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104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                    104-379
_______________________________________________________________________


 
               SENIOR CITIZENS' RIGHT TO WORK ACT OF 1995

                                _______


December 4, 1995.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

_______________________________________________________________________


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

                              R E P O R T

                        [To accompany H.R. 2684]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 2684) to amend title II of the Social Security Act 
to provide for increases in the amounts of allowable earnings 
under the social security earnings limit for individuals who 
have attained retirement age, and for other purposes, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended be passed.

                                CONTENTS

                                                                   Page
 I. Introduction......................................................9
        A. Purpose and Summary...................................     9
        B. Background and Need for Legislation...................     9
        C. Legislative History...................................    10
II. Explanation of Provisions........................................11
        Section 1. Short Title...................................    11
        Section 2. Increases in Monthly Exempt Amount for 
            Purposes of the Social Security Earnings Limit.......    11
        Section 3. Establishment of Disability Insurance 
            Continuing Disability Review Administration Revolving 
            Fund.................................................    12
        Section 4. Entitlement of Stepchildren to Child's 
            Insurance Benefits Based on Actual Dependency on 
            Stepparent Support...................................    13
        Section 5. Recomputations of Benefits After Normal 
            Retirement Age.......................................    14
        Section 6. Elimination of the Role of the Social Security 
            Administration in Processing Attorney Fees...........    15
        Section 7. Denial of Disability Benefits to Drug Addicts 
            and Alcoholics.......................................    16
        Section 8. Revocation by Members of the Clergy of 
            Exemption from Social Security Coverage..............    18
        Section 9. Pilot Study of Efficacy of Providing 
            Individualized Information to Recipients of Old-Age 
            and Survivor Insurance Benefits......................    18
III.Votes of the Committee...........................................19

IV. Budget Effects of the Bill.......................................20
        A. Committee Estimate of Budgetary Effects...............    20
        B. Statement Regarding New Budget Authority and Tax 
            Expenditures.........................................    20
        C. Cost Estimate Prepared by the Congressional Budget 
            Office...............................................    20
 V. Other Matters Required To Be Discussed Under the Rules of the Hou36
        A. Committee Oversight Findings and Recommendations......    36
        B. Summary of Findings and Recommendations of the 
            Government Reform and Oversight Committee............    36
        C. Inflationary Impact Statement.........................    36
VI. Changes in Existing Law Made by the Bill, as Reported............36

  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Senior Citizens' Right to Work Act of 
1995''.

SEC. 2. INCREASES IN MONTHLY EXEMPT AMOUNT FOR PURPOSES OF THE SOCIAL 
                    SECURITY EARNINGS LIMIT.

  (a) Increase in Monthly Exempt Amount for Individuals Who Have 
Attained Retirement Age.--Section 203(f)(8)(D) of the Social Security 
Act (42 U.S.C. 403(f)(8)(D)) is amended to read as follows:
          ``(D) Notwithstanding any other provision of this subsection, 
        the exempt amount which is applicable to an individual who has 
        attained retirement age (as defined in section 216(l)) before 
        the close of the taxable year involved shall be--
                  ``(i) for each month of any taxable year ending after 
                1995 and before 1997, $1,166.66\2/3\,
                  ``(ii) for each month of any taxable year ending 
                after 1996 and before 1998, $1,250.00,
                  ``(iii) for each month of any taxable year ending 
                after 1997 and before 1999, $1,333.33\1/3\,
                  ``(iv) for each month of any taxable year ending 
                after 1998 and before 2000, $1,416.66\2/3\,
                  ``(v) for each month of any taxable year ending after 
                1999 and before 2001, $1,500.00,
                  ``(vi) for each month of any taxable year ending 
                after 2000 and before 2002, $2,083.33\1/3\, and
                  ``(vii) for each month of any taxable year ending 
                after 2001 and before 2003, $2,500.00.''.
  (b) Conforming Amendments.--
          (1) Section 203(f)(8)(B)(ii) of such Act (42 U.S.C. 
        403(f)(8)(B)(ii)) is amended--
                  (A) by striking ``the taxable year ending after 1993 
                and before 1995'' and inserting ``the taxable year 
                ending after 2001 and before 2003 (with respect to 
                individuals described in subparagraph (D)) or the 
                taxable year ending after 1993 and before 1995 (with 
                respect to other individuals)''; and
                  (B) in subclause (II), by striking ``for 1992'' and 
                inserting ``for 2000 (with respect to individuals 
                described in subparagraph (D)) or 1992 (with respect to 
                other individuals)''.
          (2) The second sentence of section 223(d)(4)(A) of such Act 
        (42 U.S.C. 423(d)(4)(A)) is amended by striking ``the exempt 
        amount under section 203(f)(8) which is applicable to 
        individuals described in subparagraph (D) thereof'' and 
        inserting the following: ``an amount equal to the exempt amount 
        which would be applicable under section 203(f)(8), to 
        individuals described in subparagraph (D) thereof, if section 2 
        of the Senior Citizens' Right to Work Act of 1995 had not been 
        enacted''.
  (c) Effective Date.--The amendments made by this section shall apply 
with respect to taxable years ending after 1995.

SEC. 3. ESTABLISHMENT OF DISABILITY INSURANCE CONTINUING DISABILITY 
                    REVIEW ADMINISTRATION REVOLVING ACCOUNT.

  (a) Continuing Disability Review Administration Revolving Account for 
Title II Disability Benefits in the Federal Disability Insurance Trust 
Fund.--
          (1) In general.--Section 201 of the Social Security Act (42 
        U.S.C. 401) is amended by adding at the end the following new 
        subsection:
  ``(n)(1) There is hereby created in the Federal Disability Insurance 
Trust Fund a Continuing Disability Review Administration Revolving 
Account (hereinafter in this subsection referred to as the `Account'). 
The Account shall consist initially of $300,000,000 (which is hereby 
transferred to the Account from amounts otherwise available in such 
Trust Fund) and shall also consist thereafter of such other amounts as 
may be transferred to it under this subsection. The balance in the 
Account shall be available solely for expenditures certified under 
paragraph (2).
  ``(2)(A) Before October 1 of each calendar year, the Chief Actuary of 
the Social Security Administration shall--
          ``(i) estimate the present value of savings to the Federal 
        Old-Age and Survivors Insurance Trust Fund, the Federal 
        Disability Insurance Trust Fund, the Federal Hospital Insurance 
        Trust Fund, and the Federal Supplementary Medical Insurance 
        Trust Fund which will accrue for all years as a result of 
        cessations of benefit payments resulting from continuing 
        disability reviews carried out pursuant to the requirements of 
        section 221(i) during the fiscal year ending on September 30 of 
        such calendar year (increased or decreased as appropriate to 
        account for deviations of estimates for prior fiscal years from 
        the actual amounts for such fiscal years), and
          ``(ii) certify the amount of such estimate to the Managing 
        Trustee.
  ``(B) Upon receipt of certification by the Chief Actuary under 
subparagraph (A), the Managing Trustee shall transfer to the Account 
from amounts otherwise in the Trust Fund an amount equal to the 
estimated savings so certified.
  ``(C) To the extent of available funds in the Account, upon 
certification by the Chief Actuary that such funds are currently 
required to meet expenditures necessary to provide for continuing 
disability reviews required under section 221(i), the Managing Trustee 
shall make available to the Commissioner of Social Security from the 
Account the amount so certified.
  ``(D) The expenditures referred to in subparagraph (C) shall include, 
but not be limited to, the cost of staffing, training, purchase of 
medical and other evidence, and processing related to appeals 
(including appeal hearings) and to overpayments and related indirect 
costs.
  ``(E) The Commissioner shall use funds made available pursuant to 
this paragraph solely for the purposes described in subparagraph 
(C).''.
          (2) Conforming amendment.--Section 201(g)(1)(A) of such Act 
        (42 U.S.C. 401(g)(1)(A)) is amended in the last sentence by 
        inserting ``(other than expenditures from available funds in 
        the Continuing Disability Review Administration Revolving 
        Account in the Federal Disability Insurance Trust Fund made 
        pursuant to subsection (n))'' after ``is responsible'' the 
        first place it appears.
          (3) Annual report.--Section 221(i)(3) of such Act (42 U.S.C. 
        421(i)(3)) is amended--
                  (A) by striking ``and the number'' and inserting 
                ``the number'';
                  (B) by striking the period at the end and inserting a 
                comma; and
                  (C) by adding at the end the following: ``and a final 
                accounting of amounts transferred to the Continuing 
                Disability Review Administration Revolving Account in 
                the Federal Disability Insurance Trust Fund during the 
                year, the amount made available from such Account 
                during such year pursuant to certifications made by the 
                Chief Actuary of the Social Security Administration 
                under section 201(n)(2)(C), and expenditures made by 
                the Commissioner of Social Security for the purposes 
                described in section 201(n)(2)(C) during the year, 
                including a comparison of the number of continuing 
                disability reviews conducted during the year with the 
                estimated number of continuing disability reviews upon 
                which the estimate of such expenditures was made under 
                section 201(n)(2)(A).''.
  (b) Effective Date and Sunset.--
          (1) Effective date.--The amendments made by subsection (a) 
        shall apply for fiscal years beginning on or after October 1, 
        1995, and ending on or before September 30, 2002.
          (2) Sunset.--Effective October 1, 2002, the Continuing 
        Disability Review Administration Revolving Account in the 
        Federal Disability Insurance Trust Fund shall cease to exist, 
        any balance in such Account shall revert to funds otherwise 
        available in such Trust Fund, and sections 201 and 221 of the 
        Social Security Act shall read as if the amendments made by 
        subsection (a) had not been enacted.
  (c) Office of Chief Actuary in the Social Security Administration.--
          (1) In general.--Section 702 of such Act (42 U.S.C. 902) is 
        amended--
                  (A) by redesignating subsections (c) and (d) as 
                subsections (d) and (e), respectively; and
                  (B) by inserting after subsection (b) the following 
                new subsection:

                            ``Chief Actuary

  ``(c)(1) There shall be in the Administration a Chief Actuary, who 
shall be appointed by, and in direct line of authority to, the 
Commissioner. The Chief Actuary shall be appointed from individuals who 
have demonstrated, by their education and experience, superior 
expertise in the actuarial sciences. The Chief Actuary shall serve as 
the chief actuarial officer of the Administration, and shall exercise 
such duties as are appropriate for the office of the Chief Actuary and 
in accordance with professional standards of actuarial independence. 
The Chief Actuary may be removed only for cause.
  ``(2) The Chief Actuary shall be compensated at the highest rate of 
basic pay for the Senior Executive Service under section 5382(b) of 
title 5, United States Code.''.
          (2) Effective date of subsection.--The amendments made by 
        this subsection shall take effect on the date of the enactment 
        of this Act.

SEC. 4. ENTITLEMENT OF STEPCHILDREN TO CHILD'S INSURANCE BENEFITS BASED 
                    ON ACTUAL DEPENDENCY ON STEPPARENT SUPPORT.

  (a) Requirement of Actual Dependency for Future Entitlements.--
          (1) In general.--Section 202(d)(4) of the Social Security Act 
        (42 U.S.C. 402(d)(4)) is amended by striking ``was living with 
        or''.
          (2) Effective date.--The amendment made by paragraph (1) 
        shall apply with respect to benefits of individuals who become 
        entitled to such benefits for months after the third month 
        following the month in which this Act is enacted.
  (b) Termination of Child's Insurance Benefits Based on Work Record of 
Stepparent Upon Natural Parent's Divorce From Stepparent.--
          (1) In general.--Section 202(d)(1) of the Social Security Act 
        (42 U.S.C. 402(d)(1)) is amended--
                  (A) by striking ``or'' at the end of subparagraph 
                (F);
                  (B) by striking the period at the end of subparagraph 
                (G) and inserting ``; or''; and
                  (C) by inserting after subparagraph (G) the following 
                new subparagraph:
          ``(H) if the benefits under this subsection are based on the 
        wages and self-employment income of a stepparent who is 
        subsequently divorced from such child's natural parent, the 
        sixth month after the month in which the Commissioner of Social 
        Security receives formal notification of such divorce.''.
          (2) Effective date.--The amendments made by this subsection 
        shall apply with respect to notifications of divorces received 
        by the Commissioner of Social Security on or after the date of 
        the enactment of this Act.

SEC. 5. RECOMPUTATION OF BENEFITS AFTER NORMAL RETIREMENT AGE.

  (a) In General.--Section 215(f)(2)(D)(i) of the Social Security Act 
(42 U.S.C. 415(f)(2)(D)(i)) is amended to read as follows:
          ``(i) in the case of an individual who did not die in the 
        year with respect to which the recomputation is made, for 
        monthly benefits beginning with benefits for January of--
                  ``(I) the second year following the year with respect 
                to which the recomputation is made, in any such case in 
                which the individual is entitled to old-age insurance 
                benefits, the individual has attained retirement age 
                (as defined in section 216(l)) as of the end of the 
                year preceding the year with respect to which the 
                recomputation is made, and the year with respect to 
                which the recomputation is made would not be 
                substituted in recomputation under this subsection for 
                a benefit computation year in which no wages or self-
                employment income have been credited previously to such 
                individual, or
                  ``(II) the first year following the year with respect 
                to which the recomputation is made, in any other such 
                case; or''.
  (b) Conforming Amendments.--
          (1) Section 215(f)(7) of such Act (42 U.S.C. 415(f)(7)) is 
        amended by inserting ``, and as amended by section 5(b)(2) of 
        the Senior Citizens' Right to Work Act of 1995,'' after ``This 
        subsection as in effect in December 1978''.
          (2) Subparagraph (A) of section 215(f)(2) of the Social 
        Security Act as in effect in December 1978 and applied in 
        certain cases under the provisions of such Act as in effect 
        after December 1978 is amended--
                  (A) by striking ``in the case of an individual who 
                did not die'' and all that follows and inserting ``in 
                the case of an individual who did not die in the year 
                with respect to which the recomputation is made, for 
                monthly benefits beginning with benefits for January 
                of--''; and
                  (B) by adding at the end the following:
                  ``(i) the second year following the year with respect 
                to which the recomputation is made, in any such case in 
                which the individual is entitled to old-age insurance 
                benefits, the individual has attained age 65 as of the 
                end of the year preceding the year with respect to 
                which the recomputation is made, and the year with 
                respect to which the recomputation is made would not be 
                substituted in recomputation under this subsection for 
                a benefit computation year in which no wages or self-
                employment income have been credited previously to such 
                individual, or
                  ``(ii) the first year following the year with respect 
                to which the recomputation is made, in any other such 
                case; or''.
  (c) Effective Date.--The amendments made by this section shall apply 
with respect to recomputations of primary insurance amounts based on 
wages paid and self employment income derived after 1994 and with 
respect to benefits payable after December 31, 1995.

SEC. 6. ELIMINATION OF THE ROLE OF THE SOCIAL SECURITY ADMINISTRATION 
                    IN PROCESSING ATTORNEY FEES.

  (a) Actions Before the Commissioner.--Section 206(a) of the Social 
Security Act (42 U.S.C. 406(a)) is amended--
          (1) in paragraph (1), by striking the fourth and fifth 
        sentences;
          (2) by striking paragraphs (2), (3), and (4);
          (3) by inserting after paragraph (1) the following new 
        paragraph:
  ``(2)(A) No person, agent, or attorney may charge in excess of $4,000 
(or, if higher, the amount set pursuant to subparagraph (B)) for 
services performed in connection with any claim before the Commissioner 
under this title, or for services performed in connection with 
concurrent claims before the Commissioner under this title and title 
XVI.
  ``(B) The Commissioner may increase the dollar amount under 
subparagraph (A) whenever the Commissioner determines that such an 
increase is warranted. The Commissioner shall publish any such 
increased amount in the Federal Register.
  ``(C) Any agreement in violation of this paragraph shall be void.
  ``(D) Whenever the Commissioner makes a favorable determination in 
connection with any claim for benefits under this title by a claimant 
who is represented by a person, agent, or attorney, the Commissioner 
shall provide the claimant and such person, agent, or attorney a 
written notice of--
          ``(i) the determination,
          ``(ii) the dollar amount of any benefits payable to the 
        claimant, and
          ``(iii) the maximum amount under paragraph (2) that may be 
        charged for services performed in connection with such 
        claim.''; and
          (4) by redesignating paragraph (5) as paragraph (3).
  (b) Judicial Proceedings.--Section 206(b)(1) of such Act (42 U.S.C. 
406(b)(1)) is amended--
          (1) in the first sentence of subparagraph (A), by striking 
        ``representation,'' and all that follows and inserting the 
        following: ``representation. In determining a reasonable fee, 
        the court shall take into consideration the amount of the fee, 
        if any, that such attorney, or any other person, agent, or 
        attorney, may charge the claimant for services performed in 
        connection with the claimant's claim when it was pending before 
        the Commissioner.'';
          (2) in the second sentence of subparagraph (A), by striking 
        ``or certified for payment'';
          (3) by striking subparagraph (B); and
          (4) by striking ``(b)(1)(A)'' and inserting ``(b)(1)''.
  (c) Conforming Amendments.--
          (1) Section 223(h)(3) of such Act (42 U.S.C. 423(h)(3)) is 
        amended by striking all that follows ``obtained)'' and 
        inserting a period.
          (2) Section 1127(a) of such Act (42 U.S.C. 1320a-6(a)) is 
        amended by striking the last sentence.
          (3) Section 1631(d)(2)(A) of such Act (42 U.S.C. 
        1383(d)(2)(A)) is amended--
                  (A) by striking ``(other than paragraph (4) 
                thereof)''; and
                  (B) by striking all that follows ``title II'' and 
                inserting a period.
  (d) Effective Date.--The amendments made by this section shall apply 
with respect to--
          (1) any claim for benefits under the old-age, survivors, and 
        disability insurance program under title II of the Social 
        Security Act, the supplemental security income program under 
        title XVI of such Act, or the black lung program under part B 
        of the Black Lung Benefits Act that is initially filed on or 
        after the 60th day following the date of the enactment of this 
        Act, and
          (2) any claim for such benefits filed before such 60th day by 
        a claimant who is first represented by any person, agent, or 
        attorney in connection with such claim on or after such 60th 
        day.

SEC. 7. DENIAL OF DISABILITY BENEFITS TO DRUG ADDICTS AND ALCOHOLICS.

  (a) Amendments Relating to Title II Disability Benefits.--
          (1) In general.--Section 223(d)(2) of the Social Security Act 
        (42 U.S.C. 423(d)(2)) is amended by adding at the end the 
        following:
          ``(C) An individual shall not be considered to be disabled 
        for purposes of this title if alcoholism or drug addiction 
        would (but for this subparagraph) be a contributing factor 
        material to the Commissioner's determination that the 
        individual is disabled.''.
          (2) Representative payee requirements.--
                  (A) Section 205(j)(1)(B) of such Act (42 U.S.C. 
                405(j)(1)(B)) is amended to read as follows:
  ``(B) In the case of an individual entitled to benefits based on 
disability, the payment of such benefits shall be made to a 
representative payee if the Commissioner of Social Security determines 
that such payment would serve the interest of the individual because 
the individual also has an alcoholism or drug addiction condition (as 
determined by the Commissioner) that prevents the individual from 
managing such benefits.''.
                  (B) Section 205(j)(2)(C)(v) of such Act (42 U.S.C. 
                405(j)(2)(C)(v)) is amended by striking ``entitled to 
                benefits'' and all that follows through ``under a 
                disability'' and inserting ``described in paragraph 
                (1)(B)''.
                  (C) Section 205(j)(2)(D)(ii)(II) of such Act (42 
                U.S.C. 405(j)(2)(D)(ii)(II)) is amended by striking all 
                that follows ``15 years, or'' and inserting ``described 
                in paragraph (1)(B).''.
                  (D) Section 205(j)(4)(A)(i)(II) (42 U.S.C. 
                405(j)(4)(A)(ii)(II)) is amended by striking ``entitled 
                to benefits'' and all that follows through ``under a 
                disability'' and inserting ``described in paragraph 
                (1)(B)''.
          (3) Treatment referrals for individuals with an alcoholism or 
        drug addiction condition.--Section 222 of such Act (42 U.S.C. 
        422) is amended by adding at the end the following new 
        subsection:

   ``Treatment Referrals for Individuals With an Alcoholism or Drug 
                          Addiction Condition

  ``(e) In the case of any individual whose benefits under this title 
are paid to a representative payee pursuant to section 205(j)(1)(B), 
the Commissioner of Social Security shall refer such individual to the 
appropriate State agency administering the State plan for substance 
abuse treatment services approved under subpart II of part B of title 
XIX of the Public Health Service Act (42 U.S.C. 300x-21 et seq.).''.
          (4) Conforming amendment.--Subsection (c) of section 225 of 
        such Act (42 U.S.C. 425(c)) is repealed.
          (5) Effective dates.--
                  (A) The amendments made by paragraphs (1) and (4) 
                shall apply with respect to monthly insurance benefits 
                under title II of the Social Security Act based on 
                disability for months beginning after the date of the 
                enactment of this Act, except that, in the case of 
                individuals who are entitled to such benefits for the 
                month in which this Act is enacted, such amendments 
                shall apply only with respect to such benefits for 
                months beginning on or after January 1, 1997.
                  (B) The amendments made by paragraphs (2) and (3) 
                shall apply with respect to benefits for which 
                applications are filed on or after the date of the 
                enactment of this Act.
                  (C) If an individual who is entitled to monthly 
                insurance benefits under title II of the Social 
                Security Act based on disability for the month in which 
                this Act is enacted and whose entitlement to such 
                benefits would terminate by reason of the amendments 
                made by this subsection reapplies for benefits under 
                title II of such Act (as amended by this Act) based on 
                disability within 120 days after the date of the 
                enactment of this Act, the Commissioner of Social 
                Security shall, not later than January 1, 1997, 
                complete the entitlement redetermination with respect 
                to such individual pursuant to the procedures of such 
                title.
  (b) Amendments Relating to SSI Benefits.--
          (1) In general.--Section 1614(a)(3) of the Social Security 
        Act (42 U.S.C. 1382c(a)(3)) is amended by adding at the end the 
        following:
  ``(I) Notwithstanding subparagraph (A), an individual shall not be 
considered to be disabled for purposes of this title if alcoholism or 
drug addiction would (but for this subparagraph) be a contributing 
factor material to the Commissioner's determination that the individual 
is disabled.''.
          (2) Representative payee requirements.--
                  (A) Section 1631(a)(2)(A)(ii)(II) of such Act (42 
                U.S.C. 1383(a)(2)(A)(ii)(II)) is amended to read as 
                follows:
  ``(II) In the case of an individual eligible for benefits under this 
title by reason of disability, the payment of such benefits shall be 
made to a representative payee if the Commissioner of Social Security 
determines that such payment would serve the interest of the individual 
because the individual also has an alcoholism or drug addiction 
condition (as determined by the Commissioner) that prevents the 
individual from managing such benefits.''.
                  (B) Section 1631(a)(2)(B)(vii) of such Act (42 U.S.C. 
                1383(a)(2)(B)(vii)) is amended by striking ``eligible 
                for benefits'' and all that follows through ``is 
                disabled'' and inserting ``described in subparagraph 
                (A)(ii)(II)''.
                  (C) Section 1631(a)(2)(B)(ix)(II) of such Act (42 
                U.S.C. 1383(a)(2)(B)(ix)(II)) is amended by striking 
                all that follows ``15 years, or'' and inserting 
                ``described in subparagraph (A)(ii)(II).''.
                  (D) Section 1631(a)(2)(D)(i)(II) of such Act (42 
                U.S.C. 1383(a)(2)(D)(i)(II)) is amended by striking 
                ``eligible for benefits'' and all that follows through 
                ``is disabled'' and inserting ``described in 
                subparagraph (A)(ii)(II)''.
          (3) Treatment services for individuals with a substance abuse 
        condition.--Title XVI of such Act (42 U.S.C. 1381 et seq.) is 
        amended by adding at the end the following new section:
 ``treatment services for individuals with a substance abuse condition
  ``Sec. 1636. In the case of any individual whose benefits under this 
title are paid to a representative payee pursuant to section 
1631(a)(2)(A)(ii)(II), the Commissioner of Social Security shall refer 
such individual to the appropriate State agency administering the State 
plan for substance abuse treatment services approved under subpart II 
of part B of title XIX of the Public Health Service Act (42 U.S.C. 
300x-21 et seq.).''.
          (4) Conforming amendments.--
                  (A) Section 1611(e) of such Act (42 U.S.C. 1382(e)) 
                is amended by striking paragraph (3).
                  (B) Section 1634 of such Act (42 U.S.C. 1383c) is 
                amended by striking subsection (e).
          (5) Effective dates.--
                  (A) The amendments made by paragraphs (1) and (4) 
                shall apply with respect to supplemental security 
                income benefits under title XVI of the Social Security 
                Act based on disability for months beginning after the 
                date of the enactment of this Act, except that, in the 
                case of individuals who are eligible for such benefits 
                for the month in which this Act is enacted, such 
                amendments shall apply only with respect to such 
                benefits for months beginning on or after January 1, 
                1997.
                  (B) The amendments made by paragraphs (2) and (3) 
                shall apply with respect to supplemental security 
                income benefits under title XVI of the Social Security 
                Act for which applications are filed on or after the 
                date of the enactment of this Act.
                  (C) If an individual who is eligible for supplemental 
                security income benefits under title XVI of the Social 
                Security Act for the month in which this Act is enacted 
                and whose eligibility for such benefits would terminate 
                by reason of the amendments made by this subsection 
                reapplies for supplemental security income benefits 
                under title XVI of such Act (as amended by this Act) 
                within 120 days after the date of the enactment of this 
                Act, the Commissioner of Social Security shall, not 
                later than January 1, 1997, complete the eligibility 
                redetermination with respect to such individual 
                pursuant to the procedures of such title.
                  (D) For purposes of this paragraph, the phrase 
                ``supplemental security income benefits under title XVI 
                of the Social Security Act'' includes supplementary 
                payments pursuant to an agreement for Federal 
                administration under section 1616(a) of the Social 
                Security Act and payments pursuant to an agreement 
                entered into under section 212(b) of Public Law 93-66.
  (c) Conforming Amendment.--Section 201(c) of the Social Security 
Independence and Program Improvements Act of 1994 (42 U.S.C. 425 note) 
is repealed.
  (d) Supplemental Funding for Alcohol and Substance Abuse Treatment 
Programs.--
          (1) In general.--Out of any money in the Treasury not 
        otherwise appropriated, there are hereby appropriated to 
        supplement State and Tribal programs funded under section 1933 
        of the Public Health Service Act (42 U.S.C. 300x-33), 
        $100,000,000 for each of the fiscal years 1997 and 1998.
          (2) Additional funds.--Amounts appropriated under paragraph 
        (1) shall be in addition to any funds otherwise appropriated 
        for allotments under section 1933 of the Public Health Service 
        Act (42 U.S.C. 300x-33) and shall be allocated pursuant to such 
        section 1933.
          (3) Use of funds.--A State or Tribal government receiving an 
        allotment under this subsection shall consider as priorities, 
        for purposes of expending funds allotted under this subsection, 
        activities relating to the treatment of the abuse of alcohol 
        and other drugs.

SEC. 8. REVOCATION BY MEMBERS OF THE CLERGY OF EXEMPTION FROM SOCIAL 
                    SECURITY COVERAGE.

  (a) In General.--Notwithstanding section 1402(e)(4) of the Internal 
Revenue Code of 1986, any exemption which has been received under 
section 1402(e)(1) of such Code by a duly ordained, commissioned, or 
licensed minister of a church, a member of a religious order, or a 
Christian Science practitioner, and which is effective for the taxable 
year in which this Act is enacted, may be revoked by filing an 
application therefor (in such form and manner, and with such official, 
as may be prescribed in regulations made under chapter 2 of such Code), 
if such application is filed no later than the due date of the Federal 
income tax return (including any extension thereof) for the applicant's 
second taxable year beginning after December 31, 1995. Any such 
revocation shall be effective (for purposes of chapter 2 of the 
Internal Revenue Code of 1986 and title II of the Social Security Act), 
as specified in the application, either with respect to the applicant's 
first taxable year beginning after December 31, 1995, or with respect 
to the applicant's second taxable year beginning after such date, and 
for all succeeding taxable years; and the applicant for any such 
revocation may not thereafter again file application for an exemption 
under such section 1402(e)(1). If the application is filed after the 
due date of the applicant's Federal income tax return for a taxable 
year and is effective with respect to that taxable year, it shall 
include or be accompanied by payment in full of an amount equal to the 
total of the taxes that would have been imposed by section 1401 of the 
Internal Revenue Code of 1986 with respect to all of the applicant's 
income derived in that taxable year which would have constituted net 
earnings from self-employment for purposes of chapter 2 of such Code 
(notwithstanding section 1402(c)(4) or (c)(5) of such Code) except for 
the exemption under section 1402(e)(1) of such Code.
  (b) Effective Date.--Subsection (a) shall apply with respect to 
service performed (to the extent specified in such subsection) in 
taxable years beginning after December 31, 1995, and with respect to 
monthly insurance benefits payable under title II of the Social 
Security Act on the basis of the wages and self-employment income of 
any individual for months in or after the calendar year in which such 
individual's application for revocation (as described in such 
subsection) is effective (and lump-sum death payments payable under 
such title on the basis of such wages and self-employment income in the 
case of deaths occurring in or after such calendar year).

SEC. 9. PILOT STUDY OF EFFICACY OF PROVIDING INDIVIDUALIZED INFORMATION 
                    TO RECIPIENTS OF OLD-AGE AND SURVIVORS INSURANCE 
                    BENEFITS.

  (a) In General.--During a 2-year period beginning as soon as 
practicable in 1996, the Commissioner of Social Security shall conduct 
a pilot study of the efficacy of providing certain individualized 
information to recipients of monthly insurance benefits under section 
202 of the Social Security Act, designed to promote better 
understanding of their contributions and benefits under the social 
security system. The study shall involve solely beneficiaries whose 
entitlement to such benefits first occurred in or after 1984 and who 
have remained entitled to such benefits for a continuous period of not 
less than 5 years. The number of such recipients involved in the study 
shall be of sufficient size to generate a statistically valid sample 
for purposes of the study, but shall not exceed 600,000 beneficiaries.
  (b) Annualized Statements.--During the course of the study, the 
Commissioner shall provide to each of the beneficiaries involved in the 
study one annualized statement, setting forth the following 
information:
          (1) an estimate of the aggregate wages and self-employment 
        income earned by the individual on whose wages and self-
        employment income the benefit is based, as shown on the records 
        of the Commissioner as of the end of the last calendar year 
        ending prior to the beneficiary's first month of entitlement;
          (2) an estimate of the aggregate of the employee and self-
        employment contributions, and the aggregate of the employer 
        contributions (separately identified), made with respect to the 
        wages and self-employment income on which the benefit is based, 
        as shown on the records of the Commissioner as of the end of 
        the calendar year preceding the beneficiary's first month of 
        entitlement; and
          (3) an estimate of the total amount paid as benefits under 
        section 202 of the Social Security Act based on such wages and 
        self-employment income, as shown on the records of the 
        Commissioner as of the end of the last calendar year preceding 
        the issuance of the statement for which complete information is 
        available.
  (b) Inclusion With Matter Otherwise Distributed to Beneficiaries.--
The Commissioner shall ensure that reports provided pursuant to this 
subsection are, to the maximum extent practicable, included with other 
reports currently provided to beneficiaries on an annual basis.
  (c) Report to the Congress.--The Commissioner shall report to each 
House of the Congress regarding the results of the pilot study 
conducted pursuant to this section not later than 60 days after the 
completion of such study.

                            I. INTRODUCTION

                         A. Purpose and Summary

    The ``Senior Citizens' Right To Work Act'' would raise the 
earnings limit for seniors between the ages of 65 and 69 to 
$30,000 by the year 2002. The legislation would preserve the 
long-term financial integrity of the Social Security Trust 
Funds and would offset the cost of the legislation by changes 
within the Social Security system. These changes would include: 
establishing a Disability Insurance Continuing Disability 
Review Administration Revolving Fund; basing entitlement of 
stepchildren to child's benefits based on actual dependency on 
stepparent support; altering recomputations of benefits after 
normal retirement age; eliminating the role of the Social 
Security Administration (SSA) in processing attorney fees; 
eliminating benefits based on disability to drug addicts and 
alcoholics; and allowing members of the clergy to revoke their 
exemption from Social Security coverage. The legislation also 
provides for a two-year pilot study to test the efficacy of 
sending individualized benefit and contribution statements to 
Social Security recipients.

                 B. Background and Need for Legislation

    Since the creation of the Social Security program in 1935, 
payment of benefits based on attainment of retirement age has 
been restricted by the so-called ``retirement test''--a limit 
on the amount of earned income from wages or self employment 
which, if exceeded, causes loss of some or all benefits. 
However, there has never been a corresponding limit on so-
called ``unearned'' income--income from sources including 
pensions, savings, and investments.
    The earnings limit discourages older workers from remaining 
in the work force and sharing their experience, knowledge, and 
skills with younger workers. According to the Social Security 
Administration, 925,000 seniors between age 65 and 69 lose some 
or all of their benefits because of the current earnings limit.
    In general, today's retirees enjoy increased longevity and 
improved health, retiring younger with a projected longevity on 
average of 20 to 25 years. This trend is expected to continue. 
With the impending retirement of the baby boom generation comes 
the prospect of an aging society, and a slower-growing work 
force. Given these demographics, it is important to develop 
policies that tap one of society's most valued and 
underutilized resources: older workers. Older workers should be 
encouraged and enabled to remain productive for as long as they 
wish.
    It is equally important to enable beneficiaries--
particularly those with lower or middle income--to supplement 
Social Security with earned income from wages or self 
employment, just as others do with so-called ``unearned'' 
income from dividends and interest, and other investment-
related income.
    According to the American Association of Retired Persons, 
10 percent of seniors depend totally on Social Security for 
income in retirement; one in four, for 90 percent of retirement 
income, and three out of five, for at least 50 percent of 
retirement income. Allowing seniors who work to keep more of 
what they earn is especially critical to this group, who, like 
all those age 65 to 69, are currently penalized with a loss of 
$1 in benefits for every $3 earned above the limit.
    Finally, loss of Social Security benefits because of 
earnings above the current earnings limit, coupled with the tax 
on Social Security benefits imposed on individuals with incomes 
above $25,000, or couples with incomes above $32,000, can 
result in older workers realizing little or no additional 
income as a result of their labor.

                         C. Legislative History

    On January 9, 1995, the Subcommittee on Social Security 
held a public hearing on the ``Contract With America'' 
provision contained in H.R. 8, the ``Senior Citizens' Equity 
Act,'' to raise the Social Security earnings limit to $30,000. 
The Subcommittee received testimony in support of raising the 
earnings limit from senior advocates, economists, academics, 
business representatives, and senior citizens. According to 
testimony presented by SSA, 925,000 beneficiaries age 65 to 69 
lose some or all of their benefits because of the effects of 
the earnings limit. The provision was subsequently incorporated 
into H.R. 1215, the ``Tax Fairness and Deficit Reduction Act,'' 
which was favorably reported by the Committee on Ways and Means 
and later passed the House of Representatives on April 5, 1995, 
by a vote of 246 to 188.
    On November 28, 1995, the Subcommittee on Social Security 
ordered favorably reported to the Full Committee, as amended, 
draft legislation entitled the ``Senior Citizens' Right to Work 
Act of 1995,'' by a voice vote, with a quorum present.
    On November 30, 1995, the Full Committee ordered favorable 
reported, as amended, H.R. 2684 by a roll call vote of 31 yeas 
and 0 nays, with a quorum present.
    During the Full Committee markup, five amendments were 
offered. The first, offered by Mr. Gibbons, would delete the 
provision on recomputation and would increase the earnings 
limit at a slightly less rapid rate than under the Subcommittee 
bill. This amendment failed by voice vote.
    The second amendment offered by Mr. Payne, on behalf of 
Mrs. Kennelly, would retain current law link between senior 
citizens and the blind for purposes of the Social Security 
earnings test through the year 2000. The amendment also 
includes a sense of the Congress resolution that Congress 
should retain the link beyond the year 2000. This amendment was 
defeated by a roll call vote of 13 yeas and 21 nays.
    The third amendment, offered by Ms. Dunn, would require the 
Commissioner of Social Security to undertake a two-year pilot 
study on the efficacy of providing individualized information 
to recipients of monthly insurance benefits. This amendment 
passed by voice vote, as amended by Mr. Gibbons and Mr. Hancock 
to allow an individual to also be informed of the amount of 
their employer contributions.
    The fourth amendment, offered by Mr. Kleczka, would strike 
the provision related to attorneys' fees. This amendment failed 
by a voice vote.
    The fifth amendment, offered by Mr. Rangel, would strike 
the provision relating to denial of disability benefits to drug 
addicts and alcoholics. This amendment failed by voice vote.

                     II. EXPLANATION OF PROVISIONS

                          (Sec. 1) Short Title

    The short title of the bill ``Senior Citizens' Right to 
Work Act of 1995.''

        (Sec. 2) Increases in the Social Security Earnings Limit

Present law

    Senior citizens age 70 and older receive full Social 
Security benefits regardless of the amount of earnings they 
have from wages or self-employment. Those between the full 
retirement age (currently age 65) and age 70 receive full 
benefits only if their earnings are lower than an earnings 
limit amount determined by law. In 1995, the limit for those 
age 65 to 69 is $11,280. The limit is indexed, increasing 
annually in proportion to the rate of average wage growth in 
the economy.

Year:
                                                             Current law
    1996......................................................   $11,520
    1997......................................................    11,880
    1998......................................................    12,240
    1999......................................................    12,720
    2000......................................................    13,200
    2001......................................................    13,800
    2002......................................................    14,400

    Senior citizens between the age of full retirement 
(currently age 65) and 70 who earn more than the earnings limit 
lose $1 in benefits for every $3 in wages of self-employment 
income they earn over the limit.
    Beneficiaries under age 65 who are entitled to receive 
disability benefits must have a severe disability or 
disabilities that prevent them from performing work at a 
substantial gainful level--so-called ``substantial gainful 
activity'' (SGA). For individuals under age 65 disabled by 
blindness, the 1995 SGA amount is currently linked to the 
monthly earnings limit exempt amount for those now age 65 to 
69--$940, and wage-indexed in the future. For individuals with 
disabilities other than blindness, the monthly SGA amount is 
$500, and is not indexed.

Explanation of provision

    The proposal would gradually raise the earnings limit for 
those between full retirement age (currently age 65) and 70 to 
$30,000 by the year 2002. The increase would be phased in over 
7 years as follows:

Year:
                                                  Proposed earning limit
    1996......................................................   $14,000
    1997......................................................    15,000
    1998......................................................    16,000
    1999......................................................    17,000
    2000......................................................    18,000
    2001......................................................    25,000
    2002......................................................    30,000

    Senior citizens between full retirement age (currently age 
65) and 70 who earn over the given earnings limit for the year 
would continue to lose $1 in benefits for every $3 earned over 
the limit. After 2002, the annual exempt amounts would be 
indexed to growth in average wages.
    The substantial gainful activity (SGA) amount applicable to 
individuals under 65 who are eligible for disability benefits 
on the basis of blindness would no longer be inked to the 
earnings limit amount for those now age 65 to 69. As under 
current law, the SGA amount for blind individuals would 
continue to be wage-indexed in the future.

Reason for change

    According to SSA, 925,000 beneficiaries between age 65 and 
69 lose some or all of their benefits as a result of the 
earnings limit. Given the combined effects of Federal, State 
and local income taxes, Social Security payroll taxes, income 
taxes on benefits, and the earnings limit, senior citizens who 
earn even moderate amounts over the limit may realize very 
little financial gain from their labor. These rates are a 
severe disincentive to work and penalize retirees who often 
need to work out of economic need. Raising the earnings limit 
also would ease the administrative burdens of the Social 
Security Administration, which spends over $200 million a year 
to monitor and update the earnings limit. SSA estimates that 60 
percent of all overpayments, and 45 percent of all 
underpayments, result from the earnings limit.

Effective date

    The proposal would be effective beginning in 1996.

(Sec. 3) Establishment of a Disability Insurance Continuing Disability 
                  Review Administration Revolving Fund

Present law

    The administrative costs of conducting continuing 
disability reviews (CDRs) of Social Security disability 
beneficiaries are provided through an appropriation of trust 
fund monies, and are counted as discretionary spending subject 
to the domestic discretionary cap of the ``Budget Enforcement 
Act.''

Explanation of provision

    A Social Security CDR administrative revolving fund account 
would be established in the Disability Insurance Trust Fund as 
a source of non-appropriated administrative funds to finance 
all disability CDRs. At the start of each fiscal year, the 
revolving fund account would be credited with an amount equal 
to the estimated present value of savings to the Disability 
Insurance and Medicare Trust Funds achieved as a result of CDRs 
of disability recipients conducted in the prior fiscal year. 
The amounts would be calculated by SSA's Chief Actuary, with 
adjustments made annually in subsequent years, except in the 
first year, when $300 million would be credited to the account, 
based on the Congressional Budget Office estimate of savings 
that would result from FY 1995 CDRs. Amounts credited to the 
fund account would be available for all expenditures related to 
conducting CDRs by SSA and the State agencies.
    Since this proposal requires an explicit annual 
certification by the Chief Actuary, the position of Chief 
Actuary in SSA, now provided for administratively, would be 
established by statute.

Reason for change

    Limited administrative resources have prevented SSA from 
keeping up with CDRs. According to General Accounting Office 
(GAO), for every $1 spent conducting CDRs, $6 are saved in 
benefits that would otherwise be paid to individuals who are no 
longer disabled. GAO estimates that at least 200,000 
individuals who are no longer disabled continue to receive 
disability benefits, at a cost of nearly $2 billion in cash and 
Medicare benefits over the lifetime of the claims. The proposed 
revolving fund would be a source of non-appropriated 
administrative resources to finance CDRs, enabling SSA to 
perform this essential program-integrity work.

Effective date

    The proposal is effective for CDRs conducted after FY 1995. 
The revolving fund account would expire after FY 2002.

   (Sec. 4) Entitlement of Stepchildren to Child's Benefits Based on 
                Actual Dependency on Stepparent Support

Present law

    A child, including a stepchild, may become entitled to 
Social Security benefits as the child of a worker when the 
worker retires, becomes disabled, or dies. To do so, the child 
must be dependent upon the worker. Natural children are deemed 
dependent on their natural parents.
    A stepchild is deemed dependent on the stepparent if he or 
she is living with or receiving one-half support from the 
stepparent. Benefits continue to be paid to the stepchild even 
if the child's natural parent and the stepparent divorce.
    When stepchildren qualify for benefits, payment of those 
benefits reduces the amount available for payment to any other 
children entitled on the worker's record.

Explanation of provision

    The proposal requires that in all cases benefits would be 
payable to a stepchild only if it is established that the 
stepchild is dependent upon the stepparent for at least one-
half of his or her financial support. In addition, benefits to 
the stepchild would be terminated if the stepchild's natural 
parent and stepparent were divorced.

Reason for change

    This change would result in the payment of benefits only to 
stepchildren who are truly dependent on the stepparent for 
their support, and only as long as the natural parent and 
stepparent are married. As a result other children entitled on 
the worker's record will not be unnecessarily disadvantaged by 
entitlement of stepchildren who have other means of support.

Effective date

    The dependency requirement would be effective for 
stepchildren who become entitled or re-entitled to benefits 
three months after the month of enactment. In cases of a 
subsequent divorce, benefits to stepchildren would terminate 6 
months after the notice of divorce occurring between natural 
parent and the stepparent (entitled worker) is received by SSA.

    (Sec. 5) Recomputations of Benefits After Normal Retirement Age

Present law

    Social Security benefits are based on the average of an 
individual's ``high'' years of earnings. For workers born in 
1929 or later, 35 ``high'' years of earnings are averaged. For 
those born before 1929, the number of ``high'' years averaged 
is proportionately fewer (for example, for those born in 1919, 
25 ``high'' years are averaged).
    If a retiree continues to work after entitlement to 
benefits, his or her monthly benefit may be increased if the 
new yearly earnings are greater than one of the years used in 
the initial determination of benefits. Currently, 
recomputations of benefits are effective in the year 
immediately following the year of the earnings. However, 
because of the lag between when wages are earned and when they 
are reported and recomputations are processed, most 
recomputations are actually paid in a lump-sum payment near the 
end of the year that they are effective. Subsequently, the 
adjustment is reflected in the new regular monthly benefit 
amount.

Explanation of provision

    Recomputation of benefits resulting from earnings in the 
year after a worker reaches normal retirement age (currently 
age 65) and later would be reflected in the recipient's benefit 
check, effective with the January of the second year after the 
year of the earnings. An exception would be provided for 
recipients who have one or more ``zero'' years of earnings in 
their wage averaging computation. Earnings would continue to be 
credited as under current law for purposes of establishing 
entitlement.

Reason for change

    Since earnings are not reported until well into the year 
following the year in which they are earned, there is no 
administrative lead time built into the process for SSA to 
adjust payments on a timely basis. The adjustments almost 
always have to be provided to beneficiaries through end-of-year 
lump-sum payments (and are sometimes delayed until the next 
year). As a result, the current recomputation process is labor 
intensive for SSA, and because most recipients do not expect 
these increases, many are confused by receipt of the lump-sum 
checks. Many of those affected by the delay in recomputation 
are among those likely to benefit from the proposed increases 
in the earnings limitation.
    Under the proposal, SSA's ability to manage the 
recomputation process would be greatly enhanced by having ample 
lead time between the year of the earnings and the point at 
which they are reflected in benefit levels. The benefit check 
that the recipient relies on to meet regular monthly expenses 
would not be affected by delaying the recomputation.
    Beneficiares who lack earnings in one or more of the 
``high'' years, and who are therefore most likely to have the 
lowest Social Security benefits, would receive retroactive 
recomputations and past-due benefits as under current law.

Effective date

    The proposal would be effective for earnings beginning in 
1995.

(sec. 6) eliminating the role of the social security administration in 
                        processing attorney fees

Present law

    The Social Security Administration (SSA) currently approves 
the fee that may be charged by an attorney or non-attorney to 
represent an applicant in administrative proceedings before SSA 
(most commonly, appeal of a denied claim for disability 
benefits). When an appeal is decided in the applicant's favor, 
SSA generally withholds the lesser of $4,000 or 25 percent of 
past-due Social Security or black lung benefits for direct 
payment to the applicant's attorney, before forwarding the 
balance to the applicant.

Explanation of provision

    SSA would no longer withhold past-due benefits and pay 
attorneys or representatives. Attorneys would be free to 
negotiate fees of up to $4,000 with applicants in the same 
manner that fees for other legal services are negotiated. 
Present-law protection of beneficiaries through sanctions 
against attorneys who violate the established fee cap are 
preserved.

Reason for change

    This proposal is one of the Administration's ``Reinventing 
Government'' Phase II initiatives. It is an unusual function 
for a Federal agency administering benefit payments to 
routinely intercede in the payment of fees between an attorney 
and his or her client. SSA's adjudication of attorney fees is a 
costly component of the appellate process and is not critical 
to SSA's mission, which is to decide and make benefit payments. 
SSA currently spends over 400 ``work years'' annually to 
determine and withhold attorney fees. A substantial percentage 
of this work is done by SSA's 1100 Administrative Law Judges 
and their staffs, which already have an enormous backlog of 
basic disability appeals to resolve.
    Currently, 96 percent of all fees to attorneys are under 
$4,000. 54 percent are under $2,500. Limiting fees to $4,000 
will protect applicants from being charged excessive fees. The 
proposal will in no way affect an applicant's ability to obtain 
representation. It will simply result in applicants contracting 
for Social Security representation as they do for any other 
legal service. According to SSA, 73 percent of applicants for 
Social Security benefits are represented at administrative 
hearings. 64 percent of all applicants for Supplemental 
Security Income (SSI) benefits are represented, even though 
attorney fees are not withheld from past-due benefits in SSI 
cases. The proposal will also speed payment to successful 
applicants, who may already have waited up to a year to even be 
scheduled for a hearing. Payments are currently delayed an 
average of 45 days because of the existing attorney fee 
approval and payment process.

Effective date

    The proposal would be effective for claims filed 60 days or 
more after enactment.

  (Sec. 7) Denial of Benefits Based on Disability to Drug Addicts and 
                               Alcoholics

Present law

    Individuals whose drug addiction or alcoholism is the 
contributing factor material to their disability (that is, they 
would not be considered disabled if they stopped using drugs or 
alcohol), are eligible to receive Social Security and 
Supplemental Security Income (SSI) disability cash benefits 
through a representative payee for up to three years. These 
recipients must participate in an approved treatment program 
when available and appropriate, and must allow their 
participation in a treatment program to be monitored. Benefits 
end after 36 months unless the individual is disabled for some 
reason other than substance abuse. Medicare continues beyond 
the 36-month period so long as the terminated individual 
continues to be disabled based on another severe disability.

Explanation of provision

    An individual would not be considered disabled for purposes 
of entitlement to cash Social Security and SSI disability 
benefits if drug addiction or alcoholism is the contributing 
factor material to his or her disability. Individuals with drug 
addiction and/or alcoholism who have another severe disabling 
condition (such as AIDS, cancer, cirrhosis) can qualify for 
benefits based on that disabling condition.
    If a person qualifying for benefits based on another 
disability is also determined to be an alcoholic or drug 
addict, a representative payee will be appointed to receive and 
manage the individual's checks. In most cases, payment to a 
representative payee best serves the interest of the 
beneficiary because alcoholism or drug addiction prevents the 
beneficiary from properly managing his or her own benefits.
    Recipients who are unable to manage their own benefits as a 
result of alcoholism or drug addiction will be referred to the 
appropriate State agency for substance abuse treatment services 
approved under the Public Health Service Act Substance Abuse 
Prevention and Treatment Block Grant.
    For each of two years beginning with FY 1997, $100 million 
will be spent to fund additional drug (including alcohol) 
treatment programs and services to supplement State and Tribal 
programs funded under Section 1933 of the Public Health Service 
Act. The Subcommittee intends that States will use funds made 
available under this provision to provide treatment to current 
and former Social Security and SSI disability recipients on a 
priority basis.

Reason for change

    Under current law, individuals whose sole severe disabling 
condition is drug addiction or alcoholism are eligible to 
receive monthly cash Social Security and SSI disability 
benefits and medical coverage (Medicare or Medicaid) if they 
are unable to work because of their addictions. The result is a 
perverse incentive that affronts working taxpayers and fails to 
serve the interests of addicts and alcoholics, many of whom use 
their disability checks to purchase drugs and alcohol, thereby 
maintaining their addictions.
    The proposal would convert part of the savings to taxpayers 
into additional Federal funding to States for drug and alcohol 
treatment, providing an incentive for States to provide 
treatment to former recipients. The intent of this proposal is 
to eliminate payment of cash Social Security and SSI disability 
benefits to drug addicts and alcoholics, to ensure that 
beneficiaries with other severe disabilities who are also 
addicts or alcoholics are paid benefits through a 
representative payee and referred for treatment, and to provide 
additional funding to States to enable recipients to continue 
to be referred to treatment sources.

Effective date

    Generally, changes apply to benefits for months beginning 
on or after the date of enactment. However, an individual 
entitled to benefits before the month of enactment would 
continue to be eligible for benefits until January 1, 1997. The 
Commissioner of Social Security must notify such individuals 
within three months of the date of enactment. Those who wish to 
reapply for benefits must do so within four months after the 
date of enactment in order to qualify for priority 
redetermination of eligibility. The Commissioners must make 
these determinations within one year after the date of 
enactment for individuals who reapply.
    In addition, in the case of an individual with an 
alcoholism or drug addiction condition who is entitled to 
Social Security or SSI disability benefits on the date of 
enactment, the representative payee and referral to treatment 
requirement will apply on or after the first continuing 
disability review occurring after enactment.

 (Sec. 8) Revocation by Members of the Clergy of Exemption from Social 
                           Security Coverage

Present law

    Practicing members of the clergy are automatically covered 
by Social Security as self-employed workers unless they file 
for an exemption from Social Security coverage within a period 
ending with the due date of the tax return for the second 
taxable year (not necessarily consecutive) in which they begin 
performing their ministerial services. Members of the clergy 
seeking the exemption must file statements with their church, 
order, or licensing or ordaining body stating their opposition 
to the acceptance of Social Security benefit is on religious 
principles. If elected, this exemption is irrevocable.

Explanation of provision

    The proposal would provide a two-year ``open season,'' 
beginning January 1, 1996, for members of the clergy who want 
to revoke their exemption from Social Security. This decision 
to join Social Security would be irrovacable. A member of the 
clergy choosing such coverage would become subject to self 
employment taxes and his or her subsequent earnings would be 
credited for Social Security (and Medicare) benefit purposes.

Reason for change

    Some members of the clergy elected not to participate in 
Social Security (and Medicare) early in their careers, before 
they fully understood the ramifications of doing so. Because 
the election is irrevocable, there is no way for them to gain 
access to the program under current law. Clergy typically have 
modest earnings throughout their working life times and would 
be among those most likely to rely on Social Security (and 
Medicare) for much of their basic health care and living 
expenses in retirement. This proposal gives them a limited 
opportunity to enroll in the system, similar to those provided 
by Congress in 1977 and 1986.

Effective date

    The proposal would be effective January 1, 1996, for a 
period of two years.

     (sec. 9) pilot study of efficacy of providing individualized 
 information to recipients of old-age and survivors insurance benefits

Present law

    There is no provision in present law.

Explanation of provision

    The proposal would require the Commissioner of Social 
Security to undertake a two-year pilot study on the efficacy of 
providing individualized information to recipients of monthly 
insurance benefits as a way of improving public understanding 
of contributions and benefits under the Social Security system. 
The number of recipients involved in the study would be enough 
to generate a statistically valid sample, but would not exceed 
600,000. The Commissioner would report the results of the pilot 
study to the Congress within 60 days of completion of the 
pilot.

Reason for change

    Many Social Security recipients have little or no 
information on the amount of their and their employers' 
contributions into the system, or the amount of benefits they 
have received relative to those contributions. According to the 
Congressional Research Service, workers retiring in 1995 who 
had average lifetime earnings recover all of their 
contributions (plus interest) in 6.8 years--or in 13.6 years, 
when both employer and employee contributions are taken into 
account. Employee contributions based on average earnings would 
have totaled $20,290 ($52,648 with interest), matched by 
employer contributions of an equal amount.
    The pilot study will enable SSA to test public reaction to 
this information, and determine its usefulness to the broad 
population of recipients.

Effective date

    The proposal would be effective for a two-year pilot 
commencing as soon as practicable in 1996.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 2(l)(2)(B) of rule IX of the 
Rules of the House of Representatives, the following statement 
is made concerning the votes of the Committee in its 
consideration of the bill:

Motion to report the bill

    The bill, as amended, was ordered favorably reported on 
November 30, 1995, by a roll call vote of 31 yeas and 0 nays, 
with a quorum present. The vote was as follows:

----------------------------------------------------------------------------------------------------------------
        Representatives             Yea       Nay     Present    Representatives      Yea       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Archer.....................        X   ........  .........  Mr. Gibbons......        X   ........  .........
Mr. Crane......................        X   ........  .........  Mr. Rangel.......        X   ........  .........
Mr. Thomas.....................        X   ........  .........  Mr. Stark........        X   ........  .........
Mr. Shaw.......................        X   ........  .........  Mr. Jacobs.......        X   ........  .........
Mrs. Johnson...................  ........  ........  .........  Mr. Ford.........        X   ........  .........
Mr. Bunning....................        X   ........  .........  Mr. Matsui.......        X   ........  .........
Mr. Houghton...................  ........  ........  .........  Mrs. Kennelly....  ........  ........  .........
Mr. Herger.....................        X   ........  .........  Mr. Coyne........        X   ........  .........
Mr. McCrery....................        X   ........  .........  Mr. Levin........        X   ........  .........
Mr. Hancock....................        X   ........  .........  Mr. Cardin.......        X   ........  .........
Mr. Camp.......................        X   ........  .........  Mr. McDermott....  ........  ........  .........
Mr. Ramstad....................        X   ........  .........  Mr. Kleczka......        X   ........  .........
Mr. Zimmer.....................        X   ........  .........  Mr. Lewis........        X   ........  .........
Mr. Nussel.....................        X   ........  .........  Mr. Payne........  ........  ........  .........
Mr. Johnson....................        X   ........  .........  Mr. Neal.........        X   ........  .........
Ms. Dunn.......................        X   ........  .........                                                  
Mr. Collins....................        X   ........  .........                                                  
Mr. Portman....................        X   ........  .........                                                  
Mr. Laughlin...................  ........  ........  .........                                                  
Mr. English....................        X   ........  .........                                                  
Mr. Ensign.....................        X   ........  .........                                                  
Mr. Christensen................        X   ........  .........                                                  
----------------------------------------------------------------------------------------------------------------

Votes on amendments

    The Committee defeated an amendment (13 yeas and 21 nays) 
by Mr. Payne, on behalf of Mrs. Kennelly, to retain the current 
law link between senior citizens and the blind for the purpose 
of the Social Security earnings limit through the year 2000. 
The vote was as follows:

----------------------------------------------------------------------------------------------------------------
        Representatives             Yea       Nay     Present    Representatives      Yea       Nay     Present 
----------------------------------------------------------------------------------------------------------------
Mr. Archer.....................  ........        X   .........  Mr. Gibbons......        X   ........  .........
Mr. Crane......................  ........        X   .........  Mr. Rangel.......        X   ........  .........
Mr. Thomas.....................  ........        X   .........  Mr. Stark........        X   ........  .........
Mr. Shaw.......................  ........        X   .........  Mr. Jacobs.......        X   ........  .........
Mrs. Johnson...................  ........        X   .........  Mr. Ford.........        X   ........  .........
Mr. Bunning....................  ........        X   .........  Mr. Matsui.......        X   ........  .........
Mr. Houghton...................  ........        X   .........  Mrs. Kennelly....  ........  ........  .........
Mr. Herger.....................  ........        X   .........  Mr. Coyne........        X   ........  .........
Mr. McCrery....................  ........        X   .........  Mr. Levin........        X   ........  .........
Mr. Hancock....................  ........        X   .........  Mr. Cardin.......        X   ........  .........
Mr. Camp.......................  ........        X   .........  Mr. McDermott....  ........  ........  .........
Mr. Ramstad....................  ........        X   .........  Mr. Kleczka......        X   ........  .........
Mr. Zimmer.....................  ........        X   .........  Mr. Lewis........        X   ........  .........
Mr. Nussel.....................  ........        X   .........  Mr. Payne........        X   ........  .........
Mr. Johnson....................  ........        X   .........  Mr. Neal.........        X   ........  .........
Ms. Dunn.......................  ........        X   .........                                                  
Mr. Collins....................  ........        X   .........                                                  
Mr. Portman....................  ........        X   .........                                                  
Mr. Laughlin...................  ........  ........  .........                                                  
Mr. English....................  ........        X   .........                                                  
Mr. Ensign.....................  ........        X   .........                                                  
Mr. Christensen................  ........        X   .........                                                  
----------------------------------------------------------------------------------------------------------------

                     IV. BUDGET EFFECTS OF THE BILL

               A. Committee Estimate of Budgetary Effects

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

    B. Statement Regarding New Budget Authority and Tax Expenditures

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

      C. Cost Estimate Prepared by the Congressional Budget Office

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

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, December 4, 1995.
Hon. Bill Archer,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office (CBO) 
has prepared the enclosed cost estimate for H.R. 2684, the 
Senior Citizens' Right to Work Act of 1995, as ordered reported 
by the House Committee on Ways and Means on November 30, 1995.
    The bill would affect direct spending and receipts and thus 
would be subject to pay-as-you-go procedures under section 252 
of the Balanced Budget and Emergency Deficit Control Act of 
1985.
    If you wish further details, we will be pleased to provide 
them.
            Sincerely,
                                              James L. Blum
                                   (For June E. O'Neill, Director).
    Attachment.

               congressional budget office cost estimate

    1. Bill number: H.R. 2684.
    2. Bill title: Senior Citizens' Right to Work Act of 1995.
    3. Bill status: As ordered reported by the Committee on 
Ways and Means on November 30, 1995.
    4. Bill purpose: The bill would increase the exempt 
earnings amount for Social Security beneficiaries aged 65-69 in 
stages to reach $30,000 in 2002, delay for one year certain 
benefit recomputations for workers over age 65, eliminate 
Social Security and Supplemental Security Income benefits for 
certain substance abusers, eliminate Social Security benefits 
for certain stepchildren, create a revolving fund within the 
Disability Insurance Trust Fund from which continuing 
disability reviews (CDRs) would be funded, and alter the 
current practice for paying attorneys' fees.
    5. Estimated cost to the Federal Government: The following 
table summarizes the on-budget and off-budget effects of the 
changes in revenues and direct spending attributable to this 
bill. Changes in authorizations of appropriations would be 
subject to actions in future appropriation bills. Table I 
(attached) provides detail on the off-budget costs and savings 
associated with individual provisions affecting Social Security 
benefit payments and revenues. The estimated impact on the 
Social Security scorecard tracked by the House of 
Representatives also is included. Table II (attached) details 
the total budgetary effects of H.R. 2684.
    H.R. 2684 would provide ad hoc increases in the exempt 
earnings limit for Social Security recipients who have reached 
the normal retirement age until, by 2002, the exempt amount 
would be $30,000. Additional Social Security benefit payments 
would total $0.3 billion in 1996 and $2.0 billion in 2002. The 
bill would reduce other Social Security benefit payments by 
$0.1 billion in 1996 and by $1.7 billion in 2002. In addition, 
the mandatory administrative costs of the additional CDRs would 
total $4.7 billion over the seven-year period, and savings in 
other mandatory programs would amount to $5.3 billion. 
Consequently, the bill is estimated to decrease the off-budget 
surplus by about $4.3 billion during the period while reducing 
the on-budget deficit by $5.3 billion, for a net reduction of 
$1.0 billion in the total deficit.

                                ESTIMATED BUDGETARY EFFECTS OF H.R. 2684, THE SENIOR CITIZENS' RIGHT TO WORK ACT OF 1995                                
                                                        [By fiscal years, in billions of dollars]                                                       
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     1995       1996       1997       1998       1999       2000       2001       2002  
--------------------------------------------------------------------------------------------------------------------------------------------------------
Projected Spending Under Current Law:                                                                                                                   
    On-Budget Direct Spending:                                                                                                                          
        Supplemental Security Income............................       24.3       24.5       29.9       33.0       36.1       42.6       39.3       46.5
        Medicare \1\............................................      158.1      178.7      197.5      215.9      237.3      260.8      286.6      315.2
        Medicaid................................................       89.2       99.3      110.0      122.1      134.8      148.1      162.6      177.8
        Family Support..........................................       18.2       18.5       19.0       19.5       20.1       20.8       21.5       22.2
        Food stamps.............................................       26.2       26.9       28.6       30.2       31.7       33.4       35.0       36.6
        Funding for substance abuse treatment...................        0.0        0.0        0.0        0.0        0.0        0.0        0.0        0.0
                                                                 ---------------------------------------------------------------------------------------
          Subtotal, On-Budget...................................      316.1      348.0      385.0      420.6      460.1      505.7      545.0      598.3
                                                                 =======================================================================================
    Off-Budget Direct Spending:                                                                                                                         
        Old-Age and Survivors Insurance.........................      293.4      309.3      322.9      338.8      355.3      372.8      390.7      409.5
        Disability Insurance....................................       40.3       43.8       47.7       51.9       56.2       60.8       65.6       70.6
                                                                 ---------------------------------------------------------------------------------------
          Subtotal, Off-Budget..................................      333.7      353.1      370.6      390.7      411.6      433.6      456.2      480.1
                                                                 =======================================================================================
          Total, Direct Spending................................      649.8      701.1      755.6      811.3      871.7      939.2     1001.2     1078.4
                                                                 =======================================================================================
Proposed Changes:                                                                                                                                       
    On-Budget Direct Spending:                                                                                                                          
        Supplemental Security Income............................        0.0      (\2\)       -0.3       -0.4       -0.4       -0.5       -0.5       -0.5
        Medicare \1\............................................        0.0      (\2\)       -0.1       -0.2       -0.4       -0.5       -0.6       -0.8
        Medicaid................................................        0.0      (\2\)       -0.1       -0.1       -0.1       -0.1       -0.1       -0.1
        Family Support..........................................        0.0        0.0      (\2\)      (\2\)      (\2\)      (\2\)      (\2\)      (\2\)
        Food stamps.............................................        0.0      (\2\)        0.1        0.1        0.1        0.1        0.1        0.1
        Funding for substance abuse treatment...................        0.0        0.0      (\2\)        0.1        0.1      (\2\)        0.0        0.0
                                                                 ---------------------------------------------------------------------------------------
          Subtotal, On-Budget...................................        0.0      (\2\)       -0.4       -0.6       -0.8       -1.0       -1.1       -1.4
                                                                 =======================================================================================
                                                                                                                                                        
    Off-Budget Direct Spending:                                                                                                                         
        Old-Age and Survivors Insurance.........................        0.0        0.3        0.4        0.5        0.5        0.5        1.0        1.5
        Disability Insurance....................................        0.0        0.3        0.2      (\2\)      (\2\)       -0.1       -0.2       -0.3
                                                                 ---------------------------------------------------------------------------------------
          Subtotal, Off-Budget..................................        0.0        0.6        0.6        0.5        0.5        0.4        0.7        1.1
                                                                 =======================================================================================
          Total, Direct Spending................................        0.0        0.5        0.2       -0.1       -0.3       -0.6       -0.4       -0.2
                                                                 =======================================================================================
Projected Spending Under H.R. 2684:                                                                                                                     
    On-Budget Direct Spending:                                                                                                                          
        Supplemental Security Income............................       24.3       24.5       29.6       32.6       35.6       42.1       38.8       46.0
        Medicare \1\............................................      158.1      178.7      197.4      215.7      237.0      260.3      285.9      314.4
        Medicaid................................................       89.2       99.3      109.9      122.0      134.7      148.0      162.5      177.7
        Family Support..........................................       18.2       18.5       19.1       19.5       20.1       20.8       21.5       22.2
        Food stamps.............................................       26.2       26.9       28.7       30.2       31.8       33.5       35.1       36.7
        Funding for substance abuse treatment...................        0.0        0.0      (\2\)        0.1        0.1      (\2\)        0.0        0.0
                                                                 ---------------------------------------------------------------------------------------
          Subtotal, On-Budget...................................      316.1      348.0      384.7      420.1      459.3      504.7      543.8      596.9
                                                                 =======================================================================================
    Off-Budget Direct Spending:                                                                                                                         
        Old-Age and Survivors Insurance.........................      293.4      309.6      323.3      339.3      355.8      373.2      391.6      411.0
        Disability Insurance....................................       40.3       44.1       47.9       51.9       56.3       60.7       65.3       70.3
                                                                 ---------------------------------------------------------------------------------------
          Subtotal, Off-Budget..................................      293.4      309.6      323.3      339.3      355.8      373.2      391.6      411.0
                                                                 =======================================================================================
          Total, Direct Spending................................      609.5      657.5      707.9      759.3      815.1      877.9      935.4     1007.9
                                                                 =======================================================================================
Changes to Revenues:                                                                                                                                    
    On-Budget...................................................        0.0      (\2\)      (\2\)      (\2\)      (\2\)      (\2\)      (\2\)      (\2\)
    Off-Budget..................................................        0.0      (\2\)      (\2\)      (\2\)      (\2\)      (\2\)      (\2\)      (\2\)
                                                                 ---------------------------------------------------------------------------------------
      Total, Revenues...........................................        0.0      (\2\)      (\2\)      (\2\)      (\2\)      (\2\)      (\2\)      (\2\)
Deficit Effects:                                                                                                                                        
    On-Budget...................................................        0.0      (\2\)       -0.4       -0.6       -0.8       -1.0       -1.1       -1.4
    Off-Budget..................................................        0.0        0.6        0.6        0.5        0.5        0.3        0.7        1.1
                                                                 ---------------------------------------------------------------------------------------
      Total, Deficit............................................        0.0        0.5        0.2       -0.1       -0.3       -0.6       -0.4      -0.2 
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Hospital Insurance, Supplementary Medical Insurance, and premium receipts.                                                                          
\2\ Indicates less than $50 million.                                                                                                                    

    6. Basis of estimate: These estimates incorporate the 
economic and technical assumptions of CBO's March 1995 baseline 
and assume an enactment date of December 31, 1995.
    Earnings Limit. H.R. 2684 would relax the current 
limitations on the receipt of Social Security benefits for 
those aged 65-69 with earnings above a certain level. Under 
current law, individuals entitled to Social Security cash 
benefits may have their benefits reduced, or withheld 
completely, if their earnings exceed a specified exempt amount. 
In 1995, the law provides that Social Security beneficiaries 
under age 65 may earn up to $8,160 a year in wages or self-
employment income without having their benefits affected. Those 
aged 65-69 can earn up to $11,280. The earnings test currently 
reduces benefits for those under age 65 by $1 for each $2 of 
earnings above the exempt amount. Those aged 65-69 lose $1 in 
benefits for each $3 of earnings above the exempt amount. The 
test does not apply to recipients over age 69. (A different and 
more stringent earnings restriction applies to recipients of 
Disability Insurance (DI) benefits and would be unaffected by 
proposed changes in the earnings test.) The exempt amounts rise 
each year at the same rate as average wages in the economy.
    The bill would affect beneficiaries who have reached the 
normal retirement age, currently 65. Under this bill, the 
annual exempt amount for beneficiaries aged 65-69 would be 
increased in stages during the 1996-2002 period to $30,000 in 
2002. The exempt amount would be increased automatically 
thereafter based on the increase in average wages. The ad hoc 
increases in the exempt amount under the proposal are compared 
in the following table with the exempt amounts that are 
estimated to occur under current law.

------------------------------------------------------------------------
           Calendar year               Current law         H.R. 2684    
------------------------------------------------------------------------
1995..............................            $11,280            $11,280
1996..............................             11,520             14,000
1997..............................             11,880             15,000
1998..............................             12,240             16,000
1999..............................             12,720             17,000
2000..............................             13,200             18,000
2001..............................             13,800             25,000
2002..............................             14,400             30,000
------------------------------------------------------------------------

    The legislation is estimated to increase benefit outlays by 
$320 million in 1996 and by $7.0 billion over the 1996-2002 
period. According to the Social Security Administration (SSA), 
in 1996 an estimated 720,000 Social Security beneficiaries 
would receive additional benefits under the proposal. In 2002, 
when the proposal would be fully phased in, roughly 800,000 
beneficiaries would be affected.
    Although implementing the earnings test is costly from an 
administrative perspective--over $200 million annually--the 
changes entailed in H.R. 2684 would have only a marginal impact 
on SSA's administrative costs. All of those still under the 
normal retirement age would continue to be treated the same as 
under current law, and the exempt level increases would still 
leave many older workers with some benefits withheld as a 
result of the earnings test. CBO estimates that SSA would save 
about $5 million in administrative resources in 1996 and about 
$95 million over the estimating period.
    Raising the earnings test exempt amount could result in 
behavioral responses that lead to an increase in earnings of 
those 65 and over, although the response is likely to be 
relatively small. Any additional work effort would have no 
significant effect on total Social Security benefits over the 
projection period. This conclusion is based on three 
considerations. First, the earnings test is only one of many 
factors that determine work effort; other factors include the 
level of Social Security and private pension benefits that 
would be received, the employment of a spouse, the availability 
of suitable work, and the health of the worker. Second, 
empirical research that is available provides little support 
for the notion that older workers would increase their work 
effort significantly. Finally, more than half of all workers 
begin collecting benefits as soon as they become eligible at 
age 62, even though they will receive reduced benefits 
throughout their retirement.
    Under H.R. 2684 the substantial gainful activity (SGA) 
amount applicable to the blind would, in the future, be wage-
indexed from the present amount of $940 per month in 1995 and 
would no longer be linked to the earnings test exempt amount 
for individuals who have reached the normal retirement age. 
This provision of H.R. 2684 yields the same SGA level for the 
blind that would prevail under current law and, hence, has no 
cost or saving.
    Revolving Fund for Continuing Disability Review. Section 3 
of the bill would establish a new account within the Federal 
Disability Insurance (DI) Trust Fund that would contain monies 
to be used only for the CDRs required under Section 221 (i) of 
the Social Security Act. These reviews are intended to ensure 
that persons who are no longer severely disabled would not 
continue to receive benefits. In 1996, the account would be 
initially funded at $300 million. The fund would also receive 
annual payments based upon the estimates by SSA's Chief Actuary 
as to the present value of the DI savings and Medicare savings 
expected to accrue from the CDRs conducted in the previous 
fiscal year. The bill would terminate the revolving fund at the 
end of 2002.
    CBO assumes that the ultimate termination rates for CDRs--
after all appeals are exhausted--would be about 6 percent 
initially, but that the termination rate from subsequent 
reviews of the same disabled persons would fall to 4 percent. 
Because SSA already conducts some CDRs, not all of the reviews 
funded out of the revolving fund would be additional reviews. 
CBO assumes that, based on SSA's plan for CDRs over the next 5 
years, the number of CDRs in 2002 would reach more than 
500,000. The savings attributable to the new funding through 
the revolving fund would be only those accruing from the 
additional reviews made possible by the increased funding. In 
total, CBO expects that the number of reviews over the 1996-
2002 period would rise from 2.7 million under current plans to 
4.7 million under the proposal. The CBO estimates that the 
additional DI benefit savings during the seven-year period 
would amount to $2.6 billion.
    CBO assumes that the average cost of a CDR is about $1,000. 
Although some reviews are inexpensive because that disabled 
beneficiary is screened out of the complete medical work-up, 
others may cost several thousand dollars if the process results 
in numerous appeals. The additional administrative costs--which 
would now be considered direct spending--are estimated to be 
$310 million in 1996 and $4.7 billion over the 1996-2002 
period. CDRs are nevertheless viewed as cost-effective by most 
analysts, because their initial cost is more than offset by a 
stream of benefit savings in later years.
    In addition to the effects on Social Security outlays, 
CDR's would also generate savings in the SSI and Medicare 
programs. Some of the DI cases reviewed would also be 
concurrent cases with SSI benefits. Because the two programs 
rely on the same definition of disability, a person found to be 
no longer sufficiently disabled to receive DI benefits would 
also no longer receive SSI benefits. Moreover, the person would 
lose eligibility for Medicare benefits as well. The seven-year 
savings in SSI and would amount to $68 million and in Medicare 
would total $1.7 billion,.
    Entitlement to Benefits as Stepchildren. H.R. 2684 would 
introduce two new conditions for the receipt of Social Security 
benefits as a stepchild of a deceased, disabled, or retired 
worker. Under current law, stepchildren are eligible to receive 
Social Security benefits upon the death, disablement, or 
retirement of a stepparent if the child is less than 18 years 
old, or less than 19 years old and still in secondary school, 
and the stepparent either provided support for the child or was 
living with the child. The support test requires that the 
stepparent provide at least one-half of the income used to 
support the child. The child's entitlement to benefits 
continues even if the child's parents divorce. H.R. 2684 would 
require that a stepchild be eligible for benefits only if the 
stepparent provided for the support of the child, and that any 
stepchild's benefits would be terminated six months after the 
SSA was notified that the child's stepparent and natural parent 
has divorced.
    Based on data from SSA and the Census Bureau, CBO estimates 
that about two percent of all awards of benefits to children 
would be affected by the new support test, resulting in benefit 
savings of about $1.1 billion over the 1996-2002 period. The 
estimated number of affected children would be 16,000 in 1996, 
rising to about 60,000 a year by 2002.
    The termination of benefits in cases where the parents 
divorce would affect children currently receiving benefits as 
well as some of those who would come on the rolls in the 
future. According to Census Bureau data, about 40 percent of 
remarriages end in divorce, and the average length of 
remarriages that end in divorce is 4 years. CBO estimated that 
about 23,000 stepchildren receiving Social Security could be 
affected in 1996. Because SSA does not automatically receive 
notifications of divorce, CBO reduced the potential number of 
affected children by one-half. The reduction was based on SSA 
information that it receives notifications of marriages in 
about 70 percent of cases and that, because children would lose 
benefits in these cases, the notification rate would be lower 
in the case of divorce. On average, the affect children are 
assumed to lose about $225 per month in 1996, with the total 
savings amounting to $490 million over the 1996-2002 period.
    Delay Benefit Recomputations. Section 5 of the bill would 
reduce Social Security benefit payments by delaying for one 
year the recomputation of benefits to certain beneficiaries 
with post-entitlement earnings. Savings are estimated to total 
$910 million for the 1996-2002 period.
    Under current law, if a retiree continues to work after 
entitlement to benefits, his or her monthly benefit may be 
increased if the new year's earnings are greater than one of 
the years used in the most recent determination of benefits. 
Recomputation of benefits are effective in the year immediately 
following the year of the earnings. This proposal would delay 
the recomputation of benefits for workers age 66 and over by 
making the increase in benefits effective in January of the 
second year after the year of earnings. An exception would be 
provided for recipients who have one or more zero years of 
earnings among their computation years. The proposal would be 
effective for earnings beginning in 1995.
    The legislative is estimated to reduce outlays by $10 
million in fiscal year 1996 and by $150 million in each year 
between 1997 and 2002. Savings in 1996 occur because a small 
number of workers with earnings in 1995 would, under current 
law, request on their own a benefit recomputation before the 
end of fiscal year 1996. Automatic recomputation performed by 
SSA usually occur after the end of the fiscal year. According 
to SSA, about 1.2 million primary beneficiaries or families 
annually would experience a delay in their benefit increase.
    Eliminate Processing of Attorney's Fees. Under current law, 
SSA facilitates the payment of certain attorney's fees when a 
lawyer successfully represents a claimant in administrative 
proceedings. In the most common cases where a finding of 
disability is in question, SSA will withhold the lesser of 
$4,000 or 25 percent of the past-due benefits to which the 
claimant becomes entitled. SSA will pay the attorney with that 
share of the past-due benefits and pay the remainder directly 
to the claimant. This process assures the attorney that he will 
be paid, thereby avoiding any potential shortage of legal aid 
to the disabled which might occur if the attorney's had to 
collect their payments directly from the claimant and face the 
possible failure of the claimant to pay the legal fees.
    H.R. 2684 would eliminate the SSA's involvement with 
payment of attorney's fees, but would limit the maximum fee 
that could be charged a claimant to no more than $4,000. Such a 
change would allow SSA to use about 400 work years that 
currently are spent reviewing attorney's fees on other 
priorities of the agency. In addition, it would speed up the 
payment of past-due benefits to claimants by an average of the 
six weeks it takes SSA to process the attorney's fees now. The 
speed-up of payments would increase benefits outlays by $30 
million in 1997, but only $2 million to $3 million annually 
after that. The administrative cost savings would total an 
estimated $137 million over the 1996-2002 period.
    Termination of Benefits for Alcoholics and Drug Addicts. 
H.R. 2684 would eliminate DI and SSI eligibility for persons 
with substance abuse problems if the person is found to be 
disabled because they are addicted. Those addicts whose 
eligibility for benefits does not hinge on their current 
substance abuse could continue to receive benefits.
    For many years, SSA has been required to identify certain 
drug addicts and alcoholics (DA&As;) in the SSI program, when 
substance abuse is a material factor contributing to SSA's 
finding of disability. As a result of Public Law 103-296, SSA 
is now also required to identify those Social Security 
recipients for whom substance abuse is a material factor 
contributing to the finding of disability. Special provisions 
apply to those recipients: they must comply with treatment if 
available, they must have representative payees, and (beginning 
in 1998) they may be terminated from the program if they have 
received more than 36 months of benefits.
    CBO assumes that, under current law, the DA&A; caseload in 
the SSI program would grow from about 160,000 in 1996 to 
200,000 in 2002, and the comparable caseload in Social Security 
would climb from about 90,000 to 150,000 over the same 
timespan. Under the bill, awards to DA&As; in each program would 
stop immediately, and those already receiving benefits would be 
removed from the rolls on January 1, 1997, unless they had 
another seriously disabling condition.
    Estimating the number of DA&As; who already have or will 
soon develop another disabling condition is a thorny issue. 
Most cases include indicators that these recipients also have 
other significant health problems in addition to their 
addiction. In order to be worth noting on the claimant's file, 
these secondary conditions must be quite severe--but not 
necessarily disabling in their own right. On the other hand, 
there is no requirement to record secondary conditions; some 
recipients for whom none was recorded undoubtedly had them. And 
the health of many DA&A; recipients certainly deteriorates over 
time, with or without continued substance abuse. Thus, CBO 
assumes that only about one-quarter of DA&A; recipients would be 
permanently terminated from the program; the rest could 
requalify by documenting that they have another sufficiently 
disabling condition.
    The proposed restrictions are estimated to eliminate Social 
Security benefits for about 5,000 DA&As; is 1996, and about 
40,000 in 2002. Multiplying the number of recipients terminated 
times their average benefit yields savings of $20 million in 
1996 and $1.9 billion during the 1996-2002 period. The proposed 
changes in SSI would result in an estimated 4,000 fewer 
recipients in 1996 and an annual caseload reduction of about 
50,000 in years after 1998. The resulting SSI savings are $19 
million in 1996 and $1.45 billion over the next seven years.
    Besides saving on benefits, the Social Security 
Administration would also be freed from the requirement to 
maintain contracts with referral and monitoring agencies (RMAs) 
for its DA&A; caseloads. Those agencies monitor addicts' and 
alcoholics' treatment status and often serve as representative 
payees. Savings are estimated at about $200 million a year in 
1998 through 2002 in SSI and nearly $100 million in DI during 
those years. There are no savings in 1996, and combined savings 
of just $144 million in 1997, because the bill would preserve 
RMA services through January 1, 1997 for current recipients. 
The bill would also plow an extra $200 million over two years 
(1997 and 1998) into an existing block grant program to states 
for the treatment of substance abuse.
    The legislation would also eliminate Medicare and Medicaid 
coverage for DA&As; terminated from the Social Security and SSI 
programs. The estimated Medicare savings grow from $43 million 
in 1997 to $213 million in 2002. The comparable Medicaid 
savings amount to $80 million in 1997 and $136 million in 2002.
    The termination of benefits for drug addicts and alcoholics 
would cause increased costs in other federal benefit programs. 
Because terminated beneficiaries would experience reductions in 
their case income, food stamp costs are estimated to increase 
slightly--by approximately $50 million in 1997 and by nearly 
$400 million over the 1996-2002 timespan. In addition, some 
individuals removed from SSI could qualify for benefits under 
the Aid to Families With Dependent Children (AFDC) program, 
increasing annual federal outlays in that program by $5 
million.
    Social Security and Medicare Coverage For Certain Clergy. 
Under current law, ministers of a church generally are treated 
as self-employed individuals for the purpose of the Social 
Security payroll tax. However, ministers who are opposed to 
participating in the Social Security program on religious 
principles may elect to be permanently exempt from taxes under 
the Self-Employment Contributions Act (SECA) by filing with the 
Internal Revenue Service within two years of beginning their 
ministry. H.R. 2684 would offer clergy who have filed to be 
exempt from SECA an opportunity to revoke their exemptions.
    H.R. 2684 would provide clergy who have previously opted 
out of Social Security coverage with a two-year window during 
which they could revoke their exemptions. In 1977 and 1986, the 
clergy were offered a similar opportunity to opt back in to 
Social Security. Based on that experience and trends in the 
number of clergy since 1986, CBO estimates that an additional 
1,600 ministers would avail themselves of the opportunity to 
enroll in Social Security.
    CBO estimates that those clergy who opt for Social Security 
would pay about $2 million in Social Security taxes in 1996 and 
about $5 million a year by 2002. Although the clergy would also 
have to pay Hospital Insurance taxes as well as Social 
Security, the CBO estimates that these additional revenues 
would be offset by the reduced income taxes owed by the 
ministers. (As self-employed individuals, they are allowed to 
take an income tax credit against a portion of their SECA 
payments.)
    Social Security Benefits Statement Pilot Project. H.R. 2684 
would require SSA to send to a limited number of old-age and 
survivor beneficiaries an estimate of the total benefits paid 
to the retiree and his or her dependents and survivors, as well 
as an estimate of the total employee and employer contributions 
made by the individual on whose income the benefits were based. 
The pilot project would last 2 years, and SAA would be required 
to report to the Congress within 60 days an analysis of the 
results of the pilot project. CBO estimates that the pilot 
project would incur discretionary costs of less than $500,000 
in 1996, $2 million in 1997 and $3 million in 1998.
    7. Pay-as-you-go considerations: Section 252 of the 
Balanced Budget and Emergency Deficit Control Act of 1985 sets 
up pay-as-you-go procedures for legislation affecting direct 
spending or receipts through 1998. Changes in Social Security 
outlays and revenues are exempt from pay-as-you-go procedures, 
but are constrained under separate limitations in each house of 
the Congress. The so-called ``Social Security Scorecard'' for 
the House of Representatives is displayed in the attached Table 
I. The pay-as-you-go effects of the bill are as follows:

------------------------------------------------------------------------
                                       1996         1997         1998   
------------------------------------------------------------------------
Change in Outlays................          -34         -385         -576
Change in Receipts...............            0            0            0
------------------------------------------------------------------------

    8. Estimated cost to state and local governments: H.R. 2684 
would have both direct and indirect effects on the budgets of 
state and local governments, but precise estimates of the 
potential cost impacts are difficult to determine. Payments for 
the state's share of Medicaid and SSI supplements would be 
reduced however. The removal of certain recipients from Social 
Security, SSI, Medicare, and Medicaid through additional CDRs 
and the restrictions on drug addicts and alcoholics would 
likely increase the demand for general cash assistance and 
medical assistance provided in some states and localities. Some 
states may respond by redirecting some of their Medicaid and 
SSI savings to provide additional assistance through their own 
state programs. The state's share of the Medicaid savings from 
the bill is estimated to total about $0.5 billion during the 
next seven years. The additional AFDC costs for the states 
would amount to $25 million over the period. Although there 
would be additional savings to the States from the DA&A; 
provisions, CBO can not estimate the SSI effects by states 
because it has no state data on the geographical distribution 
of the DA&As; removed from the SSI program.
    9. Estimate comparison: None.
    10. Previous CBO estimate: None.
    11. Estimate prepared by: Wayne Boyington (Social Security 
Retirement and Survivors) and Kathy Ruffing (Social Security 
Disability, SSI, and related issues).
    12. Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.

                                            TABLE I: SOCIAL SECURITY BENEFIT AND REVENUE EFFECTS OF H.R. 2684                                           
                                                        [In millions of dollars, by fiscal year]                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                       5-year    7-year 
                                                                  1996      1997      1998      1999      2000      2001      2002      total     total 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     DIRECT SPENDING                                                                    
                                                                                                                                                        
Increase Earnings Limit:                                                                                                                                
    OASDI Benefit Outlays.....................................       320       650       790       850       910      1460      2030      3520      7010
CDR Revolving Fund:                                                                                                                                     
    OASDI Benefit Outlays.....................................       -20       -90      -210      -360      -510      -650      -790     -1190     -2630
Modify Dependency Requirement for Stepchild Benefits:                                                                                                   
    OASDI Benefit Outlays.....................................       -20      -100      -190      -250      -310      -350      -390      -870     -1610
Delay Benefit Recomputations One Year for Earnings after 65:                                                                                            
    OASDI Benefit Outlays.....................................       -10      -150      -150      -150      -150      -150      -150      -610      -910
Eliminate DI Benefits to Addicts and Alcoholics:                                                                                                        
    OASDI Benefit Outlays.....................................       -20      -210      -280      -310      -340      -360      -380     -1160     -1900
Limit SSA Role in Adjudicating Attorney Fees:                                                                                                           
    OASDI Benefit Outlays.....................................     (\1\)        30         2         2         3         3         3        37        43
                                                               -----------------------------------------------------------------------------------------
      Subtotal: Selected Mandatory Spending--Off-budget.......                                                                                          
          OASDI Benefit Outlays...............................       250       130       -38      -218      -397       -47       323      -273         3
                                                                                                                                                        
                                                                        REVENUES                                                                        
                                                                                                                                                        
Election of OASDI by Members of Clergy:                                                                                                                 
    Off-budget Revenues.......................................         2         4         4         4         5         5         5        19        29
                                                                                                                                                        
                           Memoranda                                                                                                                    
                                                                                                                                                        
Social Security Scorecard Balance as of November 29, 1995:                                                                                              
    Surplus (-Deficit)........................................       117        98       203       189         0     (\2\)     (\2\)       607     (\2\)
New Social Security Scorecard Balance Assuming Enactment of                                                                                             
 H.R. 2684:                                                                                                                                             
    Surplus (-Deficit)........................................      -131       -28       245       411       402     (\2\)     (\2\)       899     (\2\)
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Less than $1 million.                                                                                                                               
\2\ Not applicable.                                                                                                                                     
                                                                                                                                                        
OASDI=Old-Age, Survivors, and Disability Insurance.                                                                                                     


                                                     TABLE II: TOTAL BUDGETARY EFFECTS OF H.R. 2684                                                     
                                                        [In millions of dollars, by fiscal year]                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                       5-year    7-year 
                                                                  1996      1997      1998      1999      2000      2001      2002      total     total 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     DIRECT SPENDING                                                                    
                                                                                                                                                        
Increase Earnings Limit:                                                                                                                                
    OASDI Benefit Outlays.....................................       320       650       790       850       910      1460      2030      3520      7010
                                                               =========================================================================================
CDR Revolving Fund:                                                                                                                                     
    OASDI Benefit Outlays.....................................       -20       -90      -210      -360      -510      -650      -790     -1190     -2630
    CDR Fund Outlays..........................................       310       460       590       780       830       850       920      2970      4740
    Medicare..................................................       -10       -50      -120      -220      -330      -450      -560      -730     -1740
    SSI.......................................................        -1        -2        -5       -10       -15       -15       -20       -33       -68
                                                               -----------------------------------------------------------------------------------------
      Subtotal................................................       279       318       255       190       -25      -265      -450      1017       302
                                                               =========================================================================================
Modify Dependency Requirement for Stepchild Benefits:                                                                                                   
    OASDI Benefit Outlays.....................................       -20      -100      -190      -250      -310      -350      -390      -870     -1610
                                                               =========================================================================================
Delay Benefit Recomputations One Year for Earnings after 65:                                                                                            
    OASDI Benefits Outlays....................................       -10      -150      -150      -150      -150      -150      -150      -610      -910
                                                               =========================================================================================
Eliminate SSI & DI Benefits to Addicts and Alcoholics \1\:                                                                                              
    OASDI Benefit Outlays.....................................       -20      -210      -280      -310      -340      -360      -380     -1160     -1900
    SSI Benefits..............................................       -19      -197      -215      -249      -260      -230      -280      -940     -1450
    RMA Costs (SSI)...........................................         -      -114      -186      -166      -193      -214      -235      -659     -1108
    RMA Costs (DI)............................................         -       -30       -54       -65       -82       -88       -96      -231      -415
    Medicaid..................................................        -8       -80       -89      -108      -117      -125      -136      -402      -663
    Medicare..................................................         -       -43      -101      -140      -163      -185      -213      -447      -845
    AFDC......................................................     (\2\)         5         5         5         5         5         5        20        30
    Food Stamps...............................................         4        50        55        65        70        70        75       244       389
    Treatment Funding.........................................  ........        46        80        54        20  ........  ........       200       200
                                                               -----------------------------------------------------------------------------------------
      Subtotal................................................       -43      -573      -785      -914     -1060     -1127     -1260     -3375     -5762
                                                               =========================================================================================
Limit SSA Role in Adjudicating Attorney Fees:                                                                                                           
    OASDI Benefit Outlays.....................................     (\2\)        30         2         2         3         3         3        37        43
                                                               =========================================================================================
      Subtotal: Mandatory Spending:...........................                                                                                          
          Off-budget..........................................       560       560       498       497       351       715      1147      2466      4328
          On-budget...........................................       -34      -385      -576      -769      -983     -1144     -1364     -2747     -5255
                                                               -----------------------------------------------------------------------------------------
      Total Mandatory Spending................................       526       175       -78      -272      -632      -429      -217      -281      -927
                                                                                                                                                        
                                                                         REVENUE                                                                        
                                                                                                                                                        
Election of OASDHI by Members of Clergy:                                                                                                                
    Off-budget Revenue........................................         2         4         4         4         5         5         5        19        20
                                                                                                                                                        
                                                            AUTHORIZATIONS OF APPROPRIATIONS                                                            
                                                                                                                                                        
Earnings Test Limit:                                                                                                                                    
    Administrative Costs......................................        -5       -10       -10       -10       -10       -20       -30       -45       -95
CDR Revolving Fund:                                                                                                                                     
    Administrative Costs......................................      -234      -284      -334      -384      -434      -484      -534     -1670     -2688
Eliminate SSI & DI Benefits to Addicts and Alcoholics:                                                                                                  
    Administrative Costs......................................        75        35     (\2\)     (\2\)     (\2\)     (\2\)     (\2\)       110       110
Limit SSA Role in Adjudicating Attorney Fees:                                                                                                           
    Administrative Costs......................................        -5       -20       -21       -22       -22       -23       -24       -90      -137
Social Security Benefit Statement Pilot:                                                                                                                
    Administrative Costs......................................     (\2\)         2         3  ........  ........  ........  ........         5         5
                                                               -----------------------------------------------------------------------------------------
      Total Discretionary Spending............................        65         7       -28       -32       -32       -43       -54       -20      -117
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ The bill would impose identical restrictions on drug addicts and alcoholics (DA&As;) in both the OASDI and SSI programs. Since the House- and Senate-
  passed reconciliation bills already would impose such restrictions on SSI, those savings--if both bills were enacted--would have to be adjusted to    
  avoid double-counting. Of the $5.8 billion in 7-year savings shown above, $2.9 billion are associated with the SSI restrictions (SSI, SSI RMAs,       
  Medicaid, AFDC, part of the food stamp cost, and half of the proposed treatment funding). Based on discussions with staff, CBO assumes that a         
  technical correction will be made to the bill to clarify that new awards to DA&As; are to cease immediately after enactment.                           
\2\ Less than $1 million.                                                                                                                               

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

          A. Committee Oversight Findings and Recommendations

    In compliance with clause 2(l)(3)(A) of rule XI of the 
Rules of the House of Representatives, the Committee reports 
that the need for this legislation was confirmed by the 
oversight hearings of the Subcommittee on Social Security. On 
January 9, 1995, the Subcommittee on Social Security held a 
public hearing on the ``Contract With America'' provision 
contained in H.R. 8, the ``Senior Citizens' Equity Act,'' to 
raise the Social Security earnings limit to $30,000.

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

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

                    C. Inflationary Impact Statement

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

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

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

                          SOCIAL SECURITY ACT

          * * * * * * *

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

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

  Sec. 201. (a)  * * *
          * * * * * * *
  (g)(1)(A) The Managing Trustee of the Trust Funds (which for 
purposes of this paragraph shall include also the Federal 
Hospital Insurance Trust Fund and the Federal Supplementary 
Medical Insurance Trust Fund established by title XVIII) is 
directed to pay from the Trust Funds into the Treasury--
          (i)  * * *
          * * * * * * *
Such payments shall be carried into the Treasury as the net 
amount of repayments due the general fund account for 
reimbursement of expenses incurred in connection with the 
administration of titles II and XVIII of this Act and chapters 
2 and 21 of the Internal Revenue Code of 1986. A final 
accounting of such payments for any fiscal year shall be made 
at the earliest practicable date after the close thereof. There 
are hereby authorized to be made available for expenditure, out 
of any or all of the Trust Funds, such amounts as the Congress 
may deem appropriate to pay the costs of the part of the 
administration of this title, title XVI, and title XVIII for 
which the Commissioner of Social Security is responsible (other 
than expenditures from available funds in the Continuing 
Disability Review Administration Revolving Account in the 
Federal Disability Insurance Trust Fund made pursuant to 
subsection (n)), the costs of title XVIII for which the 
Secretary of Health and Human Services is responsible, and the 
costs of carrying out the functions of the Social Security 
Administration, specified in section 232, which relate to the 
administration of provisions of the Internal Revenue Code of 
1986 other than those referred to in clause (i) of the first 
sentence of this subparagraph.
          * * * * * * *
  (n)(1) There is hereby created in the Federal Disability 
Insurance Trust Fund a Continuing Disability Review 
Administration Revolving Account (hereinafter in this 
subsection referred to as the ``Account''). The Account shall 
consist initially of $300,000,000 (which is hereby transferred 
to the Account from amounts otherwise available in such Trust 
Fund) and shall also consist thereafter of such other amounts 
as may be transferred to it under this subsection. The balance 
in the Account shall be available solely for expenditures 
certified under paragraph (2).
  (2)(A) Before October 1 of each calendar year, the Chief 
Actuary of the Social Security Administration shall--
          (i) estimate the present value of savings to the 
        Federal Old-Age and Survivors Insurance Trust Fund, the 
        Federal Disability Insurance Trust Fund, the Federal 
        Hospital Insurance Trust Fund, and the Federal 
        Supplementary Medical Insurance Trust Fund which will 
        accrue for all years as a result of cessations of 
        benefit payments resulting from continuing disability 
        reviews carried out pursuant to the requirements of 
        section 221(i) during the fiscal year ending on 
        September 30 of such calendar year (increased or 
        decreased as appropriate to account for deviations of 
        estimates for prior fiscal years from the actual 
        amounts for such fiscal years), and
          (ii) certify the amount of such estimate to the 
        Managing Trustee.
  (B) Upon receipt of certification by the Chief Actuary under 
subparagraph (A), the Managing Trustee shall transfer to the 
Account from amounts otherwise in the Trust Fund an amount 
equal to the estimated savings so certified.
  (C) To the extent of available funds in the Account, upon 
certification by the Chief Actuary that such funds are 
currently required to meet expenditures necessary to provide 
for continuing disability reviews required under section 
221(i), the Managing Trustee shall make available to the 
Commissioner of Social Security from the Account the amount so 
certified.
  (D) The expenditures referred to in subparagraph (C) shall 
include, but not be limited to, the cost of staffing, training, 
purchase of medical and other evidence, and processing related 
to appeals (including appeal hearings) and to overpayments and 
related indirect costs.
  (E) The Commissioner shall use funds made available pursuant 
to this paragraph solely for the purposes described in 
subparagraph (C).

            old-age and survivors insurance benefit payments

                       Old-Age Insurance Benefits

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

                       Child's Insurance Benefits

  (d)(1) Every child (as defined in section 216(e)) of an 
individual entitled to old-age or disability insurance 
benefits, or of an individual who dies a fully or currently 
insured individual, if such child--
          (A)  * * *
          * * * * * * *
          (F) if such child was not under a disability (as so 
        defined) at the time he attained the age of 18, the 
        earlier of--
                  (i) the first month during no part of which 
                he is a full-time elementary or secondary 
                school student, or,
                  (ii) the month in which he attains the age of 
                19, but only if he was not under a disability 
                (as so defined) in such earlier month; [or]
          (G) if such child was under a disability (as so 
        defined) at the time he attained the age of 18 or if he 
        was not under a disability (as so defined) at such time 
        but was under a disability (as so defined) at or prior 
        to the time he attained (or would attain) the age of 
        22--
                  (i) the termination month, subject to section 
                223(e) (and for purposes of this subparagraph, 
                the termination month for any individual shall 
                be the third month following the month in which 
                his disability ceases; except that, in the case 
                of an individual who has a period of trial work 
                which ends as determined by application of 
                section 222(c)(4)(A), the termination month 
                shall be the earlier of (I) the third month 
                following the earliest month after the end of 
                such period of trial work with respect to which 
                such individual is determined to no longer be 
                suffering from a disabling physical or mental 
                impairment, or (II) the third month following 
                the earliest month in which such individual 
                engages or is determined able to engage in 
                substantial gainful activity, but in no event 
                earlier than the first month occurring after 
                the 36 months following such period of trial 
                work in which he engages or is determined able 
                to engage in substantial gainful activity),
        or (if later) the earlier of--
                  (ii) the first month during no part of which 
                he is a full-time elementary or secondary 
                school student, or
                  (iii) the month in which he attains the age 
                of 19, but only if he was not under a 
                disability (as so defined) in such earlier 
                month,
        Entitlement of any child to benefits under this 
        subsection on the basis of the wages and self-
        employment income of an individual entitled to 
        disability insurance benefits shall also end with the 
        month before the first month for which such individual 
        is not entitled to such benefits unless such individual 
        is, for such later month, entitled to old-age insurance 
        benefits or unless he dies in such month. No payment 
        under this paragraph may be made to a child who would 
        not meet the definition of disability in section 223(d) 
        except for paragraph (1)(B) thereof for any month in 
        which he engages in substantial gainful activity[.]; or
          (H) if the benefits under this subsection are based 
        on the wages and self-employment income of a stepparent 
        who is subsequently divorced from such child's natural 
        parent, the sixth month after the month in which the 
        Commissioner of Social Security receives formal 
        notification of such divorce.
          * * * * * * *
  (4) A child shall be deemed dependent upon his stepfather or 
stepmother at the time specified in paragraph (1)(C) if, at 
such time, the child [was living with or] was receiving at 
least one-half of his support from such stepfather or 
stepmother.
          * * * * * * *

                    reduction of insurance benefits

                            Maximum Benefits

  Sec. 203. (a)(1)  * * *
          * * * * * * *
  (f) For purposes of subsection (b)--
          (1)  * * *
          * * * * * * *
          (8)(A)  * * *
          (B) Except as otherwise provided in subparagraph (D), 
        the exempt amount which is applicable to individuals 
        described in such subparagraph and the exempt amount 
        which is applicable to other individuals, for each 
        month of a particular taxable year, shall each be 
        whichever of the following is the larger--
                  (i) the corresponding exempt amount which is 
                in effect with respect to months in the taxable 
                year in which the determination under 
                subparagraph (A) is made, or
                  (ii) the product of the corresponding exempt 
                amount which is in effect with respect to 
                months in [the taxable year ending after 1993 
                and before 1995] the taxable year ending after 
                2001 and before 2003 (with respect to 
                individuals described in subparagraph (D)) or 
                the taxable year ending after 1993 and before 
                1995 (with respect to other individuals), and 
                the ratio of--
                          (I) the national average wage index 
                        (as defined in section 209(k)(1)) for 
                        the calendar year before the calendar 
                        year in which the determination under 
                        subparagraph (A) is made, to
                          (II) the national average wage index 
                        (as so defined) [for 1992] for 2000 
                        (with respect to individuals described 
                        in subparagraph (D)) or 1992 (with 
                        respect to other individuals),
        with such product, if not a multiple of $10, being 
        rounded to the next higher multiple of $10 where such 
        product is a multiple of but not of 10 and to the 
        nearest multiple of $10 in any other case. Whenever the 
        Commissioner of Social Security determines that an 
        exempt amount is to be increased in any year under this 
        paragraph, he shall notify the House Committee on Ways 
        and Means and the Senate Committee on Finance within 30 
        days after the close of the base quarter (as defined in 
        section 215(i)(1)(A)) in such year of the estimated 
        amount of such increase, indicating the new exempt 
        amount, the actuarial estimates of the effect of the 
        increase, and the actuarial assumptions and methodology 
        used in preparing such estimates.
          * * * * * * *
          [(D) Notwithstanding any other provision of this 
        subsection, the exempt amount which is applicable to an 
        individual who has attained retirement age (as defined 
        in section 216(l)) before the close of the taxable year 
        involved--
                  [(i) shall be $333.33 \1/3\ for each month of 
                any taxable year ending after 1977 and before 
                1979,
                  [(ii) shall be $375 for each month of any 
                taxable year ending after 1978 and before 1980,
                  [(iii) shall be $416.66 \2/3\ for each month 
                of any taxable year ending after 1979 and 
                before 1981,
                  [(iv) shall be $458.33 \1/3\ for each month 
                of any taxable year ending after 1980 and 
                before 1982, and
                  [(v) shall be $500 for each month of any 
                taxable year ending after 1981 and before 
                1983.]
          (D) Notwithstanding any other provision of this 
        subsection, the exempt amount which is applicable to an 
        individual who has attained retirement age (as defined 
        in section 216(l)) before the close of the taxable year 
        involved shall be--
                  (i) for each month of any taxable year ending 
                after 1995 and before 1997, $1,166.66\2/3\,
                  (ii) for each month of any taxable year 
                ending after 1996 and before 1998, $1,250.00,
                  (iii) for each month of any taxable year 
                ending after 1997 and before 1999, $1,333.33\1/
                3\,
                  (iv) for each month of any taxable year 
                ending after 1998 and before 2000, $1,416.66\2/
                3\,
                  (v) for each month of any taxable year ending 
                after 1999 and before 2001, $1,500.00,
                  (vi) for each month of any taxable year 
                ending after 2000 and before 2002, $2,083.33\1/
                3\, and
                  (vii) for each month of any taxable year 
                ending after 2001 and before 2003, $2,500.00.
          * * * * * * *

           evidence, procedure, and certification for payment

  Sec. 205. (a)  * * *
          * * * * * * *

                         Representative Payees

  (j)(1)(A)  * * *
  [(B) In the case of an individual entitled to benefits based 
on disability, if alcoholism or drug addiction is a 
contributing factor material to the Commissioner's 
determination that the individual is under a disability, 
certification of payment of such benefits to a representative 
payee shall be deemed to serve the interest of such individual 
under this title. In any case in which such certification is so 
deemed under this subparagraph to serve the interest of an 
individual, the Commissioner of Social Security shall include, 
in such individual's notification of entitlement, a notice that 
alcoholism or drug addiction is a contributing factor material 
to the Commissioner's determination of such individual's 
disability and that the Commissioner of Social Security is 
therefore required to make a certification of payment of such 
individual's benefits to a representative payee.]
  (B) In the case of an individual entitled to benefits based 
on disability, the payment of such benefits shall be made to a 
representative payee if the Commissioner of Social Security 
determines that such payment would serve the interest of the 
individual because the individual also has an alcoholism or 
drug addiction condition (as determined by the Commissioner) 
that prevents the individual from managing such benefits.
  (2)(A)  * * *
          * * * * * * *
  (C)(i)  * * *
          * * * * * * *
  (v) In the case of an individual [entitled to benefits based 
on disability, if alcoholism or drug addiction is a 
contributing factor material to the Secretary's determination 
that the individual is under a disability] described in 
paragraph (1)(B), when selecting such individual's 
representative payee, preference shall be given to--
          (I)  * * *
          * * * * * * *
  (D)(i)  * * *
  (ii)(I) Except as provided in subclause (11), any deferral or 
suspension of direct payment of a benefit pursuant to clause 
(i) shall be for a period of not more than 1 month.
  (II) Subclause (I) shall not apply in any case in which the 
individual is, as of the date of the Commissioner's 
determination, legally incompetent, under the age of 15 years, 
or [(if alcoholism or drug addiction is a contributing factor 
material to the Commissioner's determination that the 
individual is under a disability) is eligible for benefits 
under this title by reason of disability.] described in 
paragraph (1)(B).
          * * * * * * *
  (4)(A)(i) A qualified organization may collect from an 
individual a monthly fee for expenses (including overhead) 
incurred by such organization in providing services performed 
as such individual's representative payee pursuant to this 
subsection if such fee does not exceed the lesser of--
          (I) 10 percent of the monthly benefit involved, or
          (II) $25.00 per month ($50.00 per month in any case 
        in which the individual is [entitled to benefits based 
        on disability and alcoholism or drug addiction is a 
        contributing factor material to the Secretary's 
        determination that the individual is under a 
        disability] described in paragraph (1)(B)).
          * * * * * * *

                      representation of claimants

  Sec. 206. (a)(1) The Commissioner of Social Security may 
prescribe rules and regulations governing the recognition of 
agents or other persons, other than attorneys as hereinafter 
provided, representing claimants before the Commissioner of 
Social Security, and may require of such agents or other 
persons, before being recognized as representatives of 
claimants that they shall show that they are of good character 
and in good repute, possessed of the necessary qualifications 
to enable them to render such claimants valuable service, and 
otherwise competent to advise and assist such claimants in the 
presentation of their cases. An attorney in good standing who 
is admitted to practice before the highest court of the State, 
Territory, District, or insular possession of his residence or 
before the Supreme Court of the United States or the inferior 
Federal courts, shall be entitled to represent claimants before 
the Commissioner of Social Security. The Commissioner of Social 
Security may, after due notice and opportunity for hearing, 
suspend or prohibit from further practice before him any such 
person, agent, or attorney who refuses to comply with the 
Commissioners' rules and regulations or who violates any 
provision of this section for which a penalty is prescribed. 
[The Commissioner of Social Security may, by rule and 
regulation, prescribe the maximum fees which may be charged for 
services performed in connection with any claim before the 
Commissioner of Social Security under this title, and any 
agreement in violation of such rules and regulations shall be 
void. Except as provided in paragraph (2)(A), whenever the 
Commissioner of Social Security, in any claim before him for 
benefits under this title, makes a determination favorable to 
the claimant, he shall, if the claimant was represented by an 
attorney in connection with such claim, fix (in accordance with 
the regulations prescribed pursuant to the preceding sentence) 
a reasonable fee to compensate such attorney for the services 
performed by him in connection with such claim.]
  [(2)(A) In the case of a claim of entitlement to past-due 
benefits under this title, if--
          [(i) an agreement between the claimant and another 
        person regarding any fee to be recovered by such person 
        to compensate such person for services with respect to 
        the claim is presented in writing to the Commissioner 
        of Social Security prior to the time of the 
        Commissioner's determination regarding the claim,
          [(ii) the fee specified in the agreement does not 
        exceed the lesser of--
                  [(I) 25 percent of the total amount of such 
                past-due benefits (as determined before any 
                applicable reduction under section 1127(a)), or
                  [(II) $4,000, and
          [(iii) the determination is favorable to the 
        claimant,
then the Commissioner of Social Security shall approve that 
agreement at the time of the favorable determination, and 
(subject to paragraph (3)) the fee specified in the agreement 
shall be the maximum fee. The Commissioner of Social Security 
may from time to time increase the dollar amount under clause 
(ii)(II) to the extent that the rate of increase in such 
amount, as determined over the period since January 1, 1991, 
does not at any time exceed the rate of increase in primary 
insurance amounts under section 215(i) since such date. The 
Commissioner of Social Security shall publish any such 
increased amount in the Federal Register.
  [(B) For purposes of this subsection, the term past-due 
benefits excludes any benefits with respect to which payment 
has been continued pursuant to subsection (g) or (h) of section 
223.
  [(C) In any case involving--
          [(i) an agreement described in subparagraph (A) with 
        any person relating to both a claim of entitlement to 
        past-due benefits under this title and a claim of 
        entitlement to past-due benefits under title XVI, and
          [(ii) a favorable determination made by the 
        Commissioner of Social Security with respect to both 
        such claims,
the Commissioner of Social Security may approve such agreement 
only if the total fee or fees specified in such agreement does 
not exceed, in the aggregate, the dollar amount in effect under 
subparagraph (A)(ii)(II).
  [(D) In the case of a claim with respect to which the 
Commissioner of Social Security has approved an agreement 
pursuant to subparagraph (A), the Commissioner of Social 
Security 1 47 shall provide the claimant and the person 
representing the claimant a written notice of--
          [(i) the dollar amount of the past-due benefits (as 
        determined before any applicable reduction under 
        section 1127(a)) and the dollar amount of the past-due 
        benefits payable to the claimant,
          [(ii) the dollar amount of the maximum fee which may 
        be charged or recovered as determined under this 
        paragraph, and
          [(iii) a description of the procedures for review 
        under paragraph (3).
  [(3)(A) The Commissioner of Social Security shall provide by 
regulation for review of the amount which would otherwise be 
the maximum fee as determined under paragraph (2) if, within 15 
days after receipt of the notice provided pursuant to paragraph 
(2)(D)--
          [(i) the claimant, or the administrative law judge or 
        other adjudicator who made the favorable determination, 
        submits a written request to the Commissioner of Social 
        Security to reduce the maximum fee, or
          [(ii) the person representing the claimant submits a 
        written request to the Commissioner of Social Security 
        to increase the maximum fee.
Any such review shall be conducted after providing the 
claimant, the person representing the claimant, and the 
adjudicator with reasonable notice of such request and an 
opportunity to submit written information in favor of or in 
opposition to such request. The adjudicator may request the 
Commissioner of Social Security to reduce the maximum fee only 
on the basis of evidence of the failure of the person 
representing the claimant to represent adequately the 
claimant's interest or on the basis of evidence that the fee is 
clearly excessive for services rendered.
  [(B)(i) In the case of a request for review under 
subparagraph (A) by the claimant or by the person representing 
the claimant, such review shall be conducted by the 
administrative law judge who made the favorable determination 
or, if the Commissioner of Social Security determines that such 
administrative law judge is unavailable or if the determination 
was not made by an administrative law judge, such review shall 
be conducted by another person designated by the Commissioner 
of Social Security for such purpose.
  [(ii) In the case of a request by the adjudicator for review 
under subparagraph (A), the review shall be conducted by the 
Commissioner of Social Security or by an administrative law 
judge or other person (other than such adjudicator) who is 
designated by the Commissioner of Social Security.
  [(C) Upon completion of the review, the administrative law 
judge or other person conducting the review shall affirm or 
modify the amount which would otherwise be the maximum fee. Any 
such amount so affirmed or modified shall be considered the 
amount of the maximum fee which may be recovered under 
paragraph (2). The decision of the administrative law judge or 
other person conducting the review shall not be subject to 
further review.
  [(4)(A) Subject to subparagraph (B), if the claimant is 
determined to be entitled to past-due benefits under this title 
and the person representing the claimant is an attorney, the 
Commissioner of Social Security shall, notwithstanding section 
205(i), certify for payment out of such past-due benefits (as 
determined before any applicable reduction under section 
1127(a)) to such attorney an amount equal to so much of the 
maximum fee as does not exceed 25 percent of such past-due 
benefits (as determined before any applicable reduction under 
section 1127(a)).
  [(B) The Commissioner of Social Security shall not in any 
case certify any amount for payment to the attorney pursuant to 
this paragraph before the expiration of the 15-day period 
referred to in paragraph (3)(A) or, in the case of any review 
conducted under paragraph (3), before the completion of such 
review.]
  (2)(A) No person, agent, or attorney may charge in excess of 
$4,000 (or, if higher, the amount set pursuant to subparagraph 
(B)) for services performed in connection with any claim before 
the Commissioner under this title, or for services performed in 
connection with concurrent claims before the Commissioner under 
this title and title XVI.
  (B) The Commissioner may increase the dollar amount under 
subparagraph (A) whenever the Commissioner determines that such 
an increase is warranted. The Commissioner shall publish any 
such increased amount in the Federal Register.
  (C) Any agreement in violation of this paragraph shall be 
void.
  (D) Whenever the Commissioner makes a favorable determination 
in connection with any claim for benefits under this title by a 
claimant who is represented by a person, agent, or attorney, 
the Commissioner shall provide the claimant and such person, 
agent, or attorney a written notice of--
          (i) the determination,
          (ii) the dollar amount of any benefits payable to the 
        claimant, and
          (iii) the maximum amount under paragraph (2) that may 
        be charged for services performed in connection with 
        such claim.
  [(5)] (3) Any person who shall, with intent to defraud, in 
any manner willfully and knowingly deceive, mislead, or 
threaten any claimant or prospective claimant or beneficiary 
under this title by word, circular, letter or advertisement, or 
who shall knowingly charge or collect directly or indirectly 
any fee in excess of the maximum fee, or make any agreement 
directly or indirectly to charge or collect any fee in excess 
of the maximum fee, prescribed by the Commissioner of Social 
Security shall be deemed guilty of a misdemeanor and, upon 
conviction thereof, shall for each offense be punished by a 
fine not exceeding $500 or by imprisonment not exceeding one 
year, or both. The Commissioner of Social Security shall 
maintain in the electronic information retrieval system used by 
the Social Security Administration a current record, with 
respect to any claimant before the Commissioner of Social 
Security, of the identity of any person representing such 
claimant in accordance with this subsection.
  (b)(1)[(A)] Whenever a court renders a judgment favorable to 
a claimant under this title who was represented before the 
court by an attorney, the court may determine and allow as part 
of its judgment a reasonable fee for such [representation, not 
in excess of 25 percent of the total of the past-due benefits 
to which the claimant is entitled by reason of such judgment, 
and the Commissioner of Social Security may, notwithstanding 
the provisions of section 205(i), certify the amount of such 
fee for payment to such attorney out of, and not in addition 
to, the amount of such past-due benefits.] representation. In 
determining a reasonable fee, the court shall take into 
consideration the amount of the fee, if any, that such 
attorney, or any other person, agent, or attorney, may charge 
the claimant for services performed in connection with the 
claimant's claim when it was pending before the Commissioner. 
In case of any such judgment, no other fee may be payable [or 
certified for payment] for such representation except as 
provided in this paragraph.
  [(B) For purposes of this paragraph--
          [(i) the term ``past-due benefits'' excludes any 
        benefits with respect to which payment has been 
        continued pursuant to subsection (g) or (h) of section 
        223, and
          [(ii) amounts of past-due benefits shall be 
        determined before any applicable reduction under 
        section 1127(a).]
          * * * * * * *

                computation of primary insurance amount

  Sec. 215. For the purposes of this title--

                        Primary Insurance Amount

  (a)  * * *
          * * * * * * *

                       Recomputation of Benefits

  (f)(1)  * * *

  The following matter in 8 point type shows provisions of the Social 
Security Act as in effect in December 1978 and applied in certain cases 
   under the provisions of such Act as in effect after December 1978.

  (2) If an individual has wages or self-employment income for a year 
after 1965 for any part of which he is entitled to old-age insurance 
benefits, the Secretary shall, at such time or times and within such 
period as he may by regulations prescribe, recompute such individual's 
primary insurance amount with respect to each year. Such recomputation 
shall be made as provided in subsections (a) (1) (A) and (C) and (a) 
(3), as though the year with respect to which such recomputation is 
made is the last year of the period specified in subsection (b) (2) 
(C). A recomputation under this paragraph with respect to any year 
shall be effective--
          (A) [in the case of an individual who did not die in such 
        year. for monthly benefits beginning with benefits for January 
        of the following year; or] in the case of an individual who did 
        not die in the year with respect to which the recomputation is 
        made, for monthly benefits beginning with benefits for January 
        of--
                  (i) the second year following the year with respect 
                to which the recomputation is made, in any such case in 
                which the individual is entitled to old-age insurance 
                benefits, the individual has attained age 65 as of the 
                end of the year preceding the year with respect to 
                which the recomputation is made, and the year with 
                respect to which the recomputation is made would not be 
                substituted in recomputation under this subsection for 
                a benefit computation year in which no wages or self-
                employment income have been credited previously to such 
                individual, or
                  (ii) the first year following the year with respect 
                to which the recomputation is made, in any other such 
                case; or
          * * * * * * *
  (D) A recomputation under this paragraph with respect to any 
year shall be effective--
          [(i) in the case of an individual who did not die in 
        that year, for monthly benefits beginning with benefits 
        for January of the following year; or]
          (i) in the case of an individual who did not die in 
        the year with respect to which the recomputation is 
        made, for monthly benefits beginning with benefits for 
        January of--
                  (I) the second year following the year with 
                respect to which the recomputation is made, in 
                any such case in which the individual is 
                entitled to old-age insurance benefits, the 
                individual has attained retirement age (as 
                defined in section 216(l)) as of the end of the 
                year preceding the year with respect to which 
                the recomputation is made, and the year with 
                respect to which the recomputation is made 
                would not be substituted in recomputation under 
                this subsection for a benefit computation year 
                in which no wages or self-employment income 
                have been credited previously to such 
                individual, or
                  (II) the first year following the year with 
                respect to which the recomputation is made, in 
                any other such case; or
          (ii) in the case of an individual who died in that 
        year, for monthly benefits beginning with benefits for 
        the month in which he died.
          * * * * * * *
  (7) This subsection as in effect in December 1978, and as 
amended by section 5(b)(2) of the Senior Citizens' Right to 
Work Act of 1995, shall continue to apply to the recomputation 
of a primary insurance amount computed under subsection (a) or 
(d) as in effect (without regard to the table in subsection 
(a)) in that month, and, where appropriate, under subsection 
(d) as in effect in December 1977, including a primary 
insurance amount computed under any such subsection whose 
operation is modified as a result of the amendments made by 
section 5117 of the Omnibus Budget Reconciliation Act of 1990. 
For purposes of recomputing a primary insurance amount 
determined under subsection (a) or (d) (as so in effect) in the 
case of an individual to whom those subsections apply by reason 
of subsection (a)(4)(B) as in effect after December 1978, no 
remuneration shall be taken into account for the year in which 
the individual initially became eligible for an old-age or 
disability insurance benefit or died, or for any year 
thereafter, and (effective January 1982) the recomputation 
shall be modified by the application of subsection (a)(6) where 
applicable.
          * * * * * * *

                       disability determinations

  Sec. 221. (a)  * * *
          * * * * * * *
  (i)(1)  * * *
          * * * * * * *
  (3) The Commissioner of Social Security shall report annually 
to the Committee on Finance of the Senate and the Committee on 
Ways and Means of the House of Representatives with respect to 
the number of reviews of continuing disability carried out 
under paragraph (1), the number of such reviews which result in 
an initial termination of benefits, the number of requests for 
reconsideration of such initial termination or for a hearing 
with respect to such termination under subsection (d), or both, 
[and] the number of such initial terminations which are 
overturned as the result of a reconsideration or hearing[.], 
and a final accounting of amounts transferred to the Continuing 
Disability Review Administration Revolving Account in the 
Federal Disability Insurance Trust Fund during the year, the 
amount made available from such Account during such year 
pursuant to certifications made by the Chief Actuary of the 
Social Security Administration under section 201(n)(2)(C), and 
expenditures made by the Commissioner of Social Security for 
the purposes described in section 201(n)(2)(C) during the year, 
including a comparison of the number of continuing disability 
reviews conducted during the year with the estimated number of 
continuing disability reviews upon which the estimate of such 
expenditures was made under section 201(n)(2)(A).
          * * * * * * *

                        rehabilitation services

                  Referral for Rehabilitation Services

  Sec. 222. (a)  * * *
          * * * * * * *

    Treatment Referrals for Individuals with an Alcoholism or Drug 
                          Addiction Condition

  (e) In the case of any individual whose benefits under this 
title are paid to a representative payee pursuant to section 
205(j)(1)(B), the Commissioner of Social Security shall refer 
such individual to the appropriate State agency administering 
the State plan for substance abuse treatment services approved 
under subpart II of part B of title XIX of the Public Health 
Service Act (42 U.S.C. 300x-21 et seq.).

                 disability insurance benefit payments

                     Disability Insurance Benefits

  Sec. 223. (a)  * * *
          * * * * * * *

                        Definition of Disability

  (d)(1)  * * *
  (2) For purposes of paragraph (1)(A)--
          (A) * * *
          * * * * * * *
          (C) An individual shall not be considered to be 
        disabled for purposes of this title if alcoholism or 
        drug addiction would (but for this subparagraph) be a 
        contributing factor material to the Commissioner's 
        determination that the individual is disabled.
          * * * * * * *
  (4)(A) The Commissioner of Social Security shall by 
regulations prescribe the criteria for determining when 
services performed or earnings derived from services 
demonstrate an individual's ability to engage in substantial 
gainful activity. No individual who is blind shall be regarded 
as having demonstrated an ability to engage in substantial 
gainful activity on the basis of earnings that do not exceed 
[the exempt amount under section 203(f)(8) which is applicable 
to individuals described in subparagraph (D) thereof] an amount 
equal to the exempt amount which would be applicable under 
section 203(f)(8), to individuals described in subparagraph (D) 
thereof, if section 2 of the Senior Citizens' Right to Work Act 
of 1995 had not been enacted. Notwithstanding the provisions of 
paragraph (2), an individual whose services or earnings meet 
such criteria shall, except for purposes of section 222(c), be 
found not to be disabled. In determining whether an individual 
is able to engage in substantial gainful activity by reason of 
his earnings, where his disability is sufficiently severe to 
result in a functional limitation requiring assistance in order 
for him to work, there shall be excluded from such earnings an 
amount equal to the cost (to such individual) of any attendant 
care services, medical devices, equipment, prostheses, and 
similar items and services (not including routine drugs or 
routine medical services unless such drugs or services are 
necessary for the control of the disabling condition) which are 
necessary (as determined by the Commissioner of Social Security 
in regulations) for that purpose, whether or not such 
assistance is also needed to enable him to carry out his normal 
daily functions; except that the amount to be excluded shall be 
subject to such reasonable limits as the Commissioner of Social 
Security may prescribe.
          * * * * * * *

          Interim Benefits in Cases of Delayed Final Decisions

  (h)(1)  * * *
          * * * * * * *
  (3) Any benefits currently paid under this title pursuant to 
this subsection (for the months described in paragraph (1)) 
shall not be considered overpayments for any purpose of this 
title (unless payment of such benefits was fraudulently 
obtained)[, and such benefits shall not be treated as past-due 
benefits for purposes of section 206(b)(l)].
          * * * * * * *

       additional rules relating to benefits based on disability

                         Suspension of Benefits

  Sec. 225. (a)  * * *
          * * * * * * *

   [Nonpayment or Termination of Benefits Where Entitlement Involves 
                      Alcoholism or Drug Addiction

  [(c)(1)(A) In the case of any individual entitled to benefits 
based on disability, if alcoholism or drug addiction is a 
contributing factor material to the Commissioner's 
determination that such individual is under a disability, such 
individual shall comply with the provisions of this subsection. 
In any case in which an individual is required to comply with 
the provisions of this subsection, the Commissioner of Social 
Security shall include, in such individual's notification of 
entitlement, a notice informing such individual of such 
requirement.
  [(B) Notwithstanding any other provision of this title, if an 
individual who is required under subparagraph (A) to comply 
with the provisions of this subsection is determined by the 
Commissioner of Social Security not to be in compliance with 
the provisions of this subsection, such individual's benefits 
based on disability shall be suspended for a period--
          [(i) commencing with the first month following the 
        month in which such individual is notified by the 
        Commissioner of Social Security of the determination of 
        noncompliance and that the individual's benefits will 
        be suspended, and
          [(ii) ending with the month preceding the first 
        month, after the determination of noncompliance, in 
        which such individual demonstrates that he or she has 
        reestablished and maintained compliance with such 
        provisions for the applicable period speci-fied in 
        paragraph (3).
  [(2)(A) An individual described in paragraph (1) is in 
compliance with the requirements of this subsection for a month 
if in such month--
          [(i) such individual undergoes substance abuse 
        treatment which is appropriate for such individual's 
        condition diagnosed as alcoholism or drug addiction and 
        for the stage of such individual's rehabilitation and 
        which is conducted at an institution or facility 
        approved for purposes of this subsection by the 
        Commissioner of Social Security, and
          [(ii) such individual complies in such month with the 
        terms, conditions, and requirements of such treatment 
        and with requirements imposed by the Commissioner of 
        Social Security under paragraph (5).
  [(B) An individual described in paragraph (1) may be 
determined as failing to comply with the requirements of this 
subsection for a month only if treatment meeting the 
requirements of subparagraph (A)(i) is available for that 
month, as determined pursuant to regulations of the 
Commissioner of Social Security.
  [(3) The applicable period specified in this paragraph is--
          [(A) 2 consecutive months, in the case of a first 
        determination that an individual is not in compliance 
        with the requirements of this subsection,
          [(B) 3 consecutive months, in the case of the second 
        such determination with respect to the individual, or
          [(C) 6 consecutive months, in the case of the third 
        or subsequent such determination with respect to the 
        individual.
  [(4) In any case in which an individual's benefit is 
suspended for a period of 12 consecutive months for failure to 
comply with treatment described in paragraph (2) of this 
subsection, the month following such period shall be deemed, 
for purposes of section 223(a)(l) or subsection (d)(1)(G)(i), 
(e)(1), or (f)(l) of section 202 (as applicable), the 
termination month with respect to such entitlement.
  [(5)(A) The Commissioner of Social Security shall provide for 
the monitoring and testing of individuals who are receiving 
benefits under this title and who as a condition of payment of 
such benefits are required to be undergoing treatment under 
paragraph (1) and complying with the terms, conditions, and 
requirements thereof as described in paragraph (2)(A), in order 
to assure such compliance.
  [(B) The Commissioner of Social Security, in consultation 
with drug and alcohol treatment professionals, shall issue 
regulations--
          [(i) defining appropriate treatment for alcoholics 
        and drug addicts who are subject to appropriate 
        substance abuse treatment required under this 
        subsection, and
        [(ii) establishing guidelines to be used to review and 
        evaluate their compliance, including measures of the 
        progress expected to be achieved by participants in 
        such programs. (C)(i) For purposes of carrying out the 
        requirements of subparagraphs (A) and (B), the 
        Commissioner of Social Security shall provide for the 
        establishment of one or more referral and monitoring 
        agencies for each State.
    [(C) Each referral and monitoring agency for a State 
shall--
          [(i) identify appropriate placements, for individuals 
        residing in such State who are entitled to benefits 
        based on disability and with respect to whom alcoholism 
        or drug addiction is a contributing factor material to 
        the Commissioner's determination that they are under a 
        disability, where they may obtain treatment described 
        in paragraph (2)(A),
          [(ii) refer such individuals to such placements for 
        such treatment, and
          [(iii) monitor compliance with the requirements of 
        paragraph (2)(A) by individuals who are referred by the 
        agency to such placements and promptly report failures 
        to comply to the Commissioner of Social Security.
    [(D) There are authorized to be transferred from the 
Federal Old Age and Survivors Insurance Trust Fund and the 
Federal Disability Insurance Trust Fund such sums as are 
necessary to carry out the requirements of this paragraph for 
referral, monitoring, and testing.
  [(6)(A) In the case of any individual who is entitled to a 
benefit based on disability for any month, if alcoholism or 
drug addiction is a contributing factor material to the 
Commissioner's determination that the individual is under a 
disability, payment of any past-due monthly insurance benefits 
under this title to which such individual is entitled shall be 
made in any month only to the extent that the sum of--
          [(i) the amount of such past-due benefit paid in such 
        month, and
          [(ii) the amount of any benefit for the preceding 
        month under such current entitlement which is payable 
        in such month, does not exceed, subject to subparagraph 
        (B), twice the amount of such individual's benefit for 
        the preceding month (determined without applying any 
        reductions or deductions under this title).
  [(B)(i) In the case of an individual who is no longer 
currently entitled to monthly insurance benefits under this 
title but to whom any amount of past-due benefits has not been 
paid, for purposes of subparagraph (A), such individual's 
monthly insurance benefit for such individual's last month of 
entitlement shall be treated as such individual's benefit for 
the preceding month.
  [(ii) For the first month in which an individual's past-due 
benefits referred to in subparagraph (A) are paid, the amount 
of the limitation provided in subparagraph (A) shall be 
increased by the amount of any debts of such individual related 
to housing which are outstanding as of the end of the preceding 
month and which are resulting in a high risk of homelessness 
for such individual.
  [(C) Upon the death of an individual to whom payment of past-
due benefits has been limited under subparagraph (A), any 
amount of such past-due benefits remaining unpaid shall be 
treated as an underpayment for purposes of section 204.
  [(D) In the case of an individual who would be entitled to 
benefits based on disability but for termination of such 
benefits under paragraph (4) or (7), such individual shall be 
entitled to payment of past-due benefits under this paragraph 
as if such individual continued to be entitled to such 
terminated benefits.
  [(7)(A) Subject to subparagraph (B), in the case of any 
individual entitled to benefits based on disability, if--
          [(i) alcoholism or drug addiction is a contributing 
        factor material to the Commissioner's determination 
        that such individual is under a disability, and
          [(ii) as of the end of the 36-month period beginning 
        with such individual's first month of entitlement, such 
        individual would not otherwise be disabled but for 
        alcoholism or drug addiction, the month following such 
        36-month period shall be deemed, for purposes of 
        section 223(a)(1) or subsection (d)(1)(G)(I), (e)(1), 
        or (f)(1) of section 202 (as applicable), the 
        termination month with respect to such entitlement. 
        Such individual whose entitlement is terminated under 
        this paragraph may not be entitled to benefits based on 
        disability for any month following such 36-month period 
        if, in such following month, alcoholism or drug 
        addiction is a contributing factor material to the 
        Commissioner's determination that such individual is 
        under a disability.
  [(B) In determining whether the 36-month period referred to 
in subparagraph (A) has elapsed--
          [(i) a month shall not be taken into account unless 
        the Commissioner of Social Security determines, under 
        regulations of the Commissioner of Social Security, 
        that treatment required under this subsection is 
        available to the individual for the month, and
          [(ii) any month for which a suspension is in effect 
        for the individual under paragraph (1)(B) shall not be 
        taken into account.
  [(8) Monthly insurance benefits under this title which would 
be payable to any individual (other than the disabled 
individual to whom benefits are not payable by reason of this 
subsection) on the basis of the wages and self-employment 
income of such disabled individual but for the provisions of 
paragraph (1), (4), or (7) shall be payable as though such 
paragraph did not apply.
  [(9) For purposes of this subsection, the term ``benefit 
based on disability'' of an individual means a disability 
insurance benefit of such individual under section 223 or a 
child's, widows, or widower's insurance benefit of such 
individual under section 202 based on the disability of such 
individual.]
          * * * * * * *

                       TITLE VII--ADMINISTRATION

          * * * * * * *

           commissioner; deputy commissioner; other officers

                    Commissioner of Social Security

  Sec. 702. (a) * * *
          * * * * * * *

                             Chief Actuary

  (c)(1) There shall be in the Administration a Chief Actuary, 
who shall be appointed by, and in direct line of authority to, 
the Commissioner. The Chief Actuary shall be appointed from 
individuals who have demonstrated, by their education and 
experience, superior expertise in the actuarial sciences. The 
Chief Actuary shall serve as the chief actuarial officer of the 
Administration, and shall exercise such duties as are 
appropriate for the office of the Chief Actuary and in 
accordance with professional standards of actuarial 
independence. The Chief Actuary may be removed only for cause.
  (2) The Chief Actuary shall be compensated at the highest 
rate of basic pay for the Senior Executive Service under 
section 5382(b) of title 5, United States Code.

                        Chief Financial Officer

  [(c)] (d) There shall be in the Administration a Chief 
Financial Officer appointed by the Commissioner in accordance 
with section 901(a)(2) of title 31, United States Code.

                           Inspector General

  [(d)] (e) There shall be in the Administration an Inspector 
General appointed by the President, by and with the advice and 
consent of the Senate, in accordance with section 3(a) of the 
Inspector General Act of 1978.
          * * * * * * *

              TITLE XI--GENERAL PROVISIONS AND PEER REVIEW

                       Part A--General Provisions

          * * * * * * *

 adjustments in ssi benefits on account of retroactive benefits under 
                                title ii

  Sec. 1127. (a) Notwithstanding any other provision of this 
Act, in any case where an individual--
          (1) is entitled to benefits under title II that were 
        not paid in the months in which they were regularly 
        due; and
          (2) is an individual or eligible spouse eligible for 
        supplemental security income benefits for one or more 
        months in which the benefits referred to in clause (1) 
        were regularly due,
then any benefits under title II that were regularly due in 
such month or months, or supplemental security income benefits 
for such month or months, which are due but have not been paid 
to such individual or eligible spouse shall be reduced by an 
amount equal to so much of the supplemental security income 
benefits, whether or not paid retroactively, as would not have 
been paid or would not be paid with respect to such individual 
or spouse if he had received such benefits under title II in 
the month or months in which they were regularly due. [A 
benefit under title II shall not be reduced pursuant to the 
preceding sentence to the extent that any amount of such 
benefit would not otherwise be available for payment in full of 
the maximum fee which may be recovered from such benefit by an 
attorney pursuant to subsection (a)(4) or (b) of section 206.]
          * * * * * * *

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

                   Part A--Determination of Benefits

                 ELIGIBILITY FOR AND AMOUNT OF BENEFITS

                   Definition of Eligible Individual

  Sec. 1611. (a)  * * *
          * * * * * * *
  (e)(1)  * * *
          * * * * * * *
  [(3)(A)(i)(I) In the case of any individual eligible for 
benefits under this title solely by reason of disability, if 
alcoholism or drug addiction is a contributing factor material 
to the Secretary's determination that the individual is 
disabled, the individual shall comply with the provisions of 
this subparagraph. In any case in which an individual is 
required to comply with the provisions of this subparagraph, 
the Secretary shall include in the individual's notification of 
such eligibility a notice informing the individual of such 
requirement.
  [(II) Notwithstanding any other provision of this title, if 
an individual who is required under subclause (I) to comply 
with the requirements of this subparagraph is determined by the 
Secretary not to be in compliance with the provisions of this 
subparagraph, the individual's benefits under this title by 
reason of disability shall be suspended for a period--
          [(aa) commencing with the first month following the 
        month in which the individual is notified by the 
        Secretary of the determination of noncompliance and 
        that the individual's benefits will be suspended; and
          [(bb) ending with the month preceding the first 
        month, after the determination of noncompliance, in 
        which the individual demonstrates that he or she has 
        reestablished and maintained compliance with such 
        provisions for the applicable period specified in 
        clause (iii).
  [(ii)(I) An individual described in clause (i) is in 
compliance with the requirements of this subparagraph for a 
month if in such month--
          [(aa) the individual undergoes substance abuse 
        treatment, which is appropriate for the individual's 
        condition diagnosed as alcoholism or drug addiction and 
        for the stage of the individual's rehabilitation and 
        which is conducted at an institution or facility 
        approved for purposes of this subparagraph by the 
        Secretary; and
          [(bb) the individual complies in such month with the 
        terms, conditions, and requirements of the treatment 
        and with requirements imposed by the Secretary under 
        this paragraph.
  [(II) An individual described in clause (i) may be determined 
as failing to comply with the requirements of this subparagraph 
for a month only if treatment meeting the requirements of 
subclause (I)(aa) is available for the month, as determined 
pursuant to regulations of the Secretary.
  [(iii) The applicable period specified in this clause is--
          [(I) 2 consecutive months, in the case of a 1st 
        determination that an individual is not in compliance 
        with the requirements of this subparagraph;
          [(II) 3 consecutive months, in the case of the 2nd 
        such determination with respect to the individual; or
          [(III) 6 consecutive months, in the case of the 3rd 
        or subsequent such determination with respect to the 
        individual.
  [(iv) An individual who is not in compliance with this 
paragraph for 12 consecutive months shall not be eligible for 
supplemental security income benefits under this title. The 
preceding sentence shall not be construed to prevent the 
individual from reapplying and becoming eligible for such 
benefits.
  [(v)(I) In the case of any individual eligible for benefits 
under this title by reason of disability, if--
          [(aa) alcoholism or drug addiction is a contributing 
        factor material to the Secretary's determination that 
        the individual is disabled; and
          [(bb) as of the end of the 36-month period beginning 
        with the 1st month for which such benefits by reason of 
        disability are payable to the individual, the 
        individual would not otherwise be disabled but for 
        alcoholism or drug addiction,
the individual shall not be eligible for such benefits by 
reason of disability for any month following such 36-month 
period if, in such following month, alcoholism or drug 
addiction would be a contributing factor material to the 
Secretary's determination that the individual is disabled, 
notwithstanding section 1619(a).
  [(II) An individual whose entitlement to benefits under title 
II based on disability has been terminated by reason of section 
225(c)(7) shall not be eligible for benefits under this title 
by reason of disability, if alcoholism or drug addiction is a 
contributing factor material to the Secretary's determination 
that the individual is disabled, for any month after the 
individual's termination month (within the meaning of section 
223(a)(1) or subsection (d)(1)(G)(i), (e)(1), or (f)(1) of 
section 202, as applicable) with respect to such benefits.
  [(III) Any month for which a suspension is in effect for the 
individual under clause (i)(II) shall not be taken into account 
in determining whether any 36-month period referred to in this 
clause has elapsed.
  [(vi)(I) In the case of any individual who is eligible for 
benefits under this title for any month solely by reason of 
disability, if alcoholism or drug addiction is a contributing 
factor material to the Secretary's determination that the 
individual is disabled, payment of any benefits under this 
title the payment of which is past due shall be made in any 
month only to the extent that the sum of--
          [(aa) the amount of the past-due benefit paid in the 
        month; and
          [(bb) the amount of any benefit under this title 
        which is payable to the individual for the month,
does not exceed twice the maximum benefit payable under this 
title to an eligible individual for the preceding month.
  [(II) For the first month in which an individual's past-due 
benefits referred to in subclause (I) are paid, the amount of 
the limitation provided in subclause (I) shall be increased by 
the amount of any debts of the individual related to housing 
which are outstanding as of the end of the preceding month and 
which are resulting in a high risk of homelessness for the 
individual.
  [(III) Upon the death of an individual to whom payment of 
past-due benefits has been limited under subclause (I), any 
amount of such past-due benefits remaining unpaid shall be 
treated as an underpayment for purposes of section 
1631(b)(1)(A).
  [(IV) As used in this clause, the term ``benefits under this 
title'' includes supplementary payments pursuant to an 
agreement for Federal administration under section 1616(a), and 
payments pursuant to an agreement entered into under section 
212(b) of Public Law 93-66.
  [(V) In the case of an individual who would be eligible for 
benefits under this title by reason of disability but for 
termination of such benefits under clause (iv) or (v), the 
individual shall be eligible for payment of past-due benefits 
under this clause as if the individual continued to be eligible 
for such terminated benefits.
  [(VI) Subclause (I) shall not apply to payments under section 
1631(g).
  [(B)(i) The Commissioner of Social Security shall provide for 
the monitoring and testing of all individuals who are receiving 
benefits under this title and who as a condition of such 
benefits are required to be undergoing treatment and complying 
with the terms, conditions, and requirements thereof as 
described in subparagraph (A), in order to assure such 
compliance and to determine the extent to which the imposition 
of such requirement is contributing to the achievement of the 
purposes of this title.
  [(ii) The Secretary, in consultation with drug and alcohol 
treatment professionals, shall issue regulations--
          [(I) defining appropriate treatment for alcoholics 
        and drug addicts who are subject to required 
        appropriate substance abuse treatment under this 
        subparagraph; and
          [(II) establishing guidelines to be used to review 
        and evaluate their compliance, including measures of 
        the progress expected to be achieved by participants in 
        such programs.
  [(iii)(I) For purposes of carrying out the requirements of 
clauses (i) and (ii), the Secretary shall provide for the 
establishment of 1 or more referral and monitoring agencies for 
each State.
  [(II) Each referral and monitoring agency for a State shall--
          [(aa) identify appropriate placements, for 
        individuals residing in the State who are eligible for 
        benefits under this title by reason of disability and 
        with respect to whom alcoholism or drug addiction is a 
        contributing factor material to the Secretary's 
        determination that they are disabled, where they may 
        obtain treatment described in subparagraph (A)(ii)(I);
          [(bb) refer such individuals to such placements for 
        such treatment; and
          [(cc) monitor compliance with the requirements of 
        subparagraph (A) by individuals who are referred by the 
        agency to such placements, and promptly report to the 
        Secretary any failure to comply with such 
        requirements.]
          * * * * * * *

                            MEANING OF TERMS

                  Aged, Blind, or Disabled Individual

  Sec. 1614. (a)(1)  * * *
          * * * * * * *
  (3)(A)  * * *
          * * * * * * *
  (I) Notwithstanding subparagraph (A), an individual shall not 
be considered to be disabled for purposes of this title if 
alcoholism or drug addiction would (but for this subparagraph) 
be a contributing factor material to the Commissioner's 
determination that the individual is disabled.
          * * * * * * *

               Part B--Procedural and General Provisions

                        PAYMENTS AND PROCEDURES

                          Payment of Benefits

  Sec. 1631. (a)(1)  * * *
  (2)(A)(i) Payments of the benefit of any individual may be 
made to any such individual or to the eligible spouse (if any) 
of such individual or partly to each.
  (ii)(I)  * * *
  [(II) In the case of an individual eligible for benefits 
under this title by reason of disability, if alcoholism or drug 
addiction is a contributing factor material to the 
Commissioner's determination that the individual is disabled, 
the payment of such benefits to a representative payee shall be 
deemed to serve the interest of the individual under this 
title. In any case in which such payment is so deemed under 
this subclause to serve the interest of an individual, the 
Commissioner of Social Security shall include, in the 
individual's notification of such eligibility, a notice that 
alcoholism or drug addiction is a contributing factor material 
to the Commissioner's determination that the individual is 
disabled and that the Commissioner of Social Security is 
therefore required to pay the individual's benefits to a 
representative payee.]
  (II) In the case of an individual eligible for benefits under 
this title by reason of disability, the payment of such 
benefits shall be made to a representative payee if the 
Commissioner of Social Security determines that such payment 
would serve the interest of the individual because the 
individual also has an alcoholism or drug addiction condition 
(as determined by the Commissioner) that prevents the 
individual from managing such benefits.
          * * * * * * *
  (B)(i)  * * *
          * * * * * * *
  (vii) In the case of an individual [eligible for benefits 
under this title by reason of disability, if alcoholism or drug 
addiction is a contributing factor material to the 
Commissioner's determination that the individual is disabled] 
described in subparagraph (A)(ii)(II), when selecting such 
individual's representative payee, preference shall be given 
to--
                  (I)  * * *
          * * * * * * *
  (ix)(I) Except as provided in subclause (II), any deferral or 
suspension of direct payment of a benefit pursuant to clause 
(viii) shall be for a period of not more than 1 month.
  (II) Subclause (I) shall not apply in any case in which the 
individual or eligible spouse is, as of the date of the 
Commissioner's determination, legally incompetent, under the 
age of 15 years, or [(if alcoholism or drug addiction is a 
contributing factor material to the Commissioner's 
determination that the individual is disabled) is eligible for 
benefits under this title by reason of disability.] described 
in subparagraph (A)(ii)(II).
          * * * * * * *
  (D)(i) A qualified organization may collect from an 
individual a monthly fee for expenses (including overhead) 
incurred by such organization in providing services performed 
as such individual's representative payee pursuant to 
subparagraph (A)(ii) if the fee does not exceed the lesser of--
          (I) 10 percent of the monthly benefit involved, or
          (II) $25.00 per month ($50.00 per month in any case 
        in which an individual is [eligible for benefits under 
        this title by reason of disability and alcoholism or 
        drug addiction is a contributing factor material to the 
        Secretary's determination that the individual is 
        disabled] described in subparagraph (A)(ii)(II)).
The Secretary shall adjust annually (after 1995) each dollar 
amount set forth in subclause (II) of this clause under 
procedures providing for adjustments in the same manner and to 
the same extent as adjustments are provided for under the 
procedures used to adjust benefit amounts under section 
215(i)(2)(A), except that any amount so adjusted that is not a 
multiple of $1.00 shall be rounded to the nearest multiple of 
$1.00. Any agreement providing for a fee in excess of the 
amount permitted under this clause shall be void and shall be 
treated as misuse by the organization of such individual's 
benefits.

  Procedures; Prohibitions of Assignments; Representation of Claimants

  (d)(1) The provisions of section 207 and subsections (a), 
(d), and (e) of section 205 shall apply with respect to this 
part to the same extent as they apply in the case of title II.
  (2)(A) The provisions of section 206(a) [(other than 
paragraph (4) thereof)] shall apply to this part to the same 
extent as they apply in the case of title II[, except that 
paragraph (2) thereof shall be applied--
          [(i) by substituting, in subparagraphs (A)(ii)(I) and 
        (C)(i), the phrase ``(as determined before any 
        applicable reduction under section 1631(g), and reduced 
        by the amount of any reduction in benefits under this 
        title or title II made pursuant to section 1127(a))'' 
        for the parenthetical phrase contained therein; and
          [(ii) by substituting ``section 1631(a)(7)(A) or the 
        requirements of due process of law'' for ``subsection 
        (g) or (h) of section 223''].
          * * * * * * *

                 DETERMINATIONS OF MEDICAID ELIGIBILITY

  Sec. 1634. (a)  * * *
          * * * * * * *
  [(c) If any individual who has attained the age of 18 and is 
receiving benefits under this title on the basis of blindness 
or a disability which began before he or she attained the age 
of 22--
          [(1) becomes entitled, on or after the effective date 
        of this subsection, to child's insurance benefits which 
        are payable under section 202(d) on the basis of such 
        disability or to an increase in the amount of the 
        child's insurance benefits which are so payable, and
          [(2) ceases to be eligible for benefits under this 
        title because of such child's insurance benefits or 
        because of the increase in such child's insurance 
        benefits,
such individual shall be treated for purposes of title XIX as 
receiving benefits under this title so long as he or she would 
be eligible for benefits under this title in the absence of 
such child's insurance benefits or such increase.]
          * * * * * * *


  treatment services for individuals with a substance abuse condition


  Sec. 1636. In the case of any individual whose benefits under 
this title are paid to a representative payee pursuant to 
section 1631(a)(2)(A)(ii)(II), the Commissioner of Social 
Security shall refer such individual to the appropriate State 
agency administering the State plan for substance abuse 
treatment services approved under subpart II of part B of title 
XIX of the Public Health Service Act (42 U.S.C. 300x-21 et 
seq.).
          * * * * * * *
                              ----------                              


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

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

  (a)  * * *
          * * * * * * *
  [(c) Demonstration Projects.--
          [(1) In general.--The Secretary of Health and Human 
        Services shall develop and carry out demonstration 
        projects designed to explore innovative referral, 
        monitoring, and treatment approaches with respect to--
                  [(A) individuals who are entitled to 
                disability insurance benefits or child's, 
                widow's, or widower's insurance benefits based 
                on disability under title II of the Social 
                Security Act, and
                  [(B) individuals who are eligible for 
                supplemental security income benefits under 
                title XVI of such Act based solely on 
                disability,
        in cases in which alcoholism or drug addiction is a 
        contributing factor material to the Secretary's 
        determination that individuals are under a disability. 
        The Secretary may include in such demonstration 
        projects individuals who are not described in either 
        subparagraph (A) or subparagraph (B) if the inclusion 
        of such individuals is necessary to determine the 
        efficacy of various monitoring, referral, and treatment 
        approaches for individuals described in subparagraph 
        (A) or (B).
          [(2) Scope.--The demonstration projects developed 
        under paragraph (1) shall be of sufficient scope and 
        shall be carried out on a wide enough scale to permit a 
        thorough evaluation of the alternative approaches under 
        consideration while giving assurance that the results 
        derived from the projects will obtain generally in the 
        operation of the programs involved without committing 
        such programs to the adoption of any particular system 
        either locally or nationally.
          [(3) Final report.--The Secretary shall submit to the 
        Committee on Ways and Means of the House of 
        Representatives and the Committee on Finance of the 
        Senate no later than December 31, 1997, a final report 
        on the demonstration projects carried out under this 
        subsection, together with any related data and 
        materials which the Secretary may consider appropriate. 
        The authority under this section shall terminate upon 
        the transmittal of such final report.]