December 6, 1955
' L-55-593 *'-170
The Board
The Associate General Counsel
The effect on the Board's administration of H.R. 7225 (passed by the House of Representatives on July 18, 1955)•
The Board's attention was called in July of this year to the bill H.R. 7225, referred to in the subject above. 1/ At that time the
Board was primarily concerned with the proposed amendment to the Social
Security Act to reduce the eligibility age for women's benefits from 65 to 62. On the dates of the memoranda referred to in footnote 1 the bill was not available for examination, and there was no way of ascertaining the extent to which it may have been technically defective for the purposes of coordination between the railroad retirement and social security systems.
The difficulties in this respect came to light only upon examination of the bill after it was reported out b; the House Committee on Ways and Means. 2/
The pertinent provisions of the bill suggest for the Board's consideration the following:
1. A permanently disabled child whose disability began before age 18 and is otherwise entitled to a child's benefit before that age,
1/ See memorandum from the Secretary to the Board dated July 8, 1955, entitled "Spouse's Eligibility Age", and my memorandum to the Board dated July 11, 1955, entitled "Effect on the Railroad Retirement j.ct of contemplated amendments to the Social Security act to reduce the eligibility age from 65 to 62 for spouses' and aged survivors' bene fits, and to provide benefits, before age 65, to persons who are totally and permanently disabled.
2/ A section-by-section analysis of the bill is attached. - 2 - Memorandum to the Board ■ would continue to receive a child's benefit after attainment of that age.
(Section 101 of the bill.) Section 109(a) of the bill would make the Social
Security Act as amended by the bill applicable to the Railroad Retirement
Act, instead of the Social Security Act of 195k; and it would follow from
this that, by reason of section 3(e) of the Railroad Retirement Act, a
child's disability annuity under the Railroad Retirement Act would be subject
to the over-all social security minimum irrespective of the special provision
now in section 3(e) providing that minimum for diabled children, Moreover,
such child's disability annuity would have to be considered under the pro visions of section 5> (k) (2); and it is quite obvious that the Railroad Retire
ment Account stands to gain from this provision. It should be noted, however,
that before the Board could apply section 5(k)(2) of the Railroad Retirement
Act to a child's disability annuity, it would have to be established that
the disability on the basis of which the Board awarded a child's annuity
is the same as on the basis of which the Social Security Act, as amended by the bill, would require payment to such child of a monthly disability
benefit. It is my opinion that the definition of disability in the bill
for a child's disability benefit is substantially the same as the definition
in the Railroad Retirement Act for a child’s disability annuity, so that no
question should arise in this respect. However, I think it would be wise
to remove any doubt before the enactment of the bill by incorporating a
statement to that effect in the Senate Committee's report, If this cannot
be agreed upon, it might be well to provide specifically in section 5(k)(2)
of the Railroad Retirement Act that for the purpose thereof the disability
defined in the bill for a child's benefit under the Social Security Act shall - 3 -
Memorandum to the Board be deemed to be the same as the disability defined under the Railroad
Retirement Act for the purposes of a child's disability annuity.
The provision in the proposed section 22h of the Social Security
Act (proposed by section 103(a) of the bill) for reducing a child's disa bility annuity by the amount payable to such child as a disability benefit
"under any other law of the United States" would be of no concern to the
Board with respect to a child's survivor disability annuity since a survivor's benefit is payable only under one or the other of the two Acts, and not under both, but it would have to be taken into account by the Board in live cases in determining the amount due to the family of an annuitant having a disabled child who would be entitled to a disability benefit under the Social Security
Act, In such a case, the Board would not only have to ascertain whether or not the child would be entitled to a disability benefit under the Social
Security Act, but also if, and to what extent, the child is entitled to a disability benefit under some other law of the United States, or some state law, as provided in said section 22h, which would reduce the amount of the
social security benefit. The resulting administrative problems for the Board will undoubtedly be commented on by the Director of Retirement Claims. If
the problem is too difficult, and avoidance thereof is desired, it would be well to amend section 3(e) of the Railroad Retirement Act to provide that, for tiie purposes thereof, the Board shall disregard the reduction provisions of the said section 22li (and, possibly, providing in section 5(k)(2) that, for the purpose thereof, the full amount of the social security benefit would be treated as payable nevertheless under the Social Security Act).
2, The eligibility age for women's benefits (wipes', old age, women parents, and aged widows') would be reduced from 65 to 62 (Section - h - Memorandum to the Board
102 of the bill.) Here, again, by reason of the provisions of section 109(a) of the bill (which would make the Social Security Act as amended by the bill applicable to the Railroad Retirement Act, instead of the Social Security
Act of 195k), the provisions of section 3(e) of the Railroad Retirement Act would be applicable.
The effect of this amendment, in the case of a wife's benefit, would be that though the Board would not be required to pay a spouse's annuity before the spouse attained age 65, the Board would be required to increase the annuity of an employee age 65, whose wife attained age 62 and would otherwise meet the eligibility conditions for a wife's benefit under
the Social Security Act, by an amount which would make the total payable
to the employee no less than the sum which would be payable to the employee and his wife under the Social Security Act if the.employee1s service as an
"employee" were "employment" under the Social Security Act.
Further, by reason of the provisions of section 5(k)(2) of the
Railroad Retirement Act, the Board could charge the social Security Adminis tration with the full amount which would be payable under the Social Security
Act as a wife's benefit to the wife of the employee whose annuity was in creased under section 3(e) of the Railroad Retirement Act, regardless of
the amount, if any, by which such annuity was increased.
It is thus quite obvious that the Railroad Retirement Account
stands to gain from the present provision in the bill insofar as it would permit the application of section 5(k)(2) of the Railroad Retirement Act
to spouset1 annuities by as much as three years sooner than is now the case.
On the other hand, however, should the Board adopt the recommendation made - 5 - Memorandum to the Board
by the Director of Retirement Claims in his memorandum to the Board dated
July 18, 1955 (in which he concluded that "From an administrative point of view, therefore, it would seem that lowering the eligibility age for spouses would be preferable to increasing the employee's annuity under section 3(e)."), the provisions of section 5(k)(2) of the Railroad Retirement Act would not be advantageous to the Board since a spouse's annuity under the Railroad Retire ment Act would generally be as much as, or more than, the wife's annuity under
the Social Security Act, and payment would be made in spouses' cases to a much greater extent than would be under the provisions of the bill as now drafted
(under the over-all social security minimum)e 3/ If such recommendation
should be adopted, an amendment to section 2(e) of the Railroad Retirement
Act would be necessary.
The provisions of section 109(b)(1) and 109(b)(2) would be necessary whether or not the eligibility age for a spouse's annuity under the Railroad
Retirement Act is reduced to age 62. The first of these two provisions would enable a widow (-‘-hose benefit, as such, would be based on combined services covered under both Acts) to elect the residual lump-sum amount, under section
5(f)(2) of the Railroad Retirement Act, before she attains age 62, instead of age 65, as is now the case. The other is a technical change to avoid possible difficulties from referring to section "202" of the Social Security Act which reference would not include the new section 223 (providing for disability insurance benefits at age 50). Since such section 223 is in Title II of that
3/ For a discussion ol the administrative problems which the bill, as now drafted, would create for the Railroad Retirement Act in this respect, I refer you to the above-mentioned memorandum from the Director of Retirement Claims. - 6 - Memorandum to the Board
Act, the reference to "Title II" would serve the purpose.
It should be noted that no alternative considerations would be required with respect to retirement annuities awarded to women at age 60 under section 2(a)2 of the Railroad Retirement Act, or insurance annuities to aged widows, or women parents, under section 5 of the Act. In all such cases the Railroad Retirement Account would be certain to gain from the pro visions (in the bill) here under discussion because, at the present time, the provisions of section 5(h)(2) of the Railroad Retirement Act are not applicable to such cases before the beneficiary attains age 65, while the provision here under discussion would permit the application of said section
5(k)(2) by as much as three years earlier than is now the case.
An absolute gain to the Railroad Retirement Account would result also from the application of the provisions of section 5(k)(2) of the Rail road Retirement Act in cases of women employees 62 years of age and over with less than 30 years of service. As in the case of spouses' annuities, an amendment to reduce the eligibility age of such women from 65 to 62 might be considered desirable, but instead of a gain to the Railroad Retirement
Account there would possibly be a loss, ij/
3. The bill would provide eligibility for retirement benefits under the Social Security net for individuals totally and permanently dis abled, as defined in the bill, if they are age 50 or over, (Section 103
G/7 1 assume that the Director of Research will, in due course, advise the Board of the financial effect on the Railroad Retirement Account of the bill as now drafted, without amendments, by reason thereof, to the Railroad, Retirement Act, and of the financial effect resulting from such amendments to the Act as directed by the Board. - 7 - Memorandum to the Board
of the bill.) This reduction in eligibility age by reason of disability
would not confer eligibility for benefits to any other person (such as a
wife or dependent child) on the basis of such individual's "employment"
before such individual attains age 65. This provision is also certain to
result in gains to the Railroad Retirement Account, under the provisions
of section 5(h)(2) of the Railroad Retirement Act, with respect to disability
annuities payable under section 2(a)5 of the Railroad Retirement Act to
employees age 50 and over. At the present time such provisions arc not
applicable until such disabled annuitants attain age 65, and the effect of
the provision of section 103 of the bill would make such provision applicable
by as much as fifteen years sooner than is now the case. Here, again, it is
necessary to make certain that total disability which was the basis for the
award under section 2(a)5 of the Railroad Retirement Act is the same as the
total disability defined in the bill for purposes of the disability insurance
benefits. It is my opinion that a statement to that effect in the Senate
Committee's report would be sufficient for the purpose; but if no agreement
inthis respect is reached before the Senate Committee reports on the bill,
an amendment to section 5(k)(2) of the Railroad Retirement Act as indicated
in paragraph 1 above would be required in order to make certain that the
provisions of section 5lk)(2) would be applicable. Of course, to obtain the
full benefit of the interchange provision in total disability cases, as dis
tinguished from occupational disability, we must make certain that total
disability cases awarded, for convenience, under section 2(a)it, would be
recognized as coming within the disability standards of section 2(a)5.
it. The provisions of the proposed section 22lt(a) of the Social
Security Act (see section 103(a) of the bill), which would reduce an - 8 - Memorandum to the Board individual's disability insurance benefit by the amount payable to such individual under the Railroad Retirement Act as a disability annuity under section 2(a)U or 2(a)5 would not operate to reduce the amount to be charged the Social Security Administration under section 5(k)(2) of the Railroad
Retirement net. This would be so because the amount not payable under the
Social Security Act by reason of such reduction would nevertheless be pay able (if the disability standards of section 2(a)$ of the Railroad Retirement
Act are met even though the award was actually made under section 2(a)b of the Act) if service as an "employee" were "employment". In order, however, to avoid any possible question with respect thereto, it would be we].l to incorporate a statement to that effect in the Senate Committee1s report on the bill. If there should be disagreement on this point before the Senate
Committee reports on the bill, however, an amendment to section 5(k)(2) of the Railroad Retirement Act, substantially the same as discussed in para graphs 1 and 3 above, could be made.
5. The proposed section 22b of the Social Security Act is defective for the purposes of the coordinating provisions between the two systems in that it fails to provide a method of procedure for a case in which an individual is eligible for a disability annuity under section 2(a)$ of the Railroad Retirement Act and also for a disability insurance benefit under the proposed section 223 of the Social Security Act (proposed by section
103 of the bill) and the provisions of section 3(e) of the Railroad Retirement act are applicable. The problem would arise in such case if the annuity of such individual, before the application of section 3(e) under the Railroad
Retirement Act, would, be less than the disability insurance benefit, but - 9 - Memorandum to the Board greater than such benefit after the application of such section 3(e). This problem could be resolved by amending section 3(e) of the Railroad Retirement
Act to provide that in such case the provisions of section 22b of the Social
Security Act, insofar as such provisions would require a reduction for an annuity under the Railroad Retirement Act, should be disregarded.
6. The proposed section 22h of the Social Security Act provides that a disability insurance benefit shall be reduced by the amount payable
"under any other law of the United States", if it is "based (in whole or in part) on a physical or mental impairment"; and that such benefit shall be reduced also by the amount payable "to such individual under a Workmen's
Compensation law or a plan of a State"; and if such other payment is not on a monthly basis the reduction "shall be made in such amounts as the
Secretary finds will approximate, as nearly as practical, the reduction prescribed" by said section 22b • Sickness benefits under the Railroad
Unemployment Insurance Act, although payable on a daily brfsis, are made
"under any other law of the United States" and the Secretary might be re quired to reduce the disability insurance benefit, on an approximate basis, by the amount of such sickness benefits as benefits "based (in whole or in part) on a physical or mental impairment". The probability is slight and I doubt that the framers of section 22b intended to apply its provisions to sickness benefits under the Railroad Unemployment Insurance Act not only because "physical or mental impairment" is rather an inept term to describe the base for sickness insurance benefits, but also because there are at least four States (New Jersey, California, Rhode Island and New YorK) that also provide sickness insurance benefits, and it is specifically provided that - 10 - Memorandum to the Board the reduction would apply only to payments "under a Workmen's Compensation law or a plan of a State", so that the provisions of the proposed section
22b would not, apparently, apply to the sickness insurance benefits payable in the four States mentioned. To provide certainty, however, that it was not intended to apply the reduction to sickness benefits under the Railroad
Unemployment Insurance Act, a specific exception of the Act from said section
22b might well be included. If such reduction was so intended, however, there would be a difference of treatment by section 22b between sickness benefits under the 1;ailroad Unemployment Insurance Act and sickness benefits under a
State law. The fact that sickness benefits under the -ailroad Unemployment
Insurance Act are payable for only 26 weeks in a year, and that a six-months waiting period would be reouired for a disability insurance benefit under the
Social Security Act, would not eliminate the problem. If no exception of the
Railroad Unemployment Insurance Act is made in paragraph 2 of subsection (a) of the proposed section 22b o.f the Social Security Act it might be well to consider the propriety of incorporating in the Senate Committee's report on the bill a statement to the effect that under the provisions of section b(a-l)(ii) of the Railroad Unemployment Insurance Act, any period with respect to which an individual would be eligible for a disability insurance benefit under the Social Security Act would not be a period which would in clude a day of sickness under the Railroad Unemployment Insurance Act, which would thus require the payment of a disability insurance benefit under the
Social Security Act for periods otherwise compensable under the Railroad
Unemployment Insurance Act. Toto, however, that the non-payment of railroad unemployment insurance benefits in such a case, and the consequent payment - 11 - Memorandum to the Board
of the social security benefit, would operate against the interest of the
Railroad Retirement Account,
7. The same section 103 of the bill (103(b)) would amend section
222 of the Social Security Act to provide for the non-payment of a disability
insurance benefit, including a child's disability benefit, for any month with respect to which a disabled beneficiary refuses without good cause to accept rehabilitation services available to him under a State plan approved under the Vocational Rehabilitation Act". I understand that the Director of Retire ment Claims is now in the process of preparing a statement setting forth the various administrative problems which the bill would create for the Board, including the administrative problems which this section would undoubtedly create in the application of section 3(e) of the Railroad Retirement Act.
The solution to the problems almost certainly to be presented by the vocational rehabilitation issue would appear to require an amendment to sec tion 3(e) of the Railroad Retirement Act, providing that the vocational rehabilitation deduction should not apply in computing the benefit amount under section 3(e) of the Railroad Retirement Act, and a further amendment to section 5(h)(2) would be necessary if it is desired to charge the Social
Security Administration with amounts paid which might not have been paid if the rehabilitation deductions had been applied.
8. In paragraph (2) of the proposed section 22l+(a), above referred to, there may be a question as to whether the Social Security Administration might not have authority to determine for itself whether an individual entitled to a disability monthly benefit under the Social Security Act meets the quali fications for a disability annuity under the Railroad Retirement Act or for
sickness benefits under the Railroad Unemployment Insurance Act; and - 12 - Memorandum to the Board
subsection (d) of said section 22li, by requiring only "information" rather
than certifications of decisions, seems to suggest the same possibility of
this question. In order to avoid such possible interpretation, it would be well to incorporate a statement to the contrary in the Senate Committee's
report on the bill.
9. The provisions in section 103 of the bill for disability
insurance benefits to individuals age 50 and over, do not dispense with the
need for disability freeze determinations to be made under the Social Security
Act for periods before an individual attains age 50 or for individuals who die before reaching that age. For the same reason, such provisions in said sec
tion 103 of the bill do not dispense with the need for disability freeze
determination to be made by the Railroad Retirement Board for purposes of
applying sections 3(e) and 5(h)(2) of the Railroad Retirement Act. Tn my memorandum dated May 16, 1955 (L-55-283), T emphasized the necessity for
jurisdiction in the Board to make disability freeze determinations for career
railroad employees for a number of reasons, one of which was that disability
freeze determinations under the Social Security Act would be made by agencies
having no financial interest in the determinations of disability (such deter minations being for the purpose of securing a higher average monthly remunera tion, or for the purpose of freezing an insured status with respect to bene
fits upon attainment of age 65), and whose concern with such determinations would certainly not be as great as the Board's because the disability freeze determinations by the Board would govern the award of a substantial life annuity beginning at an age much earlier than 65. (See the last paragraph,
and footnote L, on page 6 of 1-55-283.) The proposal in the bill to provide - 13 - Memorandum to the Board disability benefits under the Social Security Act on the basis of disability determinations to be made by the same agencies, which would have no greater interest in avoiding (unsatisfactory to the Board) disability determinations in benefit cases than in freeze cases (with the standards for disability freeze and for disability benefits under the Social Security Act being, in my opinion, substantially the same), emphasizes the necessity for jurisdiction in the
Board to make its own disability determinations for career railroad employees for all purposes since actual disability benefits would be provided by each of the two systems independently of the other. It is, of course, highly un reasonable to expect the Board, which has the Primary responsibility for administering the Railroad Retirement Act, to make awards of railroad retire ment disability annuities on the basis of determinations made by the Social
Security Administration or by any of the various State agencies. Coordination and uniformity of decisions is, of course, desirable, but it need not be effected at the expense of the Board's giving up jurisdiction over career railroad workers in this respect (compare the amicable coordination in survivor benefit cases), and subjecting the Railroad Retirement Account to possible depletion because of the application of standards unacceptable for the purposes of the Board's administration. 5/ Certainly, we must avoid the situation where a determination by the Board as to the presence or absence of eligi bility for disability freeze purposes could be reversed by the Social Security
Administration or by a State agency (as well might be the case if the Board
is not given independent jurisdiction), with a possible later reversal of the
Social Security Administration's, or the State agency's decision by the Board when acting on a disability annuity claim. That condition can be avoided
5/ The pressure for the application of such standards would be even greater in disability insurance benefit cases than disability freeze cases. - lit - Memorandum to the Board absolutely only by legislation providing specific jurisdictional boundaries and limitations.
I stated in my memorandum to the Board of November 17, 1?55, that, in due course, T would submit to the Board a draft bill which would amend the Railroad Retirement Act to the extent the Board deems necessary if H.R. 7225, supra, is enacted. I shall, of course, withhold submitting such a draft bill until after the Board has had an opportunity to consider all the issues set out in this memorandum as well as the views of the various bureau and office heads of the Board on this bill, and the Board is in a better position to indicate its wishes as to the substance of the bill to be drafted.
David B. Schreiber Associate General Counsel
Attachment Chicago 11, Illinois December 5, 1955
To: Mr. Johnson
From: Mr. McLaughlin
Subject; Section-by-section analysis of H. R. 7225, 84th Congress, 1st session (passed by the House on July 18, 1955)•
H. R. 7225 as passed by the House would amend the Social
Security Act in four major respects. It would provide for (l) child's insurance benefits for children who are disabled before attaining age
18 continuing after that age as long as disability exists and there is no disqualification otherwise; (2) full insurance benefits to totally disabled individuals upon attainment of age 50; (3) payment of old-age, widow's, wife's, and parent's insurance benefits to women as early as age 62, rather than as the present Act provides, at age 65; and (4) extending the coverage of the Act to include lawyers and those engaged in other professional services (physicians would still be excluded), and certain others. The bill would also amend the Internal Revenue
Code of 1954 to increase the scheduled social security tax rate l/2 percent each in respect of employers and employees, and 3/4 percent in respect of self-employment income, and extend the tax application in accord with the extension of social security coverage. A section-by section analysis of the bill follows:
Section 101. Subsection (a) amends section 202(d)(l) of the
Social Security Act to provide a child's insurance benefit for disabled children, regardless of age, of both individuals entitled to old-age -2- insurance benefits and deceased insured individuals if the child's disability began before age l8. Under the language it seems that only those children who were or shall be eligible for a child's benefit before attaining age l8 can receive such benefits based on disability, and not any others, even if otherwise qualified after that agej that is, the disabled child of an insured individual cannot qualify for the bene fit if over l8 when its parent dies or becomes entitled to old -age insurance benefits. Benefits to children on the basis of disability are restricted to those who attained age 18 after 1953 - However, those children only who attain age l8 after 1953 and before 1956 and are entitled to benefits except for not having applied therefor will be deemed to have filed application for child’s benefits on the last day of the month before attaining age 18 and therefore can receive such benefits on the basis of disability. Section 101(f) (described herein after) provides for the conditions described in the last two sentences.
The disability criteria would be the same as for disability insurance benefits for other than children which are provided by section 103 of the bill but would differ in certain respects from the test for the disa bility freeze determinations as described hereinafter.
Subsection (b) amends section 203(a) of the Social Security
Act, which provides for maximum benefits, by providing that maximum benefits will be determined after deductions, in addition to the other deductions, under section 222(b) (this relates to deductions by reason of failure to accept rehabilitation service), and section 224 (this relates to deductions because of entitlement to a periodic benefit from any other agency of the United States based in whole or in part on disa bility or periodic benefits under a workmen's compensation law or plan -3- of a state on account of disability). Subsection 222(b) and section 224 would be added to the Social Security Act by section 103 of the bill.
Subsection (c) amends section 203(b) of the Social Security
Act by adding two sentences after paragraph (5), the first of which pro vides that a child shall not be considered to be entitled to a child's insurance benefit for the purpose of that section (respecting deductions from a wife and mother's insurance benefit because of not having a child entitled to a child's insurance benefit in her care) for any month in which the child refuses without good cause the prescribed rehabilitation service. The second sentence provides that no deduction shall be made on the basis of the work deduction provision of section 203(b) from any child's insurance benefit for the month the child attains age l8 or later months; that is, the child would be free to work after 18 without loss of benefits (except insofar as working might establish actual recovery).
Subsection (d) amends section 203(d) of the Social Security
Act in a technical respect by adding section 222(b) (the vocational rehabilitation refusal provision) to the other deductions that will not in combination i n . a single month reduce the benefit by more than its amount.
Subsection (e) amends section 203(h) of the Social Security
Act by including the deductions of the new subsection 222(b) and section
224 with other deductions (the work deduction and incidental penalty provision), which reduce benefits only to the extent that they would reduce the total amount which would otherwise be paid on the basis of the same employment to such individual and the other individuals living in the same household. The effect of section 203(h) is to reduce, where - 4 - an individual incurs the specified reduction, the amount being paid to him and the other individual or individuals in the same household (who are paid by a single, combined check) by only the amount which would reduce the amount payable to his household group and to others on the basis of the same employment, to the extent that the total payments of all these beneficiaries would not be less than the maximum that would be payable without regard to the individual incurring the deduction.
In other words, only the check payable to the family groups in which the individual belongs is reduced and by only such amount that the total payments to all the beneficiaries would not be less than without him.
Subsection (f) restricts benefits for disabled children to those who attained the age of 18 after 1953 and then only with respect to months after December 1955 and requires from such a child a new ap plication. Benefits cannot begin until after December 1955 and the month before such application is filed.
A child who attains the age of lS after 1953 and before 1956, without filing an application for benefits, will be deemed to have filed an application for child's insurance benefits on the last day of the month preceding the month in which he attained that age, The provision described in the preceding sentence does not apply to cause anyone other than the child to be entitled to benefits
Section 102. Subsection (a) amends section 216(a) of the
Social Security Act to reduce the "retirement age for a woman to 62, which would permit a woman to be eligible for the wife's, widow's, parent's or her own retirement benefit as early as age 62. -5-
Subsection (b) provides that the change will apply to permit benefits only after December 1955 and in the case of lump-sum benefits, insofar as these would be affected by the changed 'retirement age", with respect to deaths after December 1955. For an individual whose entitle ment to a wife's or mother's insurance benefit under the Act before the amendments ended before January 1956, a new application, after December
1955, is required.
For purposes of the closing date, a woman who attained age 62 prior to 1956 and was not eligible for old-age insurance benefits before
1956 under the Act as in effect before the amendments, shall be deemed to have attained age 62 in 1956 or the year in which she died if earlier.
A woman shall not by reason of the amendment lowering retirement age be deemed fully insured before January 1956 or the month in which she died if earlier. The amendment lowering the retirement age will not be appli cable in the case of any woman who was eligible for old-age insurance benefits before 1956. Respecting the provisions described in the three preceding sentences, a woman shall be deemed eligible for old-age insur ance benefits for any month she would have been entitled to such benefits had she applied therefor, The changed retirement age does not apply until after December 1955 in the definition of wages as not including payments after retirement age (other than vacation or sick pay) where the individual does not work for the employer in the period for which paid.
Section 103 - Subsection (a) adds to the Social Security Act a provision, section 223, for monthly disability insurance benefits for individuals 50 years of age or more, and less than retirement age, upon application during the existence of the disability if insured for such benefits. Benefits begin after a waiting period of six months. Bene fits shall be the same in amount as they would be if the individual had become entitled to old-age benefits in the first month of his waiting period. The only deduction provision of a work nature appli cable specially to the recipient of disability benefits is conditional on a refusal to accept rehabilitation services.
Subsection (b) of such section 223 provides that an effec tive application for the disability benefit cannot be filed more than nine months before the first month in which the individual becomes entitled or before the month in which the bill is enacted. In this respect the disability benefit is different from other benefits for which application is now allowed earlier than three months before entitlement otherwise.
Subsection (c)(l) of such section 223 provides that an individual is insured for disability benefits in a month if he would have been a fully and currently insured individual during the month had he attained retirement age and applied for old-age insurance bene fits on the first day of such month. It is conditioned, however, on his having not less than 20 quarters of coverage during the 40-quarter period ending with the quarter in which such first day occurred, not counting any quarter in a period of disability unless it was a quarter of coverage.
The subsection (c)(2) of such section 223 defines disability as "inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of long continued and indefinite - 7 - duration . The individual shall not be considered to be under a dis ability unless he furnishes such proof as is required. This definition differs from the separate disability definition which is applicable for disability freeze purposes in that the latter definition, while
including the language of the former definition, adds "or (B) blind ness1' which means, under the definition, central visual acuity of
5/200 or less in the better eye with the use of a correcting lens.
This is deemed to include an eye in which the visual field is re duced to five degrees or less concentric contraction. The annuities based on total disability provided for in the Railroad Retirement Act
are payable to those individuals "whose permanent physical or mental
condition is such that they are unable to engage in any regular employment". Possibly the visual condition described in the freeze provision is not necessarily covered by the first clause (which is
identical to the definition respecting disability insurance benefits); but more likely the disability benefit provision is not meant to apply where the particular individual in fact can engage in substantial
gainful activity despite his physical or mental condition but the
freeze provision is to apply in blindness cases even if he can.
The "waiting period " is defined as the earliest period of
six consecutive calendar months throughout which the individual who
files an application has been under a disability and which begins not
earlier than with the first day of the sixth month before the month
in which his application is filed if the individual is insured for
disability benefits in such six months or if he is not so insured in
such month which begins not earlier than with the first day of the first -8- month after such sixth month in which he is so insured.
Under no conditions can a waiting period begin before
July 1, 1955; or before the first day of the sixth month before the month in which the individual attains the age of 50.
A new section 224 is added to the Social Security Act to provide that disability and children's disability insurance benefits are reduced for any month for which it is determined "under any other law of the United States" or "under a system established by any agency of the United States'• (as defined in subsection (e)) that a periodic benefit is payable by any agency of the United States for such month to such individual, and the amount of or eligibility for such periodic benefit is based (in whole or in part) on a physical or mental impair ment of such individual, or it is determined that a periodic benefit is payable for such month to such individual under a workmen's compensa tion law or plan of a State on account of a physical or mental impair ment of such individual. The reduction is by the amount equal to such periodic benefit.
In the "case of a wife's or mother's benefit where the bene fit based on disability from other than social security exceeds the child's insurance benefit, the wife's or mother's benefit is reduced by the amount of the excess but only if the wife's or mother's benefit would not be payable if she did not have in her care the child who is entitled to disability benefits from the other source.
If a periodic benefit from another ttmrce is payable other than on a monthly basis, an approximation will be made as to the basis for this reduction. -9-
Where there is a probability that periodic benefits from another source may become payable, adequate assurance of reimburse ment to the Social Security Trust Fund may be required as a condition to certification of benefits in case such entitlement develops and reduction is not made.
Subsection (d) of section 224 requires any agency of the
United States which is authorized by law to pay periodic benefits or has a system of periodic benefits based on disability to certify to the secretary such information as he deems necessary to carry out these functions.
Subsection (e) of section 224 defines the phrase "Agency of the United States" as any 1 department or other agency of the United
States or an instrumentality which is wholly owned by the United
States" which would, of course, include the Railroad Retirement Board.
Section 225 is added to the Social Security Act by section
103(a) of the bill to give the right to suspend benefits based on dis ability when information causes belief that there has been a recovery.
In every such case, the Secretary of the Department shall notify the state which has an agreement including the individual for "disability freeze" determinations to determine if the individual's disability, under the standards proposed by the bill, has ceased.
Subsection (b) of section 103 of the bill amends section
222 of the Social Security Act to declare it to be the policy of
Congress that disabled individuals applying for a determination of disability, and disabled individuals who are entitled to child's insurance benefits be promptly referred to the State Agency adminis tering or supervising the state plan approved under the Vocational -10-
Rehabilitation Act for necessary rehabilitation services.
Provision is made for deduction from benefits for any month in which an individual entitled to child's insurance benefits who is over l8 or to disability insurance benefits refuses without good cause to accept rehabilitation services under a state plan approved under the Vocational Rehabilitation Act.
For purposes of the disability freeze (section 2l6(i) of the Social Security Act) and the disability insurance benefit pro visions (proposed section 223), an individual shall not be regarded as able to engage in substantial gainful activity solely by reason of services rendered by him under a state plan approved under the
Vocational Rehabilitation Act. But this provision will not apply with respect to any services rendered after the eleventh month fol lowing the first month during which such services are rendered. It is not clear whether or not this last sentence applies to a disabled child.
Subsection (c)(l) of section 103 of the bill amends section
202 (a)(3) to make unnecessary a new application on attaining retire ment age by an individual who was entitled to disability insurance benefits for the month preceding the month in which he attained retirement age.
Subsection (c)(2) amends section 202(k)(2)(B) of the Social
Security Act relating to entitlement to more than one benefit by including disability insurance benefits as those benefits of which an individual can receive no more than one. -11-
Subsection (c)(3) amends section 202(n)(l)(A) of the Social
Security Act by including disability insurance benefits as benefits not payable after the individual has been deported and before he is permitted
to return for permanent residence.
Subsection (c)(4) amends section 215(a) of the Social Security
Act (relating to computation of the primary Insurance amount) to provide
that the primary insurance amount of an individual entitled to a disa bility insurance benefit on death or attainment of retirement age shall be the amount computed under that section or his disability insurance bene
fit whichever is larger.
Subsection (c)(5) amends section 215(g) of the Social Security
Act to provide that amounts of disability insurance benefits be rounded
as in the case of other benefits.
Subsection (c)(6) amends section 2l6(i)(l) of the Social Secu
rity Act to confine the definition of "disability" there to the "disa
bility freeze" provisions.
Subsection (c)(7) amends section 221(a) of the Social
Security Act to provide that disability determinations for insurance
benefits, as in the case of the "disability freeze', be made by State
Agencies under agreement.
Subsection (c)(8) amends section 221(c) of the Social Security
Act so as to give the Secretary the right to review determinations by a
State Agency on all disability questions, including disability benefits.
Subsection (d)(1) makes the amendment respecting disability
insurance benefits effective only for months after December 1955 Para
graph (2) makes an application for such benefits filed after January
1956 and before July 1956 deemed to have been filed during the first -12- month after December 1955 for which the individual would otherwise have been entitled to disability benefits had he filed before the end of such month.
Section lO-'t-. Subsection (a) amends section 210(a)(1) of the
Social Security Act to eliminate the exclusion from "employment", and thereby cover, services of certain foreign agricultural workers in certain agricultural activities.
Subsection (b)(l) amends section 210(a)(6)(B)(ii) of the
Social Security Act to include as "employment" the services of em ployees of a Federal Home Loan Bank. Paragraph (2) amends section
210(a)(6)(C)(vi) of the Social Security Act to include as "employment" services of individuals employed by the Tennessee Valley Authority.
Subsection (c)(1) amends section 210(a) of the Social Security
Act by adding a new paragraph (l6) excluding from "employment" services as share croppers (but see next paragraph, describing effect of sub section (c)(3)). Paragraph (2) amends section 211(a)(l) of the Social
Security Act by the inclusion as net earnings from self-employment income to the owner or tenant of land derived from sharecropping by another individual if the owner or tenant materially participates with respect to the commodity produced,
Paragraph (3) of section (c) amends section 211(c)(2) of the
Social Security Act to eliminate the exclusion of income of individuals as share croppers from this subsection which attributes the same meaning to "trade or business" with reference to self-employment income or net earnings from self-employment as in section 162 of the Internal Revenue
Code of 195^. The effect of the amendments of the last three subsections -13-
is to change coverage of services of share croppers as "employment” to
coverage as individuals receiving ‘net earnings from self-employment" and to cover the owner or tenant of land employing someone else in
sharecropping activity as receiving 'net earnings from self-employment".
Paragraph (d) amends section 211(c)(5) of the Social Security
Act by eliminating the exclusion from this same subsection (and thus providing social security coverage for) the performance of service as a lawyer, dentist, osteopath, veterinarian, chiropractor, naturopath,
optometrist and provides that determinations as to the exercise of his profession by a physician who is still excluded be made without regard to section 1101(a)(7) of the Social Security Act. (The term physician
is defined in such section 1101(a)(7) to include the services of
osteopathic practitioners ' within the scope of that practice as defined by State law". It will be observed that physicians are still
not covered under the Social Security Act but that income of osteopathic practitioners appears to be included as "net earnings from self-employ ment” which provides coverage for such practitioners.)
Paragraph (e) makes the amendments respecting sharecroppers
effective as to services after 1954 and as to taxable years ending after
1954. The amendments as to certain foreign agricultural workers, employers of a Federal Home Loan Bank, and individuals employed by the Tennessee
Valley Authority are made effective with respect to services performed after 1955• The amendment covering the earnings of persons in certain professions as self-employment income or net earnings from self-employ ment is made applicable to taxable years ending after 1955 > Section 105 of the bill amends section 203(g)(1) of the
Social Security Act by providing that a report of earnings of an indi vidual entitled to monthly benefits be made on or before the 15th day
of the fourth month of the taxable year instead of such day of the third month. The provision is effective for years beginning after 195^-
Paragraph (b) amends section 205(c)(1)(B) of the Social
Security Act to increase the ' time limitation as to the correction of wage and self-employment income records to three years, three months, and fifteen days from three years, two months, and fifteen days.
Section 106. Subsection (a) amends section 215(b)(l) of the
Social Security Act by excluding months in a year (rather than a
quarter which was not a quarter of coverage) any part of which was in
cluded in a period of disability from the divisor in determining the average monthly wage except the months of the year in which such period of disability began if their inclusion would result in a higher primary insurance amount. In the unamended provision, the deduction of disability months was made regardless of the effect on the primary
insurance amount
Subsection (b) amends section 215(d)(5) of the Social Security
Act by eliminating in determining the average monthly wage1', all quarters
(and the wages earned in such quarter) in any year prior to 1951 any part of which was in a period of disability even if a quarter of coverage, except the quarters in a year in which a period of disability began will be included if the inclusion of them and the wages for the period would result in a higher primary insurance amount. The amendment described
in this paragraph respects the determination, in certain cases on the -15- basis of service before 1951, of the primary insurance benefit for
conversion into the primary insurance amount.
Subsection (c) amends section 215(e)(4) of such Act so that
no wages paid an individual in any year (rather than quarter) any part
of which was included in a period of disability shall be counted in
computing the average monthly wage (even though paid in a quarter of
coverage), and no self-employment income shall be counted for such a
year, unless, in either case, the months of such year are included as
elapsed months because of providing a higher primary insurance amount.
Subsection (d) provides that the amendments made by section
106 shall apply in the case of an individual who becomes entitled to
benefits under section 202(a) of the Social Security Act without the
application of section 202(j)(1) (dealing with applications filed within
12 months of August 1950), or (2) who dies without becoming entitled
to benefits under section 202(a) and on the basis of whose wages and
self-employment income an application for benefits or a lump-sum death
payment is filed after the enactment date of the bill, or (3) who
becomes entitled to disability benefits, or (4) who files after the
date of enactment an application for a disability determination
(disability freeze provisions) which is accepted.
Section 107 of the bill provides for the establishment of an
Advisory Council on Social Security Financing for the purpose of re
viewing the status of the Trust Fund in relation to the long term
commitments of the old-age and survivors insurance program.
Section IOQ of the bill defines the term Secretary" as
meaning the 'Secretary of Health, Education, and Welfare '. -16-
Section 109. Subsection (a) amends section l(q) of the
Railroad Retirement Act to make the term Social Security Act as used therein mean the Social Security Act as amended in 1955-
Subsection (b) amends section 5(f)(2) of the Railroad Retire ment Act by substituting the term "retirement age" for "age sixty-five' each place it appears and substituting title II' for section 202 each place it appears.
Title II of the bill is confined exclusively to amendments of the Internal Revenue Code of 195**, in respect of the Social Security taxes, appropriate to the changes made in the benefit provisions. These amendments include, effective for all years after 1955) an increase of l/2 percent (applicable to both the employers and the employees) in the scheduled tax rate respecting wages, and an increase of 3A percent in the scheduled rate respecting self-employment income. These increases in the tax rate would, of course, operate adversely to the Railroad
Retirement Account under the financial interchange provisions.
Charles F. McLaughlin