Social Security Legislative Bulletin

No: 108-5
Date: April 7, 2003

House Passes H.R. 743, the Social Security Protection Act of 2003

On April 2, 2003, by a vote of 396-28, the House passed H.R. 743, the Social Security Protection Act of 2003. Prior to passing the bill, the House rejected an amendment offered by Representative Green (D-TX) that would have eliminated the provision of the bill that would require State and local employees to work for five years in a job covered by Social Security in order to avoid the application of the government pension offset (GPO).

Following are provisions in H.R. 743 that would affect SSA-administered programs.

Authority to Reissue Benefits Misused by Organizational Representative Payees

• Would require the Commissioner to re-issue benefits under Titles II, VIII, or XVI whenever an individual representative payee serving 15 or more beneficiaries, or an organizational representative payee, is found to have misused a beneficiary's funds.
• Defines "misuse" as when a representative payee converts benefits for use other than for the beneficiary.

• Would be effective for determinations of misuse on or after January 1, 1995.

Oversight of Representative Payees

• Would require non-governmental fee-for-service organizational representative payees to be both licensed and bonded, provided that licensing is available in the State. (This part of provision would be effective on the first day of the 13th month after enactment.)
• Would require the Commissioner to provide for periodic onsite reviews for all nonprofit fee-for-service payees, organizational payees (both governmental and non-governmental) representing 50 or more beneficiaries, and individual payees representing 15 or more beneficiaries.
• Would require the Commissioner to report annually to Congress on the results of the onsite reviews.

• Would be effective upon enactment unless otherwise noted.

Disqualification From Service As Representative Payee of Persons Convicted of Offenses Resulting in Imprisonment For More Than 1 Year, or Fleeing Prosecution, Custody, or Confinement

• Would disqualify an individual from serving as a representative payee if he or she has been convicted of an offense resulting in more than one year of imprisonment, unless the Commissioner determines that such certification would be appropriate notwithstanding such conviction. Also, would disqualify a person who is fleeing prosecution, custody, or confinement.

• Would require the Commissioner to share information with law enforcement on persons disqualified from service as representative payee.

• Would require report to Congress 9 months after enactment whether existing reviews and procedures for payee selection provide sufficient safeguards.

• Would be effective on the first day of the thirteenth month after enactment.

Fee Forfeiture in Case of Benefit Misuse by Representative Payees

• Would require representative payees to forfeit their fee from the beneficiary's benefits for the months during which the representative payee misused the funds, as determined by the Commissioner or a court of competent jurisdiction.

• Would be effective for any month after 180 days after enactment in which a determination of misuse is made.

Liability of Representative Payees for Misused Benefits

• Would provide that misused benefits by a nongovernmental representative payee shall be treated as overpayments to the representative payee, subject to current overpayment recovery authorities.

• Would provide that any recovered benefits not reissued to the beneficiary pursuant to the first section of this legislation would be reissued under this provision to the beneficiary or their alternate representative payee, up to the total amount misused.

• Would be effective with respect to benefit misuse determined 180 days after enactment.

Authority to Redirect Delivery of Benefit Payments when A Representative Payee Fails to Provide Required Accounting

• Would provide SSA with the authority to redirect payments of Social Security, title VIII, and SSI benefits to local Social Security field offices if a representative payee fails to provide an annual accounting of benefits report.

• Would require the Commissioner to provide proper notice prior to redirecting benefits.

• Would be effective 180 days after enactment.

Civil Monetary Penalty Authority With Respect to Wrongful Conversions by Representative Payees

• Would authorize SSA to impose a civil monetary penalty for offenses involving misuse of Social Security, title VIII, or SSI benefits received by a representative payee on behalf of another individual. The penalty equals up to $5,000 for each violation. In addition, the representative payee shall be subject to an assessment of not more than twice the amount of the misused payments.

• Would be effective for violations committed after the date of enactment.

Civil Monetary Penalty Authority With Respect to Knowing Withholding of Material Facts

• Would authorize SSA to impose, in addition to any other penalties that apply, civil monetary penalties of up to $5,000 (and assessments) for withholding of information that is material in determining eligibility for, or the amount of, benefits, if the person knows, or should know, that the withholding of such information is misleading.

• Would be effective with respect to violations committed after the date on which the Commissioner implements the centralized computer file required under the following section.

Issuance by Commissioner or Social Security of Receipts to Acknowledge Submission of Reports of Changes in Work or Earnings Status of Disabled Beneficiaries

• Would require the Commissioner to issue a receipt to disabled beneficiaries each time they report their work and earnings.

• Would be effective as soon as possible, but no later than 1 year after enactment and until such time as the Commissioner implements centralized computer file.

Denial of Title II Benefits to Persons Fleeing Prosecution, Custody, or Confinement, and to Persons Violating Probation or Parole

• Would deny title II benefits to persons fleeing prosecution, custody, or confinement, and to persons violating probation or parole, unless the Commissioner determines that good cause exists for paying such benefits.

• Would also provide, if not in violation of Federal or State law, that the Commissioner will furnish law enforcement officers the current address, SSN and photograph (if applicable) if necessary for the officer to perform his duties with respect to locating and apprehending the beneficiary.

• Would be effective first day of month beginning on or after the date that is 9 months after enactment.

Requirements Relating to Offers to Provide for a Fee a Product or Service Available without Charge from the Social Security Administration

• Would amend Section 1140 by adding a mandatory requirement that persons or companies include in their solicitations a statement that services which they provide for a fee are available directly from SSA free of charge.

• Would require that the statements comply with standards promulgated by the Commissioner with respect to their content, placement, visibility, and legibility.

• Would be effective for offers of assistance made after sixth month after enactment.

• Would require that regulations be promulgated within 1 year after enactment.

Refusal to Recognize Certain Individuals as Claimant Representatives

• Would provide that the Commissioner may, with notice and an opportunity to respond, disqualify or prohibit from further practice before SSA an attorney or non.attorney representative who has been disbarred, debarred, prohibited, or suspended from any court or bar to which he or she was previously admitted to practice, or disbarred or suspended from representing individuals before any other Federal agency or any other court system authorized under the statutory authority of any other Federal agency, or convicted of any offense or held civilly liable in any matter involving the Social Security Act.

• Would be effective upon enactment.

Penalty for Corrupt or Forcible Interference with Administration of Social Security Act

• Would penalize persons who attempt to intimidate or impede by force or threats of force any officer or employee of the United States acting in an official capacity under the Social Security Act or persons who in any other way obstruct or impede or attempt to obstruct or impede the administration of the Social Security Act. The maximum penalties would be $5,000 and/or 3 years imprisonment. If the offense were committed only by threats, the person would be fined no more than $3,000 and/or 1 year imprisonment.

• Would be effective upon enactment.

Use of Symbols, Emblems, or Names in Reference to Social Security or Medicare

• Would update section 1140 for HCFA's new name (Centers for Medicare and Medicaid Services). The section adds Death Benefits Update, Federal Benefits Information, Funeral Expenses, etc. as items prohibited from the use of symbols, emblems or names that may provide a false impression that the item is approved or endorsed by SSA, CMS or HHS.

• Would be effective for items sent 180 days after enactment.

Disqualification from Payment During Trial Work Period Upon Conviction of Fraudulent Concealment of Work Activity

• Would provide that an individual who is convicted by a Federal court of fraudulently concealing work activity during the trial work period (TWP) would not be entitled to receive a disability benefit for TWP months that occur prior to the conviction but within the same period of disability. If payment has already been made, he or she is liable for repayment plus restitution, fines, penalties and assessments.

• Would be effective with respect to work activity performed after date of enactment.

Authority for Judicial Orders of Restitution

• Would authorize Federal courts to order a defendant convicted of defrauding Social Security, Special Veterans' Benefits or SSI to make restitution to SSA

• Would establish a special fund in the Treasury for the deposit of funds so received to be use to defray expenses incurred in carrying out titles II, VIII, and XVI, except for recovered funds that represent benefits misused by representative payees, which shall be deposited in the trust funds of general fund of the Treasury, as appropriate.

• Would be effective with respect to violations occurring on or after enactment.

Cap on Attorney Assessments

• Would cap the assessment for SSA processing attorney fees at $75 or 6.3% of attorney fee, whichever is lower.

• Would adjust cap based on annual COLA's rounded down to next lower $1.

• Would be effective 180 days after enactment.

Extension of Attorney Fee Payment System to Title XVI Claims

• Would extend the direct payment of attorney fees and the assessment for processing the fees to the SSI program.

• Would limit fees to 25% of past-due benefits (same as title II) or amount remaining after States are reimbursed for interim assistance, whichever is less.

• Would require the Comptroller General of the United States to study fee withholding for non-attorney representatives.

• Would be effective 270 days after enactment and would sunset 5 years after enactment.

Application of Demonstration Authority Sunset Date to New Projects

• Would extend the authority to include projects initiated before the 5-year period ending December 17, 2004 expires.

Expansion of Waiver Authority Available in Connection with Demonstration Projects Providing for Reductions in Disability Insurance Benefits Based on Earnings

• Would provide the Commissioner with the authority to waive requirements of section 1148 of the Social Security Act for the mandated demonstration projects.

• Would be effective upon enactment.

Funding of Demonstration Projects Provided for Reductions in Disability Insurance Benefits Based on Earnings

• Would clarify that the cost of paying increased benefits will not be appropriated while the administrative costs associated with the demonstration projects will come normally from funds available for administration.

• Would be effective upon enactment.

Availability of Federal and State Work Incentive Services to Additional Individuals

• Would allow BPAO services and P&A systems services to be provided to those beneficiaries in section 1619(b) status, those beneficiaries receiving only a State Supplement payment, and those beneficiaries in an extended period of Medicare eligibility under title XVIII after a period of disability under title II has ended.

• Would allow P&A System services to include those needed to maintain employment (in addition to those needed to secure or regain it).

• Would be effective with respect to: (1) grants, cooperative agreements or contracts entered into on or after the date of enactment; and, (2) payments provided after the date of enactment.

Technical Amendment Clarifying Treatment for Certain Purposes of Individual Work Plans under the Ticket to Work and Self-Sufficiency Program

• Would treat an individual receiving vocational rehabilitation pursuant to an individual work plan established under the Ticket to Work program the same as an individual with an individualized work plan under a State plan for vocational rehabilitation services approved under the Rehabilitation Act of 1973, thereby making employers who hire such individuals eligible for the worker opportunity tax credit.

• Would be effective as if enacted in section 505 of P.L. 106-170 (i.e., applies to individuals who began work for the employer after June 30, 1999.)

Elimination of Transcript Requirement in Remand Cases Fully Favorable to the Claimant

• Would provide that the Agency does not have to prepare and file a transcript with the district court after a court-ordered remand for further administrative proceedings results in a fully-favorable award of benefits.

• Would be effective with respect to determinations made upon remand made on or after the date of enactment.

Nonpayment of Benefits upon Removal from the United States

• Would end the exemption from nonpayment of benefits for aliens removed from the United States for smuggling other aliens into the United States.

• Would apply to removal notices received from the Attorney General after the date of enactment.

Reinstatement of Certain Reporting Requirements

• Would continue the requirement for the Board of Trustees report on the OASDI, HI, and SMI trust funds, continuing disability reviews reports, and the disability preeffectuation review report.

• Would be effective upon enactment.

Clarification of Definitions Regarding Certain Survivor Benefits

• Would provide a limited exception to the 9-month duration-of-marriage requirement for widow(er)'s benefits. This exception would apply in cases in which the marriage was postponed by legal impediments to the marriage caused by State restrictions on divorce due to mental incompetence or similar incapacity.

• Would apply to applications filed during months ending after the date of enactment.

Clarification Respecting the FICA and SECA Tax Exemptions for an Individual Whose Earnings Are Subject to the Laws of a Totalization Agreement Partner

• Would provide clear legal authority to exempt a worker's earnings from U.S. Social Security tax in cases where their earnings were subject to a foreign country's laws in accordance with a U.S. totalization agreement, but the foreign country's law does not require compulsory contributions with respect to those earnings.

• Would be effective upon enactment.

Coverage under Divided Retirement System for Public Employees in Kentucky

• Would add Kentucky to the list of 21 States in the Social Security Act permitted to use the divided retirement system procedures. Under these procedures, the State has the option of extending Social Security and Medicare coverage (or Medicare coverage only) to only those current employees who wish to be covered with all future employees being covered automatically.

• Would be effective January 1, 2003.

Compensation for the Social Security Advisory Board

• Would establish compensation for SS Advisory Board members at the daily rate of basic pay for level IV of the Senior Executive Schedule for each day in which the member is engaged in performing a function of a Board member.

• Would be effective January 1, 2003.

60-Month Period of Employment Requirement for Application of Government Pension Offset Exemption

• Would require that State and local government workers be covered by Social Security throughout their last 5 years of employment with the government entity in order to be exempt from the government pension offset provision.

• Would be effective for applications filed after the month of enactment. However, the change would not apply to applications filed after the month of enactment if (1) the worker's last day of government employment occurs before the end of the 90-day period following enactment or (2) such last day occurs after the 90-day period and such employment was covered by Social Security during the 90-day period as well as subsequent to that period.

Technical Correction Relating to Responsible Agency Head

• Would delete all references to the "Secretary of Health and Human Services" found in Section 1143 (which requires issuance of Social Security Statements) of the Social Security Act and replaces them with the "Commissioner of Social Security."

• Would be effective upon enactment.

Technical Correction Relating to Retirement Benefits of Ministers

• Would provide a conforming change to the Social Security Act to exclude, for Social Security benefit purposes, certain benefits received by retired ministers and members of religious orders. This would conform the treatment of these benefits to their treatment for Social Security tax purposes.

• Would be effective for years beginning before, on, or after December 1994.

Technical Corrections Relating to Domestic Employment

• Would provide that references to domestic employment be removed from the provisions in the law that define agricultural employment, and the provisions that define domestic employment would specify that domestic employment includes domestic service performed on a farm.

• Would be effective upon enactment.

Technical Corrections of Outdated References

• Would correct various outdated references in the Social Security Act and related laws. Over the years, provisions of the Social Security Act, the Internal Revenue Code, and other laws have been deleted, re-designated, or otherwise amended.

Technical Correction Respecting Self-Employment Income in Community Property States

• Would conform the provision in the Social Security Act and the Internal Revenue Code to current practice in both community property and non-community property States--to provide that income from a trade or business that is not a partnership will be taxed and credited to the spouse who is carrying on the trade or business or to each spouse based on their distributive share of the gross earnings, if jointly operated

• Would be effective upon enactment.