S. 1 (REPORT NO 98-23) A BILL IN THE SENATE OF THE UNITED STATES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85-00003R000200130003-9
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 244
• Document Creation Date: December 21, 2016
• Document Release Date: October 29, 2008
• Sequence Number: 3
• Publication Date: January 26, 1983
• Content Type: OPEN SOURCE

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Calendar No. 41
98TH CONGRESS
1ST SESSION
S.1
[Report No. 98-23]
To implement the consensus recommendations of the National Commission on
Social Security Reform.
IN THE SENATE OF THE UNITED STATES
JANUARY 26 (legislative day, JANUARY 25), 1983
Mr. DOLE (for himself, Mr. MOYNIHAN, Mr. HEINZ, Mr. BAKER, Mr. STEVENS,
Mr. LAXALT, Mr. DANFORTH, Mr. KENNEDY, Mr. BENTSEN, Mr. MUR-
KOWSKI, Mr. STAFFORD, and Mr. WALLOP) introduced the following bill;
which was read twice and referred to the Committee on Finance
MARCH 11 (legislative day, MARCH 7), 1983
Reported by Mr. DOLE with an amendment to the text and an amendment to the
title
[Strike out all after the enacting clause and insert the part printed in italic]
A BILL
To implement the consensus recommendations of the National
Commission on Social Security Reform.
1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
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1 SHORT TEPEE
2 N 4-. Ae ; Wkh the ?0116-A411g tftble Of e0-
-3 tee ffwy be sited the " of
4 1988'
TITLE 1C144NGE-S IN COVERAGE
See: 404- Coverage of newly hired Federal employees.
See: 492 Coverage of employees of nonprofit organizations.
See- 40&.- Duration of agreement far coverage of State and leeal employees.
TITLE 14 CRANGES IN BENEFITS
See. 404-. Shift of eastofliving ftE~ttstmefits to sal r }
See: 292-: of windfall benefits for persons with pensions from neneov
ered
See 298: Benefits far divorced or disabled widow or widower who remarries:
See: 294. Change in indexing for deferred survivor benefits.
See: 29& Benefits ?e' divorced spattse regardless of whether- ?ormer spouse bas Fe-
tired:
See: 206, Increase i t benefit amount for disabled widows and widowers.
See: 297: Adjustment to easto?living increase when teost fund 'atie fads below -29
pefeent.
See: 298: Increase i t old age insurance benefit amounts en account of delayed re-
ti
TITLE 144 Fc-EVEN; 12141214 OVr ivvTmIIONS
See 894, Amendment of 1854 bode.
See 892: Taxation of bA percent of seeial security benefits of higher income per-
sons:
See 89& Aeeeleration of increase in FICA tastes; 1984 employee -FICA tart eredit.
Seer 904- Self employment taxes.
See: 89& Coverage of payments under salary reduction p
T FpFANCp;G Vp ; SIGNS
See: 441, Alleeation to Disability Insurance T-rttst Fund:
See: 498- Interfxnd borrowing extension.
See 40 Crediting amounts of unnegetiated checks to trust funds.
See, 494: Trans?er to trust ?ttads far assts of benefits attributable to military serv-
iee before 41:
See: 496, Payment to trust fonds of amounts equivalent to tames oo service in the
uni?ormed services performed after 1466.
See: 40 T-rast fund =n a tment procedure.
See: 49- Addition of publie members to trust food board of trustees.
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TITLE I-CHAN IN COVERA"
1
2 ee Af E OF Nj3Wj3jj ff!RED PEDERA13
3 gBe, 444- (a)h) Section 210(a) of the Seeial Se ty
4 Aet ie ameft& by striking w a paragraphs (b and (6~ aod
5 inserting i t Bert thereof the ?ellowing:
6 iee performed in the employ of the
7 United motes of any instnamenta4y of the meted
8 States, if such serviee-
9 4A4 wett! dnnetheiieltt& inthe terntc-
10 per '' If purposes of this subseetion by
11 reason of the previsions of paragraph (6} or () of
12 this subseetien as in effect on janttafy 4-, 4988,
13 "(B) is performed by no individttal who has
14 been eentitittettsly in the employ of the United
15 States of an thereof since Ueeem
16 her 988; and
17 is net service pe as the Presi
18 dent of Viee President of the United States or as
19 a Member, legate, of Resident CewAftissie of
20 of to the beers;
21 i46) Service performed in the employ of the
22 United States of any ifistr-ttmentality of the United
23 States if such service is per-
formed-24 in a penal institution of the United
25 States by no inmate thereof;
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1 by any in ividttal as an epee in-
2 eluded tinder seetion 6861(2) of t i& 6; United
3 States bode (r-elatiii to certain intems, sttident
4 nurses and other student employees of hospitals
5 of the Federal Government), ether than as $
6 meal of dental interns or ft medical of dental
7 resident is training; or
8 -) by anyindividttalasanemployee
9 ing on a temporary basis it ease Of fife-, Ster-M,
10 ea~quake, flood, or ether similar
11 (24 Section of such A is amended by striking
12 ottt "pr-evisions, of " and all that follows attd inserting in
13 Nett thereof " of subsection .".
14 (k } Seetion ) of the Internal Revenue bode of
15 1954 is amended by stfiking ettt paragraphs (6) and (6) and
16 inserting in lieu thereof the fellewifig-
17 145) sefviee performed its the fey of the
18 United States or any iftstfumefital4y of the United
19 States, if such serviee
20(A) would net be included in the terra n-
21 pleyiffiefit' fef purposes of this subsection by
22 reason of the provisions of paragraph (6) or (6) of
23 this subsection ae in effect on January 4-, 1988,
24 and
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1 is per?ored by att individtta4 who h"
2 been e0fitifffieusly in the employ of the lamed
3 states of an ' lity thereof since Deeem
4 bff 8 X983; and
5 is net serviee pied ae the Presi
6 defft of Viee Ffesidefft of the United states of no
7 a Me er, Delegate, Of Resident Gew.%issie of
8 e to the Congress;
9 se ee Pef?ered in the employ of the
10 United des of fffly of the Uflite
11 States if such service is performed
12 in e, pefW institution of the Unite
13 states by an imnate thereof
14 4134 by any individueA an an employee ill-
15 eluded under section 5351(2) of title 6 United
16 States Cede (fig to certain interns, 84tdont
17 uses, and other student employees of hospitals
18 of the Feder-El , ether than an a
19 medical of dental inter t of a medical of dental
20 resident i t training; Of
21 " by any ifidivi4ua4 an an employee sorv
22 ing on a besie in ease of ? r-e stem,
23 , ?loed, of other similar ?"
24 `) Seetion 8121(u)(1) of such Code in a ed to read
25 as follows-
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1
444 I ~i4ii F
f
h
i
or p
eves o
t
e taxes
n-
2
posed by seetions 8101(b) ae4 3 7 sttbseetien (4)
3
shall be applied v4theut regard to paragraph (6) there
oms1.
5
.
(e) e amefidfneft made by this section shad be e??ee-
6 tie with respect to femufler-ati
paid after Deeefflbef 34;
7
4983.
8
eeVBR OF EMPEE)YERS OF NONPROPFF
9
10
8*8 402. (a) Section 210(a)(8) of the Seeial Security
11
Aet is amended by Striking wA
(B) thereof and
12
,
str-ikin
b
-t "(A)"
4
g en
y
ft
ff
13
044) Section 8121(b)(8) of the Internal Revenue Code
14 of 4954 in amended by striking wA sttbpftr-ftgfaph (R) thereof
15 and by striking etrt "(A)" after "(8)"
16 (2} gttbseetien (k) of seetion 3421 of fi h Bede in re-
17 pealed.
18 (e) The amendmen made by this section shall be ef?ee
19 tine with respect to mmttfter-ati paid after per 34-
20 4958.
21 (d) any provision of section 3121(k) of
22 the cereal Revenue bode of 1954 (of any ether provision of
23 lam) the period for whieh a Bert' to in in e&-et under such
24 section ffiay net be ed on or after the date of t 4e
25 eel of Q is
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1 eNe~ FOR e9NzHR*GE OF HOB
2 LeeAh EMPEE)IFEBO
3 4 } Subseefi ee W of section 248 of the Seei,1
4 Security 4et is afaende to read as follows-
5 of Agreement
6 No agreement under- eetion fftay be teffftinat
7 e4-, in ite entirety of reepeet to aI coverage grew on
8 of after the date of the enactment of the Seei Security
9 AfflendfHe of 1983.".
10 (b) The amendffiefit made by subseetiee (a3 shall any
11 to soy agT-eefflefit in effect der section 24-8 of the Social
12 Security Aet on the date of the eft of tA-et,- with-
13 ertt regard to weer a notice of termination was in effect on
14 seep date:
15 TITLE CHANGES IN
16 siiiFqP 9p ZPA e*]bHND*R
17 vn e
18 gi6: 204- (ate} Section 2 5rv2)(n v;;' of the Social Se-
19 errriyAetisaffiefided by stribingertt"itme"ate ifiser-tifig
20 in lien thereof " ei".
21 (2) Section 2 5(i)(2 4 4iii) of such feet ie amended by
22 striking er?t "May" and inserting in lien thereof ""te
23
ber-.
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1 ()Seetian216(i)(2)?) of eftekA-4 jsamended by -
2 itgeut "eaehpla-eeit appearsa4inserting in
3 thereof i t each instanee "November". heu
4 (4) Section 20808)(A) of ffueh A4 is amended by fftfik-
5 ing eut June" and inserting in lieu thereof "Deeember.2'..
6 (f} Seetion 280(a) of ouch Aet is amende by striking
7 eut an4 inserting i t lieu thereof "Decemb
8 (6) Seetion 216(i)(2) of suer Aret as i t effect in Deeem
9 her 1978, an4 as applie i t eer-titin eases under the previsions
10 of ouch Aet as in effeet after Deeeffiber- 1978, is afnefide by
11 striking nut in (A)(ii) eftd inserting in
12 lieu thereof "December", an4 by strikiftg eut "May" each
13 plane it appears in (B) an4 inserting in lieu
14 thereof in each instanee eve- e-
15 4) Section 202(m) of suer Aet (as it applies in certain
16 eases by reason of seetien -9 of Publie Law 97 128) is
17 amende by striking nut "May" an4 inserting in lieu fiheree
18 "November".
19 (8) the amendmen matte by this aubseetien 964l apply
20 with respeet to eest of living inereases determined under see-
21 tier 2164) of the Seeial Security het ?er years after 1982.
22 (b)(1) Seetion 2' 5r;'(?(A ` of the Social Security Aet ie
23 anefide by sag nut Marsh 64" and inserting in lieu
24 thereof "September- 8-, and by striking eut "1974" a
25 inserting in lieu thereof "108
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1 ~ Seetien 245r;u1vn)ofeuehAetssine??eetin De-
2 eember 4978, RfA ss applied is certain eases tffidef- the
3 signs of such Aet se is effect after December 1978, is amesd
4 ed by striking Dirt "M"e &I-U and inserting in fieu thereof
5 "Septeffib er 3
6 (34 The amendmen e by this subsection shah *pply
7 with respect to i creases domed under see-
8 ties 215(i) of the Social Security Aet for years after 1983.
9 (e) Seetion 216(i)(4) of such Aet is amended by inserting
10 and ae amended by section 241 (a)(6) and ) of the
11 Social Security Amendffleii of 1988," after "as in effect in
12 December 1978".
13 (d)(44 Section 1612(b)(2) of such Aet is amended by
14 (A)
15 (B) and (G) inserting before subparagraph (9) the follow
16 isg new
17 the first $600 per year (et` Pfopef-tieflately
18 smaller amounts ?er shorter periods) of benefits re-
19 eeivod under title II of this Act;".
20 (2) Section 4612( )(2-)(B) of such Aet (as redesignated
21 by paragraph (4-)) is amended by inserting before the seo3i-
22 colon at the end thereof the fir -, redaeed (hot sot
23 below Sere) by any amount emelude under s"pamrao
24 (A-YL:
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1 (3) ire etmendme inane by grin s4seetion A+&4 he
2 effective ivi~h respect tebeflefits payable eX of
3 the Social Seettrity Aet fef ffienths after dune 1083.
4
mmmiN*gPi
OF wwDFAiE
5
HHeIBIVINe
eNsFROM
6
SEc} 40-2
)
(-a) Section te
f th
S
i
l S
r
A
a
,
o
e
oc
a
ee
y
et
7 is amended by addin g at the eod thereof the ?ollewing new
8
9 "(7)(A) Ir the ease of aft individual whose primary in-
10 suraeee amount wett! be eemputed ender- park (3) of
11 this subseetion, and who beep en ed after 1983 to a
12 monthly periodic pa-y+nent(-of a13aymentdetefmifted undef
13 sttbpafagfPph (P)) based in whole of in paft) upon his earn
14 ings ?ef service which did net const'it'ute ` ' as
de-
15 fined in seeder 249 for purposes of this title (herea?ter in grin
16 paragraph and in subseetien (d45) referred to as `~ e
17 sef-viee) the primary ifisttr-anee amount of #
18 wing his entitlement. to old age of disabi insurance berne-
19 fits shad be ee rted a under subpar-agntph GB)
20 with respect to the initial menth in which the in4ividttal be-
21 comes eligible far s benefits, and s be pefiedieally re-
22 computed thereafter at such tires as the Secretary deter-
23 mines there has been a significant edge in the amount of
24 such periodic fit.
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1 14 paragraph ( of this s4seetiett wou4d apply to
2 that individttal (except ?er () of thin Para-
3 gT-aph), there s ?if4 eemptite aa amount equal to the
4 inks pay insurance amount under this subsection
5 (ether than thin , except that ?er purposes of such
6 eemptitati the percentage of the iff"dual's, average in-
7 dexed monthly eafeings established by sttbpafagr- (A)(}) of
8 paragraph (44 ehall be 84 percent. There shall then be eor
9 puted (without regard to thin paw) a seeend amount,
s h~
10 which shall he equal to the ' p
11 amount under this subsection (other than this ,
12 except that such seeend ametmt shah be reduced by an
13 amount equal to one hail of the portion of the monthly peni-
14 wile payment to non covered service to which
15 the individual in entitled (of deem to he entitled) ?er the
16 month fof which such old age of disability insurance benefits
individttal's ount shad
17 are payable. The insw anee am
18 be the larger of the two amounts computed under this euh-
19 par-agfaph(be?erethe a-pplieatieffi. o?subseetion (i))andehall
20 be deemed to be computed under paragraph (44 of this sub-
21 section fof the purpose of applying other provisions of this
22 title:
23 No primary r anee amount ffiay be reduced by
24 reason of this paragraph below the amount of the p na
25 insurance amount as determined under paragraph (1)(C)(i).
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1 (i) Aily periodic pa ent that otherwise meets the
2 requirements of (A-)7 h4 which is paid on other
3 than a monthly basis, shall be allocated en a basis equivalent
4 to a monthly payment (as determined by the and
5 such equivalent monthly pay rt shall constitute a monthly
6 periodic patent ?er purposes of this paragraph.
7 1(ii) In the ease of an dal who has eleeted to
8 receive a periodic payment that has been redueed se as to
9 provide a survivors benefit to any ether Vial, the pa-
10 went is deemed to be ioereased (for the purpose of any eofn
11 putatien under this p g h) by such s
12 (iii) 14 an ifidivi"O'l to (A) applies
13 is eligible for a periodic payment begieeing with a month that
14 is subsequent to the month in whieh he beeemes eligible for
15 old age or disability instir-etnee benefits, the amount of that
16 payment for purposes of (B) shall be deemed to
17 be the amount to whieh he is; or is deemed, to beeeme enti-
18 tied (subjeet to clauses (i, (i and (iv) of this stibpar-aff &*
19 in such subsequent month.
20 4iv4 Fen purposes of this , the term 'pen
21 ediepaymefit' i es a payment payable ieah ox i? it
22 is a eemmutati of or a substitute ?ef-, periodie pfty+fients.".
23 (d) Section 216(d) of such Aet is amended by adding at
24 the end thereof the following
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1 In the ease of an individual whose Pfiffifffy ifisul.
2 anee amount is net computes Widef wag ph (-4 Of su isee
3 tion (a) by reason of paw (4)EB)( of that subseetior
4 and who beeemes entitled after 1983 to a monthly periodic
5 Payffiefit (or a payment determined under Subseetieft
6 (7 based (in whole or in part) upon his earnings in
7 neneovered sefviee, hie pr-ima insuranee amount ?er pitr-
8 poses of his e iti4emef}t to old age er dimbili~y insurance
9 benefits shall be the prifnafy insurance afflottfit computed or
10 r-eeempet under this subsection (withouut regard to this
11 paragraph aid before the appliestioffi. of subsection (i) re-
12 deeed by en amount equal to the smaller 4
13 i44 one half of the primary insurance ametmt
14 (eonputed without regard to this paragraph a-ad before
15 the application of subsection (i))-, Of
16 i4i4 onehalf of the wine of the monthly period
17 ie payment (.er payment determined under s bseetion
18 (o)4)(D)) attfibetabi-e to noneovered service to which
19 that individual is entitled (or deemed to be entitled) ?or
20 the initial month of hie eligibility ?er old age or disabil
21 ity ins nce benefits.
22 The amount of such periodic payTaent ?or purposes of clause
23 (ii) shall be periodically recomputed at such times es the See-
24 retary determines there has been a s igni ieant change is the
25 amount of such period a payment.
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1 No primary iesuranee amount nny he redureed by
2 reason of this paragraph belew the amount of the p~
3 a ee amount as deter-fained under sttbseetien
4 (a)(44( }(i.
5 (e) Section 24-54) of such A4 is affiende by adding at
6 the eed the following new
7 140)(A4 In the ease of ae dal who becomes enti-
8 tied to a periodic payment determined under stibseetion
9 (a4(444 of (O)74P in a month sttbsequent to the first
10 month in .tom he beeemes entitled to an old age of disftbil
11 ity a ee benefit, and whose primary insurance amount
12 has been eemputed without regard to ether s ueh subsection
13 of (3( such primary instifanee
14 amount shall be , in accordance vAth either ffueh
15 s seetion of subsection (4).54 as ffwy be e4ee
16 tine with the ?irot month of trio concurrent entitlement to
17 either such benefit aed such periodic payment.
18 `B} 14 an indiNidttal's primary insurance amount ho
19 been computed under subsection (a474 of (i)(4, and it he-
20 comes necessary to recompute that primary ranee
21 amount under this
22 " (i) ee as to increase the monthly benefit amount
23 payahle with respect to such primary insurance amettnt
24 (ethef than in the ease of the individual's deaths such
25 increase sly be deteffflified as though such prime
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1
ifistir-eflee amount }
initially been computed without
2
regard to s4seetion ((74 of (d4(4; of
3
4i4 by reason of the ifidividuaVs death, pri-
4
Hary insurance affiettnt shall be reed vAtheut
5
regard to (end as though it had never been eexptited
6
v
regard to) s4seetiee W(- of (d4(
7
individtiO whose primeryinur-
1ithe ease of a
o
8 -flee amount ie s*eet to the of sebseetioe
9 W(7-) of (4)(4, he affiettfit of eueh p~ insur-a-ftee affietifit
10 shall be r-eeomputed ae Hitt he required under such suboee
11 bees by reasee of e, get change in the amount of the
12 mlevant periodic payinent.".
13 ( Seetioes 2W(e3(239)(i ftftd (P(84(B)(i4 of seelr
14 Aet are each a-mende by striking set " eetion 2(4 of
15 (6}" std inserting in 4ett thereof "seetiee 2(?)(5 44-&(P(6)7
16 of 24-
17BENEFFPS FOR SURVIViNG DWOROED SPOUSES AND
18 eiSABLDWiDOWOAND WiDe sWHeHEMARRN,
19 ($4} Section 2490(e}(3_} of the Seeial 20 Ant is repealed. Seetifity
21 (2) Section -202(e)(4) of such Aet io amended to read ac
22 follows-
23 "(4) Fer purposes of paragraph (4} if--
marries
24 )a widow of asw-Avifigdivereedwife
25 alter aging age 649-, of
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1 4B) a disabled widew of disabled sur-viiin di-
2 vef wife yea in paw ma es
3 after attaining age 5
4 such marriage shall be deemed net to have eeeerred. ".
5 (.b ( Section (0(4) of such Aet ie repealed.
6 (2) Section 2W(#3(5) of such Aet is amended to read ne
7 mss:
8 } For purposes of pa graph (-1-7 if-
9 i4A4 e der marries after attaining age 68?; Of
10 4134 a disabled widower deseribed in paragraph
11 (-}(B}(} mares aftef attaining age W,
12 such marriage sba be deemed net to have eeearr ed.
13 (e)(4-} The a-mendmeft mace by subsection (e) shftR be
14 effective with respect to monthly benefits payable tinder title
15 14 of the Seeial Security Aet for months after December
16 1983.
17 (2) h the eeee of en individual who wee net entitled to e
18 monthly benefit under title 14 of such Aet ?er per
19 1983, ne benefit shall be paid under such tithe by reason of
20 such amendmeft Bless proper application fef such benefit iff
21 made.
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1 9p pHiMAay AMOUNT FOR
3 204. (a) Section (& of the Social Seeufi~y Aet
4 ie afneade by adding at the eed ther-ee the following new
5 paragraph,
6 (M 14 a person is entitled to benefits tinder- subsee
7 tieff (e) ew 4 of section OR the leis of the wages effid
8 sel?-empleyfaefit income of a deeeased individual whose pr-i-
9 ffmfy insurance amount would otherwise he determined under-
10 paragraph ( the pfiffiewy ire amount of such de-
ll eeased i dttal shall be deed; ?er- purposes of deter-
12 mifiing the amount of the benefit under such s4seetion; as if
13 such deeeased individual died it the year in whieh the peon
14 entitled to benefits under- such subseetie ?ir-st beeame eligible
15 ?e+ such benefits o if earlier, the year in whieh such de-
16 eeased individtial wettld have attained age 60 if he had eet
17 die4 (exeept that the actual year of death of such deeeaseed
.18 individual shall be used ?er- purposes of seetiee
19
20 (A}; if a person
21 44 ieentitledtobenefitstifider- stibseetion ~4'ei
22 (?) of section on the basis of the wages aad eel?-
23 employment ineeme of a deeeased i idual, and
24 " was entitled to benefits ender- this We off the
25 basis of the wages and self-employment income of such
S 1 RS--2
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1 deeeased individual in the month before the month in
2 whieh such meson became eligible ?ef the benefits 4e-
3 seed in clause (i)
4 the prime, r anee amount of such deeeased in4ividttal
5 shall be the primary insurance amount determined under- the
6 rules which would apply Phut ?e subpar-agF&O (A4) of the
7 pr-ifna ranee amount determined tinder subparagraph
8 (A , whiehever- is larger
9 "(G) Fer pur-poses of deteffflining the maximum family
10 benefit amount with respect to a deceased dal fef
11 when} a primary insurance amount is deter-mined under this
12 the prima insurance amount of with deeeased
13 dal shall be the primary insttr-aftee amount determined
14 under the miles which would apply Phut ?er this par-agraph) of
15 the prima rry insurance ametrrrt dew under this lea
16 graph, .. ef is lar-gef.".
17 (b) The amefidmen made by subsection (a) shall apply
18 to the benefits of individuals who become eligible fef benefits
19 under section 294 (e} and (4 of the Seeial Security Aet after
20 December 1983.
21
BENUPHIS FOR DWORefie SPOUSE HRG*HDfIR
OF
22
DER H SPOUSE HAS BETiRED
23
SEt} 20?
(
) S
ti
2
h
h
f
S
a
..
ec
on
(
) o
t
e
eeial Security Act
24 is amended by adding at the end thereof the ?ollowing
25 par-affaphs
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1 " F yeses of detemiftifig the entitlement of a
2 divorced wife to a benefit tinder- this subseetie and the
3 amount of a benefit, in the ease of a wife who has been
4 divorced ? om her- former husband ?er- a per-iod of net less
5 than -24 month s
6 -`(A) such former- husband shad be deemed to be
7 entitled to a*old -ageinsur-ameehenefit if he woul dbe
8 eked to such a benefit if he applied therefor-; and
9 i4g) the afneunt of such benefit ?er- such diver-eed
10 wife shah be determined v4thettt r-egard to reductions
11 whieh owe of would be made under seetion Ng on ae-
12 net nt of work performed by such former htxsba "..
13 04(4) he amendment made by subsection (a} shad be
14 effective with respect to menthly benefits payable under- title
15 14 of the denial Seett~ Aet f of months after D eeember-
16 4983.
17 (-2} In the ease of on individual who was net entitled to a
18 monthly benefit tinder title 11 of such Aet f er- December
19 4958, ne benefit shall be paid tinder such title by reason of
20 such amendment unless p application ?et such benefit is
21 matte
22 iNeHHAsB f# BBNEFI ? Ameum? FoR DisABbBD WIDews
23 AND WiDOWERS
24 SE~e-. W66 W(44 Section 4N (4; of the Seeial Seems
25 Aet is amended by striking em the semieeleft at the end of
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1 ~rfigraph } aiid all thfit follows andd iii iii lien
2 thereof ft period.
3 (-}See (q}6} of such Ae~ i.,4 amended to rcad as
4 follows:
5 464 pur-peses of this su ection, the `f
6 1er4od~ for ftii old tige, husba,fid's- w=-r 4)r wi4ew-
7 eels roan inec 4e* (44 is the period begiiifliiig
8 4A4 if+ the ease of f i old age ew r Aft+td-'s in sur
9 anee benefit, with the fiest dfi of the fif t i iesth for
10 li f}t" indi id, is entitled to such beiiefit,
11 `{B in the ease of a wife's insurfar}ee beoe?i ; with
12 the f iiet daw of the first menth fer whieh a eft
13 deserihed in paragraph i4 cffec ;- ~-r
14--(-) in the ease of ft widow's eeer'strr-
15 Erase ", efit; with the first day of the first month for
16 w-4" atieh iffdivi4tta4 is entitled to suer} benefit of the
17 feat day of flie month in which sash i widnf attains
18 age 64; whch is rater,
19 and ending with the last day of the month before the menth
20 in v*ieh stteri in4i 4. ftal attains retirement age.".
21 (9) , eetian (q)~74 of such Aet is amended ly striking
22 otA the matter 44 and insectiiig iii
23 lien therr of the f ollewxg:
24 -4-74 F-of pifrposes of this subsection, the `adjusted re-
25 dnetieti period' fee an eld-age; w husbafld-s, widew's, or
Si RS
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1 widower's insurance be te?it ie the reduction period Pfeser-ibed
2 i t pffagra (6~ ?o sttelt befiefit, exeltiffing'-.
3 (4 Paragraphs (44(B)(i (4)(E4(4, fffl4 (844~(ii) of see -
4 dart 4W(O of s*teit Ae aye each amende b str-iking e4
5 " EAR'-'- a insert g i t lien thereof i t each it ee "(6)".
6 (4 Section 24W((0( 44G4 of s Aet is amen by
7 striking etrt " (6~(A) (or if such pa graph does fiet
8 apply, t h e in pagmp (6 a *4 inserting
(6)-.
9 in nett thereof "paragraph
10 (6) Section 4w(q)41-93 of such A4 is amended
11 (.A4 by striking e "et an additional wed
12 4ttetiee peed" I
13 ($) in st 4 (G)( attd (4( }; by
14 suing WA -, pItts the number of ffienths in *,he ad-
15 justed a al r-eduetion period tied by 48/240
16 of 4 pereeet"; and
17 (G4 in subparagraph ~3( by sting ant "
18 the numb of fnenths in the additional reduction
19 multiplied by 48240 of 4 percent"
affiendffieft nee by tftis section shall be
20 (}E The
21 effective with respect to tttent benefits under title $ of the
22 Social geettr4y Ant fef months after Deeember- 1958.
23 (4~ le the ease of aekidiNidttetl who wan net entitle to a
24 monthly benefit under title II of such Aet fef December
25 1988, ne benefit shall he paid stwh title by reason of
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1 such amendmen unless proper- application ?ef fttwh benefit is
2 made.
3 me iNeHR*sB witEN sT
4 FUND H*TIe F LLO BELOW *9 T
5 207. (a) Section 44-544244444 of the Seeial Seeut-
6 fity A+t is amended, in he matter following elaurse(),by
7 stfiking out e increase shall be defived" axd inserting in
8 lien thereof Emeept asp- se provide in paragraph (-~}
9 the increase shall be dewed"..
10
(b) Section i) of such 44 is amended by e4ding at the
11
end thereof the felle
A
h
:
v
ng new paragrap
.
12
"` The amount of the increase
(24
13 to become effective fete menthly benefits payable fef Deeem
14 bef 4$88 of any Deeember- thereafter- shall, if the Sew
15 des a finding user this that the eeffibined trust
16 funds ratio (as de?ined in subpar-agmph (4))) as of the start of
17 business off January 4- of the calendar yeaf in whieh such
18 Deeember ?alle is less that 20 pereent, be deter finder
19 p$fftgr-ap (2)
by S"Stittftifit-
20 "(i) the percentage (fetinded to the nearest one
21 tenth of 41 pereent) by whieh the average of the total
22 wages fef the pfeeedin mar year (as deteffnine
23 for- p eyes of subseetion exceeds such
24 average fef the seeend preceding ealendaf year (aid if
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1 no increase in such wages teak wee, the percentage
2 shall be deem}red to be zeee), ?ef
3 " { the percentage otherwise app ieable endff
5 het only if the percentage deteffftined under clause (4 is less
6 than the percentage deterred under clause
7 9) In any ease in which a eest of living adjustment
8 weed net be made ender this subsection on account of the
9 relevant increase in the Consumer Price Index being less
10 than 8 percent, no such eest of living increase shad he made
11 by reason of this paragraph OF pufpeses of fffly subsequent
12 deteffainati of a nestowing increase based upw a peried
13 of more thae 49 nionths, the percentage of the eost of living
14 increase (i? any} to be applied under paragraph (2) shall be
15 the sum of the percentage increases ?er each f-elevant 4-2-
16 month period in such longer period which world have been
17 effective under this subsection (ineluding this paragraph} let
18 ?er the provision of paragraph (44 which limits such eases
19 only to eases in which the relevant increase in the Consumer
20 Price Index is equal to of greater than 8 percent.
21 The Secretary shall male the fin" g with respect
22 to the eembieed trust funds ratio (as of the start of business
23 on January 4 of each calendar year; on October 4 of each
24 calendar year, based upon the most recent data available as
25 of that time.
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1 14D) Fer poses of this per, the term
'eem
2 tined trust funds rat means the ratio of-
3 44 the eembitte balaneein the Feder-&! Old Age
4 a S ers ifistir-anee Trust Ft~ *i+4 the Federal
5 Pisability Insurance Trust Fund, reduced by the
6 amount of alean (fig interest
7 thereon) from the Federal Hospital ifisttr-aftee Trust
8 Fund, as of the start of business eft jantiewy 4 of any
9 calendar year, to
10 L(ii) the amount estimated by the ~ to he
11 the total amount to he paid from the Federal Old Age
12 and Insurance Trust Fund and the Federal
13 Disability Insurance Trust Fund during stteh eale :}lour
14 year fef all purposes auther-ime by section 201, but e-
15 eittdin g fffly transfer payments between such trust
16 funds and rig the ametrrrt of any transfer- to the
17 Railroad R rt Account by the amount of any
18 transfers into either such trust fa-Rd from the Railroad
19 Retirement Aeeettnt.
20 } 14 *i+y increase under paragraph (24 has been deter-
21 mined on the basis of the substitute ?ormula
22 (A)il of this parag r, a*&, ?er ftfly stieeees g calendar
23 year, the Secretary detefmines that the eembitte trust fttft&
24 ratio is greater t 82 percent, the Secretary shall pay adi-
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1 tienal benefits with respect to the 12 ffienth od beginning
2 with the following December in afnettfits n4 to exeeed
3 } in the aggregate, a fetal amount whieh, ae-
4 cording to a~ estimate, eqoals the amount by
5 whiek the balance in such trust funds OR the date of
6 such deter-minat exceeds the amount necessary to
7 effect a eembined trust kinds ratie of 84 percent fff
8 the following year; and
9 - " with respect to any dal, ?ei' benefits fef
10 each month in such 12 month period, an atnettnt equal
11 to one ~welfth, of the teW ametint by whieh a bettefits
12 paid to him daring all previous years were less than
13 the amounts which would have been paid to hiffi but
14 fff the provisions of this pafftgfftPh.
15 Such additional benefits shall be paid ae a percentage in-
16 crease in the tenthly benefits otherwise payable fff tenths
17 daring such 42menth period. M there are net s eient funds
18 available to pay additional benefits in the ?844 amount to all
19 ifidividuala (taking into aeeettnt the lien in elattse Ei)
20 amettnts paid tinder this shall be paid en a pre
21 rata basis to all ink who are entitled to any such
22 amettnt and are entitled to a benefit tinder this title fff the
23 tenths in whieh such additional amounts are being paid-.
24 In any ease in whieh additional payments are made
25 by reason of the previsions of ( ?er purposes
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1 of deter-mining e?it amounts fef menthe after the 4-2-
2 month period foi Lek such additional benefits were maw
3 the percentage increase ender- this sttbseetien applicable to
4 benefits payable fef such 12 month period shall be deemed to
5 be the actual percentage achieved by reason of such addition
6 al payments (as measured respect to payments which
7 are net subject to reduction under any ether provision of this
8 Aet).
9 (e) Only v4h respect to the deteffainat made fef Jan-
10 trary4 1988,the eembitte tfttfft fund ratio fef such year (?ef
11 p eses of detefi~nifiing the increase tinder seen 2-14() of
12 the Seeial Security Aet fer benefits payable ?ef December of
13 such year; sail be deterned by using the actuarial e4i-
14 orate of the Secretary of Health a-Rd Human services of the
15 ratio 4
16 (4-) the eembined balance whink will be available
17 i the Feder-&! Old Age aid Survivors insttr-anee Tf~ust
18 Fund and the Federal Disability Insurance Trust band,
19 reduced by the amount of any eutstan&ng lean (inelud
20 ingMerest thereon) from the Federal Hospital Instir
21 anee T+ttet Fundy at the close of business on December
22 8-t of such calendar year, to
23 (2) the amount estimated by the Secretary to be
24 the total amount to be paid from the Federal Old Age
25 and Survivors Insurance Trust Fund and the Federal
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1 Pisa lity insuranee Trost F*Rd ?er calendar year
2 4488 ?er all doses armed by section -244 of
3 such ~ btA excluding arty transfer pa ents between
4 such trust funds, atd f-edwillg the affiettfit of fffly
5 transfer to the Railroad Refifeffiefit Aeeetrnt by the
6 amount of any transfers into either such trust fund
7 from the RaRf-ead Retir-effiefit Areeetrrtt.
8 (4) Section 4-644(e)(124 of the Social Seettrity feet is
9 amende by inserting -, er; if greater, the percentage by
10 which benefit amounts under title 14 would he increased fop
11 stte t month bat fer the provisions of seetien (}(5 after
12 "are increased for attelt month.
13 AE fN eLAH T *meuN ON
14 AeOEWPOFD RETIREMEN+
15 gfw: 208-. (4 Section 23(w)(444) of the Social Seett
16 rity Ater is amended to read as follows
17 `{A) the applicable percentage (as determined
is under paragraph (6)) of such amotrrtt, o iplied
19 (h} Section 2(w) of such Aet ie amended by adding at
20 the end thereof the ?oliowing new pafagmph-
21 For yeses of paragraph (44(A); the applicable
22 percentage is-
23 ] of -1 percent in the ease of art dal
24 w h o ?i becomes eligible ?er an old age insurance
25 benefit before 4979; and
SIRS
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1-`{$} iii the ease of e14 ether iff(4vd--
2 44 -V+ of -- pefee}t ?$r ii+ereme fliefiths
3 earned Pfief to 4990,
4 4 respect to went meiiths
5 earl e?ter 1089, e peree ge e< to the per-
6 eents;ge in effeet onder i s s aregfftO ?er
7 months in the preceding eelexder i=ea (es in-
8 ereased ptifsttant to this ems); pht-i 44-1-8 of 4
9 pefeent e*d
10 444 44 of 4 percent months
11 earned aft,(-,f 2908".
12 (e)U) Paragraphs. (2.} (- end (-34 of seeti 2-Ww of
13 s A ere each amended by striking ff4 - ge " and
14 inser-fig in lieu fihereof ` ge 70"..
15 (24 Piece eby Pffagft 44 Aa4 a"~y
16 ivith rtpeet to increment months in calendar years e?t{er
17 4488-.
18 TITLE REVENUE PROVISION-9
19 SErC6. 904: AMENDMENT OF- W" CODE.
20 Except as o ise pfe if r T in
21 thiff #e ee amendment of repeal is expressed in tefflis of ert
22 amendment. te of repeal e a section of ether prevision,, the
23 reference ffka4 he ee to he made to a section Of other
24 prevision of fihe Internal Revenue bade of 11464.
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1 SHG SQ4-. TAXATION OF 50 HST OI SOCIAL SECURITY
2 HINDS O HIGHER INCOME PERSONS.
3 (a4 ~ V44 e?sobehapter- Re?ehap-
4 ter 4 (relating to amottnts specifically i eluded in gross
5 ineeme) is amended Jay r-edesignating section 86 as seetion 8
6 aid by inserting after section 84 the following new seetien-.
7 - W. SOCIAL SECURITY BENEFITS.
8 40 IN CORAL. H +J-- wed gross income (deter
9 mined Aithettt regard to this seetion,, section 495(4; of see
1.0 tie 221) of the taxpayer ?er the taxable year exceeds the
11 base ameaet, there shall he included in the gross ire of
12 the taxer fof the taxable year a* amount equal to one half
13 of the seems security benefits mid to the taxpayer during the
14 taxable year.
15 "(b) ArO or fowposes of this section, the
16 term `base amount
17 40 exeept as provided in paragraphs (-24 and (4,
18
$20,000,
19 i4-24 $26,000, in # e ease of a rem} ad
20 L') zero; in the ease of a taxpayer who
21 4A4 is mtaffie at the elose of the taxable
22 year (vAt the meming of seetiee 449) but does
23 net fi4e a joint return ?er such year, and
24 does Bet five apart from his spouse at
25 all times during the to le year.
S I RS
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1 "f See rb SI9e;FRITY BENTFef. purposes of
2 this section, the term 'seeial security benefit' means fffly
3 amount paid to the taxpayer by reason of ntitle nt to a
4 mefithly benefit der title fT of the Social Security Aet.".
5 9o? paA
6 fof sehehapterAof ehapter64(r-elatingto '
7 with ether persons) is amended by
8 adding at the end thereof the following new
9 ,sEc. 6o6or.-. RETURNS RELATING TO SOCIAL SECURITY
10 BENEFU
11 4a4 REQUIREMENT OF REPE)figpiNE3. The Sew of
12 Health and Human Services shall ffwke a r-etttffr according
13 to the forms and prescribed by the set-
14 Ling forth-
15 44-) the aggregate amount of seems seettr-ity bone
16 fits (vAthin the meaning of section 86(d}) paid to any
17 individual ieg any year, a
18 424 the name and address of the individual to
19 Wheffl Pffi&
20 46) ST*gPBME To Bn Fuwiisiiim) q~0 lNi)ivie
21 u*bO WiTti OT Pe Wiiem +0 FUR
22 ?iisiiRB. Eve person making a return under subsection
23 W shall furnish to each dal whose name is set forth in
statement 24 ffiteh rett~~ a writte c.tnt
e ~~~ shewixg
SIRS
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1 414 the flame and mess of the per-sell makifa
2 saehr-etufn, and
3 424 the aggregate amount of payments to the it-
4 thvidual as shown on euehfettiffi.
5 The written statement r-equife haler the preceding sentence
6 A" be ?twaishe to the ifidividtW of of before January "
7 of the ye-af following the eale r year ?ef whieh the r-etttf%
8 under- subseetion W was made.".
9 To Tftusgp
10 Fu*Ds. Seetion 401 of the Social Security Aet is amend
11 by addift g at the end theree the ?ellewiftg new s4seetiew.
12 "(m)44 There at=e appropriated-, eft of any moneys in
13 the Treasury n4 ethefwise a rmed, ?ef each fiscal
14 year;
15 -(A) to theFederreA Old Age a Survivors Insur
16 aeee Flu" an amen whieh bears the same
17 fa-tie to the increaseintaaliability ttttder- chapter 4of
18 the intefflal Revenue Co&of 1954 }ieattributa
19 bye to section 86 of such bete and properly allocable
20 to each fiscal year as
21 "4 the amount Lek to
22 such tr-ttst ?t fef such fiscal
23 yea-f-, bears to
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1
ate affiettfits
re
"4i4 the a
g
gg
2
under stibseetiens (a) acid (b) f of such f iseai year,
3
and
4
"(B4tethe Feder-alDisAilityiiistty-anee Trust
5
Ord en amount eqita4 to the portion of the increase in
6
tan described in (} whieh is net appre
7
printed under (~}
8
h
f th
T
!
S
t
ll estimate feu
sh
e
M
afy o
e
eefe
a
y
9
1984 (
d
h
fi
l
re
the amount a
year
an
eac
year
sca
pp
10
ra
h 4}
ra
i
d
d
t
un
er pa
p
pr
g
n
e
11
?4434 An the basis of the ewe under
12
ll net Tess thrn
uarter
h
f th
T
S
h
A
q
reasury s
a
eer-etftfy o
e
e K
)}; t
(
13 ly nee transfers to the trust funds.
14 4)44 The Seefetttr-y of the Tr-eersttf shall rye
15 pry adjus rnents in the amounts subsequen4y transfer-red
16 under park ( to the extent prior estimates dif?ered
17 from the amounts required to be fiat
18 "(B}l4ar purposes of thin subseetien, the ?iealdeter-ffl}
19 nation of the amount rewired to be transferred ender this
20 subseetion feu any fiscal year shall be based on the final 4e-
21 hies of ineeme whieh
22 "(i) published under section 6108(44 of the Inter
23 ual Revenue Code of end
24 44) properly allocable to such fiscal year.
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1 ( PATH. Th affiefI&Reft made by this
2 seetion shall a to benefits reeeived after December 34
3 4983, axe attfibuta-ble to pef-iods after such Elate.
4
$ 808, O W GREASE IN PICA TAXES; 1.984
5
EMPLO FICA TAX CREDIT
.
FICA T*Kias
ll
A
6
.
NeRHAa$iN
e ei
(a)
7
(a) of see -
S
b
4
T
se
u
AR e .
(
4
8
tiee 34 (}elating to cote of tax on employees ?ei old-
9
age; steers, and dis&bi4y
ie amended by
10
striking out paragraphs (6)7 (6
and (74 and inserting in
11
lieu thereof the following.
12
with respeet to wages reeeived during the
13
calendar years 4982 an 4988, the rate shall he 5.40
14
pereent;
15
46) with respect to wages r-eeeived wing the
16
calendar years 4$84 through 4987, the rate shad he
17
0 pereent;
18
the
es received durin
ith r
ct to
a
g
w
g
w
espe
19
ea4endaf years 4$88 a" 1989, the rate shall be 6.06
20
pereent; and
21
!49) with respect to wages received after Deem
22
her 34; 1989, the fate shall he 6.20 pereent".
23
(2) T-A* e
(a) of see-
24
tiee 3111 (fig to rate of tax on employers ?er 01&
25
age; sttr4vem, and disabi4ky wee) ie amended by
S 1 RS--3
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1 striking WA paragraphs (4) through (74 fffiA insetting in
2 heft thereof the following:
3 46) w 4h respect to wages p6d dtrieg the ealen
4 d years 4984 a *d 1988, he rate shall be 6.40
5 eee
6 1449) with respeet to wages paid during the ealee
7 dar years 1984 through 1987, he rake shall be 6-40
8 pereeet;
9 474 with respect to wages paid during the ealen
10 dar years 1988 aed 4980, the rate shall be 6 1)
11 eeet-; and
12 484 vvM respect to wages pftid after
Deeember-
13 84- 1989, the rate shall be 0 percent.".
14 () CONFORMING *MENDME149P me ROAD eE-
15 TiREMET 9PAX AOT Seel; gg" (fig to 4e?i-
16 eitiees) is. amended by addin g & the end thereof the
17 following new
18 L(i) T*KEc imPOSED B* NS 8101(ft-) ANI)
19 &1-44(a). For purposes of this ehapter-, the rates of taa -
20 posed by seetions 8444(a4 and 8111W shall be determined
21 without regard to the amendments made by the Seeial Seeut-
22 f4 y Amendfneft of 1988.
23 (b) QHHi)iqP F TTRIBUT
24 *BbE TO Ae OF IN q3im RATE
25 op TX
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1 (4) 9 Of Oh&PtOi' 6&
2 (fig to rules of speed application ?er abatements,
3 ereditsp and refunds) is amender by inserting at the e 4
4 thereof the following new seetion:
5 "SEC. 643& CREDIT POR CERTAIN X984 EMPLOYER FICA
6 TAXES.
7 op GREDigp. There shall be allowed
8 ae a or-edit against the ta* imposed by subtitle -A ?er any
9 to e yeff whieh begins in (and ends with of fiftef) ealefidar-
10 year 1984 an amount equal to the product of--
11
?444 -.008-, multiplie by
12
the tax
a
es reeeived b
nt of wa
mo
42 th
y
p
y
g
u
e a
13
er during calendar year 1984 with respeet to which
14
seetion 3101(a)-
as im
osed b
t
,
p
y
a* w
a
15
of
16
a payment was made under an agree
17
t under seetion 24-8 of the Seed Security
18
z4et.
19
i4) CREDIT q~e BE
For- yeses of
20 thiet 64e (thfffi sttbpaft Ao? paft Wof subehapter- A, of
21 a rapter 4 and chapter 53} the credit allowed by gabseetion
22 (a) shall be treated as if it were allowed by section 31 and net
23 this seetiee.
24 "(e) W*aRs DB ear. For pufpeses of this seetion,,
25 the term Vie leas the moaning given to such term by
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1 4(a except tha4 such term also des r-efntt
2 fier-atien covered by an agreement under- seetieft 4479 of the
3 Seems Seetwity Ae
4 4$} QeoRDiNAqPieN WIY F ADVANCE
5 UNDER SH69PION 8610.
6 14 OF
7 *ND *my pay+aentismadeto
8 the taxpayer- by ae employer- ttnder- section 8540
9 during 1984, then the ta* imposed by this chapter ?ef
10 the taxable year to whieh s4seetion (a; applies shall
11 be incased by the aggregate amount of such pay-
12 its
13 "() EFFHeT OF ON OTHER
14 increase in tax ender paragraph (4)
15 shall not be treated ae tax imposed by this chapter ?er-
16 purposes of deter-minin the amount of any credit
17 (ether- than the credit allowed by stAseetion (o) allow
18 able under this subpar-t.".
19 (2) CO*FoHmiNa ENDMEN The table of
20seetions for sttbehapter- $ of chapter 95 is amende by
21 addift g at the en4 thereof the following new
. 6480. Or-edit ?er eer4ain 4-884 employee FICA taxes.''.
22 (e; ABV*NO$ 12A*MENT~ OF SOCIAL SH@;RtI9PY
23 C~iqP.
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1
(44 IN e
2 (relating to goner
2
al
taxes) is amended
3
by adding at the end thereof the following new etieft.
4
,sEc
A
GE PANT O 4.984 rzicA CREDIT.
.
5
IN G
ae otherwise provided in
6 this seetion,, every employer making payment of wages to an
7 employee shall, at the time of paying such wages, make apt
8 additional payment to such employee equal to the product
9
4-
10
i444
mu4tipliedby-,
11
144) the amount of such wages with respect to
12
which
13
section 3-1014a4 ?er
a ta* ie im
osed b
p
y
14
the payroll period, or
15
a payment was made under an agree
16
ment under seetion 24r8 of the Seeial Security
17
18
"
To RE OF
19 FICA T
20 i444 Empbe*Hfi PATMBNIF For uses of
21 thie titles payments made by an employer trader s -
22 section (a3 to hie employees ?er any payroll period
23 shall net be treated oe the payment of
24 eompensation, a td
S 1 RS
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1 4134 be treated as made ent of amounts
2 reed to he dedueted ?ef the payroll period
3 tinder- seetion 3192 (relating to FICA employee
4 taxes), end es if the ewer hftd to the
5 Secretary, en the day on whieh the wages are
6 paid to the employee-s-, an a nertnt equal to s
7 payments.
8 49) F*iiuRE LP0 E NCE PA*MENTO.-
9 F-of per-poses of tl4s title (ineluding penalties), ?a lure
10 to eonyadvaiieepayment under- subseetion (e) t
11 the time provided therefor shall be treated es the fail-
12 we et such time to deduet end v4thhel der s-
13 chapter -A of ehapter 24 an amount equal to the
14 a nount of such wee paynent.
15 !4e) p er. F-ef purposes of this section
16 (44 WAOO-The term 'wages' hen the meaning
17 given such term by seetion 6430
18 ' EMP The term '!~
~OPYE 1ZS~, ifieludes
19 any person treated es en employer- under any agree
20 mcnt made pursuant to seetion 2-1$ of the Seeial Seeut-
21 fi~y .".
22 (2) CONFOR A~~DMHr :
23 (} Seetion 6802 (relating to mode or time
24 of eelleetion) ia amended by addin at the end
25 thereof the ?ollowing new su iseetion:
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1 14e) claoss
.
qee treatment of p"ment of FICA ta* eredit advanee
amounts as payment of withholdin a*id FICA tames, see
seetion (b
2 ~B} Pie table of seetien}s fff chapter 2 is
3 amended by addin g at the e *d thereof the follow
4 ieg new item:
A. 8610. ranee payment of 4-884 FICA ta* ere "..
5 DATE. The amendmen a by this
6 seetiee shall ftpply el respeet to ie-
7 eeived of pair ax4 taxable years beginning, after December
8 1988.
9 BEG. 9". R-M-PLOYMENT- TAXES.
10 ~ *sH fN RATE o TAX. Suboeetion W of
11 seetiee 1401 (fig to the old age, sufviver-s, a*d disabiky
12 iesuranee tax off self empleyfaent ieeeme) is amended by
13 string net pars graphs ( T axd (~ and inserting in line
14 thereof the ? g-
15 45 in the ease of axy taxable year beginning
16 after December 1981, and before January 4-, 1984,
17 the t shaN be eqtteA to 8.05 percent of the amount of
18 the self employment income fff eeeb taxable year;
19 46) in the ease of any taxable year beg g
20 after December 4-, 1988, and before jaiattafy 4~ 1988,
21 equfti to 11.40 perthe afnetifit
22 of the seU employment income fff ffixeh taxable year;
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1 47-) in the ease of my taxable year beonin
2 after December 8 4087, and before January 4-, 4990,
3 he t shall be eqtteA to 12.12 percent of the amount
4 of # e self empleyfaefit bleeme ?er such taxable ytw-,
5 aftd
6 14-8) in the ee7ee of ayfi able year beginning
7 after December &1- 989 the tax shag be eq*W to
8 12.40 percent of the amount of the self employment
9 ineeme for such taxable year.".
10 (b} ALLOW-AN OF PEDUOTION FOR 60 PERGENT OF
11 T*K.
12 (.14 Aubew*NeB op .
13 ` (A) IN GENERAl. Part 14 of subs -B
14 e?ehaipter- 4(r-elatiegto additiefieA itemized de-
15 duetions for individuab) in weeded by redes
16 ignating section 249 as section 424 and by insert
17 ing after seetion 82-2 fihe following new section:
18 "SM PERCENT O SELF EMPLOY
19 T TAXES.
20 "There shall be mowed as a deduction for the taxable
21 year an amount equal to 60 pereeet of the tax imposed by
22 section 1401(a) which is. paid of aeeruee by the taxpayer-
23 during such taxable fir.".
24 (134 a IN eeMPUTINO
25 a 89 (defining
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1
adjusted grass ineeme) is amende by inserting
2
afterpar-Wap (4494 the iollowing new
The dedue
XED
3
) TA
.
228
ti
d b
i
ll
4
on
..
y sec
owe
er a
t
5
(Q~
6
(A4 Paragraph (4-) of section
(felating
7
to disallowan of deductions ?er certain terxes) ie
8
amended
the end of
d"
t "
iki
b
9
a
an
()
ng oj?
y str
10
(B-)-,
11
() by strikifig ant the per-io
at the end
12
of (9) and ifiseffing in liett
d"
d
d "
i
l
f
h
13
; an
an
on an
a sem
co
ereo
t
14
(iii) by adding a the end thereel the ?e4-
15
16
!owing
the t es imposed by seetion 1401 (re-
17
lacing to self empleyffient taxes) to the extent a
18
deduction is net allowed with respect to such
"
228
ti
am
19
.
.
on
er sec
taxes t
20
of section 4403 (relating
21
to cross es) ie amended by addin g at the
22
end thereof the following new paragraph:
2 3
40 Fff pis relatitrg to dedttetibi4ity of
24
self efopleyffient taxes, see sections 2 and
25
275( ti) "-
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1 ( Subseetion (a3 of seetien 4404 (defining
2 met eaf%ifigs ? self ewpleyment) ie amended by
3 inserting "(other- ~hm fihe dew allowed by
4 seetion 223)" a?t "trade of business" the second
5 plane it appear
6 (P The table of sections ?ei part V9 of web-
7 chapter 9of chapter 4 ie amended by striking oi.t
8 the its relating to section 22N and inserting i
9 lieu thereof the following new items:
. Deduetieft ?ef 50 pereent e
a
10 (e~ &PpHeTivii DAET e amendffiett made by this.
11 seetion shall app* to taxable years beginning after December
12 4983.
13 sr ae5 CAVsRA6E AE PAYS
14 TION PLANS.
15 (o) OF WAGES.
16 (4 IN AL REVEMUE OE)DE OF 1954. n
17 3 y ` O( n) (4e? rg wages) i& amended by inserting
18 s e payment under a qualified Bash of deferred ar-
19 rangement wider section 401W W ei after "mess etteh
20
payinefit"?
21 (-2) 8ee1*1, TY ACm Sect 209(e)(1) of
22 the dal Seems Aet ie amended by inserting "}s a
23 V"ent under a died Bash of deferred arrange
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1 t under seetion 4 Dom) of the Internal Revenue
2 Cede of 444 er" after tnless stteh payment"..
3 (b) EFFHeqpivii r _ '''h a amendments made by stth-
4 seetien (a; shall atply t respeet to payments made after
5 Deemer &1-, 1988.
6 TITLE
7 PROAqKONS
8 Pe mP Ft~ND
9 . 404: (a; Section 201(b)(1) of the Social Seettrity
10 44 3samende by Stfikif,geat clauses 4K through (M a4
11 inserting in iiea thereof the ?ellwwing- ) 4 per eentttm
12 of the wages (as se defined) paid after December 84; 1981,
13 and before January 4 4884, and se reported, (b 0.50 per
14 eefAtt of the wages (as se defined) paid after December
15 1983, and before January 4-, 1985, aod se repented, ( 4-.00
16 per eentum of the wages (as se defined) paid after December
17 8-1- 1984, and before January 4, 1990, and se reported, and
18 (} } 1.60 per eentut of the wages (as se de?iaed) paid after
19 December 4950, sod se reported,".
20 (b Section 201(b)(2) of such Aret is amended by striking
21 et4 elauses (K through 044 and inserting in nett thereof the
22 ?olle "(K) 1.2876 per eenttim of the atnettnt of sew
23 employment income (as se defined) se reported ?er any tax-
24 able year hem after December 1981, and before
25 January 4 4984, (b 0.50 per eefittim of the amount of self-
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1 empleyine" ineeme (as se defifted) se reported ?er ary tax-
2 able year begiftning after per &1-,- 1988, a*d before
3 January 4-, 198?,, ( 4.00 per eenttffn of the amount of self-
4 event income (ae ee defined) ee reported ?er ay tax--
5 able year beginnkig after per 3 1984, a*d before
6 January 4, 1990, a (#} 4,60 per eetAttm of the self em
7 pleyment ineeme (as se defined) ee reported ?er ay taxable
8 year bed after Peeeffiber- &1- 1989,".
9 iNTERFUND BORRE)WINO EXTENSION
10 SEp. 44)-g-. W Section 2010)(1) of the Seeial e y
11 A4 in afnefide by striking eat "January 1983" ai4 insert
12 ing in lieu thereof "ja-nuar-y 1988".
13 ( Seetion 1817 of sueh A4 is amended by sfi ng etrt
14 s4seetion () thereof.
15 6R}DITI#6 *MOUNTS 9F TO
16 TRUST FUNDS
17 gfw: 403. W The Secretary of the Treasury shall tale
18 sueh aefions ae ffffiy be neeeseary to ensure that axe s of
19 eheeles ?er benefits under the II of the Social Seetw Aet
20 which have r been preset for payffient within a reason
21 able length of time (not to exceed twelve mew) after isstt-
22 ease are Br-edited to the Federal Old Age and Survivors In-
23 strraaee Trust Ftmd of the Federal Day Iffistffaieee
24 Try Fund, whichever way be the fmid from whiek the
25 check was issued. Ame s of afty such elree shall be re-
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1 charged to the fund from which they were issued if patent
2 is subsequently made on such cheek.
3 44(-14 The Secretary of the Treasury shall transfer from
4 the general fund of the Treasury to the Federal Old Age and
5 Steers Insurance Trust Fund and to the Federal Disabil
6 ity Insurance Trust Ftt ae ante, such sums as may
7 be necessary to use such Trust Fttnds in the total
8 amounts of all currently unnegetiat benefit cheeks. Ater
9 the amounts by this subsection have been trans
10 ?erred to the Trust Fundy the previsions of s section (a)
11 shah be applicable. There are hereby appropriated into each
12 Trust Funds such sums as may he necessary to reimburse
13 such Trust Funds ?er the arson of currently
14 benefit eheelts. The first such transfer- shah be made within
15 thirty days after the date of the enactment of this Aet with
16 respect to all such unnegetiat checks as of each date of
17 enactment.
18 (24 As used in paragraph 444 the term "currently unne
19 getiatecl benefit eheehs" means the checks issued under title
20 II of the Seeial Seems Aet prier to the date of the enact
21 meat of this A-et-, which remain unnegetiated sAff the twelfth
22 month ?ollowing the date on which they were issued.
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46 1 TRANSFER TO DS i 33ENEF19PS
2 ATTRIBUTABLE +0M1149PARY SERVIOB BEFORE
3 gfo- 404. W Section 217(g) of the Social Seems Act
4 is amended to read as ?ellews:
5 priatee to T+tt t Ards
6 (g3(44 Within the days after the date of the ettaet
7 Ott of the Social of 1988, the Seere
8 tart' shall d ie the amounts vAiieh aie the ametmts esfi -
9 mated to be necessary to he transferred into each of the Fed-
10 eral Old Age artd ors Insurance Trust Ftffid, the Fed-
11 eral Doty wee Trust ltd, attd the Federal Hopi
12 tifisttfaftee eestteh4ateof enactment flO that
13 each sash Trust Fund will be in the same position at the
14 elese of September third 2016 as each sueh Trust Fund
15 would otherwise be i .at the elese of September 5
16 if seetion 940 of this Aet as in effect prier to the Social Seett
17 city Aet Azmen&ne of 1950, aid this seetiett,, had rtet been
18 enacted (less aay WHOU ppr-eviettsly transferred ruder the
19 pis of this subneetion ae in effect prier to the date of
20 the enactment of the Seel of 4988)
21 he rate of interest to he u6ed in initis4 detefffinift such
22 ametmt shall be the rate deteined der ocotioe 201(1) ?er
23 public debt mere er could have been issued
24 ?er purchase by each Trust Funds on the date of the enact
25 mein of the Social of 1983, and the
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1 respect to future increases in wage and
2 price levels ehall be eensistent v4h such fmce of inter-est. The
3 Secretary of the Treasury s transfer- the amounts deter
4 mine tinder this paragraph into such Trust Ftinds from the
5 general ?trrxd in the Treasury within thirty days after the date
6 of the eneetment of the Seeial of
7 1983. There are hereby into each Trust Ftmds
8 sums eqttal to the amounts to be trans?erred in accordance
9 with tlrie paragraph into each Trust F"ds.
10 "4-2) The Secretary ehall revise the amount deter
11 under paragraph (4 vAthin eee year after the date of the
12 transfer maile under pafagr-aph (-1} and every ? w years
13 thereafter, ae warranted by data which may beeeme avail"le
14 to hint after the date of the transfer under par-agr-aph (44
15 based upon actual benefits paid trader 'hie title and title
16 XVM. Any amounts drmed to be needed ?er transfer
17 shall be tr-ansfeffed annually by the Secretary of the Tr-eas
18 w y into the appropriate Trust Ft~ from the general fund in
19 theTr-easttr-y, ofe4oft the appropriate Tr&st R into the
20 general fund in the Tr-easttr-y, as nay be appfopfiat-et There
21 are authorized to be appropriated to such Trust Funds sums
22 equal to the amounts to be tr-ansfeffed in accordance with
23 thin paragraph into each Trust Funds.".
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1 PAYMENTS TO TRUST DS OF AMOUNTS
2 T9 ASS ON SERVioH IN THE 9&A }B s
3 PERFORMED R1966
4 SEe-. 405: () Section of the Social Seeufi Aet
5 is affiende to read " fedews:
6 " There aie auther-ised to ee apps to the Fed-
7 ero4 Old Age and Insurance Tfitst Fund, the Fed-
8 e "J Disability R anee Trust Affid, aftd the Federal Hospi
9 tal Insurance Trust Fundy fff each fiscal year, amounts e
10 to the additional amounts whiek weu4 d be into
11 each such Trust Fund fff such fiscal year under sections 201
12 and 1817 of this Aet if the amounts of the additional wages
13 deemed to have been paid by reason of s eetien W eensti
14 tuted fff employment (ae de?ined in section
15 ) of the Internal Reventie bode of 1954) fff poses
16 of the taxes imposed by sections 5101 and of the Inter
17 fta4 L Gode 4.".
18 (b) The amendment made by subseetion (a) shall be of-
19 ?eetive with respect to wages deemed to have been paid ?er
20 calendar years after 1982.
21 (e)(1) Within testy days after the date of the enactment
22 of thin the Secretary of Health and Httman Services
23 sbalf determine the its equal to the additional amounts
24 which wettld have been appr-epriat into the Federal 01&
25 Age and Sys Insurance Tract Ftffid, the Federal Iis-
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1 amity Insurattee Trust Fund, and the Federal Hospital In-
2 sum-nee Trust Fund under seetions 244 and 1817 of the
3 Serial Security A-et,, if the additional wages deemed to have
4 been paid under eeotion 229(a) of the Serial Security Aet
5 prior to 1988 had eenstitttte ?er empley+aefit
6 (as defined in seefiien ) of the Internal Revenue Cede
7 of 4964) ?ef pwpeses of the taxes imposed by seetions 3401
8 and 3111 of the Internal Revenue Code of 1964, and the
9 amettnt of merest whieh would have been earned on such
10 amounts if they had been ee appropriated-.
11 (2)(A) The Secretary of the Treasury sal, within thifty
12 days after the date of the enactment of this A-et, transfer into
13 each such Trust Ftmd, from the general fund in the Treasury,
14 an amettnt equal to the amount deed with respect to
15 such Trust Fund under paragraph 4} ieee any amount ap-
16 py-ep into such Trust Fund under the pens of see
17 tiers 220(b) of the Serial Security Art prier to the date of the
18 detefifainati made under paragraph (44 with respect to
19 wages deemed to have been paid ?er calendar years prier to
20 1983. There are hereby i tte such Trust Funds
21 sums equal to the amounts to be transferred in accordance
22 with this subparagraph into such Trust Funds.
23 (9) The Secretary shah revise the amount deterred
24 under subpa-fagmph (} within one year after the date of the
25 transfer made under paw (4); as warranted by data
S 1 RS--4
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1 wrier ffi&y beeeme available to lit a?ter the date of the
2 transfer- tiler- (M based u t actual bettefits
3 paid under this title and title amounts deter
4 Tined to be needed fef transfer- ffha4 be transferred by the
5 Secretary of the Treasury into the Trust F*Rd
6 k-em the general fthad in theTr-easttfy, of etrtof thea epri-
7 ate Trost Ord into the general fund i t the Tom, ae
8 be . There are a erized to be appr-epriat to
9 such Trost Funds sums equal to the amounts to be trans
10 ?erred in aeeer-dattee with Iris s4pafagmph into such Trost
11 Funds.
12 THU89P FUND
13 406 (a) Section of the Seeial Security Aet ie
14 amended by striking ettt subseetiefts, (4)7 (e)7 aid (t) attd ii*-
15 sertieg i t liett thereof the following r .
16 "(4) There are hereby created on the books of the
17 Tr-easu of the Uftite States an seeount to he known ae the
18 Old Age a Insurance Depositary Aeeeunt and
19 an eeeettat to be known ae the Disability Insurance Depesi
20 tart' Aeeetmt.
21 } The Managing Trustee shall deposit that portion of
22 the Federal Old Age and Survivors Insurance Trost Fund
23 net required to meet current from such Trust
24 Fond in the Old a and Steers Insurance
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1 Aeeount and that portion of the feral Pisabil4y Insm-anee
2 Trust F*tftd net r-equir-e to meet current from
3 such Trust F"d in the Disability Insurance Depositary Ae-
4 eetrnt.
5 " ; The Secretary of the Treasury may apply meneys
6 deposited in an aeeettnt pursuant to subsection (e) in any way
7 in which he ie attther-ime by law to apply meneys in the
8 general fund of the Treasury.
9 Moneys deposited in an aeeetmt pursuant to sub-
10 seetion (e4 shall be treated as indebte" of the United
11 States for purposes of seetion 2) of title United
12 States bode, and shall earn interest, payable monthly, in an
13 amount equal to the product obtained by ffittitiplying the
14 average balance of moneys in the aeeettnt for such month by
15 the average market yield (computed by the Managing
16 Trustee on the basis of market quotations as of the end of
17 each day of the previous mend}) en all marketableinter-est
18 bearing obligations of the United States then forming a part
19 of the publie debt which are net due or eaIlable until after the
20 expiration of ?ettp years from the end of each previous month,,
21 except that 'lower bends'' shall net be i neitide in such eem
22 putation.
23 ) Fef yeses of this paragraph,, the term Viewer
24 bend'' means a United States Treasury bend whieh was
25 issued before March 47 4$71 and which may, at the option of
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1 the 4 eenstitttted representatives of the estate of a do-
2 eeased iftdividtta4, he redeemed at pff (faee) v hte, plus ae-
3 erttedinterest to the dateof payfne
4 a(4 it was awned by such deeeased ift4ividtW at
5 the t eo?hisdeat,
6 L Q it is part of the estate of such deeeased ind -
7 .wand
8 i4iii) such authorize the
9 of the Tr-eastffy to *pply the entire proceeds of the re-
10 demptien of such bend to the payment of Federal
11 estate taxes.
12 48) The Managing Trustee may ~ithdr-a moneys de-
13 posited in an account pursuant to subseetieti k4 whenever- he
14 determines that such meneys are necessary to meet agent
15 withdfwwalff from the Trost Fund which deposited such
16 moneys, a *4 the Secretary of the Treasury may sell oblige
17 gees of the United States in the met in an amount net to
18 exceed the amount of such if he determines that
19 such states an increase in the general fund
20 of the Treasury by an amount not exceeding such amot
21 (h) Section 1817 of such Act ie amended by stFiking ettt
22 sub: ions (e); (d) and (e) and inserting in lieu thereof the
23 following new s4seetionw;
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1 14e) There is hereby ereated on the books of the Treas
2 eyof the Unite States States an account to be known aetheRes-
3 pital Insurance Depositary Aeeount.
4 The Managing Trustee shall deposit that portion of
5 the Federal Hospital Insurance Trust Fund net required to
6 meet current with&wwalg ?rom such Trust Fund in the loe-
7 pital Insurance Depositary Aeeetmt.
8 (43 The Secretary of the Tay may apply
9 moneys deposited in the aeeetmt pttr-sttattt to subseetien (d~ in
10 any way in which he ie authorized by law to apply moneys in
11 the general fund of the Treasury.
12 (M} Moneys deposited in the account pursuant to
d
13 s bseetion (d~ shall be treated as indebtednes-a of the Unite
14 States ?er purposes of section 18042) of title United
15 States Code, and shall earn interest, payable monthly, in an
16 amount equal to the product obtained by multiplyifig the
17 average balance of moneys in the aeeerrnt ?er such month by
18 the average market yield (eemptrted by the Managing Trust
19 ee en the basis of market q ions as of the end of each day
20 of the previous month) en all marketable interest hearing eb-
21 ligations of the United States then ?orming a part of the
22 public debt which are net due or eallable until after the expi-
2 3 ration of few years from the end of such previous month,
24 except that 'lower bonds' shall net be included in such ee n
25 potation:
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1 4B) Fer pu peses of t rie parag r, the term Viewer
2 bend.' means a United States Treasury bend Lek was
3 issued before March 4 4971, an4 Lek ma eA the option of
4 the d* eel mpr-esentatives of the estate of a de-
5 eeased individtW, be redeemed at par (?aee) value, plus ae-
6 erued interest to the date of payment, if--
7 i) it was owned by etteh deeeased kidividtW at
8 the time of hi'a deafih,,
9 it is paft of the estate of nueh deeeased ifi&
10 vidttal, and
11 "(iii) etteh authorize the Secretary
12 of the Tr-easttfy to a the entire preeeed2 of the te-
13 demptien of s}teh heed to the payment of Federal
14 estate taxes:
15 " {- The Managing Trustee may withdraw moneys do-
16 posited in the aeeexnt ptwstia-Ht to subseetiee (d~ whenever he
17 determines that etteh moneys are neeessary to meet current
18 ?rerrt the Test Fffnd, and the Secretary of the
19 Treasury may sell obligations of the United des in the
20 market in an amount net to exeeed the amount of etteh with
21 dfawal if he deter-mines that seed sitaten an
22 ieerease in the general fufid of the Treasury by an amount
23 net exceeding s amount.".
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1 (e} Seetion 1841 of such Aet is amended by striking eat
2 subsections (e ( a (e) and inser-ting in liett thereof the
3 following fie s4seetiens--.
4 4e) There is hereby on the books of the
5 Treasury an aeeettnt to be known as the Supplemen"
6 Medical Insurance Depositary Aeeettnt.
7 4} The Managing Trustee ehall deposit that portion of
8 the Medical Insurance Trost Fond
9 not refired to meet ettt? from such Trust
10 Fund in the Supplemen" Medical Insurance Depositary
11 Aeeettitt.
12 (} The Sew of the Treasury ffiay apply
13 moneys deposited in the account pursuant to s eetion 44} in
14 any way in which he i authorized by law to apply faeneys in
15 the general fund of the Treasury.
16 424(A4 Moneys deposited in the account pursuant to
17 subsection (d} shall be treated ae ' of the United
18 States ?er purposes of section 4305 of tine 84; United
19 States bode, and shall earn interest, payable menthly, in an
20 amount equal to the product ebtaine by multiplying the
21 average balance of moneys in the aeeetret ?er such month by
22 the average market yie4d (eemputed by the Managing Trust
23 ee on the basis of market quotations as of the end of each day
24 of the previous month) on all marketableinter-estbearing oh-
25 ligations of the United motes then ?orming a pfft of the
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1 die debt which are net due of callable until after the exi-
2 ration of few years from the end of eueh previous month,
3 except that `flower bonds' 964 net he included in sueh eom
4 pxtatien.
5 "(B) For pufpeses of this par ph, the term 'flower
6 hand' means a United States Treastxy bond whiek was
7 isoued before Leh 47 1971, and whieh at the option of
8 the dttly eenotituted mpr-esentatives of the estate of a de-
9 eeased indi be redeemed at par 4f$ee) vahte, p ae-
10 ertted intereot to the date of payment, if--
11 14i) it was owned by etteh deeeased individual at
12 the time of hie death
13 "(ii} it is po# of the estate of such deeeased indi-
14 Vidtifti, and
15 "(iii} stteh represents authorize the Secretary
16 of the Treasury to apply the entire preeeeds of the re-
17 demptian of such heed to the payment of Federal
18 estate tames.
19 The Managing tstee ffffiy withdraw moneys de-
20 posited in the aeeetmt pufsttant to s4seetion 4d3 whenever- he
21 determines that ouch maneyo are necessary to meet current
22 wither ?rom the Trost Ftmd, and the Secretary of the
23 Treasury may sell obligations of the United States in the
24 market in an auneunt not to exceed the amount of otteh with-
25 drawal if he detenes that ouch wdthdr-a-wal neeesoitates an
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1 increase in the general fund of the Treasury by an amount
2 net exeeediiig such amem
3 (d413 Net t y 4wfs after the dfite of eeaet
4 ment of this Ae-t-,- the Secretary of the Treasury shall redeem
5 at par all eutstanding obligations o?fiheUnite States
6 ender the Seeend Liberty Bend Aet exeittsively ?or purchase
7 by the Federal Old Age Insurance the Federal
8 Day Insurance Trust Amd, the Federal Hospital Insur
9 anee Trust Fund, and the Feder-&I Supplement"y Medical
10 Insurance Trust Fend (her er in this subsection referred
11 to as the "Tfust Funds").
12 4 M The Managing Trustee may sell as marketable
13 obligation of the Unite States heW by the T-Ftmat s at
14 market price at aay time tad shall sell Of redeem) all
15 "fiewer- bonds" held by the Trust Funds at market price
16 within thirty days of the date of enactment of this
17 (H) Far purposes of this paragraph, the term "flower-
18 bend" means a wed States Treasury fend which was
19 issued before March 4 29t1, and which may, at the option of
20 the day eefistituted mpr-esetttatives of the estate of a de-
21 ceased duals be redeemed at par (?aee) vahte, pins ae-
22 erred interest to the date of payment, if--
23 it was evened by such deceased dal at
24 the time of his death,
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1 ( i i i t i s p a r t of t h e estate of e deeease i i-
2 Vidual, and
3 (Q ouch representaties authorize the Secretary
4 of the Treasury to apply the entire preeeedo of the fe-
5 dempti of such beffii to the payment of Feder-a!
6 estate tames.
7 (3) The preeeeds from the r-edemptieft an4 sale of obliga
8 tions of the United des ptff stiant to paragraphs (} and (-2)
9 shall be to theT~ust F-&i+d sellin Of redeeming ouch
10' obligations and that portion of such preeeeds whieh is net
11 refired to meet event ?rom such Trust end
12 shall be deposited in the account estlished with respeet to
13 o ueh Trnet Find by subeeetien (a) (b)7 of (e) of this
14 (e) The affiendme made by thia A et ehail take effect
15 fif4 day of the menth ?ellowifigthe date of enaetment
16 of thin
17 ADDITION OF B BEBs q~e 4R 'P H Ds
18 O s
19 ,SEc. 407. W Seetions (e}; 454~(b)7 and 4444(h) of
20 the Seeial geoufity Aet are each amended by stfili-ing out the
21 period at the end of the ?irst wee and inserting in lieu
22 thereof a eemxa and "and of two members of the public
23 (bath of whom ffmy net be from the same political party)
24 who ehall be nominated by the President ?er a term of ?em
25 years and snbjeet to confirmation by the .
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1 (b) The amendffien e seetien W
2 beeeme effective on the da-+e of enactment of firms
3 SHORT TITLE
4 SECTION 1. This Act, with the following table of con-
5 tents, may be cited as the "Social Security Amendments of
6 1983
Part A-Changes in Coverage
Sec.
101.
Coverage of newly hired Federal employees.
Sec.
102.
Coverage of employees of nonprofit organizations.
Sec.
103.
Duration of agreement for coverage of State and local employees.
Sec.
104.
Exclusion of services performed by members of certain religious sects.
Sec. 111. Shift of cost-of-living adjustments to calendar year basis.
Sec. 112. Elimination of windfall benefits for persons with pensions from noncov-
ered employment.
Sec. 113. Benefits for divorced or disabled widow or widower who remarries.
Sec. 114. Change in indexing for deferred survivor benefits.
Sec. 115. Benefits for divorced spouse regardless of whether former spouse has re-
tired.
Sec. 116. Increase in benefit amount for disabled widows and widowers.
Sec. 117. Adjustment to cost-of-living increase when trust fund ratio falls below 20
percent.
Sec. 118. Increase in old-age insurance benefit amounts on account of delayed re-
tirement.
Sec. 119. Increase in retirement age.
Sec. 120. Adjustments to OASDI benefit formula.
Sec. 121. Phaseout of earnings limitation for beneficiaries who have attained re-
tirement age.
Sec. 122. Increase in dropout years for time spent in child care.
Sec. 123. Limitation on payments to prisoners.
Sec. 124. Limitations on payments to nonresident aliens.
Sec. 125. Reduction of cost-of-living increase if trust funds ratio is below 20 per-
cent and declining.
Sec. 131. Taxation of Social Security and tier 1 railroad retirement benefits.
Sec. 132. Acceleration of increases in FICA taxes; 1984 employee tax credit.
Sec. 133. Taxes on self-employment income; credit against such taxes.
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Sec. 141. Allocation to Disability Insurance Trust Fund.
Sec. 142. Interf and borrowing extension.
Sec. 143. Crediting amounts of unnegotiated checks to trust funds.
Sec. 144. Transfer to trust funds for costs of benefits attributable to military serv-
ice before 1957.
Sec. 145. Payment to trust funds of amounts equivalent to taxes on service in the
uniformed services performed after 1956.
Sec. 146. Trust fund investment procedure.
Sec. 147. Addition of public members to trust fund board of trustees.
Sec. 148. Payment schedule by State and local governments.
Sec. 149. Normalized crediting of social security taxes to trust funds.
Sec. 150. Amounts received under certain deferred compensation and salary reduc-
tion arrangements treated as wages for FICA taxes.
Sec. 151. Codification of Rowan decision with respect to meals and lodging.
Sec. 152. Treatment of contributions under simplified employee pensions.
Sec. 201. Increase in benefit standard.
Sec. 202. Adjustments in Federal SSI pass-through provisions.
Sec. 203. Notification with respect to SSI program.
Sec. 301. Medicare payments for inpatient hospital services on the basis of prospec-
tive rates.
Sec. 302. Conforming amendments.
Sec. 303. Reports, experiments, and demonstration projects.
Sec. 304. Effective dates.
Sec. 305. Delay in provision relating to hospital-based skilled nursing facilities.
Sec. 306. Shift in part B premium to coincide with cost-of-living increase.
Sec. 307 Shift in voluntary part A premium to coincide with cost-of-living in-
crease.
PART A-FEDERAL SUPPLEMENTAL COMPENSATION
Sec. 401. Extension of program.
Sec. 402. Number of weeks for which compensation payable.
Sec. 403. Effective date.
PART B-PROVISIONS RELATING TO INTEREST AND CREDIT REDUCTIONS
Sec. 411. Deferral of interest.
Sec. 412. Cap on credit reduction.
Sec. 413. Average employer contribution rate.
Sec. 414. Date for payment of interest.
Sec. 415. Recoupment of interest.
Sec. 421. Treatment of employees providing services to educational institutions.
Sec. 422. Extended benefits for individuals who are hospitalized or on jury duty.
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1 TITLE I-SOCIAL SECURITY
2 PART A-CHANGES IN COVERAGE
3 COVERAGE OF NEWLY HIRED FEDERAL EMPLOYEES
4 SEC. 101. (a)(1) Section 210(a) of the Social Security
5 Act is amended by striking out paragraphs (5) and (6) and
6 inserting in lieu thereof the following:
7 "(5) Service performed in the employ of the
8 United States or any instrumentality of the United
9 States, if such service-
10 "(A) would not be included in the term 'em-
11 ployment' for purposes of this subsection by
12 reason of the provisions of paragraph (5) or (6) of
13 this subsection as in effect on January 1, 1983,
14 and
15 "(B) is performed by an individual who has
16 been continuously in the employ of the United
17 States or an instrumentality thereof (including,
18 solely for purposes of this paragraph, the receipt
19 of benefits under the Civil Service Retirement
20 and Disability Fund, or any other benefits (based
21 upon service as an employee) under another re-
22 tirement system established by a law of the
23 United States for employees of the Federal Gov-
24 ernment or members of the Uniformed Services as
25 being `in the employ' of the United States) since
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1 December 31, 1983 (and for this purpose an indi-
2 vidual who returns to the performance of such
3 service after a separation from such service shall
4 nevertheless be considered upon such return as
5 having been continuously in the employ of the
6 United States or an instrumentality thereof, re-
7 gardless of whether the period of such separation
8 began before, on, or after December 31, 1983, if
9 the period of such separation does not exceed 365
10 days);
11 except that this paragraph shall not apply with respect
12 to-
13 "(i) service performed as the President or
14 Vice President of the United States,
15 "(ii) service performed as a Member, Dele-
16 gate, or Resident Commissioner of or to the Con-
17 gress,
18 "(iii) service performed as the Commissioner
19 of Social Security, or
20 "(iv) any other service in the legislative
21 branch of the Federal Government if such service
22 is performed by an individual who, on December
23 31, 1983, is not subject to subchapter III of chap-
24 ter 83 of title 5, United States Code.
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1 "(6) Service performed in the employ of the
2 United States or any instrumentality of the United
3 States if such service is performed-
4 "(A) in a penal institution of the United
5 States by an inmate thereof;
6 "(B) by any individual as an employee in-
7 cluded under section 5351(2) of title 5, United
8 States Code (relating to certain interns, student
9 nurses, and other student employees of hospitals of
10 the Federal Government), other than as a medical
11 or dental intern or a medical or dental resident in
12 training; or
13 "(C) by any individual as an employee serv-
14 ing on a temporary basis in case of fire, storm,
15 earthquake, flood, or other similar emergency; ".
16 (2) Section 210(p) of such Act is amended by striking
17 out `provisions of-" and all that follows and inserting in
18 lieu thereof "provisions of subsection (a) (5). ".
19 (b)(1) Section 3121(b) of the Internal Revenue Code of
20 1954 is amended by striking out paragraphs (5) and (6) and
21 inserting in lieu thereof the following:
22 "(5) service performed in the employ of the
23 United States or any instrumentality of the United
24 States, if such service-
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"(A) would not be included in the term 'em-
2 ployment' for purposes of this subsection by
reason of the provisions of paragraph (5) or (6) of
this subsection as in effect on January 1, 1983,
and
"(B) is performed by an individual who has
been continuously in the employ of the United
8 States or an instrumentality thereof (including,
9 solely for purposes of this paragraph, the receipt
10 of benefits under the Civil Service Retirement
11 and Disability Fund, or any other benefits (based
12 upon service as an employee) under another re-
13 tirement system established by a law of the
14 United States for employees of the Federal Gov-
15 ernment or members of the Uniformed Services as
16 being `in the employ' of the United States) since
17 December 31, 1983 (and for this purpose an indi-
18 vidual who returns to the performance of such
19 service after a separation from such service shall
20 nevertheless be considered upon such return as
21 having been continuously in the employ of the
22 United States or an instrumentality thereof, re-
23 gardless of whether the period of such separation
24 began before, on, or after December 31, 1983, if
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1 the period of such separation does not exceed 365
2 days);
3 except that this paragraph shall not apply with respect
4 to-
5 "(i) service performed as the President or
6 Vice President of the United States,
7 "(ii) service performed as a Member, Dele-
8 gate, or Resident Commissioner of or to the Con-
9 gress,
10 "(iii) service performed as the Commissioner
11 of Social Security, or
12 "(iv) any other service in the legislative
13 branch of the Federal Government if such service
14 is performed by an individual who, on December
15 31, 1983, is not subject to subchapter III of chap-
16 ter 83 of title 5, United States Code;
17 "(6) service performed in the employ of the
18 United States or any instrumentality of the United
19 States if such service is performed-
20 "(A) in a penal institution of the United
21 States by an inmate thereof;
22 "(B) by any individual as an employee in-
23 cluded under section 5351(2) of title 5, United
24 States Code (relating to certain interns, student
25 nurses, and other student employees of hospitals of
S 1 RS--5
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1 the Federal Government), other than as a medical
2 or dental intern or a medical or dental resident in
3 training; or
4 "(C) by any individual as an employee serv-
5 ing on a temporary basis in case of fire, storm,
6 earthquake, flood, or other similar emergency;".
7 (2) Section 3121(u) (1) of such Code is amended to read
8 as follows:
9 "(1) IN GENERAL.-For purposes of the taxes
10 imposed by sections 3101(b) and 3111(b), subsection
11 (b) shall be applied without regard to paragraph (5)
12 thereof. ".
13 (c) The amendments made by this section shall be e f fec-
14 tive with respect to remuneration paid after December 31,
15 1983.
16 (d) Nothing in this Act shall reduce the accrued entitle-
17 ments to future benefits under the Federal Retirement
18 System of current and retired Federal employees and their
19 families.
20 COVERAGE OF EMPLOYEES OF NONPROFIT
21 ORGANIZATIONS
22 SEC. 102. (a) Section 210(a)(8) of the Social Security
23 Act is amended by striking out subparagraph (B) thereof and
24 by striking out "(A) " after "(8) ".
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1 (b) (1) Section 3121(b) (8) of the Internal Revenue Code
2 of 1954 is amended by striking out subparagraph (B) thereof
3 and by striking out "(A) " after "(8) ".
4 (2) Subsection (k) of section 3121 of such Code is re-
5 pealed.
6 (c) The amendments made by this section shall be e f fec-
7 tive with respect to remuneration paid after December 31,
8 1983.
9 (d) Notwithstanding any provision of section 3121(k) of
10 the Internal Revenue Code of 1954 (or any other provision of
11 law) the period for which a certificate is in effect under such
12 section may not be terminated on or after the date of the
13 enactment of this Act.
14 DURATION OF AGREEMENT FOR COVERAGE OF STATE AND
15 LOCAL EMPLOYEES
16 SEC. 103. (a) Subsection (g) of section 218 of the
17 Social Security Act is amended to read as follows:
18 "Duration of Agreement
19 "(g) No agreement under this section may be terminat-
20 ed, in its entirety or with respect to any coverage group, on or
21 after the date of the enactment of the Social Security Amend-
22 meets of 1983. ".
23 (b) The amendment made by subsection (a) shall apply
24 to any agreement in effect under section 218 of the Social
25 Security Act on the date of the enactment of this Act, without
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1 regard to whether a notice of termination was in effect on
2 such date, and to any agreement or modification thereof
3 which may become effective under such section 218 after that
4 date.
5 EXCLUSION OF SERVICES PERFORMED BY MEMBERS OF
6 CERTAIN RELIGIOUS SECTS
7 SEC. 104. (a) Section 3121 of the Internal Revenue
8 Code of 1954 is amended by adding at the end thereof the
9 following new subsection:
10 "(v) MEMBERS OF CERTAIN RELIGIOUS FAITHS.-
11 "(1) EXEMPTION.-Any individual may file an
12 application (in such form and manner, and with such
13 official, as may be prescribed by regulations under this
14 chapter) for an exemption from the tax imposed by this
15 chapter with respect to wages paid to such individual
16 by an employer who is exempt from the tax imposed
17 under section 1401 by reason of an exemption granted
18 under section 1402(g), if such individual is a member
19 Of a recognized religious sect or division thereof and is
20 an adherent of established tenets or teachings of such
21 sect or division by reason of which he is conscientious-
22 ly opposed to acceptance of the benefits of any private
23 or public insurance which makes payments in the
24 event of death, disability, old-age, or retirement or
25 makes payments toward the cost of, or provides services
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1 for, medical care (including the benefits of any insur-
2 ance system established by the Social Security Act).
3 Such exemption may be granted only if the application
4 contains or is accompanied by-
5 "(A) such evidence of such individual's
6 membership in, and adherence to the tenets or
7 teachings of the sect or division thereof as the
8 Secretary may require for purposes of determin-
9 ing such individual's compliance with the preced-
10 ing sentence, and
11 "(B) his waiver of all benefits and other
12 payments under titles II and X VIII of the Social
13 Security Act on the basis of his wages and self-
14 employment income as well as all such benefits
15 and other payments to him on the basis of the
16 wages and self-employment income of any other
17 person,
18 and only if the Secretary of Health and Human Serv-
19 ices finds that-
20 "(i) such sect or division thereof has the es-
21 tablished tenets or teachings referred to in the pre-
22 ceding sentence,
23 "(ii) it is the practice, and has been for a
24 period of time which he deems to be substantial,
25 for members of such sect or division thereof to
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1 make provision for their dependent members
2 which in his judgment is reasonable in view of
3 their general level of living, and
4 "(iii) such sect or division thereof has been
5 in existence at all times since December 31,
6 1950.
7 An exemption may not be granted to any individual if
8 any benefit or other payment referred to in subpara-
9 graph (B) became payable (or, but for section 203 or
10 222(b) of the Social Security Act, would have become
11 payable) at or before the time of the filing of such
12 waiver.
13 "(2) PERIOD FOR WHICH EXEMPTION EFFEC-
14 TIVE.-An exemption granted to any individual pur-
15 suant to this subsection shall apply with respect to all
16 taxable years beginning after December 31, 1983,
17 except that such exemption shall not apply for any cal-
18 endar year-
19 "(A) beginning (i) before the calendar year
20 in which such individual first met the require-
21 ments of the first sentence of paragraph (1), or
22 (ii) before the time as of which the Secretary of
23 Health and Human Services finds that the sect or
24 division thereof of which such individual is a
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1 member met the requirements of clauses (i) and
(ii) of paragraph (1), or
3 "(B) ending (i) after the time such individu-
4 al ceases to meet the requirements of the first sen-
5 tence of paragraph (1), or (ii) after the time as of
6 which the Secretary of Health and Human Serv-
7 ices finds that the sect or division thereof of which
8 he is a member ceases to meet the requirements of
9 clauses (i) and (ii) of paragraph (1). '
10 (b) Section 210(a) of the Social Security Act is amend-
11 ed-
12 (1) by striking out "or" at the end of paragraph
13 (19);
14 (2) by striking out the period at the end of para-
15 graph (20) and inserting in lieu thereof ", or",- and
16 (3) by adding at the end thereof the following new
17 paragraph:
18 "(21) Service performed, in the employ of an em-
19 ployer who is exempt from the tax imposed under sec-
20 tion 1401 of the Internal Revenue Code of 1954 by
21 reason of an exemption granted under section 1402(g)
22 Of such Code, by an individual with respect to whom
23 an exemption has been granted (and is applicable)
24 under section 3121(v) of such Code. ".
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1 (c) Section 3121(b) of the Internal Revenue Code of
2 1954 is amended-
3 (1) by striking out "or" at the end of paragraph
4 (19);
5 (2) by striking out the period at the end of para-
6 graph (20) and inserting in lieu thereof "7- or",- and
7 (3) by adding at the end thereof the following new
8 paragraph:
9 "(21) service performed, in the employ of an em-
10 ployer who is exempt from the tax imposed under sec-
11 tion 1401 by reason of an exemption granted under
12 section 1402(g), by an individual with respect to whom
13 an exemption has been granted (and is applicable)
14 under subsection (v) of this section. '
15 (d) Section 202(v) of the Social Security Act is amend-
16 ed by inserting "or 3121(b)" after "1402(g) " each place it
17 appears.
18 (e) The amendments made by this section shall apply
19 with respect to remuneration paid after December 31, 1983.
20 PART B-CHANGES IN BENEFITS
21 SHIFT OF COST-OF-LIVING ADJUSTMENTS TO CALENDAR
22 YEAR BASIS
23 SEC. 111. (a)(1) Section 215(i)(2)(A)(ii) of the Social
24 Security Act is amended by striking out "June" and insert-
25 ing in lieu thereof "December".
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1 (2) Section 215(i)(2)(A)(iii) of such Act is amended by
2 striking out "May" and inserting in lieu thereof "Novem-
3 ber".
4 (3) Section 215(i) (2) (B) of such Act is amended by
5 striking out "May" each place it appears and inserting in
6 lieu thereof in each instance "November"7 (4) Section 203(f) (8) (A) of such Act is amended by
8 striking out "June" and inserting in lieu thereof "Decem-
9 ber"10 (5) Section 230(a) of such Act is amended by striking
11 out "June " and inserting in lieu thereof "December"12 (6) Section 215(i)(2) of such Act as in effect in Decem-
13 ber 1978, and as applied in certain cases under the provi-
14 sions of such Act as in effect after December 1978, is amend-
15 ed by striking out "June" in subparagraph (A)(ii) and in-
16 serting in lieu thereof "December"; and by striking out
17 "May" each place it appears in subparagraph (B) and in-
18 serting in lieu thereof in each instance "November".
19 (7) Section 202(m) of such Act (as it applies in certain
20 cases by reason of section 2 of Public Law 97-123) is
21 amended by striking out "May" and inserting in lieu thereof
22 "November"23 (8) The amendments made by this subsection shall
24 apply with respect to cost-of-living increases determined
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1 under section 215(i) of the Social Security Act for years
2 after 1982.
3 (b) (1) Section 215(i) (1) (A) of the Social Security Act
4 is amended by striking out "March 31 " and inserting in lieu
5 thereof "September 30" , and by striking out "1974" and
6 inserting in lieu thereof "1982".
7 (2) Section 2156)(1)(A) of such Act as in effect in De-
8 cember 1978, and as applied in certain cases under the provi-
9 sions of such Act as in effect after December 1978, is amend-
10 ed by striking out "March 31 " and inserting in lieu thereof
11 "September 30"12 (3) The amendments made by this subsection shall
13 apply with respect to cost-of-living increases determined
14 under section 215(i) of the Social Security Act for years
15 after 1983.
16 (c) Section 215(i) (4) of such Act is amended by insert-
17 ing ", and as amended by section 201 (a) (6) and (b) (2) of the
18 Social Security Amendments of 1983, " after "as in effect in
19 December.1978"20 (d) Notwithstanding any provision to the contrary in
21 section 215(i) of the Social Security Act, the "base quarter"
22 (as defined in paragraph (1) (A) (i) of such section) in the
23 calendar year 1983 shall be a "cost-of-living computation
24 quarter" within the meaning of paragraph (1) (B) of such sec-
25 tion (and shall be deemed to have been determined by the
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1 Secretary of Health and Human Services to be a "cost-of-
2 living computation quarter" under paragraph (2)(A) of such
3 section) for all of the purposes of such Act as amended by this
4 section and by other provisions of this Act, without regard to
5 the extent by which the Consumer Price Index has increased
6 since the last prior cost-of-living computation quarter which
7 was established under such paragraph (1)(B).
8 ELIMINATION OF WINDFALL BENEFITS FOR INDIVIDUALS
9 RECEIVING PENSIONS FROM NONCOVERED EMPLOY-
10 MENT
11 SEC. 112. (a) Section 215(a) of the Social Security
12 Act is amended by adding at the end thereof the following
13 new paragraph:
14 "(7)(A) In the case of an individual who was not eligi-
15 ble for an old-age or disability insurance benefit for Decem-
16 ber 1983 and whose primary insurance amount would be
17 computed under paragraph (1) of this subsection, and who
18 first becomes eligible after 1983 to a monthly periodic pay-
19 ment (or a payment determined under subparagraph (D))
20 based (in whole or in part) upon his earnings for service
21 which did not constitute `employment' as defined in section
22 210 for purposes of this title (hereafter in this paragraph and
23 in subsection (d)(5) referred to as `noncovered service) of at
24 least one year's duration, the primary insurance amount of
25 that individual during his entitlement to old-age or disability
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1 insurance benefits shall be computed or recomputed under
2 subparagraph (B) with respect to the initial month in which
3 the individual becomes eligible for such benefits, and shall be
4 periodically recomputed thereafter at such times as the Secre-
5 tary determines there has been a significant change in the
6 amount of such periodic payment.
7 "(B) (ii) If paragraph (1) of this subsection would apply
8 to that individual (except for subparagraph (A) of this para-
9 graph), there shall first be computed an amount equal to the
10 individual's primary insurance amount under this subsection
11 (other than this paragraph), except that for purposes of such
12 computation the percentage of the individual's average in-
13 dexed monthly earnings established by subparagraph (A)(i)
14 of paragraph (1) shall be the percent specified in clause (ii).
15 There shall then be computed (without regard to this para-
16 graph) a second amount, which shall be equal to the individ-
17 ual's primary insurance amount under this subsection (other
18 than this paragraph), except that such second amount shall
19 be reduced by an amount equal to the applicable fraction (as
20 determined under subparagraph (E)) of the portion of the
21 monthly periodic payment attributable to noncovered service
22 to which the individual is entitled (or deemed to be entitled)
23 for the month for which such old-age or disability insurance
24 benefits are payable. For purposes of the preceding sentence,
25 the portion of the monthly periodic payment attributable to
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1 noncovered service shall be that portion of such payment
2 which bears the same ratio to the amount of such payment as
3 the number of months of service in noncovered service to
4 which such benefit is attributable (but only counting any
5 such months occurring after 1956) bears to the total number
6 of months of service to which such benefit is attributable. The
7 individual's primary insurance amount shall be the larger of
8 the two amounts computed under this subparagraph (before
9 the application of subsection (i)) and shall be deemed to be
10 computed under paragraph (1) of this subsection for the pur-
11 pose of applying other provisions of this title.
12 "(ii) For purposes of clause (i), the percent specified in
13 this clause is-
14 "(I) 78.4 percent, with respect to individuals who
15 initially become eligible for old age or disability insur-
16 ance benefits, or who die (before becoming eligible for
17 such benefits) in 1984;
18 "(II) 66.8 percent with respect to individuals who
19 so become eligible or die in 1985;
20 "(III) 55.2 percent with respect to individuals
21 who so become eligible or die in 1986;
22 "(IV) 43.6 percent with respect to individuals
23 who so become eligible or die in 1987; and
24 "(V) 32.0 percent with respect to individuals who
25 so become eligible or die in 1988 or thereafter.
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1 "(C) No primary insurance amount may be reduced by
2 reason of this paragraph below the amount of the primary
3 insurance amount as determined under paragraph (1)(C)(i).
4 "(D)(i) Any periodic payment that otherwise meets the
5 requirements of subparagraph (A), but which is paid on other
6 than a monthly basis, shall be allocated on a basis equivalent
7 to a monthly payment (as determined by the Secretary), and
8 such equivalent monthly payment shall constitute a monthly
9 periodic payment for purposes of this paragraph.
10 "(ii) In the case of an individual who has elected to
11 receive a periodic payment that has been reduced so as to
12 provide a survivors benefit to any other individual, the pay-
13 ment is deemed to be increased (for the purpose of any com-
14 putation under this paragraph) by such reduction.
15 "(iii) If an individual to whom subparagraph (A) ap-
16 plies is eligible for a periodic payment beginning with a
17 month that is subsequent to the month in which he becomes
18 eligible for old-age or disability insurance benefits, the
19 amount of that payment for purposes of subparagraph (B)
20 shall be deemed to be the amount to which he is, or is deemed,
21 to become entitled (subject to clauses (i), (ii), and (iv) of this
22 subparagraph) in such subsequent month.
23 "(iv) For purposes of this subparagraph, the term peri-
24 odic payment' includes a payment payable in a lump sum if
25 it is a commutation of, or a substitute for, periodic payments.
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1 "(E) For purposes of subparagraph (B), the applicable
2 fraction is-
3 "(i) in the case of an individual who first becomes
4 eligible during 1984 to a monthly periodic payment de-
5 scribed in subparagraph (A), one-fifteenth,
6 "(ii) in the case of an individual who first be-
7 comes eligible during 1985 to a monthly periodic pay-
8 ment described in subparagraph (A), two-fifteenths,
9 "(iii) in the case of an individual who first be-
10 comes eligible during 1986 to a monthly periodic pay-
11 ment described in subparagraph (A), one-fifth,
12 "(iv) in the case of an individual who first be-
13 comes eligible during 1987 to a monthly periodic pay-
14 ment described in subparagraph (A), four-fifteenths,
15 and
16 "(v) in the case of an individual who first be-
17 comes eligible during 1988 or thereafter to a monthly
18 periodic payment described in subparagraph (A), one-
19 third.
20 "(F) This paragraph shall not apply in the case of an
21 individual who has more than 30 years of coverage (as de-
22 fined in paragraph (1) (C) (ii). In the case of an individual
23 who has more than 24 years of coverage (as so defined), the
24 figure `32 percent' in subparagraph (B) shall, if larger, be
25 deemed to be-
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1 "(i) 90 percent, in the case of an individual who
2 has 30 or more of such years of coverage;
3 "(ii) 80 percent, in the case of an individual who
4 has 29 of such years;
5 "(iii) 70 percent, in the case of an individual who
6 has 28 of such years;
7 "(iv) 60 percent, in the case of an individual who
8 has 27 of such years;
9 "(v) 50 percent, in the case of an individual who
10 has 26 of such years; and
11 "(vi) 40 percent, in the case of an individual who
12 has 25 of such years. ".
13 (b) Section 215(d) of such Act is amended by adding at
14 the end thereof the following new paragraph:
15 "(5)(A) In the case of an individual who was not eligi-
16 ble for an old-age or disability insurance benefit for Decem-
17 ber 1983 and whose primary insurance amount is not com-
18 puted under paragraph (1) of subsection (a) by reason of
19 paragraph (4)(B)(ii) of that subsection, and who first be-
20 comes eligible after 1983 to a monthly periodic payment (or a
21 payment determined under subsection (a)(7)(D)) based (in
22 whole or in part) upon his earnings in noncovered service of
23 at least one year's duration, his primary insurance amount
24 for purposes of his entitlement to old-age or disability insur-
25 ance benefits shall be the primary insurance amount comput-
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1 ed or recomputed under this subsection (without regard to
2 this paragraph and before the application of subsection (i))
3 reduced by an amount equal to the smaller of-
4 "(i) one-half of the primary insurance amount
5 (computed without regard to this paragraph and before
6 the application of subsection (i)), or
7 "(ii) the applicable fraction (as determined under
8 subparagraph (B)) of the portion of the monthly peri-
9 odic payment (or payment determined under subsection
10 (a)(7)(D)) attributable to noncovered service to which
11 that individual is entitled (or deemed to be entitled) for
12 the initial month of his eligibility for old-age or dis-
13 ability insurance benefits.
14 For purposes of the preceding sentence, the portion of the
15 monthly periodic payment attributable to noncovered service
16 shall be that portion of such payment which bears the same
17 ratio to the amount of such payment as the number of months
18 of service in noncovered service to which such benefit is at-
19 tributable bears to the total number of months of service to
20 which such benefit is attributable. The amount of such peri-
21 odic payment for purposes of clause (ii) shall be periodically
22 recomputed at such times as the Secretary determines there
23 has been a significant change in the amount of such periodic
24 payment.
S 1 RS--6
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1 "(B) For purposes of subparagraph (A), the applicable
2 fraction is-
3 "(i) in the case of an individual who first becomes
4 eligible during 1984 to a monthly periodic payment de-
5 scribed in subparagraph (A), one-fifteenth,
6 "(ii) in the case of an individual who first be-
7 comes eligible during 1985 to a monthly periodic pay-
8 ment described in subparagraph (A), two-fifteenths,
9 "(iii) in the case of an individual who first be-
10 comes eligible during 1986 to a monthly periodic pay-
11 ment described in subparagraph (A), one-fifth,
12 "(iv) in the case of an individual who first be-
13 comes eligible during 1987 to a monthly periodic pay-
14 ment described in subparagraph (A), four-fifteenths,
15 and
16 "(v) in the case of an individual who first be-
17 comes eligible during 1988 or thereafter to a monthly
18 periodic payment described in subparagraph (A), one-
19 third. '
20 "(C) No primary. insurance amount may be reduced by
21 reason of this paragraph below the amount of the primary
22 insurance amount as determined under subsection
23 (a)(1)(C)(i).'
24 (c) Section 215(f) of such Act is amended by adding at
25 the end the following new paragraph:
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1 "(9)(A) In the case of an individual who first becomes
2 eligible for a periodic payment determined under subsection
3 (a)(7)(A) or (a)(7)(D) in a month subsequent to the first
4 month in which he becomes eligible for an old-age or disabil-
5 ity insurance benefit, and whose primary insurance amount
6 has been computed without regard to either such subsection or
7 subsection (d)(5), such individual's primary insurance
8 amount shall be recomputed, in accordance with either such
9 subsection or subsection (d) (5), as may be applicable, e f f ec-
10 tive with the first month of his concurrent eligibility for
11 either such benefit and such periodic payment.
12 "(B) If an individual's primary insurance amount has
13 been computed under subsection (a)(7) or (d)(5), and it be-
14 comes necessary . to recompute that primary insurance
15 amount under this subsection-
16 "(i) so as to increase the monthly benefit amount
17 payable with respect to such primary insurance
18 amount (other than in the case of the individual's
19 death), such increase shall be determined as though
20 such primary insurance amount had initially been
21 computed without regard to subsection (a) (7) or (d) (5),
22 or
23 "(ii) by reason of the individual's death, such pri-
24 mary insurance amount shall be recomputed without
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1 regard to (and as though it had never been computed
2 with regard to) subsection (a) (7) or (d) (5).
3 "(C) In the case of any individual whose primary in-
4 surance amount is subject to the requirements of subsection
5 (a) (7) or (d) (5), the amount of such primary insurance
6 amount shall be recomputed as may be required under such
7 subsections by reason of a significant change in the amount
8 of the relevant periodic payment. ".
9 (d) Sections 202(e)(2)(B)(i) and 202(f)(3)(B)(i) of such
10 Act are each amended by striking out "section 215(f)(5) or
11 (6) " and inserting in lieu thereof "section 215(f) (5),
12 215(f)(6), or 215(f)(9)(B)":
13 BENEFITS FOR SURVIVING DIVORCED SPOUSES AND
14 DISABLED WIDOWS AND WIDOWERS WHO REMARRY
15 SEC. 113. (a)(1) Section 202(e)(3) of the Social Secu-
16 rity Act is repealed.
17 (2) Section 202(e)(4) of such Act is amended to read as
18 follows:
19 "(4) For purposes of paragraph (1), i f -
20 "(A) a widow or a surviving divorced wife mar-
21 ries after attaining age 60, or
22 "(B) a disabled widow or disabled surviving di-
23 vorced wife described in paragraph (1)(B)(ii) marries
24 after attaining age 50,
25 such marriage shall be deemed not to have occurred. '
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1 (b) (1) Section 202(f) (4) of such Act is repealed.
2 (2) Section 202(f)(5) of such Act is amended to read as
3 follows:
4 "(5) For purposes of paragraph (1), i f -
5 "(A) a widower marries after attaining age 60, or
6 "(B) a disabled widower described in paragraph
7 (1) (B) (ii) marries after attaining age 50,
8 such marriage shall be deemed not to have occurred. ".
9 (c)(1) The amendments made by subsection (a) shall be
10 effective with respect to monthly benefits payable under title
11 II of the Social Security Act for months after December
12 1983.
13 (2) In the case of an individual who was not entitled to
14 a monthly benefit under title II of such Act for December
15 1983, no benefit shall be paid under such title by reason of
16 such amendments unless proper application for such benefit
17 is made.
18 DETERMINATION OF PRIMARY INSURANCE AMOUNT FOR
19 DEFERRED SURVIVOR BENEFITS
20 SEC. 114. (a) Section 215(a) of the Social Security
21 Act is amended by adding at the end thereof the following
22 new paragraph:
23 "(8) (A) If a person is entitled to benefits under subsec-
24 tion (e) or (f) of section 202 on the basis of the wages and
25 self-employment income of a deceased individual whose pri-
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1 mary insurance amount would otherwise be determined
2 under paragraph (1), the primary insurance amount of such
3 deceased individual shall be determined, for purposes of de-
4 termining the amount of the benefit under such subsection, as
5 if such deceased individual died in the year in which the
6 person entitled to benefits under such subsection first became
7 eligible for such benefits or, if earlier, the year in which such
8 deceased individual would have attained age 62 if he had not
9 died (except that the actual year of death of such deceased
10 individual shall be used for purposes of section
11 215(b) (2) (B) (ii) (II)).
12 "(B) Notwithstanding subparagraph (A), if a person-
13 "(i) is entitled to benefits under subsection (e) or
14 (f) Of section 202 on the basis of the wages and self-
15 employment income of a deceased individual, and
16 "(ii) was entitled to benefits under this title on
17 the basis of the wages and self-employment income of
18 such deceased individual in the month before the month
19 in which such person became eligible for the benefits
20 described in clause (i),
21 the primary insurance amount of such deceased individual
22 shall be the primary insurance amount determined under the
23 rules which would apply (but for subparagraph (A)) or the
24 primary insurance amount determined under subparagraph
25 (A), whichever is larger. ".
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1 (b) The amendments made by subsection (a) shall apply
2 to the benefits of individuals who become eligible for benefits
3 under section 202 (e) and (f) of the Social Security Act after
4 December 1984.
5 BENEFITS FOR DIVORCED SPOUSE REGARDLESS OF
6 WHETHER FORMER SPOUSE HAS RETIRED
7 SEC. 115. (a) Section 202(b) of the Social Security
8 Act is amended by adding at the end thereof the following
9 new paragraph:
10 "(5) For purposes of determining the entitlement of a
11 divorced wife to a benefit under this subsection and the
12 amount of such benefit, in the case of a wife who has been
13 divorced from her former husband for a period of not less
14 than 24 months-
15 "(A) such former husband shall be deemed to be
16 entitled to an old-age insurance benefit if he would be
17 entitled to such a benefit if he applied therefor; and
18 "(B) the amount of such benefit for such divorced
19 wife shall be determined without regard to reductions
20 which are or would be made under section 203 on ac-
21 count of work performed by such former husband. ".
22 (b)(1) The amendment made by subsection (a) shall be
23 effective with respect to monthly benefits payable under title
24 II of the Social Security Act for months after December
25 1984.
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1 (2) In the case of an individual who was not entitled to
2 a monthly benefit under title II of such Act for December
3 1984, no benefit shall be paid under such title by reason of
4 such amendment unless proper application for such benefit is
5 made.
6 INCREASE IN BENEFIT AMOUNT FOR DISABLED WIDOWS
7 AND WIDOWERS
8 SEC. 116. (a)(1) Section 202(q)(1) of the Social Secu-
9 city Act is amended by striking out the semicolon at the end
10 of subparagraph (B)(ii) and all that follows and inserting in
11 lieu thereof a period.
12 (2) Section 202(q)(6) of such Act is amended to read as
13 follows:
14 "(6) For purposes of this subsection, the `reduction
15 period' for an old-age, wife's, husband's, widow's, or widow-
16 er's insurance benefit is the period beginning-
17 "(A) in the case of an old-age or husband's insur-
18 ance benefit, with the first day of the first month for
19 which such individual is entitled to such benefit,
20 "(B) in the case of a wife's insurance benefit,
21 with the first day of the first month for which a certifi-
22 cate described in paragraph (5)(A)(i) is effective, or
23 "(C) in the case of a widow's or widower's insur-
24 ance benefit, with the first day of the first month for
25 which such individual is entitled to such benefit or the
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1 first day of the month in which such individual attains
2 age 60, whichever is later,
3 and ending with the last day of the month before the month in
4 which such individual attains retirement age. ".
5 (3) Section 202(q)(7) of such Act is amended by strik-
6 ing out the matter preceding subparagraph (A) and inserting
7 in lieu thereof the following:
8 "(7) For purposes of this subsection, the `adjusted re-
9 duction period' for an old-age, wife's, husband's, widow's, or
10 widower's insurance benefit is the reduction period prescribed
11 in paragraph (6) for such benefit, excluding- ".
12 (4) Paragraphs (1) (B) (i), (3) (E) (ii), and (3) (F) (ii) of
13 section 202(q) of such Act are each amended by striking out
14 "(6) (A) " and inserting in lieu thereof in each instance "(6) ".
15 (5) Section 202(q)(3)(G) of such Act is amended by
16 striking out "paragraph (6)(A) (or, if such paragraph does
17 not apply, the period specified in paragraph (6)(B))" and
18 inserting in lieu thereof "paragraph (6) ".
19 (6) Section 202(q)(10) of such Act is amended-
20 (A) by striking out "or an additional adjusted re-
21 duction period"22 (B) in subparagraphs (B) (i), (C) (i), and (C) (ii),
23 by striking out
plus the number of months in the
24 adjusted additional reduction period multiplied by 43/24o
25 of 1 percent" and
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1 (C) in subparagraph (B)(ii), by striking out
2 plus the number of months in the additional reduction
3 period multiplied by 43/40 Of 1 percent'
4 (b) (1) The amendments made by this section shall be
5 effective with respect to monthly benefits under title II of the
6 Social Security Act for months after December 1983.
7 (2) In the case of an individual who was not entitled to
8 a monthly benefit under title II of such Act for December
9 1983, no benefit shall be paid under such title by reason of
10 such amendments unless proper application for such benefit
11 is made.
12 ADJUSTMENT TO COST-OF-LIVING INCREASE WHEN TRUST
13 FUND RATIO FALLS BELOW 20 PERCENT
14 SEC. 117 (a) Section 215(i) (2) (A) (ii) of the Social Se-
15 curity Act is amended, in the matter following clause (III),
16 by striking out "The increase shall be derived" and inserting
17 in lieu thereof "Except as otherwise provided in paragraph
18 (5), the increase shall be derived".
19 (b) Section 215(i) of such Act is amended by adding at
20 the end thereof the following new paragraph:
21 "(5) (A) The amount of the increase under paragraph
22 (2) to become effective for monthly benefits payable for De-
23 cember 1988 or any December thereafter shall, if the Secre-
24 tary makes a finding under this paragraph that the combined
25 trust funds ratio (as defined in subparagraph (D)) as of the
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1 start of business on January 1 of the calendar year in which
2 such December falls is less than 20.0 percent, be determined
3 under paragraph (2) by substituting-
4 "(i) the percentage (rounded to the nearest one-
5 tenth of 1 percent) by which the average of the total
6 wages for the preceding calendar year (as determined
7 for purposes of subsection (b) (3) (A) (ii)) exceeds such
8 average for the second preceding calendar year (and if
9 no increase in such wages took place, the percentage
10 shall be deemed to be zero), for
11 "(ii) the percentage otherwise applicable under
12 paragraph (2),
13 but only if the percentage determined under clause (i) is less
14 than the percentage determined under clause (ii).
15 "(B) In any case in which a cost-of-living adjustment
16 would not be made under this subsection on account of the
17 relevant increase in the Consumer Price Index being less
18 than 3 percent, no such cost-of-living increase shall be made
19 by reason of this paragraph. For purposes of any subsequent
20 determination of a cost-of-living increase based upon a period
21 of more than 12 months, the percentage of the cost-of-living
22 increase (if any) to be applied under paragraph (2) shall be
23 the sum of the percentage increases for each relevant 12-
24 month period in such longer period which would have been
25 effective under this subsection (including this paragraph) but
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1 for the provision of paragraph (1) which limits such increases
2 only to cases in which the relevant increase in the Consumer
3 Price Index is equal to or greater than 3 percent.
4 "(C) The Secretary shall make the finding with respect
5 to the combined trust funds ratio (as of the start of business
6 on January 1 of each calendar year) on October 1 of each
7 calendar year, based upon the most recent data available as
8 of that time.
9 "(D) For purposes of this paragraph, the term `com-
10 bined trust funds ratio' means the ratio of-
11 "(i) the combined balance in the Federal Old-Age
12 and Survivors Insurance Trust Fund and the Federal
13 Disability Insurance Trust Fund, reduced by the
14 amount of any outstanding loan (including interest
15 thereon) from the Federal Hospital Insurance Trust
16 Fund, as of the start of business on January 1 of any
17 calendar year, to
18 "(ii) the amount estimated by the Secretary to be
19 the total amount to be paid from the Federal Old-Age
20 and Survivors Insurance Trust Fund and the Federal
21 Disability Insurance Trust Fund during such calendar
22 year for all purposes authorized by section 201, but ex-
23 cluding any transfer payments between such trust
24 funds and reducing the amount of any transfer to the
25 Railroad Retirement Account by the amount of any
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1 transfers into either such trust fund from the Railroad
2 Retirement Account.
3 "(E) If any increase under paragraph (2) has been de-
4 termined on the basis of the substitute formula in subpara-
5 graph (A) (i) of this paragraph, and, for any succeeding cal-
6 endar year, the Secretary determines that the combined trust
7 funds ratio is greater than 32.0 percent, the Secretary shall
8 pay additional benefits with respect to the 12-month period
9 beginning with the following December in amounts not to
10 exceed-
11 "(i) in the aggregate, a total amount which, ac-
12 cording to actuarial estimate, equals the amount by
13 which the balance in such trust funds on the date of
14 such determination exceeds the amount necessary to
15 effect a combined trust funds ratio of 32.0 percent for
16 the following year; and
17 "(ii) with respect to any individual, for benefits
18 for each month in such 12-month period, an amount
19 equal to one-twelfth of the total amount by which all
20 benefits paid to him during all previous years were less
21 than the amounts which would have been paid to him
22 but for the provisions of this paragraph.
23 Such additional benefits shall be paid as a percentage in-
24 crease in the monthly benefits otherwise payable for months
25 during such 12-month period. If there are not sufficient
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1 funds available to pay additional benefits in the full amount
2 to all individuals (taking into account the limitation in
3 clause (i)), amounts paid under this subparagraph shall be
4 paid on a pro rata basis to all individuals who are entitled to
5 any such amount and are entitled to a benefit under this title
6 for the months in which such additional amounts are being
7 paid.
8 "(F) In any case in which additional payments are
9 made by reason of the provisions of subparagraph (E), for
10 purposes of determining benefit amounts for months after the
11 12-month period for which such additional benefits were
12 made, the percentage increase under this subsection applica-
13 ble to benefits payable for such 12-month period shall be
14 deemed to be the actual percentage achieved by reason of such
15 additional payments (as measured with respect to payments
16 which are not subject to reduction under any other provision
17 of this Act). '
18 (c) Only with respect to the determination made for
19 January 1, 1988, the combined trust fund ratio for such year
20 (for purposes of determining the increase under section
21 215(i) of the Social Security Act for benefits payable for
22 December of such year) shall be determined by using the ac-
23 tuarial estimate of the Secretary of Health and Human serv-
24 ices of the ratio of-
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1 (1) the combined balance which will be available
2 in the Federal Old-Age and Survivors Insurance
3 Trust Fund and the Federal Disability Insurance
4 Trust Fund, reduced by the amount of any outstanding
5 loan (including interest thereon) from the Federal Hos-
6 pital Insurance Trust Fund, at the close of business on
7 December 31 of such calendar year, to
8 (2) the amount estimated by the Secretary to be
9 the total amount to be paid from the Federal Old-Age
10 and Survivors Insurance Trust Fund and the Federal
11 Disability Insurance Trust Fund for calendar year
12 1988 for all purposes authorized by section 201 of such
13 Act, but excluding any transfer payments between such
14 trust funds, and reducing the amount of any transfer
15 to the Railroad Retirement Account by the amount of
16 any transfers into either such trust fund from the Rail-
17 road Retirement Account.
18 (d) Section 1617(a) (2) of the Social Security Act is
19 amended by inserting `; or, if greater, the percentage by
20 which benefit amounts under title II would be increased for
21 such month but for the provisions of section 215(i) (5), "after
22 "are increased for such month ".
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1 INCREASE IN OLD-AGE INSURANCE BENEFIT AMOUNTS ON
2 ACCOUNT OF DELAYED RETIREMENT
3 SEC. 118. (a) Section 202(w)(1)(A) of the Social Secu-
4 rity Act is amended to read as follows:
5 "(A) the applicable percentage (as determined
6 under paragraph (6)) of such amount, multiplied by".
7 (b) Section 202(w) of such Act is amended by adding at
8 the end thereof the following new paragraph:
9 "(6) For purposes of paragraph (1)(A), the applicable
10 percentage is-
11 "(A) 1/12 of 1 percent in the case of an individual
12 who first becomes eligible for an old-age insurance
13 benefit before 1979; and
14 "(B) 1/4 of 1 percent in the case of an individual
15 who first becomes so eligible after 1978, and before
16 1990;
17 "(C) in the case of an individual who first be-
18 comes so eligible after 1989 and before 2009, a per-
19 centage equal to the percentage in effect under this sub-
20 paragraph for individuals who first became eligible in
21 the preceding calendar year (as increased pursuant to
22 this clause), plus 1/48 o f 1 percent, and
23 "(D) in the case of an individual who first be-
24 comes so eligible after 2008, % of 1 percent. ".
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1 (c) (1) Paragraphs (2) (A) and (3) of section 202 (w) of
2 such Act are each amended by striking out "age 72" and
3 inserting in lieu thereof "age 70".
4 (2) The amendments made by paragraph (1) shall apply
5 with respect to increment months in calendar years after
6 1983.
7 INCREASE IN RETIREMENT AGE
8 SEC. 119. (a) Section 216 of the Social Security Act is
9 amended by inserting before subsection (b) the following new
10 subsection:
11 "Retirement Age
12 "(a) (1) The term `retirement age' means-
13 "(A) with respect to an individual who attains the
14 early retirement age (as defined in paragraph (2))
15 before January 1, 2000, 65 years of age;
16 "(B) with respect to an individual who attains
17 early retirement age after December 31, 1999, and
18 before January 1, 2012, 65 years of age plus the
19 number of months in the age increase factor (as deter-
20 mined under paragraph (3)) for the year in which such
21 individual attains early retirement age; and
22 "(C) with respect to an individual who attains
23 early retirement age after December 31, 2014, 66
24 years of age.
S 1 RS--7
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1 "(2) The term `early retirement age' means age 62 in
2 the case of an old-age, wife's, or husband's benefit, and age
3 60 in the case of a widow's or widower's benefit.
4 "(3) The age increase factor for individuals who attain
5 early retirement age in the period described in subparagraph
6 (B) shall be equal to one-twelfth of the number of months in
7 the period beginning with January 2000 and ending with
8 December of the year in which the individual attains early
9 retirement age.
10 (b)(1) Section 202(q)(9) of such Act is amended to read
11 as follows:
12 "(9) The amount of the reduction for early retirement
13 specified in paragraph (1) shall be periodically revised by the
14 Secretary such that-
15 "(A) for old-age insurance benefits, wife's insur-
16 ance benefits, and husbands insurance benefits, the re-
17 duction applicable to an individual entitled to such a
18 benefit at an age not more than 3 years lower than the
19 retirement age applicable to such individual, shall be
20 the same as under such paragraph (1), and such reduc-
21 tion shall be increased by five-twelfths of 1 percent for
22 each month below that age which is 3 years lower than
23 the applicable retirement age; and
24 "(B) for widow's insurance benefits and widow-
25 er's insurance benefits, the reduction for those entitled
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1 to such benefits at the earliest possible early retirement
2 age shall be the same as specified in paragraph (1),
3 and those for later ages shall be established by linear
4 interpolation between the applicable reduction for such
5 earliest possible early retirement age and a factor of
6 unity at the applicable retirement age. ".
7 (2) Section 202(q)(1) of such Act is amended by strik-
8 ing out "If " and inserting in lieu thereof "Subject to para-
9 graph (9), if
".
10 (c) The Social Security Act is amended-
11 (1) by striking out "age 65 " or "age of 65", as
12 the case may be, each place it appears in the following
13 sections and inserting in lieu thereof in each instance
14 "retirement age (as defined in section 216(a))"-
15 (A) subsections (a), (b), (c), (d), (e), (f), (q),
16 (r), and (w) of section 202,
17 (B) subsections (c) and (f) of section 203,
18 (C) section 211(b) (3),
19 (D) subsection (f) of section 215,
20 (E) subsections (h) and (i) of section 216,
21 (F) section 223(a),
22 (G) subsections (a), (b), (c), and (e) of sec-
23 tion 226,
24 (H) section 1811,
25 (1) section 1818(a)(1),
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1 (J) section 1836(2),
2 (K) section 1837,
3 (L) subsections (c) and (f) of section 1839,
4 (M) section 1838,
5 (N) section 1844(a), and
6 (0) section 1876(a) (5);
7 (2) by striking out "age sixty-five" in section
8 203(c) and inserting in lieu thereof "retirement age (as
9 defined in section 216(a))' , and
10 (3) by striking out "age of sixty-five" in section
11 223(a) and inserting in lieu thereof "retirement age
12 (as defined in section 216(a))'
13 ADJUSTMENTS IN OASDI BENEFIT FORMULA
14 SEC. 120. (a) Section 215(a)(1)(A) of the Social Secu-
15 rity Act is amended by striking out "90 percent" in clause
16 (i), "32 percent" in clause (ii), and "15 percent" in clause
17 (iii) and inserting in lieu thereof in each instance "the appli-
18 cable percentage (determined under paragraph (8))".
19 (b) The first sentence of section 215(a) (7) (B) of such
20 Act (as added by section 113(a) of this Act) is amended by
21 striking out "61 percent" and inserting in lieu thereof "the
22 applicable percentage as determined under paragraph (8) ".
23 (c) Section 215(a) of such Act is further amended by
24 adding at the end thereof (after the new paragraph added by
25 section 113 of this Act) the following new paragraph:
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1 "(8) The `applicable percentages' for purposes of clauses
2 (i), (ii), and (iii) of paragraph (1) (A), and the `applicable
3 percentage' for purposes of the first sentence of paragraph
4 (7)(B), shall be determined as follows:
"For individuals who
initially become eligible for
old-age or disability
insurance benefits, or who
die (before becoming eligible
for such benefits) in-
for Purposes o f clause
for purposes of clause (ii) of paragraph for purposes of clause
(i) of paragraph (1)(A) and the first (iii) of paragraph
(1)(A) is- sentence of paragraph (1)(A) is-
(7)(B) is-
any year from 1979
through 1999............
90.0
32.0
15.0
2000 ..............................
89.4
31.8
14.9
2001
..............................
88.8
31.6
14.8
2002
..............................
88.2
31.4
14.7
2003
..............................
87.6
31.1
14.6
2004
..............................
87.0
30.9
14.5
2005 ..............................
86.4
30.7
14.4
2006 ..............................
85.8
30.5
.14.3
2007 or thereafter.........
85.2
30.3
14.2
5 PHASEOUT OF EARNINGS LIMITATION FOR BENEFICI-
6 ARIES WHO HAVE ATTAINED RETIREMENT AGE
7 SEC. 121. (a) Section 203(f)(8)(D) of the Social Secu-
8 rity Act is amended by inserting "(i) " after "(D) " and
9 adding at the end thereof the following new clause:
10 "(ii) Notwithstanding any other provision of this sub-
11 section, the exempt amount applicable to any individual who
12 has attained retirement age, as otherwise determined under
13 this subsection, shall be increased by-
14 "(I) $250 for each month in any taxable year
15 ending after 1989 and before 1991;
16 "(II) $500 for each month in any taxable year
17 ending after 1990 and before 1992;
S1RS
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1 "(III) $750 for each month in any taxable year
2 ending after 1991 and before 1993,
3 "(IV) $1,000 for each month in any taxable year
4 ending after 1992 and before 1994; and
5 "(V) $1,250 for each month in any taxable year
6 ending after 1993 and before 1995. ".
7 (b) Section 203(c)(1) of the Social Security Act is
8 amended by striking out "the age of seventy" and inserting
9 in lieu thereof "retirement age".
10 (c) The last sentence of section 203(c) of such Act is
11 amended by striking out "nor shall any deduction" and all
12 that follows and inserting in lieu thereof "nor shall any de-
13 duction be made under this subsection from any widow's or
14 widower's insurance benefits if the widow, surviving divorced
15 wife, widower, or surviving divorced husband involved
16 became entitled to such benefit prior to attaining age 60. ".
17 (d) Section 203(d)(1) of such Act is amended by strik-
18 ing out "the age of seventy" and inserting in lieu thereof
19 "retirement age"20 (e) Section 203(f)(1) of such Act is amended-
21 (1) in clause (B), by striking out "the age of sev-
22 enty" and inserting in lieu thereof "retirement age
23 (2) by amending clause (D) to read as follows:
24 "(D) for which such individual is entitled to widow's
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1 or widower's insurance benefits if such individual
2 became so entitled prior to attaining age 60, ' , and
3 (3) by striking out "the applicable exempt
4 amount" each place it appears and inserting in lieu
5 thereof in each instance "the exempt amount".
6 (f) Section 203(f)(3) of such Act is amended-
7 (1) by striking out "applicable exempt amount"
8 and inserting in lieu thereof "exempt amount" and
9 (2) by striking out "age 70" and inserting in lieu
10 thereof "retirement age"11 (g) Section 203(f)(4)(B) of such Act is amended by
12 striking out "applicable exempt amount" and inserting in
13 lieu thereof "exempt amount".
14 (h) Section 203(f)(8)(A) of such Act is amended by
15 striking out "exempt amounts (separately stated for individ-
16 uals described in subparagraph (D) and for other individ-
17 uals) which are to be applicable " and inserting in lieu thereof
18 "exempt amount which is to be applicable"19 (i) Section 203(f)(8)(B) of such Act is amended-
20 (1) by striking out "Except as otherwise provided
21 in subparagraph (D), the exempt amount which is ap-
22 plicable to individuals described in such subparagraph
23 and the exempt amount which is applicable to other in-
24 dividuals, for each month of a particular taxable year,
25 shall each be" and inserting in lieu thereof "The
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1 exempt amount for each month of a particular taxable
2 year shall be'
3 (2) in clause (i), by striking out "corresponding'
4 and
5 (3) in the matter following clause (ii), by striking
6 out "an exempt amount " and inserting in lieu thereof
7 "the exempt amount ".
8 (j) Section 203(f)(8) of such Act is amended by striking
9 out subparagraph (D) thereof.
10 (k) Section 203(h)(1)(A) of such Act is amended-
11. (1) by striking out "applicable exempt amount "
12 and inserting in lieu thereof "exempt amount", and
13 (2) by striking out "age 70" each place it appears
14 and inserting in lieu thereof in each instance "retire-
15 ment age"16 (1) Section 203(j) of such Act is amended-
17 (1) by striking out "Age Seventy" in the heading
18 thereof and inserting in lieu thereof "Retirement Age'
19 and
20 (2) by striking out "seventy years of age" and in-
21 serting in lieu thereof "retirement age'.
22 (m) Section 202(w)(2) of such Act (as amended by sec-
23 tion 118 of this Act) is further amended by inserting "for
24 months prior to 1984" before "and prior"
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1 (n) The amendments made by this section, other than
2 subsection (a) and subsection (m), shall be effective with re-
3 spect to taxable years ending after 1994.
4 INCREASE IN DROPOUT YEARS FOR TIME SPENT IN
5 CHILD CARE
6 SEC. 122. (a) Section 215(b)(2)(A) of the Social Secu-
7 rity Act is amended, in the third sentence thereof-
8 (1) by striking out "clause (ii) " each place it ap-
9 pears and inserting in lieu thereof in each instance
10 "clause (i) or (ii)" and
11 (2) by striking out "a combined total not exceed-
12 ing 3" and inserting "a combined total not exceeding
13
7.
14 (b) The amendments made by this section shall apply
15 only with respect to individuals who first become eligible for
16 benefits under title II of the Social Security Act for months
17 after December 1983.
18 LIMITATION ON PAYMENTS TO PRISONERS
19 SEC. 123. (a) Section 202 of the Social Security Act is
20 amended by adding at the end thereof the following new sub-
21 section:
22 "Suspension of Benefits for Inmates of Penal Institutions
23 "(x)(1) Notwithstanding any other provision of this
24 title, no monthly benefits shall be paid under this section or
25 under section 223 to any individual for any month during
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1 which such individual is confined in a jail, prison, or other
2 penal institution or correctional facility, pursuant to his con-
3 viction of an offense which constituted a felony under appli-
4 cable law.
5 "(2) Benefits which would be payable to any individual
6 (other than a confined individual to whom benefits are not
7 payable by reason of paragraph (1)) under this title on the
8 basis of the wages and self-employment income of such a con-
9 fined individual but for the provisions of paragraph (1), shall
10 be payable as though such confined individual were receiving
11 such benefits.
12 "(3) Notwithstanding the provisions of section 552a of
13 title 5, United States Code, or any other provision of Federal
14 or State law, any agency of the United States Government
15 or of any State (or political subdivision thereof) shall make
16 available to the Secretary, upon written request, the name
17 and social security account number of any individual who is
18 confined in a jail, prison, or other penal institution or correc-
19 tional facility under the jurisdiction of such agency, pursu-
20 ant to his conviction of an offense which constituted a felony
21 under applicable law, which the Secretary may require to
22 carry out the provisions of this subsection. ".
23 (b) Section 223 of such Act is amended by striking out
24 subsection (f).
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1 (c) The amendments made by subsections (a) and (b)
2 shall apply with respect to monthly benefits payable for
3 months beginning on or after the date of the enactment of this
4 Act.
5 LIMITATIONS ON PAYMENTS TO NONRESIDENT ALIENS
6 SEC. 124. (a) Section 202(t)(1) of the Social Security
7 Act is amended to read as follows:
8 "(1)(A) Notwithstanding any other provision of this
9 title (but subject to subparagraphs (B) through (D) of this
10 paragraph), no monthly benefit shall be paid under this sec-
11 tion or section 223 for any month to any individual who is
12 not a citizen or national of the United States if such individ-
13 ual is outside the United States.
14 "(B) For purposes of this paragraph, an individual
15 shall be considered to be outside the United States in any
16 month only if such month occurs-
17 "(i) after the sixth consecutive calendar month
18 during all of which (as determined by the Secretary on
19 the basis of information furnished to him by the Attor-
20 ney General or information which otherwise comes to
21 his attention) such individual is outside the United
22 States, and
23 "(ii) prior to the first month thereafter during all
24 of which such individual has been in the United
25 States;
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1 but in applying the preceding provisions of this subparagraph
2 an individual who has been outside the United States for any
3 period of 30 consecutive days shall be treated as remaining
4 outside the United States until he has been in the United
5 States for a period of 30 consecutive days.
6 "(C)(i) An individual who is otherwise prevented by
7 subparagraph (A) from receiving benefits under this title
8 shall nevertheless be paid such benefits, as though such sub-
9 paragraph were inapplicable, until the total amount of such
10 benefits (excluding amounts withheld from such benefits
11 under section 1441 of the Internal Revenue Code of 1954)
12 equals the total amount of the taxes payable under sections
13 3101 and 1401 of the Internal Revenue Code of 1954 (or the
14 corresponding provisions of prior law) with respect to the
15 wages and self-employment income on which such benefits
16 are based (as determined by the Secretary on the basis of
17 such wages and self-employment income) plus interest (as de-
18 termined under clause (iii)).
19 "(ii) In determining the total amount of benefits pay-
20 able to an individual under clause (i) with respect to the
21 wages and self-employment income of any individual, the
22 Secretary shall take into account all benefits paid before such
23 determination is made on the basis of such wages and self-
24 employment income (wherever paid).
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1 "(iii) For purposes of this subparagraph, interest on
2 taxes payable under sections 3101 and 1401 of the Internal
3 Revenue Code of 1954 (or corresponding provisions of prior
4 law) shall be compounded annually from July 1 of the year
5 in which such taxes were payable only until the last day of
6 the year preceding the year in which the individual on the
7 basis of whose wages and self-employment income benefits
8 are to be paid attains age 62, becomes disabled, or dies,
9 whichever occurs first, at a rate of 3.0 percent for the period
10 after 1936 and before 1951, and, for each year after 1950, at
11 a rate equal to the average of the twelve monthly interest rates
12 determined under section 201 for such year.
13 "(D) For purposes of this paragraph, the term `United
14 States' (when used in either a geographical or political sense)
15 means the States, the District of Columbia, the Common-
16 wealth of Puerto Rico, the Virgin Islands, Guam, American
17 Samoa, the Trust Territory of the Pacific Islands, and any
18 other territory or possession of the United States. ".
19 (b) Section 202(t)(2) of such Act is repealed.
20 (c) Section 202(t)(3) of such Act is amended to read as
21 follows:
22 "(3) Paragraph (1) shall not apply-
23 "(A) in any case where its application would be
24 contrary to any treaty obligation of the United States
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1 in effect on the date of the enactment of the Social Se-
2 curity Amendments of 1983, or
3 "(B) to individuals who are citizens or residents
4 of a country with which the United States has con-
5 cluded an international social security agreement pur-
6 suant to section 233, unless otherwise provided by such
7 agreement. ".
8 (d) Section 202(t)(4) of such Act is amended-
9 (1) by striking out subparagraphs (A) and (B);
10 (2) by redesignating subparagraphs (C), (D), and
11 (E) as subparagraphs (A), (B), and (C); and
12 (3) by striking out the semicolon at the end of
13 subparagraph (C) (as so redesignated) and all that fol-
14 lows and inserting in lieu thereof a period.
15 (e) The heading of section 202(t) of such Act is amended
16 by adding at the end thereof the following: `, Prohibition
17 Against Payment of Benefits to Aliens Not Permanent Resi-
18 dents"19 (f) (1) The amendments made by the preceding subsec-
20 tions shall apply with respect to any individual who initially
21 becomes eligible for benefits under section 202 or 223 of the
22 Social Security Act after December 31, 1984.
23 (2) Section 202(t) of the Social Security Act (as in
24 effect on the day before the date of enactment of this Act)
25 shall apply with respect to individuals who are eligible for
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1 benefits under section 202 or 223 of such Act before January
2 1, 1985.
3 REDUCTION OF COST-OF-LIVING INCREASE IF TRUST
4 FUNDS RATIO IS BELOW 20 PERCENT AND DECLINING
5 SEC. 125. (a) Section 215(i) of the Social Security Act
6 is amended by adding at the end thereof the following new
7 paragraph:
8 "(5) (A) On or before July 1 of each calendar year after
9 1983, the Secretary shall determine whether the estimated
10 OASDI trust fund ratio for the second calendar year follow-
11 ing such calendar year will be-
12 "(i) less than 20.0 percent; and
13 "(ii) less than the estimated OASDI trust fund
14 ratio for the first calendar year following the year in
15 which such determination is made.
16 "(B) If the Secretary finds that the OASDI trust fund
17 ratio for the second calendar year following such calendar
18 year will be less than each of the ratios described in clauses
19 (i) and (ii) of subparagraph (A), the Secretary shall-
20 "(i) notify the Congress on or before July 1 of
21 such calendar year that, absent a change of circum-
22 stances, it will be necessary to reduce the amount of
23 the percentage cost-of-living increase otherwise payable
24 under this subsection with respect to benefits for
25 months after November of such calendar year, and
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1 "(ii) absent a change of circumstances before such
2 cost-of-living increase is determined that will allow the
3 full amount of benefits otherwise payable to be paid in
4 a timely fashion, reduce the amount of such percentage
5 increase (but not below zero) in accordance with sub-
6 paragraph (C) to the extent necessary to ensure that
7 the OASDI trust fund ratio for the second calendar
8 year following the calendar year in which the determi-
9 nation is made will not fall below the lower of-
10 "(I) 20.0 percent, or
11 "(II) the OA SDI trust fund ratio for the
12 calendar year following the calendar year in
13 which the determination is made.
14 "(C) In reducing a cost-of-living percentage increase
15 under subparagraph (B), the Secretary shall first apply such
16 reduction to the percentage increase otherwise payable with
17 respect to monthly benefits payable under this section that are
18 based on a primary insurance amount of $250 or more for
19 the month preceding such cost-of-living increase; the percent-
20 age increase applied to the primary insurance amount used to
21 determine all other monthly benefits shall not be such as to
22 increase such primary insurance amounts above $250. If
23 further reduction in outgo is required, a reduction in the per-
24 centage increase applicable with respect to monthly benefits
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1 based on a primary insurance amount of less than $250 for
2 such preceding month shall be made.
3 "(D) For purposes of this paragraph, the term `OA SDI
4 trust fund ratio' shall mean, with respect to any calendar
5 year, the ratio of-
6 "(i) the amount estimated by the Secretary to be
7 equal to the combined balance in the Federal Old-Age
8 and Survivors Insurance Trust Fund and the Federal
9 Disability Insurance Trust Fund as of the start of
10 business on January 1 of such calendar year, taking
11 into account any cost-of-living increase that otherwise
12 would be made with respect to benefits paid during
13 such year, and any actions possible to be taken under
14 sections 201(l) and 1817(j) (relating to inter f and bor-
15 rowing) and 201 (a) and (m) (relating to normalized
16 crediting of social security taxes), to
17 "(ii) the amount estimated by the Secretary to be
18 the total amount to be paid from such Trust Funds
19 during such calendar year (other than payments of in-
20 terest on, and repayments of loans from), such Trust
21 Funds, and reducing the amount of any transfer to the
22 Railroad Retirement Account by the amount of any
23 transfer to such account from any such Trust Fund.
24 "(E) With respect to any calendar year beginning
25 before January 1988 for which a determination is required to
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1 be made under subparagraph (A), the estimated OASDI
2 trust fund ratio for the second calendar year following such
3 calendar year shall be treated as exceeding the estimated
4 OA SDI trust fund ratio for the first calendar year following
5 such calendar year if ratio of the estimated combined bal-
6 ances in the Federal Old-Age and Survivors Insurance
7 Trust Fund, the Federal Disability Insurance Trust Fund,
8 and the Federal Hospital Insurance Trust Fund for such
9 second following calendar year to the amounts estimated to be
10 paid from all such Trust Funds during such second following
11 calendar year exceeds the ratio of the estimated balances in
12 all such Trust Funds to estimated payments from all such
13 Trust Funds for such first following calendar year. ".
14 PART C-REVENUE PROVISIONS
15 SEC. 131. TAXATION OF SOCIAL SECURITY AND TIER 1 RAIL-
16 ROAD RETIREMENT BENEFITS.
17 (a) GENERAL RULE. -Part II of subchapter B of
18 chapter 1 of the Internal Revenue Code of 1954 (relating to
19 amounts specifically included in gross income) is amended
20 by redesignating section 86 as section 87 and by inserting
21 after section 85 the following new section:
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1 "SEC. 86. SOCIAL SECURITY AND TIER 1 RAILROAD RETIRE-
2 MENT BENEFITS.
3 "(a) IN GENERAL.-Gross income for the taxable year
4 of any taxpayer described in subsection (b) includes social
5 security benefits in an amount equal to the lesser of-
6
"(1) one-half of the social security benefits re-
7
ceived during the taxable year, or
8
"(2) one-half of the excess described in subsection
9
(b).
10
"(b)
TAXPAYERS TO WHOM SUBSECTION (a) AP-
11
PLIES.-
12
"(1) IN GENERAL.-A taxpayer is described in
13
this subsection if-
14
"(A) the sum of-
15
"(i) the adjusted gross income of the
16
taxpayer for the taxable year, plus
17
"(ii) one-half of the social security
18
benefits received during the taxable year, ex-
19
ceeds
20
"(B) the base amount.
21
"(2) ADJUSTED GROSS INCOME.-For purposes
22
of this subsection, the adjusted gross income of the tax-
23
payer for the taxable year shall be-
24
"(A) determined without regard to this sec-
25
tion and sections 221, 911, and 931, and
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1 "(B) increased by the amount of interest of
2 the taxpayer which is exempt from tax for the
3 taxable year.
4 "(c) BASE AMOUNT. -For purposes of this section, the
5 term `base amount' means-
6 "(1) except as otherwise provided in this subsec-
7 tion, $25, 000,
8 "(2) $32,000, in the case of a joint return, and
9 "(3) zero, in the case of a taxpayer who-
10 "(A) is married at the close of the taxable
11 year (within the meaning of section 143) but does
12 not file a joint return for such year, and
13 "(B) does not live apart from his spouse at
14 all times during the taxable year.
15 "(d) SOCIAL SECURITY BENEFIT.-
16 "(1) IN GENERAL.-For purposes of this section,
17 the term `social security benefit' means any amount re-
18 ceived by the taxpayer by reason of entitlement to-
19 "(A) a monthly benefit under title II of the
20 Social Security Act (determined without regard to
21 section 203(i) of the Social Security Act), or
22 "(B) a tier 1 railroad retirement benefit.
23 "(2) ADJUSTMENT FOR REPAYMENTS DURING
24 YEAR.-
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1 "(A) IN GENERAL.-For purposes of this
2 section, the amount of social security benefits re-
3 ceived during any taxable year shall be reduced
4 by any repayment made by the taxpayer during
5 the taxable year of a social security benefit previ-
6 ously received by the taxpayer (whether or not
7 such benefit was received during the taxable
8 year).
9 "(B) DENIAL OF DEDUCTION.-If (but for
10 this subparagraph) any portion of the repayments
11 referred to in subparagraph (A) would have been
12 allowable as a deduction for the taxable year
13 under section 165, such portion shall be allowable
14 as a deduction only to the extent it exceeds the
15 social security benefits received by the taxpayer
16 during the taxable year (and not repaid during
17 such taxable year).
18 "(3) TIER 1 RAILROAD RETIREMENT BENE-
19 FIT. -For purposes of paragraph (1), the term `tier 1
20 railroad retirement benefit' means a monthly benefit
21 under section 3(a), 4(a), or 4(f) of the Railroad Retire-
22 ment Act of 1974.
23 "(e) LIMITATION ON AMOUNT INCLUDED WHERE
24 TAXPAYER RECEIVES LUMP-SUM PAYMENT.-
25 "(1) LIMITATION.-
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1 "(A) any portion of a lump-sum payment of
2 social security benefits received during the taxable
3 year is attributable to prior taxable years, and
4 "(B) the taxpayer makes an election under
5 this subsection for the taxable year,
6 then the amount included in gross income under this section
7 for the taxable year by reason of the receipt of such portion
8 shall not exceed the sum of the increases in gross income
9 under this chapter for prior taxable years which would result
10 solely from taking into account such portion in the taxable
11 years to which it is attributable.
12 "(2) SPECIAL RULES.-
13 "(A) YEAR TO WHICH BENEFIT ATTRIBUT-
14 ABLE.-For purposes of this subsection, a social
15 security benefit is attributable to a taxable year if
16 the generally applicable payment date for such
17 benefit occurred during such taxable year.
18 "(B) ELECTION.-An election under this
19 subsection shall be made at such time and in such
20 manner as the Secretary shall by regulations pre-
21 scribe. Such election, once made, may be revoked
22 only with the consent of the Secretary.
23 "(f) TREATMENT AS PENSION OR ANNUITY FOR CER-
24 TAIN PURPOSES.-For purposes of-
25 "(1) section 43(c)(2) (defining earned income),
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"(2) section 219(f) (1) (defining compensation),
2 "(3) section 221(b) (2) (defining earned income),
3 ,: nd
4 "(4) section 911(b) (1) (defining foreign earned
5 income),
6 any social security benefit shall be treated as an amount re-
7 ceived as a pension or annuity. ".
8 (b) INFORMATION REPORTING.-Subpart B of part
9 III of subchapter A of chapter 61 of such Code (relating to
10 information concerning transactions with other persons) is
11 amended by adding at the end thereof the following new sec-
12 tion:
13 "SEC. 6050F. RETURNS RELATING TO SOCIAL SECURITY BENE-
14 FITS.
15 "(a) REQUIREMENT OF REPORTING.-The appropri-
16 ate Federal official shall make a return, according to the
17 forms and regulations prescribed by the Secretary, setting
18 forth-
19 "(1) the-
20 "(A) aggregate amount of social security
21 benefits paid with respect to any individual
22 during any calendar year, and
23 "(B) aggregate amount of social security
24 benefits repaid by such individual during such
25 calendar year, and
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1 "(2) the name and address of such individual.
2 "(b) STATEMENTS To BE FURNISHED TO INDIVID-
3 UALS WITH RESPECT TO WHOM INFORMATION IS FUR-
4 NISHED.-Every person making a return under subsection
5 (a) shall furnish to each individual whose name is set forth
6 in such return a written statement showing-
7 "(1) the name of the agency making the pay-
8 ments, and
9 "(2) the aggregate amount of payments, of repay-
10 means, and of reductions, with respect to the individual
11 as shown on such return.
12 The written statement required under the preceding sentence
13 shall be furnished to the individual on or before January 31
14 of the year following the calendar year for which the return
15 under subsection (a) was made.
16 "(c) DEFINITIONS.-For purposes of this section-
17 "(1) APPROPRIATE FEDERAL OFFICIAL.-The
18 term `appropriate Federal official' means-
19 "(A) the Secretary of Health and Human
20 Services in the case of social security benefits de-
21 scribed in section 86(d) (1) (A), and
22 "(B) the Railroad Retirement Board in the
23 case of social security benefits described in section
24 86(d) (1) (B).
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1 "(2) SOCIAL SECURITY BENEFIT.-The term
2 `social security benefit' has the meaning given to such
3 term by section 86(d) (1). ".
4 (c) TREATMENT OF NONRESIDENT ALIENS.-
5 (1) AMENDMENT OF SECTION 871(a).-Subsec-
6 tion (a) of section 871. of such Code (relating to tax on
7 income not connected with United States business) is
8 amended by adding at the end thereof the following
9 new paragraph:
10 "(3) TAXATION OF SOCIAL SECURITY BENE-
11 FITS.-For purposes of this section and section
12 1441-
13 "(A) one-half of any social security benefit
14 (as defined in section 86(d)) shall be included in
15 gross income, and
16 "(B) section 86 shall not apply. '
17 (2) DISCLOSURE OF INFORMATION TO SOCIAL
18 SECURITY ADMINISTRATION OR RAILROAD RETIRE-
19 MENT BOARD. -
20 (A) IN GENERAL.-Subsection (h) of section
21 6103 of such Code (relating to disclosure to cer-
22 tain Federal officers and employees for purposes
23 of tax administration, etc.) is amended by adding
24 at the end thereof the following new paragraph:
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1 "(6) SOCIAL SECURITY BENEFITS.-Upon writ-
2 ten request, the Secretary may disclose available
3 return information from the master files of the Internal
4 Revenue Service with respect to the address and status
5 of an individual as a nonresident alien or as a citizen
6 or resident of the United States to the Social Security
7 Administration or the Railroad Retirement Board for
8 purposes of carrying out its responsibilities under sec-
9 tion 1441 with respect to social security benefits (as
10 defined in section 86(d)).' .
11 (B) CONFORMING AMENDMENT. -Para-
12 graph (4) of section 6103(p) of such Code (relat-
13 ing to safeguards) is amended by inserting
14 "(h)(6), " after "(h)(2), " in the material preceding
15 subparagraph (A) and in subparagraph (F)(ii)
16 thereof.
17 (d) SOCIAL SECURITY BENEFITS TREATED AS
18 UNITED STATES SOURCED.-Subsection (a) of section 861
19 of such Code (relating to income from sources within the
20 United States) is amended by adding at the end thereof the
21 following new paragraph:
22 "(8) SOCIAL SECURITY BENEFITS.-Any social
23 security benefit (as defined in section 86(d)). '
24 (e) TRANSFERS TO TRUST FUNDS.-
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1 (1) IN GENERAL.-There are hereby appropriated
2 to each payor fund amounts equivalent to the aggregate
3 increase in tax liabilities under chapter 1 of the Inter-
4 nal Revenue Code of 1954 which is attributable to the
5 application of sections 86 and 871(a) (3) of such Code
6 (as added by this section) to payments from such payor
7 fund.
8 (2) TRANSFERS.-The amounts appropriated by
9 paragraph (1) to any payor fund shall be transferred
10 from time to time (but not less frequently than quarter-
11 ly) from the general fund of the Treasury on the basis
12 of estimates made by the Secretary of the Treasury of
13 the amounts referred to in such paragraph. Any such
14 quarterly payment shall be made on the first day of
15 such quarter and shall take into account social security
16 benefits estimated to be received during such quarter.
17 Proper adjustments shall be made in the amounts sub-
18 sequently transferred to the extent prior estimates were
19 in excess of or less than the amounts required to be
20 transferred.
21 (3) DEFINITIONS.-For purposes of this subsec-
22 tion-
23 (A) PAYOR FUND.-The term "payor fund"
24 means any trust fund or account from which pay-
25 ments of social security benefits are made.
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1 (B) SOCIAL SECURITY BENEFITS.-The
2 term "social security benefits" has the meaning
3 given such term by section 86(d)(1) of the Inter-
4 nal Revenue Code of 1954.
5 (4) REPORTS.-The Secretary of the Treasury
6 shall submit annual reports to the Congress and to the
7 Secretary of Health and Human Services and the
8 Railroad Retirement Board on-
9 (A) the transfers made under this subsection
10 during the year, and the methodology used in de-
11 termining the amount of such transfers and the
12 funds or account to which made, and
13 (B) the anticipated operation of this subsec-
14 tion during the next 5 years.
15 (f) TECHNICAL AMENDMENTS.-
16 (1) Subsection (a) of section 85 of such Code is
17 amended by striking out "this section, " and inserting
18 in lieu thereof "this section, section 86, ".
19 (2) Subparagraph (B) of section 128(c) (3) of such
20 Code (as in effect for taxable years beginning after De-
21 cember 31, 1984) is amended by striking out "85, "
22 and inserting in lieu thereof "85, 86, ".
23 (3) The table of sections for part II of subchapter
24 B of chapter 1 of such Code is amended by striking
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1 out the item relating to section 86 and inserting in lieu
2 thereof the following:
"Sec. 86. Social security and tier 1 railroad retirement benefits.
"Sec. 87. Alcohol fuel credit. "
3 (4) The table of sections for subpart B of part III
4 of subchapter A of chapter 61 of such Code is amended
5 by adding at the end thereof the following new item:
"Sec. 6050F. Returns relating to social security benefits. ".
6 (g) EFFECTIVE DATES.-
7 (1) IN GENERAL.-Except as provided in para-
8 graph (2), the amendments made by this section shall
9 apply to benefits received after December 31, 1983, in
10 taxable years ending after such date.
11 (2) TREATMENT OF CERTAIN LUMP-SUM PAY-
12 MENTS RECEIVED AFTER DECEMBER 31, 1983.-The
13 amendments made by this section shall not apply to
14 any portion of a lump-sum payment of social security
15 benefits (as defined in section 86(d) of the Internal
16 Revenue Code of 1954) received after December 31,
17 1983, if the generally applicable payment date for such
18 portion was before January 1, 1984.
19 SEC. 132. ACCELERATION OF INCREASES IN FICA TAXES; 1984
20 EMPLOYEE TAX CREDIT.
21 (a) ACCELERATION OF INCREASES IN FICA
22 TAXES.-
23 (1) TAX ON EMPLOYEES.-Subsection (a) of sec-
24 Lion 3101 of the Internal Revenue Code of 1954 (relat-
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1 ing to rate of tax on employees for old-age, survivors,
2 and disability insurance) is amended by striking out
3 paragraphs (1) through (7) and inserting in lieu there-
4 of the following:
`In cases of wages received The rate shall be:
during:
1984, 1985, 1986, or 1987 ........................................................... 5.7 percent
1988 or 1989 ................................................................................ 6.06 percent
1990 or thereafter ......................................................................... 6.2 percent. ".
5 (2) EMPLOYER TAX.-Subsection (a) of section
6 3111 of such Code is amended by striking out para-
7 graphs (1) through (7) and inserting in lieu thereof the
8 following:
`In cases of wages paid during: The rate shall be.
1984, 1985, 1986, or 1987 ........................................................... 5.7 percent
1988 or 1989 ................................................................................ 6.06 percent
1990 or thereafter ......................................................................... 6.2 percent.
9 (3) EFFECTivE DATE.-The amendments made
10 by this subsection shall apply to remuneration paid
11 after December 31, 1983.
12 (b) 1984 EMPLOYEE TAX CREDIT.-
13 (1) IN GENERAL.-Chapter 25 of such Code is
14 amended by adding at the end thereof the following
15 new section:
16 "SEC. 3510. CREDIT FOR INCREASED SOCIAL SECURITY EM-
17 PLOYEE TAXES AND RAILROAD RETIREMENT
18 TIER 1 EMPLOYEE TAXES IMPOSED DURING 1984.
19 "(a) GENERAL RULE.-There shall be allowed as a
20 credit against the tax imposed by section 3101(a) on wages
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1 received during 1984 an amount equal to 3/ 0 of 1 percent of
2 the wages so received.
3 "(b) TIME CREDIT ALLOWED.-The credit under sub-
4 section (a) shall be taken into account in determining the
5 amount of the tax deducted under section 3102(a).
6 "(c) WAGES.-For purposes of this section, the term
7 `wages' has the meaning given to such term by section
8 3121(a).
9 "(d) APPLICATION TO AGREEMENTS UNDER SEC-
10 TION 218 OF THE SOCIAL SECURITY ACT.-For purposes
11 of determining amounts equivalent to the tax imposed by sec-
12 tion 3101(a) with respect to remuneration which-
13 "(1) is covered by an agreement under section
14 218 of the Social Security Act, and
15 "(2) is paid during 1984,
16 the credit allowed by subsection (a) shall be taken into ac-
17 count. A similar rule shall also apply in the case of an agree-
18 ment under section 3121(l).
19 "(e) CREDIT AGAINST RAILROAD RETIREMENT EM-
20 PLOYEE AND EMPLOYEE REPRESENTATIVE TAXES.-
21 "(1) IN GENERAL.-There shall be allowed as a
22 credit against the taxes imposed by sections 3201(a)
23 and 3211(a) on compensation paid during 1984 and
lo of 1 per-
24 subject to such taxes an amount equal to 31
25 cent Of such compensation.
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1 "(2) TIME CREDIT ALLOWED.-The credit under
2 paragraph (1) shall be taken into account in determin-
3 ing the amount of the tax deducted under section
4 3202(a) (or the amount of the tax under section
5 3211(a)).
6 "(3) COMPENSATION.-For purposes of this sub-
7 section, the term `compensation' has the meaning given
8 to such term by section 3231(e).
9 "(f) COORDINATION WITH SECTION 6413(c).-For
10 purposes of subsection (c) of section 6413, in determining the
11 amount of the tax imposed by section 3101 or 3201, any
12 credit allowed by this section shall be taken into account. ".
13 (2) CLERICAL AMENDMENT.-The table of sec-
14 tions for chapter 25 of such Code is amended by
15 adding at the end thereof the following new item:
"Sec. 3510. Credit for increased social security employee taxes and
railroad retirement tier 1 employee taxes imposed
during 1984. ".
16 (3) EFFECTIVE DATE.-The amendments made
17 by this subsection shall apply to remuneration paid
18 during 1984.
19 (4) DEPOSITS IN SOCIAL SECURITY TRUST
20 FUNDS. -For purposes of subsection (h) of section 218
21 of the Social Security Act (relating to deposits in
22 social security trust funds of amounts received under
23 section 218 agreements), amounts allowed as a credit
24 pursuant to subsection (d) of section 3510 of the Inter-
S1RS
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1 nal Revenue Code of 1954 (relating to credit for remu-
2 neration paid during 1984 which is covered under an
3 agreement under section 218 of the Social Security
4 Act) shall be treated as amounts received under such
5 an agreement.
6 (5) DEPOSITS IN RAILROAD RETIREMENT AC-
7 COUNT.-For purposes of subsection (a) of section 15
8 of the Railroad Retirement Act of 1974, amounts al-
9 lowed as a credit under subsection (e) of section 3510
10 of the Internal Revenue Code of 1954 shall be treated
11 as amounts covered into the Treasury under subsection
12 (a) of section 3201 of such Code.
13 (6) STATEMENTS FURNISHED TO EMPLOY-
14 EES.-Any written statement which is required to be
15 furnished to an employee under section 6051(a) with
16 respect to remuneration paid during 1984 shall in-
17 clude-
18 (A) the total amount which would have been
19 deducted and withheld as a tax under section
20 3101 if the credit allowable under section 3510
21 had not been taken into account, and
22 (B) the amount of the credit allowable under
23 section 3510.
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1 SEC. 133. TAXES ON SELF-EMPLOYMENT INCOME; CREDIT
2 AGAINST SUCH TAXES.
3 (a) INCREASE IN RATES.-Subsections (a) and (b) of
4 section 1401 of the Internal Revenue Code of 1954 (relating
5 to rates of tax on self-employment income) are amended to
6 read as follows:
7 "(a) OLD-AGE, SURVIVORS, AND DISABILITY INSUR-
8 ANCE.-In addition to other taxes, there shall be imposed for
9 each taxable year, on the self-employment income of every
10 individual, a tax equal to the following percent of the amount
11 of the self-employment income for such taxable year.
`In the case of a taxable year
Beginning after.- And before: Percent-
December 31, 1983 ............................. January 1, 1988........................... 11.40
December 31, 1987 ............................. January 1, 1990........................... 12.12
December 31, 1989 ..................................................................................... 12.40
12 "(b) HOSPITAL INSURANCE.-In addition to the tax
13 imposed by the preceding subsection, there shall be imposed
14 for each taxable year, on the self-employment income of every
15 individual, a tax equal to the following percent of the amount
16 of the self-employment income for such taxable year.
`In the case of a taxable year
Beginning after: And before:
Percent.
December 31,
1983
............................. January 1, 1985...........................
2.60
December 31,
1984
............................. January 1, 1986...........................
2.70
December 31,
1985
.....................................................................................
2.90. '
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1 (b) CREDIT AGAINST SELF-EMPLOYMENT TAXES.-
2 Section 1401 of such Code is amended by redesignating sub-
3 section (c) as subsection (d) and by inserting after subsection
4 (b) the following new subsection:
5 "(c) CREDIT AGAINST TAXES IMPOSED BY THIS
6 SECTION.-
7 "(1) IN GENERAL.-There shall be allowed as a
8 credit against the taxes imposed by this section for any
9 taxable year an amount equal to the applicable percent-
10 age of the self-employment income of the individual for
11 such taxable year.
12 "(2) APPLICABLE PERCENTAGE.-For purposes
13 of paragraph (1), the applicable percentage shall be de-
14 termined in accordance with the following table:
`In the case of taxable The applicable
years beginning in: percentage is:
1984 ...................................................................................................... 2.9
1985 ...................................................................................................... 2.5
1986 ...................................................................................................... 2.2
1987, 1988, or 1989 ............................................................................ 2.1
1990 or thereafter ................................................................................. 2.3. ".
15 (c) EFFECTIVE DATE.-The amendments made by this
16 section shall apply to taxable years beginning after December
17 31, 1983.
18 PART D-MISCELLANEOUS FINANCING PROVISIONS
19 ALLOCATIONS TO DISABILITY INSURANCE TRUST FUND
20 SEC. 141. (a) Section 201(b)(1) of the Social Security
21 Act is amended by striking out clauses (K) through (M) and
22 inserting in lieu thereof the following: "(K)1.65 per centum of
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1 the wages (as so defined) paid after December 31, 1981, and
2 before January 1, 1984, and so reported, (L) 1 per centum of
3 the wages (as so defined) paid after December 31, 1983, and
4 before January 1, 1988, and so reported, (M) 1.06 per
5 centum of the wages (as so defined) paid after December 31,
6 1987, and before January 1, 1990, and so reported, (N) 1.20
7 per centum of the wages (as so defined) paid after December
8 31, 198.9, and before January 1, 2000, and (M) 1.30 per
9 centum of the wages (as so defined) paid after December 31,
10 1999, and so reported, ".
11 (b) Section 201(b) (2) of such Act is amended by striking
12 out clauses (K) through (M) and inserting in lieu thereof the
13 following: "(K) 1.2375 per centum of the amount of self-
14 employment income (as so defined) so reported for any taxable
15 year beginning after December 31, 1981, and before January 1,
16 1984, (L) 1 per centum of the amount of self-employment
17 income (as so defined) so reported for any taxable year
18 beginning after December 31, 1983, and before January 1,
19 1988, (M) 1.06 per centum of the amount of self-employment
20 income (as so defined) so reported for any taxable year
21 beginning after December 31, 1987, and before January 1,
22 1990, (N) 1.20 per centum of the self-employment income (as
23 so defined) so reported for any taxable year beginning after
24 December 31, 1989, and before January 1, 2000, and (M)
25 1.30 per centum of the amount of self-employment income (as
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1 so defined) so reported for any taxable year beginning after
2 December 31, 1999, ".
3 INTERFUND BORROWING EXTENSION
4 SEC. 142. (a)(1) Section 201(1)(1) of the Social Secu-
5 rity Act is amended-
6 (A) by striking out "January 1983" and insert-
7 ing in lieu thereof "January 1988" and
8 (B) by inserting after "or" the second place it ap-
9 pears ", subject to paragraph (5), ".
10 (2) (A) Section 201(l)(2) of such Act is amended-
11 (i) by striking out "from time to time" and insert-
12 ing in lieu thereof "on the last day of each month after
13 such loan is made"14 (ii) by striking out "interest" and inserting in
15 lieu thereof "the total interest accrued to such day"16 and
17 (iii) by striking out "the loan were an investment
18 under subsection (d) " and inserting in lieu thereof
19 "such amount had remained in the Depositary Account
20 established with respect to such lending Trust Fund
21 under subsection (d) or section 1817(c) ".
22 (B) The amendment made by this paragraph shall
23 apply with respect to months beginning more than thirty days
24 after the date of enactment of this Act.
25 (3) Section 201(1) (3) of such Act is amended-
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1 (A) by inserting "W" after the paragraph desig-
2 nation; and
3 (B) by adding at the end thereof the following
4 new subparagraphs:
5 "(B) (i) If on the last day of any year after a loan has
6 been made under paragraph (1) by the Federal Hospital In-
7 surance Trust Fund to the Federal Old Age and Survivors
8 Trust Fund or the Federal Disability Insurance Trust
9 Fund, the Managing Trustee determines that the OASDI
10 trust fund ratio exceeds 15 percent, he shall transfer from the
11 borrowing Trust Fund to the Federal Hospital Insurance
12 Trust Fund an amount that-
13 "(I) together with any amounts transferred from
14 another borrowing Trust Fund under this paragraph
15 for such year, will reduce the OASDI trust fund ratio
16 to 15 percent; and
17 "(II) does not exceed the outstanding balance of
18 such loan.
19 "(ii) Amounts required to be transferred under clause
20 (i) shall be transferred on the last day of the first month of
21 the year succeeding the year in which the determination de-
22 scribed in clause (i) is made.
23 "(iii) For purposes of this subparagraph, the term
24 `OASDI trust fund ratio' means, with respect to any calen-
25 dar year, the ratio of-
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1 "(I) the combined balance in the Federal Old Age
2 and Survivors Insurance Trust Fund and the Federal
3 Disability Insurance Trust Fund, reduced by the out-
4 standing amount of any loan (including interest there-
5 on) theretofore made to either such Fund from the Fed-
6 eral Hospital Insurance Trust Fund, as of the last day
7 of such calendar year, to
8 "(II) the amount estimated by the Secretary to be
9 the total amount to be paid from the Federal Old Age
10 and Survivors Insurance Trust Fund and the Federal
11 Disability Insurance Trust Fund during the calendar
12 year following such calendar year for all purposes au-
13 thorized by section 201 (other than payments of inter-
14 est on, and repayments of, loans from the Federal Hos-
15 pital Insurance Trust Fund under paragraph (1)), but
16 excluding any transfer payments between such trust
17 funds and reducing the amount of any transfer to the
18 Railroad Retirement Account by the amount of any
19 transfers into either such trust fund from that Account.
20 "(C)(i) The full amount of all loans made under para-
21 graph (1) (whether made before or after January 1, 1983)
22 shall be repaid at the earliest feasible date and in any event
23 no later than December 31, 1989.
24 "(ii) For the period after December 31, 1987, and
25 before January 1, 1990, the Managing Trustee shall transfer
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1 each month to the Federal Hospital Insurance Trust Fund
2 from any Trust Fund with any amount outstanding on a
3 loan made from the Federal Hospital Insurance Trust Fund
4 under paragraph (1) an amount equal to one twenty-fourth of
5 the amount owed to the Federal Hospital Insurance Trust
6 Fund by such Trust Fund at the beginning of such period
7 (plus the interest accrued on the outstanding balance of such
8 loan during such month). ".
9 (4) Section 201(l) of such Act is further amended by
10 adding at the end thereof the following new paragraph:
11 "(5)(A) No amounts may be borrowed from the Federal
12 Hospital Insurance Trust Fund under paragraph (1) during
13 any month if the Hospital Insurance Trust Fund ratio for
14 such month is less than 10 percent.
15 "(B) For purposes of this paragraph, the term `Hospital
16 Insurance trust fund ratio' means, with respect to any
17 month, the ratio of-
18 "(i) the balance in the Federal Hospital Insur-
19 ance Trust Fund, reduced by the outstanding amount
20 of any loan (including interest thereon) theretofore
21 made to such Trust Fund under this subsection, as of
22 the last day of the second month preceding such month,
23 to
24 "(ii) the amount obtained by multiplying by
25 twelve the total amount which (as estimated by the
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1 Secretary) will be paid from the Federal Hospital In-
2 surance Trust Fund during the month for which such
3 ratio is to be determined (other than payments of inter-
4 est on, or repayments of loans from another Trust
5 Fund under this subsection), and reducing the amount
6 of any transfers to the Railroad Retirement Account by
7 the amount of any transfer into the Hospital Insurance
8 Trust Fund from that Account.'
9 (b) (1) Section 18176)(1) of such Act is amended-
10 (A) by striking out "January 1983" and insert-
11 ing in lieu thereof "January 1988" and
12 (B) by inserting ", subject to paragraph (5), "
13 after "may ".
14 (2) (A) Section 1817(j) (2) of such Act is amended-
15 (i) by striking out "from time to time" and insert-
16 ing in lieu thereof "on the last day of each month after
17 such loan is made"18 (ii) by striking out "interest" and inserting in
19 lieu thereof "the total interest accrued to such day"20 and
21 (iii) by striking out "the loan were an investment
22 under subsection (c) " and inserting in lieu thereof
23 "such amount had remained in the Depositary Account
24 established with respect to such lending Trust Fund
25 under section 201(d)"
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1 (B) The amendment made by this paragraph shall
2 apply with respect to months beginning more than 30 days
3 after the date of enactment of this Act.
4 (3) Section 1817(j) (3) of such Act is amended-
5 (A) by inserting "W" after the paragraph desig-
6 nation; and
7 (B) by adding at the end thereof the following
8 new subparagraphs:
9 "(B) (i) If on the last day of any year after a loan has
10 been made under paragraph (1) by the Federal Old Age and
11 Survivors Insurance Trust Fund or the Federal Disability
12 Insurance Trust Fund to the Federal Hospital Insurance
13 Trust Fund, the Managing Trustee determines that the Hos-
14 pital Insurance Trust Fund ratio exceeds 15 percent, he
15 shall transfer from such Trust Fund to the lending trust fund
16 an amount that-
17 "(I) together with any amounts transferred to an-
18 other lending trust fund under this paragraph for such
19 year, will reduce Hospital Insurance Trust Fund ratio
20 to 15 percent; and
21 "(II) does not exceed the outstanding balance of
22 such loan.
23 "(ii) Amounts required to be transferred under clause
24 (i) shall be transferred on the last day of the first month of
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1 the year succeeding the year in which the determination de-
2 scribed in clause (i) is made.
3 "(iii) For purposes of this subparagraph, the term `Hos-
4 pital Insurance Trust Fund ratio' means, with respect to any
5 calendar year, the ratio of-
6 "(I) the balance in the Federal Hospital Insur-
7 ance Trust Fund, reduced by the amount of any out-
8 standing loan (including interest thereon) from the
9 Federal Old Age and Survivors Insurance Trust Fund
10 and the Federal Disability Insurance Trust Fund, as
11 of the last day of such calendar year; to
12 "(II) the amount estimated by the Secretary to be
13 the total amount to be paid from the Federal Hospital
14 Insurance Trust Fund during the calendar year fol-
15 lowing such calendar year (other than payments of in-
16 terest on, and repayments of, loans from the Federal
17 Old Age and Survivors Insurance Trust Fund and the
18 Federal Disability Insurance Trust Fund under para-
19 graph (1)), and reducing the amount of any transfer to
20 the Railroad Retirement Account by the amount of any
21 transfers into such Trust Fund from the Railroad Re-
22 tirement Account.
23 "(C)(i) The full amount of all loans made under para-
24 graph (1) (whether made before or after January 1, 1983)
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1 shall be repaid at the earliest feasible date and in any event
2 no later than December 31, 1989. '
3 "(ii) For the period after December 31, 1987 and before
4 January 1, 1990, the Managing Trustee shall transfer each
5 month from the Federal Hospital Insurance Trust Fund to
6 any Trust Fund that is owed any amount by the Federal
7 Hospital Insurance Trust Fund on a loan made under para-
8 graph (1), an amount equal to 1/24 of the amount owed to
9 such Trust Fund by the Federal Hospital Insurance Trust
10 Fund at the beginning of such period (plus the interest ac-
11 crued on the outstanding balance of such loan during such
12 month). '
13 (4) Section 1817(j) of such Act is further amended by
14 adding at the end thereof the following new paragraph:
15 "(5) (A) No amounts may be loaned by the Federal Old
16 Age and Survivors Insurance Trust Fund or the Federal
17 Disability Insurance Trust Fund under paragraph (1)
18 during any month if the OASDI trust fund ratio for such
19 month is less than 10 percent.
20 "(B) For purposes of this paragraph, the term `OA SDI
21 trust fund ratio' means, with respect to any month, the ratio
22 of-
23 "(i) the combined balance in the Federal Old Age
24 and Survivors Insurance Trust Fund and the Federal
25 Disability Insurance Trust Fund, reduced by the out-
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1 standing amount of any loan (including interest there-
2 on) theretofore made to either such Trust Fund from
3 the Federal Hospital Insurance Trust Fund under sec-
4 tion 201(l), as of the last day of the second month pre-
5 ceding such month, to
6 "(ii) the amount obtained by multiplying by
7 twelve the total amount which (as estimated by the
8 Secretary) will be paid from the Federal Old Age and
9 Survivors Insurance Trust Fund and the Federal Dis-
10 ability Insurance Trust Fund during the month for
11 which such ratio is to be determined for all purposes
12 authorized by section 201 (other than payments of in-
13 terest on, or repayments of, loans from the Federal
14 Hospital Insurance Trust Fund under section 201(l)),
15 but excluding any transfer payments between such
16 trust funds and reducing the amount of any transfers
17 to the Railroad Retirement Account by the amount of
18 any transfers into either such trust fund from that Ac-
19 count. ".
20 CREDITING AMOUNTS OF UNNEGOTIATED CHECKS TO
21 TRUST FUNDS
22 SEC. 143. (a) The Secretary of the Treasury shall take
23 such actions as may be necessary to ensure that amounts of
24 checks for benefits under title II of the Social Security Act
25 which have not been presented for payment within a reason-
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1 able length of time (not to exceed twelve months) after issu-
2 ance are credited to the Federal Old-Age and Survivors In-
3 surance Trust Fund or the Federal Disability Insurance
4 Trust Fund, whichever may be the fund from which the check
5 was issued. Amounts of any such check shall be recharged to
6 the fund from which they were issued if payment is subse-
7 quently made on such check.
8 (b)(1) The Secretary of the Treasury shall transfer from
9 the general fund of the Treasury to the Federal Old-Age and
10 Survivors Insurance Trust Fund and to the Federal Disabil-
11 ity Insurance Trust Fund, as appropriate, such sums as may
12 be necessary to reimburse such Trust Funds in the total
13 amounts of all currently unnegotiated benefit checks. After
14 the amounts appropriated by this subsection have been trans-
15 ferred to the Trust Funds, the provisions of subsection (a)
16 shall be applicable. There are hereby appropriated into such
17 Trust Funds such sums as may be necessary to reimburse
18 such Trust Funds for the amount of currently unnegotiated
19 benefit checks. The first such transfer shall be made within
20 thirty days after the date of the enactment of this Act with
21 respect to all such unnegotiated checks as of such date of
22 enactment.
23 (2) As used in paragraph (1), the term "currently unne-
24 gotiated benefit checks" means the checks issued under title
25 II of the Social Security Act prior to the date of the enact-
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1 ment of this Act, which remain unnegotiated after the twelfth
2 month following the date on which they were issued.
3 TRANSFER TO TRUST FUNDS FOR BENEFITS
4 ATTRIBUTABLE TO MILITARY SERVICE BEFORE 1957
5 SEC. 144. (a) Section 217(g) of the Social Security Act
6 is amended to read as follows:
7 "APPROPRIATION TO TRUST FUNDS
8 "(g) (1) Within thirty days after the date of the enact-
9 ment of the Social Security Amendments of 1983, the Secre-
10 tary shall determine the amount equal to the excess of-
11 "(A) the actuarial present value as of such date of
12 enactment of the past and future benefit payments from
13 the Federal Old-Age and Survivors Insurance Trust
14 Fund, the Federal Disability Insurance Trust Fund,
15 and the Federal Hospital Insurance Trust Fund under
16 this title and title X VIII, together with associated ad-
17 ministrative costs, resulting from the operation of this
18 section (other than this subsection) and section 210 of
19 this Act as in effect before the enactment of the Social
20 Security Act Amendments of 1950, over
21 "(B) any amounts previously transferred from the
22 general fund of the Treasury to such Trust Funds pur-
23 suant to the provisions of this subsection as in effect
24 immediately before the date of the enactment of the
25 Social Security Amendments of 1983.
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1 Such actuarial present value shall be based on the relevant
2 actuarial assumptions set forth in the report of the Board of
3 Trustees of each such Trust Fund for 1983 under sections
4 201(c) and 1817(b). Within thirty days after the date of the
5 enactment of the Social Security Amendments of 1983, the
6 Secretary of the Treasury shall transfer the amount deter-
7 mined under this paragraph with respect to each such Trust
8 Fund to such Trust Fund from amounts in the general fund
9 of the Treasury not otherwise appropriated.
10 "(2) The Secretary shall revise the amount determined
11 under paragraph (1) with respect to each such Trust Fund in
12 1985 and each fifth year thereafter, as determined appropri-
13 ate by the Secretary from data which becomes available to
14 him after the date of the determination under paragraph (1)
15 on the basis of the amount of benefits and administrative
16 expenses actually paid from such Trust Fund under this title
17 or title X VIII and the relevant actuarial assumptions set
18 forth in the report of the Board of Trustees of such Trust
19 Fund for such year under section 201(c) or 1817(b). Within
20 30 days after any such revision, the Secretary of the Treas-
21 ury, to the extent provided in advance in appropriation Acts,
22 shall transfer to such Trust Fund, from amounts in the gen-
23 eral fund of the Treasury not otherwise appropriated, or from
24 such Trust Fund to the general fund of the Treasury, such
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1 amounts as the Secretary of the Treasury determines neces-
2 nary to compensate for such revision. ".
3 PAYMENTS TO TRUST FUNDS OF AMOUNTS EQUIVALENT
4 TO TAXES ON SERVICE IN THE UNIFORMED SERV-
5 ICES PERFORMED AFTER 1956
6 SEC. 145. (a) Section 229(b) of the Social Security
7 Act is amended to read as follows:
8 "(b) There are authorized to be appropriated to each of
9 the Trust Funds, consisting of the Federal Old-Age and Sur-
10 vivors Insurance Trust, the Federal Disability Insurance
11 Trust Fund, and the Federal Hospital Insurance Trust
12 Fund, for transfer on July 1 of each calendar year to such
13 Trust Fund from amounts in the general fund in the Treas-
14 ury not otherwise appropriated, an amount equal to the total
15 of the additional amounts which would be appropriated to
16 such Trust Fund for the fiscal year ending September 30 of
17 such calendar year under section 201 or 1817 of this Act if
18 the amounts of the additional wages deemed to have been paid
19 for such calendar year by reason of subsection (a) constituted
20 remuneration for employment (as defined in section 3121(b)
21 of the Internal Revenue Code of 1954) for purposes of the
22 taxes imposed by sections 3101 and 3111 of the Internal
23 Revenue Code of 1954. Amounts authorized to be appropri-
24 ated under this subsection for transfer on July 1 of each cal-
25 endar year shall be determined on the basis of estimates of
S 1 RS--10
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1 the Secretary of the wages deemed to be paid for such calen-
2 dar year under subsection (a); and proper adjustments shall
3 be made in amounts authorized to be appropriated for subse-
4 quent transfer to the extent prior estimates were in excess of
5 or were less than such wages so deemed to be paid. ".
6 (b) The amendment made by subsection (a) shall be e f-
7 fective with respect to wages deemed to have been paid for
8 calendar years after 1983.
9 (c)(1) Within thirty days after the date of the enactment
10 of this Act, the Secretary of Health and Human Services
11 shall determine the additional amounts which would have
12 been appropriated into the Federal Old-Age and Survivors
13 Insurance Trust Fund, the Federal Disability Insurance
14 Trust Fund, and the Federal Hospital Insurance Trust
15 Fund under sections 201 and 1817 of the Social Security
16 Act, if the additional wages deemed to have been paid under
17 section 229(a) of the Social Security Act prior to 1984 had
18 constituted remuneration for employment (as defined in sec-
19 tion 3121(b) of the Internal Revenue Code of 1954) for pur-
20 poses of the taxes imposed by sections 3101 and 3111 of the
21 Internal Revenue Code of 1954, and the amount of interest
22 which would have been earned on such amounts if they had
23 been so appropriated.
24 (2)(A) The Secretary of the Treasury shall, within
25 thirty days after the date of the enactment of this Act, trans-
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1 fer into each such Trust Fund, from the general fund in the
2 Treasury, an amount equal to the amount determined with
3 respect to such Trust Fund under paragraph (1), less any
4 amount appropriated into such Trust Fund under the provi-
5 sions of section 229(b) of the Social Security Act prior to the
6 date of the determination made under paragraph (1) with re-
7 spect to wages deemed to have been paid for calendar years
8 prior to 1984. There are hereby appropriated into such Trust
9 Funds sums equal to the amounts to be transferred in accord-
10 ance with this subparagraph into such Trust Funds.
11 (B) The Secretary shall revise the amount determined
12 under subparagraph (A) within one year after the date of the
13 transfer made under paragraph (1), as warranted by data
14 which may become available to him after the date of the
15 transfer under subparagraph (A) based upon actual benefits
16 paid under this title and title X VIII. Any amounts deter-
17 mined to be needed for transfer shall be transferred by the
18 Secretary of the Treasury into the appropriate Trust Fund
19 from the general fund in the Treasury, or out of the appropri-
20 ate Trust Fund into the general fund in the Treasury, as
21 may be appropriate. There are authorized to be appropriated
22 to such Trust Funds sums equal to the amounts to be trans-
23 ferred in accordance with this subparagraph into such Trust
24 Funds.
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1 TRUST FUND INVESTMENT PROCEDURE
2 SEC. 146. (a) Section 201 of the Social Security Act is
3 amended by striking out subsections (d), (e), and (f) and in-
4 serting in lieu thereof the following new subsections:
5 "(d) There are hereby created on the books of the Treas-
6 ury of the United States an account to be known as the Old-
7 Age and Survivors Insurance Depositary Account and an
8 account to be known as the Disability Insurance Depositary
9 Account.
10 "(e) The Managing Trustee shall deposit that portion of
11 the Federal Old-Age and Survivors Insurance Trust Fund
12 not required to meet current withdrawals from such Trust
13 Fund in the Old-Age and Survivors Insurance Depositary
14 Account and that portion of the Federal Disability Insurance
15 Trust Fund not required to meet current withdrawals from
16 such Trust Fund in the Disability Insurance Depositary Ac-
17 count.
18 "(f)(1) The Secretary of the Treasury may apply
19 moneys deposited in an account pursuant to subsection (e) in
20 any way in which he is authorized by law to apply moneys
21 in the general fund of the Treasury.
22 "(2)(A) Moneys deposited in an account pursuant to
23 subsection (e) shall be treated as indebtedness of the United
24 States for purposes of section 1305(2) of title 31, United
25 States Code, and shall earn interest, payable monthly, in an
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1 amount equal to the product obtained by multiplying the
2 average balance of moneys in the account for such month by
3 the average market yield (computed by the Managing Trustee
4 on the basis of market quotations as of the end of each busi-
5 ness day of such month) on all marketable interest-bearing
6 obligations of the United States then forming a part of the
7 public debt which are not due or callable until after the expi-
8 ration of four years from the end of such month, except that
9 `flower bonds' shall not be included in such computation.
10 "(B) For purposes of this paragraph, the term `flower
11 bond' means a United States Treasury bond which was
12 issued before March 4, 1971 and which may, at the option of
13 the duly constituted representatives of the estate of a deceased
14 individual, be redeemed at par (face) value, plus accrued in-
15 terest to the date of payment, if-
16 "(i) it was owned by such deceased individual at
17 the time of his death,
18 "(ii) it is part of the estate of such deceased indi-
19 vidual, and
20 "(iii) such representatives authorize the Secretary
21 of the Treasury to apply the entire proceeds of the re-
22 demption of such bond to the payment of Federal estate
23 taxes.
24 "(3) The Managing Trustee may withdraw moneys de-
25 posited in an account pursuant to subsection (e) whenever he
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1 determines that such moneys are necessary to meet current
2 withdrawals from the Trust Fund which deposited such
3 moneys, and the Secretary of the Treasury may sell obliga-
4 tions of the United States in the market in an amount not to
5 exceed the amount of such withdrawal if he determines that
6 such withdrawal necessitates an increase in the general fund
7 of the Treasury by an amount not exceeding such amount. ".
8 (b) Section 1817 of such Act is amended by striking out
9 subsections (c), (d), and (e) and inserting in lieu thereof the
10 following new subsections:
11 "(c) There is hereby created on the books of the Treas-
12 ury of the United States an account to be known as the Hos-
13 pital Insurance Depositary Account.
14 "(d) The Managing Trustee shall deposit that portion of
15 the Federal Hospital Insurance Trust Fund not required to
16 meet current withdrawals from such Trust Fund in the Hos-
17 pital Insurance Depositary Account.
18 "(e)(1) The Secretary of the Treasury may apply
19 moneys deposited in the account pursuant to subsection (d) in
20 any way in which he is authorized by law to apply moneys
21 in the general fund of the Treasury.
22 "(2)(A) Moneys deposited in the account pursuant to
23 subsection (d) shall be treated as indebtedness of the United
24 States for purposes of section 1305(2) of title 31, United
25 States Code, and shall earn interest, payable monthly, in an
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1 amount equal to the product obtained by multiplying the
2 average balance of moneys in the account for such month by
3 the average market yield (computed by the Managing Trustee
4 on the basis of market quotations as of the end of each busi-
5 ness day of such month) on all marketable interest-bearing
6 obligations of the United States then forming a part of the
7 public debt which are not due or callable until after the expi-
8 ration of four years from the end of such month, except that
9 `flower bonds' shall not be included in such computation.
10 "(B) For purposes of this paragraph, the term `flower
11 bond' means a United States Treasury bond which was
12 issued before March 4, 1971, and which may, at the option of
13 the duly constituted representatives of the estate of a deceased
14 individual, be redeemed at par (face) value, plus accrued in-
15 terest to the date of payment, if-
16 "(i) it was owned by such deceased individual at
17 the time of his death,
18 "(ii) it is part of the estate of such deceased indi-
19 vidual, and
20 "(iii) such representatives authorize the Secretary
21 of the Treasury to apply the entire proceeds of the re-
22 demption of such bond to the payment of Federal estate
23 taxes.
24 "(3) The Managing Trustee may withdraw moneys de-
25 posited in the account pursuant to subsection (d) whenever he
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1 determines that such moneys are necessary to meet current
2 withdrawals from the Trust Fund, and the Secretary of the
3 Treasury may sell obligations of the United States in the
4 market in an amount not to exceed the amount Of such with-
5 drawal if he determines that such withdrawal necessitates an
6 increase in the general fund of the Treasury by an amount
7 not exceeding such amount. '
8 (c) Section 1841 of such Act is amended by striking out
9 subsections (c), (d), and (e) and inserting in lieu thereof the
10 following new subsections:
11 "(c) There is hereby established on the books of the
12 Treasury an account to be known as the Supplementary
13 Medical Insurance Depositary Account.
14 "(d) The Managing Trustee shall deposit that portion of
15 the Federal Supplementary Medical Insurance Trust Fund
16 not required to meet current withdrawals from such Trust
17 Fund in the Supplementary Medical Insurance Depositary
18 Account.
19 "(e)(1) The Secretary of the Treasury may apply
20 moneys deposited in the account pursuant to subsection (d) in
21 any way in which he is authorized by law to apply moneys
22 in the general fund of the Treasury.
23 "(2)(A) Moneys deposited in the account pursuant to
24 subsection (d) shall be treated as indebtedness of the United
25 States for purposes of section 1305(2) of title 31, United
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1 States Code, and shall earn interest, payable monthly, in an
2 amount equal to the product obtained by multiplying the
3 average balance of moneys in the account for such month by
4 the average market yield (computed by the Managing Trustee
5 on the basis of market quotations as of the end of each busi-
6 ness day of such month) on all marketable interest-bearing
7 obligations of the United States then forming a part of the
8 public debt which are not due or callable until after the expi-
9 ration of four years from the end of such month, except that
10 `flower bonds' shall not be included in such computation.
11 "(B) For purposes of this paragraph, the term `flower
12 bond' means a United States Treasury bond which was
13 issued before March 4, 1971, and which may, at the option of
14 the duly constituted representatives of the estate of a deceased
15 individual, be redeemed at par (face) value, plus accrued in-
16 terest to the date of payment, if-
17 "(i) it was owned by such deceased individual at
18 the time of his death,
19 "(ii) it is part of the estate of such deceased indi-
20 vidual, and
21 "(iii) such representatives authorize the Secretary
22 of the Treasury to apply the entire proceeds of the re-
23 demption of such bond to the payment of Federal estate
24 taxes.
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1 "(3) The Managing Trustee may withdraw moneys de-
2 posited in the account pursuant to subsection (d) whenever he
3 determines that such moneys are necessary to meet current
4 withdrawals from the Trust Fund, and the Secretary of the
5 Treasury may sell obligations of the United States in the
6 market in an amount not to exceed the amount of such with-
7 drawal if he determines that such withdrawal necessitates an
8 increase in the general fund of the Treasury by an amount
9 not exceeding such amount. "
10 (d) (1) No later than the date on which this section takes
11 effect, the Secretary of the Treasury shall redeem at par all
12 outstanding obligations of the United States issued under the
13 Second Liberty Bond Act exclusively for purchase by the
14 Federal Old-Age Insurance Trust Fund, the Federal Dis-
15 ability Insurance Trust Fund, the Federal Hospital Insur-
16 ance Trust Fund, and the Federal Supplementary Medical
17 Insurance Trust Fund (hereinafter in this subsection re-
18 ferred to as the "Trust Funds').
19 (2)(A) The Managing Trustee may sell any marketable
20 obligation of the United States held by the Trust Funds at
21 market price at any time and shall sell (or redeem) all
22 "flower bonds" held by the Trust Funds on the date of enact-
23 ment of this section at market price no later than the date on
24 which this section takes effect.
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1 (B) For purposes of this paragraph, the term "flower
2 bond" means a United States Treasury bond which was
3 issued before March 4, 1971, and which may, at the option of
4 the duly constituted representatives of the estate of a deceased
5 individual, be redeemed at par (face) value, plus accrued in-
6 terest to the date of payment, if-
7 (i) it was owned by such deceased individual at
8 the time of his death,
9 (ii) it is part of the estate of such deceased indi-
10 vidual, and
11 (iii) such representatives authorize the Secretary
12 of the Treasury to apply the entire proceeds of the re-
13 demption of such bond to the payment of Federal estate
14 taxes.
15 (3) The proceeds from the redemption and sale of obliga-
16 tions of the United States pursuant to paragraphs (1) and
17 (2) shall be paid to the Trust Fund selling or redeeming such
18 obligations and that portion of such proceeds which is not
19 required to meet current withdrawals from such Trust Fund
20 shall be deposited in the account established with respect to
21 such Trust Fund by subsection (a), (b), or (c) of this Act.
22 (e) The amendments made by this section shall take
23 effect on the first day of the first month beginning more than
24 30 days after the date of enactment of this Act.
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1 ADDITION OF PUBLIC MEMBERS TO TRUST FUND BOARDS
2 OF TRUSTEES
3 SEC. 147 (a) Sections 201(c), 1817(b), and 1841(b) of
4 the Social Security Act are each amended-
5 (1) by striking out the period at the end of the
6 first sentence and inserting in lieu thereof a comma
7 and "and of two members of the public (both of whom
8 may not be from the same political party), who shall be
9 nominated by the President for a term of four years
10 and subject to confirmation by the Senate; and
11 (2) by adding at the end thereof the following new
12 sentence: "A member of the public serving on the
13 Board of Trustees shall not be considered to be a fidu-
14 ciary and shall not be personally liable for actions
15 taken in such capacity with respect to the Trust
16 Funds. "17 (b) The amendments made by subsection (a) shall
18 become effective on the date of enactment of this Act.
19 PAYMENT SCHEDULE BY STATE AND LOCAL
20 GOVERNMENTS
21 SEC. 148. (a) Section 218(e)(1)(A) of the Social Secu-
22 rity Act is amended by striking out "within the thirty-day
23 period immediately following the last day of each calendar
24 month " and inserting in lieu thereof "in accordance with the
25 same payment schedule as applies to payment by employers
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1 of the taxes imposed under sections 3101 and 3111 of the
2 Internal Revenue Code of 1954'
3 (b) The amendment made by subsection (a) shall be ef-
4 fective with respect to payments due on or after January 1,
5 1984.
6 NORMALIZED CREDITING OF SOCIAL SECURITY TAXES TO
7 TRUST FUNDS
8 SEC. 149. (a) Section 201(a) of the Social Security
9 Act is amended by striking out "The amounts appropriated"
10 in the last sentence and inserting in lieu thereof "Except as
11 provided in subsection (m), the amounts appropriated".
12 (b) Section 201 of such Act is further amended by
13 adding at the end thereof the following new subsection:
14 "(m)(1) The procedures in effect on January 1, 1983,
15 with respect to the transfer of the amounts appropriated by
16 clauses (3) and (4) of subsection (a) and the amounts appro-
17 priated by clauses (1) and (2) of subsection (b) shall apply to
18 a calendar month unless the Secretary makes a finding
19 under this paragraph that the OASDI trust fund ratio as of
20 the first day of such calendar month is less than 12 percent.
21 "(2) If the Secretary makes the finding described in
22 paragraph (1) with respect to a calendar month, the amounts
23 appropriated by clauses (3) and (4) shall be transferred on
24 the first day of such calendar month from the general fund of
25 the Treasury to the Federal Old-Age and Survivors Insur-
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1 ance Trust Fund, and the amounts appropriated by clauses
2 (1) and (2) Of subsection (b) shall be transferred on the first
3 day of such calendar month from the general fund of the
4 Treasury to the Federal Disability Insurance Trust Fund,
5 such amounts to be determined on the basis of estimates by
6 the Secretary of the Treasury of the taxes, specified in
7 clauses (3) and (4) Of subsection (a), to be paid to or deposit-
8 ed into the Treasury during such calendar month.
9 "(3) Proper adjustments shall be made in amounts sub-
10 sequently transferred to the extent prior estimates were in
11 excess of or were less than the taxes specified in clauses (3)
12 and (4) of subsection (a).
13 "(4) All amounts transferred to either Trust Fund
14 under paragraph (2) shall be treated by the Managing
15 Trustee in the same manner and to the same extent as the
16 other assets of such Trust Fund; and such Trust Fund shall
17 pay interest to the general fund on the amount so transferred
18 at a rate (calculated on a daily basis, and applied against the
19 difference between the amount so transferred on such first
20 day and the amount which would have been transferred to the
21 Trust Fund up to that day under the procedures in effect on
22 January 1, 1983) equal to the average 91-day Treasury bill
23 rate during such month (payable on the last day of such
24 month).
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1 "(5) For purposes of this subsection, the term 'OA SDI
2 trust fund ratio' means, with respect to any month, the ratio
3 of-
4 "(A) the combined balance in the Federal Old-
5 Age and Survivors Insurance Trust Fund and the
6 Federal Disability Insurance Trust Fund, reduced by
7 the outstanding amount of any loan (including interest
8 thereon) theretofore made to either such Trust Fund
9 from the Federal Hospital Insurance Trust Fund
10 under subsection (1), and determined without regard to
11 amounts transferred theretofore under this subsection,
12 as of the last day of the second month preceding such
13 month, to
14 "(B) the amount obtained by multiplying by
15 twelve the total amount which (as estimated by the
16 Secretary) will be paid from the Federal Old-Age and
17 Survivors Insurance Trust Fund and the Federal Dis-
18 ability Insurance Trust Fund during the month for
19 which such ratio is to be determined for all purposes
20 authorized by section 201 (other than payments of in-
21 terest on, or repayments of, loans from the Federal
22 Hospital Insurance Trust Fund under subsection (1)),
23 but excluding any transfer payments between such
24 trust funds and reducing the amount of any transfers
25 to the Railroad Retirement Account by the amount of
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1 any transfers into either such trust fund from that Ac-
2 count. ".
3 (c) The amendments made by this section shall apply to
4 calendar months beginning after the date of enactment of this
5 section and before January 1, 1988.
6
AMOUNTS RECEIVED
UNDER CERTAIN DEFERRED COM-
7
PENSATION AND
SALARY REDUCTION ARRANGE-
8
MENTS TREATED AS WAGES FOR FICA TAXES
9
SEC. 150. (a)(1) Section 3121 of the Internal Revenue
10 Code of 1954 (relating to definitions) is amended by adding
11 at the end thereof the following new subsection:
12 "(v) TREATMENT OF CERTAIN DEFERRED COMPEN-
13 SATION AND SALARY REDUCTION ARRANGEMENTS.-
14 "(1) CERTAIN EMPLOYER CONTRIBUTIONS
15 TREATED AS WAGES.-Nothing in any paragraph of
16 subsection (a) (other than paragraph (1)) shall exclude
17 from the term `wages' any employer contribution-
18 "(A) under a qualified cash or deferred ar-
19 rangement (as defined in section 401(k)) to the
20 extent not included in gross income by reason of
21 section 402(a)(8), or
22 "(B) under a cafeteria plan (as defined in
23 section 125(d)) which includes an arrangement
24 described in subparagraph (A) to the extent the
25 employee had the right to choose cash, property, or
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1 other benefits which would be wages for purposes
2 of this chapter.
3 "(2) GOVERNMENTAL PLANS.-For purposes of
4 subsection (a)-
5 "(A) IN GENERAL.-Except as provided in
6 subparagraph (B), the term `wages' shall not in-
7 clude any payment to or from a Governmental
8 plan (within the meaning of section 414(d)).
9 "(B) ExCEPTIONS.-The term `wages' shall
10 include any amount-
11 "(i) deferred under a plan described in
12 section 457(a) (at the time the services which
13 relate to such payment were performed),
14 "(ii) deferred under a plan described in
15 subsection (e) (1), (e) (2) (D), or (e) (2) (E) of
16 section 457, or
17 "(iii) which is treated as wages under
18 subsection (a) (5) (E) by reason of a salary
19 reduction agreement. ".
20 (2) Paragraph (5) of section 3121(a) of such Code (de-
21 fining wages) is amended-
22 (A) by striking out "or" at the end of subpara-
23 graph (C),
S 1 RS--11
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1 (B) by striking out the semicolon at the end of
2 subparagraph (D) and inserting in lieu thereof a
3 comma and "or", and
4 (C) by adding at the end thereof the following
5 new subparagraph:
6 "(E) under an annuity contract described in sec-
7 tion 403(b), other than a payment for the purchase of
8 such contract which is made by reason of a salary re-
9 duction agreement; "10 (3) Subsection (a) of section 3121 of such Code (de f in-
11 ing wages) is amended-
12 (A) in paragraph (2), by striking out subpara-
13 graph (A) and redesignating subparagraphs (B), (C),
14 and (D) as subparagraphs (A), (B), and (C), respec-
15 tively,
16 (B) by striking out paragraphs (3) and (9),
17 (C) in paragraph (13) (A)-
18 (i) by inserting "or" after "death, ", and
19 (ii) by striking out "or (iii) retirement after
20 attaining an age specified in the plan referred to
21 in subparagraph (B) or in a pension plan of the
22 employer, ", and
23 (D) by striking out "subparagraph (B) " in the
24 last sentence thereof and inserting in lieu thereof "sub-
25 paragraph (A) ".
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1 (b)(1) Section 3306 of the Internal Revenue Code of
2 1954 (relating to definitions) is amended by adding at the
3 end thereof the following new subsection:
4 "(r) TREATMENT OF CERTAIN DEFERRED COMPEN-
5 SATION AND SALARY REDUCTION ARRANGEMENTS.-
6 "(1) CERTAIN EMPLOYER CONTRIBUTIONS
7 TREATED AS WAGES.-Nothing in any paragraph of
8 subsection (b) (other than paragraph (1)) shall exclude
9 from the term `wages' any employer contribution-
10 "(A) under a qualified cash or deferred ar-
11 rangement (as defined in section 401(k)) to the
12 extent not included in gross income by reason of
13 section 402(a)(8), or
14 "(B) under a cafeteria plan (as defined in
15 section 125(d)) which includes an arrangement
16 described in subparagraph (A) to the extent the
17 employee had the right to choose cash, property, or
18 other benefits which would be wages for purposes
19 of this chapter.
20 "(2) GOVERNMENTAL PLANS.-For purposes of
21 subsection (b)-
22 "(A) IN GENERAL.-Except as provided in
23 subparagraph (B), the term `wages' shall not in-
24 clude any payment to or from a governmental
25 plan (within the meaning of section 414(d)).
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1 "(B) EXCEPTIONS.-The term `wages' shall
2 include any amount-
3 "(i) deferred under a plan described in
4 section 457(a) (at the time the services which
5 relate to such payment were performed),
6 "(ii) deferred under a plan described in
7 subsection (e) (1), (e) (2) (D), or (e) (2) (E) of
8 section 457, or
9 "(iii) which is treated as wages under
10 subsection (b) (5) (E) by reason of a salary
11 reduction agreement. "12 (2) Paragraph (5) of section 3306(b) of such Code (de-
13 fining wages) is amended-
14 (A) by striking out "or" at the end of subpara-
15 graph (C),
16 (B) by striking out the semicolon at the end of
17 subparagraph (D) and inserting in lieu thereof a
18 comma and "or", and
19 (C) by adding at the end thereof the following
20 new subparagraph:
21 "(E) under an annuity contract described in sec-
22 tion 403(b), other than a payment for the purchase of
23 such contract which is made by reason of a salary re-
24 duction agreement; ".
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1 (3) Subsection (b) of section 3306 of such Code (de fin-
2 ing wages) is amended-
3 (A) in paragraph (2), by striking out subpara-
4 graph (A) and redesignating subparagraphs (B), (C),
5 and (D) as subparagraphs (A), (B), and (C), respec-
6 tively,
7 (B) by striking out paragraphs (3) and (8), and
8 (C) in paragraph (10) (A)-
9 (i) by inserting "or" after "death, ", and
10 (ii) by striking out "or (iii) retirement after
11 attaining an age specified in the plan referred to
12 in subparagraph (B) or in a pension plan of the
%
13 employer, "
14 (4) (A) Subparagraph (A) of section 3306(b) (2) of such
15 Code, as redesignated by paragraph (3) (A), is amended to
16 read as follows:
17 "(A) sickness or accident disability (but, in
18 the case of payments made to an employee or any of
19 his dependents, this subparagraph shall exclude
20 from the term `wages' only payments which are
21 received under a workman's compensation law),
22
or
23 (B) Subsection (b) of section 3306 of such Code (de f in-
24 ing wages) is amended by adding at the end thereof the fol-
25 lowing new flush sentence:
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1 "Except as otherwise provided in regulations prescribed by
2 the Secretary, any third party which makes a payment in-
3 cluded in wages solely by reason of the parenthetical matter
4 contained in subparagraph (A) of paragraph (2) shall be
5 treated for purposes of this chapter and chapter 22 as the
6 employer with respect to such wages. '
7 (C) Rules similar to the rules of subsections (d) and (e)
8 of section 3 of the Act entitled "An Act to amend the Omni-
9 bus Reconciliation Act of 1981 to restore minimum benefits
10 under the Social Security Act" (Public Law 97-123), ap-
11 proved December 29, 1981, shall apply in the administration
12 of section 3306(b) (2) (A) of such Code (as amended by sub-
13 paragraph (A)).
14 (c)(1) Section 209 of the Social Security Act is amend-
15 ed by adding at the end thereof (as amended by this Act) the
16 following new paragraphs:
17 "Nothing in any of the foregoing provisions of this sec-
18 tion (other than subsection (a)) shall exclude from the term
19 `wages' any employer contribution-
20 "(1) under a qualified cash or deferred arrange-
21 ment (as defined in section 401(k)) to the extent not
22 included in gross income by reason of section
23 402(a)(8), or
24 "(2) under a cafeteria plan (as defined in section
25 125(d)) which includes an arrangement described in
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1 paragraph (1) to the extent the employee had the right
2 to choose cash, property, or other benefits which would
3 he wages for purposes of this chapter.
4 Per purposes of this section-
5 "(1) the term `wages' shall not include any pay-
6 ment to or from a governmental plan (within the
7 meaning of section 414(d) of the Internal Revenue
8 Code of 1954); except that
9 "(2) the term `wages' shall include any amount-
10 "(A) deferred under a plan described in sec-
11 tion 457(a) of such Code (at the time the services
12 which relate to such payment were performed),
13 "(B) deferred under a plan described in sub-
14 section (e) (1), (e) (2) (D), or (e) (2) (E) of section
15 457 of such Code, or
16 "(C) which is treated as wages under subsec-
17 tion (e)(5) by reason of a salary reduction agree-
18 ment. ".
19 (2) Subsection (e) of section 209 of such Act is amended
20 by adding before the semicolon at the end thereof the follow-
21 ing: ", or (5) under an annuity contract described in section
22 403(b) of the Internal Revenue Code of 1954, other than a
23 payment for the purchase of such contract which is made by
24 reason of a salary reduction agreement;".
25 (3) Section 209 of such Act is amended-
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1 (A) in subsection (b), by striking out paragraph
2 (1) and redesignating paragraphs (2), (3), and (4) as
3 paragraphs (1), (2), and (3), respectively,
4 (B) by striking out subsections (c) and (i), and
5 (C) in subsection (m)(1)-
6 (i) by inserting "or" after "death, ", and
7 (ii) by striking out "or (C) retirement after
8 attaining an age specified in the plan referred to
9 in paragraph (2) or in a pension plan of the em-
10 ployer, "11 (d)(1) Except as provided in paragraph (2), the amend-
12 ments made by this section shall apply to remuneration paid
13 after December 31, 1983.
14 (2) The amendments made by subsection (b) shall apply
15 to remuneration paid after December 31, 1984.
16 CODIFICATION OF ROWAN DECISION WITH RESPECT TO
17 MEALS AND LODGING
18 SEC. 151. (a)(1) Subsection (a) of section 3121 of the
19 Internal Revenue Code of 1954 (defining wages) is amended
20 by striking out "or" at the end of paragraph (17), by striking
21 out the period at the end of paragraph (18) and inserting in
22 lieu thereof ", or", and by inserting after paragraph (18) the
23 following new paragraph:
24 "(19) the value of any meals or lodging furnished
25 by or on behalf of the employer if at the time of such
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1 furnishing it is reasonable to believe that the employee
2 will be able to exclude such items from income under
3 section 119. ".
4 (2) Section 209 of the Social Security Act is amended
5 by striking out "or" at the end of subsection (p), by striking
6 out the period at the end of subsection (q) and inserting in
7 lieu thereof ", or", and by inserting after subsection (q) the
8 following new subsection:
9 "(r) The value of any meals or lodging furnished by or
10 on behalf of the employer if at the time of such furnishing it
11 is reasonable to believe that the employee will be able to ex-
12 clude such items from income under section 119 of the Inter-
13 nal Revenue Code of 1954. ".
14 (h)(1) Subsection (a) of section 3121 of such Code is
15 amended by inserting after paragraph (19) (as added by sub-
16 section (a) of this section) the following new sentence: "Noth-
17 ing in the regulations prescribed for purposes of chapter 24
18 (relating to income tax withholding) which provides an exclu-
19 sion from `wages' as used in such chapter shall be construed
20 to require a similar exclusion from `wages' in the regulations
21 prescribed for purposes of this chapter. ".
22 (2) Section 209 of the Social Security Act is amended
23 by inserting immediately after subsection (r) (as added by
24 subsection (a) of this section) the following new sentence:
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1 "Nothing in the regulations prescribed for purposes of chap-
2 ter 24 of the Internal Revenue Code of 1954 (relating to
3 income tax withholding) which provides an exclusion from
4 `wages' as used in such chapter shall be construed to require
5 a similar exclusion from `wages' in the regulations prescribed
6 for purposes of this title. '
7 (c) Subsection (b) of section 3306 of the Internal Reve-
8 nue Code of 1954 (defining wages) is amended-
9 (1) by striking out "or" at the end of paragraph
10 (12),
11 (2) by striking out the period at the end of para-
12 graph (13) and inserting in lieu thereof ", or",
13 (3) by adding immediately after paragraph (13)
14 the following new paragraph:
15 "(14) the value of any meals or lodging furnished
16 by or on behalf of the employer if at the time of such
17 furnishing it is reasonable to believe that the employee
18 will be able to exclude such items from income under
19 section 119. ", and
20 (4) by adding at the end thereof the following new
21 flush sentence:
22 "Nothing in the regulations prescribed for purposes of chap-
23 ter 24 (relating to income tax withholding) which provides an
24 exclusion from `wages' as used in such chapter shall be con-
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1 strued to require a similar exclusion from `wages' in the reg-
2 ulations prescribed for purposes of this chapter. ".
3 (d) (1) Except as provided in paragraph (2), the amend-
4 meets made by subsections (a) and (b) shall apply to remu-
5 neration paid after December 31, 1983.
6 (2) The amendments made by subsection (c) shall apply
7 to remuneration paid after December 31, 1984.
8 TREATMENT OF CONTRIBUTIONS UNDER SIMPLIFIED
9 EMPLOYEE PENSIONS
10 SEC. 152. (a) Subparagraph (D) of section 3121(a) (5)
11 of the Internal Revenue Code of 1954 (defining wages) is
12 amended by striking out "section 219" and inserting in lieu
13 thereof "section 219(b)(2)"14 (b) Subsection (e) of section 209 of the Social Security
15 Act, as amended by this Act, is amended by striking out the
16 semicolon at the end thereof and inserting in lieu thereof the
17 following: ", or (6) under a simplified employee pension (as
18 defined in section 408(k) of the Internal Revenue Code of
19 1954) if, at the time of the payment, it is reasonable to be-
20 lieve that the employee will be entitled to a deduction under
21 section 219(b) (2) of such Code for such payment; "22 (c) Subparagraph (D) of section 3306(b)(5) of the In-
23 ternal Revenue Code of 1954 is amended by striking out
24 "section 219" and inserting in lieu thereof "section
25 219(b)(2) ".
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1 (d) (1) Except as provided in paragraph (2), the amend-
2 ments made by this section shall apply to remuneration paid
3 after December 31, 1983.
4 (2) The amendments made by subsection (c) shall apply
5 to remuneration paid after December 31, 1984.
6 TITLE II-SUPPLEMENTAL SECURITY
7 INCOME
8 INCREASE IN BENEFIT STANDARD
9 SEC. 201. (a) Section 1617 of the Social Security Act
10 is amended by adding at the end thereof the following new
11 subsection:
12 "(c) Effective July 1, 1983-
13 "(1) each of the dollar amounts in effect under
14 subsections (a) (1) (A) and (b) (1) of section 1611, as
15 previously increased under this section, shall be in-
16 creased by $240 (and the dollar amount in effect under
17 subsection (a)(1)(A) of Public Law 93-66, as previous-
18 ly so increased, shall be increased by $120); and
19 "(2) each of the dollar amounts in effect under
20 subsections (a)(2)(A) and (b)(2) of section 1611, as
21 previously increased under this section, shall be in-
22 creased by $360. ".
23 (b) Section 1617(b) of such Act is amended by striking
24 out "this section" and inserting in lieu thereof "subsection
25 (a) of this section ".
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1 ADJUSTMENT IN FEDERAL SSI PASS-THROUGH
2 PROVISIONS
3 SEc. 202. Section 1618 of the Social Security Act is
4 amended by adding at the end thereof the following new sub-
5 section:
6 (d) (1) For any particular month after March 1983, a
7 State shall be deemed to have met the requirements of para-
8 graph (4) of subsection (a) if-
9 "(A) the combined level of its supplementary pay-
10 ments (to recipients of the type involved) and the
11 amounts payable under section 1611(b) (to such recipi-
12 ents), for that particular month,
13 is not less than-
14 "(B) the combined level of its supplementary pay-
15 ments (to recipients of the type involved) and the
16 amounts payable under section 1611(b) (to such recipi-
17 ents), for March 1983, increased by the amount of all
18 cost-of-living adjustments under section 1617 (and any
19 other benefit increases under this title) which have oc-
20 curred after March 1983 and before that particular
21 month.
22 "(2) In determining the amount of any increase in the
23 combined level involved under paragraph (1)(B) of this sub-
24 section, any portion of such amount which would otherwise
25 be attributable to the increase under section 1617(c) shall be
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1 deemed instead to be equal to the amount of the cost-of-living
2 adjustment which would have occurred in July 1983 (with-
3 out regard to the 3-percent limitation contained in section
4 215(i)(1)(B)) if section 111 of the Social Security Act
5 Amendments of 1983 had not been enacted. '
6 NOTIFICATION REGARDING SSI
7 SEC. 203. Prior to July 1, 1984, the Secretary of
8 Health and Human Services shall notify all elderly recipi-
9 ents of benefits under title II of the Social Security Act, who
10 may be eligible for supplemental security income benefits
11 under title X VI of such Act, of the availability of the supple-
12 mental security income program, and shall encourage such
13 recipients to contact the Social Security district office. Such
14 notification shall also be made to all recipients prior to at-
15 tainment of age 65, with the notification made with respect to
16 eligibility for supplemental medical insurance.
17 TITLE III-MEDICARE
18 MEDICARE PAYMENTS FOR INPATIENT HOSPITAL
19 SERVICES ON THE BASIS OF PROSPECTIVE RATES
20 SEC. 301. (a)(1) Section 1886(a)(4) of the Social Se-
21 curity Act is amended by adding at the end the following new
22 sentence: "Such term does not include costs of approved edu-
23 cational activities, or, with respect to costs incurred in cost
24 reorting periods beginning prior to October 1, 1986, capital-
25 related costs, as defined by the Secretary. ".
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1 (2) Subsection (a) (1) of section 1886 of such Act is
2 amended by adding at the end thereof the following new sub-
3 paragraph:
4 "(D) Subparagraph (A) shall not apply to cost reporting
5 periods beginning on or after October 1, 1985. ".
6 (3) It is the intent of Congress that, in considering the
7 implementation of a system for including capital-related costs
8 under a prospectively determined payment rate for inpatient
9 hospital services, costs related to capital projects initiated on
10 or after the effective date of the implementation of such a
11 system, may or may not be distinguished and treated differ-
12 ently from costs of projects initiated before such date.
13 (b) Section 1886(b) of such Act is amended-
14 (1) by striking out "Notwithstanding sections
15 1814(b), but subject to the provisions of sections" in
16 paragraph (1) and inserting in lieu thereof "Notwith-
17 standing section 1814(b) but subject to the provisions
18 of section"19 (2) by inserting "(other than a subsection (d) hos-
20 pital, as defined in subsection (d) (1) (B)) " in the
21 matter before subparagraph (A) of paragraph (1) after
22 "of a hospital"
23 (3) by inserting, in the matter in paragraph (1)
24 following subparagraph (B), "(other than on the basis
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1 of a DR G prospective payment rate determined under
2 subsection (d)) " after `payable under this title'
3 (4) by repealing paragraph (2);
4 (5) by inserting "and subsection (d) and except as
5 provided in subsection (e) " in paragraph (3) (B) after
6 "subparagraph (A)"?
7 (6) by inserting "or fiscal year" after "cost re-
8 porting period" each place it appears in paragraph
9 (3) (B);
10 (7) by inserting "before the beginning of the
11 period or year" in paragraph (3)(B) after "estimated
12 by the Secretary",-
13 (8) by striking out "exceeds" in paragraph (3) (B)
14 and inserting in lieu thereof "will exceed" and
15 (9) by amending paragraph (6), effective with re-
16 spect to cost reporting periods beginning on or after
17 October 1, 1982, to read as follows:
18 "(6) In the case of any hospital which becomes subject
19 to the taxes under section 3111 of the Internal Revenue Code
20 for 1954 for part or all of a cost reporting period, and was
21 not subject to such taxes for the 12-month cost-reporting
22 period referred to in subsection (b)(3)(A)(i), the Secretary
23 shall provide for an adjustment by increasing the base year
24 amount referred to in subsection (b) (3) (A) (i) for such hospi-
25 tal applicable to such cost reporting period by the amount of
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1 such taxes paid or accrued by such hospital for such cost
2 reporting period. ".
3 (c) (1) Subsection (c) (1) of such section is amended-
4 (A) by striking out "and" at the end of subpara-
5 graph (B),
6 (B) by striking out the period at the end of sub-
7 paragraph (C) and inserting in lieu thereof ` , and",
8 and
9 (C) by adding at the end the following:
10 "(D) the Secretary determines that the system
11 will not preclude an eligible organization (as defined in
12 section 1876(b)) from negotiating directly with hospi-
13 tals with respect to the organization's rate of payment
14 for inpatient hospital services.
15 The Secretary cannot deny the application of a State under
16 this subsection on the ground that the State's hospital reim-
17 bursement control system is based on a payment methodology
18 other than on the basis of a diagnosis-related group or on the
19 ground that the amount of payments made under this title
20 under such system must be less than the amount of payments
21 which would otherwise have been made under this title not
22 using such system. If the Secretary determines that the con-
23 ditions described in subparagraph (C) are based on main-
24 taining payment amounts at no more than a specified per-
25 centage increase above the payment amounts in a base period,
S 1 RS--12
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1 the State has the option of applying such test (for inpatient
2 hospital services under part A) on an aggregate payment
3 basis or on the basis of the amount of payment per inpatient
4 discharge or admission. If the Secretary determines that the
5 conditions described in subparagraph (C) are based on main-
6 taining aggregate payment amounts below a national average
7 percentage increase in total payments under part A for inpa-
8 tient hospital services, the Secretary cannot deny the applica-
9 tion of a State under this subsection on the ground that the
10 State's rate of increase in such payments for such services
11 must be less than such national average rate of increase. '
12 (2) Subsection (c)(3) of such section is amended-
13 (A) by striking out "requirement of paragraph
14 (1)(A)" and inserting in lieu thereof "requirements of
15 subparagraphs (A) and (D) of paragraph (1) and, if
16 applicable, the requirements of paragraph (5), ", and
17 (B) by inserting "(or, if applicable, in paragraph
18 (5)) " in subparagraph (B) after `paragraph (1) ".
19 (3) Subsection (c) of such section is further amended by
20 adding at the end the following new paragraphs:
21 "(4) The Secretary shall approve the request of a State
22 under paragraph (1) with respect to a hospital reimbursement
23 control system if-
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1 "(A) the requirements of subparagraphs (A), (B),
2 (C), and (D) of paragraph (1) have been met with re-
3 spect to the system, and
4 "(B) with respect to that system a waiver of cer-
5 tain requirements of title X VIII of the Social Security
6 Act has been approved on or before (and which is in
7 effect as of) the date of the enactment of the Social Se-
8 curity Act Amendments of 1983, pursuant to section
9 402(a) of the Social Security Amendments of 1967 or
10 section 222(a) of the Social Security Amendments of
11 1972.
12 With respect to a State system described in this paragraph,
13 the Secretary shall judge the effectiveness of such system on
14 the basis of its rate of increase or inflation in inpatient hospi-
15 tal payments for individuals under this title, as compared to
16 the national rate of increase or inflation for such payments,
17 with the State retaining the option to have the test applied on
18 the basis of the aggregate payment or payments per inpatient
19 admission or discharge during the three cost reporting periods
20 beginning on or after October 1, 1983, after which such test
21 shall no longer apply, and such hospitals shall be treated in
22 the same manner as under other waivers.
23 "(5) The Secretary shall approve the request of a State
24 under paragraph (1) with respect to a hospital reimbursement
25 control system if-
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1 "(A) the requirements of subparagraphs (A), (B),
2 (C), and (D) of paragraph (1) have been met with re-
3 spect to the system;
4 "(B) the Secretary determines that the system-
5 "(i) is operated directly by the State or by
6 an entity designated pursuant to State law,
7 "(ii) provides for payment of hospitals cov-
8 ered under the system under a methodology
9 (which sets forth exceptions and adjustments, as
10 well as any method for changes in the methodolo-
11 gy) by which rates or amounts to be paid for hos-
12 pital services during a specified period are estab-
13 lished under the system prior to the defined rate
14 period, and
15 "(iii) hospitals covered under the system will
16 make such reports (in lieu of cost and other re-
17 ports, identified by the Secretary, otherwise re-
18 quired under this title) as the Secretary may re-
19 quire in order to properly monitor assurances pro-
20 vided under this subsection;
21 "(C) the State has provided the Secretary with
22 satisfactory assurances that operation of the system
23 will not result in any change in hospital admission
24 practices which result in-
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1 "(i) a significant reduction in the proportion
2 of patients (receiving hospital services covered
3 under the system) who have no third-party cover-
4 age and who are unable to pay for hospital serv-
5 ices,
6 "(ii) a significant reduction in the proportion
7 of individuals admitted to hospitals for inpatient
8 hospital services for which payment is (or is
9 likely to be) less than the anticipated charges for
10 or costs of such services,
11 "(iii) the refusal to admit patients who
12 would be expected to require unusually costly or
13 prolonged treatment for reasons other than those
14 related to the appropriateness of the care available
15 at the hospital, or
16 "(iv) the refusal to provide emergency serv-
17 ices to any person who is in need of emergency
18 services if the hospital provides such services;
19 "(D) any change by the State in the system
20 which has the effect of materially reducing payments to
21 hospitals can only take effect upon 60 days notice to
22 the Secretary and to the hospitals the payment to
23 which is likely to be materially affected by the change;
24 and
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1 "(E) the State has provided the Secretary with
2 satisfactory assurances that in the development of the
3 system the State has consulted with local governmental
4 officials concerning the impact of the system on public
5 hospitals.
6 The Secretary shall respond to requests of States under this
7 paragraph within 60 days of the date the request is submitted
8 to the Secretary.
9 "(6) If the Secretary determines that the assurances de-
10 scribed in paragraph (1)(C) have not been met with respect to
11 any 36-month period, the Secretary may reduce payments
12 under this title to hospitals under the system in an amount
13 equal to the amount by which the payments under this title
14 under such system for such period exceeded the amount of
15 payments which would otherwise have been made under this
16 title not using such system. ".
17 (d) Subsection (d) of such section, as added by section
18 110 of the Tax Equity and Fiscal Responsibility Act of
19 1982, is amended-
20 (1) by striking out "section 1814(b)" in para-
21 graph (2)(A) and inserting in lieu thereof "subsection
22 (b)" and
23 (2) by redesignating the subsection as subsection
24 (j) and transferring and inserting such subsection at
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1 the end of section 1814 of the Social Security Act
2 under the following heading:
3 "Elimination of Lesser-of- Cost-or- Charges Provision ".
4 (e) Such section 1886 is further amended by adding at
5 the end the following new subsections:
6 "(d) (1) (A) Notwithstanding section 1814(b) but subject
7 to the provisions of section 1813, the amount of the payment
8 with respect to the operating costs of inpatient hospital serv-
9 ices (as defined in subsection (a) (4)) of a subsection (d) hos-
10 pital (as defined in subparagraph (B)) for inpatient hospital
11 discharges in a cost reporting period or in a fiscal year-
12 "(i) beginning on or after October 1, 1983, and
13 before October 1, 1986, is equal to the sum of-
14 "(I) the target percentage (as defined in sub-
15 paragraph (C)) of the hospital's target amount for
16 the cost reporting period (as defined in subsection
17 (b)(3) (A)) for the period, and
18 "(II) the DRG percentage (as defined in
19 subparagraph (C)) of the applicable combined ad-
20 justed DRG prospective payment rate determined
21 under subparagraph (D) for such discharges; or
22 "(ii) beginning on or after October 1, 1986, is
23 equal to the national adjusted DRG prospective pay-
24 ment rate determined under paragraph (3) for such
25 discharges.
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1 "(B) As used in this section, the term `subsection (d)
2 hospital' means a hospital located in one of the fifty States or
3 the District of Columbia other than-
4 "(i) a psychiatric hospital (as defined in section
5 1861(f)),
"(ii)
a rehabilitation hospital (as defined by the
7 Secretary),
8 "(iii) a hospital whose inpatients are predomi-
9 nantly individuals under 18 years of age, or
10 "(iv) a hospital which has an average inpatient
11 length of stay (as determined by the Secretary) of
12 greater than 25 days;
13 and, in accordance with regulations of the Secretary, does not
14 include a psychiatric or rehabilitation unit of the hospital
15 which is a distinct part of the hospital (as defined by the
16 Secretary). The exclusion of any category of hospitals or
17 units under this subparagraph shall become inapplicable at
18 such time as the Secretary determines that adequate data of
19 clinical and statistical significance is available such that the
20 Secretary may include such category in the payment system
21 established under this subsection.
22 "(C) For purposes of this subsection, for cost reporting
23 periods beginning, or discharges occurring-
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1 "(i) on or after October 1, 1983, and before Octo-
2 ber 1, 1984, the `target percentage' is 75 percent and
3 the `DR G percentage' is 25 percent;
4 "(ii) on or after October 1, 1984, and before Oc-
5 tober 1, 1985, the `target percentage' is 50 percent and
6 the `DR G percentage' is 50 percent; and
7 "(iii) on or after October 1, 1985, and before Oc-
8 tober 1, 1986, the `target percentage' is 25 percent and
9 the `DR G percentage' is 75 percent.
10 "(D) For purposes of subparagraph (A) (i) (II), the `ap-
11 plicable combined adjusted DR G prospective payment rate'
12 for cost reporting periods beginning, or discharges occur-
13 ring-
14 "(i) on or after October 1, 1983, and before Octo-
15 ber 1, 1984, is a combined rate consisting of 25 per-
16 cent of the national DR G prospective payment rate,
17 and 75 percent of the regional DR G prospective pay-
18 ment rate, determined under paragraph (2) for such
19 discharges;
20 "(ii) on or after October 1, 1984, and before Oc-
21 tober 1, 1985, is a combined rate consisting of 50 per-
22 cent of the national DR G prospective payment rate,
23 and 50 percent of the regional DR G prospective pay-
24 ment rate, determined under paragraph (3) for such
25 discharges;
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1 "(iii) on or after October 1, 1985, and before Oc-
2 tober 1, 1986, is a combined rate consisting of 75 per-
3 cent of the national DR G prospective payment rate,
4 and 25 percent of the regional DR G prospective pay-
5 ment rate, determined under paragraph (3); and
6 "(iv) on or after October 1, 1986, is a rate equal
7 to the national DR G prospective payment rate deter-
8 mined under paragraph (3).
9 "(2) The Secretary shall determine a national adjusted
10 DRG prospective payment rate, for each inpatient hospital
11 discharge in fiscal year 1984 involving inpatient hospital
12 services of a subsection (d) hospital in the United States, and
13 shall determine a regional adjusted DR G prospective pay-
14 ment rate for such discharges in each such region, for which
15 payment may be made under part A of this title. Each such
16 rate shall also be determined for hospitals located in urban or
17 rural areas within the United States and within each such
18 region. Such determinations shall be made as follows:
19 "(A) DETERMINING ALLOWABLE INDIVIDUAL
20 HOSPITAL COSTS FOR BASE PERIOD.-The Secretary
21 shall determine the allowable operating costs per dis-
22 charge of inpatient hospital services for the hospital for
23 the most recent cost reporting period for which data are
24 available.
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1 "(B) UPDATING FOR FISCAL YEAR 1984.-The
2 Secretary shall update each amount determined under
3 subparagraph (A) for fiscal year 1984 by-
4 "(i) updating for fiscal year 1983 by the es-
5 timated average rate of change of hospital costs
6 industry-wide between the cost reporting period
7 used under such subparagraph and fiscal year
8 1983, and
9 "(ii) projecting for fiscal year 1984 by the
10 applicable percentage increase (as defined in sub-
11 section (b) (3) (B)) for fiscal year 1984.
12 "(C) STANDARDIZING AMOUNTS.-The Secre-
13 tart' shall standardize the amount updated under sub-
14 paragraph (B) for each hospital by-
15 "(i) excluding an estimate of indirect medi-
16 cal education costs,
17 "(ii) adjusting for variations among hospi-
18 tals by area and region in the average hospital
19 wage level, and
20 "(iii) adjusting for variations in case mix
21 among hospitals.
22 "(D) COMPUTING URBAN AND RURAL AVER-
23 AGES.-The Secretary shall compute an average of the
24 standardized amounts determined under subparagraph
25 (C) for the United States and for each region-
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12
13
15
16
17
18
19
20
22
23
25
188
"(i) for all subsection (d) hospitals located in
an urban area, and
"(ii) for all subsection (d) hospitals located
in a rural area.
For purposes of this subsection, the term `region'
means one of the four census regions established by the
Bureau of the Census, established by the Secretary;
the term `urban area' means an area within a Stand-
ard Metropolitan Statistical Area (as defined by the
Office of Management and Budget) or within such
similar area as the Secretary has recognized under
subsection (a) by regulation; and the term `rural area'
means any area outside such an area or similar area.
"(E) REDUCING FOR VALUE OF OUTLIER PAY-
MENTS.-The Secretary shall reduce each of the aver-
age standardized amounts determined under subpara-
graph (D) by a proportion equal to the proportion (esti-
mated by the Secretary) of the amount of payments
under this subsection based on DR G prospective pay-
ment rates which are additional payments described in
paragraph (5)(A) (relating to outlier payments).
"(F) MAINTAINING BUDGET NEUTRALITY.-The
Secretary shall adjust each of such average standard-
ized amounts as may be required under subsection
(e) (1) (B) for that fiscal year.
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1 "(G) COMPUTING DRG-SPECIFIC RATES FOR
2 URBAN AND RURAL HOSPITALS IN THE UNITED
3 STATES AND IN EACH REGION.-For each discharge
4 classified within a diagnosis-related group, the Secre-
5 tary shall establish a DING prospective payment rate
6 which is equal-
7 "(i) for hospitals located in an urban area in
8 the United States, and for hospitals located in an
9 urban area in each region, to the product of-
10 "(I) the average standardized amount
11 (computed under subparagraph (D), reduced
12 under subparagraph (E), and adjusted under
13 subparagraph (F)) for hospitals located in an
14 urban area in the United States or in that
15 region, and
16 "(II) the weighting factor (determined
17 under paragraph (4)(B)) for that diagnosis-
18 related group; and
19 "(ii) for hospitals located in a rural area in
20 the United States, and for hospitals located in a
21 rural area in each region, to the product of-
22 "(1) the average standardized amount
23 (computed under subparagraph (D), reduced
24 under subparagraph (E), and adjusted under
25 subparagraph (F)) for hospitals located in a
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1 rural area in the United States or in that
2 region, and
3 "(II) the weighting factor (determined
4 under paragraph (4) (B)) for that diagnosis-
5 related group.
6 "(H) ADJUSTING FOR DIFFERENT AREA WAGE
7 LEVELS.-The Secretary shall adjust the proportion
8 (as estimated by the Secretary from time to time) of
9 hospitals' costs which are attributable to wages and
10 wage-related costs, of the DR G prospective payment
11 rates computed under subparagraph (G) for area di f-
12 ferences in hospital wage levels by a factor (established
13 by the Secretary) reflecting the relative hospital wage
14 level in the geographic area of the hospital compared to
15 the national or regional average hospital wage level as
16 appropriate.
17 "(3) The Secretary shall determine an adjusted DR G
18 prospective payment rate, for each inpatient hospital dis-
19 charge in a fiscal year after fiscal year 1984 involving inpa-
20 tient hospital services of a subsection (d) hospital for which
21 payment may be made under part A of this title, as follows:
22 "(A) UPDATING PREVIOUS STANDARDIZED
23 AMOUNTS.-The Secretary shall compute an average
24 standardized amount for hospitals located in an urban
25 area within the United States and, for fiscal year
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1 1985, for hospitals located in an urban area within
2 each region, and for hospitals located in a rural area
3 within the United States, and for fiscal year 1985, for
4 hospitals located in a rural area within each region,
5 and equal to the respective average standardized
6 amount computed for the previous fiscal year under
7 paragraph (2)(D) or under this subparagraph, in-
8 creased by the applicable percentage increase under
9 subsection (b) (3) (B) for that particular fiscal year.
10 "(B) REDUCING FOR VALUE OF OUTLIER PAY-
11 MENTS.-The Secretary shall reduce each of the aver-
12 age standardized amounts determined under subpara-
13 graph (A) by a proportion equal to the proportion (esti-
14 mated by the Secretary) of the amount of payments
15 under this subsection based on DRG prospective pay-
16 ment amounts which are additional payments described
17 in paragraph (5)(A) (relating to outlier payments).
18 "(C) MAINTAINING BUDGET NEUTRALITY.-The
19 Secretary shall adjust each of such average standard-
20 ized amounts as may be required under subsection
21 (e) (1) (B) for that fiscal year.
22 "(D) COMPUTING DRG-SPECIFIC RATES FOR
23 URBAN AND RURAL HOSPITALS.-For each discharge
24 classified within a diagnosis-related group, the Secre-
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1 tary shall establish a DR G prospective payment rate
2 for the fiscal year which is equal-
3 "(i) for hospitals located in an urban area in
4 the United States and (if applicable) for hospitals
5 located in an urban area in each region, to the
6 product of-
7 "(I) the average standardized amount
8 (computed under subparagraph (A), reduced
9 under subparagraph (B), and adjusted under
10 subparagraph (C)) for the fiscal year for hos-
11 pitals located in an urban area in the United
12 States or in that region, and
13 "(II) the weighting factor (determined
14 under paragraph (4)(B)) for that diagnosis-
15 related group; and
16 "(ii) for hospitals located in a rural area in
17 the United States and (if applicable) for hospitals
18 located in a rural area in each region (and, if ap-
19 plicable, in a census division), to the product of-
20 "(I) the average standardized amount
21 (computed under subparagraph (A), reduced
22 under subparagraph (B), and adjusted under
23 subparagraph (C)) for the fiscal year for hos-
24 pitals located in a rural area in the United
25 States or in that region, and
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1 "(ii) the weighting factor (determined
2 under paragraph (4) (B)) for that diagnosis-
3 related group.
4 "(E) ADJUSTING FOR DIFFERENT AREA WAGE
5 LEVELS.-The Secretary shall adjust the proportion,
6 (as estimated by the Secretary from time to time) of
7 hospitals' costs which are attributable to wages and
8 wage-related costs, of the DR G prospective payment
9 rates computed under subparagraph (D) for area differ-
10 ences in hospital wage levels by a factor (established by
11 the Secretary) reflecting the relative hospital wage level
12 in the geographic area of the hospital compared to the
13 national or regional average hospital wage level as ap-
14 propriate.
15 "(4)(A) The Secretary shall establish a classification of
16 inpatient hospital discharges by diagnosis-related groups and
17 a methodology for classifying specific hospital discharges
18 within these groups.
19 "(B) For each such diagnosis-related group the Secre-
20 tary shall assign an appropriate weighting factor which re-
21 flects the relative hospital resources used with respect to dis-
22 charges classified within that group compared to discharges
23 classified within other groups.
24 "(C) The Secretary shall adjust the classifications and
25 weighting factors established under subparagraphs (A) and
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1 (B), at least every five years, to reflect changes in treatment
2 patterns, technology, and other factors which may change the
3 relative use of hospital resources.
4 "(D) The Commission (established under subsection
5 (e)(2)) shall consult with and make recommendations to the
6 Secretary with respect to adjustments to be made under sub-
7 paragraph (C), based upon its evaluation of scientific evi-
8 dence with respect to new practices, including the use of new
9 technologies and treatment modalities. The Commission shall
10 report to the Congress with respect to its evaluation of any
11 adjustments made by the Secretary under subparagraph (C).
12 "(5)(A)(i) The Secretary shall provide for an additional
13 payment for a subsection (d) hospital for any discharge in a
14 diagnosis-related group, the length of stay of which exceeds
15 the mean length of stay for discharges within that group by a
16 fixed number of days, or exceeds such mean length of stay by
17 some fixed number of standard deviations, whichever is the
18 lesser.
19 "(ii) For cases which are not included in clause (i), a
20 hospital may request additional payments in any case where
21 changes, adjusted to cost, exceed a fixed multiple of the DR G
22 rate, or exceed such other fixed dollar amount, whichever is
23 greater.
24 "(iii) The amount of such additional payment under
25 clauses (i) and (ii) shall be determined by the Secretary and
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1 shall approximate the marginal cost of care beyond the cutoff
2 point applicable under clause (i) or (ii).
3 "(iv) The total amount of the additional payments made
4 under this subparagraph for discharges in a fiscal year may
5 not be less than 5 percent nor more than 6 percent of the total
6 payments made based on DR G prospective payment rates for
7 discharges in that year, and the DRG rates shall be reduced
8 to compensate for any payments under this subparagraph in
9 excess of such 6 percent.
10 "(B) The Secretary shall provide for an additional pay-
11 ment amount for subsection (d) hospitals with indirect costs
12 of medical education, in an amount computed in the same
13 manner as the adjustment for such costs under regulations
14 (in effect as of January 1, 1983) under subsection (a) (2),
15 except that in the computation under this subparagraph the
16 Secretary shall use an educational adjustment factor equal to
17 twice the factor provided under such regulations.
18 "(C)(i) The Secretary shall provide for such exceptions
19 and adjustments to the payment amounts established under
20 this subsection as the. Secretary deems appropriate to take
21 into account the special needs of public or other hospitals that
22 serve a significantly disproportionate number of patients who
23 have low income or are entitled to benefits under part A of
24 this title.
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1 "(ii) With respect to a hospital which is a `sole commu-
2 nity hospital', payment under paragraph (1)(A)(i) for any
3 cost reporting period or fiscal year beginning on or after Oc-
4 tober 1, 1983, shall be determined using the target percentage
5 and DR G percentage applicable for the fiscal year beginning
6 on October 1, 1983, and in no case shall total payments to
7 such a hospital under this title for any cost reporting period
8 beginning on or after October 1, 1983, and before October 1,
9 1986, be less than such payments to such hospital for the
10 preceding cost reporting period. For purposes of this subpara-
11 graph, the term `sole community hospital' means a hospital
12 that, by reason of factors such as isolated location, weather
13 conditions, travel conditions, or absence of other hospitals (as
14 determined by the Secretary), is the sole source of inpatient
15 hospital services reasonably available to individuals in a geo-
16 graphical area who are entitled to benefits under part A.
17 "(iii) The Secretary may provide for such adjustments
18 to the payment amounts as the Secretary deems appropriate
19 to take into account the unique circumstances of hospitals
20 located in Alaska and Hawaii.
21 "(D)(i) The Secretary shall estimate the amount of re-
22 imbursement made for services described in section
23 1862(a)(14) with respect to which payment was made under
24 part B in the base reporting periods referred to in paragraph
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1 (2)(A) and with respect to which payment is no longer being
2 made.
3 "(ii) The Secretary shall provide for an adjustment to
4 the payment for subsection (d) hospitals in each fiscal year so
5 as appropriately to reflect the net amount described in clause
6 (i).
7 "(E) This paragraph shall apply only to subsection (d)
8 hospitals that receive payments in amounts computed under
9 this subsection.
10 "(6) The Secretary shall provide for publication in the
11 Federal Register, on or before the September 1 before each
12 fiscal year (beginning with fiscal year 1984), of a description
13 of the methodology and data used in computing the adjusted
14 DR G prospective payment rates under this subsection, in-
15 cluding any adjustments required under subsection (e)(1)(B).
16 "(7) There shall be no administrative or judicial review
17 under section 1878 or otherwise of-
18 "(A) the determination of the requirement, or the
19 proportional amount, of any adjustment effected pursu-
20 ant to subsection (e)(1), and
21 "(B) the establishment of diagnosis-related
22 groups, of the methodology for the classification of dis-
23 charges within such groups, and of the appropriate
24 weighting factors thereof under paragraph (4).
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1 "(e)(1)(A) For cost reporting periods of hospitals begin-
2 ning in fiscal year 1984 or fiscal year 1985, the Secretary
3 shall provide for such proportional adjustment in the applica-
4 ble percentage increase (otherwise applicable to the periods
5 under subsection (b) (3) (B)) as may be necessary to assure
6 that-
7 "(i) the aggregate payment amounts otherwise
8 provided under subsection (d) (1) (A) (i) (I) and (d) (5) for
9 that fiscal year for operating costs of inpatient hospital
10 services of hospitals,
11 are not greater or less than-
12 "(ii) the target percentage (as defined in subsec-
13 tion (d)(1)(0) of the payment amounts which would
14 have been payable for such services for those same hos-
15 pitals for that fiscal year under this section under the
16 law as in effect before the date of the enactment of the
17 Social Security Act Amendments of 1983;
18 except that the adjustment made under this subparagraph
19 shall apply only to subsection (d) hospitals and shall not
20 apply for purposes of making computations under subsection
21 (d) (2) (B) (ii) or subsection (d) (3) (A).
22 "(B) For discharges occurring in fiscal year 1984 or
23 fiscal year 1985, the Secretary shall provide under subsec-
24 tions (d)(2)(F) and (d)(3)(C) for such equal proportional ad-
25 justment in each of the average standardized amounts other-
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1 wise computed for that fiscal year as may be necessary to
2 assure that-
3 "(i) the aggregate payment amounts otherwise
4 provided under subsection (d) (1) (A) (i) (II) and (d) (5)
5 for that fiscal year for operating costs of inpatient hos-
6 pital services of hospitals,.
7 are not greater or less than-
8 "(ii) the DR G percentage (as defined in subsec-
9 tion (d) (1) (C)) of the payment amounts which would
10 have been payable for such services for those same hos-
11 pitals for that fiscal year under this section under the
12 law as in effect before the date of the enactment of the
13 Social Security Act Amendments of 1983.
14 "(2) The Secretary shall provide for appointment of a
15 Commission of independent experts, selected by the Office of
16 Technology Assessment (hereinafter in this subsection re-
17 ferred to as the `Commission) to review the applicable per-
18 centage increase factor described in subsection (b) (3) (B) and
19 make recommendations to the Secretary on the appropriate
20 percentage increase which should be effected for hospital in-
21 patient discharges under subsections (b) and (d) for fiscal
22 years beginning with fiscal year 1985. In making its recom-
23 mendations, the Commission shall take into account changes
24 in the hospital market-basket described in subsection
25 (b)(3)(B), hospital productivity, technological and scientific
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1 advances, the quality of health care provided in hospitals (in-
2 cluding the quality and skill level of professional nursing
3 required to maintain quality care), and long-term cost-e f fec-
4 tiveness in the provision of inpatient hospital services.
5 "(3) The Commission, not later than the April 1 before
6 the beginning of each fiscal year (beginning with fiscal year
7 1985), shall report its recommendations to the Secretary on
8 an appropriate increase factor which should be used (instead
9 of the applicable percentage increase described in subsection
10 (b)(3)(B)) for inpatient hospital services for discharges in
11 that fiscal year.
12 "(4) Taking into consideration the recommendations of
13 the Commission, the Secretary shall determine for each fiscal
14 year (beginning with fiscal year 1986) the percentage in-
15 crease which will apply for purposes of this section as the
16 applicable percentage increase (otherwise described in subsec-
17 tion (b)(3) (B)) for discharges in that fiscal year, and which
18 will assure adequate compensation for the efficient and e f fec-
19 tive delivery of medically appropriate and necessary care of
20 high quality.
21 "(5) The Secretary shall cause to have published in the
22 Federal Register, not later than-
23 "(A) the June 1 before each fiscal year (beginning
24 with fiscal year 1985), the Secretary's proposed deter-
25 mination under paragraph (4) for that fiscal year, and
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1 "(B) the September 1 before such fiscal year, the
2 Secretary's final determination under such paragraph
3 for that year.
4 The Secretary shall include in the publication referred to in
5 subparagraph (A) for a fiscal year the report of the Commis-
6 sion's recommendations submitted under paragraph (3) for
7 that fiscal year.
8 "(6)(A) The Commission shall consist of fifteen individ-
9 uals selected and appointed by the Director of the Congres-
10 sional Office of Technology Assessment (hereafter in this
11 part referred to as the `Director' and the `Office ; respective-
12 ly). Such appointments shall be without regard to the provi-
13 sions of title 5, United States Code, governing appointments
14 in the competitive service. Members of the Commission shall
15 be appointed no later than April 1, 1984, for a term of three
16 years, except that the Director may provide initially for such
17 shorter terms as will insure that (on a continuing basis) the
18 terms of no more than seven members shall expire in any one
19 year. Members of the Commission shall be eligible for reap-
20 pointment for no more than .two consecutive terms.
21 "(B) The membership of the Commission shall provide
22 expertise and experience in the provision and financing of
23 health care, including but not limited to physicians and reg-
24 istered professional nurses, employers, third party payors,
25 and individuals skilled in the conduct and interpretation of
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1 biomedical, health services, and health economics research.
2 The Director shall seek nominations from a wide range of
3 groups, including but not limited to-
4 "(i) national organizations representing physi-
5 cians, including medical specialty organizations and
6 registered professional nurses and other skilled health
7 professionals;
8 "(ii) national organizations representing hospitals,
9 including teaching hospitals; and
10 "(iii) national organizations representing the
11 business community, health benefit programs, labor,
12 and the elderly.
13 "(C) The Commission may employ such personnel (not
14 to exceed 50) as may be necessary to carry out its duties.
15 Subject to approval by the Director, the Commission shall
16 appoint one of the members of its staff as Executive Director.
17 The Commission is authorized to seek such assistance and
18 support as may be required in the performance of its duties
19 from appropriate Federal departments and agencies. Such
20 assistance may include the provision of detailees, office space,
21 and related services, with or without reimbursement, as
22 agreed upon by the Commission and the head of the appropri-
23 ate department or agency.
24 "(D) While serving on the business of the Commission
25 (including traveltime), a member of the Commission shall be
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1 entitled to compensation at the per diem equivalent of the rate
2 provided for level IV of the Executive Schedule under section
3 5315 of title 5, United States Code; and while so serving
4 away from home and his regular place of business, a member
5 may be allowed travel expenses, including per diem in lieu of
6 subsistence, as authorized by the Chairman of the Commis-
7 sion.
8 "(E) The Executive Director shall be compensated at
9 the rate provided for level IV of the Executive Schedule
10 under section 5315 of title 5, United States Code.
11 "(F) The Executive Director shall, in accordance with
12 such policies as the Commission may prescribe, appoint and
13 fix the rates of compensation of such personnel as may be
14 necessary to carry out the provisions of this part. Such rates
15 of compensation may not exceed the level specified in subpar-
16 agraph (E).
17 "(G) The Commission shall have the authority to-
18 "(i) enter into contracts or make other arrange-
19 ments, as may be necessary for the conduct of the work
20 of the Commission, with any competent personnel or
21 organization, with or without reimbursement, without
22 performance or other bonds, and without regard to sec-
23 tion 3709 of the Revised Statutes (41 U.S.C. 5);
24 "(ii) make advance, progress, and other payments
25 which relate to the work of the Commission without
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1 regard to the provisions of section 3324 of title 31,
2 United States Code;
3 "(iii) accept services of voluntary and uncompen-
4 sated personnel that are necessary for the conduct of
5 the work of the Commission and provide transportation
6 and subsistence as authorized by section 5703 of title
7 5, United States Code, for persons serving without
8 compensation;
9 "(iv) acquire by purchase, lease, loan, or gift, and
10 hold and dispose of by sale, lease, or loan, real and
11 personal property of all kinds that is necessary for, or
12 results from, the exercise of authority granted by this
13 part (without regard to the first section of the Act of
14 March 3, 1877 (19 Stat. 370, chapter 106; 40 U.S.C.
15 34)); and
16 "(v) prescribe such rules and regulations as it
17 deems necessary with respect to the internal organiza-
18 tion and operation of the Commission.
19 "(H) In order to identify medically appropriate patterns
20 of health resources use in accordance with paragraph (2) (A),
21 the Commission shall collect and assess information on medi-
22 cal and surgical procedures and services, including informa-
23 tion on regional variations of medical practice and lengths of
24 hospitalization and on other patient-care data, giving special
25 attention to treatment patterns for conditions which appear to
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1 involve excessively costly or inappropriate services not
2 adding to the quality of care provided. In order to assess the
3 safety, efficiency, and cost-effectiveness of new and existing
4 medical and surgical procedures, the Commission shall, in
5 coordination to the extent possible with the Secretary, collect
6 and assess factual information, giving special attention to the
7 needs of updating existing DR G's, establishing new DR G's,
8 and making recommendations on relative DR G weights to
9 reflect appropriate differences in resource consumption in de-
10 livering safe, efficacious, and cost-effective care. In collecting
11 and assessing information, the Commission shall-
12 "(i) utilize existing information, both published
13 and unpublished, where possible, collected and assessed
14 either by its own staff or under other arrangements
15 made in accordance with this part; and
16 "(ii) carry out, or award grants or contracts for,
17 original research where existing information is inad-
18 equate for the development of useful and valid guide-
19 lines by the Commission.
20 "(I) The Commission shall have access to such relevant
21 information and data as may be available from appropriate
22 Federal agencies. The Commission shall maintain the confi-
23 dentiality of all confidential information it receives.
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1 "(J) There shall be established a Federal Liaison Com-
2 mittee to the Commission (hereafter in this part referred to as
3 the 'Committee). The Committee shall-
4 "(1) arrange for the acquisition of information in
5 accordance with subparagraph (I) and assure that its
6 activities, especially the conduct of original research
7 and medical studies, are coordinated with the activities
8 of Federal agencies; and
9 "(2) advise the Commission with respect to the
10 activities of Federal agencies that relate to the duties of
11 the Commission or to particular medical procedures
12 and services under study, or being considered for
13 study, by the Commission.
14 The Federal Liaison Committee shall consist of delegates of
15 those Federal agencies which can, in the judgment of the
16 Commission, play a significant role in assisting the Commis-
17 sion. The Administrator of the Health Care Financing Ad-
18 ministration shall serve as the Chairman of the Committee.
19 Members of the Committee shall serve without additional
20 compensation. The Committee shall meet at the call of the
21 Chairman of the Committee, or at the call of the Chairman
22 of the Commission, but not less than six times a year.
23 "(K)(i) The Office shall report to the Congress, from
24 time to time, on the functioning and progress of the Commis-
25 sion and on the status of the assessment of medical proce-
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1 dures and services by the Commission. Such reports shall be
2 annual for the first three years of the Commission's operation
3 and biannual thereafter, and shall be delivered to the Con-
4 gress by March 15 of each reporting year.
5 "(ii) The Office shall have unrestricted access to all de-
6 liberations, records, and data of the Commission, immediate-
7 ly upon its request.
8 "(iii) In order to carry out its duties under this part, the
9 Office is authorized to expend reasonable and necessary
10 funds as mutually agreed upon by the Office and the Com-
11 mission. The Office shall be reimbursed for such funds by the
12 Commission from the appropriations made with respect to the
13 Commission. The Office shall carry out such duties subject
14 to approval of the Technology Assessment Board, as pre-
15 scribed by sections 3(d) (2) and (3) of the Technology Assess-
16 ment Act of 1972 (2 U.S.C. 472(d) (2) and (3)).
17 "(L)(i) There are authorized to be appropriated such
18 sums as may be necessary to carry out the provisions of this
19 paragraph.
20 "(ii) Eighty-five percent of such appropriation shall be
21 payable from the Federal Hospital Insurance Trust Fund,
22 and 15 percent of such appropriation shall be payable from
23 the Federal Supplementary Medical Insurance Trust
24 Fund. ".
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1 (f) Section 1862(a)(1) of the Social Security Act is
2 amended-
3 (1) by striking out "(B) or (C) " and inserting in
4 lieu thereof "(B), (C), or (D)"5 (2) by striking out "and" at the end of subpara-
6 graph (B);
7 (3) by striking out the semicolon at the end of
8 subparagraph (C) and inserting in lieu thereof a
9 comma and "and" and
10 (4) by adding at the end thereof the following new
11 subparagraph:
12 "(D) in the case of clinical care items and serv-
13 ices provided with the concurrence of the Secretary and
14 with respect to research and experimentation conducted
15 by, or under contract with, the Prospective Payment
16 Assessment Commission or the Secretary, which are
17 not reasonable and necessary to carry out the purposes
18 of section 1886(d) (6); ".
19 CONFORMING AMENDMENTS
20 SEC. 302. (a) Sections 1814(g) and 1835(e) of the
21 Social Security Act are each amended by inserting "(or
22 would be if section 1886 did not apply) " after "section
23 1861(v) (1) (D) ".
24 (b) Section 1814(h)(2) of such Act is amended by strik-
25 ing out "the reasonable costs for such services" and inserting
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1 in lieu thereof "the amount that would be payable for such
2 services under subsection (b) and section 1886"3 (c) (1) The matter in section 1861 (v) (1) (G) (i) of such
4 Act following subclause (III) is amended by striking out "on
5 the basis of the reasonable cost of" and inserting in lieu
6 thereof "the amount otherwise payable under part A with re-
7 spect to"8 (2) Section 1861(v) (2) (A) of such Act is amended by
9 striking out "an amount equal to the reasonable cost of " and
10 inserting in lieu thereof "the amount that would be taken into
11 account with respect to".
12 (3) Section 1861 (v) (2) (B) of such Act is amended by
13 striking out "the equivalent of the reasonable cost of "14 (4) Section 1861(v) (3) of such Act is amended by strik-
15 ing out "the reasonable cost of such bed and board furnished
16 in semiprivate accommodations (determined pursuant to
17 paragraph MY' and inserting in lieu thereof "the amount
18 otherwise payable under this title for such bed and board fur-
19 nished in semiprivate accommodations"20 (d) Section 1862(a) of such Act is amended-
21 (1) by striking out "or" at the end of paragraph
22 (12),
23 (2) by striking out the period at the end of para-
24 graph (13) and inserting in lieu thereof "; or", and
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1 (3) by adding at the end the following new para-
2 graph:
3 "(14) which are other than physicians' services
4 (as defined in regulations) and which are furnished to
5 an individual who is an inpatient of a hospital by an
6 entity other than the hospital, unless the services are
7 furnished under arrangements (as defined in section
8 1861(w) (1)) with the entity made by the hospital. ".
9 (e) (1) Section 1866(a) (1) of such Act is amended-
10 (A) by striking out "and" at the end of subpara-
11 graph (D),
12 (B) by striking out the period at the end of sub-
13 paragraph (E), and
14 (C) by adding at the end the following new sub-
15 paragraphs:
16 "(F) in the case of hospitals which provide inpa-
17 tient hospital services for which payment may be made
18 under subsection (c) or (d) of section 1886, to main-
19 tain an agreement with a utilization and quality con-
20 trol peer review organization (if there is such an orga-
21 nization which has a contract with the Secretary under
22 part B of title XI for the area in which the hospital is
23 located) under which the organization will perform
24 functions under that part with respect to the review of
25 the accuracy of diagnostic information on such hospi-
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1 tal's bills, the completeness and adequacy of care pro-
2 vided, the appropriateness of admissions, and the ap-
3 propriateness of care provided for which additional
4 payments are sought under section 1886(d)(5), with re-
5 spect to inpatient hospital services for which payment
6 may be made under part A of this title (and for pur-
7 poses of payment under this title, the cost Of such
8 agreement to the hospital shall be considered a cost in-
9 curred by such hospital in providing inpatient services
10 under part A, but shall be paid directly by the Secre-
11 tary to such organization on behalf of such hospital in
12 accordance with a budget approved by the Secretary),
13 "(G) in the case of hospitals which provide inpa-
14 tient hospital services for which payment may be made
15 under subsection (b) or (d) of section 1886, not to
16 charge any individual or any other person for inpatient
17 hospital services for which such individual would be
18 entitled to have payment made under part A but for a
19 denial or reduction of payments under section 1886(f),
20 and
21 "(H) in the case of hospitals which provide inpa-
22 tient hospital services for which payment may be made
23 under section 1886(d), to have all items and services
24 (other than physicians' services as defined in regula-
25 tions) (i) that are furnished to an individual who is an
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1 inpatient of the hospital, and (ii) for which the individ-
2 ual is entitled to have payment made under this title,
3 furnished by the hospital or otherwise under arrange-
4 ments (as defined in section 1861(w) (1)) made by the
5 hospital. ".
6 (2) The matter in section 1866(a)(2)(B)(ii) of such Act
7 preceding subclause (I) is amended by inserting "and except
8 with respect to inpatient hospital costs with respect to which
9 amounts are payable under section 1886(d) " after "(except
10 with respect to emergency services) ".
11 (f) Section 1876(g) of such Act is amended by adding at
12 the end the following:
13 "(4) A risk-sharing contract under this subsection may,
14 at the option of an eligible organization, provide that the Sec-
15 retary-
16 "(A) will reimburse hospitals for payment
17 amounts determined in accordance with section 1886,
18 as applicable, of inpatient hospital services furnished to
19 individuals enrolled with such organization pursuant to
20 subsection (d), and
21 "(B) will deduct the amount of such reimburse-
22 ment for payment which would otherwise be made to
23 such organization. ".
24 (g)(1) Section 1878(a) of such Act is amended-
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1 (A) by inserting "and (except as provided in sub-
2 section (g)(2)) any hospital which receives payments in
3 amounts computed under section 1886(d) and which
4 has submitted such reports within such time as the
5 Secretary may require in order to make payment
6 under such section may obtain a hearing with respect
7 to such payment by the Board" after "subsection (h)"
8 in the matter before paragraph (1),
9 (B) by inserting "(i) " after "(A) " in paragraph
10 (1) (A),
11 (C) by inserting "or" at the end of paragraph
12 (1) (A) and by adding after such paragraph the follow-
13 ing new clause:
14 "(ii) is dissatisfied with a final determina-
15 tion of the Secretary as to the amount of the pay-
16 ment under section 1886(d), ", and
17 (D) by striking out "(1)(A)" in paragraph (3)
18 and inserting in lieu thereof "(1) (A) (i), or with respect
19 to appeals under paragraph (1) (A) (ii), 180 days after
20 notice of the Secretary's final determination, ".
21 (2)(A) The last sentence of section 1878(f)(1) of the
22 Social Security Act is amended by inserting "(or, in an
23 action brought jointly by several providers, the judicial dis-
24 trict in which the greatest number of such providers are locat-
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1 ed) after "the judicial district in which the provider is locat-
2 ed"3 (B) Section 1878(f) (1) of such Act is further amended
4 by adding at the end thereof the following new sentence:
5 "Any appeal to the Board or action for judicial review by
6 providers which are under common ownership or control must
7 be brought by such providers as a group with respect to any
8 matter involving an issue common to such providers. ".
9 (3) Section 1878(g) of such Act is amended by inserting
10 "(1) " after "(g) " and by adding at the end the following new
11 paragraph:
12 "(2) The determinations and other decisions described
13 in section 1886(d)(7) shall not be reviewed by the Board or
14 by any court pursuant to an action brought under subsection
15 (f) or otherwise. "
16 (4) The third sentence of section 1878(h) of such Act is
17 amended striking out "cost reimbursement" and inserting in
18 lieu thereof `payment of providers of services'
19 (h) The first sentence of section 1881 (b) (2) (A) of such
20 Act is amended by inserting "or section 1886 (if applicable) "
21 after "section 1861(v) "22 (i) Section 1887(a) (1) (B) of such Act is amended by
23 inserting "or on the bases described in section 1886" after
24 "on a reasonable cost basis"
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1 (j) The Secretary may, for any cost reporting period
2 beginning prior to October 1, 1986, waive the requirements
3 of sections 1862(a) (14) and 1866(a) (1) (H) of the Social Se-
4 curity Act in the case of a hospital which has followed a
5 practice of allowing direct billing under part B of title
6 X VIII of such Act for services (other than physician serv-
7 ices) so extensively, that immediate compliance with those
8 requirements would threaten the stability of patient care. Any
9 such waiver shall provide that such billing may continue to
10 be made under part B but that the payments to such hospital
11 under part A of such title shall be reduced by the amount of
12 the billings for such services under part B. If such a waiver
13 is granted, at the end of the waiver period the Secretary may
14 provide for such methods of payments under part A as is
15 appropriate, given the organizational structure of the institu-
16 tion.
17 REPORTS, EXPERIMENTS, AND DEMONSTRATION
18 PROJECTS
19 SEC. 303. (a)(1) The Secretary of Health and Human
20 Services (hereinafter in this title referred to as the "Secre-
21 tart'') shall study and report to the Congress within 18
22 months after the date of the enactment of this Act on the
23 method by which capital-related costs, such as return on net
24 equity, associated with inpatient hospital services can be in-
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1 cluded within the prospective payment amounts computed
2 under section 1886(d) of the Social Security Act.
3 (2)(A) The Secretary shall study and report annually to
4 the Congress at the end of each year (beginning with 1984
5 and ending with 1987) on the impact, of the payment meth-
6 odology under section 1886(d) of the Social Security Act
7 during the previous year, classes of hospitals, beneficiaries,
8 and other payors for inpatient hospital services, and other
9 providers.
10 (B) During fiscal year 1984, the Secretary shall begin
11 the collection of data necessary to compute the amount of phy-
12 sician charges attributable, by diagnosis-related groups, to
13 physicians' services furnished to inpatients of hospitals whose
14 discharges are classified within those groups. The Secretary
15 shall include, in a report to Congress in 1985, legislative
16 recommendations on the advisability and feasibility of pro-
17 viding for determining the amount of the payments for physi-
18 cians' services furnished to hospital inpatients based on the
19 DR G classification of the discharges of those inpatients.
20 (C) In the annual report to Congress under subpara-
21 graph (A) for 1985, the Secretary shall include the results of
22 studies on-
23 (i) the feasibility and impact of eliminating or
24 phasing out separate urban and rural DR G prospec-
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1 tine payment rates under paragraph (3) of section
2 1886(d) of the Social Security Act;
3 (ii) whether and the method under which hospi-
4 tals, not paid based on amounts determined under such
5 section, can be paid for inpatient hospital services on a
6 prospective basis as under such section;
7 (iii) the application of severity of illness, intensity
8 of care, or other modifications to the diagnosis-related
9 groups, and the advisability and feasibility of provid-
10 ing for such modifications; and
11 (iv) the feasibility and desirability of applying the
12 payment methodology under such section to payment
13 by all payors for inpatient hospital services.
14 (3) Prior to April 1, 1985, the Secretary shall complete
15 a study and make legislative recommendations to the Con-
16 gress with respect to an equitable method of reimbursing sole
17 community hospitals which takes into account their unique
18 vulnerability to substantial variations in occupancy. In addi-
19 tion, the Secretary shall examine ways to coordinate an in-
20 formation transfer between parts A and B, particularly with
21 respect to those cases where a denial of coverage is made
22 under part A, and no adjustment is made in the reimburse-
23 ment to the admitting physician, or physicians. The Secre-
24 tary also reports on the appropriate treatment of uncompen-
25 sated care costs, and adjustments that might be appropriate
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1 for large teaching hospitals located in rural areas. The Secre-
2 tart' shall also on the advisability of having hospitals make
3 available information on the cost of care to patients financed
4 by both public programs and private payors.
5 (4) The Secretary shall complete a study and make rec-
6 ommendations to the Congress, before April 1, 1984, with
7 respect to whether hospitals located outside of the fifty States
8 and the District of Columbia should be included under a
9 prospective payment system.
10 (b)(1) Except as provided in paragraph (2), the amend-
11 ments made by this title shall not affect the authority of the
12 Secretary to develop, carry out, or continue experiments and
13 demonstration projects.
14 (2) The Secretary shall provide that, upon the request Of
15 a State which has a demonstration project, for payment of
16 hospitals under title X VIII of the Social Security Act ap-
17 proved under section 402(a) of the Social Security Amend-
18 ments of 1967 or section 222(a) of the Social Security
19 Amendments of 1972, which (A) is in effect as of March 1,
20 1983, and (B) was entered into after August 1982, the terms
21 of the demonstration agreement shall be modified so that the
22 percentage by which such demonstration project is required to
23 maintain the rate of increase in medicare hospital costs in
24 that State below the national rate of increase in medicare
25 hospital costs shall be decreased by one-half of one percentage
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1 point per contract year, beginning with the contract year be-
2 ginning in 1983.
3 (c) The Secretary shall approve, with appropriate terms
4 and conditions as defined by the Secretary, within 30 days
5 after the date of enactment of this Act-
6 (1) the risk-sharing application of On Lok Senior
7 Health Services (according to terms and conditions as
8 specified by the Secretary), dated July 2, 1982, for
9 waivers, pursuant to section 222 of the Social Security
10 Amendments of 1972 and section 402(a) of the Social
11 Security Amendments of 1967, of certain requirements
12 of title X VIII of the Social Security Act over a period
13 of 36 months in order to carry out a long-term care
14 demonstration project, and
15 (2) the application of the Department of Health
16 Services, State of California, dated November 1, 1982,
17 pursuant to section 1115 of the Social Security Act,
18 for the waiver of certain requirements of title XIX of
19 such Act over a period of 36 months in order to carry
20 out a demonstration project for capitated reimburse-
21 meet for comprehensive long-term care services involv-
22 ing On Lok Senior Health Services.
23 (d) The Secretary shall continue demonstrations with
24 hospitals in areas with critical shortages of skilled nursing
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1 facilities to study the feasibility of providing alternative sys-
2 terns of care or methods of payment.
3 EFFECTIVE DATES
4 SEC. 304. (a)(1) Except as provided in paragraph (2),
5 the amendments made by the preceding provisions of this title
6 apply to items and services furnished by or under arrange-
7 ments with a hospital beginning with its first cost reporting
8 period that begins on or after October 1, 1983. A change in a
9 hospital's cost reporting period that has been made after No-
10 vember 1982 shall be recognized for purposes of this section
11 only if the Secretary finds good cause for that change.
12 (2) Section 1866(a)(1)(F) of the Social Security Act
13 (as added by section 302(f)(1)(C) of this title), section
14 1862(a)(14) (as added by section 302(e)(3) of this title) and
15 sections 1886(a)(1) (Cr) and (H) of such Act (as added by
16 section 302(f)(1)(C) of this title) take effect on October 1,
17 1983.
18 (b) The Secretary shall make an appropriate reduction
19 in the payment amount under section 1886(d) of the Social
20 Security Act (as amended by this title) for any discharge, if
21 the admission has occurred before a hospital's first cost re-
22 porting period that begins after September 1983, to take into
23 account amounts payable under title X VIII of that Act (as
24 in effect before the date of the enactment of this Act) for items
25 and services furnished before that period.
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1 (c)(1) The Secretary shall cause to be published in the
2 Federal Register a notice of the interim final DR G prospec-
3 tive payment rates established under subsection (d) of section
4 1886 of the Social Security Act (as amended by this title) no
5 later than September 1, 1983, and allow for a period of
6 public comment thereon. The DR G prospective payment
7 rates shall become effective on October 1, 1983, without the
8 necessity for consideration of comments received, but the Sec-
9 retary shall, by notice published in the Federal Register,
10 affirm or me di f y the amounts by December 31, 1983, after
11 considering t, ose comments.
12 (2) A modification under paragraph (1) that reduces a
13 DR G prospective payment rate shall apply only to discharges
14 occurring after 30 days after the date the notice of the modi f i-
15 cation is published in the Federal Register.
16 (3) Rules to implement subsection (d) of section 1886 of
17 the Social Security Act (as so amended) shall, and excep-
18 tions, adjustments, or additional payment amounts under
19 paragraph (5) of such subsection may, be established in ac-
20 cordance with the procedure described in this subsection.
21 DELAY IN PROVISION RELATING TO HOSPITAL-BASED
22 SKILLED NURSING FACILITIES
23 SEC. 305. (a) Section 102 of the Tax Equity and
24 Fiscal Responsibility Act of 1982 is amended by striking out
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1 "October 1, 1982" and inserting in lieu thereof "October 1,
2 1983
3 (b) The Secretary of Health and Human Services shall,
4 prior to December 31, 1983, complete a study and report to
5 the Congress, with respect to the effect which the implementa-
6 tion of section 102 of the Tax Equity and Fiscal Responsi-
7 bility Act of 1982 would have on hospital-based skilled nurs-
8 ing facilities, given the differences (if any) in the patient
9 populations served by such facilities and by community-
10 based skilled nursing facilities.
11 SHIFT IN PART B PREMIUM TO COINCIDE WITH COST-OF-
12 LIVING INCREASE
13 SEC. 306. (a) Section 1839 of the Social Security Act
14 is amended by striking out subsections (a), (b), and (c) and
15 inserting in lieu thereof the following:
16 "(a)(1) The Secretary shall, during October of 1983 and
17 of each year thereafter, determine the monthly actuarial rate
18 for enrollees who have attained retirement age (as defined in
19 section 216(a)) which shall be applicable for the succeeding
20 calendar year. Such actuarial rate shall be the amount the
21 Secretary estimates to be necessary so that the aggregate
22 amount for such calendar year with respect to those enrollees
23 who have attained retirement age will equal one-half of the
24 total of the benefits and administrative costs which he esti-
25 mates will be payable from the Federal Supplementary
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1 Medical Insurance Trust Fund for services performed and
2 related administrative costs incurred in such calendar year
3 with respect to such enrollees. In calculating the monthly ac-
4 tuarial rate, the Secretary shall include an appropriate
5 amount for a contingency margin.
6 "(2) The monthly premium of each individual enrolled
7 under this part for each month after December 1983 shall,
8 except as provided in subsections (b) and (e), be the amount
9 determined under paragraph (3).
10 "(3) The Secretary shall, during October of 1983 and
11 of each year thereafter, determine and promulgate the month-
12 ly premium applicable for individuals enrolled under this
13 part for the succeeding calendar year. The monthly premium
14 shall (except as otherwise provided in subsection (e)) be equal
15 to the smaller of-
16 "(A) the monthly actuarial rate for enrollees who
17 have attained retirement age, determined according to
18 paragraph (1) of this subsection, for that calendar
19 year, or
20 "(B) the monthly premium rate most recently pro-
21 mulgated by the Secretary under this paragraph, in-
22 creased by a percentage determined as follows: The Sec-
23 retary shall ascertain the primary insurance amount
24 computed under section 215(a)(1), based upon average
25 indexed monthly earnings of $900, that applied to in-
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1 dividuals who became eligible for and entitled to old-
2 age insurance benefits for December of the year preced-
3 ing the promulgation. He shall increase the monthly
4 premium rate by the same percentage by which that
5 primary insurance amount is increased when, by
6 reason of the law in effect at the time the promulgation
7 is made, it is so computed to apply to those individuals
8 for the following December.
9 Whenever the Secretary promulgates the dollar amount
10 which shall be applicable as the monthly premium for any
11 period, he shall, at the time such promulgation is announced,
12 issue a public statement setting forth the actuarial assump-
13 tions and bases employed by him in arriving at the amount of
14 an adequate actuarial rate for enrollees who have attained
15 retirement age as provided in paragraph (1) and the deriva-
16 Lion of the dollar amounts specified in this paragraph.
17 "(4) The Secretary shall also, during October of 1983
18 and of each year thereafter, determine the monthly actuarial
19 rate for disabled enrollees who have not attained retirement
20 age which shall be applicable for the succeeding calendar
21 year. Such actuarial rate shall be the amount the Secretary
22 estimates to be necessary so that the aggregate amount for
23 such calendar year with respect to disabled enrollees who
24 have not attained retirement age will equal one-half of the
25 total of the benefits and administrative costs which he esti-
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1 mates will be payable from the Federal Supplementary
2 Medical Insurance Trust Fund for services performed and
3 related administrative costs incurred in such calendar year
4 with respect to such enrollees. In calculating the monthly ac-
5 tuarial rate under this paragraph, the Secretary shall include
6 an appropriate amount for a contingency margin. ".
7 (2) Subsections (d), (e), (f), and (g) of section 1839 of
8 such Act are redesignated as subsections (b), (c), (d), and (e),
9 respectively.
10 (3) (A) Section 1839(b) of such Act (as so redesignated)
11 is amended by striking out "subsection (b), (c), or (g) " and
12 inserting in lieu thereof "subsection (a) or (e) ".
13 (B) Section 1839(d) of such Act (as so redesignated) is
14 amended by striking out `purposes of subsection (c) " and
15 inserting in lieu thereof "purposes of subsection (b)"16 (C) Section 1839(e) of such Act (as so redesignated) is
17
amended by striking out "subsection (c) " and "subsection
18 (c) (1) " and by inserting in lieu thereof "subsection (a) " and
19 "subsection (a) (1) '; respectively.
20 (D) Section 1818(c) of such Act is amended by striking
21 out "subsection (c) of section 1839" and inserting in lieu
22 thereof "subsection (a) of section 1839"23 (E) Section 1843(d)(1) of such Act is amended by
24 striking out "without any increase under subsection (c) there-
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1 of " and inserting in lieu thereof "without any increase under
2 subsection (b) thereof "3 (F) Section 1844(a) (1) (A) (i) of such Act is amended-
4 (i) by striking out "1839(c) (1) " and inserting in
5 lieu thereof "1839(a) (1)", and
6 (ii) by striking out "1839(c) (3) or 1839(g) " and
7 inserting in lieu thereof "1839(a) (3) or 1839(e) ".
8 (G) Section 1844(a)(1)(B)(i) of such Act is amended-
9 (i) by striking out "1839(c) (4) " and inserting in
10 lieu thereof "1839(a)(4) ", and
11 (ii) by striking out "1839(c)(3) or 1839(g) " and
12 inserting in lieu thereof "1839(a)(3) or 1839(e) ".
13 (H) Section 1876(a)(5) of such Act is amended-
14 (i) in subparagraph (A)(ii), by striking out
15 "1839(c) (1) " and inserting in lieu thereof
16 "1839(a)(1)" and
17 (ii) in subparagraph (B)(ii), by striking out
18 "1839(c)(4) " and inserting in lieu thereof
19 "1839(a) (4) ".
20 (4) The amendments made by this subsection shall
21 apply with respect to premiums payable for January 1984
22 and each month thereafter.
23 (5) The monthly premium amount under section 1839
24 of the Social Security Act for the months of July through
25 December of 1983 shall be equal to the monthly premium
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1 amount as determined under such section (as in effect prior
2 to the amendments made by this section) for June 1983.
3 SHIFT IN VOLUNTARY PART A PREMIUM TO COINCIDE
4 WITH COST-OF-LIVING INCREASES
5 SEC. 307 (a) Section 1818(d)(2) of the Social Secu-
6 rity Act is amended-
7 (1) by striking out "during the last calendar
8 quarter of each year, beginning in 1973, " in the first
9 sentence and inserting in lieu thereof "during the next
10 to last calendar quarter of each year"11 (2) by striking out "the 12-month period com-
12 mencing July 1 of the next year" in the first sentence
13 and inserting in lieu thereof "the following calendar
14 year" and
15 (3) by striking out "for such next year" in the
16 second sentence and inserting in lieu thereof "for that
17 following calendar year".
18 (b) The amendments made by this section shall apply to
19 premiums for months beginning with January 1984, and for
20 months after June 1983 and before January 1984, the
21 monthly premium under part A of title X VIII of the Social
22 Security Act for individuals enrolled under each respective
23 part shall be the monthly premium under that part for the
24 month of June 1983.
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1 TITLE IV-UNEMPLOYMENT COMPENSATION
2 PROVISIONS
3 PART A-FEDERAL SUPPLEMENTAL COMPENSATION
4 EXTENSION OF PROGRAM
5 SEC. 401. (a) Paragraph (2) of section 602(f) of the
6 Federal Supplemental Compensation Act of 1982 is amend-
7 ed by striking out "March 31, 1983" and inserting in lieu
8 thereof "September 30, 1983"9 (b) Section 605(2) of such Act is amended by striking
10 out "April 1, 1983" and inserting in lieu thereof "October 1,
11 1983".
12 NUMBER OF WEEKS FOR WHICH COMPENSATION PAYABLE
13 SEC. 402. (a) Subsection (e) of section 602 of the Fed-
14 eral Supplemental Compensation Act of 1982 is amended by
15 redesignating paragraph (3) as paragraph (4) and by strik-
16 ing out paragraph (2) and inserting in lieu thereof the follow-
17 ing new paragraphs:
18 "(2) (A) In the case of any account from which Federal
19 supplemental compensation was first payable to an individu-
20 al for a week beginning after March 31, 1983, the amount
21 established in such account shall be equal to the lesser of-
22 "(i) 65 per centum of the total amount of regular
23 compensation (including dependents' allowances) pay-
24 able to the individual with respect to the benefit year
25 (as determined under the State law) on the basis of
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1 which he most recently received regular compensation,
2 or
3 "(ii) the applicable limit determined under the fol-
4 lowing table times his average weekly benefit amount
5 for his benefit year,
"In the case of
weeks during a: The applicable
limit is:
6-percent period ...............................................................
14
5-percent period ...............................................................
12
4-percent period ...............................................................
10
Low-unemployment period ..............................................
8
6 "(B) Notwithstanding the provisions of clause (ii) of
7 subparagraph (A), the applicable limit under such clause
8 shall not be lower than 4 less than the number of weeks appli-
9 cable to such State under this paragraph as in effect for the
10 week beginning March 27, 1983, to the amendments made by
11 the Social Security Amendments of 1983.
12 "(C) In the case of any account from which Federal
13 supplemental compensation was payable to an individual for
14 a week beginning before April 1, 1983, the amount estab-
15 lished in such account shall be equal to the lesser of the sub-
16 paragraph (A) entitlement or the sum of-
17 "(i) the subparagraph (A) entitlement reduced
18 (but not below zero) by the aggregate amount of Feder-
19 al supplemental compensation paid to such individual
20 for weeks beginning before April 1, 1983, plus
21 "(ii) such individual's additional entitlement.
S 1 RS--16
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1 "(D) For purposes of subparagraph (C) and this sub-
2 paragraph-
3 "(i) The term `subparagraph (A) entitlement'
4 means the amount which would have been established
5 in the account if subparagraph (A) had applied to such
6 account.
7 "(ii) The term `additional entitlement' means the
8 applicable limit determined under the following table
9 times the individual's average weekly benefit amount
10 for his benefit year.
`In the case of
weeks during a: The applicable
limit is.
6-percent period ............................................................... 8
5-percent period ............................................................... 6
4-percent period ............................................................... 4
Low-employment period .................................................. 4
11 "(D) Except as provided in subparagraph (00), for
12 purposes of determining the amount of Federal supplemental
13 compensation payable for weeks beginning after March 31,
14 1983, from an account described in subparagraph (C), no
15 reduction in such account shall be made by reason of any
16 Federal supplemental compensation paid to the individual for
17 weeks beginning before April 1, 1983.
18 "(3)(A) For purposes of this subsection, the terms `6-
19 percent period', `5-percent period', `4-percent period', and
20 `low-unemployment period' mean, with respect to any State,
21 the period which-
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1 "(i) begins with the 3d week after the 1st week in
2 which the rate of insured unemployment in the State
3 for the period consisting of such week and the immedi-
4 ately preceding 12 weeks falls in the applicable range,
5 and
6 "(ii) ends with the 3d week after the 1st week in
7 which the rate of insured unemployment for the period
8 consisting of such week and the immediately preceding
9 12 weeks does not fall within the applicable range.
10 "(B) For purposes of subparagraph (A), the applicable
11 range is as follows:
`In the case of a: The applicable range is:
6-percent period ................................. A rate equal to or exceeding 6 percent.
5-percent period ................................. A rate equal to or exceeding 5 percent
but less than 6 percent.
4-percent period ................................. A rate equal to or exceeding 4 percent
but less than 5 percent.
Low-employment period .................... A rate less than 4 percent.
12 "(C) No 6 -percent period, 5-percent period, or 4-percent
13 period, as the case may be, shall last for a period of less than
14 4 weeks unless the State enters a period with a higher per-
15 centage designation.
16 "(D) For purposes of this subsection-
17 "(i) The rate of insured unemployment for any
18 period shall be determined in the same manner as de-
19 termined for purposes of section 203 of the Federal-
20 State Extended Unemployment Compensation Act of
21 1970.
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1
"(ii) The amount of an individual's average
2
weekly benefit amount shall be determined in the same
3
manner as determined
for purposes of section
4
202(b)(1)(C) of such Act. ".
5
(b)(1) Section 602(f)(2) of such Act is amended by in-
6 serting before the period at the end thereof the following: ",-
7 except that in the case of any individual who received such
8 compensation for the week preceding the last week beginning
9 after such date, such compensation shall be payable to such
10 individual for weeks beginning after such date, but the total
11 amount of such compensation payable for such weeks shall be
12 limited to 50 percent of the total amount which would other-
13 wise be payable for such weeks ".
14 (2) Section 605(2) of such Act is amended by inserting
15 before the semicolon the following: "(except as otherwise pro-
16 vided in section 602(f)(2)) ".
17 (c)(1) Section 602(b)(1) of such Act is amended by
18 striking out "and " at the end of subparagraph (B), adding
19 "and " at the end of subparagraph (C), and inserting after
20 subparagraph (C) the following:
21 "(D) had at least 26 weeks of full-time insured
22 employment, during his base period or the equivalent
23 in insured wages during his base period (as determined
24 using a methodology equivalent to that used under sec-
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1 tion 202(a)(5) of the Federal-State Extended Unem-
2 ployment Compensation Act of 1970); ".
3 (2) The amendment made by paragraph (1) shall apply
4 only to individuals who first became eligible for Federal sup-
5 plemental compensation for weeks beginning on or after April
6 1, 1983.
7 (d) Paragraph (3) of section 602(d) of the Federal Sup-
8 plemental Compensation Act of 1982 (as amended by section
9 544(d) of the Highway Revenue Act of 1982) is amended by
10 striking out "subsection (e)(2)(A)(ii)" and inserting in lieu
11 thereof "subparagraph WOO or (C) (ii) (II) of subsection
12 (e) (2) ".
13 EFFECTIVE DATE
14 SEC. 403. (a) The amendments made by this part shall
15 apply to weeks beginning after March 31, 1983.
16 (b) In the case of any eligible individual-
17 (1) to whom any Federal supplemental compensa-
18 tion was payable for any week beginning before April
19 1, 1983, and
20 (2) who exhausted his rights to such compensation
21 (by reason of the payment of all the amount in his
22 Federal supplemental compensation account) before the
23 first week beginning after March 31, 1983,
24 such individual's eligibility for additional weeks of compen-
25 sation by reason of the amendments made by this part shall
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1 not be limited or terminated by reason of any event, or fail-
2 ure to meet any requirement of law relating to eligibility for
3 unemployment compensation, occurring after the date of such
4 exhaustion of rights and before April 1, 1983 (and the period
5 after such exhaustion and before April 1, 1983, shall not be
6 counted for purposes of determining the expiration of the two
7 years following the end of his benefit year for purposes of
8 section 602(b) of the Federal Supplemental Compensation
9 Act of 1982).
10 (c) The Secretary of Labor shall, at the earliest practi-
11 cable date after the date of the enactment of this Act, propose
12 to each State with which he has in effect an agreement under
13 section 602 of the Federal Supplemental Compensation Act
14 of 1982 a modification of such agreement designed to provide
15 for the payment of Federal supplemental compensation under
16 such Act in accordance with the amendments made by this
17 part. Notwithstanding any other provision of law, if any
18 State fails or refuses, within the 3-week period beginning on
19 the date the Secretary of Labor proposed such a modification
20 to such State, to enter into such a modification of such agree-
21 ment, the Secretary of Labor shall terminate such agreement
22 effective with the end of the last week which ends on or before
23 such 3-week period.
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1 PART B-PROVISIONS RELATING TO INTEREST AND
2 CREDIT REDUCTIONS
3 DEFERRAL OF INTEREST
4 SEC. 411. (a) Section 1202(b) of the Social Security
5 Act is amended by adding at the end thereof the following
6 new paragraph:
7 "(8)(A) With respect to interest due under this section
8 for any year after December 31, 1982, and before January 1,
9 1986, a State may pay 80 percent of such interest in four
10 annual installments of at least 20 percent beginning with the
11 year after the year in which it is otherwise due, if such State
12 meets the criteria of subparagraph (B). Interest shall accrue
13 on such deferred interest in the same manner as under para-
14 graph (3) (C).
15 "(B) To meet the criteria of this subparagraph a State
16 must-
17 "(i) have taken no action since October 1, 1982,
18 which would reduce its net unemployment tax effort or
19 the net solvency of its unemployment system (as deter-
20 mined for purposes of section 3302(f) of the Internal
21 Revenue Code of 1954); and
22 "(ii) have taken an action (as certified by the
23 Secretary of Labor) after October 1, 1982, which will
24 increase revenues and decrease benefits under the
25 State's unemployment compensation system (herein-
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1 after referred to as a `solvency effort) by a combined
2 total of the applicable percentage (as compared to such
3 revenues and benefits as they would have been in effect
4 without such State action).
5 In the case of the first year for which there is a deferral (over
6 a 4-year period) of the interest otherwise payable for such
7 year, the applicable percentage shall be 30 percent. In the
8 case of the second such year, the applicable percentage shall
9 be 40 percent. In the case of the third such year, the applica-
10 ble percentage shall be 50 percent.
11 "(C)(i) The base year is the first year for which deferral
12 under this provision is granted. The Secretary of Labor shall
13 estimate the unemployment rate for the base year. To deter-
14 mine whether a State meets the requirements of subpara-
15 graph (B) (ii), the Secretary of Labor shall determine the per-
16 centage by which the benefits and taxes in the base year with
17 the application of the action referred to in subparagraph
18 (B) (ii) are lower or greater, as the case may be, than such
19 benefits and taxes would have been without the application of
20 such action. In making this determination, the Secretary
21 shall deem the application of the action referred to in subpar-
22 agraph (B)(ii) to have been effective for the base year to the
23 same extent as such action is effective for the year following
24 the base year. Once a deferral is approved a State must con-
25 tinue to maintain its solvency effort. Failure to do so shall
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1 result in the State being required to make immediate pay-
2 ment of all deferred interest.
3 "(ii) Increases in the taxable wage base from $6,000 to
4 $7,000 or increases after 1984 in the maximum tax rate to
5 5.4 percent shall not be counted for purposes of meeting the
6 requirement of subparagraph (B).
7 "(D) In the case of a State which produces a solvency
8 effort of 50 percent, 80 percent, and 90 percent rather than
9 the 30 percent, 40 percent, 50 percent required under subpar-
10 agraph (B), the deferred interest shall be computed at an in-
11 terest rate which is 1 percentage point less than the otherwise
12 applicable interest rate. ".
13 (b) Section 1202(b)(7) of such Act is amended by strik-
14 ing out ", and before January 1, 1988 ".
15 CAP ON CREDIT REDUCTION
16 SEC. 412. (a)(1) Section 3302(f) of the Internal Reve-
17 nue Code of 1954 is amended by adding at the end thereof
18 the following new paragraph:
19 "(8) PARTIAL LIMITATION.-
20 "(A) In the case of a State which would
21 meet the requirements of this subsection for a tax-
22 able year prior to 1987 but for its failure to meet
23 one of the requirements contained in subpara-
24 graph (C) or (D) of paragraph (2), the reduction
25 under subsection (c) (2) in credits otherwise appli-
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1 cable to taxpayers in such State for such taxable
2 year and each subsequent year (in a period of
3 consecutive years for each of which a credit reduc-
4 tion is in effect for taxpayers in such State) shall
5 be reduced by 0.1 percentage point.
6 "(B) In the case of a State described in sub-
7 paragraph (A) which also meets the requirements
8 of section 1202(b)(8)(B) with respect to such tax-
9 able year, the reduction under subsection (c) (2) in
10 credits otherwise applicable to taxpayers in such
11 State for such taxable year and each subsequent
12 year (in a period of consecutive years for each of
13 which a credit reduction is in effect for taxpayers
14 in such State) shall be further reduced by an ad-
15 ditional 0.1 percentage point. ".
16 (2) The amendment made by paragraph (1) shall apply
17 with respect to taxable year 1983 and taxable years thereaf-
18 ter.
19 (b) Section 3302(f) (1) of such Code is amended by
20 striking out "beginning before January 1, 1988, ".
21 AVERAGE EMPLOYER CONTRIBUTION RATE
22 SEC. 413. (a) Section 3302(d)(4)(B) of the Internal
23 Revenue Code of 1954 is amended by striking out "the total
24 of the remuneration subject to contributions under the State
25 unemployment compensation law" and inserting in lieu
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1 thereof "the total of the wages attributable to such State sub-
2 ject to taxation under this chapter".
3 (b) Sections 3302(c)(2)(B)(i) and 3302(c)(4) of such
4 Code are each amended by striking out "2.7" and inserting
5 in lieu thereof "2.7 multiplied by the ratio of the wage base
6 under this chapter divided by the estimated average annual
7 wage in covered employment for the calendar year in which
8 the determination is to be made".
9 (c) The amendments made by this section shall be e f f ec-
10 tive for taxable year 1984 and taxable years thereafter.
11 DATE FOR PAYMENT OF INTEREST
12 SEC. 414. Section 1202(b)(3)(A) of the Social Security
13 Act is amended by striking out "not later than" and insert-
14 ing in lieu thereof "prior to"15 RECOUPMENT OF INTEREST
16 SEC. 415. Section 3302 of the Internal Revenue Code
17 of 1954 is amended by adding at the end thereof the following
18 new subsection:
19 "(h) RECOUPMENT OF OVERDUE INTEREST.-
20 "(1) In addition to any other reduction required
21 under this section, if any accrued interest under sec-
22 tion 1202(b) of the Social Security Act has not been
23 paid by a State within one year after the date such
24 payment is otherwise required to be paid, then the total
25 credits (after applying any other provisions of this sec-
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1 tion) otherwise allowable under this section for the fol-
2 lowing taxable year, in the case of a taxpayer subject
3 to the unemployment compensation law of such State,
4 shall be reduced by an amount equal to 0.1 percent of
5 the amount of the wages paid by such taxpayer during
6 such taxable year which are attributable to such State.
7 "(2) Any increase in the amount of tax paid by
8 reason of paragraph (1) shall be first applied as a pay-
9 ment of such overdue interest, and any remainder shall
10 be applied as a repayment of principal under section
11 1202(b) of the Social Security Act. ".
12 PART C-MISCELLANEOUS PROVISIONS
13 TREATMENT OF EMPLOYEES PROVIDING SERVICES TO
14 EDUCATIONAL INSTITUTIONS
15 SEC. 421. (a)(1) Section 3306(a)(6)(A) of the Internal
16 Revenue Code of 1954 is amended by adding at the end
17 thereof the following new clause:
18 "(v) with respect to services to which section
19 3309(a)(1) applies, if such services are provided to or
20 on behalf of an educational institution, compensation
21 shall be denied in the same manner as if such services
22 were performed directly for an educational institution,
23 and ".
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1 (2) Clauses (ii) (I), (iii), and (iv) of such section are
2 each amended by striking out "may be denied" and inserting
3 in lieu thereof "shall be denied".
4 (b)(1) Except as provided in paragraph (2), the amend-
5 ments made by this section shall apply in the case of compen-
6 sation paid for weeks beginning on or after April 1, 1984.
7 (2) In the case of a State with respect to which the
8 Secretary of Labor has determined that State legislation is
9 required in order to comply with the amendment made by this
10 section, the amendment made by this section shall apply in
11 the case of c impensation paid for weeks which begin on or
12 after April 1, 1984, and after the end of the first session of
13 the State legislature which begins after the date of the enact-
14 ment of this Act, or which began prior to the date of the
15 enactment of this Act and remained in session for at least
16 twenty-five calendar days after such date of enactment. For
17 purposes of the preceding sentence, the term "session " means
18 a regular, special, budget, or other session of a State legisla-
19 ture.
20 EXTENDED BENEFITS FOR INDIVIDUALS WHO ARE
21 HOSPITALIZED OR ON JURY DUTY
22 SEc. 422. (a) Clause (ii) of paragraph (3)(A) of section
23 202(a) of the Federal-State Extended Unemployment Com-
24 pensation Act of 1970 is amended to read as follows:
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1 "(ii) during which he fails to actively engage in
2 seeking work, unless such individual is not actively en-
3 gaged in seeking work because such individual is, as
4 determined in accordance with State law-
5 "(1) before any court of the United States or
6 any State pursuant to a lawfully issued summons
7 to appear for jury duty (as such term may be de-
8 fined by the Secretary of Labor), or
9 "(II) hospitalized for treatment of an emer-
10 gency or a life-threatening condition (as such term
11 may be defined by such Secretary),
12 if such exemptions in clauses (I) and (II) apply to recipients
13 of regular benefits, and the State chooses to apply such ex-
14 emptions for recipients of extended benefits; or".
15 (b) The amendment made by this section shall become
16 effective on the date of the enactment of this Act.
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Amend the title so as to read: "An Act to implement
the consensus recommendations of the National Commission
on Social Security Reform, and for other purposes.".
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,t o
m~?
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