Social Security Amendments of 1965:

Summary and Legislative Historv J BY WILBUR J. COHEN AND ROBERT M. BALL*

WITH THE SIGNING on July 30, 1965, of 1. Establishment, under a new title, of a pro- H.R: 66’75, the Social Security Amendments of gram to provide medical assistance for needy or . 1965 became law. The historic legislation, Public medically needy aged, blind, or disabled persons Law 89-97, establishes two coordinated health and dependent children. insurance programs for the aged and makes a 2. Increased Federal sharing in assistance number of substantial improvements in the payments to the aged, t,he blind, the disabled, and existing old-age, survivors, and disabilit,y insur- dependent children. ance (OASDI) program and other programs 3. Removal of limitations on Federal partici- under the Social Securit,y act. pation in assistance payments with respect to The most significant, changes in t’he social aged persons in tuberculosis and mental disease securit,y system are the following: hospitals under certain conditions. 1. Establishment, of two related national health 4. Kew or increased amounts of income received insurance programs for the aged-( a) a basic by assistance recipients that may be disregarded plan affording protection against the costs of in determining need. hospital and related care, and (b) a voluntary The major changes in the maternal and child supplementary plan covering payments for phy- health and child welfare services are the follow- sicians’ services and other medical and health ing : services. 1. Increase in the annual authorizations of 2. A 7-percent, increase in OaSDI benefits. Federal funds for the three programs. :3. Liberalization of the definition of disability. 2. Authorization of special project grants to 4. Liberalization of the retirement test. provide comprehensive health care for children 5. Payment of benefits to eligible children of lowincome families. aged 18-21 who are attending school. 6. Payment of benefits to widows at, age 60 on an actuarially reduced basis. 7. Coverage of self-employed physicians. 8. Coverage of t,ips as wages. Background and Legislative History 9. Liberalization of insured-status require- of the Insurance Provisions ments for persons already aged 72 or over. The Social Security amendments of 1965 em- 10. Increase to $6,600 in the contribution and body the most far-reaching social security legis- benefit base. lation to be enacted since the original Social 11: Increase in the contribution rate schedule. Security Act, was passed 30 years earlier. The The amendments include the following import- law closes one of the major gaps in the economic ant, changes in the public assistance titlr..; of the security of the elderly by providing protection Social Security f4ct.l against the high costs of hospital and medical care, and it brings the existing OASDI program ‘%Mr. (‘ohen is I’nder Secretary of Health, Education, more in line with current economic and social and Welfare and Mr. Ball is the Commissioner of conditions. Social Security. Bills to provide hospital insurance and related ’ For a brief summary of the amendments affecting public assistance and the maternal and child health health benefits as part of the social security sys- and child welfare Iwograms, see pages 1X-21. llrrlfarc tem have been introduced in every Congress ijr X~~~ic~rf: (Welfare Atlrninistratioli) , August 1065, car- since 1952. The proposals did not receive active ries a legislative history and a fuller description of the welfare Ibrorisions of 1’. I,. X9-97. congressional consideration, however, unt,il 1958,

BULLETIN, SEPTEMBER 1965 3 when Representat,ive Forand (I~., R,.I.) intro- aged uncler the Social Security Act became part duced a bill that. became the subject of testimony of the -~dministrntion’s legislative program. In in public hearings before the Committee on Ways 1961 the ,1dministrntion-sponsored hospital in- and Means of the House of Representatives on surance proposal was contained in bills intro- the Social Security Amendments of 1958. The duced by Representative King (I)., (‘illif.) and (‘ommittee concluded that more information was by Senator .\nderson (I)., N. Mex.) and Senator needed before legislation could be recommended, .Jnvits (I<., N.Y.). and no further action was taken on the proposal In 1962, Senator Anderson proposed, as an at, that time. amendment to the public welfare bill, hospital insurance as part of the social security system. In 1959 and 1960 the Committee on li(‘nys and Means held public hearings on several proposals ‘I’be Senate voted 52 to 18 to table the amend- to amend the Social Security Act, including ments, ant1 no further action was taken on the propos:il by the Eighty-seventh Congress. another bill (H.R. 4700) introduced by Repre- sentative Forand to provide “insurance against the costs of hospital, nursing-home, and surgical services for persons eligible for old-age and sur- vivors insurance benefits.” The Committee, after ACTION IN THE EIGHTY-EIGHTH CONGRESS careful review of the many proposed solutions to In his State of the Knion Message of January the problem of meeting health costs in olcl age, 14, 1963, President Kennedy urged the new Con- concluded that Federal ;tctioIl was necessary but gress to enact a program of health insurance for did not recommend adoption of the proposal for the agecl under the Social Security Act. He elab- hospital insurance under the social security sys- orated on this theme in both his special Message tem. Instead, the Committee recommended addi- on a Health Program, submitted to Congress on tional medical assistance for the needy aged February 7, and in his special Message on El- through liberalizations in the Federal-State pub- derly (‘itizens of Our Xation, submitted on Feb- lic assistance programs. This proposed medical r11:11y 21. In the latter message, the President assistance legislation was later modified by the recommended not only the enactment of a pro- Senate Finance Committee, and the result was a gram of hospital insurance for the elderly but, new program of medical assistance for the aged. also numerous improvements in the OASDI pro- I

4 SOCIAL SECURITY security program. During the Senate debate on support and filing application for lump-sum H.R. 11865, however, an amendment to provide death payments. such :I program was adopted by a vote of 49 to 8. Automntic: recomputation of benefits. 44, and the Sennte subsequently passed the bill by :L vote of 60 to 28. The Conference Committee failed to reach agreement on the hospital insur- ance part of the bill as passed by the Senate, and Action of Ways and Means Committee H.R. 11865 died in the Conference Committee On ,January 67 the Committee on Ways and when the Eighty-eighth Congress came to an end Means began executive sessions’on the King- on October 3, 1964. Anderson bill and other bills, particularly H.R. 288, which was introduced by Representative Byrnes (R., Wis.)-the ranking minority mem- ber of the Committee. The OASDI provisions of CONGRESSIONAL ACTION IN 1965 113. 688 were similar to those in H.R. 11865, but As the Eighty-ninth (!ongress convened on there was no provision for hospital insurance. ,Janunry 3, 1965, there was every indication that, Two other bills, which would have provided major social security legislation related to both health insurance benefits for the aged under :L health insurance and increased cash benefits system not related to social security, also received would be on its agenda for early consideration. the (‘ommittee’s attention. The “Eldercare” pro- The improvements in OASPI that had failed to pow-identical bills, H.R. 3727 and H.R. 3728 be enacted 3 months earlier because the Confer- -was made by Representative Herlong (I>., Fin.) ence Committee did not agree on the hospital :~ncl Representative Curtis (R., MO.). This pro- insurance provisions of H.R. 11865 were con- posal would have modified the provisions of the sidered to be l~ollcolltroversial. It was also gen- Kerr-Mills progrnm to encourage the States to erally conceded t!lat the November elections hnd provide medicnl nssistance for the aged, the blind, ensured passage by the House of any hospital :uid the disabled in the form of private health insurance legislation that the Committee on Ways insurance coverage. and Means might report out. Finally, the House, The second proposal, H.R. 4351, was intro- in an unusunl nction, changed the composition of duced by Representative Byraes and was sup- the Ways and Means (‘ommittee-shortly after ported by five of the eight Republican Commit- Congress convened-to reflect the large majority tee members. It would have established a Federal that the Democrats held in the House of Repre- health insurance program for the aged, financed sent at ives. from Federal general revenues and from premi- On ,January 4, 1965, Representative King intro- ums paid by participants. Enrollment would have duced H.R. l-the hdlnillistratioll’s proposals been voluntary, and premium amounts would for hospital insurance and improvements in the have been scaled to the amount, of the partici- OhSI>1 program as well as in the public nssist- pant’s OA4S111 benefits. ante programs. Senator Anderson introduced the After 2 months of deliberations, Chairman companion bill, S. 1. The King-Anderson bills Mills introduced H.R. 6675, embodying the de- contained :I number of the provisions that had cisions made during the executive sessionsof the been considered by Congress in 1964. Commit tee. The new bill provided for t w-o related Thea major provisions of H.R. 1 were: health insurance programs. The first was a basic 1. ‘Hospital insurance for the aged. program, under the sociiil security system, of pro- 2. it general increase of 7 percent in cash tection against hospital and related he,zlth costs, benefits. similar to the program proposed by the King- 3. An increase to $5,600 in the contribution Anderson bill. I’nlike that bill, however, the and benetit base. (‘ommittee’s bill called for financing by an enrn- 4. An increase in the contribution schedule. ings tax identified separately from the present 5. (‘overage of self-employecl doctors. social security taxes. 6. Coverage of tips. The second health program for the aged pro- ‘7. Extension of the period for filing proof of posed in the Committee3 bill w-as a voluntary

BULLETIN, SEPTEMBER 1965 5 program of protection against the cost of phy- 5. An increase from $1,800 to $2,400 in the sicians’ and certain other medical and health maximum amount of gross farm income that services not covered under the basic program. The farmers may use in computing covered farm supplementary program was to be financed by self-employment income under the optional premiums from enrollees and a matching amount method of reporting such income. paid by the Federal Government from Federal 6. An increase from $1,700 to $2,400 in the tax revenues. span of earnings over which $1 in benefits is The Committee’s reasons for recommending the withheld for each $2 in earnings. health insurance programs were stated in its re- The Committee also adopted the following pro- port’ as follows: visions : Although your committee believes that the Kerr-Mills 1. Payment of wife’s or widow’s benefits to a legislation as a whole has been very beneficial to the divorced wife aged 62 or over if she had been needy aged in our country, it has now concluded that the overall national problem of adequate medical care married to the worker for at least 20 years and for the aged has not been met to the extent desired if her divorced husband was making a substantial under existing legislation because of the failure of some contribution to her support when he became en- States to implement to the extent anticipated and thus the existing program is inadequate to solve the prob- titled to benefits or died, and restorat,ion of bene- lem. Pour committee, therefore, has concluded that a fit rights that were terminated by remarriage if more comprehensive Federal program as to both per- the marriage ended in divorce after 20 years. sons who can qualify and protection afforded is required. 2. Exclusion from gross income of a self-em- Therefore, a threefold approach to meet this national ployed person who has attained age 65, for re- problem has been developed. First, since your commit- tee believes that Government action should not be lim- tirement test purposes, of royalties received in ited to measures that assist the aged only after they or after the year of attaining age 65 from a copy- have become needy, your committee recommends more right or patent obtained before that year. adequate and feasible health insurance protection under two separate but complementary programs which would 3. Elimination of the requirement that a contribute toward making economic security in old age worker’s disability must be expected to result in more realistic, a more nearly attainable goal for most death or to be of long-continued and indefinite Americans. In addition, your committee recommends . a strengthening of the medical assistance provisions duration, and provision instead for an insured of the Social Security Act so that adequate medical aid worker to be eligible for disability benefits if may be provided for needy people. totally disabled throughout a continuous period of at least 6 calendar months. In addition to the OASDI provisions of H.R. 4. Payment, of disability benefits beginning 1, the Committee adopted the following pro- with the last month of the 6-month waiting per- visions of H.R. 288: iod rather than after the 6-month waiting period. 1. Payment, of actuarially reduced benefits to widows at age 60. H.R. 6675 was reported to the House of Rep- 2. Payment of child’s insurance benefits after resentatives on March 29. On April 8, after 2 attainment of age 18 and up to the age of 22 for days of debate on H.R. 6675 under a closed rule, a full-time student. the House passed the bill, without amendment, by 3. Payment of benefits to certain uninsured a vote of 313 to 115. persons already aged ‘72 and over who have fewer than 6 quarters of coverage under transitional provisions that would permit, benefits to be paid on the basis of 3,4, or 5 quarters of coverage. 4. Provision for members of certain religious Action of Senate Finance Committee sects to be exempt from social security self-em- The Senate Finance Committee held 15 days of ployment taxes upon application accompanied by a waiver of all benefits and other payments under public hearings (April 29 through May 19) on the Social Security Act. H.R. 6675. In testifying for the Administration the Secretary of Health, Education, and Welfare, Snthony J. Celebrezze, endorsed the proposed ‘Social Security Amendments of 1965: Report of the health insurance programs for the aged and rec- Committee on Ways an.d Means on H.R. 6675, (House Report No. 213, 89th Cong., 1st sess.), 1965, page 20. ommended adopt,ion with only one major change.

6 SOCIAL SECUPITY The Secretary recommended that physicians’ 3. Deletion of the House provision under services in the fields of radiology, anesthesiology, which payment of disability benefits would have pathology, and physical medicine be covered started with the sixth full month of disability under the hospital insurance program rather rather than the seventh month, as under present than the supplementary program, where the serv- law. ices are furnished through an arrangement, under 4. &4ddition of a provision under which dis- which the physician bills for his services through ability benefits under the Social Security Act the hospital. would be reduced to take account of workmen? Throughout the public hearings of the Senate compensation payments when the combined Finance Committee, testimony centered on the monthly benefits exceed 80 percent of the recipi- proposed health insurance programs. Opposition ent’s average monthly earnings before his dis- to the programs came largely from the Smerican ablement. Medical Association and various State and local 5. Coverage of tips as self-employment income medical societies. The American Medical Asso- rather than as wages. ciation based its opposit,ion on the belief that, 6. Payment of benefits to a child based on his the programs would eventually lead to Govern- father’s earnings, without regard to State law, ment interveution into the practice of medicine. if the father was supporting him or had a legal Some medical groups, however, testified in sup- obligation to do so. port of the health insurance provisions of the 7. Continuation of benefit payments based on bill. a former spouse’s earnings record, at the rate of During executive sessions, the Senate Finance 50 percent of his or her primary insurance Committee adopted the Secretary’s recommenda- amount, to widows aged 60 or over and to wid- t,ion, as proposed in an amendment by Senator owers aged 62 or over who remarry. Douglas (I)., 111.). Under this proposal, the pro- 8. Restoration of the benefit rights lost because fessional services of radiologists, anesthesiolo- of remarriage for divorced wives, widows, sur- gists, pathologists, and physiatrists, when pro- viving divorced wives, and surviving divorced vided under arrangements with hospitals, would mothers who are not currently married. be covered under the hospital insurance plan 9. Addition of a provision authorizing limited rather than under the sul~plementary plan (as the expenditures from social securit,y trust funds to House bill had provided). The Committee also reimburse State agencies for vocational rehabili- increased the maximum duration of hospital tation services furnished to selected disability benems from 60 days to 120, with the last 60 days insurance beneficiaries. of benefits subject to coinsurance payments by the 10. Addition of a provision for payment of dis- beneficiary, and adopted several changes that abled child’s benefits to a child who is disabled liberalized benefits under the two proposed health before reaching age 22 (instead of age 18, as insurance programs. under present law). In addition, the Committee adopted a number 11. Addition of a provision under which an of chauges in the cash benefits provisions of the affiliated group of corporations would be con- bill, including the following : sidered a single employer for purposes of deter- 1. Liberalization of the House-approved retire- mining the maximum amount of amunl lvages ment test provision by increasing to $1,800 the subject to the employer tax. annual amount of earnings exempt) from the test, 12. ,Qddition of a provision authorizing the by extending the $1-for-@ adjustment span t,o Secretary to make disability determinations in $3,000 with a $l-for-$1 adjustment on earnings those cases that can be promptly adjudicated on above $3,000, and by raising to $150 the amount the basis of readily available medical and other that a beneficiary may earn in a month and still evidence. get full benefits for that month. 13. Revision of the financing provisions of the 2. Amendment of the definit,ion of disability House bill to provide a $6,600 contribution and to require that a qualifying disability be one that benefit base, effective for 1966, and a contribution has lasted or can be expected to last at least 12 rate schedule under which rates would be some- months (instead of 6, as under the House bill). what lower in the immediate future than under

BULLETIN, SRPTEMBER 1965 7 the House-passed bill but higher over the long of living, by a vote of 21 for and 64 against; (2) nlll. provide under the two health insurance programs The Finance Committee reported the bill on for alternate variable deductible amounts related June 30. to a person’s income-tax liability, by a vote of 40 for and 52 against; (3) delete the health insur- ance provisions, by a vote of 26 for and 64 against ; (4) delete the provision for compulsory Senate Floor Debate coverage of self-employed physicians and interns, by a vote of 41 for and 50 against; and (5) pro- A number of amendments were adopted during vide that a worker under age 31 may qualify for the Senate debate, including the follo\ving : disability insurance benefits if he had been in 1. Removal of the 120~day limit on the l’ay- covered work for at least half the period bet\veen ment of inpatient hospital benefits; benefits be- the date he attained age 21 and the time he be- yond the sixtieth day would be reduced by a came disabled, by a voice vote. The Senate re- coinsurance payment of $10 a day. jected, by a vote of 26 for and 63 against, a 2. Elimination of the requirement under the motion to recommit the bill to the Finance Com- basic hospital insurance plan that> a person must mittee, with instructions to report the bill back have been in a hospital or extended-care facility immediately after eliminating the health insur- in order to be eligible for home health benefits. ance provisions and report later a bill providing 3. Appointment, to be made by the Secretary, medical insurance for the aged patterned after of an Sdvisory Council on Social Security to the health insurance program now in ell+ect for make a comprehensive study of nursing homes retired civil-service employees, with premiums and other extended-care facilities. paid by those covered except those unable to pay. 4. Provision for the Secretary to study the 011 ,July 9 the Senate passed H.R. 6675, with feasibility of covering prescription drugs under amendments, by a vote of 68 to 21. the supplementary medical insurance plan. 5. Reduction in the age of eligibilit,y for cash benefits to 60 for everyone, with the benefits re- duced to take account of the longer period over which they will be paid. CONFERENCE COMMITTEE ACTION AND 6. Exclusion of the increase in benefits under ENACTMENT the Social Security Act from income considered for purposes of determining a person’s eligibility On July 14 the House aud Senate conferees for, or the amount of, a veteran’s pension. met to settle the tlifferences betweenn the two 7. Payment of disability insurance benefits to versions of H.R. 6675. On July 26 the conferees blind persons on the basis of 6 quarters of cov- filed their report. erage, without respect to their capacity to work. The bill as reported by the conferees departed 8. Requirement that the most recent, addresses from the Senate version in the following signifi- of husbands and parents who have deserted their cant respects : families be disclosed to a State public welfare 1. Adoption of the House provisions for cov- agency or a court. ering the professional services of certain hos- 0. Addition of a provision under which adop- pital-based specialists under the supplementary tion by a brother or sister would not terminate a medical insurance program rather than under child’s benefits. the hospital insurance plan. 10. Revision of the contribution schedule to 2. Adoption of a compromise provision under provide for slightly higher rates to meet. the cost, which inpatient hospital benefits can be paid for of the changes made on the Senate floor. a maximum of 90 days in a spell of illness; bene- fits for the first. 60 days would be reduced by a The Senate rejected a number of amendments. $40 deductible amount? and benefits for each day They included proposals to (1) provide for an beyond the sixtieth would be reduced by a coin- automatic :-)-percent OhSDI benefit increase surance payment of $10. whenever there is a 3-percent increase in the cost, 3. Adoption of the House provisions requiring

8 SOCIAL SECURITY that. a person must have been in a hospital or work; and (b) an alternative disability insured- extended-care facility in order to be eligible foi status requirement, applicable to workers who home health benefits under the hospital insurance become blind before reaching age 31, under which program. such workers are insured if they have quarters 4. Rejection of the Senate provisions under of coverage in half the quarters elapsing after which a study of nursing homes and other ex- age 21 up to the time of disablement or, for tended-care facilit,ies would have been made by those becoming disabled before age 24, quarters an Advisory Council on Social Security and of coverage in at least half the 12 quarters pre-. under which the Secretary would have been re- ceding the quarter in which they become disabled. quired to make a study of the feasibility of cov- 13. Aldol)tion of a compromise provision under ering the cost of drugs under the supplementary which the most recent address of a deserting medical insurance plan. parent would be disclosed to a State or local wel- 5. 4\dol~tion of a compromise provision under fare agency if the children are applicants for or which the amount t,hat a beneficiary may earn in recipients of assistance, if there is a court. order a year and get full benefits for the year is in- for the support of the childreii, if the agency has creased from $1,200 to $1,500, with an increase attempted to obtain the information from all from $100 to $125 in the monthly measure; $1 in other reasonable sources, and if the information benefits is withheld for each $2 of earnings above is to be used (by the agency or court) to obtain $1,500 and LIP to $2,700 a year and for each $1 support for the children. of earnings thereafter. 6. Deletion of the Senate provision under On July 2’7 the House adopted the conference which the eligibility age for cash benefits would report by a vote of 307 to 116. On July 29 the have been reduced to age 60 for everyone. (The Senate approved the report by a vote of ‘70 to provision under which widows can elect to get, 24, and the bill was cleared for the President’s benefits at, age 60 was retained.) signature. ‘i. Adoption of a. compromise provision under On July 30, 1965, H.R. 6675 was signed by which cash tips are covered as wages for social President dohnson and became Public Lam security and income-tax withholding purposes, X9-97. except that employers are not required to pay the social security employer tax on tips. 8. Deletion of the Senate provision under which the increase in benefits under the Social Summary of Major Provisions Security Act would have been excluded from countable income in determining eligibility for HEALTH INSURANCE FOR THE AGED and the amount of a veteran!s pension. Public JAW 89-97 adds to the Social Securit,y 9. Delet,ion of the Senate provision under Act a new title XVIII establishing two related which an affiliated group of corporations would health insurance programs for persons aged 65 have been considered a single employer in deter- and over : (1) a hospital insurance plan providing mining the maximum amount of annual wages protection against the costs of hospital and re- subjest’ to the employer tax. lated care, and (A) a medical insurance plan cov- 10. Deletion of the Senate provision under ering payments for physicians services and other which childhood disability benefits would have medical and health services to cover certain areas been. payable to a child who became disabled not covered by the hospital insurance plan. before reaching age 22. The hospital insurance plan is financed through 11. I>eletion of the Senate provision under a separate earnings tax and a separate trust fund. which the Secretary would have been authorized Eenefits for persons who are currently aged 65 to make disability determinations in certain cases. and over who are not insured under the social 12. iicloption of a compromise providing for security or the railroad retirement systems will (a) the payment of benefits to blind workers aged be financed out of Federal general revenues. 55-65 who are unable to engage in their ~sunl Enrollment in the medical insurance plan is occupation and who are not doing substantial voluntary, and the plan is financed by a small

BULLETIN, SEPTEMBER 1965 9 monthly premium ($6 a month initially-$3 paid inpatients. Payment will not be made, however, I,y enrollees and an equal amount paid by the for private-duty nursing or for the hospital serv- I;ederal Government from general revenues). ices of physicians (including radiologists, nnes- ‘l’he premiums for social security and railroad thesiologists, pathologists, and physiatrists) ex- retirement beneficiaries and for civil-service re- cept those provided by interns or residents in I Irement annuitnnts who enroll will be deducted training under approved teaching programs. In- from their monthly benefits. t7ninsured persons patient psychiatric hospital services are covered, desiring the medical insurance plan will make but a lifetime limitation of 190 days is imposed. r!!e periodic premium payments to the Govern- Inpatient services in Christian Science sanatori- ‘llcllt. State welfare programs may arrange fol unls are covered as inpatient hospital services, !Inmsured assistance recipients to be covered. but only under such conditions and limitations (in lieu of or in addition to those applicable to hospitals) as are provided by regulations. b. Posthospital extended care (in a qualified Hospital Insurance facility having an arrangement with a hospital Protection, financed by means of an earnings for the timely transfer of patients and for fur- tax, is provided against the costs of inpatient nishing medical information about patients and hospital services, posthospital extended care, meeting certain other requirements) after the pa- posthospital home health services, and outpatient tient is transferred from a hospital (after at least hospital diagnostic services for beneficiaries a 3-day stay) for a maximum of 100 days in each under the social security and railroad retirement spell of illness. After the first 20 days of care, the systems when they attain age 65. The same pro- patient will pay $5 a day for the remaining 80 tection, financed from general revenues, is pro- days of extended care in a spell of illness. Under vided under a special transitional provision for a special provision, extended care in Christian essentially all persons who are now aged 65 or Science sanatoriums is covered for a maximum of who will reach age 65 before 1968, but who are ~30days, with the patient paying $5 a day. not eligible for social security or railroad retire- c. Outpatient hospital diagnostic services, with ment benefits. Together, these two groups make the patient paying a $20 deductible amount and up virtually the entire aged population. making a 20-percent coinsurance payment, for The persons not protected are Federal employ- each diagnost,ic study (that is, for diagnostic ees who are covered under the Federal Employ- services furnished to him by the same hospital ees Health Benefits Act of 1959 or who, if they during a 20-day period). were retired after February 15, 1965, were cov- ered or could have been covered under that act. d. Posthospital home health services for as Others excluded are aliens who have not been many as 100 visits, after discharge from a hos- residents of the I-nited States for 5 years, aliens pital (after at least a 3-day stay) or from an who have not been admitted for permanent resi- extended-care facility and before the beginning dence, and certain subversives. of a new spell of illness. The person must be in Benefits will be first available on July 1, 1966, the care of a physician and under a plan calling except for services in extended-care facilities, for such services tjlat was established by a phy- which will become available January 1, 1967. sician within 14 days of the patient’s discharge, Benefits.-The services for which payment is and the services must be provided by a qualified to be made under the hospital insurance plan in- home health agency. These covered services in- clude : clude intermittent nursing care and physical a. Inpatient hospital services for a maximum therapy. The patient must be homebound except of 90 days in each spell of illness. The patient that payment may be made for services furnished mill pay a deductible amount of $40 for the first at a hospital or extended-care facility or rehabil- 60 days, plus a coinsurance payment of $10 a day itation center-that requires the use of equipment that cannot ordinarily be taken to the patient’s for each day in excess of 60 during each spell of home. illness. Covered hospital services include almost all those ordinarily furnished by a hospital to its No service is covered as posthospital extended

10 SOCIAL SECURITY care or as outpatient diagnostic or posthospital bution rates established can be reduced under the home health services if it is of a kind t’hat could cost assumptions underlying the law. The cost of not be covered if it were furnished to a patient hospital insurance benefits for persons who are in a hospital. not, beneficiaries under the social security or rail- A spell of illness is considered to begin when road retirement systems will be paid from general the individual enters a hospital and to end when funds of the Treasury. he has not been an inpatient of a hospital or ex- tended-care facility for 60 consecutive days. The deductible amounts for inpatient hospital Medical Insurance Plan and. outpatient hospital diagnostic services will 9 package of benefits supplementing those pro- be increased if necessary to keep pace with in- vided under the hospital insurance plan is arail- creases in hospital costs, but no increase will be able to all persons aged 65 and over. Individuals made before 1969. For administrative simplicity, who enroll initially will pay $3 a month (de- increases in the hospital deductible will be made ducted, where possible, from social security, rail- only when a $4 change is called for, and the road retirement, or civil-service retirement bene- outpat,ient deductible mill change in $2 steps. fits). The (;overnment will match this amount B~is of reimburse~nen~t.-Payment, of bills with $3 paid from general funds. Since the mini- under the hospital insurance plan will be made to in~uii increase in cash social security benefits for the providers of service on the basis of the “rea- workers who are aged 65 or over’ when the benefit sonable cost” incurred in providing care for bene- increase is effective for them is $4 a month ($6 ficiaries. a month for man and wife receiving benefits Administwtion.-Basic responsibility for ad- based on the same earnings record), the benefit ministration rests with the Secretary of Health, increase fully corers the amount of monthly pre- Education, and Welfare. The Secretary will use miums. appropriate State agencies and private organi- KnrolTmenf.--For persons aged 65 before ,Jnnu- zations (nominated by providers of services) to ary 1, 1966, an enrollment period will begin assist in administering the program. Provision September 1, 1965, and end March 31, 1966. Per- is made for the establishment of an Advisory sons attaining age 65 after December 31, 1965, Council thaf. will advise the Secretary on polic,y will have enrollment periods of 7 months begin- matters in connection with administration. ning 3 months before they attain age 65. In the Film?lcin.g.-Contributioils to finance the hos- future, general enrollment periods will be from pit al insurance plan, paid by employers, employ- October 1 to December 31, in each odd year, be- ees, land self-employed persons, are to be placed ginning in 1967. No person may enroll more t,han in a separate hospital insurance trust fund es- 3 years after the close of the first enrollment tablished in the Treasury. The earnings base- period in which he could have enrolled. Persons the amount of annual earnings subject to the new tax-is the same ($6,600) as the earnings base who are in the plan but drop out will have only for purposes of financing the cash benefits. The one chance to reenroll, and reenrollment must. same contribution rates apply equally to em- occur within 3 years of termination of the pre- ployers, employees, and self-employed persons vious enrollment. Coverage may be terminated and are as follows: by the individual, who must file not,ice during a general enrollment period, or by the Govern- Percent ment, for nonpayment of premiums. A State can 1066 ------__-______0.35 provide the medical insurance protection for its 1967-72 --_-_-______------______.50 1973-75 -----_--______------______.55 public assistance recipients who are receiving 1976-79 ------.60 cash assistance if it choosesto do so. Benefits will 1980-96 ------_____------______.70 be available beginning July 1, 1966. 1987 and thereafter _------______.80 Benefits.-The medical insurance plan covers The schedule of contribut.ion rates is based on physicians services, home health services, and cost est,imates that assume that the earnings base numerous other medical and health services in will not be increased above $6,600. If Congress, in and out of medical institutions. later years, should increase the base, the contri- The plan covers 80 percent of the pat,ient’s bill

BIJLLRTIN, SEPTEMBER 1965 11 (above an annual deduct’ible of $50) for the fol- and subscribers. In determining reasonable lowing services : charges, the carriers will consider the customary a. Physicians’ and surgeons? services, whether charges for similar services generally made by furnished in a hospital, clinic, office, in the home, the physician or other person or organization or elsewhere. furnishing the covered services and also the pre- b. Home health services lmder an approved vailing charges in the locality for similar serv- plan (with no requirement of earlier hospitnliza- ices. Payment by carrier for physicians’ services tion) for a maximum of 100 visits during each will be made on the basis of a receipted bill or an calendar year. assignment under which the reasonable charge c. Diagnostic X-ray and laboratory tests, and will be the full charge for the service. other diagnostic tests. The requirement that the reasonable charge d. X-ray, radium, and radioactive isotope must be the full charge where an assignment pro- therapy. cedure is used and that otherwise a receipted bill e. Ambulance services. must be submitted would (1) assure that the f. Surgical dressings and splints, casts, and amount shown on the bill was the actual charge other devices for reduction of fractures and dis- for the services and (2) provide a safeguard locations; rental of durable medical equipment, especially for the less lvell-to-do who are covered such as iron lungs, oxygen tents, hospital beds, under the plan, for whom it is probable that col- and wheelchairs used in the patient’s home ; pros- lection would normally be made through an as- thetic devices (other than dental) t,hat replace signment. all or part of an internal body organ ; and braces Financing.-Aged persons who enroll in the and artificial legs, arms, eyes, etc. medical insurance plan will pay monthly premi- There is a special limitation on outside-the- ~Liiis of $3. If the individual is currently receiving hospital treatment of mental, psychoneurotic, and monthly social security, railroad retirement, or personality disorders. Payment for such treat- civil-service retirement benefits, the premiums ment during any calendar year is limited, in will be deductecl from his benefits. effect, to $250 or 50 percent of the expenses, The (;overnment will help finance the medical whichever is smaller. insurance plan through a payment from general Administration by carriers: basis for reim- revenues of $3 a month l)er enrollee. To provicle bursement.-The Secretary of Health, Education, an operating fund when the medical insurance and Welfare is required, to the extent possible, plan is first eflective and to establish a contin- to contract with carriers to carry out the major gency reserve, a Gorernment al)propriation will administrative functions of the medical insurance be available (on a repayable basis) equal to $18 plan, such as determining rates of payments, per aged person estimated to be eligible in July holding and disbursing funds for benefit pay- 1!)66, when the sul)l)lementary plan goes into ef- ments, and determining compliance and assisting fect. The individual and Government contribu- in utilization review. No contract can be entered t ions will be placed in a separate trust. fund for into by the Secretary unless he finds that the the medical insurance plan, and all benefit and carrier will perform its obligations efficiently and administrative expenses will be paicl from this effectively and will meet requirements, such as t 1’LW funcl. those relating to financial responsibility and legal The provision in the income tax law limiting authority and other matters as the Secretary medical expense cleductions to amounts in excess finds pertinent. of 3 percent of acljusted gross income for persons The contract must provide that the carrier take under age 65 will be reinstituted for persons aged necessary action to see that, where payments are 65 and over. Thus, partial or full recovery of the made on :I cost basis, the cost is reasonable. Government contribution will be made from en- Where payments are on a charge basis the car- rolled persons with incomes high enough to re- rier must see that such charge will be reasonable quire them to pay income taxes. A special deduc- and not higher than the charge applicable, for a tion (for taxpayers who itemize deductions) of comparable service and under comparable cir- half tlie amount of premiums for insurance cumstances, to the carrier’s other policyholders covering medical care will, however, be added.

12 SOCIAL SECURITY This deduct ion, applicable to taxpayers of all made from that fund. In these years the Railroad ages, cannot exceed $150 a year. Retirement Board mill determine the rights of Premium rates for enrolled persons (and the railroad retirement beneficiaries to hospital in- matching Government contribution) will be in- surance benefits and provide hospital insurance creased from time to time if costs rise, but not protection, financed from the railroad retirement more often than once every 2 years. The premium account, for railroad retirement beneficiaries in rate for a person who enrolls after the first period Canadian hospitals. when enrollment was open to him will be in- These provisions presumably anticipate the creased by 10 percent for each full year he stayed enactment of legislation making and keeping the out of the program. railroad retirement wage and tax base equal to that under the Social Security Act. Should there be years, however, in which the tax and wage bases of the two programs are not equal, hospital Cost of the Hospital Insurance and Medical insurance taxes for those years would be levied Insurance Plans under the social securit,y taxing provisions and Benefits under bot,h plans become payable for hospital insurance protection for railroad benefi- services furnished in July 1966, except services in ciaries would be provided under social security on extended-care facilities, for which benefits be- the same basis as that for social security bene- come payable in January 1967. Benefits and ad- ficiaries. ministrative expenses under the hospital insur- ance plan will be about $2.2 billion for the first year of operations. For those uninsured under the hospital insurance plan the annual cost (paid OLD-AGE, SURVIVORS, AND DISABILITY from general revenues) will be about $290 mil- lion in the early years, with a substantial offset, INSURANCE AMENDMENTS for public assistance savings. Benefit payments of the medical insurance plan will be about $1.2 Benefits billion in the first year of operation. Increase in monthly cash benefits.-The law provides a ‘(-percent across-the-board benefit in- crease, effective retroactively beginning January 1965, with a minimum increase of $4 for retired Railroad Retirement Health Insurance Provisions workers aged 65 and older. Benefits are increased The basic administration of the health insur- for the 20 million social security beneficiaries on ance benefits program will be handled by the the rolls at the time of enactment and for all Social Security Administration in much the future beneficiaries. same way for railroad retirement beneficiaries as The minimum monthly benefit for workers re- for social security beneficiaries. That is, the Ad- tiring at or after age 65 is now $44. For the ministration will be responsible for making pay- present, the maximum benefit will be $135.90 ments to providers of services and carrying out (based on average monthly earnings of $400, the related administrative functions. highest amount possible under the $4,800 base The law cont,ains provisions designed to ensure for contributions and benefits). In the future, the that the hospital insurance taxes paid on em- higher creditable earnings resulting from raising ployment covered under the railroad retirement the base to $6,600 a year will make possible a program will be the same as those paid on em- maximum benefit of $168. ployment. covered under social security. For The maximum amount of benefits payable to a years in which the annual earnings and tax bases family on the basis of a single earnings record of the two programs are equal, hospital insurance is related, at all earnings levels, to the worker’s taxes on railroad employment will be levied average monthly earnings with an ultimate fam- under the railroad retirement taxing provisions ily maximum of $368. of the law and then transferred to the Federal The benefits of persons on the rolls will be re- hospital insurance trust fund, with payments computed automatically each year to take account

BULLETIN, SEPTEMBER 1965 13 of any covered earnings that the worker might will be reduced to the extent that the total bene- have had in the preceding year that can increase fits payable to him and his dependents under his benefit amount. The amendment is effective both programs exceed 80 percent of his average for calendar years after 1964. monthly earnings before the onset of disability, but with the reduction periodically adjusted to G’hcmge in the retiren1en.t test.-Effective for take account of changes in national average taxable years ending after 1965, a beneficiary earnings levels. Under this provision, the work- array have :umnal earnings of $1,500 and still get er?s average monthly earnings are defined as the all his benefits for the year; if his earnings ex- higher of (a) his average monthly wage used for ceed $1,500, $1 in benetits will be withheld for purposes of computing his disability benefit each $2 of anuual earnings up to $2,700 and for under the Social Security Act or (b) his average eac11 $1 of earnings thereafter. He will get, bene- monthly earnings in covered employment during fits, regardless of the amount of his annual earn- his highest 5 consecutive years after 1950. This ings, for any month in which he earns $125 or less offset, provision applies to benefits payable after in wages and does not render substantial services December 1965 on the--basis of disabilit,ies com- iii self-employment. mencing after June 1, 1965. Certain ro@ies that are received in or after Reimbursement will be made from the social i he sear in which :t person reaches age 65 from security trust funds to State vocational rehabil- copyrights and patents that were obtained before itation agencies for the cost of rehabilitation he reached that age are not counted as earnings services furnished to selected individuals who for purposes of the test. This provision is effective are entitled to disability insurance benefits or to for taxablt years beginning after 1964. disabled child’s benefits. The total amount that may be made available from the trust funds for Payment of child’s insurance benefits to child- purposes of reimbursing State agencies cannot, tm nged 1841 md &tending xhoo7 or college.- in any year, exceed 1 percent of the disability (‘hild’s insurance benefits are payable until the benefits paid under the Social Security Act in child reaches age 22, 1lrovided the child is nttend- the preceding year. This provision is effective ing a public or accredited school as a full-time immediately. student after he reaches age 18. Children of de- The disability provisions with respect to t,he ceased. retired? and disabled workers are in- blind are modified in t,wo respects. First, the def- cluded. so person will be paid mother’s or wife’s inition of disability 110~ provides that an individ- benefits solely on the basis of having in her care ual is considered to be disabled for purposes of a child who has attained age 18 and is in school. entitlement to disability benefits if he is between The change is effective for months after I)ecem- the ages of 55 and 65, meets the definition of ber 1964. “blindness” (as p rovided for purposes of the disability “freeze”) and is unable, because of (‘Anngcx in the dimbility ~~‘rogrnm.-The law such blindness, to engage in substantial gainful eliminates the requirement that a worker’s dis- activity requiring skills or abilities comparable ability must be expected to be of long-continued to those required in his past occupat.ion or occu- and indefinite duralion. It provides instead that pations. He will receive no payment, however, ;L~Linsured worker is eligible for disability bene- for any month in which he engages in substantial fits (payable after the sixth month, as in the past) gainful activity. if he has been under a disability that can be Second, an alternative insured-status require- expected to result, in death or that has lasted or ment is provided for persons who are disabled can be expected to last) for a continuous period of before they reach age 31 because of “blindness” not, less than 12 calendar months. Benefits pay- RS defined. Under this provision, the blind indi- able because of this change are payable beginning vidual would be insured if he has quarters of with benefits for September 1965. coverage in half the quarters elapsing after st- The disability benefit under the Social Security tainment of age 21 and up to the point of dis- Act, for any month for which a worker is receiv- ability, or, for those becoming disabled before ing a periodic workmen’s compensation benefit they reach age 24, for at least half the 3 years

14 SOCIAL SECURITY preceding the quarter in which he becomes dis- Quarters ol coverage requirfd if the widow attains age i2 in abled. Year of husband’s death (or ___.______. --_-----_ attainment of age 65, if earlier) I A person who becomes entitled before age 65 19fiRor I 19Gi 19th beforr / I to a benefit payable on account of old age could / / _ --- 1954 or before...... ___....._ ... _ .. 3 4i later become entitled to disability insurance bene- lYj5...... --...--.-.--..--.--.--.~ .. 4 4 5 1956...... ~-...... ~- - 5 5 / :> fits. The amendment is effective begimling with I I monthly benefits for September 1965 on the basis of applications filed in or after July 1965. Benefits of $35 will be payable to retired workers and widows; wives of retired workers will receiw Rimefits for widows at age 60.-Widows can $1$.50. elect to receive benefits at age 60. The benefits These provisions are effective for September payable to those who claim them before age 62 1965. will be actuarially reduced to take accomlt of the longer period over which they xi11 be paid. This Dependents’ benefits.--Under the new law a provision is eflective beginning September 1965. child can be paid benefits based on his father’s earnings without, regard to whether he has the Y’mwvitionnc irmwed stcrtm-The law sets up a status of a child under State inheritance laws if “transitional insured status” provision. Persons the father was supporting the child or had a who reached retirement age in 1955 or 1956 can legal obligation to do so. Benefits will be paid to qualify for benefits if they have 1 quarter of cov- a child on his father’s earnings record, ewn erage for each year that elapsed after 1950 and though he cannot inherit the father’s intestate up to retirement age (t’hat is, 4 or 5 quarters), personal property, if the father (1) had acknowl- and those who reached retirement age in or be- edged the child in writing; (2) had been ordered fore 1954 can qualify if they have 3 quarters of by a court to contribute to the child’s support: coverage instead of 6. Benefits are not payable (3) had been judicially decreed to be the child’s under this provision until age 72. father; or (4) is shown by other satisfactory The following tabulation shows the operation evidence to be the child’s father and was living of the “transitional insured status” provision for with or contributing to the support of the child. workers : The amendment is effective with respect to monthly benefits beginning September 1965. AOC Quarters of coverage (in 1965) required Benefits are payable to widows (and widowers) Men : 76 or over -__----__----___---______3 even though they have remarried if the remar- 7.5 ------4 riage was after they reached age 60 (age 62 for 74 ------__---___---______- 5 widowers). The amount of their benefit equals Women : 73 or over -___----_------3 50 percent of the primary insurance amount of 72 ------__----__---______- 4 the deceased spouse rather than %31/r,percent of 71 ------_-----_------5 that, amount, which is payable to widows and widowers while they are not married. The changr Rife’s benefits are payable at age F2 to a is effective with respect to monthly benefits be- woman whose husband qualifies for benefit.s ginning with those payable for September 1965. under the transitional provision if she attains age 72 before 1969. Widow’s benefit will be payable The law authorizes payment of wife’s or wicl- at age 72 to a woman who reaches age 72 before ow’s benefits to the divorced wife of a retirrtl, 1969 if her husband was living in September deceased, or disabled worker if she had been 1965 and if he met the work requirements of the married to the worker for at least 20 years l)e- 1)rovisiou. A widow who reaches age 12 before fore the date of the divorce and if her divorced 1969 but whose husband died before September husband was making (or was obligated by a court, 1965 can qualify if her husband attained age 65 to make) a substantial contribution to her sulb- or died before 1957 and if he had a specified port when he became entitled to benefits, becanlr number of quarters of coverage, as shown in the disabled, or died. It also provides that a wife’s following tabulation. benefits Cl1 not terminate when the woman and

BULLETIN, SEPTEMBER 1965 her husband are divorced if the marriage has TABLE I.-Number of persons immediately affected by OASI>I amendments and amount of additional cash benefit been in effect for 20 years. Provision is also made payments in 1966 l for the re-establishment of benefit rights for a Number of divorced wife, a widow, a surviving divorced persons Provision immediately mother, or a surviving divorced wife who has affected remarried if the subsequent marriage has ended. Total additional payments $2,320,000,000 ,..._.__.__....-- ‘These changes are effective for September 1965. -- 7.percent benefit increase ($4 minimum /--- The provisions relating to the payment of in primary benefits) ~...... _ ~. 1,470,000,000 20.000,000 benefits to children who are adopted by old-age Reduced henefits for widows at age 60.....; ? 165,000,OOO 185,000 insurance beneficiaries are changed to require Ilenefits for persons aged 72 and over with limited periods in covered u-or%.; 140,000,000 355,000 that, if the adoption occurs after the worker be- Improvements in benefits for children: i comes entitled to an old-age benefit, (1) the Eenefits for children to age 22 if in school.1 195,000,000 295,000 Ikoadencd definition of “child”...... ~ 10.000,000 20,000 child be living with the worker (or adoption Modifications in disability provisions: proceedings have begun) in or before the month Change in definition..... _._.__...... , 40.000,000 64,000 Liberalized requirements for benefits 1 the application for old-age benefits is filed; (2) for the blind . ..__...... I 5.000,000 I 7,000 the child has been receiving half his support for Modification of earnings test-- _. 295.000,000 j 3 750,000 the year before the worker’s entitlement ; and (3) 1 First full year of operation. the adoption be completed within 2 years after 2 No long-range cost to the system because the benefits are actuarially reduced. the worker’s entitlement. The amendment is ef- 3 Number affected in 1966; modification does not become effective Until then. fective with respect to applications filed on or after July 30, except that the e-year time limit will not apply to adoptions completed within the ting benefits without causing termination of the 12 months following that date. child’s benefits. The amendment is effective with A wife, husband, widow, or widower may get respect to monthly benefits beginning August benefits without regard to the generally appli- 1965. cable requirement that a marriage must, have lasted at least a year, if, in the month preceding the marriage he or she was actually or potentially entitled to a widow’s, widower?, parent%, or (if Coverage over age 18) child’s annuity under the Railroad Physicians and in terns.-Coverage is extended Retirement Act. Also, a woman worker’s hus- to self-employment as a doctor of medicine, ef- band or widower who was entitled to a specified fective for taxable years ending on or after railroad retirement annuity before marriage to December 31, 1965. The employment of int,erns a person insured under the Social Security Act is covered, beginning on January 1, 1966, on the may get benefits without regard to the generally same basis as that of other employees rvorking applicable requirement that the wife be currently for the same employer. insured and have provided at least half her hus- Tips covered CCR tonges.-Cash tips received band’s support. The amendment will be effective after 1965 by an employee in the course of his beginning with monthly benefits payable for employment are covered as wages for social secur- September 1965. ity and income-tax withholding purposes, except The law extends indefinitely the period for that employers are not required to pay an em- filing proof of support for dependent husband’s, ployer tax on the tips. widower’s, and parent’s benefits and applications The employee must give his employer a writ- for lump-sum death payments, where good cause ten report of his tips within 10 days after the exists for failure to file within the initial 2-year end of the month in which the tips are received. period. The amendment is effective for lump-sum To the extent that unpaid wages due an employee payments and monthly benefits based on applica- and in his employer’s possession are insufficient tions filed in or after July 1965. to pay the employee social security tax due on Brothers and sisters are added to the list of the tips, the employee may make available to the relatives who may adopt a child after the death employer sufficient funds to pay the tax. If an of the worker on whose earnings record he is get- employee fails to report some or all of his cov-

lb SOCIAL SECURITY ered tips to his employer, he is liable not only than $2,400 they must report their actual net for the employee tax but also for an additional earnings if $1,600 or more; if actual net earnings 50 percent, of that tax. are less than $1,600, they may report either that The employer must withhold the employee tax amount or $1,600. (For taxable years beginning only on tips reported to him within the specified before *January 1, 1966, farmers whose annual time and for which he has sufficient funds of the gross earnings are more than $1,800 must report employee out, of which to pay the tax. He will be their actual net earnings if $1,200 or more, but if liable for withholding income tax on only those actual net earnings are less than $1,200, they may tips that are reported to him within 10 days after report either their actual net earnings or $1,800.) the end of the month in which the tips were re- ceived, and then, in general, only to the extent Mi&sters.-For ministers who have been in that he can collect the tax (at or after the time the ministry for at least 2 years since 1954 the the tips are reported to him and before the close period during which they may file waiver certi- of the calendar year in which the tips were re- ficates electing coverage is reopened, through ceived) from unpaid wages (not including tips), April 15, 1966. Coverage for ministers whose eli- or from funds turned over to him for that pur- . . gibility to file waiver certificates is reopened will l)ose remainmp after the amount equal to the ordinarily begin with 1963. In addition, social amount due for the social security tax has been security credit, may be obtained for the past earn- subtracted. ings of certain ministers who die or file waiver Exemption of Amish and other religious sects. certificates before April 16, 1966, where such -Under specified conditions, members of reli- earnings were reported for social security pur- gious sects may obtain exemption from social poses but could not be credited. security self-employment taxes upon application accompanied by a waiver of benefit rights. To be Employees of nonprofit organizations.-ATon- eligible for exemption an individual must be profit organizations may file a waiver certificate found to be a member of a recognized religious and make it retroactive up to 5 years (formerly sect, (or a division of a sect) and to be an ad- 1 year) before the quarter in which the certifi- herent of the established tenets or teachings of cate is filed. If an organization files a waiver the sect by reason of which he is conscientiously certificate before 1966, the certificate may be opposed to accepting any private or public insur- amended during 1965 or 1966 to begin coverage ance benefits paid in the event of death, disabil- as early as 5 years before the quarter in which ity, old-age, or retirement, or paid toward the the certificate is amended. Those employees to cost of, or providing services for, medical care whom additional retroactive coverage is appli- (including the benefits of any insurance system cable (because the organization amends its cer- established by the Social Security act). It must tificate) are given an individual choice of such be found that the sect has such teachings and has additional coverage. Employees who were re- been in existence at all times since December 31, ported erroneously and who are no longer em- 1950, and that it is the practice for members to ployed when an organization files or amends its make provision for their dependent members that waiver certificate may validate the erroneous re- is rkasonable in view of their general level of portings for periods during which the certificat,e living. The application for exemption for taxable or amended certificate is in effect. In addition, yea:ss ending on or before December 31, 1965, certain employees whose wages were erroneously must be filed by April 15, 1966. The exemption reported by a nonprofit organization during the may become effective as early as the first taxable period its waiver certificate was in effect may year beginning after December 31, 1950. validate the erroneously reported wages. These provisions are effective immediately. Farm,ers.-Farm operators whose annual gross earnings are $2,400 or less may report either their actual net earnings or two-thirds of their gross District of Columbia employees.-Coverage is earnings, for taxable years beginning after De- provided for employees of the District of Colum- cember 31, 1965. When gross earnings are more bia who are not covered by a retirement system.

BULLETIN, SEPTEMBER 1965 17 The District of Columbia Commissioners may as though they were under separate retirement arrange n.lso for the coverage. of te.mporary and systems for social security coverage purposes. intermittent, employees to be shifted from the Federal civil-service retirement system to the social securit,y system. Coverage begins after the calendar quarter in which the Secretary of the Miscellaneous Changes Treasury receives 11 certific.ate from the District The law also includes a number of adminis- of Columbia Commissioners expressing their de- trative and technical changes, including pro- sire to ha.ve coverage exter1de.d to the affected visions relating to the length of time an appli- employees. cation for benefits is effective, tre.atment of Pfnte c1~ld 7octrZ roverage changes. - Another underpayments and of payments to two or more opport.unity is provided, through 1966, for the members of the same family, attorney’s fees, and election of coverage by members of State and disclosure of the whereabouts of a beneficiary. 10CbiLlgovernment retirement systems who orig- In addition to these changes, the legislation inally did not chose coverage under the divide.d revises the provisions authorizing reimbursement retirement system provision, under which current. of the social security trust funds out of genera.1 employees have a clioice of coverage.. Alaska is revenue for gratuitous wage credits for service- added to the list of States that may use the di- men so that reimbursement will be spread over vided retirement system provision. These pro- the next 50 years? rather than 10 years. visions are effective immediately. Iowa a.nd Nort,h Dakota are permitted to mod- ify t,heir coverage agreements with the Secretary of Health, Education, a.nd Welfare to exclude Financing Old-Age, Survivors, and Disability from coverage services performed by students, Insurance Amendments including services already covered, in t.he employ The old-age, survivors, and disability insurance of a. school, college, or university in any calendar provisions of the law are financed by (1) an in- quarter if the remuneration for such services is crease in the earnings base from $2,800 to $6,600, less than $50. The modification may specify the efYec.tive January 1, 1966, and (2) a revised tax effective date of the exclusion, but it may not. be rate schedule. The revised schedule is shown earlier than July 30, 1965. below : The. past coverage under the social securit,y system of employees of certain school districts Year in Alaska that, have been included in error as separate political subdivisions under the Alaska social security coverage agreements is validated. (The emplo9ee.s of the school districts involved should properly have. been covered as employees of the political subdivisions of which the school *411 additional 0.20 pe.rcent of taxable wages districts are integral parts.) The provision is and 0.15 percent of taxable self-employment in- effective for 1965 and earlier years; coverage. for c.ome will be allocated to the disability insurance years after 1965 must, be wlcler the general pro- trust fund, bringing the total allocation to 0.70 visions of the law. percent. of wages and 0.525 percent of self-em- California is permitted to modify its coverage ployment income beginning in 1966. a.greement to e.xtend coverage to certain hospital employees whose positions were removed from a State or local government retirement system. ‘JJle PUBLIC ASSISTANCE AMENDMENTS State will have until the end of January 1966 to take action under this provision. Medical Assistance Program Maine is given until ,July 1, 1967 (rather than July 1? 1963): to treat teaching and nonteaching To provide a more effective program of medi- employees who are in the same retirement system cal care for ne.edy persons, the law establishes

18 !5OCIAL SECURITY a program of medical assistance under a new order to receive Federal participation in vendor t,itle of the Social Security Act-title XIX. medical payments. Other items of medical serv- This title is intended to replace the Kerr-Mills ice are optional with the States. law-medical assistance for the aged-and the Eligibility.-The law improves the program provisions for direct payments to suppliers of for the needy elderly by requiring that the States medical care and services under old-age assist- establish a flexible income test that takes into ance, aid to the blind, aid to families with de- account medical expenses ; it may not set up rigid pendent children, aid to the permanently and income standards that arbitrarily deny assist- totally disabled, and the consolidated program ance to persons with large medical bills. In the for the aged, the blind, and the disabled. The same spirit the law provides that no deductible, program may be administered by a State agency cost-sharing, or similar charge may be imposed designated for the purpose, but eligibilit’y is to by the State for hospitalization under its pro- be determined by the State agency responsible gram and that such a charge on other medical for administering old-age assistance. services must be reasonably related to the recip- The program is to include all persons now re- iem’s income or resources. Elderly needy recipi- ceiving assistance for basic maintenance under ents under the State programs must be provided the public assistance titles and also may include assistance to meet~the deductibles imposed by the persons who are iLble to ljrovide their mninte- new basic program of hospital insurame. Where nance but whose income and resources are not a portion of any deduct’ible or cost-sharing under sufficient to meet their medical care costs. Serv- either program is met by a State program, it ices offered the former group may be no less in must be done in a manner reasonably related to amount or scope than those for the latter group. the individual’s income and resources. No income If the medically needy are included, comparable can be imputed to an individual unless it is eligibility provisions are to apply so that all per- actually available, and the financial responsibility sons similarly situated among the aged, the blind, of an individual for an applicant may be taken the disabled, and dependent children would be into account. only if the applicant is the individ- included in the program. Other medically needy ual’s spouse or child who is under age 21 or blind children could be included. Xo age requirement or disabled. may be imposed that would exclude any person Increased Federal matching. - The Federal over age 65 or, after July 1, 196’7, mlder age 21. share of medical assistance expenditures under ,4 flexible income test taking medical expenses the new program is determined by a uniform into account would be used. formula, with no maximum on the amount of The old provisions in the various public as- expenditures subject to participation-the pro- sistance titles of the ,4ct providing vendor medi- cedure followed for medical assistance for the cal assistance terminate upon the adoption of the aged. The Federal share varies in relation to a new program by a State but no later than Decem- State’s per capita income; States with a national ber 31, 1969. average income receive 55 percent (rather than A\‘~ol~c!of medicnl nNSi8tnncr!.-ITnder the old the 50 percent formerly received for medical as- provisions, the State has had to provide “some sistance for the aged), and States at the lowest institutional and noninst,itutional care?’ under level receive as much as 83 percent, (in contrast the program of medical assistance for the aged. to 80 percent). There have been no minimum benefit require- To receive any additional Federal funds as a ments with respect to vendor medical payments result of expenditures under the new program, under the other public assistance programs. For the States must continue their own expendi- the new program a State must, by July 1, 1967, tures at their present rate. For a specified per- provide inpatient hospital services, outpatient iod, no State would receive less in Federal funds hospital services, other laboratory and X-ray because of the new formula than it had in the services, skilled nursing home services for indi- past, and any State that did not reduce its own viduals aged 21 and over, and physician’s services expenditures would be assured of at least a 5- (whet.her furnished in the office, the patient’s percent increase in Federal participation in medi- home, a hospital, or a skilled nursing home) in cal care expenditures. The Federal share in the

BULLETIN, SEPTEMBER 1965 19 cost of compensation and training of professional aid to the blind, aid to the permanently and medical personnel is now 75 percent, compared totally disabled (and recipients under the com- with the 50-50 Federal-State sharing for other bined title XVI program), who are unable to administrative expenses. manage their money because of physical or mental incapacity. Earnings and income exemptions.-The amount of earned or other income received by assistance recipients that may be disregarded by the States Other Public Assistance Provisions in determining need under various programs was increased by several provisions. increased assistance payments.--The Federal A State may, at its option, exempt the first share in old-age assistance, aid to the blind, $20 (formerly $10) of earned income received by and aid to the permanently and totally disabled persons on the old-age assistance rolls (and by is raised, effective January 1, 1966, to $31 of the aged in a combined program) and half the the first $37 of a State’s average monthly pay- next $60 (formerly $40) of a recipient’s monthly ment per recipient (instead of $29 of the first This provision is effective October 1, $35) plus a proportion of the remainder up to $75 earnings. (formerly $70). In aid to families with dependent, 1965. children the Federal share is increased to $15 of In aid to families with dependent children the first $18 of a State’s average monthly pay- the States may disregard up to $50 of earnings ment per recipient, (instead of $14 of the first, per child per month, but not more than $150 in $17), plus a proportion of the balance ~111 to $32 the same family may be exempted in determining need. The amendment, which is wholly permissive (formerly ~113 to $30). States receive no additional Federal funds except to the extent that they pass with the States, is eflective July 1, 1965. them on to individual recipients. Recipients of aid to the permanently and Tubewdous rind mental ycrtients.-In old-age totally disabled may have the same exemption of assistance and medical assistance for the aged earnings that is provided under old-age assist- (and the combined program), the law removes the ance and the same exempt ion of income and re- exclusion from Federal matching with respect to sources, if they are under an approved rehabil- payments for aged individuals who are patients itation plan, that is now provided for the blind. in institutions for t,uberculosis or mental diseases This amendment is also ~vholly permissive with or who have been diagnosed as having tuberculosis the States and is effective October 1, 1965. or psychosis and, as a result, are patients in a In addition to earnings, up to $5 per recipi- general medical institution. As a condition of ent per month of any income may be exempted Federal part,icipation in such payments to, or under any of the federally aided public assist- for, mental patients, certain agreements and ar- ance programs. rangements are required to ensure that, better The States may disregard as much of the care results from the additional Federal money. OASDI benefit increase as is attributable to its States will receive no more in Federal funds retroactive effective date. under this provision than the increase in their The law also provides a grace period for expenditures for mental health purposes under action by States that, have not had regular legis- public health and public welfare programs. Re- lative sessions ancl whose public assistance stat- strictions are removed on Federal matching in utes now prevent them from disregarding a recip- payments for the needy blind and the disabled ient’s earnings under the Economic Opportunity who are tuberculous or psychotic and are in gen- act. eral medical institutions. The provision is eflec- School attendance for child recipients.-The tive January 1, 1966, and will cost about $75 definition of a school in which a child aged 18-21 million a year. may receive aid to families with dependent chil- Protective payments to third pemons.- dren, at the State’s option, is broadened to in- The lam adds a provision, effective January 1, clude colleges. 1966, for protective payments to third persons Definition of medical rcssistancefor the aged.- on behalf of recipients of old-age assistance, The law modifies the definition of medical as-

20 SOCIAL SECURITY sistance for the aged, effective July 1, 1965, Health Care for the Children to allow Federal sharing in payments in behalf of Low-Income Families of old-age assistance recipients for the month A new provision authorizes the Secretary of they are ndmit,ted to or discharged from a medi- Health, Education, and Welfare to carry out a 5 cal institution. year program of special project. grants to provide Judicial review-A State dissatisfied with comprehensive health care and services for chil- the Secretary’s decision with respect to State dren of school age, or for preschool children, public assistance plans may appeal to t,he courts particularly in areas with concentrations of low- for review. income families. The grants (not to exceed 75 Altewaative formula-Any State, at its option, percent of the cost of the project) will be made to after adopting tit.le XIX (medical’ assistance) State health agencies, State agencies administer- may claim Federal participation in its money ing the crippled children’s program, any school payments under the formula provided under t,hat, of medicine (with appropriate part,icipation by title instead of under the different formulas in a school of dentistry), and any teaching hospital the other public assistance titles. affiliated with such a scl~ool. Projects will provide screening, diagnosis, preventive services, treat- ment, correction of defects, and aftercare, includ- MATERNAL AND CHILD HEALTH AND CHILD ing dental services, for children in low-income WELFARE AMENDMENTS families. An appropriation of $15 million is authorized Increase in Annual Authorizations for the fiscal year ending June 30, 1966 ; $35 million for the year ending June 30, 1967; $40 The law increases the amount authorized for million for the year ending June 30, 1968; $45 materna1 and child health services over current million for the year ending June 30, 1969; and authorizations by $5 million for fiscal year $50 million for the year ending June 30, 1970. 1965-66 and by $10 million in each succeeding fiscal year, as shown below.

Fiscal year 1 Old law ( New law Mental Retardation 1965-66 __._.___ __._.....______.._.._ _.... $40.000.000 $45,000,000 196667...... ______...... __ _...... _ 40,000,000 50,000,000 1967-Lxe- _ ...... _...__._ ...... __ ... 45.000.000 55,000,000 Grants totaling $2,750,000 are authorized~ for 1968-69. _...... _._...... _ _ _...... __. 45.000.000 55.000,000 1969-70 andafter...... -.-...... --- ... 50,000,000 60.000,000 each of 2 fiscal years-1965-66 and 1966-67. The grants will be available during the year for which the appropriation is authorized and during the The authorizations for crippled children’s succeeding fiscal year. They are for the purpose services and child welfare services are increased of assisting States to implement and follow up on to the same amounts. Such increases will assist plans and other steps to combat mental retarda- the States, in all these programs, to move toward t ion, as authorized mlder section 1701 of the the goal of extending services and making them Social Security Act. available to children in all parts of the State by-July 1, 19’75.

Study of Resources Relating to Children’s Tiaining Personnel For Care of Crippled Children Emotional Illness The law also authorizes $5 million for the The Secretary of Health, Education, and Wel- fiscal year 1966-67, $10 million for 1967-68, fare is authorized to make grants for carrying and $17.5 million for each succeeding fiscal year out a program of research into resources, methods, in grants to institutions of higher learning to and practices for diagnosing or preventing emo- be used in training professional personnel for tional illness in children and of treating, caring the care of crippled children, particularly men- for, and rehabilitating children with emotional tally retarded children with multiple handicaps. illness.

BULLETIN, SEPTEMBER 1965 21