-2009 period, the
provisions would lead to payments of $85 million to
correctional institutions out of the OASDI trust funds and
benefit savings of $205 million, for a net saving of $120
million. CBO also expects that the broader arrangement, by
doubling the pool of potential payments, would encourage more
jailers to submit information accurately and promptly and would
therefore lead to spillover savings in the SSI program
amounting to about $90 million over the 10-year period.
Open Season for Clergy to Enroll in Social Security.
Section 1402(e) of the Internal Revenue Code allows certain
clergy to exempt the self-employment income from their ministry
from Social Security and Medicare taxes. Under current law,
such an exemption is irrevocable.
Section 403 of S. 331 would allow clergy who have received
an exemption a two-year opportunity to revoke that exemption
beginning in calendar year 2000. Similar opportunities were
offered in 1978 and 1987. Based on those experiences, CBO
estimates that 3,500 taxpayers would choose to revoke their
exemptions, and that the average new enrollee would have about
$20,000 of self-employment income. (There would be a slight
decrease in income tax revenue, since a portion of payroll
taxes is deductible for income tax purposes.) From 2000 through
2009, off-budget revenues would increase by $87 million, and
on-budget revenues would increase by $10 million.
Those taxpayers who revoke their exemption will eventually
receive higher Social Security benefits, but that effect will
mostly occur in years beyond the 10-year estimation period. CBO
estimates that outlays will increase by $4 million in the 2000-
2009 period.
Authorization for State to Permit Annual Wage Reports. S.
331 would amend the Social Security Act to allow States to
permit employers of domestic workers to report on such
employment annually rather than quarterly. State-maintained
employment histories are used to verify eligibility for certain
benefits, such as unemployment insurance, food stamps, and SSI.
This change would not affect eligibility requirements. It could
present an administrative burden to States that choose to allow
annual reporting, because they would have to research cases
manually if they suspect domestic employment. CBO expects any
budgetary effects to be insignificant.
Revenues (Title V)
S. 331 would amend the tax code to modify the foreign tax
credit carryback and carryforward periods. The Joint Committee
on Taxation (JCT) estimates that this provision would increase
governmental receipts by $1.2 billion over the 2000-2004
period. The bill also would limit the nonaccrual experience
method of accounting to amounts to be received for the
performance of qualified professional services. JCT estimates
that this provision would increase governmental receipts by
$0.2 billion over the 2000-2004 period.
S. 331 would extend through fiscal year 2006 the authority
of the Internal Revenue Service (IRS) to charge taxpayers fees
for certain rulings by the office of the chief counsel and by
the office for employee plans and exempt organizations. CBO
estimates that the extension of the IRS's authority to charge
fees for such services, which is set to expire at the end of
fiscal year 2003, would increase governmental receipts by $159
million over fiscal years 2004 through 2006, net of income and
payroll tax offsets. CBO based its estimate on recent
collections data and on information from the IRS. The IRS would
have the authority to retain and spend a small portion of these
fees without further appropriation. CBO estimates that the
extension of the fees would increase direct spending by $9
million over fiscal years 2004 through 2006.
SPENDING SUBJECT TO APPROPRIATION
S. 331 would also create several new programs or activities
to be funded out of SSA's annual appropriation (see Table 4).
Section 201 of S. 331 would create a Work Incentives
Advisory Panel to advise the Secretaries of Health and Human
Services (HHS), Labor, and Education, and the Commissioner of
Social Security on work incentives for the disabled, and to
advise SSA on implementation and evaluation of the Ticket to
Work program. The panel would consist of 12 members appointed
by the Commissioner
in consultation with the Congress. At least 5 of the members
would be current or former SSI or DI recipients. S. 331 would
permit the panel to hire a director and other staff and pay
other necessary expenses. CBO estimates that the panel would
cost between $1 million and $2 million a year.
Section 221 would establish a community-based program to
disseminate information about work incentives and related
issues. Grants totaling no more than $23 million a year would
be awarded competitively to community-based groups. Because
this would be a brand-new program, CBO assumes that spending
would be low at first, not reaching $23 million until the third
year.
Section 222 would require the Commissioner of Social
Security to make grants to the protection and advocacy (P&A)
system established under part C of title I of the Developmental
Disabilities Act to assist disabled people to obtain vocational
rehabilitation or employment. That P&A system is currently
funded by the Children and Family Services Program in the
Department of HHS. The bill would authorize $7 million in 2000
and such sums as shall be necessary thereafter; CBO assumed
that funding would remain at about $7 million. Actual outlays
would be $3 million in 2000, and $6 million to $7 million a
year thereafter.
Although they do not explicitly call for future
appropriations, several other provisions of S. 331 would affect
SSA's workload and thus the pressures on its annual
appropriation. The Ticket to Work program (section 201) would
require significant planning and oversight by SSA staff.
Section 221 would direct SSA to establish a special corps of
work incentive specialists to deal with questions from
applicants, beneficiaries, and the community-based
organizations funded under the same section. Enforcement of the
tougher restrictions on prisoners in section 402 would require
SSA staff time, because suspension of benefits occurs only
after careful verification. Partly offsetting these extra
costs, SSA would no longer be required to do work CDRs under
section 211. CBO estimates that these effects on SSA's workload
would, on balance, cost the agency between $10 million and $30
million a year in the 2000-2004 period.
PAY-AS-YOU-GO CONSIDERATIONS
The Balanced Budget and Emergency Deficit Control Act sets
up pay-as-you-go procedures for legislation affecting direct
spending or receipts. The net changes in outlays and
governmental receipts that are subject to pay-as-you-go
procedures are shown in the following table. For the purposes
of enforcing pay-as-you-go procedures, only the effects in the
current year, the budget year, and the succeeding four years
are counted.
TABLE 5. SUMMARY OF PAY-AS-YOU-GO EFFECTS OF S. 331
--------------------------------------------------------------------------------------------------------------------------------------------------------
By Fiscal Year, in Millions of Dollars
---------------------------------------------------------------------------------------------------------------------------------------------------------
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in outlays............................................ 43 104 151 175 209 181 202 222 277 327
Changes in receipts........................................... 73 53 143 641 594 562 535 448 314 na
--------------------------------------------------------------------------------------------------------------------------------------------------------
na = not available.
ESTIMATED IMPACT ON THE PRIVATE SECTOR
JCT has determined that S. 331 would impose two new
private-sector mandates by modifying the foreign tax credit
carryback and carryover periods and by limiting the use of the
nonaccrual experience method of accounting. The direct costs of
the new mandates would exceed the statutory threshold ($100
million in 1996, adjusted annually for inflation) established
in UMRA in each of fiscal years 2002 through 2004 (see Table
6).
TABLE 6. ESTIMATED COST OF PRIVATE-SECTOR MANDATES
----------------------------------------------------------------------------------------------------------------
By Fiscal Year, in Millions of Dollars
-----------------------------------------------------------------------------------------------------------------
2000 2001 2002 2003 2004
----------------------------------------------------------------------------------------------------------------
Cost to the Private Sector..................... 72 52 142 640 543
----------------------------------------------------------------------------------------------------------------
Source: Joint Committee on Taxation.
ESTIMATED IMPACT ON STATE, LOCAL, AND TRIBAL GOVERNMENTS
Section 4 of the Unfunded Mandates Reform Act excludes from
the application of that act any legislative provisions that
relate to the old-age, survivors, and disability insurance
programs under title II of the Social Security Act, including
tax provisions in the Internal Revenue Code. CBO has determined
that subtitles A and B in title II and titles III and IV of
this bill fall within that exclusion.
The remainder of the bill contains no intergovernmental
mandates as defined in UMRA. However, it includes optional
programs for States that would result in greater State spending
if they chose to participate as well as additional grants to
States for specific programs.
Title I contains a number of options for States to expand
their Medicaid program to cover workers with disabilities who
want to buy into Medicaid and to continue Medicaid coverage for
individuals who lose their eligibility for DI or SSI following
a continuing disability review. CBO estimates that State costs
attributable to these optional expansions during the first five
years would total about $70 million for the first option and
about $10 million for the second. States that implement the
first of these Medicaid options would be eligible for grants to
develop and operate programs to support working individuals
with disabilities. CBO estimates that States would receive a
total of about $40 million during the first five years the
program is in effect. States would also have the option of
charging participants premiums or other fees to offset a
portion of the costs.
Title I would also allow States to establish demonstration
projects that would provide Medicaid to working individuals
with physical or mental impairments who, without Medicaid,
could become blind or disabled. CBO estimates that State costs
attributable to this optional coverage would total $215 million
over the first five years of implementation.
IV. VOTE OF THE COMMITTEE
In compliance with section 133 of the Legislative
Reorganization Act of 1946, the Committee states that S. 331,
as amended by the Committee, was ordered reported favorably by
a recorded vote of 11 to 1, with an additional 5 proxy votes in
favor of the bill and with 1 proxy voted no.
V. REGULATORY IMPACT AND OTHER MATTERS
A. Regulatory Impact
In compliance with paragraph 11(b) of Rule XXVI of the
Standing Rules of the Senate, the Committee states that the
legislation will not significantly regulate any individuals or
businesses, will not impact on the personal privacy of
individuals, and will result in no significant additional
paperwork.
Title I. The regulatory impact of this title will be
limited largely to the need for the Health Care Financing
Administration develop regulations for the implementation of
the new Medicaid options for the States. States would be free
to establish their own parameters around the administration of
these new Medicaid options, as specified in the legislation.
Title II-IV. The regulatory impact of Title II will limited
largely to the need for the Social Security Administration and
the U.S. Department of Education to develop regulations for the
implementation of the new employment assistance program.
Title V. Title V of the bill provides three revenue offsets
to cover the budget costs of Titles I-IV (relating to
availability of certain health care services and work-related
incentives):
(1) 1-year carryback and 7-year carryforward of
foreign tax credits (bill sec. 501);
(2) limit use of non-accrual experience method of
accounting to amounts to be received for the
performance of qualified professional services (bill
sec. 502); and
(3) extension of Internal Revenue Service (IRS) user
fees from October 1, 2003 through September 30, 2006
(bill sec. 503).
These revenue provisions should not have any significant
adverse regulatory impact on taxpayers. These provisions should
not have any adverse impact on personal privacy.
B. Unfunded Mandates Statement
This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995 (P.L. 104-4).
The Committee has reviewed the provisions of the bill as
reported. In accordance with the requirements of Public Law
104-4, the Committee has determined that the following
provisions of the bill contain Federal private sector mandates:
Modification to foreign tax credit carryback and
carryover periods (bill sec. 501); and
Limitation on use of non-accrual experience method
of accounting (bill sec. 502).
These provisions are estimated to increase tax revenues by
$3,195 million over fiscal years 1999-2008, which are no
greater than the aggregate estimated amounts that the private
sector will be required to pay in order to comply with the
Federal private sector mandates under the bill.
These provisions will not impose a Federal
intergovernmental mandate on State, local or tribal
governments.
C. Complexity Analysis
Section 4022(b) of the Internal Revenue Service Reform and
Restructuring Act of 1998 (the ``IRS Reform Act'') requires the
Joint Committee on Taxation (in consultation with the Internal
Revenue Service and the Department of the Treasury) to provide
a tax complexity analysis. The complexity analysis is required
for all legislation reported by the Senate Committee on
Finance, the House Committee on Ways and Means, or any
committee of conference if the legislation includes a provision
that directly or indirectly amends the Internal Revenue Code
(the ``Code'') and has widespread applicability to individuals
or small businesses.
Under the authority of the Joint Committee on Taxation, its
staff has determined that a complexity analysis is not required
under section 4022(b) of the IRS Reform Act because the bill
contains no provisions that amend the Code and that have
widespread applicability to individuals or small businesses.
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
In the opinion of the Committee, it is necessary, in order
to expedite the business of the Senate, to dispense with the
requirements of paragraph 12 of rule XXVI of the Standing Rules
of the Senate (relating to the showing of changes in existing
law made by the bill as reported by the Committee).