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The
7 SOCIAL SECURITY ACT
and Related Laws
April 1978 Edition
COMMITTEE ON FINANCE
UNITED STATES SENATE
RUSSELL B. LONG, Chairman
APRIL 30, 1978
The Univer
of Michi
Bur. or
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8.1979
Printed for the use of the Committee on Finance
BUREAU OR
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The
· MIGLIIGAN •
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· LIBRARIES ·
95th Congress
COMMITTEE PRINT
2d Session
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The
SOCIAL SECURITY ACT
21-746 O
#13
and Related Laws
April 1978 Edition
COMMITTEE ON FINANCE
UNITED STATES SENATE
RUSSELL B. LONG, Chairman

APRIL 30, 1978
Printed for the use of the Committee on Finance
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON: 1978
For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402
Bureau of
Government
KF
3644
1978
COMMITTEE ON FINANCE
RUSSELL B. LONG, Louisiana, Chairman
HERMAN E. TALMADGE, Georgia
ABRAHAM RIBICOFF, Connecticut
HARRY F. BYRD, JR., Virginia
GAYLORD NELSON, Wisconsin
MIKE GRAVEL, Alaska
LLOYD BENTSEN, Texas
WILLIAM D. HATHAWAY, Maine
FLOYD K. HASKELL, Colorado
SPARK M. MATSUNAGA, Hawaii
DANIEL PATRICK MOYNIHAN, New York
CARL T. CURTIS, Nebraska
CLIFFORD P. HANSEN, Wyoming
ROBERT DOLE, Kansas
BOB PACKWOOD, Oregon
WILLIAM V. ROTH, JR., Delaware
PAUL LAXALT, Nevada
JOHN C. DANFORTH, Missouri
MICHAEL STERN, Staff Director
GEORGE W. PRITTS, Jr., Minority Counsel
(II)
Bue of bout
Gift
2-8-19
PREFACE
Since the 92d Congress, numerous laws have been enacted amend-
ing the Social Security Act or otherwise directly affecting programs
under that act. In order to provide a convenient reference to the
Social Security Act as it has been amended by these various laws,
this document has been prepared. It includes all of the titles of that
act currently in force with all amendments up to April 30, 1978. Also
included are the full text of the Federal-State Extended Unemploy-
ment Compensation Act, as amended, and pertinent excerpts from
the Internal Revenue Code and from various public laws enacted
since the 92d Congress.
This document is intended to supplement and not to replace the
Compilation of the Social Security Laws which is prepared by the
Social Security Administration and published from time to time as a
document of the House of Representatives. The most recent edition
of that Compilation was issued as House Document No. 93-117 (in 2
volumes) and contained the Social Security Act and related laws as
amended through January 1, 1973. The Compilation, although not con-
taining amendments after that date, does have several features not
found in this current document. In particular, the Compilation has
far more extensive footnotes, contains an index, and includes excerpts
from numerous laws affecting social security programs which are not
included in the current document.
It is expected that, as subsequent amendments to the Social Security
Act and related laws are enacted or as changes are made through the
operation of certain automatic provisions of existing law, appropriate
revision pages will be printed from time to time.
This document has been prepared solely for convenient reference
purposes. It does not have the effect of law.
(III)
CONTENTS
SOCIAL SECURITY ACT AS AMENDED:
Title I-Grants to States for Old-Age Assistance and Med-
ical Assistance for the Aged----
Title II-Federal Old-Age, Survivors, and Disability In-
surance Benefits__
Title III-Grants to States for Unemployment Compensa-
tion Administration
Title IV-Grants to States for Aid and Services to Needy
Families with Children and for Child Welfare Services__
Title V-Maternal and Child Health and Crippled Chil-
dren's Services____
Title VI [Repealed effective Oct. 1, 1975].
Title VII-Administration__
Title VIII-Taxes With Respect to Employment (super-
seded by Chapter 21 of the Internal Revenue Code of
1954)
Title IX-Miscellaneous Provisions Relating to Employ-
ment Security__.
Title X-Grants to States for Aid to the Blind_.
Title XI-General Provisions and Professional Standards
Review
Title XII-Advances to State Unemployment Funds-----
Title XIII-Reconversion Unemployment Benefits for Sea-
men (the provisions of this title have expired)
Title XIV-Grants to States for Aid to the Permanently
and Totally Disabled__
Title XV-[Repealed] (See chapter 85, title 5, U.S.C.) ---
Title XVI-Grants to States for Aid to the Aged, Blind,
or Disabled, or for Such Aid and Medical Assistance for
the Aged-----
Title XVI-Supplemental Security Income for the Aged,
Blind, and Disabled__.
Title XVII-Grants for Planning Comprehensive Action
to Combat Mental Retardation..
Title XVIII-Health Insurance for the Aged and Dis-
abled
I
Page
1
15
203
207
259
271
273
278
279
295
305
347
349
351
359
361
377
403
405
!
(V)
VI
Title XIX-Grants to States for Medical Assistance Pro-
grams
Title XX-Grants to States for Services__
Selected Provisions of the Internal Revenue Code of 1954:
Subtitle A-Income Taxes:
Chapter 1-Normal Taxes and Surtaxes.
Subchapter A, Part IV, Subpart A-Credits
Allowable
Section 40-Expenses of Work Incentive
Programs
Section 43-Earned Income_
Section 44A. Expenses for Household and De-
pendent Care Services Necessary for Gain-
ful Employment__.
Subpart C-Rules for Computing Credit for Expenses of
Work Incentive Programs-
Section 50A____
Section 50B.
Subchapter B, Part VI-Itemized Deductions for Indi-
viduals and Corporations--
Section 188-Amortization of Certain Expenditures
for On-the-Job Training and Child Care Facilities.
Section 214-Repealed.
Chapter 2-Tax on Self-Employment Income__
Subtitle C-Employment Taxes:
Chapter 21-Federal Insurance Contributions Act___
Chapter 22-Railroad Retirement Tax Act___.
Chapter 23-Federal Unemployment Tax Act...
Chapter 25-General Provisions Relating to Employ-
ment Taxes__.
Subtitle F-Procedure and Administration:
Chapter 61-Information and Returns
Chapter 62-Time and Place for Paying Tax_
Chapter 63-Assessments_
Chapter 64 Collection___
Chapter 65-Abatements, Credits and Refunds.
Chapter 66-Limitations..
Chapter 67-Interest_.
Chapter 68-Additions to the Tax,
the Tax, Additional
Amounts, and Assessable Penalties__
Chapter 75-Crimes, Other Offenses, and Forfeitures_
Chapter 78-Discovery of Liability and Enforce-
ment of Title____
Chapter 79-Definitions___.
Chapter 80-General Rules.
T
1
1
T
T
I
1
I
I
1
I
Page
507
541
557
557
557
557
559
562
562
567
570
570
570
570
581
617
629
662
662
675
676
677
681
685
689
690
695
697
699
699
Revised August 1978
VII
Excerpt from the Consumer Credit Protection Act, as amended
(P.L. 90-321)_.
Excerpts from the Food Stamp Act of 1977, as enacted by sec-
tion 1301 of the Food and Agriculture Act of 1977 (P.L.
95-113)
Selected Unemployment Insurance Laws:
Federal-State Extended Unemployment Compensation
Act, as amended_.
Excerpt from Public Law 93-618, the Trade Act of 1974,
(Adjustment Assistance for Workers)
Excerpt from Title 5,-U.S. Code (Unemployment Benefits
for Federal Employees and Servicemen) –
Excerpts from Public Laws related to the Social Security Act:
Public Law 93-66, as amended__.
Public Law 93-233, as amended_.
Public Law 93–368_
Public Law 93-480_.
Public Law 93-647, as amended.
Public Law 94-12-
Public Law 94-45.
Public Law 94-88----
Public Law 94-164.
Public Law 94–182__-
Public Law 94-202-
Public Law 94-274, as amended
Public Law 94-331, as amended.
Public Law 94-368___
Public Law 94-375-
Public Law 94-401, as amended.
Public Law 94-437.
Public Law 94-455.
Public Law 94-563-
Public Law 94-566-
Public Law 94-585__.
Public Law 95-19---
Public Law 95-30-.
Public Law 95-59-
Public Law 95-142, as amended.
Public Law 95-171.
Public Law 95-210___.
Public Law 95-216--
Public Law 95–291.
Public Law 95-292.
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1
1
J
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Page
703
707
711
718
733
741
749
757
758
758
760
762
765
767
768
771
774
777
778
778
779
781
782
783
785
794
794
795
796
797
802
802
805
817
820
VIII
Appendix:
Page
(i)
(v)
(vii)
(viii)
E-Variable Amounts Applicable to Selected Provisions__ (ix)
F-Section 215 Under Former Law___
(viii)
A—Amending Legislation_
B-Social Security Taxes__
C-Federal Matching Percentages for Welfare Programs:
1975-77
|
D-Federal Matching Percentages for Welfare Programs:
1978-79
SOCIAL SECURITY ACT, AS AMENDED
AN ACT
To provide for the general welfare by establishing a system of Federal old-age
benefits, and by enabling the several States to make more adequate provision
for aged persons, blind persons, dependent and crippled children, maternal and
child welfare, public health, and the administration of their unemployment
compensation laws; to establish a Social Security Board; to raise revenue;
and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
TITLE I-GRANTS TO STATES FOR OLD-AGE ASSIST-
ANCE AND MEDICAL ASSISTANCE FOR THE AGED¹
Sec. 1. Appropriation
Sec. 2. State Old-Age Assistance and Medical Assistance Plans
Sec. 3. Payment to States--
Sec. 4. Operation of State Plans-
Sec. 5. Administration
Sec. 6. Definitions
I
Page¹
1
2
5
11
12
12
Appropriation
Section 1. For the purpose (a) of enabling each State, as far as
practicable under the conditions in such State, to furnish financial
assistance to aged needy individuals, (b) of enabling each State, as
far as practicable under the conditions in such State, to furnish medi-
cal assistance on behalf of aged individuals who are not recipients
of old-age assistance but whose income and resources are insufficient
to meet the costs of necessary medical services, and (c) of encourag-
ing each State, as far as practicable under the conditions in such
State, to furnish rehabilitation and other services to help individuals
referred to in clause (a) or (b) to attain or retain capability for self-
care, there is hereby authorized to be appropriated for each fiscal
year a sum sufficient to carry out the purposes of this title. The sums
made available under this section shall be used for making payments
to States which have submitted, and had approved by the Secretary
of Health, Education, and Welfare (hereinafter referred to as the
“Secretary”), State plans for old-age assistance, or for medical assist-
¹ P.L. 92–603, sec. 303, repealed title I effective January 1, 1974, but such repeal does not
apply to Puerto Rico, Guam, and the Virgin Islands.
2 This table of contents does not appear in the law.
(1)
Sec. 1
2
ance for the aged, or for old-age assistance and medical assistance for
the aged.
State Old-Age and Medical Assistance Plans
Sec. 2. (a) A State plan for old-age assistance, or for medical
assistance for the aged, or for old-age assistance and medical assistance
for the aged must-
(1) except to the extent permitted by the Secretary with re-
spect to services, provide that it shall be in effect in all political
subdivisions of the State, and, if administered by them, be man-
datory upon them;
(2) provide for financial participation by the State;
(3) either provide for the establishment or designation of a
single State agency to administer the plan, or provide for the
establishment or designation of a single State agency to supervise
the administration of the plan;
(4) (A) provide for granting an opportunity for a fair hearing
before the State agency to any individual whose claim for assist-
ance under the plan is denied or is not acted upon with reason-
able promptness, and (B) that if the State plan is administered
in each of the political subdivisions of the State by a local agency
and such local agency provides a hearing at which evidence may
be presented prior to a hearing before the State agency, such local
agency may put into effect immediately upon issuance its decision
upon the matter considered at such hearing;
(5) provide (A) such methods of administration (including
methods relating to the establishment and maintenance of per-
sonnel standards on a merit basis, except that the Secretary shall
exercise no authority with respect to the selection, tenure of office,
and compensation of any individual employed in accordance with
such methods) as are found by the Secretary to be necessary for
the proper and efficient operation of the plan, and (B) for the
training and effective use of paid subprofessional staff, with par-
ticular emphasis on the full-time or part-time employment of re-
cipients and other persons of low income, as community service
aides, in the administration of the plan and for the use of nonpaid
or partially paid volunteers in a social service volunteer program
in providing services to applicants and recipients and in assisting
any advisory committees established by the State agency;
(6) provide that the State agency will make such reports, in
such form and containing such information, as the Secretary may
from time to time require, and comply with such provisions as
the Secretary may from time to time find necessary to assure the
correctness and verification of such reports;
3
Sec. 2(a)
(7) provide safeguards which permit the use or disclosure of
information concerning applicants cr recipients only (A) to
public officials who require such information in connection with
their official duties or (B) to other persons for purposes directly
connected with the administration of the State plan;
(8) provide that all individuals wishing to make application
for assistance under the plan shall have opportunity to do so, and
that such assistance shall be furnished with reasonable prompt-
ness to all eligible individuals;
(9) provide, if the plan includes assistance for or on behalf of
individuals in private or public institutions, for the establishment.
or designation of a State authority or authorities which shall be
responsible for establishing and maintaining standards for such
institutions;
(10) if the State plan includes old-age assistance—
(A) provide that the State agency shall, in determining
need for such assistance, take into consideration any other
income and resources of an individual claiming old-age as-
sistance, as well as any expenses reasonably attributable to
the earning of any such income; except that, in making such
determination, (i) the State agency may disregard not more
than $7.50 per month of any income and (ii) of the first $80
per month of additional income which is earned the State
agency may disregard not more than the first $20 thereof
plus one-half of the remainder;
(B) include reasonable standards, consistent with the ob-
jectives of this title, for determining eligibiltiy for and the
extent of such assistance; and
(C) provide a description of the services (if any) which
the State agency makes available (using whatever internal
organizational arrangement it finds appropriate for this pur-
pose) to applicants for and recipients of such assistance to
help them attain self-care, including a description of the
steps taken to assure, in the provision of such services, maxi-
mum utilization of other agencies providing similar or re-
lated services; and
(11) if the State plan includes medical assistance for the
aged-
(A) provide for inclusion of some institutional and some
noninstitutional care and services;
(B) provide that no enrollment fee, premium, or similar
charge will be imposed as a condition of any individual's
eligibility for medical assistance for the aged under the plan;
Sec. 2(a)
4
(C) provide for inclusion, to the extent required by regula-
tions prescribed by the Secretary, of provisions (conforming
to such regulations) with respect to the furnishing of such
assistance to individuals who are residents of the State but
are absent therefrom;
Foto
(D) include reasonable standards, consistent with the ob-
jectives of this title, for determining eligibility for and the
extent of such assistance; and
(E) provide that no lien may be imposed against the prop-
erty of any individual prior to his death on account of medi-
cal assistance for the aged paid or to be paid on his behalf
under the plan (except pursuant to the judgment of a court
on account of benefits incorrectly paid on behalf of such indi-
vidual), and that there shall be no adjustment or recovery
(except, after the death of such individual and his surviving
spouse, if any, from such individual's estate) of any medical
assistance for the aged correctly paid on behalf of such indi-
vidual under the plan;
(12) if the State plan includes assistance to or in behalf of
individuals who are patients in institutions for mental diseases—
D
(A) provide for having in effect such agreements or other
arrangements with State authorities concerned with mental
diseases, and, where appropriate, with such institutions, as
may be necessary for carrying out the State plan, including
arrangements for joint planning and for development of al-
ternate methods of care, arrangements providing assurance of
immediate readmittance to institutions where needed for in-
dividuals under alternate plans of care, and arrangements
providing for access to patients and facilities, for furnishing
information, and for making reports;
G
(B) provide for an individual plan for each such patient
to assure that the institutional care provided to him is in his
best interests, including, to that end, assurances that there
will be initial and periodic review of his medical and other
needs, that he will be given appropriate medical treatment
within the institution, and that there will be a periodic deter-
mination of his need for continued treatment in the
institution;
(C) provide for the development of alternate plans of
care, making maximum utilization of available resources, for
recipients who would otherwise need care in such institutions,
including appropriate medical treatment and other assist-
ance; for services referred to in section 3 (a) (4) (A) (i) and
(ii) which are appropriate for such recipients and for such
5
Sec. 3(a)
patients; and for methods of administration necessary to as-
sure that the responsibilities of the State agency under the
State plan with respect to such recipients and such patients
will be effectively carried out; and
(D) provide methods of determining the reasonable cost
of institutional care for such patients; and
(13) if the State plan includes assistance to or in behalf of
patients in public institutions for mental diseases, show that the
State is making satisfactory progress toward developing and im-
plementing a comprehensive mental health program, including
provision for utilization of community mental health centers,
nursing homes, and other alternatives to care in public institu-
tions for mental diseases.
(b) The Secretary shall approve any plan which fulfills the con-
ditions specified in subsection (a), except that he shall not approve
any plan which imposes, as a condition of eligibility for assistance
under the plan—
(1) an age requirement of more than sixty-five years; or
(2) any residence requirement which (A) in the case of appli-
cants for old-age assistance, excludes any resident of the State who
has resided therein five years during the nine years immediately
preceding the application for old-age assistance and has resided
therein continuously for one year immediately preceding the ap-
plication, and (B) in the case of applicants for medical assistance
for the aged, excludes any individual who resides in the State; or
(3) any citizenship requirement which excludes any citizen of
the United States.
At the option of the State, the plan may provide that manuals and
other policy issuances will be furnished to persons without charge for
the reasonable cost of such materials, but such provision shall not be
required by the Secretary as a condition for the approval of such plan
under this title.
(c) Nothing in this title shall be construed to permit a State to have
in effect with respect to any period more than one State plan approved
under this title.
Payment to States
Sec. 3. (a) From the sums appropriated therefor, the Secretary of
the Treasury shall pay to each State which has a plan approved under
this title, for each quarter, beginning with the quarter commencing
October 1, 1960-
(1) in the case of any State other than Puerto Rico, the Virgin
Islands, and Guam, an amount equal to the sum of the following
proportions of the total amounts expended during each month of
such quarter as old-age assistance under the State plan (including
Sec. 3(a)
6
expenditures for premiums under part B of title XVIII for indi-
viduals who are recipients of money payments under such plan
and other insurance premiums for medical or any other type of
remedial care or the cost thereof)-
(A) 3137 of such expenditures, not counting so much of
any expenditure with respect to such month as exceeds the
product of $37 multiplied by the total number of recipients
of old-age assistance for such month (which total number,
for purposes of this subsection, means (i) the number of
individuals who received old-age assistance in the form of
money payments for such month, plus (ii) the number of
other individuals with respect to whom expenditures were
made in such month as old-age assistance in the form of
medical or any other type of remedial care); plus
(B) the larger of the following:
(i) (I) the Federal percentage (as defined in section
1101 (a) (8)) of the amount by which such expendi-
tures exceed the amount which may be counted under
clause (A), not counting so much of such excess with
respect to such month as exceeds the product of $38 mul-
tiplied by the total number of recipients of old-age assist-
ance for such month, plus (II) 15 per centum of the
total expended during such month as old-age assistance
under the State plan in the form of medical or any other
type of remedial care, not counting so much of such ex-
penditure with respect to such month as exceeds the
product of $15 multiplied by the total number of recip-
ients of old-age assistance for such month, or
(ii) (I) the Federal medical percentage (as defined
in section 6(c)) of the amount by which such expendi-
tures exceed the maximum which may be counted under
clause (A), not counting so much of any expenditures
with respect to such month as exceeds (a) the product of
$52 multiplied by the total number of such recipients of
old-age assistance for such month, or (b) if smaller, the
total expended as old-age assistance in the form of medi-
cal or any other type of remedial care with respect to such
month plus the product of $37 multiplied by such total
number of such recipients, plus (II) the Federal per-
centage of the amount by which the total expended dur-
ing such month as old-age assistance under the State
plan exceeds the amount which may be counted under
clause (A) and the preceding provisions of this clause
(B) (ii), not counting so much of such excess with respect
7
Sec. 3(a)
to such month as exceeds the product of $38 multiplied by
the total number of such recipients of old-age assistance
for such month;
(2) in the case of Puerto Rico, the Virgin Islands, and Guam,
an amount equal to—
(A) one-half of the total of the sums expended during
such quarter as old-age assistance under the State plan (in-
cluding expenditures for premiums under part B of title
XVIII for individuals who are recipients of money payments
under such plan and other insurance premiums for medical
or any other type of remedial care or the cost thereof), not
counting so much of any expenditure with respect to any
month as exceeds $37.50 multiplied by the total number of
recipients of old-age assistance for such month; plus
-
(B) the larger of the following amounts: (i) one-half of
the amount by which such expenditures exceed the maximum
which may be counted under clause (A), not counting so
much of any expenditure with respect to any month as ex-
ceeds (I) the product of $45 multiplied by the total number
of such recipients of old-age assistance for such month, or
(II) if smaller, the total expended as old-age assistance in
the form of medical or any other type of remedial care with
respect to such month plus the product of $37.50 multiplied
by the total number of such recipients, or (ii) 15 per centum
of the total of the sums expended during such quarter as old-
age assistance under the State plan in the form of medical or
any other type of remedial care, not counting so much of
any expenditure with respect to any month as exceeds the
product of $7.50 multiplied by the total number of such re-
cipients of old-age assistance for such month;
(3) in the case of any State, an amount equal to the Federal
medical percentage (as defined in section 6(c)) of the total
amounts expended during such quarter as medical assistance for
the aged under the State plan (including expenditures for insur-
ance premiums for medical or any other type of remedial care
or the cost thereof); and
(4) in the case of any State whose State plan approved under
section 2 meets the requirements of subsection (c) (1), an amount
equal to the sum of the following proportions of the total amounts
expended during such quarter as found necessary by the Secretary
of Health, Education, and Welfare for the proper and efficient
administration of the State plan—
(A) 75 per centum of so much of such expenditures as
are for-
Sec. 3(a)
8
1
(i) services which are prescribed pursuant to subsection
(c) (1) and are provided (in accordance with the next
sentence) to applicants for or recipients of assistance
under the plan to help them attain or retain capability
for self-care, or
(ii) other services, specified by the Secretary as likely
to prevent or reduce dependency, so provided to such ap-
plicants or recipients, or
(iii) any of the services prescribed pursuant to sub-
section (c) (1), and of the services specified as provided
in clause (ii), which the Secretary may specify as appro-
priate for individuals who, within such period or periods
as the Secretary may prescribe, have been or are likely
to become applicants for or recipients of assistance under
the plan, if such services are requested by such individ-
uals and are provided to such individuals in accordance.
with the next sentence, or
(iv) the training (including both short- and long-
term training at educational institutions through grants
to such institutions or by direct financial assistance to
students enrolled in such institutions) of personnel em-
ployed or preparing for employment by the State agency
or by the local agency administering the plan in the po-
litical subdivision; plus
(B) one-half of so much of such expenditures (not in-
cluded under subparagraph (A)) as are for services provided
(in accordance with the next sentence) to applicants for or
recipients of assistance under the plan, and to individuals
requesting such services who (within such period or periods
as the Secretary may prescribe) have been or are likely to
become applicants for or recipients of such assistance; plus
(C) one-half of the remainder of such expenditures.
The services referred to in subparagraphs (A) and (B) shall,
except to the extent specified by the Secretary, include only-
(D) services provided by the staff of the State agency, or
of the local agency administering the State plan in the politi-
cal subdivision: Provided, That no funds authorized under
this title shall be available for services defined as vocational
rehabilitation services under the Vocational Rehabilitation
Act (i) which are available to individuals in need of them
under programs for their rehabilitation carried on under a
State plan approved under such Act, or (ii) which the State
agency or agencies administering or supervising the adminis-
tration of the State plan approved under such Act, are able
į
apda
:
9
Sec. 3(b)
and willing to provide if reimbursed for the cost thereof pur-
suant to agreement under subparagraph (E), if provided by
such staff, and
(E) under conditions which shall be prescribed by the
Secretary, services which in the judgment of the State agency
cannot be as economically or as effectively provided by the
staff of such State or local agency and are not otherwise rea-
sonably available to individuals in need of them, and which
are provided, pursuant to agreement with the State agency,
by the State health authority or the State agency or agencies
administering or supervising the administration of the State
plan for vocational rehabilitation services approved under
the Vocational Rehabilitation Act or by any other State
agency which the Secretary may determine to be appropri-
ate (whether provided by its staff or by contract with public
(local) or nonprofit private agencies);
except that services described in clause (i) of subparagraph (D)
hereof may be provided only pursuant to agreement with such
State agency or agencies administering or supervising the admin-
istration of the State plan for vocational rehabilitation services
so approved. The portion of the amount expended for adminis-
tration of the State plan to which subparagraph (A) applies and
the portion thereof to which subparagraph (B) and (C) apply
shall be determined in accordance with such methods and pro-
cedures as may be permitted by the Secretary; and
(5) in the case of any State whose State plan approved under
section 2 does not meet the requirements of subsection (c)(1), an
amount equal to one-half of the total of the sums expended dur-
ing such quarter as found necessary by the Secretary for the
proper and efficient administration of the State plan, including
services referred to in paragraph (4) and provided in accordance
with the provisions of such paragraph.
(b) The method of computing and paying such amounts shall be
as follows:
ww
(1) The Secretary of Health, Education, and Welfare shall,
prior to the beginning of each quarter, estimate the amount to
be paid to the State for such quarter under the provisions of
subsection (a), such estimate to be based on (A) a report filed
by the State containing its estimate of the total sum to be ex-
pended in such quarter in accordance with the provisions of such
subsection, and stating the amount appropriated or made avail-
able by the State and its political subdivisions for such expendi-
tures in such quarter, and if such amount is less than the State's
proportionate share of the total sum of such estimated expendi-
21-746 O - 78 2
-
i
Sec. 3(b)
10
tures, the source or sources from which the difference is expected
to be derived, (B) records showing the number of aged individ-
uals in the State, and (C) such other investigation as the Secre-
tary may find necessary.
(2) The Secretary of Health, Education, and Welfare shall
then certify to the Secretary of the Treasury the amount so
estimated by the Secretary of Health, Education, and Welfare,
(A) reduced or increased, as the case may be, by any sum by
which the Secretary of Health, Education, and Welfare finds that
his estimate for any prior quarter was greater or less than the
amount which should have been paid to the State under sub-
section (a) for such quarter, and (B) reduced by a sum equivalent
to the pro rata share to which the United States is equitably
entitled, as determined by the Secretary of Health, Education,
and Welfare, of the net amount recovered during any prior quar-
ter by the State or any political subdivision thereof with respect
to assistance furnished under the State plan; except that such
increases or reductions shall not be made to the extent that such
sums have been applied to make the amount certified for any
prior quarter greater or less than the amount estimated by the
Secretary of Health, Education, and Welfare for such prior
quarter: Provided, That any part of the amount recovered from
the estate of a deceased recipient which is not in excess of the
amount expended by the State or any political subdivision thereof
for the funeral expenses of the deceased shall not be considered
as a basis for reduction under clause (B) of this paragraph.
(3) The Secretary of the Treasury shall thereupon, through
the Fiscal Service of the Treasury Department and prior to audit
or settlement by the General Accounting Office, pay to the State,
at the time or times fixed by the Secretary of Health, Education,
and Welfare, the amounts so certified.
(c) (1) In order for a State to qualify for payments under para-
graph (4) of subsection (a), its State plan approved under section 2
must provide that the State agency shall make available to applicants
for recipients of old-age assistance under such State plan at least those
services to help them attain or retain capability for self-care which are
prescribed by the Secretary.
(2) In the case of any State whose State plan included a provision
meeting the requirements of paragraph (1), but with respect to which
the Secretary finds, after reasonable notice and opportunity for hear-
ing to the State agency administering or supervising the administra-
tion of such plan, that—
(A) the provision has been so changed that it no longer com-
plies with the requirements of paragraph (1), or
11
Sec. 4
(B) in the administration of the plan there is a failure to com-
ply substantially with such provision,
the Secretary shall notify such State agency that further payments
will not be made to the State under paragraph (4) of subsection (a)
until he is satisfied that there will no longer be any such failure to
comply. Until the Secretary is so satisfied further payments with re-
spect to the administration of such State plan shall not be made under
paragraph (4) of subsection (a) but shall instead be made, subject to
the other provisions of this title, under paragraph (5) of such sub-
section.
(d) Notwithstanding the preceding provisions of this section, the
amount determined under such provisions for any State for any quar-
ter which is attributable to expenditures with respect to patients in
institutions for mental diseases shall be paid only to the extent that
the State make a showing satisfactory to the Secretary that total ex-
penditures in the State from Federal, State, and local sources for
mental health services (including payments to or in behalf of individ-
uals with mental health problems) under State and local public health
and public welfare programs for such quarter exceed the average of
the total expenditures in the State from such sources for such services
under such programs for each quarter of the fiscal year ending June 30,
1965. For purposes of this subsection, expenditures for such services
for each quarter in the fiscal year ending June 30, 1965, in the case
of any State shall be determined on the basis of the latest data, satis-
factory to the Secretary, available to him at the time of the first de-
termination by him under this subsection for such State; and expendi-
tures for such services for any quarter beginning after December 31,
1965, in the case of any State shall be determined on the basis of the
latest data, satisfactory to the Secretary, available to him at the time
of the determination under this subsection for such State for such
quarter; and determinations so made shall be conclusive for purposes
of this subsection.
Operation of State Plans
Sec. 4. In the case of any State plan which has been approved under
this title by the Secretary of Health, Education, and Welfare, if the
Secretary, after reasonable notice and opportunity for hearing to the
State agency administering or supervising the administration of such
plan finds-
(1) that the plan has been so changed as to impose any age,
residence, or citizenship requirement prohibited by section 2(b),
or that in the administration of the plan any such prohibited re-
quirement is imposed, with the knowledge of such State agency,
in a substantial number of cases; or
Sec. 4
12
(2) that in the administration of the plan there is a failure to
comply substantially with any provision required by section 2(a)
to be included in the plan;
the Secretary shall notify such State agency that further payments
will not be made to the State (or, in his discretion, that payments will
be limited to categories under or parts of the State plan not affected
by such failure) until the Secretary is satisfied that such prohibited
requirement is no longer imposed, and that there is no longer any such
failure to comply. Until he is so satisfied he shall make no further
payments to such State (or shall limit payments to categories under
or parts of the State plan not affected by such failure).
Administration
Sec. 5. [Executed. Authorized appropriation for administrative
expenses of the Social Security Board under this title for the fiscal year
ending June 30, 1936.]
Definitions
Sec. 6. (a) For the purposes of this title, the term "old-age assist-
ance" means money payments to, or (if provided in or after the third
month before the month in which the recipient makes application for
assistance) medical care in behalf of or any type of remedial care
recognized under State law in behalf of, needy individuals who are
sixty-five years of age or older, but does not include any such pay-
ments to or care in behalf of any individual who is an inmate of a
public institution (except as a patient in a medical institution). Such
term also includes payments which are not included within the mean-
ing of such term under the preceding sentence, but which would be so
included except that they are made on behalf of such a needy indi-
vidual to another individual who (as determined in accordance with
standards prescribed by the Secretary) is interested in or concerned
with the welfare of such needy individual, but only with respect to a
State whose State plan approved under section 2 includes provision
for-
(1) determination by the State agency that such needy indi-
vidual has, by reason of his physical or mental condition, such
inability to manage funds that making payments to him would
be contrary to his welfare and, therefore, it is necessary to provide
such assistance through payments described in this sentence;
(2) making such payments only on cases in which such pay-
ments will, under the rules otherwise applicable under the State
plan for determining need and the amount of old-age assistance to
be paid (and in conjunction with other income and resources),
13
Sec. 6(b)
meet all the need of the individuals with respect to whom such
payments are made;
(3) undertaking and continuing special efforts to protect the
welfare of such individual and to improve, to the extent possible,
his capacity for self-care and to manage funds;
(4) periodic review by such State agency of the determination
under paragraph (1) to ascertain whether conditions justifying
such determination still exist, with provision for termination of
such payments if they do not and for seeking judicial appointment
of a guardian or other legal representative, as described in section
1111, if and when it appears that such action will best serve the
interests of such needy individual; and
(5) opportunity for a fair hearing before the State agency on
the determination referred to in paragraph (1) for any individual
with respect to whom it is made.
At the option of a State (if its plan approved under this title so pro-
vides), such term (i) need not include money payments to an individ-
ual who has been absent from such State for a period in excess of 90
consecutive days (regardless of whether he has maintained his resi-
dence in such State during such period) until he has been present in
such State for 30 consecutive days in the case of such an individual who
has maintained his residence in such State during such period or 90
consecutive days in the case of any other such individual, and (ii)
may include rent payments made directly to a public housing agency
on behalf of a recipient or a group or groups of recipients of assist-
ance under such plan.
(b) For purposes of this title, the term "medical assistance for the
aged" means payment of part or all of the cost of the following care
and services (if provided in or after the third month before the month
in which the recipient makes application for assistance) for individ-
uals sixty-five years of age or older who are not recipients of old-age
assistance (except, for any month, for recipients of old-age assistance
who are admitted to or discharged from a medical institution during
such month) but whose income and resources are insufficient to meet
all of such cost—
(1) inpatient hospital services;
(2) skilled nursing-home services;
(3) physicians' services;
(4) outpatient hospital or clinic services;
(5) home health care services;
(6) private duty nursing services;
(7) physical therapy and related services;
(8) dental services;
Sec. 6(b)
14
(9) laboratory and X-ray services;
(10) prescribed drugs, eyeglasses, dentures, and prosthetic de-
vices;
(11) diagnostic, screening, and preventive services; and
(12) any other medical care or remedial care recognized under
State law;
except that such term does not include any such payments with respect.
to care or services for any individual who is an inmate of a public
institution (except as a patient in a medical institution).
(c) For purposes of this title, the term "Federal medical percent-
age" for any State shall be 100 per centum less the State percentage;
and the State percentage shall be that percentage which bears the same.
ratio to 50 per centum as the square of the per capita income of such
State bears to the square of the per capita income of the continental
United States (including Alaska) and Hawaii; except that (i) the
Federal medical percentage shall in no case be less than 50 per centum
or more than 80 per centum, and (ii) the Federal medical percentage
for Puerto Rico, the Virgin Islands, and Guam shall be 50 per centum.
The Federal medical percentage for any State shall be determined and
promulgated in accordance with the provisions of subparagraph (B)
of section 1101 (a) (8) (other than the proviso at the end thereof);
except that the Secretary shall, as soon as possible after enactment of
the Social Security Amendments of 1960, determine and promulgate
the Federal medical percentage for each State--
(1) for the period beginning October 1, 1960, and ending with
the close of June 30, 1961, which promulgation shall be based on
the same data with respect to per capita income as the data used.
by the Secretary in promulgating the Federal percentage (under
section 1101(a)(8)) for such State for the fiscal year ending
June 30, 1961 (which promulgation of the Federal medical per-
centage shall be conclusive for such period), and
(2) for the period beginning July 1, 1961, and ending with
the close of June 30, 1963, which promulgation shall be based on
the same data with respect to per capita income as the data used
by the Secretary in promulgating the Federal percentage (under
section 1101(a) (8)) for such State for such period (which pro-
mulgation of the Federal medical percentage shall be conclusive
for such period).
❤
Revised April 1978
TITLE II-FEDERAL OLD-AGE, SURVIVORS, AND DIS-
ABILITY INSURANCE BENEFITS
SEC. 201. Federal Old-Age and Survivors Insurance Trust Fund and Page¹
Federal Disability Insurance Trust Fund___
20
(a) Creation of Federal Old-Age and Survivors Insurance Trust
Fund
(b) Creation of Federal Disability Insurance Trust Fund
(c) Board of Trustees__
(d) Investment of Funds.
(e) Sale of Obligations__.
(f) Crediting of Interest on and Proceeds From Sales of Obligations_
(g) Payment From Trust Funds Into Treasury.
(h) Trust Funds Used for Payments of Benefits_.
(i) Acceptance of Gifts__
SEC. 202. Old-Age and Survivors Insurance Benefit Payments_
(a) Old-Age Insurance Benefits..
(b) Wife's Insurance Benefits--.
(c) Husband's Insurance Benefits.
(d) Child's Insurance Benefits_.
(e) Widow's Insurance Benefits_-
(f) Widower's Insurance Benefits.
(g) Mother's Insurance Benefits.
(h) Parent's Insurance Benefits.
(i) Lump-sum Death Payments---
(j) Application for Monthly Insurance Benefits; Retroactive Effect
of Application; Waiver of Entitlement.
(k) Simultaneous Entitlement to More Than One Type of Insurance
Benefit
(1) Effect of Entitlement to Survivor Benefits Under Railroad Re-
tirement Act__
(m) Minimum Survivor's Benefit--.
(n) Termination of Benefits Upon Deportation of Primary Bene-
ficiary
(0) Application for Benefits by Survivors of Members and Former
Members of the Uniformed Services_.
(p) Extension of Period for Filing Proof of Support and Applica-
tions for Lump-Sum Death Payment….
(q) Reduction of Benefit Amounts for Certain Beneficiaries__
(r) Presumed Filing of Application by Individuals Eligible for Old-
Age Insurance Benefits and for Wife's or Husband's Insurance
Benefits
(s) Child Aged 18 or Over Attending School_.
(t) Suspension of Benefits of Aliens Who Are Outside the United
States
(u) Effect of Conviction of Subversive Activities, etc--.
(v) Waiver of Benefits---
(w) Increase in Old-Age Insurance Benefit Amounts on Account of
Delayed Retirement..
SEC. 203. Reduction of Insurance Benefits..
(a) Maximum Benefits Payable...
(b) Deductions on Account of Work_
(c) Deductions on Account of Noncovered Work Outside the U.S.;
Failure To Have Child in Care__
(d) Deductions From Dependents' Benefits on Account of Old-Age
Insurance Beneficiary's Noncovered Work Outside the U.S.
(e) Occurrence of More Than One Event-..
--
¹ This table of contents does not appear in the law.
20
21
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(15)
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Revised April 1978
|
!
SEC. 203. Reduction of Insurance Benefits-Continued
(f) Months to Which Earnings Are Charged_-_-
(g) Penalty for Failure To Report Certain Events.
(h) Report of Earnings to Secretary-
(i) Circumstances Under Which Deductions and Reductions Not
Required
79-C
79-C
(j) Attainment of Age Seventy-.
(k) Noncovered Remunerative Activity Outside the United States-- 79-C
(1) Good Cause for Failure To Make Reports Required_.
79-D
SEC. 204. Overpayments and Underpayments__
(a) Adjustment of Errors in Payments_
(b) When Adjustment or Recovery of Overpayment Not Made_
(c) Nonliability of Certifying or Disbursing Officer.
(d) Special Rules Regarding Underpayments___
SEC. 205. Evidence, Procedure, and Certification for Payment___
(a) Authority of Secretary To Make Rules and Regulations To Carry
Out Provisions of Title II___
(b) Decisions by Secretary Regarding Rights of Claimants..
(c) Earnings Records Maintained by Secretary; Time Limitation for
Revisions
(d) Authority of Secretary To Issue Subpenas.
(e) Contumacy or Failure To Obey Subpena_.
(f) [Repealed.]
(g) Review of Secretary's Decision by Court.
(h) Finality of Secretary's Decision__.
(i) Certification by Secretary for Payment_--
(j) Authority of Secretary To Certify Payment of Benefits to Some-
one Other Than the Beneficiary-
(k) Settlement of Claims of Incompetents--
(1) Authority of Secretary To Delegate Powers.
(m) [Repealed.]
(q) Expedited Benefit Payments___
SEC. 206. Representation of Claimants_.
(a)
(n) Joint Payment of Benefits__
(0) Crediting of Compensation Under the Railroad Retirement Act__
(p) Special Rules in Case of Federal Service_‒‒‒
(a)
(b)
(c)
(b)
Court Determination of Fees in Certain Cases-
SEC. 207. Assignment
SEC. 208. Penalties
€ 00
(d)
False Statements To Obtain Increase in Benefits_
False Statements on Applications..
False Statements Made for Use in Determining Rights to
Payments
Fraudulent Concealment or Failure To Disclose Events Affecting
Initial or Continued Right to Payment__
(e) Willful Conversion of Benefits by Representative Payee_-
(f) Furnishing False Information To Obtain Social Security Account
Number
Representation Before Secretary; Fees for Services Before
Secretary
(h) Penalty for Misuse of Social Security Number_
SEC. 209. Definition of Wages--
(f)
(g)
(g) Penalty for Furnishing False Social Security Number With In-
tent To Deceive____
(a)
Remuneration Excluded____
(b) Payments Under Plan or System Excluded_
(c)
Retirement Pay Excluded__
(d)
(e)
(h)
(i)
I
Sick Pay Excluded---
Payments to or by Trust Exempt From Tax Under Internal
Revenue Code Excluded_
Remuneration for Agricultural Labor-When Excluded-
Remuneration Paid After Retirement Age-When Excluded.
(j) Remuneration Paid to Homeworkers-When Excluded..
Payment of Employee Tax by Employer Excluded.
Payments in Kind and Certain Cash Payments for Domestic
Employment or Employment Not in Course of Employer's
Trade or Business Excluded___.
Page
74
79
79-A
79-D
79-D
79-E
79-E
79-E
79-F
79-F
79-F
79-G
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85
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86
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5558
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Revised April 1978
17
SEC. 209. Definition of Wages-Continued
Moving Expenses of Employees-
Tips
(k)
(1)
(m) Payments by Employer Upon or After Termination of
Employment
(n) Payments by Employer to Survivor of Estate of Former Em-
ployee
(0) Payments to Employee Entitled to Disability Insurance Benefits-
(p) Remuneration Paid by Tax Exempt Organizations_
SEC. 210. Employment
Employment; Excluded Employment Defined_
Included and Excluded Service Performed During Pay Period--
(c) American Vessel Defined..
(d) American Aircraft Defined.
(e) American Employer Defined.
Agricultural Labor Defined___.
(g) Farm Defined__
(f)
State Defined___
United States Defined.
(a)
(b)
@sszę Ēz o fas
Employee Defined____
Covered Transportation Service Defined_.
Service in the Uniformed Services Defined_
(m) Member of a Uniformed Service Defined_--
Crew Leader Defined____.
Peace Corps Volunteer Service___
SEC. 211. Self-Employment
Net Earnings From Self-Employment Defined___
Self-Employment Income Defined.
(b)
(c) Trade or Business Defined___
(d)
(e)
(f)
(a)
(b) Taxable Year Other Than a Calendar Year.
SEC. 213. Quarter and Quarter of Coverage_.
FI
1 1
I
Partnership and Partner Defined_
Taxable Year Defined____.
Computing Deceased's Net Earnings From Self-Employment
When Partnership Taxable Year Ends Because of Death.
Regular Basis..
(g)
SEC. 212. Crediting of Self-Employment Income to Calendar Quarters--
Calendar Taxable Year_
(i)
SEC. 216. Other Definitions___
I
(a) [Repealed.]
(b) Wife
(c)
Widow
(d) Divorced Wives, Divorce_
(e) Child
(f)
1
Husband
(g) Widower
(a)
Definitions
(b) Crediting of Wages Paid in 1937.
(c)
Alternative Method for Determining Quarters of Coverage for
1937 to 1950_.
(d) Amount Required for a Quarter of Coverage.
SEC. 214. Insured Status for Purposes of Old-Age and Survivors Insurance
Benefits
(a)
Fully Insured Individual_.
Currently Insured Individual_
(b)
SEC. 215. Computation of Primary Insurance Amount.
(a)
Primary Insurance Amount_.
(b) Average Indexed Monthly Earnings; Average Monthly Wage__
Application of Prior Provisions in Certain Cases--
mda
(c)
(d) Primary Insurance Benefit Under 1939 Act__
(e)
Certain Wages and Self-Employment Income Not To Be
Counted
Recomputation of Benefits.
T
(f)
(g) Rounding of Benefits_
(h)
Exclusion Under Certain Circumstances of Remuneration Paid
to Public Health Service Reserve Officer for Service Prior to
July 1, 1960___.
Cost-of-Living Increases in Benefits.
Page
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106
106
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108
110
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134
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141-A
141-A
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18
Revised April 1978
SEC. 216. Other Definitions-Continued
(h) Determination of Status as Wife, Husband, Widow, Widower,
Child, or Parent___
(i) Disability: Period of Disability.
(j) When Periods of Limitation End on Nonwork Days_
(k) Waiver of 9-Month Requirement for Widow, Stepchild, or
Widower in Certain Death Cases, or in the Case of Remarriage
to the Same Individual___
(a) Purpose of Agreement
(b) Definitions of Terms_.
SEC. 217. Benefits in Case of Veterans.
(a) Wage Credits for World War II Service_
(b) Insured Status of World War II Veterans Dying Within 3 Years
After Separation From Active Service__
(c) Time for Parent of Deceased Veteran To File Proof of Support___
(d) Definition of World War II and World War II Veteran__.
(e) Wage Credits for Military Service After World War II_
(f) Waiver of Rights to Civil Service Retirement Annuity by Widow
or Child as Condition of Entitlement to Social Security Benefits_
(g) Reimbursement of Trust Fund for Cost of Wage Credits for
Certain Military Service--.
(h) Wage Credits for American Citizen's World War II Service in
Armed Forces of U.S. Allies_.
SEC. 218. Voluntary Agreements for Coverage of State and Local Em-
ployees
(c) Services Covered_
(d) Positions Covered by Retirement Systems.
(e) Payments and Reports by States-.
(f) Effective Date of Agreement--
(g) Termination of Agreement---
(h) Deposits in Trust Fund; Adjustments-
(i) Purpose of Regulations Issued Under This Section_.
(j) Result of State Failure To Make Payments Required Under
Agreement
(k) Instrumentalities of Two or More States__.
(1) Delegation of Functions_
(m) Wisconsin Retirement Fund_
(n) Modification of Agreement To Apply to Certain Positions No
Longer Covered by Retirement Systems--
(0) Modification of Agreement To Apply to Certain Employees of the
State of Utah.
(p) Modification of Agreement To Apply to Policemen and Firemen
in Certain States__
(q) Time Limitation on Assessments
(r) Time Limitation on Credits and Refunds--
(s) Review by Secretary of Assessment; Allowance or Disallowance
of Claim for Credit or Refunds_.
(t) Review by Court-.
(u) Positions Compensated Solely on a Fee Basis__
SEC. 219. [Repealed.]
SEC. 220. Disability Provisions Inapplicable if Benefit Rights Impaired---
SEC. 221. Disability Determinations_.
(a) Disability Determination To Be Made by State Agency-
(b) Federal-State Agreements--.
(c) Review by Secretary on His Own Motion of Disability Deter-
minations Made by State--
(d) Individual Dissatisfied by Determination Entitled to Hearing---
(e) Reimbursement of States for Cost of Carrying Out Federal-State
Agreements
(f) Use of Payments by States.
(g) Disability Determinations Made by Secretary
SEC. 222.
(a)
(b)
(c)
(d)
Rehabilitation Services__.
Referral for Rehabilitation Services_
Deductions on Account of Refusal To Accept Rehabilitation
Services
Period of Trial Work___.
Costs of Rehabilitation Services From Trust Funds_-_.
Page
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Revised August 1978
19
SEC. 223.
(a)
(b)
(c)
(d)
SEC. 224.
Disability Insurance Benefit Payments--
Disability Insurance Benefits..
Filing of Application__.
Definitions of Insured Status and Waiting Period___
Definition of Disability-
Reduction of Benefits Based on Disability on Account of Re-
ceipt of Workmen's Compensation_.
Computation of Reduction_.
(a)
(b) Benefit Payable on Other Than a Monthly Basis---
(c)
E
(e)
(d) No Reduction if Workmen's Compensation Benefit Reduced
Because of Receipt of Title II Benefits___
Certification by Individual as to Award or Possibility of Award
of Workmen's Compensation Benefits_
Redetermination of Reduction__
(f)
Reduction of Auxiliary Benefits Before Reduction of Disability
Insurance Benefit_
(g)
SEC. 227.
(a)
(b)
SEC. 225.
SEC. 226.
(a)
(b)
(c)
(d) Qualified Railroad Retirement Beneficiary-Definition….
(e) Widows' and Widowers' Hospital Benefits_.
(f)
Uninsured Individuals_
SEC. 226A. Special Provisions Relating to Coverage Under Medicare Pro-
gram for End Stage Renal Disease__
Transitional Insured Status__.
Benefit Rate__
Widow's Benefits-Individual Deceased Prior to Becoming
Eligible Under Transitional Insured Status Provisions___..
(c) Widow's Benefits-Individual Deceased After Becoming Eligible
Under Transitional Insured Status Provisions__
SEC. 228.
(a)
(b)
(c)
Application When Other Reduction or Deduction Under this
Title Applicable---
(h)
SEC. 229.
Suspension of Benefits Based on Disability.
Entitlement to Hospital Insurance Benefits___
Requirements for Entitlement-Individual over 65.
Requirements for Entitlement-Individual under 65.
Limitations-Deemed Entitlement___
(a)
(b)
SEC. 230.
(a)
(b)
(c)
SEC. 231.
Benefits at Age 72 for Certain Uninsured Individuals___
Eligibility
——
(d) Suspension for Months in Which Cash Payments Are Made
Under Public Assistance….
Benefit Amount---
Reduction for Governmental Pension System Benefits.
(e) Suspension Where Individual Is Residing Outside the United
States
(f) Treatment as Monthly Insurance Benefits----
(g)
1
Annual Reimbursement of Federal Old-Age and Survivors
Insurance Trust Fund___
(a)
(b) Wages
(c)
Appropriations
SEC. 232. Processing of tax data----
SEC. 233.
International Agreements.
Definitions
Benefits in Case of Members of the Uniformed Services-
Deemed Wage Credits for Service after December 1967.
Appropriations to Cover Wage Credits.
Adjustment of the Contribution and Benefit Base---
Publication in the Federal Register__
The amount of the contribution and benefit base_-
Interim contribution and benefit base_-.
Benefits in Case of Certain Individuals Interned During World
War II____.
Definition of Internee__
K
(a) Purpose of Agreement_.
(b)
Definitions
(c) Crediting Periods of Coverage; Conditions of Payment of
Benefits
Regulations
(d)
(e) Reports to Congress; Effective Date of Agreements___
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Sec. 201(a)
20
Federal Old-Age and Survivors Insurance Trust Fund and
Federal Disability Insurance Trust Fund
Section 201. (a) There is hereby created on the books of the Treas-
ury of the United States a trust fund to be known as the "Federal
Old-Age and Survivors Insurance Trust Fund". The Federal Old-Age
and Survivors Insurance Trust Fund shall consist of the securities
held by the Secretary of the Treasury for the Old-Age Reserve Ac-
count and the amount standing to the credit of the Old-Age Reserve
Account on the books of the Treasury on January 1, 1940, which se-
curities and amount the Secretary of the Treasury is authorized and
directed to transfer to the Federal Old-Age and Survivors Insurance
Trust Fund, and, in addition, such gifts and bequests as may be made
as provided in subsection (i) (1), and such amounts as may be ap-
propriated to, or deposited in, the Federal Old-Age and Survivors In-
surance Trust Fund as hereinafter provided. There is hereby appro-
priated to the Federal Old-Age and Survivors Insurance Trust Fund
for the fiscal year ending June 30, 1941, and for each fiscal year there-
after, out of any moneys in the Treasury not otherwise appropriated,
amounts equivalent to 100 per centum of—
(1) the taxes (including interest, penalties, and additions to
the taxes) received under subchapter A of chapter 9 of the In-
ternal Revenue Code of 1939 (and covered into the Treasury)
which are deposited into the Treasury by collectors of internal
revenue before January 1, 1951; and
(2) the taxes certified each month by the Commissioner of
Internal Revenue as taxes received under subchapter A of chapter
9 of such Code which are deposited into the Treasury by collectors
of internal revenue after December 31, 1950, and before January
1, 1953, with respect to assessments of such taxes made before
January 1, 1951; and
(3) the taxes imposed by subchapter A of chapter 9 of such
Code with respect to wages (as defined in section 1426 of such
Code), and by chapter 21 (other than sections 3101 (b) and 3111
(b)) of the Internal Revenue Code of 1954 with respect to wages
(as defined in section 3121 of such Code) reported to the Com-
missioner of Internal Revenue pursuant to section 1420 (c) of the
Internal Revenue Code of 1939 after December 31, 1950, or to
the Secretary of the Treasury or his delegates pursuant to sub-
title F of the Internal Revenue Code of 1954 after December 31,
1954, as determined by the Secretary of the Treasury by apply-
ing the applicable rates of tax under such subchapter or chapter
21 (other than sections 3101(b) and 3111(b)) to such wages,
which wages shall be certified by the Secretary of Health, Educa-
tion, and Welfare on the basis of the records of wages established
21
Sec. 201(b)
and maintained by such Secretary in accordance with such re-
ports, less the amounts specified in clause (1) of subsection (b) of
this section; and
(4) the taxes imposed by subchapter E of chapter 1 of the
Internal Revenue Code of 1939, with respect to self-employment
income (as defined in section 481 of such Code), and by chapter
2 (other than section 1401 (b)) of the Internal Revenue Code of
1954 with respect to self-employment income (as defined in section.
1402 of such Code) reported to the Commissioner of Internal
Revenue on tax returns under such subchapter or to the Secretary
of the Treasury, or his delegate on tax returns under subtitle F
of such Code, as determined by the Secretary of the Treasury by
applying the applicable rate of tax under such subchapter or
chapter (other than section 1401 (b)) to such self-employment
income, which self-employment income shall be certified by the
Secretary of Health, Education, and Welfare on the basis of the
records of self-employment income established and maintained by
the Secretary of Health, Education, and Welfare in accordance
with such returns, less the amounts specified in clause (2) of sub-
section (b) of this section.
The amounts appropriated by clauses (3) and (4) shall be transferred
from time to time from the general fund in the Treasury to the Fed-
eral Old-Age and Survivors Insurance Trust Fund, and the amounts
appropriated by clauses (1) and (2) of subsection (b) shall be trans-
ferred from time to time from the general fund in the Treasury to the
Federal Disability Insurance Trust Fund, such amounts to be deter-
mined on the basis of estimates by the Secretary of the Treasury of the
taxes, specified in clauses (3) and (4) of this subsection, paid to or de-
posited into the Treasury; and proper adjustments shall be made in
amounts subsequently transferred to the extent prior estimates were
in excess of or were less than the taxes specified in such clauses (3) and
(4) of this subsection.
(b) There is hereby created on the books of the Treasury of the
United States a trust fund to be known as the "Federal Disability In-
surance Trust Fund". The Federal Disability Insurance Trust Fund
shall consist of such gifts and bequests as may be made as provided in
subsection (i)(1), and of such amounts as may be appropriated to, or
deposited in, such fund as provided in this section. There is hereby
appropriated to the Federal Disability Insurance Trust Fund for the
fiscal year ending June 30, 1957, and for each fiscal year thereafter, out
of any moneys in the Treasury not otherwise appropriated, amounts
equivalent to 100 per centum of-
(1) (A) 1½ of 1 per centum of the wages (as defined in section
3121 of the Internal Revenue Code of 1954) paid after Decem-
Sec. 201(b)
22
Revised April 1978
ber 31, 1956, and before January 1, 1966, and reported to the Sec-
retary of the Treasury or his delegate pursuant to subtitle F of
the Internal Revenue Code of 1954, (B) 0.70 of 1 per centum of
the wages (as so defined) paid after December 31, 1965, and be-
fore January 1, 1968, and so reported, and (C) 0.95 of 1 per
centum of the wages (as so defined) paid after December 31,
1967, and before January 1, 1970, and so reported, (D) 1.10 per
centum of the wages (as so defined) paid after December 31,
1969, and before January 1, 1973, and so reported, (E) 1.1 per
centum of the wages (as so defined) paid after December 31,
1972, and before January 1, 1974, and so reported, (F) 1.15 per
centum of the wages (as so defined) paid after December 31, 1973,
and before January 1, 1978, and so reported, (G) 1.55 per centum
of the wages (as so defined) paid after December 31, 1977, and
before January 1, 1979, and so reported, (H) 1.50 per centum of
the wages (as so defined) paid after December 31, 1978, and before
January 1, 1981, and so reported, (I) 1.65 per centum of the wages
(as so defined) paid after December 31, 1980, and before Janu-
ary 1, 1985, and so reported, (J) 1.90 per centum of the wages
(as so defined) paid after December 31, 1984, and before Janu-
ary 1, 1990, and so reported, and (K) 2.20 per centum of the wages
(as so defined) paid after December 31, 1989, and so reported.
which wages shall be certified by the Secretary of Health, Educa-
tion, and Welfare on the basis of the records of wages established
and maintained by such Secretary in accordance with such
reports; and 1
(2) (A) % of 1 per centum of the amount of self-employment
income (as defined in section 1402 of the Internal Revenue Code
of 1954) reported to the Secretary of the Treasury or his delegate
on tax returns under subtitle F of the Internal Revenue Code of
1954 for any taxable year beginning after December 31, 1956, and
before January 1, 1966, (B) and 0.525 of 1 per centum of the
amount of self-employment income (as so defined) so reported for
any taxable year beginning after December 31, 1965, and before
January 1, 1968, and (C) 0.7125 of 1 per centum of the amount of
self-employment income (as so defined) so reported for any tax-
able year beginning after December 31, 1967, and before Janu-
ary 1, 1970, (D) 0.825 of 1 per centum of the amount of self-
employment income (as so defined) so reported for any taxable
year beginning after December 31, 1969, and before January 1,
1973, (E) 0.795 of 1 per centum of the amount of self-employ-
ment income (as so defined) so reported for any taxable year
beginning after December 31, 1972, and before January 1, 1974,
1 Paragraph (1) was amended by section 102 (a)(1) of Public Law 95–216. The period
at the end of clause (K) is a technical error and should be a comma.
Revised April 1978
23
Sec. 201(c)
(F) 0.815 of 1 per centum of the amount of self-employment
income (as so defined) as reported for any taxable year beginning
after December 31, 1973, and before January 1, 1978, (G) 1.090
per centum of the amount of self-employment income (as so
defined) so reported for any taxable year beginning after Decem-
ber 31, 1977, and before January 1, 1979, (H) 1.0400 per centum
of the amount of self-employment income (as so defined) so re-
ported for any taxable year beginning after December 31, 1978,
and before January 1, 1981, (I) 1.2375 per centum of the amount
of self-employment income (as so defined) so reported for any
taxable year beginning after December 31, 1980, and before Jan-
uary 1, 1985, (J) 1.4250 per centum of the amount of self-employ-
ment income (as so defined) so reported for any taxable year be-
ginning after December 31, 1984, and before January 1, 1990, and
(K) 1.650 per centum of the amount of self-employment income
(as so defined) so reported for any taxable year beginning after
December 31, 1989, which self-employment income shall be cer-
tified by the Secretary of Health, Education, and Welfare on the
basis of the records of self-employment income established and
maintained by the Secretary of Health, Education, and Welfare
in accordance with such returns.¹
(c) With respect to the Federal Old-Age and Survivors Insurance
Trust Fund and the Federal Disability Insurance Trust Fund (here-
inafter in this title called the "Trust Funds") there is hereby created
a body to be known as the Board of Trustees of the Trust Funds (here-
inafter in this title called the "Board of Trustees") which Board of
Trustees shall be composed of the Secretary of the Treasury, the Sec-
retary of Labor, and the Secretary of Health, Education, and Welfare,
all ex officio. The Secretary of the Treasury shall be the Managing
Trustee of the Board of Trustees (hereinafter in this title called the
"Managing Trustee"). The Commissioner of Social Security shall
serve as Secretary of the Board of Trustees. Such Board of Trustees
shall meet not less frequently than once each calendar year. It shall be
the duty of the Board of Trustees to—
(1) Hold the Trust Funds;
(2) Report to the Congress not later than the first day of April
of each year on the operation and status of the Trust Funds dur-
ing the preceding fiscal year and on their expected operation and
status during the next ensuing five fiscal years;
(3) Report immediately to the Congress whenever the Board
of Trustees is of the opinion that the amount of either of the Trust
Funds is unduly small;
1 Paragraph (2) was amended by sec. 102(a) (2) of Public Law 95-216.
Revised April 1978
23-A
Sec. 201(c)
(4) Recommend improvements in administrative procedures.
and policies designed to effectuate the proper coordination of the
old-age and survivors insurance and Federal-State unemploy-
ment compensation program; and
:
(5) Review the general policies followed in managing the Trust
Funds, and recommend changes in such policies, including neces-
sary changes in the provisions of the law which govern the way in
which the Trust Funds are to be managed.
21-746 O - 78 3
The report provided for in paragraph (2) above shall include a state-
ment of the assets of, and the disbursements made from, the Trust
Sec. 201(c)
24
Funds during the preceding fiscal year, an estimate of the expected
future income to, and disbursements to be made from, the Trust Funds
during each of the next ensuing five fiscal years, and a statement of the
actuarial status of the Trust Funds. Such report shall also include an
actuarial analysis of the benefit disbursements made from the Federal
Old-Age and Survivors Insurance Trust Fund with respect to disabled
beneficiaries. Such report shall be printed as a House document of the
session of the Congress to which the report is made.
(d) It shall be the duty of the Managing Trustee to invest such
portion of the Trust Funds as is not, in his judgment, required to meet
current withdrawals. Such investments may be made only in interest-
bearing obligations of the United States or in obligations guaranteed
as to both principal and interest by the United States. For such pur-
pose such obligations may be acquired (1) on original issue at the issue
price, or (2) by purchase of outstanding obligations at the market
price. The purposes for which obligations of the United States may be
issued under the Second Liberty Bond Act, as amended, are hereby
extended to authorize the issuance at par of public-debt obligations for
purchase by the Trust Funds. Such obligations issued for purchase by
the Trust Funds shall have maturities fixed with due regard for the
needs of the Trust Funds and shall bear interest at a rate equal to the
average market yield (computed by the Managing Trustee on the basis
of market quotations as of the end of the calendar month next preced-
ing the date of such issue) on all marketable interest-bearing obliga-
tions of the United States then forming a part of the public debt
which are not due or callable until after the expiration of four years
from the end of such calendar month; except that where such average
market yield is not a multiple of one-eighth of 1 per centum, the rate
of interest of such obligations shall be the multiple of one-eighth of
1 per centum nearest such market yield. The Managing Trustee may
purchase other interest-bearing obligations of the United States or
obligations guaranteed as to both principal and interest by the United
States, on original issue or at the market price, only where he deter-
mines that the purchase of such other obligations is in the public
interest.
K
(e) Any obligation acquired by the Trust Funds (except public-
debt obligations issued exclusively to the Trust Funds) may be sold
by the Managing Trustee at the market price, and such public-debt
obligations may be redeemed at par plus accrued interest.
(f) The interest on, and the proceeds from the sale or redemption
of, any obligations held in the Federal Old-Age and Survivors Insur-
ance Trust Fund and the Federal Disability Insurance Trust Fund
shall be credited to and form a part of the Federal Old-Age and
Survivors Insurance Trust Fund and the Disability Insurance Trust
Fund, respectively.
25
Sec. 201(g)
(g) (1) (A) The Managing Trustee of the Trust Funds (which for
purposes of this paragraph shall include also the Federal Hospital
Insurance Trust Fund and the Federal Supplementary Medical Insur-
ance Trust Fund established by title XVIII) is directed to pay from
the Trust Funds into the Treasury-
(i) the amounts estimated by him and the Secretary of Health,
Education, and Welfare which will be expended, out of moneys
appropriated from the general fund in the Treasury, during a
three-month period by the Department of Health, Education, and
Welfare and the Treasury Department for the administration of
titles II, XVI, and XVIII of this Act and subchapter E of chap-
ter 1 and subchapter A of chapter 9 of the Internal Revenue Code
of 1939, and chapters 2 and 21 of the Internal Revenue Code of
1954, less
(ii) the amounts estimated (pursuant to the method prescribed
by the Board of Trustees under paragraph (4) of this subsection)
by the Secretary of Health, Education, and Welfare which will
be expended, out of moneys made available for expenditures from
the Trust Funds, during such three-month period to cover the cost
of carrying out the functions of the Department of Health, Educa-
tion, and Welfare, specified in section 232, which relate to the ad-
ministration of provisions of the Internal Revenue Code of 1954
other than those referred to in clause (i).
Such payments shall be carried into the Treasury as the net amount of
repayments due the general fund account for reimbursement of ex-
penses incurred in connection with the administration of titles II, XVI,
and XVIII of this Act and subchapter E of chapter 1 and subchapter
A of chapter 9 of the Internal Revenue Code of 1939, and chapters
2 and 21 of the Internal Revenue Code of 1954. A final account-
ing of such payments for any fiscal year shall be made at the earliest
practicable date after the close thereof. There are hereby authorized
to be made available for expenditure, out of any or all of the Trust
Funds, such amounts as the Congress may deem appropriate to pay the
costs of the part of the administration of this title, title XVI, and title
XVIII for which the Secretary of Health, Education, and Welfare is
responsible and of carrying out the functions of the Department of
Health, Education, and Welfare, specified in section 232, which relate
to the administration of provisions of the Internal Revenue Code of
1954 other than those referred to in clause (i) of the first sentence of
this subparagraph.
(B) After the close of each fiscal year the Secretary of Health,
Education, and Welfare shall determine the portion of the costs,
incurred during such fiscal year, of administration of this title, title
XVI, and title XVIII and of carrying out the functions of the De-
Sec. 201(g)
26
partment of Health, Education, and Welfare, specified in section 232,
which relate to the administration of provisions of the Internal Reve-
nue Code of 1954 (other than those referred to in clauses (i) of the
first sentence of subparagraph (A)), which should have been borne
by the general fund in the Treasury and the portion of such costs
which should have been borne by each of the Trust Funds; except
that the determination of the amounts to be borne by the general
fund in the Treasury with respect to expenditures incurred in carry-
ing out such functions specified in section 232 shall be made pursuant
to the method prescribed by the Board of Trustees under paragraph
(4) of this subsection. After such determination has been made, the
Secretary of Health, Education, and Welfare shall certify to the
Managing Trustee the amounts, if any, which should be transfer-
red from one to any of the other of such Trust Funds and the amounts,
if any, which should be transferred between the Trust Funds (or
one of the Trust Funds) and the general fund in the Treasury, in
order to insure that each of the Trust Funds and the general fund in
the Treasury have borne their proper share of the costs, incurred
during such fiscal year, for the part of the administration of this
title, title XVI, and title XVIII for which the Secretary of Health,
Education, and Welfare is responsible and of carrying out the func-
tions of the Department of Health, Educaton, and Welfare, specified
in section 232, which relate to the administration of provisions of the
Internal Revenue Code of 1954 (other than those referred to in clause
(i) of the first sentence of subparagraph (A)). The Managing Trus-
tee is authorized and directed to transfer any such amounts in accord-
ance with any certification so made.¹
A
(2) The Managing Trustee is directed to pay from time to time
from the Trust Funds into the Treasury the amount estimated by
him as taxes imposed under section 3101 (a) which are subject
to refund under section 6113 (c) of the Internal Revenue Code of
1954 with respect to wages (as defined in section 1426 of the Internal
Revenue Code of 1939 and section 3121 of the Internal Revenue Code
of 1954) paid after December 31, 1950. Such taxes shall be deter-
mined on the basis of the records of wages established and maintained
by the Secretary of Health, Education, and Welfare in accordance
with the wages reported to the Commissioner of Internal Revenue
pursuant to section 1420 (c) of the Internal Revenue Code of 1939 and
to the Secretary of the Treasury or his delegate pursuant to subtitle F
of the Internal Revenue Code of 1954, and the Secretary shall furnish
the Managing Trustee such information as may be required by the
Trustee for such purpose. The payments by the Managing Trustee
shall be covered into the Treasury as repayments to the account for
1 Subsection (g) (1) was amended by section 8(d) of Public Law 94-202. See also section
8(f) of Public Law 94-202 which appears in this document on page 773.
27
Sec. 201 (i)
refunding internal revenue collections. Payments pursuant to the first
sentence of this paragraph shall be made from the Federal Old-Age
and Survivors Insurance Trust Fund and the Federal Disability In-
surance Trust Fund in the ratio in which amounts were appropriated
to such Trust Funds under clause (3) of subsection (a) of this section
and clause (1) of subsection (b) of this section.
(3) Repayments made under paragraph (1) or (2) shall not be
available for expenditures but shall be carried to the surplus fund of
the Treasury. If it subsequently appears that the estimates under
either such paragraph in any particular period were too high or too
low, appropriate adjustments shall be made by the Managing Trustee
in future payments.
(4) The Board of Trustees shall prescribe before January 1, 1981,
the method of determining the costs which should be borne by the gen-
eral fund in the Treasury of carrying out the functions of the Depart-
ment of Health, Education, and Welfare, specified in section 232,
which relate to the administration of provisions of the Internal
Revenue Code of 1954 (other than those referred to in clause (i) of
the first sentence of paragraph (1)(A)). If at any time or times
thereafter the Boards of Trustees of such Trust Fund deem such
action advisable they may modify the method so determined.¹
(h) Benefit payments required to be made under section 223, and
benefit payments required to be made under subsection (b), (c), or
(d), of section 202 to individuals entitled to benefits on the basis
of the wages and self-employment income of an individual entitled to
disability insurance benefits, shall be made only from the Federal Dis-
ability Insurance Trust Fund. All other benefit payments required
to be made under this title (other than section 226) shall be made only
from the Federal Old-Age and Survivors Insurance Trust Fund.
(i) (1) The Managing Trustee of the Federal Old-Age and Survi-
vors Insurance Trust Fund, the Federal Disability Insurance Trust
Fund, the Federal Hospital Insurance Trust Fund, and the Federal
Supplementary Medical Insurance Trust Fund is authorized to ac-
cept on behalf of the United States money gifts and bequests made
unconditionally to any one or more of such Trust Funds or to the
Department of Health, Education, and Welfare, or any part or officer
thereof, for the benefit of any of such Funds or any activity financed
through such Funds.
(2) Any such gift accepted pursuant to the authority granted in
paragraph (1) of this subsection shall be deposited in-
(A) the specific trust fund designated by the donor or
(B) if the donor has not so designated, the Federal Old-Age
and Survivors Insurance Trust Fund.
1 Paragraph (4) was added by section 8 of Public Law 94-202. See also section 8(e)
of Public Law 94-202 which is reprinted in this document on page 773.
Sec. 202(a)
Revised April 1978
28
Old-Age and Survivors Insurance Benefit Payments
Old-Age Insurance Benefits
Sec. 202. (a) Every individual who-
(1) is a fully insured individual (as defined in section 214 (a)),
(2) has attained age 62, and
(3) has filed application for old-age insurance benefits or was
entitled to disability insurance benefits for the month preceding
the month in which he attained the age of 65,
shall be entitled to an old-age insurance benefit for each month, be-
ginning with the first month after August 1950 in which such indi-
vidual becomes so entitled to such insurance benefits and ending with
the month preceding the month in which he dies. Except as provided
in subsection (q) and subsection (w), such individual's old-age insur-
ance benefit for any month shall be equal to his primary insurance
amount (as defined in section 215 (a)) for such month.
Wife's Insurance Benefits
(b) (1) The wife (as defined in section 216(b)) and every divorced
wife (as defined in section 216(d)) of an individual entitled to old-age
or disability insurance benefits, if such wife or such divorced wife—
(A) has filed application for wife's insurance benefits,
(B) has attained age 62 or (in the case of a wife) has in her
care (individually or jointly with such individual) at the time of
filing such application a child entitled to a child's insurance bene-
fit on the basis of the wages and self-employment income of such
individual,
(C) in the case of a divorced wife, is not married, and
(D) is not entitled to old-age or disability insurance benefits
or is entitled to old-age or disability insurance benefits based on
a primary insurance amount which is less than one-half of the
primary insurance amount of such individual,
shall (subject to subsection (s)) be entitled to a wife's insurance bene-
fit for each month beginning with the first month in which she becomes
so entitled to such insurance benefits and ending with the month pre-
ceding the first month in which any of the following occurs-
(E) she dies,
(F) such individual dies,
(G) in the case of a wife, they are divorced and either (i) she
has not attained age 62, or (ii) she has attained age 62 but
has not been married to such individual for a period of 10 years.
immediately before the date the divorce became effective,¹
1 Subparagraph (G) was amended by sec. 337 (b) of Public Law 95-216 effective as
specified in sec. 337 (c) which appears in this document on p. 811.
Revised April 1978
29
Sec. 202(b)
(H) in the case of a divorced wife, she marries a person other
than such individual,
(I) in the case of a wife who has not attained age 62, no child
of such individual is entitled to a child's insurance benefit,
(J) she becomes entitled to an old-age or disability insurance
benefit based on a primary insurance amount which is equal to or
exceeds one-half of the primary insurance amount of such indi-
vidual, or
(K) such individual is not entitled to disability insurance bene-
fits and is not entitled to old-age insurance benefits.
(2) Except as provided in subsection (q) and paragraph (4) of this
subsection, such wife's insurance benefit for each month shall be equal
to one-half of the primary insurance amount of her husband (or, in
the case of a divorced wife, her former husband) for such month.¹
(3) In the case of any divorced wife who marries—
1
(A) an individual entitled to benefits under subsection (f) or
(h), of this section, or
(B) an individual who has attained the age of 18 and is entitled
to benefits under subsection (d),
such divorced wife's entitlement to benefits under this subsection shall,
notwithstanding the provisions of paragraph (1) (but subject to sub-
section (s)), not be terminated by reason of such marriage; except
that, in the case of such a marriage to an individual entitled to bene-
fits under subsection (d), the preceding provisions of this paragraph
shall not apply with respect to benefits for months after the last month
for which such individual is entitled to such benefits under subsection
(d) unless he ceases to be so entitled by reason of his death.
(4) (A) The amount of a wife's insurance benefit for each month
as determined after application of the provisions of subsections (q)
and (k) shall be reduced (but not below zero) by an amount equal to
the amount of any monthly periodic benefit payable to such wife (or
divorced wife) for such month which is based upon her earnings while
in the service of the Federal Government or any State (or political
subdivision thereof, as defined in section 218 (b) (2)) if, on the last.
day she was employed by such entity, such service did not constitute
"employment" as defined in section 210.
(B) For purposes of this paragraph, any periodic benefit which
otherwise meets the requirements of subparagraph (A), but which
is paid on other than a monthly basis, shall be allocated on a basis
equivalent to a monthly benefit (as determined by the Secretary) and
such equivalent monthly benefit shall constitute a monthly periodic
1 Paragraph (2) was amended by sec. 334 (a) of Public Law 95-216, effective as specified
in sec. 334(f) and subject to the exception specified in sec. 334(g). These subsections are
printed in this document on pages 809–810.
1
Sec. 202(b)
30
Revised April 1978
benefit for purposes of subparagraph (A). For purposes of this sub-
paragraph, the term "periodic benefit" includes a benefit payable in a
lump sum if it is a commutation of, or a substitute for, periodic pay-
ments.¹
Husband's Insurance Benefits
(c) (1) The husband (as defined in section 216(f)) of an individual
entitled to old-age or disability insurance benefits, if such husband-
(A) has filed application for husband's insurance benefits,
(B) has attained age 62, and
(C) is not entitled to old-age or disability insurance benefits,
or is entitled to old-age or disability insurance benefits based on a
primary insurance amount which is less than one-half of the pri-
mary insurance amount of his wife,
shall be entitled to a husband's insurance benefit for each month,
beginning with the first month after August 1950 in which he be-
comes so entitled to such insurance benefits and ending with the month
preceding the month in which any of the following occurs: he dies,
his wife dies, they are diyorced, or he becomes entitled to an old-age
or disability insurance benefit, based on a primary insurance amount.
which is equal to or exceeds one-half of the primary insurance amount
of his wife, or his wife is not entitled to disability insurance benefits
and is not entitled to old-age insurance benefits.¹
(2) (A) The amount of a husband's insurance benefit for each month
as determined after application of the provisions of subsections (q)
and (k) shall be reduced (but not below zero) by an amount equal to
the amount of any monthly periodic benefit payable to such husband
for such month which is based upon his earnings while in the service
of the Federal Government or any State (or political subdivision
thereof, as defined in section 218(b)(2)) if, on the last day he was
employed by such entity, such service did not constitute "employment"
as defined in section 210.
1
(B) For purposes of this paragraph, any periodic benefit which
otherwise meets the requirements of subparagraph (A), but which
is paid on other than a monthly basis, shall be allocated on a basis
equivalent to a monthly benefit (as determined by the Secretary) and
such equivalent monthly benefit shall constitute a monthly periodic
benefit for purposes of subparagraph (A). For purposes of this sub-
paragraph, the term "periodic benefit" includes a benefit payable in a
lump sum if it is a commutation of, or a substitute for, periodic
payments.
1 Paragraph (4) was added by sec. 334(a) of Public Law 95-216, effective as specified in
sec. 334(f) and subject to the exception specified in sec. 334 (g). These subsections are
printed in this document on pages S09-810.
:
Revised April 1978
Sec. 202(d)
30-A
(3) Except as provided in subsection (q) and paragraph (2) of this
subsection, such husband's insurance benefit for each month shall be
equal to one-half of the primary insurance amount of his wife for
such month.1
Child's Insurance Benefits
(d) (1) Every child (as defined in section 216(e)) of an individual
entitled to old-age or disability insurance benefits, or of an individual
who dies a fully or currently insured individual if such child—
(A) has filed application for child's insurance benefits,
(B) at the time such application was filed was unmarried and
(i) either had not attained the age of 18 or was a full-time student
and had not attained the age of 22, or (ii) is under a disability (as
defined in section 223(d)) which began before he attained the
age of 22, and
(C) was dependent upon such individual—
(i) if such individual is living, at the time such application
was filed,
(ii) if such individual has died, at the time of such death,
or
1 Subsection (c) was amended (in paragraphs (1), (2), and (3)) by sec. 334(b) of
Public Law 95-216 effective as specified in sec. 334(f) and subject to the exception speci
fied in sec. 334(g). These subsections are printed in this document on pages 809-810.
31
Sec. 202(d)
(iii) if such individual had a period of disability which
continued until he became entitled to old-age or disability
insurance benefits, or (if he has died) until the month of his
death, at the beginning of such period of disability or at the
time he became entitled to such benefits,
shall be entitled to a child's insurance benefit for each month, begin-
ning with the first month after August 1950 in which such child be-
comes so entitled to such insurance benefits and ending with the month
preceding which ever of the following first occurs-
(D) the month in which such child dies, or marries,
(E) the month in which such child attains the age of 18, but
only if he (i) is not under a disability (as so defined) at the time
he attains such age, and (ii) is not a full-time student during any
part of such month.
(F) if such child was not under a disability (as so defined)
at the time he attained the age of 18, the earlier of—
(i) the first month during no part of which he is a full-
time student, or
(ii) the month in which he attains the age of 22,
but only if he was not under a disability (as so defined) in such
earlier month; or
(G) if such child was under a disability (as so defined) at
the time he attained the age of 18, or if he was not under a dis-
ability (as so defined) at such time but was under a disability
(as so defined) at or prior to the time he attained (or would at-
tain) the age of 22, the third month following the month in which
he ceases to be under such disability or (if later) the earlier of-
(i) the first month during no part of which he is a full-
time student, or
(ii) the month in which he attains the age of 22,
but only if he was not under a disability (as so defined) in such
earlier month.
Entitlement of any child to benefits under this subsection on the basis
of the wages and self-employment income of an individual entitled to
disability insurance benefits shall also end with the month before the
first month for which such individual is not entitled to such benefits
unless such individual is, for such later month, entitled to old-age in-
surance benefits or unless he dies in such month. No payment under
this paragraph may be made to a child who would not meet the defini-
tion of disability in section 223 (d) except for paragraph (1) (B)
thereof for any month in which he engages in substantial gainful
activity.
(2) Such child's insurance benefit for each month shall, if the indi-
vidual on the basis of whose wages and self-employment income the
child is entitled to such benefit has not died prior to the end of such
Sec. 202(d)
32
month, be equal to one-half of the primary insurance amount of such
individual for such month. Such child's insurance benefit for each
month shall, if such individual has died in or prior to such month, be
equal to three-fourths of the primary insurance amount of such in-
dividual.
(3) A child shall be deemed dependent upon his father or adopting
father or his mother or adopting mother at the time specified in para-
graph (1)(C) unless, at such time, such individual was not living
with or contributing to the support of such child and—
(A) such child is neither the legitimate nor adopted child of
such individual, or
(B) such child has been adopted by some other individual.
For purposes of this paragraph, a child deemed to be a child of a fully
or currently insured individual pursuant to section 216 (h) (2) (B) or
section 216 (h) (3) shall be deemed to be the legitimate child of such
individual.
(4) A child shall be deemed dependent upon his stepfather or step-
mother at the time specified in paragraph (1)(C) if, at such time,
the child was living with or was receiving at least one-half of his sup-
port from such stepfather or stepmother.
(5) In the case of a child who has attained the age of eighteen and
who marries—
(A) an individual entitled to benefits under subsection (a), (b),
(e), (f), (g), or (h) of this section or under section 223 (a), or
(B) another individual who has attained the age of eighteen
and is entitled to benefits under this subsection,
such child's entitlement to benefits under this subsection shall, not-
withstanding the provisions of paragraph (1) but subject to subsec-
tion (s), not be terminated by reason of such marriage; except that,
in the case of such a mariage to a male individual entitled to benefits
under section 223 (a) or this subsection, the preceding provisions of
this paragraph shall not apply with respect to benefits for months
after the last month for which such individual is entitled to such bene-
fits under section 223 (a) or this subsection unless (i) he ceases to be
so entitled by reason of his death, or (ii) in the case of an individual
who was entitled to benefits under section 223 (a), he is entitled, for
the month following such last month, to benefits under subsection (a)
of this section.
(6) A child whose entitlement to child's insurance benefits on the
basis of the wages and self-employment income of an insured indi-
vidual terminated with the month preceding the month in which such
child attained the age of 18, or with a subsequent month, may again
become entitled to such benefits (provided no event specified in para-
graph (1)(D) has occurred) beginning with the first month there-
after in which he-
33
Sec. 202(d)
(A) (i) is a full-time student or is under a disability (as defined
in section 223 (d)), and (ii) had not attained the age of 22, or
(B) is under a disability (as so defined) which began before
the close of the 84th month following the month in which his
most recent entitlement to child's insurance benefits terminated
because he ceased to be under such disability,
but only if he has filed application for such reentitlement. Such reen-
titlement shall end with the month preceding whichever of the follow-
ing first occurs:
(C) the first month in which an event specified in paragraph
(1) (D) occurs;
(D) the earlier of (i) the first month during no part of which
he is a full-time student, or (ii) the month in which he attains the
age of 22, but only if he is not under a disability (as so defined)
in such earlier month; or
(E) if he was under a disability (as so defined), the third month
following the month in which he ceases to be under such dis-
ability or (if later) the earlier of
(i) the first month during no part of which he is a full-
time student, or
(ii) the month in which he attains the age of 22.
(7) For the purposes of this subsection-
(A) A "full-time student" is an individual who is in full-time
attendance as a student at an educational institution, as deter-
mined by the Secretary (in accordance with regulations pre-
scribed by him) in the light of the standards and practices of the
institutions involved, except that no individual shall be considered
a "full-time student" if he is paid by his employer while attend-
ing an educational institution at the request, or pursuant to a re-
quirement, of his employer.
(B) Except to the extent provided in such regulations, an
individual shall be deemed to be a full-time student during any
period of nonattendance at an educational institution at which
he has been in full-time attendance if (i) such period is 4 calendar
months or less, and (ii) he shows to the satisfaction of the Secre-
tary that he intends to continue to be in full-time attendance at
an educational institution immediately following such period. An
individual who does not meet the requirement of clause (ii) with
respect to such period of nonattendance shall be deemed to have
met such requirement (as of the beginning of such period) if he
is in full-time attendance at an educational institution immedi-
ately following such period.
(C) An "educational institution" is (i) a school or college or
university operated or directly supported by the United States,
or by any State or local government or political subdivision there-
B
Sec. 202(d)
34
of, or (ii) a school or college or university which has been ap-
proved by a State or accredited by a State-recognized or
nationally-recognized accrediting agency or body, or (iii) a non-
accredited school or college or university whose credits are ac-
cepted, on transfer, by not less than three institutions which are
so accredited, for credit on the same basis as if transferred from
an institution so accredited.
(D) A child who attains age 22 at a time when he is a full-time
student (as defined in subparagraph (A) of this paragraph and
without the application of subparagraph (B) of such paragraph)
but has not (at such time) completed the requirements for, or
received, a degree from a four-year college or university shall be
deemed (for purposes of determining whether his entitlement to
benefits under this subsection has terminated under paragraph
(1)(F) and for purposes of determining his initial entitlement
to such benefits under clause (i) of paragraph (1)(B)) not to
have attained such age until the first day of the first month fol-
lowing the end of the quarter or semester in which he is enrolled
at such time (or, if the educational institution (as defined in this
paragraph) in which he is enrolled is not operated on a quarter
or semester system, until the first day of the first month following
the completion of the course in which he is so enrolled or until
the first day of the third month beginning after such time, which-
ever first occurs).
-
(8) In the case of—
(A) An individual entitled to old-age insurance benefits (other
than an individual referred to in subparagraph (B)), or
(B) an individual entitled to disability insurance benefits, or
an individual entitled to old-age insurance benefits who was
entitled to disability insurance benefits for the month preceding
the first month for which he was entitled to old-age insurance
benefits,
a child of such individual adopted after such individual became en-
titled to such old-age or disability insurance benefits shall be deemed
not to meet the requirements of clause (i) or (iii) of paragraph (1)
(C) unless such child-
or
(C) is the natural child or stepchild of such individual (in-
cluding such a child who was legally adopted by such individual),
(D) (i) was legally adopted by such individual in an adoption
decreed by a court of competent jurisdiction within the United
States,
(ii) was living with such individual in the United States and
receiving at least one-half of his support from such individual
(I) if he is an individual referred to in subparagraph (A), for
35
Sec. 202(d)
the year immediately before the month in which such individual
became entitled to old-age insurance benefits or, if such individual
had a period of disability which continued until he had become
entitled to old-age insurance benefits, the month in which such
period of disability began, or (II) if he is an individual referred
to in subparagraph (B), for the year immediately before the
month in which began the period of disability of such individual
which still exists at the time of adoption (or, if such child was
adopted by such individual after such individual attained age 65,
the period of disability of such individual which existed in the
month preceding the month in which he attained age 65), or the
month in which such individual became entitled to disability
insurance benefit, or (III) if he is an individual referred to in
either subparagraph (A) or subparagraph (B) and the child is
the grandchild of such individual or his or her spouse, for the year
immediately before the month in which such child files his or her
application for child's insurance benefits, and
(iii) had not attained the age of 18 before he began living
with such individual.
In the case of a child who was born in the one-year period during
which such child must have been living with and receiving at least
one-half of his support from such individual, such child shall be
deemed to meet such requirements for such period if, as of the close
of such period, such child has lived with such individual in the United
States and received at least one-half of his support from such indi-
vidual for substantially all of the period which begins on the date of
birth of such child.
Ka
(9) (A) A child who is a child of an individual under clause (3)
of the first sentence of section 216(e) and is not a child of such indi-
vidual under clause (1) or (2) of such first sentence shall be deemed
not to be dependent on such individual at the time specified in sub-
paragraph (1)(C) of this subsection unless (i) such child was liv-
ing with such individual in the United States and receiving at least
one-half of his support from such individual (I) for the year imme-
diately before the month in which such individual became entitled to
old-age insurance benefits or disability insurance benefits or died, or
(II) if such individual had a period of disability which continued
until he had become entitled to old-age insurance benefits, or disability
insurance benefits, or died, for the year immediately before the month
in which such period of disability began, and (ii) the period during
which such child was living with such individual began before the
child attained age 18.
(B) In the case of a child who was born in the one-year period dur-
ing which such child must have been living with and receiving at least
one-half of his support from such individual, such child shall be
Sec. 202(d)
36
1
1
deemed to meet such requirements for such period if, as of the close.
of such period, such child has lived with such individual in the United
States and received at least one-half of his support from such indi-
vidual for substantially all of the period which begins on the date of
such child's birth.
Widow's Insurance Benefits
(e) (1) The widow (as defined in section 216 (c)) and every surviv-
ing divorced wife (as defined in section 216(d)) of an individual who
died a fully insured individual, if such widow or such surviving di-
vorced wife-
1
(A) is not married,
(B) (i) has attained age 60, or (ii) has attained age 50 but has
not attained age 60 and is under a disability (as defined in sec-
tion 223(d)) which began before the end of the period specified
in paragraph (5),
(C) (i) has filed application for widow's insurance benefits, or
was entitled to wife's insurance benefits, on the basis of the
wages and self-employment income of such individual, for the
month preceding the month in which he died, and (I) has attained
age 65 or (II) is not entitled to benefits under subsection (a) or
section 223, or
(ii) was entitled, on the basis of such wages and self-employ-
ment income, to mother's insurance benefits for the month pre-
ceding the month in which she attained age 65, and
(D) is not entitled to old-age insurance benefits or is entitled
to old-age insurance benefits each of which is less than the pri-
mary insurance amount of such deceased individual, shall be
entitled to a widow's insurance benefit for each month, beginning
with-
(E) if she satisfies subparagraph (B) by reason of clause (i)
thereof, the first month in which she becomes so entitled to such
insurance benefits, or
(F) if she satisfies subparagraph (B) by reason of clause (ii)
thereof-
(i) the first month after her waiting period (as defined in
paragraph (6)) in which she becomes so entitled to such
insurance benefits, or
(ii) the first month during all of which she is under a dis-
ability and in which she becomes so entitled to such insurance
benefits, but only if she was previously entitled to insurance
benefits under this subsection on the basis of being under a
disability and such first month occurs (I) in the period
specified in paragraph (5) and (II) after the month in
which a previous entitlement to such benefits on such basis
terminated,
Revised April 1978
Sec. 202(e)
37
and ending with the month preceding the first month in which any
of the following occurs: she remarries, dies, becomes entitled to an
old-age insurance benefit equal to or exceeding the primary insur-
ance amount of such deceased individual, or, if she became entitled to
such benefits before she attained age 60, the third month following the
month in which her disability ceases (unless she attains age 65 on or
before the last day of such third month).
(2) (A) Except as provided in subsection (q), paragraph (8) of this
subsection, and subparagraph (B) of this paragraph, such widow's
insurance benefit for each month shall be equal to the primary insur-
ance amount (as determined after application of the following sen-
tence) of such deceased individual. If such deceased individual was
(or upon application would have been) entitled to an old-age insur-
ance benefit which was increased (or subject to being increased) on
account of delayed retirement under the provisions of subsection (w),
then, for purposes of this subsection, such individual's primary insur-
ance amount, if less than the old-age insurance benefit (increased,
where applicable, under section 215(f) (5) or (6) and under section
215 (i) as if such individual were still alive in the case of an individual
who has died) which he was receiving (or would upon application
have received) for the month prior to the month in which he died,
shall be deemed to be equal to such old-age insurance benefit, and
(notwithstanding the provisions of paragraph (3) of such subsection
(w) the number of increment months shall include any month in the
months of the calendar year in which he died, prior to the month in
which he died, which satisfy the conditions in paragraph (2) of such
subsection (w).¹
1
(B) If the deceased individual (on the basis of whose wages and
self-employment income a widow or surviving divorced wife is en-
titled to widow's insurance benefits under this subsection) was, at any
time, entitled to an old-age insurance benefit which was reduced by
reason of the application of subsection (q), the widow's insurance
benefit of such widow or surviving divorced wife for any month shall,
if the amount of the widow's insurance benefit of such widow or sur-
viving divorced wife (as determined under subparagraph (A) and
after application of subsection (q)) is greater than—
(i) the amount of the old-age insurance benefit to which such
deceased individual would have been entitled (after application
of subsection (q)) for such month if such individual were still
living and section 215(f) (5) or (6) were applied, where appli-
cable,, and 2
1 Subparagraph (A) was amended by sec. 204 (a), effective for months after May 1978
and by secs. 334 (c) (1) and 336(a)(1) of Public Law 95-216. The amendment made by
sec. 336(a)(1) is effective as specified in sec. 336(c) which is printed in this document on
page 811.
Subparagraph (B) (1) was amended by sec. 204 (b) of Public Law 95-216. The double
comma is a technical error.
21-746 O - 78 - 4
Sec. 202(e)
Revised April 1978
38
(ii) 821½ percent of the primary insurance amount of such de-
ceased individual,
be reduced to the amount referred to in clause (i), or (if greater) the
amount referred to in clause (ii).
(3) If a widow, before attaining age 60, or a surviving divorced
wife, marries-
(A) an individual entitled to benefits under subsection (f) or
(h) of this section, or
(B) an individual who has attained the age of eighteen and is
entitled to benefits under subsection (d),
such widow's or surviving divorced wife's entitlement to benefits under
this subsection shall, notwithstanding the provisions of paragraph (1)
but subject to subsection (s), not be terminated by reason of such
marriage; except that, in the case of such a marriage to an individual
entitled to benefits under subsection (d), the preceding provisions of
this paragraph shall not apply with respect to benefits for months.
after the last month for which such individual is entitled to such bene-
fits under subsection (d) unless he ceases to be so entitled by reason
of his death.1
(4) If a widow, after attaining age 60, marries, such marriage shall,
for purposes of paragraph (1), be deemed not to have occurred.2
(5) The period referred to in paragraph (1)(B)(ii), in the case
of
any widow or surviving divorced wife, is the period beginning with
whichever of the following is the latest:
(A) the month in which occurred the death of the fully in-
sured individual referred to in paragraph (1) on whose wages
and self-employment income her benefits are or would be based,
or
(B) the last month for which she was entitled to mother's in-
surance benefits on the basis of the wages and self-employment
income of such individual, or
(C) the month in which a previous entitlement to widow's in-
surance benefits on the basis of such wages and self-employment
income terminated because her disability had ceased,
and ending with the month before the month in which she attains age
60, or, if earlier, with the close of the eighty-fourth month following
the month with which such period began.
(6) The waiting period referred to in paragraph (1)(F), in the
case of any widow or surviving divorced wife, is the earliest period of
five consecutive calendar months-
¹ Paragraph (3) was amended by sec. 336 (a) (2) of Public Law 95-216 effective as spec-
ified in sec. 336 (c) which is printed in this document on p. 811.
2 Paragraph (4) was amended by sec. 336 (b) (2) of Public Law 95-216 effective as spec-
ified in sec. 336 (c) which is printed in this document on p. 811. (In general, the amend-
ment is effective January 1979.)
•
Revised April 1978
39
Sec. 202(f)
(A) throughout which she has been under a disability. and
(B) which begins not earlier than with whichever of the fol-
lowing is the later: (i) the first day of the seventeenth month
before the month in which her application is filed, or (ii) the first
day of the fifth month before the month in which the period
specified in paragraph (5) begins.
(7) In the case of an individual entitled to monthly insurance
benefits payable under this section for any month prior to January
1973 whose benefits were not redetermined under section 102(g) of
the Social Security Amendments of 1972, such benefits shall not be
redetermined pursuant to such section, but shall be increased pursuant
to any general benefit increase (as defined in section 215 (i) (3)) or any
increase in benefits made under or pursuant to section 215 (i), includ-
ing for this purpose the increase provided effective for March 1974,
as though such redetermination had been made.
(8) (A) The amount of a widow's insurance benefit for each month
as determined (after application of the provisions of subsections (q)
and (k), paragraph (2) (B), and paragraph (4)) shall be reduced
(but not below zero) by an amount equal to the amount of any monthly
periodic benefit payable to such widow (or surviving divorced wife)
for such month which is based upon her earnings while in the service
of the Federal Government or any State (or any political subdivision
thereof, as defined in section 218(b)(2)) if, on the last day she was
employed by such entity, such service did not constitute "employment"
as defined in section 210.
(B) For purposes of this paragraph, any periodic benefit which
otherwise meets the requirements of subparagraph (A), but which is
paid on other than a monthly basis, shall be allocated on a basis equiva-
lent to a monthly benefit (as determined by the Secretary) and such
equivalent monthly benefit shall constitute a monthly periodic benefit
for purposes of subparagraph (A). For purposes of this subpara-
graph, the term "periodic benefit" includes a benefit payable in a
lump sum if it is a commutation of, or a substitute for, periodic
payments.¹
Widower's Insurance Benefits
(f) (1) The widower (as defined in section 216 (g)) of an individual
who died a fully insured individual, if such widower—
(A) has not remarried,
(B) (i) has attained age 60, or (ii) has attained age 50 but has
not attained age 60 and is under a disability (as defined in section
223(d)) which began before the end of the period specified in
paragraph (6),
1 Paragraph (8) was added by sec. 334 (c) (2) of Public Law 95-216, effective as specified
in sec. 334 (f) and subject to the exception specified in sec. 334 (g). These subsections are
printed in this document on pp. 809–810.
Sec. 202(f)
Revised April 1978
40
(C) has filed application for widower's insurance benefits or
was entitled to husband's insurance benefits, on the basis of the
wages and self-employment income of such individual, for the
month preceding the month in which she died, and (I) has at-
tained age 65 or (II) is not entitled to benefits under subsection
(a) or section 223,
(D) is not entitled to old-age insurance benefits, or is entitled
to old-age insurance benefits each of which is less than the pri-
mary insurance amount of his deceased wife,
shall be entitled to a widower's insurance benefit for each month, be-
ginning with-
(E) if he satisfies subparagraph (B) by reason of clause (i)
thereof, the first month in which he becomes so entitled to such
insurance benefits, or
(F) if he satisfies subparagraph (B) by reason of clause (ii)
thereof-
(i) the first month after his waiting period (as defined in
paragraph (7)) in which he becomes so entitled to such in-
surance benefits, or
(ii) the first month during all of which he is under a dis-
ability and in which he becomes so entitled to such insurance
benefits, but only if he was previously entitled to insurance
benefits under this subsection on the basis of being under a
disability and such first month occurs (I) in the period
specified in paragraph (6) and (II) after the month in
which a previous entitlement to such benefits on such basis
terminated,
and ending with the month preceding the first month in which any of
the following occurs: he remarries, dies, or becomes entitled to an old-
age insurance benefit equal to or exceeding the primary insurance
amount of his deceased wife, or, if he became entitled to such benefits
before he attained age 60, the third month following the month.
in which his disability ceases (unless he attains age 65 on or before
the last day of such third month).¹
(2) (A) The amount of widower's insurance benefit for each
month (as determined after application of the provisions of subsec-
tions (k) and (q), paragraph (3)(B), and paragraph (5)) shall be
reduced (but not below zero) by an amount equal to the amount of
any monthly periodic benefit payable to such widower for such month
which is based upon his earnings while in the service of the Federal
Government or any State (or any political subdivision thereof, as
defined in section 218 (b) (2)) if, on the last day he was employed by
1 Paragraph (1) was amended by sec. 334 (d) (1) of Public Law 95-216.
Revised April 1978
41
Sec. 202(f)
such entity, such service did not constitute "employment" as defined in
section 210.
(B) For purposes of this paragraph, any periodic benefit which
otherwise meets the requirements of subparagraph (A), but which is
paid on other than a monthly basis, shall be allocated on a basis equiv-
alent to a monthly benefit (as determined by the Secretary) and such
equivalent monthly benefit shall constitute a monthly periodic benefit
for purposes of subparagraph (A). For purposes of this subpara-
graph, the term “periodic benefit” includes a benefit payable in a lump
sum if it is a commutation of, or a substitute for, periodic payments.¹
(3)(A) Except as provided in subsection (q), paragraph (2), of
this subsection, and subparagraph (B) of this paragraph, such wid-
ower's insurance benefit for each month shall be equal to the primary
insurance amount (as determined after application of the following
sentence) of his deceased wife. If such deceased individual was (or
upon application would have been) entitled to an old-age insurance
benefit which was increased (or subject to being increased) on account
of delayed retirement under the provisions of subsection (w), then,
for purposes of this subsection, such individual's primary insurance ·
amount, if less than the old-age insurance benefit (increased, where
applicable, under section 215 (f) (5) or (6) and under section 215 (i)
as if such individual were still alive in the case of an individual who
has died) which she was receiving (or would upon application have
received) for the month prior to the month in which she died, shall be
deemed to be equal to such old-age insurance benefit, and (notwith-
standing the provisions of paragraph (3) of such subsection (w)) the
number of increment months shall include any month in the months
of the calendar year in which she died, prior to the month in which
she died, which satisfy the conditions in paragraph (2) of such sub-
section (w).2
(B) If the deceased wife (on the basis of whose wages and self-
employment income a widower is entitled to widower's insurance bene-
fits under this subsection) was, at any time, entitled to an old-age
insurance benefit which was reduced by reason of the application of
subsection (q), the widower's insurance benefit of such widower for
any month shall, if the amount of the widower's insurance benefit of
such widower (as determined under subparagraph (A) and after ap-
plication of subsection (q)) is greater than—
(i) the amount of the old-age insurance benefit to which such
deceased wife would have been entitled (after application of sub-
¹ Paragraph (2) was amended by sec. 334(d) (2) of Public Law 95-216 effective as speci-
fied in sec. 334(f) and subject to the exception specified in sec. 334(g). These subsections
are printed in this document on pp. 809–810.
2 Paragraph (3)(A) was amended by sec. 204 (c) of Public Law 95-216 effective for
months after May 1978. Paragraph (3) (A) was also amended by sec. 334(d)(3) and sec.
336(b)(1) of Public Law 95-216.
Sec. 202(f)
42
Revised April 1978
section (q)) for such month if such wife were still living and
section 215 (f) (5) or (6) were applied, where applicable,; and
(ii) 821½ percent of the primary insurance amount of such de-
ceased wife;
be reduced to the amount referred to in clause (i), or (if greater) the
amount referred to in clause (ii).¹
1
(4) If a widower, before attaining age 60, remarries-
(A) an individual entitled to benefits under subsection (b),
(e), (g), or (h), or
(B) an individual who has attained the age of eighteen and is
entitled to benefits under subsection (d),
such widower's entitlement to benefits under this subsection shall,
notwithstanding the provisions of paragraph (1) but subject to sub-
section (s), not be terminated by reason of such marriage.2
(5) If a widower, after attaining the age of 60, marries, such
marriage shall, for purposes of paragraph (1), be deemed not to
have occurred.³ 3
(6) The period referred to in paragraph (1)(B) (ii), in the case
of any widower, is the period beginning with whichever of the follow-
ing is the latest:
(A) the month in which occurred the death of the fully in-
sured individual referred to in paragraph (1) on whose wages
and self-employment income his benefits are or would be based, or
(B) the month in which a previous entitlement to widower's
insurance benefits on the basis of such wages and self-employ-
ment income terminated because his disability had ceased,
and ending with the month before the month in which he attains age
60, or, if earlier, with the close of the eighty-fourth month following
the month with which such period began.
(7) The waiting period referred to in paragraph (1)(F), in the
case of any widower, is the earliest period of five consecutive calendar
months-
(A) throughout which he has been under a disability, and
(B) which begins not earlier than with whichever of the fol-
lowing is the later: (i) the first day of the seventeenth month
before the month in which his application is filed, or (ii) the
first day of the fifth month before the month in which the period
specified in paragraph (6) begins.*
(8) In the case of an individual entitled to monthly insurance
benefits payable under this section for any month prior to January
1 Paragraph (3) was amended by sec. 204(d) of Public Law 95-216 effective for months
after May 1978. The comma preceding the semicolon is a technical error.
2 Paragraph (4) was amended by sec. 336(b)(2) of Public Law 95-216.
3 Paragraph (5) was amended by sec. 336(b)(3) of Public Law 95-216 effective as
specified in sec. 336(c) which is printed in this doument on p. 811.
• Paragraph (7) was amended by sec. 334(d)(4) (A) of Public Law 95-216.
Revised April 1978
43
Sec. 202(g)
1973 whose benefits were not redetermined under section 102 (g) of
the Social Security Amendments of 1972, such benefits shall not be
redetermined pursuant to such section, but shall be increased pursuant
to any general benefit increase (as defined in section 215 (i) (3)) or any
increase in benefits made under or pursuant to section 215 (i), includ-
ing for this purpose the increase provided effective for March 1974,
as though such redetermination had been made.
Mother's Insurance Benefits
(g) (1) The widow and every surviving divorced mother (as de-
fined in section 216(d)) of an individual who died a fully or currently
insured individual, if such widow or surviving divorced mother—
(A) is not married,
(B) is not entitled to a widow's insurance benefit,
(C) is not entitled to old-age insurance benefits, or is entitled
to old-age insurance benefits each of which is less than three-
fourths of the primary insurance amount of such individual,
(D) has filed application for mother's insurance benefits, or was
entitled to wife's insurance benefits on the basis of the wages and
self-employment income of such individual for the month pre-
ceding the month in which he died,
(E) at the time of filing such application has in her care a child
of such individual entitled to a child's insurance benefit, and
(F) in the case of a surviving divorced mother-
(i) the child referred to in subparagraph (E) is her son,
daughter, or legally adopted child, and
(ii) the benefits referred to in such subparagraph are pay-
able on the basis of such individual's wages and self-employ-
ment income,
shall (subject to subsection (s)) be entitled to a mother's insurance
benefit for each month, beginning with the first month after August
1950 in which she becomes so entitled to such insurance benefits and
ending with the month preceding the first month in which any of the
following occurs: no child of such deceased individual is entitled to a
child's insurance benefit, such widow or surviving divorced mother be-
comes entitled to an old-age insurance benefit equal to or exceeding
three-fourths of the primary insurance amount of such deceased in-
dividual, she becomes entitled to a widow's insurance benefit, she re-
marries, or she dies. Entitlement to such benefits shall also end, in the
case of a surviving divorced mother, with the month immediately pre-
ceding the first month in which no son, daughter, or legally adopted
child of such surviving divorced mother is entitled to a child's insur-
ance benefit on the basis of the wages and self-employment income
of such deceased individual.
Sec. 202(g)
44
Revised April 1978
P
(2) Except as provided in paragraph (4) of this subsection, such
mother's insurance benefit for each month shall be equal to three-
fourths of the primary insurance amount of such deceased individual.¹
(3) In the case of a widow or surviving divorced mother who mar-
ries-
(A) an individual entitled to benefits under subsection (a),
(f), or (h), or under section 223 (a), or
(B) an individual who has attained the age of eighteen and is
entitled to benefits under subsection (d),
the entitlement of such widow or surviving divorced mother to benefits
under this subsection shall, notwithstanding the provisions of para-
graph (1) but subject to subsection (s), not be terminated by reason
of such marriage; except that, in the case of such a marriage to an
individual entitled to benefits under section 223 (a) or subsection (d)
of this section, the preceding provisions of this paragraph shall not
apply with respect to benefits for months after the last month for
which such individual is entitled to such benefits under section 223 (a)
or subsection (d) of this section unless (i) he ceases to be so entitled
by reason of his death, or (ii) in the case of an individual who was
entitled to benefits under section 223 (a), he is entitled, for the month
following such last month, to benefits under subsection (a) of this
section.
(4) (A) The amount of a mother's insurance benefit for each
month to which any individual is entitled under this subsection (as
determined after application of subsection (k)) shall be reduced
(but not below zero) by an amount equal to the amount of any
monthly periodic benefit payable to such individual for such month.
which is based upon such individual's earnings while in the service
of the Federal Government or any State (or political subdivision
thereof, as defined in section 218(b)(2)) if, on the last day such
individual was employed by such entity, such service did not con-
stitute “employment" as defined in section 210.
(B) For purposes of this paragraph, any periodic benefit which
otherwise meets the requirements of subparagraph (A), but which
is paid on other than a monthly basis, shall be allocated on a basis
equivalent to a monthly benefit (as determined by the Secretary)
and such equivalent monthly benefit shall constitute a monthly
periodic benefit for purposes of subparagraph (A). For purposes
of this subparagraph, the term "periodic benefit" includes a benefit
payable in a lump sum if it is a commutation of, or a substitute
for, periodic payments.¹
1 Paragraph (2) was amended and paragraph (4) was added by sec. 334 (e) of Public
Law 95-216 effective as specified in sec. 334 (f) and subject to the exception specified in
sec. 334(g). These subsections are printed in this document on pp. 809-810.
Revised April 1978
Sec. 202(h)
45
Parent's Insurance Benefits
(h) (1) Every parent (as defined in this subsection) of an individual
who died a fully insured individual if such parent—
(A) has attained age 62,
(B) (i) was receiving at least one-half of his support from such
individual at the time of such individual's death or, if such indi-
vidual had a period of disability which did not end prior to the
month in which he died, at the time such period began or at the
time of such death, and (ii) filed proof of such support within
two years after the date of such death, or, if such individual had
such a period of disability, within two years after the month in
which such individual filed application with respect to such period
of disability or two years after the date of such death, as the case
may be,
(C) has not married since such individual's death,
(D) is not entitled to old-age insurance benefits, or is entitled
to old-age insurance benefits each of which is less than 821½ per-
cent of the primary insurance amount of such deceased individual
if the amount of the parent's insurance benefit for such amount is
determinable under paragraph (2)(A) (or 75 percent of such
primary insurance amount in any other case), and
(E) has filed application for parent's insurance benefits,
shall be entitled to a parent's insurance benefit for each month begin-
ning with the first month after August 1950 in which such parent
becomes so entitled to such parent's insurance benefits and ending with
the month preceding the first month in which any of the following
occurs: such parent dies, marries, or becomes entitled to an old-age
insurance benefit equal to or exceeding 822 percent of the primary
insurance amount of such deceased individual if the amount of the
parent's insurance benefit for such month is determinable under para-
graph (2)(A) (or 75 percent of such primary insurance amount in
any other case).
(2) (A) Except as provided in subparagraphs (B) and (C), such
parent's insurance benefit for each month shall be equal to 821½ per-
cent of the primary insurance amount of such deceased individual.
(B) For any month for which more than one parent is entitled to
parent's insurance benefits on the basis of such deceased individual's
wages and self-employment income, such benefit for each such parent
for such month shall (except as provided in subparagraph (C)) be
equal to 75 percent of the primary insurance amount of such deceased
individual.
(C) In any case in which-
(i) any parent is entitled to a parent's insurance benefit for a
month on the basis of a deceased individual's wages and self-
employment income, and
1
Sec. 202(h)
46
Revised April 1978
(ii) another parent of such deceased individual is entitled to a
parent's insurance benefit for such month on the basis of such
wages and self-employment income, and on the basis of an appli-
cation filed after such month and after the month in which the
application for the parent's benefits referred to in clause (i) was
filed,
the amount of the parent's insurance benefit of the parent referred to
in clause (i) for the month referred to in such clause shall be deter-
mined under subparagraph (A) instead of subparagraph (B) and the
amount of the parent's insurance benefit of a parent referred to in
clause (ii) for such month shall be equal to 150 percent of the primary
insurance amount of the deceased individual minus the amount (be-
fore the application of section 203(a)) of the benefit for such month
of the parent referred to in clause (i).
(3) As used in this subsection, the term "parent" means the mother
or father of an individual, a stepparent of an individual by a marriage
contracted before such individual attained the age of sixteen, or an
adopting parent by whom an individual was adopted before he at-
tained the age of sixteen.
(4) In the case of a parent who marries-
(A) an individual entitled to benefits under this subsection or
subsection (b), (e), (f), or (g),
or
(B) an individual who has attained the age of eighteen and is
entitled to benefits under subsection (d),
such parent's entitlement to benefits under this subsection shall, not-
withstanding the provisions of paragraph (1) but subject to subsec-
tion (s), not be terminated by reason of such marriage; except that,
in the case of such a marriage to a male individual entitled to bene-
fits under subsection (d), the preceding provisions of this paragraph
shall not apply with respect to benefits for months after the last month
for which such individual is entitled to such benefits under subsection
(d) unless he ceases to be so entitled by reason of his death.
Lump-Sum Death Payments
(i) Upon the death, after August 1950, of an individual who died a
fully or currently insured individual, an amount equal to three times
such individual's primary insurance amount, or an amount equal to
$255, whichever is the smaller, shall be paid in a lump sum to the per-
son, if any, determined by the Secretary to be the widow or widower
of the deceased and to have been living in the same household with the
deceased at the time of death. If there is no such person, or if such per-
son dies before receiving payment, then such amount shall be paid-
(1) if all or part of the burial expenses of such insured indi-
vidual which are incurred by or through a funeral home or fun-
Revised April 1978
47
Sec. 202(i)
eral homes remains unpaid, to such funeral home or funeral homes
to the extent of such unpaid expenses, but only if (A) any per-
son who assumed the responsibility for the payment of all or
any part of such burial expenses files an application, prior to the
expiration of two years after the date of death of such insured
individual, requesting that such payment be made to such funeral
home or funeral homes, or (B) at least 90 days have elapsed after
the date of death of such insured individual and prior to the ex-
piration of such 90 days no person has assumed responsibility for
the payment of any such burial expenses;
(2) if all of the burial expenses of such insured individual
which were incurred by or through a funeral home or funeral
homes have been paid (including payments made under clause
(1)), to any person or persons, equitably entitled thereto, to the
extent and in the proportions that he or they shall have paid such
burial expenses;
(3) if the body of such insured individual is not available for
burial but expenses were incurred with respect to such individual
in connection with a memorial service, a memorial marker, a site
for the marker, or any other item of a kind for which expenses
are customarily incurred in connection with a death and such
expenses have been paid, to any person or persons, equitably
entitled thereto, to the extent and in the proportions that he or
they shall have paid such expenses; or
(4) if any part of the amount payable under this subsection
remains after payments have been made pursuant to clauses (1),
(2), and (3), to any person or persons, equitably entitled thereto,
to the extent and in the proportions that he or they shall have paid
other expenses in connection with the burial of such insured indi-
vidual, in the following order of priority: (A) expenses of open-
ing and closing the grave of such insured individual, (B) expenses
of providing the burial plot of such insured individual, and (C)
any remaining expenses in connection with the burial of such
insured individual.
No payment (except a payment authorized pursuant to clause (1) (A)
of the preceding sentence) shall be made to any person under this sub-
section unless application therefor shall have been filed, by or on be-
half of such person (whether or not legally competent), prior to the
expiration of two years after the date of death of such insured indi-
vidual, or unless such person was entitled to wife's or husband's insur-
ance benefits, on the basis of the wages and self-employment income
of such insured individual, for the month preceding the month in which
such individual died. In the case of any individual who died out-
Sec. 202(i)
48
Revised April 1978
Ka
side the forty-eight States and the District of Columbia after Decem-
ber 1953 and before January 1, 1957, whose death occurred while he
was in the active military or naval service of the United States, and
who is returned to any of such States, the District of Columbia,
Alaska, Hawaii, the Commonwealth of Puerto Rico, the Virgin Is-
lands, Guam, or American Samoa for interment or reinterment, the
provisions of the preceding sentence shall not prevent payment to
any person under the second sentence of this subsection if application
for a lump-sum death payment with respect to such deceased in-
dividual is filed by or on behalf of such person (whether or not legally
competent) prior to the expiration of two years after the date of such
interment or reinterment. In the case of any individual who died out-
side the fifty States and the District of Columbia after December
1956 while he was performing service, as a member of a uniformed
service, to which the provisions of section 210(1) (1) are applicable,
and who is returned to any State or to any Territory or possession of
the United States, for interment or reinterment, the provisions of the
third sentence of this subsection shall not prevent payment to any
person under the second sentence of this subsection if application for a
lump-sum death payment with respect to such deceased individual is
filed by or on behalf of such person (whether or not legally competent)
prior to the expiration of two years after the date of such interment or
reinterment.
Application for Monthly Insurance Benefits
(j) (1) Subject to the limitations contained in paragraph (4), an
individual who would have been entitled to a benefit under subsection
(a), (b), (c), (d), (e), (f), (g), or (h) for any month after August
1950 had he filed application therefor prior to the end of such month
shall be entitled to such benefit for such month if he files application
therefor prior to the end of the twelfth month immediately succeeding
such month. Any benefit under this title for a month prior to the month
in which application is filed shall be reduced, to any extent that may be
necessary, so that it will not render erroneous any benefit which, before
the filing of such application, the Secretary has certified for payment
for such prior month.¹
(2) An application for any monthly benefits under this section filed
before the first month in which the applicant satisfies the require-
ments for such benefits shall be deemed a valid application only if the
applicant satisfies the requirements for such benefits before the Secre-
tary makes a final decision on the application. If upon final decision
by the Secretary, or decision upon judicial review thereof, such appli-
1 Paragraph (1) was amended by sec. 332(a) of Public Law 95-216.
Revised April 1978
49
Sec. 202(j)
cant is found to satisfy such requirements, the application shall be
deemed to have been filed in such first month.
(3) Notwithstanding the provisions of paragraph (1), an individual
may, at his option, waive entitlement to any benefit referred to in para-
graph (1) for any one or more consecutive months (beginning with
the earliest month for which such individual would otherwise be en-
titled to such benefit) which occur before the month in which such
individual files application for such benefit; and, in such case, such
individual shall not be considered as entitled to such benefits for any
such month or months before such individual filed such application.
An individual shall be deemed to have waived such entitlement for any
such month for which such benefit would, under the second sentence
of paragraph (1), be reduced to zero.
(4)(A) Except as provided in subparagraph (B), no individual
shall be entitled to a monthly benefit under subsection (a), (b), (c),
(e), or (f) for any month prior to the month in which he or she files
an application for benefits under that subsection if the effect of entitle-
ment to such benefit would be to reduce, pursuant to subsection (q),
the amount of the monthly benefit to which such individual would
otherwise be entitled for the month in which such application is filed.
(B) (i) If the individual applying for retroactive benefits is apply-
ing for such benefits under subsection (a), and there are one or more
other persons who would (except for subparagraph (A)) be entitled
for any month, on the basis of the wages and self-employment income
of such individual and because of such individual's entitlement to
such retroactive benefits, to retroactive benefits under subsection (b),
(c), or (d) not subject to reduction under subsection (q), then sub-
paragraph (A) shall not apply with respect to such month or any
subsequent month.
(ii) If the individual applying for retroactive benefits is a widow,
surviving divorced wife, or widower and is under a disability (as
defined in section 223 (d)), and such individual would, except for sub-
paragraph (A), be entitled to retroactive benefits as a disabled widow
or widower or disabled surviving divorced wife for any month before
attaining the age of 60, then subparagraph (A) shall not apply with
respect to such month or any subsequent month.
(iii) If the individual applying for retroactive benefits has excess
earnings (as defined in section 203 (f)) in the year in which he or she
files an application for such benefits which could, except for subpara-
graph (A), be charged to months in such year prior to the month of
application, then subparagraph (A) shall not apply to so many of
such months immediately preceding the month of application as are
required to charge such excess earnings to the maximum extent
possible.
Sec. 202(j)
50
Revised April 1978
(iv) As used in this subparagraph, the term "retroactive benefits"
means benefits to which an individual becomes entitled for a month
prior to the month in which application for such benefits is filed.¹
1
Simultaneous Entitlement to Benefits
(k) (1) A child, entitled to child's insurance benefits on the basis
of the wages and self-employment income of an insured individual,
who would be entitled, on filing application, to child's insurance bene-
fits on the basis of the wages and self-employment income of some
other insured individual, shall be deemed entitled, subject to the pro-
visions of paragraph (2) hereof, to child's insurance benefits on the
basis of the wages and self-employment income of such other individ-
ual if an application for child's insurance benefits on the basis of the
wages and self-employment income of such other individual has been
filed by any other child who would, on filing application, be entitled
to child's insurance benefits on the basis of the wages and self-employ-
ment income of both such insured individuals.
(2)(A) Any child who under the preceding provisions of this sec-
tion is entitled for any month to child's insurance benefits on the wages
and self-employment income of more than one insured individual shall,
notwithstanding such provisions, be entitled to only one of such child's
insurance benefits for such month. Such child's insurance benefits for
such month shall be the benefit based on the wages and self-employ-
ment income of the insured individual who has the greatest primary
insurance amount, except that such child's insurance benefits for such
month shall be the largest benefit to which such child could be entitled
under subsection (d) (without the application of section 203 (a)) or
subsection (m) if entitlement to such benefit would not, with respect
to any person, result in a benefit lower (after the application of section
203 (a)) than the benefit which would be applicable if such child were
entitled on the wages and self-employment income of the individual
with the greatest primary insurance amount. Where more than one
child is entitled to child's insurance benefits pursuant to the preceding
provisions of this paragraph, each such child who is entitled on the
wages and self-employment income of the same insured individuals
shall be entitled on the wages and self-employment income of the same
such insured individual.
(B) Any individual (other than an individual to whom subsection
(e) (4) or (f)(5) applies) who, under the preceding provisions of
this section and under the provisions of section 223, is entitled for any
month to more than one monthly insurance benefit (other than old-age
or disability insurance benefit) under this title shall be entitled to only
one such monthly benefit for such month, such benefit to be the largest
1 Paragraph (4) was added by sec. 332(a) of P.L. 95-216.
Revised April 1978
Sec. 202(m)
51
of the monthly benefits to which he (but for this subparagraph (B))
would otherwise be entitled for such months. Any individual who is
entitled for any month to more than one widow's or widower's insur-
ance benefit to which subsection (e) (4) or (f) (5) applies shall be en-
titled to only one such benefit for such month, such benefit to be the
largest of such benefits.
(3)(A) If an individual is entitled to an old-age or disability in-
surance benefit for any month and to any other monthly insurance
benefit for such month, such other insurance benefit for such month,
after any reduction under subsection (q), subsection (e) (2) or (f)
(3), and any reduction under section 203 (a), shall be reduced, but not
below zero, by an amount equal to such old-age or disability insurance
benefit (after reduction under such subsection (q)).
(B) If an individual is entitled for any month to a widow's or
widower's insurance benefit to which subsection (e) (4) or (f) (5)
applies and to any other monthly insurance benefit under section 202
(other than an old-age insurance benefit), such other insurance bene-
fit for such month, after any reduction under subparagraph (A), any
reduction under subsection (q), and any reduction under section 203
(a), shall be reduced, but not below zero, by an amount equal to such
widow's or widower's insurance benefit after any reduction or reduc-
tions under such subparagraph (A) and such section 203 (a).
(4) Any individual who, under this section and section 223, is en-
titled for any month to both an old-age insurance benefit and a dis-
ability insurance benefit under this title shall be entitled to only the
larger of such benefits for such month, except that, if such individual
so elects, he shall instead be entitled to only the smaller of such bene-
fits for such month.
Entitlement to Survivor Benefits Under Railroad Retirement Act
(1) If any person would be entitled, upon filing application there-
for to an annuity under section 2 of the Railroad Retirement Act of
1974, or to a lump-sum payment under section (6) (b) of such Act,
with respect to the death of an employee (as defined in such Act) no
lump-sum death payment, and no monthly benefit for the month in
which such employee died or for any month thereafter, shall be paid
under this section to any person on the basis of the wages and self-
employment income of such employee.
Minimum Survivor's Benefit
(m) (1) In any case in which an individual is entitled to a monthly
benefit under this section on the basis of a primary insurance amount
computed under section 215 (a) or (d), as in effect after December
1978, on the basis of the wages and self-employment income of a
•
Sec. 202(m)
52
Revised April 1978
deceased individual for any month and no other person is (without
the application of subsection (j) (1)) entitled to a monthly benefit
under this section for that month on the basis of such wages and
self-employment income, the individual's benefit amount for that
month, prior to reduction under subsection (k) (3), shall not be less
than that provided by subparagraph (C) (i) (I) of section 215 (a) (1)
and increased under section 215 (i) for months after May of the year
in which the insured individual died as though such benefit were a
primary insurance amount.¹
(2) In the case of any such individual who is entitled to a monthly
benefit under subsection (e) or (f), such individual's benefit amount,
after reduction under subsection (q) (1), shall be not less than-
(A) $84.50, if his first month of entitlement to such benefit is
the month in which such individual attained age 62 or a subse-
quent month, or
-
(B) $84.50 reduced under subsection (q) (1) as if retirement
age as specified in subsection (q) (6) (A)(ii) were age 62 instead
of the age specified in subsection (q) (9), if his first month of en-
titlement to such benefit is before the month in which he attained
age 62.
(3) In the case of any individual whose benefit amount was com-
puted (or recomputed) under the provisions of paragraph (2) and
such individual was entitled to benefits under subsection (e) or (f) for
a month prior to any month after 1972 for which a general benefit in-
crease under this title (as defined in section 215 (i) (3)) or a benefit
increase under section 215 (i) becomes effective, the benefit amount of
such individual as computed under paragraph (2) without regard to
the reduction specified in subparagraph (B) thereof shall be increased
by the percentage increase applicable for such benefit increase, prior
to the application of subsection (q) (1) pursuant to paragraph (2) (B)
and subsection (q) (4).
Termination of Benefits Upon Deportation of Primary Beneficiary
(n) (1) If any individual is (after the date of enactment of this sub-
section) deported under paragraph (1), (2), (4), (5), (6), (7), (10),
(11), (12), (14), (15), (16), (17), or (18) of section 241 (a) of the
Immigration and Nationality Act, then, notwithstanding any other
provisions of this title—
(A) no monthly benefit under this section or section 223 shall be
paid to such individual, on the basis of his wages and self-employ-
ment income, for any month occurring (i) after the month in
which the Secretary is notified by the Attorney General that such
¹ Paragraph (1) was amended by sec. 205(a) of Public Law 95-216 effective for benefits
payable after December 1978.
Revised April 1978
Sec. 202(n)
53
individual has been so deported, and (ii) before the month in
which such individual is thereafter lawfully admitted to the
United States for permanent residence.
(B) if no benefit could be paid to such individual (or if no
benefit could be paid to him if he were alive) for any month by
reason of subparagraph (A), no monthly benefit under this section
shall be paid, on the basis of his wages and self-employment in-
come, for such month to any other person who is not a citizen of
the United States and is outside the United States for any part of
such month, and
(C) no lump-sum death payment shall be made on the basis of
such individual's wages and self-employment income if he dies.
(i) in or after the month in which such notice is received, and
(ii) before the month in which he is thereafter lawfully admitted
to the United States for permanent residence.
Section 203 (b), (c), and (d) of this Act shall not apply with respect
to any such individual for any month for which no monthly benefit
may be paid to him by reason of this paragraph.
(2) As soon as practicable after the deportation of any individual
under any of the paragraphs of section 241 (a) of the Immigration
and Nationality Act enumerated in paragraph (1) in this subsection,
the Attorney General shall notify the Secretary of such deportation.
Application for Benefits by Survivors of Members and Former Members of the
Uniformed Services
(0) In the case of any individual who would be entitled to benefits
under subsection (d), (e), (g), or (h), upon filing proper application
therefor, the filing with the Administrator of Veterans' Affairs by
or on behalf of such individual of an application for such benefits, on
the form described in section 3005 of title 38, United States Code,
shall satisfy the requirement of such subsection (d), (e), (g), or (h)
that an application for such benefits be filed.
Extension of Period for Filing Proof of Support and Applications for Lump-Sum
Death Payment
(p) In any case in which there is a failure-
(1) to file proof of support under subparagraph (B) of sub-
section (h)(1), or under clause (B) of subsection (f)(1) of this
section as in effect prior to the Social Security Act Amendments
of 1950, within the period prescribed by such subparagraph or
clause, or 1
(2) to file, in the case of a death after 1946, application for a
lump-sum death payment under subsection (i), or under subsection
¹ Paragraph (1) was amended by sec. 334 (d) (5) of Public Law 95-216 effective as speci-
fied in sec. 334(f) which is printed in this document on p. 809.
21-746 O 78
de
5
Sec. 202(p)
54
Revised April 1978
I
(g) of this section as in effect prior to the Social Security Act
Amendments of 1950, within the period prescribed by such sub-
section,
any such proof or application, as the case may be, which is filed after
the expiration of such period shall be deemed to have been filed within
such period if it is shown to the satisfaction of the Secretary that there
was good cause for failure to file such proof or application within
such period. The determination of what constitutes good cause for
purposes of this subsection shall be made in accordance with regula-
tions of the Secretary.
Reduction of Benefit Amounts for Certain Beneficiaries
(q) (1) If the first month for which an individual is entitled to an
old-age, wife's, husband's, widow's, or widower's insurance benefit is
a month before the month in which such individual attains retirement
age, the amount of such benefit for such month and for any subse-
quent month shall, subject to the succeeding paragraphs of this sub-
section, be reduced by—
(A) 5% of 1 percent of such amount if such benefit is an old-
age insurance benefit, 25% of 1 percent of such amount if such
benefit is a wife's or husband's insurance benefit, or 1940 of 1 per-
cent of such amount if such benefit is a widow's or widower's
insurance benefit, multiplied by-
(B)(i) the number of months in the reduction period for such
benefit (determined under paragraph (6)(A)), if such benefit is
for a month before the month in which such individual attains
retirement age, or
(ii) if less, the number of such months in the adjusted reduction
period for such benefit (determined under paragraph (7)), if
such benefit is (I) for the month in which such individual attains
age 62, or (II) for the month in which such individual attains
retirement age;
and in the case of a widow or widower whose first month of entitle-
ment to a widow's or widower's insurance benefit is a month before
the month in which such widow or widower attains age 60, such bene-
fit, reduced pursuant to the preceding provisions of this paragraph
(and before the application of the second sentence of paragraph (8)),
shall be further reduced by—
(C) 43240 of 1 percent of the amount of such benefit, multiplied
by-
(D) (i) the number of months in the additional reduction
period for such benefit (determined under paragraph (6)(B)), if
such benefit is for a month before the month in which such indi-
vidual attains age 62, or
Revised April 1978
55
Sec. 202(q)
(ii) if less, the number of months in the additional adjusted
reduction period for such benefit (determined under paragraph
(7)), if such benefit is for the month in which such individual
attains age 62 or any month thereafter.
(2) If an individual is entitled to a disability insurance benefit for
a month after a month for which such individual was entitled to an
old-age insurance benefit, such disability insurance benefit for each
month shall be reduced by the amount such old-age insurance benefit
would be reduced under paragraphs (1) and (4) for such months had
such individual attained age 65 in the first month for which he most
recently became entitled to a disability insurance benefit.
(3) (A) If the first month for which an individual both is entitled
to a wife's, husband's, widow's, or widower's insurance benefit and
has attained age 62 (in the case of a wife's or husband's insurance
benefit) or age 50 (in the case of a widow's or widower's insurance
benefit) is a month for which such individual is also entitled to-
(i) an old-age insurance benefit (to which such individual was
first entitled for a month before he attains age 65), or
(ii) a disability insurance benefit,
then in lieu of any reduction under paragraph (1) (but subject to
the succeeding paragraphs of this subsection) such wife's, husband's,
widow's, or widower's insurance benefit for each month shall be re-
duced as provided in subparagraph (B), (C), or (D).
(B) For any month for which such individual is entitled to an old-
age insurance benefit and is not entitled to a disability insurance bene-
fit, such individual's wife's, or husband's insurance benefit shall be
reduced by the sum of—
(i) the amount by which such old-age insurance benefit is re-
duced under paragraph (1) for such month, and
(ii) the amount by which such wife's or husband's insurance
benefit would be reduced under paragraph (1) for such month
if it were equal to the excess of such wife's or husband's insurance
benefit (before reduction under this subsection) over such old-
age insurance benefit (before reduction under this subsection).
(C) For any month for which such individual is entitled to a dis-
ability insurance benefit, such individual's wife's, husband's, widow's,
or widower's insurance benefit shall be reduced by the sum of-
(i) the amount by which such disability insurance benefit is re-
duced under paragraph (2) for such month (if such paragraph
applied to such benefit), and
(ii) the amount by which such wife's, husband's, widow's, or
widower's insurance benefit would be reduced under paragraph
(1) for such month if it were equal to the excess of such wife's,
husband's, widow's, or widower's insurance benefit (before re-
Sec. 202 (q)
56
Revised April 1978
duction under this subsection) over such disability insurance
benefit (before reduction under this subsection).
(D) For any month for which such individual is entitled neither
to an old-age insurance benefit nor to a disability insurance benefit,
such individual's wife's, husband's, widow's, or widower's insurance
benefit shall be reduced by the amount by which it would be reduced
under paragraph (1).
(E) If the first month for which an individual is entitled to an old-
age insurance benefit (whether such first month occurs before, with,
or after the month in which such individual attains the age of 65) is
a month for which such individual is also (or would, but for sub-
section (e) (1) in the case of a widow or surviving divorced wife or
subsection (f) (1) in the case of a widower, be) entitled to a widow's or
widower's insurance benefit to which such individual was first en-
titled for a month before she or he attained retirement age, then
such old-age insurance benefit shall be reduced by whichever of the
following is the larger:
(i) the amount by which (but for this subparagraph) such
old-age insurance benefit would have been reduced under para-
graph (1), or
(ii) the amount equal to the sum of (I) the amount by which
such widow's or widower's insurance benefit would be reduced
under paragraph (1) if the period specified in paragraph (6)(A)
ended with the month before the month in which she or he at-
tained age 62 and (II) the amount by which such old-age insur-
ance benefit would be reduced under paragraph (1) if it were
equal to the excess of such old-age insurance benefit (before re-
duction under this subsection over such widow's or widower's
insurance benefit (before reduction under this subsection).
(F) If the first month for which an individual is entitled to a dis-
ability insurance benefit (when such first month occurs with or after
the month in which such individual attains the age of 62) is a month
for which such individual is also (or would, but for subsection (e) (1)
in the case of a widow or surviving divorced wife or subsection (f) (1)
in the case of a widower, be) entitled to a widow's or widower's in-
surance benefit to which such individual was first entitled for a month
before she or he attained retirement age, then such disability insurance
benefit for each month shall be reduced by whichever of the follow-
ing is larger:
(i) the amount by which (but for this subparagraph) such dis-
ability insurance benefit would have been reduced under para-
graph (2), or
(ii) the amount equal to the sum of (I) the amount by which
such widow's or widower's insurance benefit would be reduced
Revised April 1978
Sec. 202(q)
57
under paragraph (1) if the period specified in paragraph (6)(A)
ended with the month before the month in which she or he at-
tained age 62 and (II) the amount by which such disability insur-
ance benefit would be reduced under paragraph (2) if it were
equal to the excess of such disability insurance benefit (before
reduction under this subsection) over such widow's or widower's
insurance benefit (before reduction under this subsection).
(G) If the first month for which an individual is entitled to a
disability insurance benefit (when such first month occurs before the
month in which such individual attains the age of 62) is a month for
which such individual is also (or would, but for subsection (e)(1) in
the case of a widow or surviving divorced wife or subsection (f) (1)
in the case of a widower, be) entitled to a widow's or widower's in-
surance benefit, then such disability insurance benefit for each month
shall be reduced by the amount such widow's insurance benefit would
be reduced under paragraphs (1) and (4) for such month as if the
period specified in paragraph (6)(A) (or, if such paragraph does not
apply, the period specified in paragraph (6) (B)) ended with the
month before the first month for which she or he most recently be-
came entitled to a disability insurance benefit.
(H) Notwithstanding subparagraph (A) of this paragraph, if the
first month for which an individual is entitled to a widow's or widow-
er's insurance benefit is a month for which such individual is also en-
titled to an old-age insurance benefit to which such individual was
first entitled for that month or for a month before she or he became
entitled to a widow's or widower's benefit, the reduction in such wid-
ow's or widower's insurance benefit shall be determined under para-
graph (1).¹
(4) If-
(A) an individual is or was entitled to a benefit subject to re-
duction under paragraph (1) or (3) of this subsection, and
(B) such benefit is increased by reason of an increase in the
primary insurance amount of the individual on whose wages and
self-employment income such benefit is based,
then the amount of the reduction of such benefit (after the applica-
tion of any adjustment under paragraph (7)) for each month begin-
ning with the month of such increase in the primary insurance amount
shall be computed under paragraph (1) or (3), whichever applies, as
though the increased primary insurance amount had been in effect for
and after the month for which the individual first became entitled
to such monthly benefit reduced under such paragraph (1) or (3).²
(5) (A) No wife's insurance benefit shall be reduced under this sub-
section-
1 Subparagraph (H) was amended by sec. 331 (c) (2) of Public Law 95-216.
2 Paragraph (4) was amended by sec. 331 (a) of Public Law 95-216.
Sec. 202(q)
Revised April 1978
58
(i) for any month before the first month for which there is in
effect a certificate filed by her with the Secretary, in accordance
with regulations prescribed by him, in which she elects to receive
wife's insurance benefits reduced as provided in this subsection, or
(ii) for any month in which she has in her care (individually
or jointly with the person on whose wages and self-employment
income her wife's insurance benefit is based) a child of such person
entitled to child's insurance benefits.
(B) Any certificate described in subparagraph (A)(i) shall be ef-
fective for purposes of this subsection (and for purposes of preventing
deductions under section 203 (c) (2))-
(i) for the month in which it is filed and for any month there-
after, and
(ii) for months, in the period designated by the woman filing
such certificate, of one or more consecutive months (not exceeding
12) immediately preceding the month in which such certificate is
filed;
except that such certificate shall not be effective for any month before
the month in which she attains age 62, nor shall it be effective for any
month to which subparagraph (A) (ii) applies.
(C) If a woman does not have in her care a child described in sub-
paragraph (A) (ii) in the first month for which she is entitled to a
wife's insurance benefit, and if such first month is a month before the
month in which she attains age 65, she shall be deemed to have filed
in such first month the certificate described in subparagraph (A)(i).
(D) No widow's insurance benefit for a month in which she has
in her care a child of her deceased husband (or deceased former hus-
band) entitled to child's insurance benefits shall be reduced under this
subsection below the amount to which she would have been entitled had
she been entitled for such month to mother's insurance benefits on
the basis of her deceased husband's (or deceased former husband's)
wages and self-employment income.
(6) For the purposes of this subsection—
(A) the "reduction period" for an individual's old-age, wife's,
husband's, widow's, or widower's insurance benefit is the period-
(i) beginning-
(I) in the case of an old-age or husband's insurance
benefit, with the first day of the first month for which
such individual is entitled to such benefit, or
(II) in the case of a wife's insurance benefit, with the
first day of the first month for which a certificate de-
scribed in paragraph (5) (A) (i) is effective, or
(III) in the case of a widow's or widower's insurance
benefit, with the first day of the first month for which
Revised April 1978
59
Sec. 202 (q)
1.
such individual is entitled to such benefit or the first day
of the month in which such individual attains age 60,
whichever is the later, and
(ii) ending with the last day of the month before the
month in which such individual attains retirement age; and
(B) the "additional reduction period" for an individual's
widow's, or widower's insurance benefit is the period-
(i) beginning with the first day of the first month for
which such individual is entitled to such benefit, but only if
such individual has not attained age 60 in such first month,
and
(ii) ending with the last day of the month before the
month in which such individual attains age 60.
(7) For purposes of this subsection the "adjusted reduction period"
for an individual's old-age, wife's, husband's, widow's, or widower's
insurance benefit is the reduction period prescribed in paragraph (6)
(A) for such benefit, and the "additional adjusted reduction period"
for an individual's, widow's, or widower's, insurance benefit is the addi-
tional reduction period prescribed by paragraph (6)(B) for such
benefit, excluding from each such period—
(A) any month in which such benefit was subject to deduc-
tions under section 203 (b), 203 (c) (1), 203 (d) (1), or 222 (b),
(B) in the case of wife's insurance benefits, any month in which
she had in her care (individually or jointly with the person on
whose wages and self-employment income such benefit is based)
a child of such person entitled to child's insurance benefits,
(C) in the case of wife's or husband's insurance benefits, any
month for which such individual was not entitled to such bene-
fits because of the occurrence of an event that terminated her or
his entitlement to such benefits,¹
1
(D) in the case of widow's insurance benefits, any month in
which the reduction in the amount of such benefit was determined
under paragraph (5) (D),
(E) in the case of widow's or widower's insurance benefits, any
month before the month in which she or he attained age 62, and
also for any later month before the month in which he attained re-
tirement age, for which she or he was not entitled to such bene-
fit because of the occurrence of an event that terminated her or his
entitlement to such benefits, and
(F) in the case of old-age insurance benefits, any month for
which such individual was entitled to a disability insurance benefit.
(8) This subsection shall be applied after reduction under section
203 (a) and after application of section 215 (g). If the amount of any
¹ Subparagraph (C) was amended by sec. 331(c)(1) of Public Law 95-216.
Sec. 202 (q)
60
Revised April 1978
reduction computed under paragraph (1), (2), or (3) is not a multi-
ple of $0.10, it shall be reduced to the next lower multiple of $0.10.
(9) For purposes of this subsection, the term "retirement age" means
age 65.
(10) For purposes of applying paragraph (4), with respect to
monthly benefits payable for any month after December 1977 to an
individual who was entitled to a monthly benefit as reduced under
paragraph (1) or (3) prior to January 1978, the amount of reduction
in such benefit for the first month for which such benefit is increased
by reason of an increase in the primary insurance amount of the indi-
vidual on whose wages and self-employment income such benefit is
based and for all subsequent months (and similarly for all subsequent
increases) shall be increased by a percentage equal to the percentage
increase in such primary insurance amount (such increase being made.
in accordance with the provisions of paragraph (8)). In the case of
an individual whose reduced benefit under this section is increased as a
result of the use of an adjusted reduction period or an additional
adjusted reduction period (in accordance with paragraphs (1) and (3)
of this subsection), then for the first month for which such increase is
effective, and for all subsequent months, the amount of such reduction.
(after the application of the previous sentence, if applicable) shall be
determined—
(A) in the case of old-age, wife's, and husband's insurance
benefits, by multiplying such amount by the ratio of (i) the num-
ber of months in the adjusted reduction period to (ii) the number
of months in the reduction period,
(B) in the case of widow's and widower's insurance benefits
for the month in which such individual attains age 62, by multi-
plying such amount by the ratio of (i) the number of months in
the reduction period beginning with age 62 multiplied by 1940
of 1 percent, plus the number of months in the adjusted reduction
period prior to age 62 multiplied by 1940 of 1 percent, plus the
number of months in the adjusted additional reduction period
multiplied by 43/240 of 1 percent to (ii) the number of months
in the reduction period multiplied by 1940 of 1 percent, plus the
number of months in the additional reduction period multiplied
by 43/240 of 1 percent, and
(C) in the case of widow's and widower's insurance benefits
for the month in which such individual attains age 65, by multi-
plying such amount by the ratio of (i) the number of months in
the adjusted reduction period multiplied by 1940 of 1 percent,
plus the number of months in the adjusted additional reduction
period multiplied by 43240 of 1 percent to (ii) the number of
months in the reduction period beginning with age 62 multiplied
J
Revised April 1978
61
Sec. 202(s)
by 1940 of 1 percent, plus the number of months in the adjusted
reduction period prior to age 62 multiplied by 1940 of 1 percent,
plus the number of months in the adjusted additional reduction
period multiplied by 43/240 of 1 percent.
such determination being made in accordance with the provisions of
paragraph (8).1
(11) When an individual is entitled to more than one monthly
benefit under this title and one or more of such benefits are reduced
under this subsection, paragraph (10) shall apply separately to each
such benefit reduced under this subsection before the application of
subsection (k) (pertaining to the method by which monthly benefits
are offset when an individual is entitled to more than one kind of bene-
fit) and the application of this paragraph shall operate in conjunction
with paragraph (3).²
Presumed Filing of Application by Individuals Eligible for Old-Age Insurance
Benefits and for Wife's or Husband's Insurance Benefits
(r) (1) If the first month for which an individual is entitled to an
old-age insurance benefit is a month before the month in which such
individual attains age 65, and if such individual is eligible for a wife's
or husband's insurance benefit for such first month, such individual
shall be deemed to have filed an application in such month for wife's
or husband's insurance benefits.
(2) If the first month for which an individual is entitled to a wife's
or husband's insurance benefit reduced under subsection (q) is a month
before the month in which such individual attains age 65, and if such
individual is eligible (but for section 202 (k) (4)) for an old-age insur-
ance benefit for such first month, such individual shall be deemed to
have filed an application for old-age insurance benefits—
(A) in such month, or
(B) if such individual is also entitled to a disability insurance
benefit for such month, in the first subsequent month for which
such individual is not entitled to a disability insurance benefit.
(3) For purposes of this subsection, an individual shall be deemed
eligible for a benefit for a month if, upon filing application therefor
in such month, he would be entitled to such benefit for such month.
Child Aged 18 or Over Attending School
(s) (1) For the purposes of subsections (b)(1), (g)(1), (q)(5),
and (q) (7) of this section and paragraphs (2), (3), and (4) of sec-
tion 203 (c), a child who is entitled to child's insurance benefits under
subsection (d) for any month, and who has attained the age of 18 but
is not in such month under a disability (as defined in section 223 (d))
1 Paragraph (10) was added by sec. 331(b) of Public Law 95–216.
2 Paragraph (11) was added by sec. 331 (b) of Public Law 95-216.
Sec. 202(s)
62
Revised April 1978
shall be deemed not entitled to such benefits for such month, unless
he was under such a disability in the third month before such month.
(2) Subsection (f)(4), and so much of subsections (b)(3),
(d)(5), (e)(3), (g)(3), and (h) (4), of this section as precedes the
semicolon, shall not apply in the case of any child unless such child, at
the time of the marriage referred to therein, was under a disability
(as defined in section 223 (d)) or had been under such a disability
in the third month before the month in which such marriage occurred.
(3) So much of subsections (b) (3), (d)(5), (e) (3), (g) (3), and
(h) (4) of this section as follows the semicolon, the last sentence of
subsection (c) of section 203, subsection (f) (1) (C) of section 203,
and subsections (b) (3) (B), (c) (6) (B), (f) (3)(B), and (g) (6) (B)
of section 216 shall not apply in the case of any child with respect
to any month referred to therein unless in such month or the third
month prior thereto such child was under a disability (as defined in
section 223 (d)).¹
1
Suspension of Benefits of Aliens Who Are Outside the United States
(t) (1) Notwithstanding any other provision of this title, no
monthly benefits shall be paid under this section or under section 223
to any individual who is not a citizen or national of the United States
for any month which is-
(A) after the sixth consecutive calendar month during all of
which the Secretary finds, on the basis of information furnished
to him by the Attorney General or information which otherwise
comes to his attention, that such individual is outside the United
States, and
(B) prior to the first month thereafter for all of which such
individual has been in the United States.
For purposes of the preceding sentence, after an individual has been
outside the United States for any period of thirty consecutive days he
shall be treated as remaining outside the United States until he has
been in the United States for a period of thirty consecutive days.
(2) Paragraph (1) shall not apply to any individual who is a citi-
zen of a foreign country which the Secretary finds has in effect a social
insurance or pension system which is of general application in such
country and under which-
(A) periodic benefits, or the actuarial equivalent thereof, are
paid on account of old-age, retirement, or death, and
(B) individuals who are citizens of the United States but not
citizens of such foreign country and who qualify for such benefits
are permitted to receive such benefits or the actuarial equivalent
¹ Subsection (3) was amended by sec. 334(d)(6) of Public Law 95-216 effective as
specified in sec. 334(f) which is printed in this document on p. 809.
Revised April 1978
63
Sec. 202(t)
thereof while outside such foreign country without regard to
the duration of the absence.
(3) Paragraph (1) shall not apply in any case where its application
would be contrary to any treaty obligation of the United States in
effect on the date of the enactment of this subsection.
(4) Paragraph (1) shall not apply to any benefit for any month if-
(A) not less than forty of the quarters elapsing before such
month are quarters of coverage for the individual on whose wages
and self-employment income such benefit is based, or
(B) the individual on whose wages and self-employment in-
come such benefit is based has, before such month, resided in the
United States for a period or periods aggregating ten years or
more, or
(C) the individual entitled to such benefit is outside the United
States while in the active military or naval service of the United
States, or
(D) the individual on whose wages and self-employment in-
come such benefit is based died, before such month, either (i)
while on active duty or inactive duty training (as those terms are
defined in section 210(1), (2) and (3) as a member of a uniformed
service (as defined in section 210(m)), or (ii) as the result of a
disease or injury which the Administrator of Veterans' Affairs
determines was incurred or aggravated in line of duty while on
active duty (as defined in section 210(1) (2)), or an injury which
he determines was incurred or aggravated in line of duty while
on inactive duty training (as defined in section 210(1) (3)), as
a member of a uniformed service (as defined in section 210 (m)),
if the Administrator determines that such individual was dis-
charged or released from the period of such active duty or in-
active duty training under conditions other than dishonorable,
and if the Administrator certifies to the Secretary his determina-
tions with respect to such individual under this clause, or
(E) the individual on whose employment such benefit is based
had been in service covered by the Railroad Retirement Act which
was treated as employment covered by this Act pursuant to the
provisions of section 5 (k) (1) of the Railroad Retirement Act;
except that subparagraphs (A) and (B) of this paragraph shall not
apply in the case of any individual who is a citizen of a foreign
country that has in effect a social insurance or pension system which
is of general application in such country and which satisfies subpara-
graph (A) but not subparagraph (B) of paragraph (2), or who is
a citizen of a foreign country that has no social insurance or pension
system of general application if at any time within five years prior
to the month in which the Social Security Amendments of 1967 are
Sec. 202(t)
64
Revised April 1978
enacted (or the first month thereafter for which his benefits are sub-
ject to suspension under paragraph (1)) payments to individuals re-
siding in such country were withheld by the Treasury Department
under the first section of the Act of October 9, 1940 (31 U.S.C. 123).
(5) No person who is, or upon application would be, entitled to a
monthly benefit under this section for December 1956 shall be de-
prived, by reason of paragraph (1), of such benefit or any other bene-
fit based on the wages and self-employment income of the individual
on whose wages and self-employment income such monthly benefit for
December 1956 is based.
(6) If an individual is outside the United States when he dies and
no benefit may, by reason of paragraph (1) or (10) be paid to him for
the month preceding the month in which he dies, no lump-sum death
payment may be made on the basis of such individual's wages and self-
employment income.
(7) Subsections (b), (c), and (d) of section 203 shall not apply
with respect to any individual for any month for which no monthly
benefit may be paid to him by reason of paragraph (1) of this sub-
section.
(8) The Attorney General shall certify to the Secretary such infor-
mation regarding aliens who depart from the United States to any
foreign country (other than a foreign country which is territorially
contiguous to the continental United States) as may be necessary to
enable the Secretary to carry out the purposes of this subsection and
shall otherwise aid, assist, and cooperate with the Secretary in obtain-
ing such other information as may be necessary to enable the Secretary
to carry out the purposes of this subsection.
(9) No payments shall be made under part A of title XVIII with
respect to items or services furnished to an individual in any month
for which the prohibition in paragraph (1) against payment of bene-
fits to him is applicable (or would be if he were entitled to any such
benefits).
(10) Notwithstanding any other provision of this title, no monthly
benefits shall be paid under this section or under section 223, for any
month beginning after June 30, 1968, to an individual who is not a
citizen or national of the United States and who resides during such
month in a foreign country if payments for such month to individuals
residing in such country are withheld by the Treasury Department
under the first section of the Act of October 9, 1940 (31 U.S.C. 123).
Effect of Conviction of Subversive Activities, etc.
(u) (1) If any individual is convicted of any offense (committed
after the date of the enactment of this subsection) under-
(A) chapter 37 (relating to espionage and censorship), chapter
Revised April 1978
65
Sec. 202(v)
105 (relating to sabotage), or chapter 115 (relating to treason,
sedition, and subversive activities) of title 18 of the United States
Code, or
(B) section 4, 112, or 113 of the Internal Security Act of 1950,
as amended,
then the court may, in addition to all other penalties provided by law,
impose a penalty that in determining whether any monthly insurance
benefit under this section or section 223 is payable to such individual
for the month in which he is convicted or for any month thereafter, in
determining the amount of any such benefit payable to such individual
for any such month, and in determining whether such individual is
entitled to insurance benefits under part A of title XVIII for any such
month, there shall not be taken into account—
(C) any wages paid to such individual or to any other individ-
ual in the calendar year in which such conviction occurs or in
any prior calendar year, and
(D) any net earnings from self-employment derived by such
individual or by any other individual during a taxable year in
which such conviction occurs or during any prior taxable year.¹
(2) As soon as practicable after an additional penalty has, pursuant
to paragraph (1), been imposed with respect to any individual, the
Attorney General shall notify the Secretary of such imposition.
(3) If any individual with respect to whom an additional penalty
has been imposed pursuant to paragraph (1) is granted a pardon of
the offense by the President of the United States, such additional
penalty shall not apply for any month beginning after the date on
which such pardon is granted.
Waiver of Benefits
(v) Notwithstanding any other provisions of this title, in the case
of any individual who files a waiver pursuant to section 1402 (h) of the
Internal Revenue Code of 1954 and is granted a tax exemption there-
under, no benefits or other payments shall be payable under this title.
to him, no payments shall be made on his behalf under part A of title
XVIII, and no benefits or other payments under this title shall be
payable on the basis of his wages and self-employment income to any
other person, after the filing of such waiver; except that, if thereafter
such individual's tax exemption under such section 1402 (h) ceases to
be effective, such waiver shall cease to be applicable in the case of bene-
fits and other payments under this title and part A of title XVIII
to the extent based on his self-employment income for and after the
first taxable year in which such tax exemption ceases to be effective
and on his wages for and after the calendar year (if any) which
begins in or with the beginning of such taxable year.
¹ Paragraph (1) was amended by sec. 353 (f) (1) of Public Law 95-216.
Sec. 202(w)
66
Revised April 1978
Increase in Old-Age Insurance Benefit Amounts on Account of Delayed
Retirement
(w) (1) The amount of an old-age insurance benefit (other than a
benefit based on a primary insurance amount determined under sec-
tion 215(a) (3) as in effect in December 1978 or section 215 (a) (1) (C)
(i) (II) as in effect thereafter) which is payable without regard to
this subsection to an individual shall be increased by-
(A) one-twelfth of 1 percent of such amount, or, in the case of
an individual who first becomes eligible for an old-age insurance
benefit after December 1978, one-quarter of 1 percent of such
amount, multiplied by
(B) the number (if any) of the increment months for such
individual.¹
(2) For purposes of this subsection, the number of increment months
for any individual shall be a number equal to the total number of the
months-
(A) which have elapsed after the month before the month in
which such individual attained age 65 or (if later) December
1970 and prior to the month in which such individual attained
age 72, and
(B) with respect to which-
(i) such individual was a fully insured individual (as
defined in section 214(a)), and
(ii) such individual either was not entitled to an old-age
insurance benefit or suffered deductions under section 203 (b)
or 203 (c) in amounts equal to the amount of such benefit.
(3) For purposes of applying the provisions of paragraph (1), a
determination shall be made under paragraph (2) for each year, begin-
ning with 1972, of the total number of an individual's increment
months through the year for which the determination is made and the
total so determined shall be applicable to such individual's old-age
insurance benefits beginning with benefits for January of the year fol-
lowing the year for which such determination is made; except that
the total number applicable in the case of an individual who attains
age 72 after 1972 shall be determined through the month before the
month in which he attains such age and shall be applicable to his old-
age insurance benefit beginning with the month in which he attains
such age.
(4) This subsection shall be applied after reduction under section
203 (a).
(5) If an individual's primary insurance amount is determined
under paragraph (3) of section 215 (a) as in effect in December 1978,
1 Paragraph (1) was amended by sec. 203 and sec. 205(b)(1) of Public Law 95-216.
The amendment by sec. 205(b) (1) is effective for benefits for months after December 1978.
Revised April 1978
67
Sec. 203(a)
or section 215 (a) (1) (C) (i) (II) as in effect thereafter, and, as a
result of this subsection, he would be entitled to a higher old-age
insurance benefit if his primary insurance amount were determined
under section 215 (a) (whether before, in, or after December 1978)
without regard to such paragraph, such individual's old-age insurance
benefit based upon his primary insurance amount determined under
such paragraph shall be increased by an amount equal to the difference
between such benefit and the benefit to which he would be entitled if
his primary insurance amount were determined under such section
without regard to such paragraph.¹
Reduction of Insurance Benefits
Maximum Benefits
Sec. 203. (a) (1) In the case of an individual whose primary insur-
ance amount has been computed or recomputed under section 215 (a)
(1) or (4), or section 215 (d), as in effect after December 1978, the
total monthly benefits to which beneficiaries may be entitled under
section 202 or 223 for a month on the basis of the wages and self-
employment income of such individual shall, except as provided by
paragraph (3) (but prior to any increases resulting from the applica-
tion of paragraph (2)(A)(ii) (III) of section 215 (i)), be reduced
as necessary so as not to exceed—
(A) 150 percent of such individual's primary insurance
amount to the extent that it does not exceed the amount estab-
lished with respect to this subparagraph by paragraph (2),
(B) 272 percent of such individual's primary insurance
amount to the extent that it exceeds the amount established with
respect to subparagraph (A) but does not exceed the amount
established with respect to this subparagraph by paragraph (2),
(C) 134 percent of such individual's primary insurance
amount to the extent that it exceeds the amount established with
respect to subparagraph (B) but does not exceed the amount
established with respect to this subparagraph by paragraph (2),
and
(D) 175 percent of such individual's primary insurance
amount to the extent that it exceeds the amount established with
respect to subparagraph (C).
Any such amount that is not a multiple of $0.10 shall be increased to
the next higher multiple of $0.10.
1 Paragraph (5) was amended by sec. 205(b) (2) and (3) of Public Law 95-216 effective
for benefits for months after December 1978.
Sec. 203(a)
68
Revised April 1978
(2) (A) For individuals who initially become eligible for old-age
or disability insurance benefits, or who die (before becoming so eligi-
ble for such benefits), in the calendar year 1979, the amounts estab-
lished with respect to subparagraphs (A), (B), and (C) of para-
graph (1) shall be $230, $332, and $433, respectively.
(B) For individuals who initially become eligible for old-age or
disability insurance benefits, or who die (before becoming so eligible
for such benefits), in any calendar year after 1979, each of the amounts
so established shall equal the product of the corresponding amount
established for the calendar year 1979 by subparagraph (A) of
this paragraph and the quotient obtained under subparagraph (B)
(ii) of section 215 (a) (1), with such product being rounded in the
manner prescribed by section 215(a) (1) (B) (iii).
(C) In each calender year after 1978 the Secretary shall publish
in the Federal Register, on or before November 1, the formula which
(except as provided in section 215 (i) (2) (D)) is to be applicable
under this paragraph to individuals who become eligible for old-age
or disability insurance benefits, or who die (before becoming eligible
for such benefits), in the following calendar year.
(D) A year shall not be counted as the year of an individual's death
or eligibility for purposes of this paragraph or paragraph (7) in any
case where such individual was entitled to a disability insurance bene-
fit for any of the 12 months immediately preceding the month of such
death or eligibility (but there shall be counted instead the year of the
individual's eligibility for the disability insurance benefits to which he
was entitled during such 12 months).
(3) (A) When an individual who is entitled to benefits on the basis
of the wages and self-employment income of any insured individual
and to whom this subsection applies would (but for the provisions of
section 202 (k) (2) (A)) be entitled to child's insurance benefits for a
month on the basis of the wages and self-employment income of one
or more other insured individuals, the total monthly benefits to which
all beneficiaries are entitled on the bases of such wages and self-em-
ployment income shall not be reduced under this subsection to less.
than the smaller of—
1
(i) the sum of the maximum amounts of benefits payable on
the basis of the wages and self-employment income of all such
insured individuals, or
(ii) an amount equal to the product of 1.75 and the primary
insurance amount that would be computed under section 215(a)
(1) for that month with respect to average indexed monthly
earnings equal to one-twelfth of the contribution and benefit base
determined for that year under section 230.
1 The word "bases" is a technical error in the law. It should read “basis”.
Revised April 1978
69
Sec. 203(a)
(B) When two or more persons were entitled (without the appli-
cation of section 202(j) (1) and section 223(b)) to monthly benefits
under section 202 or 223 for January 1971 or any prior month on the
basis of the wages and self-employment income of such insured indi-
vidual and the provisions of this subsection as in effect for any such
month were applicable in determining the benefit amount of any per-
sons on the basis of such wages and self-employment income, the total
of benefits for any month after January 1971 shall not be reduced to
less than the largest of-
(i) the amount determined under this subsection without re-
gard to this subparagraph,
(ii) the largest amount which has been determined for any
month under this subsection for persons entitled to monthly
benefits on the basis of such insured individual's wages and self-
employment income, or
(iii) if any persons are entitled to benefits on the basis of such
wages and self-employment income for the month before the effec-
tive month (after September 1972) of a general benefit increase
under this title (as defined in section 215 (i) (3)) or a benefit in-
crease under the provisions of section 215 (i), an amount equal
to the sum of amounts derived by multiplying the benefit amount
determined under this title (excluding any part thereof deter-
mined under section 202 (w)) for the month before such effective
month (including this subsection, but without the application of
section 222(b), section 202(q), and subsections (b), (c), and (d)
of this section), for each such person for such month, by a per-
centage equal to the percentage of the increase provided under
such benefit increase (with any such increased amount which is
not a multiple of $0.10 being rounded to the next higher multiple
of $0.10);
but in any such case (I) subparagraph (A) of this paragraph shall not
be applied to such total of benefits after the application of clause (ii)
or (iii), and (II) if section 202 (k) (2) (A) was applicable in the case
of any such benefits for a month, and ceases to apply for a month after
such month, the provisions of clause (ii) or (iii) shall be applied, for
and after the month in which section 202 (k) (2) (A) ceases to apply,
as though subparagraph (A) of this paragraph had not been appli-
cable to such total of benefits for the last month for which clause (ii)
or (iii) was applicable.
(C) When any of such individuals is entitled to monthly benefits as
a divorced spouse under section 202 (b) or (c) or as a surviving di-
vorced spouse under section 202 (e) or (f) for any month, the benefit
to which he or she is entitled on the basis of the wages and self-em-
21-746 O 78 - 6
Sec. 203(a)
70
Revised April 1978
ployment income of such insured individual for such month shall
be determined without regard to this subsection, and the benefits of all
other individuals who are entitled for such month to monthly benefits
under section 202 on the wages and self-employment income of such
insured individual shall be determined as if no such divorced spouse
or surviving divorced spouse were entitled to benefits for such month.
(4) In any case in which benefits are reduced pursuant to the pre-
ceding provisions of this subsection, the reduction shall be made after
any deductions under this section and after any deductions under sec-
tion 222(b). Whenever a reduction is made under this subsection in
the total of monthly benefits to which individuals are entitled for any
month on the basis of the wages and self-employment income of an
insured individual, each such benefit other than the old-age or dis-
ability insurance benefit shall be proportionately decreased.
(5) Notwithstanding any other provision of law, when-
(A) two or more persons are entitled to monthly benefits for a
particular month on the basis of the wages and self-employment
income of an insured individual and (for such particular month)
the provisions of this subsection are applicable to such monthly
benefits, and
(B) such individual's primary insurance amount is increased
for the following month under any provision of this title,
then the total of monthly benefits for all persons on the basis of such
wages and self-employment income for such particular month, as
determined under the provisions of this subsection, shall for purposes
of determining the total monthly benefits for all persons on the basis
of such wages and self-employment income for months subsequent to
such particular month be considered to have been increased by the
smallest amount that would have been required in order to assure that
the total of monthly benefits payable on the basis of such wages and
self-employment income for any such subsequent month will not be
less (after the application of the other provisions of this subsection
and section 202 (q)) than the total of monthly benefits (after the
application of the other provisions of this subsection and section 202
(q)) payable on the basis of such wages and self-employment income
for such particular month.
(6) In the case of any individual who is entitled for any month
to benefits based upon the primary insurance amounts of two or more
insured individuals, one or more of which primary insurance amounts
were determined under section 215(a) or 215 (d) as in effect (without
regard to the table contained therein) prior to January 1979 and one
or more of which primary insurance amounts were determined under
section 215 (a) (1) or (4), or section 215 (d), as in effect after Decem-
ber 1978, the total benefits payable to that individual and all other
G
Revised April 1978
71
Sec. 203(b)
individuals entitled to benefits for that month based upon those pri-
mary insurance amounts shall be reduced to an amount equal to the
product of 1.75 and the primary insurance amount that would be com-
puted under section 215 (a) (1) for that month with respect to average
indexed monthly earnings equal to one-twelfth of the contribution
and benefits base determined under section 230 for the year in which
that month occurs.
(7) Subject to paragraph (6), this subsection as in effect in Decem-
ber 1978 shall remain in effect with respect to a primary insurance
amount computed under section 215 (a) or (d), as in effect (without
regard to the table contained therein) in December 1978, except that a
primary insurance amount so computed with respect to an individual
who first becomes eligible for an old-age or disability insurance benefit,
or dies (before becoming eligible for such a benefit), after December
1978, shall instead be governed by this section as in effect after Decem-
ber 1978.
(8) When-
(A) one or more persons were entitled (without the applica-
tion of section 202(j) (1)) to monthly benefits under section 202
for May 1978 on the basis of the wages and self-employment
income of an individual,
(B) the benefit of at least one such person for June 1978 is
increased by reason of the amendments made by section 204 of
the Social Security Amendments of 1977; and
(C) the total amount of benefits to which all such persons are
entitled under such section 202 are reduced under the provisions
of this subsection (or would be so reduced except for the first
sentence of section 203 (a) (4)),
then the amount of the benefit to which each such person is entitled
for months after May 1978 shall be increased (after such reductions
are made under this subsection) to the amount such benefits would
have been if the benefit of the person or persons referred to in subpara-
graph (B) had not been so increased.¹
Deductions on Account of Work
(b) Deductions, in amounts and at such time or times as the Secre-
tary shall determine, shall be made from any payment or payments
under this title to which an individual is entitled, and from any pay-
ment or payments to which any other persons are entitled on the basis
of such individual's wages and self-employment income, until the total
of such deductions equals
1 Sec. 203 (a) was amended by sec. 202 of Public Law 95-216 effective for benefits payable
for months after December 1978 and paragraph (8) was added to sec. 203 (a) by sec. 204(e)
of Public Law 95-216 effective for benefits for months after May 1978. The words "bene-
fits base" in paragraph (6) are a technical error in the law and should read "benefit base".
Sec. 203(b)
72
Revised April 1978
(1) such individual's benefit or benefits under section 202 for
any month, and
(2) if such individual was entitled to old-age insurance benefits
under section 202(a) for such month, the benefit or benefits of all
other persons for such month under section 202 based on such
individual's wages and self-employment income,
if for such month he is charged with excess earnings, under the pro-
visions of subsection (f) of this section, equal to the total of benefits
referred to in clauses (1) and (2). If the excess earnings so charged
are less than such total benefits, such deductions with respect to such
month shall be equal only to the amount of such excess earnings. If
a child who has attained the age of 18 and is entitled to child's insur-
ance benefits, or a person who is entitled to mother's insurance bene-
fits, is married to an individual entitled to old-age insurance benefits
under section 202 (a), such child or such person, as the case may be,
shall, for the purposes of this subsection and subsection (f), be deemed
to be entitled to such benefits on the basis of the wages and self-
employment income of such individual entitled to old-age insurance
benefits. If a deduction has already been made under this subsection
with respect to a person's benefit or benefits under section 202 for a
month, he shall be deemed entitled to payments under such section
for such month for purposes of further deductions under this sub-
section, and for purposes of charging of each person's excess earnings
under subsection (f), only to the extent of the total of his benefits
remaining after such earlier deductions have been made. For purposes
of this subsection and subsection (f)-
(A) an individual shall be deemed to be entitled to payments
under section 202 equal to the amount of the benefit or benefits to
which he is entitled under such section after the application of
subsection (a) of this section, but without the application of the
penultimate sentence thereof; and
(B) if a deduction is made with respect to an individual's
benefit or benefits under section 202 because of the occurence in
any month of an event specified in subsection (c) or (d) of this
section or in section 222 (b), such individual shall not be consid-
ered to be entitled to any benefits under such section 202 for such
month.
Deductions on Account of Noncovered Work Outside the United States or
Failure To Have Child in Care
(c) Deductions, in such amounts and at such time or times as the
Secretary shall determine, shall be made from any payment or pay-
ments under this title to which an individual is entitled, until the total
of such deductions equals such individual's benefits or benefit under
section 202 for any month-
Revised April 1978
73
Sec. 203 (d)
(1) in which such individual is under the age of seventy 1
and on seven or more different calendar days of which he engaged
in noncovered remunerative activity outside the United States; or
(2) in which such individual, if a wife under age sixty-five
entitled to a wife's insurance benefits, did not have in her care
(individually or jointly with her husband) a child of her hus-
band entitled to a child's insurance benefit and such wife's insur-
ance benefit for such month was not reduced under the provisions
of section 202 (q); or
(3) in which such individual, if a widow entitled to a mother's
insurance benefit, did not have in her care a child of her deceased
husband entitled to a child's insurance benefit; or
G
(4) in which such an individual, if a surviving divorced mother
entitled to a mother's insurance benefit, did not have in her care a
child of her deceased former husband who (A) is her son, daugh-
ter, or legally adopted child and (B) is entitled to a child's in-
surance benefit on the basis of the wages and self-employment
income of her deceased former husband.
For purposes of paragraphs (2), (3), and (4) of this subsection, a
child shall not be considered to be entitled to a child's insurance benefit
for any month in which paragraph (1) of section 202 (s) applies or an
event specified in sections 222 (b) occurs with respect to such child.
Subject to paragraph (3) of such section 202 (s), no deductions shall
be made under this subsection from any child's insurance benefit for
the month in which the child entitled to such benefit attained the age
of eighteen or any subsequent month; nor shall any deduction be
made under this subsection from any widow's insurance benefits for
any month in which the widow or surviving divorced wife is entitled
and has not attained age 65 (but only if she became so entitled
prior to attaining age 60), or from any widower's insurance benefit for
any month in which the widower is entitled and has not attained age
65 (but only if he became so entitled prior to attaining age 60).
Deductions From Dependents' Benefits on Account of Noncovered Work Out-
side the United States by Old-Age Insurance Beneficiary
(d) (1) Deductions shall be made from any wife's, husband's, or
child's insurance benefit, based on the wages and self-employment
income of an individual entitled to old-age insurance benefits, to which
a wife, divorced wife, husband, or child is entitled, until the total of
such deduction equals such wife's, husband's, or child's insurance
benefit or benefits under section 202 for any month in which such
individual is under the age of seventy 2 and on seven or more
1 In subsection (c) (1), sec. 302(a) of Public Law 95-216 changed "seventy-two" to
"seventy" effective for taxable years ending after Dec. 31, 1981.
2 In subsection (d) (1), sec. 302 (a) of Public Law 95-216 changed "seventy-two" to
"seventy" effective for taxable years ending after Dec. 31, 1981.
Sec. 203(d)
74
Revised April 1978
different calendar days of which he engaged in noncovered remunera-
tive activity outside the United States.
(2) Deductions shall be made from any child's insurance benefit to
which a child who has attained the age of eighteen is entitled, or from
any mother's insurance benefit to which a person is entitled, until the
total of such deductions equals such child's insurance benefit or bene-
fits or mother's insurance benefit or benefits under section 202 for any
month in which such child or person entitled to mother's insurance
benefits is married to an individual who is entitled to old-age insur-
ance benefits and on seven or more different calendar days of which
such individual engaged in noncovered remunerative activity outside.
the United States.
Occurrence of More Than One Event
(e) If more than one of the events specified in subsections (c) and
(d) and section 222(b) occurs in any one month which would occasion
deductions equal to a benefit for such month, only an amount equal
to such benefit shall be deducted.
Months to Which Earnings Are Charged
(f) For purposes of subsection (b)-
(1) The amount of an individual's excess earnings (as defined
in paragraph (3)) shall be charged to months as follows: There
shall be charged to the first month of such taxable year an amount
of his excess earnings equal to the sum of the payments to which
he and all other persons are entitled for such month under section
202 on the basis of his wages and self-employment income (or the
total of his excess earnings if such excess earnings are less than
such sum), and the balance, if any, of such excess earnings shall
be charged to each succeeding month in such year to the extent, in
the case of each such month, of the sum of the payments to which
such individual and all other persons are entitled for such month
under section 202 on the basis of his wages and self-employment
income, until the total of such excess has been so charged. Where
an individual is entitled to benefits under section 202(a) and other
persons are entitled to benefits under section 202(b), (c), or (d)
on the basis of the wages and self-employment income of such
individual, the excess earnings of such individual for any taxable
year shall be charged in accordance with the provisions of this
subsection before the excess earnings of such persons for a taxable
year are charged to months in such individual's taxable year.
Notwithstanding the preceding provisions of this paragraph, but
subject to section 202(s), no part of the excess earnings of an in-
dividual shall be charged to any month (A) for which such indi-
vidual was not entitled to a benefit under this title. (B) in which
Revised April 1978
75
Sec. 203(f)
such individual was age seventy¹ or over, (C) in which such
individual, if a child entitled to child's insurance benefits, has
attained the age of 18, (D) for which such individual is entitled to
widow's insurance benefits and has not attained age 65 (but only if
she became so entitled prior to attaining age 60) or widower's in-
surance benefits and has not attained age 65 (but only if he became
so entitled prior to attaining age 60), or (E) in which such
individual did not engage in self-employment and did not render
services for wages (determined as provided in paragraph (5) of
this subsection) of more than the applicable exempt amount as de-
termined under paragraph (8), if such month is in the taxable
year in which occurs the first month that is both (i) a month for
which the individual is entitled to benefits under subsection (a),
(b), (c), (d), (e), (f), (g), or (h) of section 202 (without having
been entitled for the preceding month to a benefit under any other
of such subsections), and (ii) a month in which the individual did
not engage in self-employment and did not render services for
wages (determined as provided in paragraph (5)) of more than
the applicable exempt amount as determined under paragraph
(8).2
(2) As used in paragraph (1), the term "first month of such
taxable year" means the earliest month in such year to which the
charging of excess earnings described in such paragraph is not
prohibited by the application of clauses (A), (B), (C), (D), and
(E) thereof.
(3) For purposes of paragraph (1) and subsection (h), an in-
dividual's excess earnings for a taxable year shall be 50 per centum
of his earnings for such year in excess of the product of the appli-
cable exempt amount as determined under paragraph (8), multi-
plied by the number of months in such year, except that, in deter-
mining an individual's excess earnings for the taxable year in
which he attains age 70,3 there shall be excluded any earnings of
such individual for the month in which he attains such age and
any subsequent month (with any net earnings or net loss from
self-employment in such year being prorated in an equitable
manner under regulations of the Secretary). The excess earn-
ings as derived under the preceding sentence, if not a multiple of
$1, shall be reduced to the next lower multiple of $1.4
(4) For purposes of clause (E) of paragraph (1)—
(A) An individual will be presumed, with respect to any
month, to have been engaged in self-employment in such
<
1 In subsection (f)(1)(B), sec. 302(a) of Public Law 95-216 changed "seventy-two"
to "seventy" effective for taxable years ending after Dec. 31, 1981.
2 Subparagraph (E) was amended by secs. 301(d) and 303(a) of Public Law 95-216.
In paragraph (3), sec. 302(b) of Public Law 95-216 changed "age 72" to "age 70"
effective for taxable years ending after December 31, 1981.
l'aragraph (3) and (4) (B) were amended by sec. 301 (d) of Public Law 95-216.
Sec. 203(f)
76
Revised April 1978
month until it is shown to the satisfaction of the Secretary
that such individual rendered no substantial services in such
month with respect to any trade or business the net income or
loss of which is includible in computing (as provided in
paragraph (5) of this subsection) his net earnings or net
loss from self-employment for any taxable year. The Secre-
tary shall by regulations prescribe the methods and criteria
for determining whether or not an individual has rendered
substantial services with respect to any trade or business.
(B) An individual will be presumed, with respect to any
month, to have rendered services for wages (determined as
provided in paragraph (5) of this subsection) of more than
the applicable exempt amount as determined under para-
graph (8) until it is shown to the satisfaction of the Secretary
that such individual did not render such services in such
month for more than such amount.¹
(5)(A) An individual's earnings for a taxable year shall be
(i) the sum of his wages for services rendered in such year and
his net earnings from self-employment for such year, minus (ii)
any net loss from self-employment for such year.
(B) For purposes of this section—
(i) an individual's net earnings from self-employment for
any taxable year shall be determined as provided in section
211, except that paragraphs (1), (4), and (5) of section 211
(c) shall not apply and the gross income shall be computed
by excluding the amounts provided by subparagraph (D),
and
(ii) an individual's net loss from self-employment for any
taxable year is the excess of the deductions (plus his distribu-
tive share of loss described in sections 702 (a) (9) of the In-
ternal Revenue Code of 1954) taken into account under clause
(i) over the gross income (plus his distributive share of in-
come so described) taken into account under clause (i).
(C) For purposes of this subsection, an individual's wages shall
be computed without regard to the limitations as to amounts of
remuneration specified in subsections (a), (g)(2), (g) (3),
(h)(2), and (j) of section 209; and in making such computation
services which do not constitute employment as defined in section
210, performed within the United States by the individual as an
employee or performed outside the United States in the active
military or naval service of the United States, shall be deemed to
be employment as so defined if the remuneration for such services.
1 Paragraph (3) and (4) (B) were amended by sec. 301 (d) of Public Law 95-216.
Revised April 1978
77
Sec. 203(f)
is not includible in computing his net earnings or net loss from
self-employment.
(D) In the case of an individual-
(i) who has attained the age of 65 on or before the last day
of the taxable year, and
(ii) who shows to the satisfaction of the Secretary that he
is receiving royalties attributable to a copyright or patent
obtained before the taxable year in which he attained the age
of 65 and that the property to which the copyright or patent
relates was created by his own personal efforts,
there shall be excluded from gross income any such royalities.
(6) For purposes of this subsection, wages (determined as pro-
vided in paragraph (5) (C)) which, according to reports received
by the Secretary, are paid to an individual during a taxable year
shall be presumed to have been paid to him for services performed
in such year until it is shown to the satisfication of the Secretary
that they were paid for services performed in another taxable
year. If such reports with respect to an individual show his wages
for a calendar year, such individual's taxable year shall be pre-
sumed to be a calendar year for purposes of this subsection until
it is shown to the satisfaction of the Secretary that his taxable
year is not a calendar year.
(7) Where an individual's excess earnings are charged to a
month and the excess earnings so charged are less than the total of
the payments (without regard to such charging) to which all per-
sons are entitled under section 202 for such month on the basis
of his wages and self-employment income, the difference between
such total and the excess so charged to such month shall be paid
(if it is otherwise payable under this title) to such individual and
other persons in the proportion that the benefit to which each of
them is entitled (without regard to such charging, without the
application of section 202 (k) (3), and prior to the application of
section 203 (a)) bears to the total of the benefits to which all of
them are entitled.
(8) (A) Whenever the Secretary pursuant to section 215 (i)
increases benefits effective with the month of June following a
cost-of-living computation quarter, he shall also determine and
publish in the Federal Register on or before November 1 of the
calendar year in which such quarter occurs the new exempt
amounts (separately stated for individuals described in subpara-
graph (D) and for other individuals) which are to be applicable
(unless prevented from becoming effective by subparagraph (C))
with respect to taxable years ending in (or with the close of) the
calendar year after the calendar year in which such benefit in-
Sec. 203 (f)
Revised April 1978
78
crease is effective (or, in the case of an individual who dies during
the calendar year after the calendar year in which the benefit
increase is effective, with respect to such individual's taxable year
which ends, upon his death, during such year).¹
(B) Except as otherwise provided in subparagraph (D), the
exempt amount which is applicable to individuals described in
such subparagraph and the exempt amount which is applicable to
other individuals, for each month of a particular taxable year,
shall each be whichever of the following is the larger-
(i) the corresponding exempt amount which is in effect
with respect to months in the taxable year in which the deter-
mination under subparagraph (A) is made, or
(ii) the product of the exempt amount described in clause
(i) and the ratio of (I) the average of the total wages (as de-
fined in regulations of the Secretary and computed without
regard to the limitations specified in section 209 (a)) reported
to the Secretary of the Treasury or his delegate for the calen-
dar year before the calendar year in which the determination
under subparagraph (A) is made to (II) the average of the
total wages (as so defined and computed) reported to the
Secretary of the Treasury or his delegate for the calendar
year before the most recent calendar year in which an in-
crease in the exempt amount was enacted or a determination
resulting in such an increase was made under subparagraph
(A), with such product, if not a multiple of $10, being
rounded to the next higher multiple of $10 where such prod-
uct is a multiple of $5 but not of $10 and to the nearest multi-
ple of $10 in any other case.
Whenever the Secretary determines that an exempt amount is to
be increased in any year under this paragraph, he shall notify the
House Committee on Ways and Means and the Senate Committee
on Finance within 30 days after the close of the base quarter (as
defined in section 215 (i) (1) (A)) in such year of the estimated
amount of such increase, indicating the new exempt amount,
the actuarial estimates of the effect of the increase, and the ac-
tuarial assumptions and methodology used in preparing such
estimates.2
(C) Notwithstanding the determination of a new exempt
amount by the Secretary under subparagraph (A) (and notwith-
standing any publication thereof under such subparagraph or any
notification thereof under the last sentence of subparagraph (B)),
1 Subparagraph (A) was amended by sec. 301 (a) of Public Law 95-216. See Appendix E
for exempt amounts for each year.
2 Subparagraph (B) was amended by sec. 8(i) of Public Law 94-202 and by secs.
301(b) and 353 (a) of Public Law 95-216.
Revised April 1978
79
Sec. 203(g)
such new exempt amount shall not take effect pursuant thereto if
during the calendar year in which such determination is made a
law increasing the exempt amount is enacted.
(D) Notwithstanding any other provision of this subsection,
the exempt amount which is applicable to an individual who has
attained age 65 before the close of the taxable year involved-
(i) shall be $333.331% for each month of any taxable year
ending after 1977 and before 1979,
(ii) shall be $375 for each month of any taxable year
ending after 1978 and before 1980,
(iii) shall be $416.66% for each month of any taxable year
ending after 1979 and before 1981,
(iv) shall be $458.33% for each month of any taxable year
ending after 1980 and before 1982, and
(v) shall be $500 for each month of any taxable year end-
ing after 1981 and before 1983.¹
Penalty for Failure to Report Certain Events
(g) Any individual in receipt of benefits subject to deduction under
subsection (c) (or who is in receipt of such benefits on behalf of an-
other individual), because of the occurrence of an event specified there-
in, who fails to report such occurrence to the Secretary prior to the
receipt and acceptance of an insurance benefit for the second month
following the month in which such event occurred, shall suffer de-
ductions in addition to those imposed under subsection (c) as follows:
(1) if such failure is the first one with respect to which an
additional deduction is imposed by this subsection, such addi-
tional deduction shall be equal to his benefit or benefits for the
first month of the period for which there is a failure to report even
though such failure is with respect to more than one month;
(2) if such failure is the second one with respect to which an
additional deduction is imposed by this subsection, such additional
deduction shall be equal to two times his benefit or benefits for the
first month of the period for which there is a failure to report even
though such failure is with respect to more than two months; and
(3) if such failure is the third or a subsequent one for which
an additional deduction is imposed under this subsection, such
additional deduction shall be equal to three times his benefit or
benefits for the first month of the period for which there is a
failure to report even though the failure to report is with respect
to more than three months;
1 Subparagraph (D) was added by sec. 301(c)(1) of Public Law 95-216. See also sec.
301 (c) (2) of Public Law 95-216 which is printed in this document on p. 805.
Sec. 203(g)
79-A
Revised April 1978
except that the number of additional deductions required by this sub-
section shall not exceed the number of months in the period for which
there is a failure to report. As used in this subsection, the term "period
for which there is a failure to report" with respect to any individual
means the period for which such individual received and accepted in-
surance benefits under section 202 without making a timely report and
for which deductions are required under subsection (c).
Report of Earnings to Secretary
(h)(1)(A) If an individual is entitled to any monthly insurance
benefit under section 202 during any taxable year in which he has
earnings or wages, as computed pursuant to paragraph (5) of subsec-
tion (f), in excess of the product of the applicable exempt amount as
determined under subsection (f) (8) times the number of months
in such year, such individual (or the individual who is in receipt of
such benefit on his behalf) shall make a report to the Secretary of
his earnings (or wages) for such taxable year. Such report shall
be made on or before the fifteenth day of the fourth month following
the close of such year, and shall contain such information and be made
in such manner as the Secretary may by regulations prescribe. Such
report need not be made for any taxable year (i) beginning with or
after the month in which such individual attained age 70,¹ or (ii) if
benefit payments for all months (in such taxable year) in which such
individual is under age 701 have been suspended under the provisions.
of the first sentence of paragraph (3) of this subsection. The Secretary
may grant a reasonable extension of time for making the report of
earnings required in this paragraph if he finds that there is valid rea-
son for a delay, but in no case may the period be extended more than
three months.2
(B) If the benefit payments of an individual have been suspended
for all months in any taxable year under the provisions of the first
sentence of paragraph (3) of this subsection, no benefit payments shall
be made to such individual for any such month in such taxable year
after the expiration of the period of three years, three months, and
fifteen days following the close of such taxable year unless within
such period the individual, or some other person entitled to benefits
under this title on the basis of the same wages and self-government
income, files with the Secretary information showing that a benefit
for such month is payable to such individual.
(2) If an individual fails to make a report required under para-
graph (1), within the time prescribed by or in accordance with such
paragraph, for any taxable year and any deduction is imposed under
1 Sec. 302(c) of Public Law 95-216 changed "72" to "70" effective for taxable years
ending after Dec. 31, 1981.
2 Subparagraph (A) was also amended by sec. 301 (d) of Public Law 95–216.
Revised April 1978
79-B
Sec. 203(h)
subsection (b) by reason of his earnings for such year, he shall suffer
additional deductions as follows:
(A) if such failure is the first one with respect to which an
additional deduction is imposed under this paragraph, such addi-
tional deduction shall be equal to his benefit or benefits for the
last month of such year for which he was entitled to a benefit
under section 202, except that if the deduction imposed under sub-
section (b) by reason of his earnings for such year is less than
the amount of his benefit (or benefits) for the last month of
such year for which he was entitled to a benefit under section 202,
the additional deduction shall be equal to the amount of the deduc-
tion imposed under subsection (b) but not less than $10;
(B) if such failure is the second one for which an additional
deduction is imposed under this paragraph, such additional de-
duction shall be equal to two times his benefit or benefits for the
last month of such year for which he was entitled to a benefit
under section 202;
(C) if such failure is the third or a subsequent one for which
an additional deduction is imposed under this paragraph, such
additional deduction shall be equal to three times his benefit or
benefits for the last month of such year for which he was entitled
to a benefit under section 202;
except that the number of the additional deductions required by this
paragraph with respect to a failure to report earnings for a taxable
year shall not exceed the number of months in such year for which
such individual received and accepted insurance benefits under section
202 and for which deductions are imposed under subsection (b) by
reason of his earnings. In determining whether a failure to report
earnings is the first or a subsequent failure for any individual, all
taxable years ending prior to the imposition of the first additional
deduction under this paragraph, other than the latest one of such
years, shall be disregarded.
(3) If the Secretary determines, on the basis of information ob-
tained by or submitted to him, that it may reasonably be expected
that an individual entitled to benefits under section 202 for any tax-
able year will suffer deductions imposed under subsection (b) by
reason of his earnings for such year, the Secretary may, before the
close of such taxable year, suspend the total or less than the total
payment for each month in such year (or for only such months as the
Secretary may specify) of the benefits payable on the basis of such
individual's wages and self-employment income; and such suspension
shall remain in effect with respect to the benefits for any month until
the Secretary has determined whether or not any deduction is imposed
for such month under subsection (b). The Secretary is authorized,
Sec. 203 (h)
79-C
Revised April 1978
before the close of the taxable year of an individual entitled to benefits
during such year, to request of such individual that he make, at such
time or times as the Secretary may specify, a declaration of his
estimated earnings for the taxable year and that he furnish to the
Secretary such other information with respect to such earnings as the
Secretary may specify. A failure by such individual to comply with
any such request shall in itself constitute justification for a deter-
mination under this paragraph that it may reasonably be expected
that the individual will suffer deductions imposed under subsection
(b) by reason of his earnings for such year. If, after the close of a
taxable year of an individual entitled to benefits under section 202
for such year, the Secretary requests such individual to furnish a
report of his earnings (as computed pursuant to paragraph (5) of
subsection (f)) for such taxable year or any other information with
respect to such earnings which the Secretary may specify, and the
individual fails to comply with such request, such failure shall in
itself constitute justification for a determination that such individual's
benefits are subject to deductions under subsection (b) for each month
in such taxable year (or only for such months thereof as the Secretary
may specify) by reason of his earnings for such year.
Circumstances Under Which Deductions and Reductions not Required
(i) In the case of any individual, deductions by reason of the provi-
sions of subsection (b), (c), (g), or (h) of this section, or the provi-
sions of section 222(b), shall, notwithstanding such provisions, be
made from the benefit to which such individual is entitled only to the
extent that such deductions reduce the total amount which would oth-
erwise be paid, on the basis of the same wages and self-employment
income, to such individual and the other individuals living in the
same household.
Attainment of Age Seventy¹
(j) For the purposes of this section, an individual shall be con-
sidered as seventy years of age during the entire month in which he
attains such age.
1
Noncovered Remunerative Activity Outside the United States
(k) An individual shall be considered to be engaged in noncovered
remunerative activity outside the United States if he performs serv-
ices outside the United States as an employee and such services do
not constitute employment as defined in section 210 and are not per-
formed in the active military or naval service of the United States, or
if he carries on a trade or business outside the United States (other
1 Sec. 302 (a) and (d) changed "seventy-two" to "seventy" effective for taxable years
ending after Dec. 31, 1981.
Revised April 1978
79-D
Sec. 204(a)
than the performance of service as an employee) the net income or
loss of which (1) is not includible in computing his net earnings from
self-employment for a taxable year and (2) would not be excluded
from net earnings from self-employment, if carried on in the United
States, by any of the numbered paragraphs of section 211(a). When
used in the preceding sentence with respect to a trade or business
(other than the performance of service as an employee), the term
"United States" does not include the Commonwealth of Puerto Rico,
the Virgin Islands, Guam, or American Samoa in the case of an alien
who is not a resident of the United States (including the Common-
wealth of Puerto Rico, the Virgin Islands, Guam, and American Sa-
moa) and the term "trade or business" shall have the same meaning
as when used in Section 162 of the Internal Revenue Code of 1954.
Ga
Good Cause for Failure To Make Reports Required
(1) The failure of an individual to make any report required by sub-
section (g) or (h) (1) (A) within the time prescribed therein shall not
be regarded as such a failure if it is shown to the satisfaction of the
Secretary that he had good cause for failing to make such report
within such time. The determination of what constitutes good cause
for purposes of this subsection shall be made in accordance with regu-
lations of the Secretary.
Overpayments and Underpayments
Sec. 204. (a) Whenever the Secretary finds that more or less than
the correct amount of payment has been made to any person under
this title, proper adjustment or recovery shall be made, under regu-
lations prescribed by the Secretary, as follows:
(1) With respect to payment to a person of more than the correct
amount, the Secretary shall decrease any payment under this title
to which such overpaid person is entitled, or shall require such over-
paid person or his estate to refund the amount in excess of the correct
amount, or shall decrease any payment under this title payable to his
estate or to any other person on the basis of the wages and self-employ-
ment income which were the basis of the payments to such overpaid
person, or shall apply any combination of the foregoing. A payment
made under this title on the basis of an erroneous report of death by
the Department of Defense of an individual in the line of duty while
he is a member of the uniformed services (as defined in section 210
(m)) on active duty (as defined in section 210(1)) shall not be con-
sidered an incorrect payment for any month prior to the month such
Department notifies the Secretary that such individual is alive.
Sec. 204(a)
Revised April 1978
79-E
(2) With respect to payment to a person less than the correct
amount, the Secretary shall make payment of the balance of the
amount due such underpaid person, or, if such person dies before
payments are completed or before negotiating one or more checks.
representing correct payments, disposition of the amount due shall be
made in accordance with subsection (d).
(b) In any case in which more than the correct amount of payment
has been made, there shall be no adjustment of payments to, or recov-
ery by the United States from, any person who is without fault if
such adjustment or recovery would defeat the purpose of this title or
would be against equity and good conscience.
(c) No certifying or disbursing officer shall be held liable for any
amount certified or paid by him to any person where the adjustment
or recovery of such amount is waived under subsection (b), or where
adjustment under subsection (a) is not completed prior to the death
of all persons against whose benefits deductions are authorized.
(d) If an individual dies before any payment due him under this
title is completed, payment of the amount due (including the amount
of any unnegotiated checks) shall be made
(1) to the person, if any, who is determined by the Secretary
to be the surviving spouse of the deceased individual and who
either (i) was living in the same household with the deceased at
the time of his death or (ii) was, for the month in which the
deceased individual died, entitled to a monthly benefit on the basis
of the same wages and self-employment income as was the de-
ceased individual;
(2) if there is no person who meets the requirements of para-
graph (1), or if the person who meets such requirements dies
before the payment due him under this title is completed, to the
child or children, if any, of the deceased individual who were, for
the month in which the deceased individual died, entitled to
monthly benefits on the basis of the same wages and self-employ-
ment income as was the deceased individual (and, in case there
is more than one such child, in equal parts to each such child);
(3) if there is no person who meets the requirements of para-
graph (1) or (2), or if each person who meets such requirements
dies before the payment due him under this title is completed,
to the parent or parents, if any, of the deceased individual who
were, for the month in which the deceased individual died, en-
titled to monthly benefits on the basis of the same wages and self-
employment income as was the deceased individual (and, in case
there is more than one such parent, in equal parts to each such
parent);
Revised April 1978
Sec. 205(b)
79-F
(4) if there is no person who meets the requirements of para-
graph (1), (2), or (3), or if each person who meets such require-
ments dies before the payment due him under this title is com-
pleted, to the person, if any, determined by the Secretary to be
the surviving spouse of the deceased individual;
(5) if there is no person who meets the requirements of para-
graph (1), (2), (3), or (4), or if each person who meets such
requirements dies before the payment due him under this title is
completed, to the person or persons, if any, determined by the
Secretary to be the child or children of the deceased individual
(and, in case there is more than one such child, in equal parts to
each such child);
J
(6) if there is no person who meets the requirements of para-
graph (1), (2), (3), (4), or (5), or if each person who meets such
requirements dies before the payment due him under this title
is completed, to the parent or parents, if any, of the deceased in-
dividual (and, in case there is more than one such parent, in equal
parts to each such parent); or
sagl
(7) if there is no person who meets the requirements of para-
graph (1), (2), (3), (4), (5), or (6), or if each person who meets
such requirements dies before the payment due him under this
title is completed, to the legal representative of the estate of the
deceased individual, if any.
Evidence, Procedure, and Certification for Payment
Sec. 205. (a) The Secretary shall have full power and authority to
make rules and regulations and to establish procedures, not inconsist-
ent with the provisions of this title, which are necessary or appropri-
ate to carry out such provisions, and shall adopt reasonable and
proper rules and regulations to regulate and provide for the nature
and extent of the proofs and evidence and the method of taking and
furnishing the same in order to establish the right to benefits here-
under.
(b) The Secretary is directed to make findings of fact, and decisions
as to the rights of any individual applying for a payment under this
title. Upon request by any such individual or upon request by a wife,
divorced wife, widow, surviving divorced wife, surviving divorced
mother, husband, widower, child, or parent who makes a showing in
writing that his or her rights may be prejudiced by any decision the
Secretary has rendered, he shall give such applicant and such other
individual reasonable notice and opportunity for a hearing with re-
spect to such decision, and, if a hearing is held, shall, on the basis of
21-746 O - 78 - 7
Sec. 205(b)
Revised April 1978
79-G
evidence adduced at the hearing, affirm, modify, or reverse his findings
of fact and such decision. Any such request with respect to such a de-
cision must be filed within sixty days after notice of such decision
is received by the individual making such request. The Secretary
is further authorized, on his own motion, to hold such hearings and to
conduct such investigations and other proceedings as he may deem
necessary or proper for the administration of this title. In the course
of any hearing, investigation, or other proceeding, he may administer
oaths and affirmations, examine witnesses, and receive evidence. Evi-
dence may be received at any hearing before the Secretary even
though inadmissible under rules of evidence applicable to court
procedure.¹
1
(c) (1) For the purposes of this subsection-
(A) The term "year" means a calendar year when used with
respect to wages and a taxable year when used with respect to self-
employment income.2
(B) The term "time limitation" means a period of three years,
three months, and fifteen days.
(C) The term "survivor" means an individual's spouse, sur-
viving divorced wife, surviving divorced mother, child, or parent,
who survives such individual.
(D) The term "period" when used with respect to self-employ-
ment income means a taxable year and when used with respect to
wages means-
(i) a quarter if wages were reported or should have been
reported on a quarterly basis on tax returns filed with the
Secretary of the Treasury or his delegate under section 6011
of the Internal Revenue Code of 1954 or regulations there-
under (or on reports filed by a State under section 218 (e) or
regulations thereunder),
(ii) a year if wages were reported or should have been
reported on a yearly basis on such tax returns or reports, or
(iii) the half year beginning January 1 or July 1 in the
case of wages which were reported or should have been
reported for calendar year 1937.3
(2) (A) On the basis of information obtained by or submitted to the
Secretary, and after such verification thereof as he deems necessary,
the Secretary shall establish and maintain records of the amounts of
wages paid to, and the amounts of self-employment income derived
by, each individual and of the periods in which such wages were paid
and such income was derived and, upon request, shall inform any in-
1 The third sentence of section 205(b) was amended by section 4 of Public Law 94-202
effective Mar. 1, 1976. Prior to that date, the appeal period is six months.
2 Subparagraph (A) was amended by sec. 353(f) (2) (A) of Public Law 95-216.
3 Subparagraph (D) was added by sec. 353 (f) (2) (B) of Public Law 95–216.
Revised April 1978
79-H
Sec. 205(c)
dividual or his survivor, or the legal representative of such individual
or his estate, of the amounts of wages and self-employment income of
such individual and the periods during which such wages were paid
and such income was derived, as shown by such records at the time of
such request.
(B) (i) In carrying out his duties under subparagraph (A), the
Secretary shall take affirmative measures to assure that social security
account numbers will, to the maximum extent practicable, be assigned
to all members of appropriate groups or categories of individuals by
assigning such numbers (or ascertaining that such numbers have al-
ready been assigned):
(I) to aliens at the time of their lawful admission to the United
States either for permanent residence or under other authority
of law permitting them to engage in employment in the United
States and to other aliens at such time as their status is so changed
as to make it lawful for them to engage in such employment;
(II) to any individual who is an applicant for or recipient of
benefits under any program financed in whole or in part from
Federal funds including any child on whose behalf such benefits
are claimed by another person; and
(III) to any other individual when it appears that he could
have been but was not assigned an account number under the pro-
visions of subclauses (I) or (II) but only after such investiga-
tion as is necessary to establish to the satisfaction of the Secretary,
the identity of such individual, the fact that an account number
has not already been assigned to such individual, and the fact that
such individual is a citizen or a noncitizen who is not, because of
his alien status, prohibited from engaging in employment;
and, in carrying out such duties, the Secretary is authorized to take
affirmative measures to assure the issuance of social security numbers:
(IV) to or on behalf of children who are below school age at
the request of their parents or guardians; and
(V) to children of school age at the time of their first enroll-
ment in school.
(ii) The Secretary shall require of applicants for social security
account numbers such evidence as may be necessary to establish the age,
Sec. 205(c)
80
citizenship, or alien status, and true identity of such applicants, and to
determine which (if any) social security account number has previ-
ously been assigned to such individual.
(iii) In carrying out the requirements of this subparagraph, the Sec-
retary shall enter into such agreements as may be necessary with the
Attorney General and other officials and with State and local wel-
fare agencies and school authorities (including non-public school
authorities).
(C) (i) It is the policy of the United States that any State (or
political subdivision thereof) may, in the administration of any tax,
general public assistance, driver's license, or motor vehicle registration
law within its jurisdiction, utilize the social security account numbers
issued by the Secretary for the purpose of establishing the identifica-
tion of individuals affected by such law, and may require any individ-
ual who is or appears to be so affected to furnish to such State (or
political subdivision thereof (or any agency thereof having adminis-
trative responsibility for the law involved, the social security account
number (or numbers, if he has more than one such number) issued to
him by the Secretary.
(ii) If and to the extent that any provision of Federal law hereto-
fore enacted is inconsistent with the policy set forth in clause (i) of
this subparagraph, such provision shall, on and after the date of the
enactment of this subparagraph, be null, void, and of no effect.
(iii) For purposes of clause (i) of this subparagraph, an agency of
a State (or political subdivision thereof) charged with the adminis-
tration of any general public assistance, driver's license, or motor
vehicle registration law which did not use the social security account
number for identification under a law or regulation adopted before
January 1, 1975, may require an individual to disclose his or her social
security number to such agency solely for the purpose of administer-
ing the laws referred to in clause (i) above and for the purpose of
responding to requests for information from an agency operating pur-
suant to the provisions of part A or D of title IV of the Social Security
Act.
(iv) For purposes of this subparagraph, the term "State" includes
the District of Columbia, the Commonwealth of Puerto Rico, the Vir-
gin Islands, Guam, the Commonwealth of the Northern Marianas,
and the Trust Territory of the Pacific Islands.¹
(3) The Secretary's record shall be evidence for the purpose of pro-
ceedings before the Secretary or any court of the amounts of wages
paid to, and self-employment income derived by, an individual and of
the periods in which such wages were paid and such income was de-
1 Subparagraph (C) was added by section 1211(b) of Public Law 94-455.
81
Sec. 205(c)
rived. The absence of an entry in such records as to wages alleged to
have been paid to, or as to self-employment income alleged to have
been derived by, an individual in any period shall be evidence that
no such alleged wages were paid to, or that no such alleged income was
derived by, such individual during such period.
(4) Prior to the expiration of the time limitation following any
year the Secretary may, if it is brought to his attention that any entry
of wages or self-employment income in his records for such year is
erroneous or that any item of wages or self-employment income for
such year has been omitted from such records, correct such entry or
include such omitted item in his records, as the case may be. After the
expiration of the time limitation following any year-
(A) the Secretary's records (with changes, if any, made pur-
suant to paragraph (5)) of the amounts of wages paid to, and
self-employment income derived by, an individual during any
period in such year shall be conclusive for the purposes of this
title;
(B) the absence of an entry in the Secretary's records as to the
wages alleged to have been paid by an employer to an individual
during any period in such year shall be presumptive evidence for
the purposes of this title that no such alleged wages were paid to
such individual in such period; and
(C) the absence of an entry in the Secretary's records as to the
self-employment income alleged to have been derived by an indi-
vidual in such year shall be conclusive for the purposes of this
title that no such alleged self-employment income was derived
by such individual in such year unless it is shown that he filed a
tax return of his self-employment income for such year before
the expiration of the time limitation following such year, in which
case the Secretary shall include in his records the self-employ-
ment income of such individual for such year.
(5) After the expiration of the time limitation following any year
in which wages were paid or alleged to have been paid to, or self-
employment income was derived or alleged to have been derived by, an
individual, the Secretary may change or delete any entry with respect
to wages or self-employment income in his records of such year for
such individual or include in his records of such year for such indi-
vidual any omitted item of wages or self-employment income but
only-
-
(A) if an application for monthly benefits or for a lump-sum
death payment was filed within the time limitation following
such year; except that no such change, deletion, or inclusion may
be made pursuant to this subparagraph after a final decision upon
the application for monthly benefits or lump-sum death payment;
Sec. 205(c)
82
(B) if within the time limitation following such year an in-
dividual or his survivor makes a request for a change or deletion,
or for an inclusion of an omitted item, and alleges in writing that
the Secretary's records of the wages paid to, or the self-employ-
ment income derived by, such individual in such year are in one or
more respects erroneous; except that no such change, deletion, or
inclusion may be made pursuant to this subparagraph after a final
decision upon such request. Written notice of the Secretary's de-
cision on any such request shall be given to the individual who
made the request;
(C) to correct errors apparent on the face of such records;
(D) to transfer items to records of the Railroad Retirement
Board if such items were credited under this title when they
should have been credited under the Railroad Retirement Act, or
to enter items transferred by the Railroad Retirement Board
which have been credited under the Railroad Retirement Act when
they should have been credited under this title;
(E) to delete or reduce the amount of any entry which is er-
roneous as a result of fraud;
(F) to conform his records to-
(i) tax returns or portions thereof (including information
returns and other written statements) filed with the Commis-
sioner of Internal Revenue under title VIII of the Social
Security Act, under subchapter E of chapter 1 or subchapter
A of chapter 9 of the Internal Revenue Code of 1939, under
chapter 2 or 21 of the Internal Revenue Code of 1954, or
under regulations made under authority of such title, sub-
chapter, or chapter;
(ii) wage reports filed by a State pursuant to an agree-
ment under section 218 or regulations of the Secretary, there-
under; or
(iii) assessments of amounts due under an agreement pur-
suant to section 218, if such assessments are made within the
period specified in subsection (q) of such section, or allow-
ances of credits or refunds of overpayments by a State under
an agreement pursuant to such section;
except that no amount of self-employment income of an individ-
ual for any taxable year (if such return or statement was filed
after the expiration of the time limitation following the taxable
year) shall be included in the Secretary's records pursuant to this
subparagraph;
(G) to correct errors made in the allocation, to individuals or
periods, of wages or self-employment income entered in the rec-
ords of the Secretary;
G
83
Sec. 205(d)
(H) to include wages paid during any period in such year to
an individual by an employer if there is an absence of an entry
in the Secretary's records of wages having been paid by such
employer to such individual in such period;
(I) to enter items which constitute remuneration for employ-
ment under subsection (o), such entries to be in accordance with
certified reports of records made by the Railroad Retirement
Board pursuant to section 5(k) (3) of the Railroad Retirement
Act of 1937; or
(J) to include self-employment income for any taxable year,
up to, but not in excess of, the amount of wages deleted by the
Secretary as payments erroneously included in such records as
wages paid to such individual, if such income (or net earnings
from self-employment), not already included in such records as
self-employment income, is included in a return or statement (re-
ferred to in subparagraph (F)) filed before the expiration of the
time limitation following the taxable year in which such deletion
of wages is made.
(6) Written notice of any deletion or reduction under paragraph
(4) or (5) shall be given to the individual whose record is involved or
to his survivor, except that (A) in the case of a deletion or reduction
with respect to any entry of wages such notice shall be given to such
individual only if he has previously been notified by the Secretary of
the amount of his wages for the period involved, and (B) such notice
shall be given to such survivor only if he or the individual whose
record is involved has previously been notified by the Secretary of the
amount of such individual's wages and self-employment income for
the period involved.
(7) Upon request in writing (within such period, after any change
or refusal of a request for a change of his records pursuant to this
subsection, as the Secretary may prescribe), opportunity for hearing
with respect to such change or refusal shall be afforded to any individ-
ual named therein, or by registered mail or by certified mail the
Secretary shall make findings of fact and a decision based upon the
evidence adduced at such hearing and shall include any omitted items,
or change or delete any entry, in his records as may be required by such
findings and decision.
(8) Decisions of the Secretary under this subsection shall be review-
able by commencing a civil action in the United States district court
as provided in subsection (g).
(d) For the purpose of any hearing, investigation, or other pro-
ceeding authorized or directed under this title, or relative to any
other matter within his jurisdiction hereunder, the Secretary shall
have power to issue subpenas requiring the attendance and testimony
C
Sec. 205(d)
84
of witnesses and the production of any evidence that relates to any
matter under investigation or in question before the Secretary. Such
attendance of witnesses and production of evidence at the designated
place of such hearing, investigation, or other proceeding may be re-
quired from any place in the United States or in any Territory or
possession thereof. Subpenas of the Secretary shall be served by any-
one authorized by him (1) by delivering a copy thereof to the individ-
ual named therein, or (2) by registered mail or by certified mail ad-
dressed to such individual at his last dwelling place or principal place
of business. A verified return by the individual so serving the subpena
setting forth the manner of service, or, in the case of service by reg-
istered mail or by certified mail, the return post-office receipt therefor
signed by the individual so served, shall be proof of service. Witnesses
so subpenaed shall be paid the same fees and mileage as are paid wit-
nesses in the district courts of the United States.
-
(e) In case of contumacy by, or refusal to obey a subpena duly
served upon, any person, any district court of the United States for the
judicial district in which said person charged with contumacy or re-
fusal to obey is found or resides or transacts business, upon application
by the Secretary, shall have jurisdiction to issue an order requiring
such person to appear and give testimony, or to appear and produce
evidence, or both; any failure to obey such order of the court may be
punished by said court as contempt thereof.
(f) [Repealed.]
(g) Any individual, after any final decision of the Secretary made
after a hearing to which he was a party, irrespective of the amount
in controversy, may obtain a review of such decision by a civil action
commenced within sixty days after the mailing to him of notice of
such decision or within such further time as the Secretary may allow.
Such action shall be brought in the district court of the United States
for the judicial district in which the plaintiff resides, or has his princi-
pal place of business, or, if he does not reside or have his principal
place of business within any such judicial district, in the District Court
of the United States for the District of Columbia. As part of his an-
swer the Secretary shall file a certified copy of the transcript of the
record including the evidence upon which the findings and decision
complained of are based. The court shall have power to enter, upon
the pleadings and transcript of the record, a judgment affirming, modi-
fying, or reversing the decision of the Secretary, with or without
remanding the case for a rehearing. The findings of the Secretary as
to any fact, if supported by substantial evidence, shall be conclusive,
and where a claim has been denied by the Secretary or a decision is
rendered under subsection (b) hereof which is adverse to an individual
who was a party to the hearing before the Secretary, because of failure
85
Sec. 205 (i)
of the claimant or such individual to submit proof in conformity with
any regulation prescribed under subsection (a) hereof, the court shall
review only the question of conformity with such regulations and the
validity of such regulations. The court shall, on motion of the Secre-
tary made before he files his answer, remand the case to the Secretary
for further action by the Secretary, and may, at any time, on good
cause shown, order additional evidence to be taken before the Secre-
tary, and the Secretary shall, after the case is remanded, and after
hearing such additional evidence if so ordered, modify or affirm his
findings of fact or his decision, or both, and shall file with the court.
any such additional and modified findings of fact and decision, and
a transcript of the additional record and testimony upon which his ac-
tion in modifying or affirming was based. Such additional or modified
findings of fact and decision shall be reviewable only to the extent
provided for review of the original findings of fact and decision. The
judgment of the court shall be final except that it shall be subject to
review in the same manner as a judgment in other civil actions. Any
action instituted in accordance with this subsection shall survive not-
withstanding any change in the person occupying the office of Secre-
tary or any vacancy in such office.
(h) The findings and decision of the Secretary after a hearing shall
be binding upon all individuals who were parties to such hearing. No
findings of fact or decision of the Secretary shall be reviewed by any
person, tribunal, or governmental agency except as herein provided.
No action against the United States, the Secretary, or any officer or
employee threof shall be brought under Section 24 of the Judicial
Code of the United States to recover on any claim arising under this
title.
(i) Upon final decision of the Secretary, or upon final judgment of
any court of competent jurisdiction, that any person is entitled to any
payment or payments under this title, the Secretary shall certify to
the Managing Trustee the name and address of the person so entitled
to receive such payment or payments, the amount of such payment or
payments, and the time at which such payment or payments should
be made, and the Managing Trustee, through the Fiscal Service of the
Treasury Department, and prior to any action thereon by the General
Accounting Office, shall make payment in accordance with the certifi-
cation of the Secretary (except that in the case of (A) an individual
who will have completed ten years of service creditable under the Rail-
road Retirement Act of 1937 or the Railroad Retirement Act of 1974,
(B) the wife or husband of such an individual, (C) any survivor of
such an individual if such survivor is entitled, or could upon applica-
tion become entitled, to an annuity under section 2 of the Railroad
Retirement Act of 1974, and (D) any other person entitled to benefits
Sec. 205(i)
86
+
under section 202 of this Act on the basis of the wages and self-employ
ment income of such an individual (except a survivor of such an indi
vidual where such individual did not have a current connection with
the railroad industry, as defined in the Railroad Retirement Act of
1974, at the time of his death), such certification shall be made to the
Railroad Retirement Board which shall provide for such payment or
payments to such person on behalf of the Managing Trustee in accord-
ance with the provisions of the Railroad Retirement Act of 1974):
Provided, That where a review of the Secretary's decision is or may
be sought under subsection (g) the Secretary may withhold certifica-
tion of payment pending such review. The Managing Trustee shall
not be held personally liable for any payment or payments made in
accordance with a certification by the Secretary.
(j) When it appears to the Secretary that the interest of an appli-
cant entitled to a payment would be served thereby, certification of
payment may be made, regardless of the legal competency or incompe-
tency of the individual entitled thereto, either for direct payment to
such applicant, or for his use and benefit to a relative or some other
person.
(k) Any payment made after December 31, 1939, under conditions
set forth in subsection (j), any payment made before January 1, 1940,
to, or on behalf of, a legally incompetent individual, and any payment
made after December 31, 1939, to a legally incompetent individual
without knowledge by the Secretary of incompetency prior to certifi-
cation of payment, if otherwise valid under this title, shall be a com-
plete settlement and satisfaction of any claim, right, or interest in and
to such payment.
(1) The Secretary is authorized to delegate to any member, officer,
or employee of the Department of Health, Education, and Welfare
designated by him any of the powers conferred upon him by this sec-
tion, and is authorized to be represented by his own attorneys in any
court in any case or proceeding arising under the provisions of sub-
section (e).
(m) [Repealed.]
(n) The Secretary may, in his discretion, certify to the Managing
Trustee any two or more individuals of the same family for joint pay-
ment of the total benefits payable to such individuals for any month,
and if one of such individuals dies before a check representing such
joint payment is negotiated, payment of the amount of such unnegoti-
ated check to the surviving individual or individuals may be author-
ized in accordance with regulations of the Secretary of the Treasury;
except that appropriate adjustment or recovery shall be made under
section 204 (a) with respect to so much of the amount of such check as
Revised April 1978
87
Sec. 205(p)
exceeds the amount to which such surviving individual or individuals
are entitled under this title for such month.
Crediting of Compensation Under the Railroad Retirement Act
(0) If there is no person who would be entitled, upon application
therefor, to an annuity under section 2 of the Railroad Retirement Act
of 1974, or to a lump-sum payment under section 6(b) of such Act
with respect to the death of an employee (as defined in such Act),
then, notwithstanding section 210(a)(9) of this Act, compensation
(as defined in such Railroad Retirement Act, but excluding com-
pensation attributable as having been paid during any month on
account of military service creditable under section 3 (i) of such Act
if wages are deemed to have been paid to such employee during such
month under subsection (a) or (e) of section 217 of this Act) of such
employee shall constitute remuneration for employment for purposes
of determining (A) entitlement to and the amount of any lump-sum
death payment under this title on the basis of such employee's wages
and self-employment income and (B) entitlement to and the amount
of any monthly benefit under this title, for the month in which such
employee died or for any month thereafter, on the basis of such wages
and self-employment income. For such purposes, compensation (as so
defined) paid in a calendar year before 1978 shall, in the absence of evi-
dence to the contrary, be presumed to have been paid in equal propor-
tions with respect to all months in the year in which the employee
rendered services for such compensation.¹
Special Rules in Case of Federal Service
(p) (1) With respect to service included as employment under sec-
tion 210 which is performed in the employ of the United States or in
the employ of any instrumentality which is wholly owned by the
United States, including service, performed as a member of a uni-
formed service, to which the provisions of subsection (1)(1) of such
section are applicable, and including service, performed as a volunteer
or volunteer leader within the meaning of the Peace Corps Act, to
which the provisions of section 210(o) are applicable, the Secretary
shall not make determinations as to whether an individual has per-
formed such service, the periods of such service, the amounts of re-
muneration for such service which constitute wages under the provi-
sions of section 209, or the periods in which or for which such wages
were paid, but shall accept the determinations with respect thereto of
the head of the appropriate Federal agency or instrumentality, and
of such agents as such head may designate, as evidenced by returns
filed in accordance with the provisions of section 3122 of the Internal
¹ Subsection (o) was amended by sec. 353(f) (2) (C) of Public Law 95-216.
Sec. 205(p)
88
Revenue Code of 1954 and certifications made pursuant to this sub-
section. Such determinations shall be final and conclusive.
(2) The head of any such agency or instrumentality is authorized
and directed, upon written request of the Secretary, to make certifica-
tion to him with respect to any matter determinable for the Secretary
by such head or his agents under this subsection, which the Secretary
finds necessary in administering this title.
(3) The provisions of paragraphs (1) and (2) shall be applicable in
the case of service performed by a civilian employee, not compensated
from funds appropriated by the Congress, in the Army and Air Force
Exchange Service, Army and Air Force Motion Picture Service, Navy
Exchanges, Marine Corps Exchanges, or other activities, conducted by
an instrumentality of the United States subject to the jurisdiction of
the Secretary of Defense, at installations of the Department of Defense
for the comfort, pleasure, contentment, and mental and physical im-
provement of personnel of such Department; and for purposes of
paragraphs (1) and (2) the Secretary of Defense shall be deemed to
be the head of such instrumentality. The provisions of paragraphs
(1) and (2) shall be applicable also in the case of service performed
by a civilian employee, not compensated from funds appropriated by
the Congress, in the Coast Guard Exchanges or other activities, con-
ducted by an instrumentality of the United States subject to the juris-
diction of the Secretary of the Treasury, at installations of the Coast
Guard for the comfort, pleasure, contentment, and mental and physical
improvement of personnel of the Coast Guard; and for purposes of
paragraphs (1) and (2) the Secretary of the Treasury shall be deemed
to be the head of such instrumentality.
Expedited Benefit Payments
(q) (1) The Secretary shall establish and put into effect procedures
under which expedited payment of monthly insurance benefits under
this title will, subject to paragraph (4) of this subsection, be made as
set forth in paragraphs (2) and (3) of this subsection.
(2) In any case in which-
(A) an individual makes an allegation that a monthly benefit
under this title was due him in a particular month but was not
paid to him, and
(B) such individual submits a written request for the payment
of such benefit-
(i) in the case of an individual who received a regular
monthly benefit in the month preceding the month with re-
spect to which such allegation is made, not less than 30 days
after the 15th day of the month with respect to which such
allegation is made (and in the event that such request is sub-
mitted prior to the expiration of such 30-day period, it shall
89
Sec. 206(a)
be deemed to have been submitted upon the expiration of
such period), and
(ii) in any other case, not less than 90 days after the later
of (I) the date on which such benefit is alleged to have been
due, or (II) the date on which such individual furnished the
last information requested by the Secretary (and such written
request will be deemed to be filed on the day on which it was
filed, or the ninetieth day after the first day on which the
Secretary has evidence that such allegation is true, which-
ever is later),
the Secretary shall, if he finds that benefits are due, certify such
benefits for payment, and payment shall be made within 15 days
immediately following the date on which the written request is
deemed to have been filed.
(3) In any case in which the Secretary determines that there is
evidence, although additional evidence might be required for a final
decision, that an allegation described in paragraph (2) (A) is true, he
may make a preliminary certification of such benefit for payment even
though the 30-day or 90-day periods described in paragraph (2) (B)
(i) and (B) (ii) have not elapsed.
(4) Any payment made pursuant to a certification under paragraph
(3) of this subsection shall not be considered an incorrect payment for
purposes of determining the liability of the certifying or disbursing
officer.
(5) For purposes of this subsection, benefits payable under section
228 shall be treated as monthly insurance benefits payable under this
title. However, this subsection shall not apply with respect to any
benefit for which a check has been negotiated, or with respect to any
benefit alleged to be due under either section 223, or section 202 to a
wife, husband, or child of an individual entitled to or applying for
benefits under section 223, or to a child who has attained age 18 and
is under a disability, or to a widow or widower on the basis of being
under a disability.
Representation of Claimants
Sec. 206. (a) The Secretary may prescribe rules and regulations
governing the recognition of agents or other persons, other than at-
torneys as hereinafter provided, representing claimants before the
Secretary, and may require of such agents or other persons, before
being recognized as representatives of claimants that they shall show
that they are of good character and in good repute, possessed of the
necessary qualifications to enable them to render such claimants valu-
able service, and otherwise competent to advise and assist such claim-
ants in the presentation of their cases. An attorney in good standing
W
Sec. 206(a)
90
who is admitted to practice before the highest court of the State, Terri-
tory, District, or insular possession of his residence or before the Su-
preme Court of the United States or the inferior Federal courts, shall
be entitled to represent claimants before the Secretary. The Secretary
may, after due notice and opportunity for hearing, suspend or pro-
hibit from further practice before him any such person, agent, or
attorney who refuses to comply with the Secretary's rules and regula-
tions or who violates any provision of this section for which a penalty
is prescribed. The Secretary may, by rule and regulation, prescribe
the maximum fees which may be charged for services performed in
connection with any claim before the Secretary under this title, and
any agreement in violation of such rules and regulations shall be
void. Whenever the Secretary, in any claim before him for benefits
under this title, makes a determination favorable to the claimant, he
shall, if the claimant was represented by an attorney in connection
with such claim, fix (in accordance with the regulations prescribed
pursuant to the preceding sentence) a reasonable fee to compensate
such attorney for the services performed by him in connection with
such claim. If, as a result of such determination, such claimant is en-
titled to past-due benefits under this title, the Secretary shall, notwith-
standing section 205 (i), certify for payment (out of such past-due
benefits) to such attorney an amount equal to whichever of the follow-
ing is the smaller: (A) 25 per centum of the total amount of such past-
due benefits, (B) the amount of the attorney's fee so fixed, or (C) the
amount agreed upon between the claimant and such attorney as the fee
for such attorney's services. Any person who shall, with intent to de-
fraud, in any manner willfully and knowingly deceive, mislead, or
threaten any claimant or prospective claimant or beneficiary under
this title by word, circular, letter, or advertisement, or who shall
knowingly charge or collect directly or indirectly any fee in excess of
the maximum fee, or make any agreement directly or indirectly to
charge or collect any fee in excess of the maximum fee, prescribed by
the Secretary shall be deemed guilty of a misdemeanor and, upon con-
viction thereof, shall for each offense be punished by a fine not exceed-
ing $500 or by imprisonment not exceeding one year, or both.
(b) (1) Whenever a court renders a judgment favorable to a claim-
ant under this title who was represented before the court by an at-
torney, the court may determine and allow as part of its judgment a
reasonable fee for such representation, not in excess of 25 percent of
the total of the past-due benefits to which the claimant is entitled by
reason of such judgment, and the Secretary may, notwithstanding the
provisions of section 205 (i), certify the amount of such fee for pay-
ment to such attorney out of, and not in addition to, the amount of
such past-due benefits. In case of any such judgment, no other fee may
91
Sec. 208 (c)
be payable or certified for payment for such representation except as
provided in this paragraph.
A
(2) Any attorney who charges, demands, receives, or collects for
services rendered in connection with proceedings before a court to
which paragraph (1) is applicable any amount in excess of that al-
lowed by the court thereunder shall be guilty of a misdemeanor and
upon conviction thereof shall be subject to a fine of not more than
$500, or imprisonment for not more than one year, or both.
Assignment
Sec. 207. The right of any person to any future payment under this
title shall not be transferable or assignable, at law or in equity, and
none of the moneys paid or payable or rights existing under this title
shall be subject to execution, levy, attachment, garnishment, or other
legal process, or to the operation of any bankruptcy or insolvency law.
Penalties
Sec. 208. Whoever-
(a) for the purpose of causing an increase in any payment author-
ized to be made under this title, or for the purpose of causing any
payment to be made where no payment is authorized under this title,
shall make or cause to be made any false statement or representation
(including any false statement or representation in connection with
any matter arising under subchapter E of chapter 1, or subchapter A
or E of chapter 9 of the Internal Revenue Code of 1939, or chapter 2
or 21 or subtitle F of the Internal Revenue Code of 1954) as to-
(1) whether wages were paid or received for employment (as
said terms are defined in this title and the Internal Revenue
Code), or the amount of wages or the period during which paid
or the person to whom paid; or
(2) whether net earnings from self-employment (as such term
is defined in this title and in the Internal Revenue Code) were
derived, or as to the amount of such net earnings or the period
during which or the person by whom derived; or
(3) whether a person entitled to benefits under this title had
earnings in or for a particular period (as determined under sec-
tion 203(f) of this title for purposes of deductions from benefits),
or as to the amount thereof; or
(b) makes or causes to be made any false statement or representa-
tion of a material fact in any application for any payment or for a
disability determination under this title; or
(c) at any time makes or causes to be inade any false statement or
representation of a material fact for use in determining rights to pay-
ment under this title; or
Sec. 208(d)
92
(d) having knowledge of the occurrence of any event affecting (1)
his initial or continued right to any payment under this title, or (2)
the initial or continued right to any payment of any other individual
in whose behalf he has applied for or is receiving such payment, con-
ceals or fails to disclose such event with an intent fraudulently to
secure payment either in a greater amount than is due or when no
payment is authorized; or
(e) having made application to receive payment under this title for
the use and benefit of another and having received such a payment,
knowingly and willfully converts such a payment, or any part there-
of, to a use other than for the use and benefit of such other person,
shall be guilty of a misdemeanor and upon conviction thereof shall
be fined not more than $1,000 or imprisoned for not more than one
year, or both, or
(f) willfully, knowingly, and with intent to deceive the Secretary
as to his true identity (or the true identity of any other person) fur-
nishes or causes to be furnished false information to the Secretary
with respect to any information required by the Secretary in connec-
tion with the establishment and maintenance of the records provided
for in section 205 (c) (2); or
(g) for the purpose of causing an increase in any payment author-
ized under this title (or any other program financed in whole or in
part from Federal funds), or for the purpose of causing a payment
under this title (or any such other program) to be made when no pay-
ment is authorized thereunder, or for the purpose of obtaining (for
himself or any other person) any payment or any other benefit to
which he (or such other person) is not entitled, or for any other
purpose-
(1) willfully, knowingly, and with intent to deceive, uses a
social security account number, assigned by the Secretary (in the
exercise of his authority under section 205 (c) (2) to establish and
maintain records) on the basis of false information furnished to
the Secretary by him or by any other person; or
(2) with intent to deceive, falsely represents a number to be
the social security account number assigned by the Secretary to
him or to another person, when in fact such number is not the
social security account number assigned by the Secretary to him
or to such other person; or ¹1
(h) discloses, uses, or compels the disclosure of the social secu-
rity number of any person in violation of the laws of the United
States; 2
shall be guilty of a misdemeanor and upon conviction thereof shall
be fined not more than $1,000 or imprisoned for not more than one
year, or both.
1 Subsection (g) was amended by sections 1211(a) and (d) (2) of P.L. 94-455.
* Subsection (h) was added by section 1211(d) (1) of P.L. 94-455.
93
Sec. 209(a)
Definition of Wages
Sec. 209. For the purposes of this title, the term "wages" means
remuneration paid prior to 1951 which was wages for the purposes
of this title under the law applicable to the payment of such remunera-
tion, and remuneration paid after 1950 for employment, including
the cash value of all remuneration paid in any medium other than
cash; except that, in the case of remuneration paid after 1950, such
term shall not include—
(a) (1) That part of remuneration which, after remuneration (other
than remuneration referred to in the succeeding subsections of this
section) equal to $3,600 with respect to employment has been paid
to an individual during any calendar year prior to 1955, is paid
to such individual during such calendar year;
(2) That part of remuneration which, after remuneration (other
than remuneration referred to in the succeeding subsections of this
section) equal to $4,200 with respect to employment has been paid
to an individual during any calendar year after 1954 and prior to
1959, is paid to such individual during such calendar year;
(3) That part of remuneration which, after remuneration (other
than remuneration referred to in the succeeding subsection of this
section) equal to $4,800 with respect to employment has been paid to
an individual during any calendar year after 1958 and prior to 1966,
is paid to such individual during such calendar year;
(4) That part of remuneration which, after remuneration (other
than remuneration referred to in the succeeding subsections of this
section) equal to $6,600 with respect to employment has been paid to
an individual during any calendar year after 1965 and prior to 1968,
is paid to such individual during such calendar year;
(5) That part of remuneration which, after remuneration (other
than remuneration referred to in the succeeding subsections of this
section) equal to $7,800 with respect to employment has been paid to
an individual during any calendar year after 1967 and prior to 1972,
is paid to such individual during such calendar year;
21-746 O - 78 - 8
(6) That part of remuneration which, after remuneration (other
than remuneration referred to in the succeeding subsections of this
section) equal to $9,000 with respect to employment has been paid to
an individual during any calendar year after 1971 and prior to 1973
is paid to such individual during such calendar year;
(7) That part of remuneration which, after remuneration (other
than remuneration referred to in the succeeding subsections of this
section) equal to $10,800 with respect to employment has been paid to
an individual during any calendar year after 1972 and prior to 1974,
is paid to such individual during such calendar year;
Sec. 209(a)
94
Revised April 1978
(8) That part of remuneration which, after remuneration (other
than remuneration referred to in the succeeding subsections of this
section) equal to $13,200 with respect to employment has been paid
to an individual during any calendar year after 1973 and prior to
1975, is paid to such individual during such calendar year;
(9) That part of remuneration which, after remuneration (other
than remuneration referred to in the succeeding subsections of this
section) equal to the contribution and benefit base (determined under
section 230)¹ with respect to employment has been paid to an indi-
vidual during any calendar year after 1974 with respect to which
such contribution and benefit base is effective, is paid to such individual
during such calendar year;
(b) The amount of any payment (including any amount paid by an
employer for insurance or annuities, or into a fund, to provide for
any such payment) made to, or on behalf of, an employee or any of
his dependents under a plan or system established by an employer
which makes provision for his employees generally (or for his em-
ployees generally and their dependents) or for a class or classes of
his employees (or for a class or classes of his employees and their
dependents), on account of (1) retirement, or (2) sickness or accident
disability, or (3) medical or hospitalization expenses in connection
with sickness or accident disability, or (4) death;
(c) Any payment made to an employee (including any amount paid
by an employer for insurance or annuities, or into a fund, to provide
for any such payment) on account of retirement;
(d) Any payment on account of sickness or accident disability, or
medical or hospitalization expenses in connection with sickness or
accident disability, made by an employer to, or on behalf of, an em-
ployee after the expiration of six calendar months following the last
calendar month in which the employee worked for such employer;
(e) Any payment made to, or on behalf of an employee or his bene-
ficiary (1) from or to a trust exempt from tax under section 165 (a) of
the Internal Revenue Code of 1939 at the time of such payment or, in
the case of a payment after 1954, under sections 401 and 501(a) of
the Internal Revenue Code of 1954, unless such payment is made to an
employee of the trust as remuneration for services rendered as such
employee and not as a beneficiary of the trust, or (2) under or to an
annuity plan which, at the time of such payment, meets the require-
ments of section 165 (a) (3), (4), (5), and (6) of the Internal Revenue
Code of 1939, or, in the case of a payment after 1954 and prior to 1963,
the requirements of section 401 (a) (3), (4), (5), and (6) of the Inter-
nal Revenue Code of 1954, or (3) under or to an annuity plan which,
1 See Appendix B.
Revised April 1978
95
Sec. 209(i)
at the time of any such payment after 1962, is a plan described in sec-
tion 403 (a) of the Internal Revenue Code of 1954, or (4) under or to
a bond purchase plan which, at the time of any such payment after
1962, is a qualified bond purchase plan described in section 405 (a) of
the Internal Revenue Code of 1954;
(f) The payment by an employer (without deduction from the re-
muneration of the employee) (1) of the tax imposed upon an employee
under section 1400 of the Internal Revenue Code of 1939, or in the case
of a payment after 1954 under section 3101 of the Internal Revenue
Code of 1954, or (2) of any payment required from an employee
under a State unemployment compensation law;
(g) (1) Remuneration paid in any medium other than cash to an
employee for service not in the course of the employer's trade or busi-
ness or for domestic service in a private home of the employer;
(2) Cash remuneration paid by an employer in any calendar quar-
ter to an employee for domestic service in a private home of the em-
ployer, if the cash remuneration paid in such quarter by the employer
to the employee for such service is less than $50. As used in this para-
graph, the term "domestic service in a private home of the employer”
does not include service described in section 210(f) (5);
P
(3) Cash remuneration paid by an employer in any calendar year
to an employee for service not in the course of the employer's trade
or business, if the cash remuneration paid in such year by the em-
ployer to the employee for such service is less than $100. As used in this
paragraph, the term "service not in the course of the employer's trade
or business" does not include domestic service in a private home of
the employer and does not include service described in section
210 (f) (5); 1
(h) (1) Remuneration paid in any medium other than cash for agri-
cultural labor;
(2) Cash remuneration paid by an employer in any calendar year
to an employee for agricultural labor unless (A) the cash remunera-
tion paid in such year by the employer to the employee for such labor
is $150 or more, or (B) the employee performs agricultural labor for
the employer on twenty days or more during such year for cash
remuneration computed on a time basis;
(i) Any payment (other than vacation or sick pay) made to an em-
ployee after the month in which he attains age 62 if he did not work
for the employer in the period for which such payment is made. As
used in this subsection, the term "sick pay" includes remuneration for
service in the employ of a State, a political subdivision (as defined in
section 218(b) (2)) of a State, or an instrumentality of two or more
¹ Paragraph (3) was amended by sec. 353(a) (1) and (2) of Public Law 95-216.
<
Sec. 209(i)
96
Revised April 1978
States, paid to an employee thereof for a period during which he was
absent from work because of sickness;
(j) Remuneration paid by an employer in any year to an em-
ployee for service described in section 210(j) (3) (C) (relating to home
workers), if the cash remuneration paid in such year by the employer
to the employee for such service is less than $100;
(k) Remuneration paid to or on behalf of an employee if (and to
the extent that) at the time of the payment of such remuneration it is
reasonable to believe that a corresponding deduction is allowable under
section 217 of the Internal Revenue Code of 1954;
(1) (1) Tips paid in any medium other than cash;
(2) Cash tips received by an employee in any calendar month in the
course of his employment by an employer unless the amount of such
cash tips is $20 or more;
(m) Any payment or series of payments by an employer to an
employee or any of his dependents which is paid-
(1) upon or after the termination of an employee's employ-
ment relationship because of (A) death, (B) retirement for dis-
ability, or (C) retirement after attaining an age specified in the
plan referred to in paragraph (2) or in a pension plan of the
employer, and
(2) under a plan established by the employer which makes
provision for his employees generally or a class or classes of his
employees (or for such employees or class or classes of employees
and their dependents),
1
other than any such payment or series of payments which would have
been paid if the employee's employment relationship had not been
so terminated;
(n) Any payment made by an employer to a survivor or the estate
of a former employee after the calendar year in which such employee
died;
(0) Any payment made by an employer to an employee, if at the
time such payment is made such employee is entitled to disability in-
surance benefits under section 223 (a) and such entitlement commenced
prior to the calendar year in which such payment is made, and if such
employee did not perform any services for such employer during the
period for which such payment is made; or
(p) Remuneration paid by an organization exempt from income
tax under section 501 of the Internal Revenue Code of 1954 in any
calendar year to an employee for service rendered in the employ of
such organization, if the remuneration paid in such year by the orga-
nization to the employee for such service is less than $100.²
1 Subsection (j) was amended by sec. 351(a)(1) and (2) of Public Law 95–216.
* Subsection (p) was added by sec. 351(a) (3) (A) of Public Law 95-216.
Revised April 1978
Sec. 209(p)
96-A
For purposes of this title, in the case of domestic service described in
subsection (g) (2), any payment of cash remuneration for such service
which is more or less than a whole-dollar amount shall, under such
conditions and to such extent as may be prescribed by regulations made
under this title, be computed to the nearest dollar. For the purpose of
•
1
97
Sec. 209 (p)
the computation to the nearest dollar, the payment of a fractional part
of a dollar shall be disregarded unless it amounts to one-half dollar or
more, in which case it shall be increased to $1. The amount of any pay-
ment of cash remuneration so computed to the nearest dollar shall, in
lieu of the amount actually paid, be deemed to constitute the amount.
of cash remuneration for purposes of subsection (g) (2).
For purposes of this title, in the case of an individual performing
service, as a member of a uniformed service, to which the provisions
of section 210(1) (1) are applicable, the term "wages" shall, subject to
the provisions of subsection (a) of this section, include as such individ-
ual's remuneration for such service only his basic pay as described in
section 102 (10) of the Servicemen's and Veterans' Survivor Benefits
Act.
For purposes of this title, in the case of an individual performing
service, as a volunteer or volunteer leader within the meaning of the
Peace Corps Act, to which the provisions of section 210(o) are appli-
cable, (1) the term "wages" shall, subject to the provisions of subsec-
tion (a) of this section, include as such individual's remuneration for
such service only amounts certified as payable pursuant to section 5 (c)
or 6(1) of the Peace Corps Act, and (2) any such amount shall be
deemed to have been paid to such individual at the time the service,
with respect to which it is paid, is performed.
For purposes of this title, tips received by an employee in the course
of his employment shall be considered remuneration for employment.
Such remuneration shall be deemed to be paid at the time a written
statement including such tips is furnished to the employer pursuant to
section 6053 (a) of the Internal Revenue Code of 1954 or (if no state-
ment including such tips is so furnished) at the time received.
For purposes of this title, in any case where an individual is a mem-
ber of a religious order (as defined in section 3121 (r) (2) of the Inter-
nal Revenue Code of 1954) performing service in the exercise of duties
required by such order, and an election of coverage under section 3121
(r) of such Code is in effect with respect to such order or with respect
to the autonomous subdivision thereof to which such member belongs,
the term "wages" shall, subject to the provisions of subsection (a) of
this section, include as such individual's remuneration for such service
the fair market value of any board, lodging, clothing, and other per-
quisites furnished to such member by such order or subdivision
thereof or by any other person or organization pursuant to an agree-
ment with such order or subdivision, except that the amount included
as such individual's remuneration under this paragraph shall not be
less than $100 a month.
Sec. 210(a)
98
¡
Definition of Employment
Sec. 210. For the purposes of this title—
Employment
(a) The term "employment" means any service performed after
1936 and prior to 1951 which was employment for the purposes of this
title under the law applicable to the period in which such service was
performed, and any service, of whatever nature, performed after 1950
either (A) by an employee for the person employing him, irrespective
of the citizenship or residence of either, (i) within the United States,
or (ii) on or in connection with an American vessel or American air-
craft under a contract of service which is entered into within the
United States or during the performance of which and while the
employee is employed on the vessel or aircraft it touches at a port in
the United States, if the employee is employed on and in connection
with such vessel or aircraft when outside the United States, or (B)
outside the United States by a citizen of the United States as an
employee (i) of an American employer (as defined in subsection (e)),
or (ii) of a foreign subsidiary (as defined in section 3121 (1) of the
Internal Revenue Code of 1954) of a domestic corporation (as deter-
mined in accordance with section 7701 of the Internal Revenue Code.
of 1954) during any period for which there is in effect an agreement
entered into pursuant to section 3121 (1) of the Internal Revenue Code
of 1954, with respect to such subsidiary; except that, in the case of
service performed after 1950, such term shall not include-
(1) Service performed by foreign agricultural workers (A)
under contracts entered into in accordance with title V of the
Agricultural Act of 1949, as amended, or (B) lawfully admitted
to the United States from the Bahamas, Jamaica, and the other
British West Indies, or from any other foreign country or posses-
sion thereof, on a temporary basis to perform agricultural labor;
(2) Domestic service performed in a local college club, or local
chapter of a college fraternity or sorority, by a student who is
enrolled and is regularly attending classes at a school, college, or
university;
A
(3) (A) Service performed by an individual in the employ of
his spouse, and service performed by a child under the age of
twenty-one in the employ of his father or mother;
(B) Service not in the course of the employer's trade or busi-
ness, or domestic service in a private home of the employer, per-
formed by an individual in the employ of his son or daughter;
except that the provisions of this subparagraph shall not be
applicable to such domestic service if-
99
Sec. 210(a)
(i) the employer is a surviving spouse or a divorced indi-
vidual and has not remarried, or has a spouse living in the
home who has a mental or physical condition which results in
such spouse's being incapable of caring for a son, daughter,
stepson, or stepdaughter (referred to in clause (ii)) for at
least 4 continuous weeks in the calendar quarter in which the
service is rendered, and
(ii) a son, daughter, stepson, or stepdaughter of such em-
ployer is living in the home, and
(iii) the son, daughter, stepson, or stepdaughter (referred
to in clause (ii)) has not attained age 18 or has a mental or
physical condition which requires the personal care and super-
vision of an adult for at least 4 continuous weeks in the cal-
lendar quarter in which the service is rendered;
(4) Service performed by an individual on or in connection
with a vessel not an American vessel, or on or in connection with
an aircraft not an American aircraft, if (A) the individual is
employed on and in connection with such vessel or aircraft when
outside the United States and (B)(i) such individual is not a
citizen of the United States or (ii) the employer is not an Amer-
ican employer;
(5) Service performed in the employ of any instrumentality
of the United States, if such instrumentality is exempt from the
tax imposed by section 3111 of the Internal Revenue Code of
1954 by virtue of any provision of law which specifically refers
to such section in granting such exemption;
(6) (A) Service performed in the employ of the United States
or in the employ of any instrumentality of the United States, if
such service is covered by a retirement system established by a law
of the United States;
(B) Service performed by an individual in the employ of an
instrumentality of the United States if such an instrumentality
was exempt from the tax imposed by section 1410 of the Internal
Revenue Code of 1939 on December 31, 1950, and if such service
is covered by a retirement system established by such instru-
mentality; except that the provisions of this subparagraph shall
not be applicable to-
(i) service performed in the employ of a corporation which
is wholly owned by the United States:
(ii) service performed in the employ of a Federal land
bank, a Federal intermediate credit bank, a bank for cooper-
atives, a Federal land bank association, a production credit
Sec. 210(a)
100
association, a Federal Reserve Bank, a Federal Home Loan
Bank, or a Federal Credit Union;
(iii) service performed in the employ of a State, county,
or community committee under the Production and Market-
ing Administration;
(iv) service performed by a civilian employee, not com-
pensated from funds appropriated by the Congress, in the
Army and Air Force Exchange Service, Army and Air Force
Motion Picture Service, Navy Exchanges, Marine Corps Ex-
changes, or other activities, conducted by an instrumentality
of the United States subject to the jurisdiction of the Secre-
tary of Defense, at installations of the Department of De-
fense for the comfort, pleasure, contentment, and mental and
physical improvement of personnel of such Department; or
(v) service performed by a civilian employee, not compen-
sated from funds appropriated by the Congress, in the Coast
Guard Exchanges or other activities, conducted by an instru-
mentality of the United States subject to the jurisdiction of
the Secretary of the Treasury, at installations of the Coast
Guard for the comfort, pleasure, contentment, and mental
and physical improvement of personnel of the Coast Guard;
(C) Service performed in the employ of the United States or
in the employ of any instrumentality of the United States, if such
service is performed-
(i) as the President or Vice President of the United States
or as a Member, Delegate, or Resident Commissioner of or to
the Congress;
-
(ii) in the legislative branch;
(iii) in a penal institution of the United States by an in-
mate thereof;
(iv) by any individual as an employee included under sec-
tion 5351(2) of title. 5, United States Code (relating to cer-
tain interns, student nurses, and other student employees of
hospitals of the Federal Government), other than as a medi-
cal or dental intern or a medical or dental resident in
training;
(v) by any individual as an employee serving on a tempo-
rary basis in case of fire, storm, earthquake, flood, or other
similar emergency; or
(vi) by any individual to whom subchapter III of chapter
83 of title 5, United States Code, does not apply because such
individual is subject to another retirement system other than
the retirement system of the Tennessee Valley Authority);
101
Sec. 210(a)
(7) Service performed in the employ of a State, or any political
subdivision thereof, or any instrumentality of any one or more of
the foregoing which is wholly owned thereby, except that this
paragraph shall not apply in the case of—
(A) service included under an agreement under section 218,
(B) service which, under subsection (k), constitutes covered
transportation service,
(C) service in the employ of the Government of Guam or the
Government of American Samoa or any political subdivision
thereof, or of any instrumentality of any one or more the fore-
going which is wholly owned thereby, performed by an officer
or employee thereof (including a member of the legislature of
any such Government or political subdivision), and, for purposes
of this title—
(i) any person whose service as such an officer or employee
is not covered by a retirement system established by a law
of the United States shall not, with respect to such service, be
regarded as an officer or employee of the United States or any
agency or instrumentality thereof, and
(ii) the remuneration for service described in clause (i)
(including fees paid to a public official) shall be deemed to
have been paid by the Government of Guam or the Govern-
ment of American Samoa or by a political subdivision thereof
or an instrumentality of any one or more of the foregoing
which is wholly owned thereby, whichever is appropriate,
(D) service performed in the employ of the District of Colum-
bia or any instrumentality which is wholly owned thereby, if
such service is not covered by a retirement system established by
a law of the United States; except that the provisions of this sub-
paragraph shall not be applicable to service performed—
(i) in a hospital or penal institution by a patient or inmate
thereof;
(ii) by any individual as an employee included under sec-
tion 5351 (2) of title 5, United States Code (relating to certain
interns, student nurses, and other student employees of hos-
pitals of the District of Columbia Government), other than
as a medical or dental intern or as a medical or dental resident
in training;
(iii) by any individual as an employee serving on a tem-
porary basis in case of fire, storm, snow, earthquake, flood, or
other similar emergency; or
(iv) by a member of a board, committee, or council of the
Sec. 210(a)
102
District of Columbia, paid on a per diem, meeting, or other
fee basis, or
(E) service performed in the employ of the Government of
Guam (or any instrumentality which is wholly owned by such
Government) by an employee properly classified as a temporary or
intermittent employee, if such service is not covered by a re-
tirement system established by a law of Guam; except that (i)
the provisions of this subparagraph shall not be applicable to
services performed by an elected official or a member of the legis-
lature or in a hospital or penal institution by a patient or inmate
thereof, and (ii) for purposes of this subparagraph, clauses (i)
and (ii) of subparagraph (C) shall apply;
(8) (A) Service performed by a duly ordained, commissioned,
or licensed minister of a church in the exercise of his ministry or
by a member of a religious order in the exercise of duties required
by such order, except that this subparagraph shall not apply to
service performed by a member of such an order in the exercise of
such duties, if an election of coverage under section 3121 (r) of the
Internal Revenue Code of 1954 is in effect with respect to such
order, or with respect to the autonomous subdivision thereof to
which such member belongs;
(B) Service performed in the employ of a religious, charitable,
educational, or other organization described in section 501 (c) (3)
of the Internal Revenue Code of 1954, which is exempt from in-
come tax under section 501(a) of such Code, but this subpara-
graph shall not apply to service performed during the period for
which a certificate, filed pursuant to section 3121(k) of the In-
ternal Revenue Code of 1954, (or deemed to have been so filed
under paragraph(4) or (5) of such section 3121(k)) is in effect
if such service is performed by an employee-
(i) whose signature appears on the list filed (or deemed
to have been filed) by such organization under such section
3121(k),
(ii) who became an employee of such organization after
the calendar quarter in which the certificate (other than a
certificate referred to in clause (iii)) was filed (or deemed to
have been filed), or
(iii) who, after the calendar quarter in which the certifi-
cate was filed (or deemed to have been filed) with respect to
a group described in paragraph (1) (E) of such section 3121
(k), became a member of such group,
Revised April 1978
103
Sec. 210(a)
except that this subparagraph shall apply with respect to serv-
ice performed by an employee as a member of a group described
in such paragraph (1)(E) with respect to which no certificate is
(or is deemed to be) in effect;¹
1
(9) Service performed by an individual as an employee or
employee representative as defined in section 3231 of the Internal
Revenue Code of 1954;
(10) Service performed in the employ of—
(A) a school, college, or university, or
(B) an organization described in section 509 (a) (3) of the
Internal Revenue Code of 1954 if the organization is orga-
nized, and at all times thereafter is operated, exclusively for
the benefit of, to perform the functions of, or to carry out
the purposes of a school, college, or university and is oper-
ated, supervised, or controlled by or in connection with such
school, college, or university, unless it is a school, college, or
university of a State or a political subdivision thereof and
the services in its employ performed by a student referred to
in section 218 (c) (5) are covered under the agreement between
the Secretary of Health, Education, and Welfare and such
State entered into pursuant to section 218;
if such service is performed by a student who is enrolled and regu-
larly attending classes at such school, college, or university;
2
(11) Service performed in the employ of a foreign government
(including service as a consular or other officer or employee or a
nondiplomatic representative);
(12) Service performed in the employ of an instrumentality
wholly owned by a foreign government—
(A) If the service is of a character similar to that per-
formed in foreign countries by employees of the United States
Government or of an instrumentality thereof; and
(B) If the Secretary of State shall certify to the Secre-
tary of the Treasury that the foreign government, with re-
spect to whose instrumentality and employees thereof exemp-
tion is claimed, grants an equivalent exemption with respect
to similar service performed in the foreign country by em-
ployees of the United States Government and of instrumen-
talities thereof;
C
(13) Service performed as a student nurse in the employ of a
hospital or a nurses' training school by an individual who is
enrolled and is regularly attending classes in a nurses' training
school chartered or approved pursuant to State law;
¹ Subparagraph (B) was amended by section 1(a) of P.L. 94–563.
2 Paragraph (10) was amended by sec. 351 (a) (3) (B) of Public Law 95–216.
Sec. 210(a)
104
Revised April 1978
(14) (A) Service performed by an individual under the age of
eighteen in the delivery or distribution of newspapers or shop-
ping news, not including delivery or distribution to any point for
subsequent delivery or distribution;
D
(B) Service performed by an individual in, and at the time of,
the sale of newspapers or magazines to ultimate consumers, under
an arrangement under which the newspapers or magazines are to
be sold by him at a fixed price, his compensation being based on
the retention of the excess of such price over the amount at which
the newspapers or magazines are charged to him, whether or not
he is guaranteed a minimum amount of compensation for such
service, or is entitled to be credited with the unsold newspapers
or magazines turned back;
(15) Service performed in the employ of an international or-
ganization entitled to enjoy privileges, exemptions, and immuni-
ties as an international organization under the International Or-
ganizations Immunities Act (59 Stat. 669);
(16) Service performed by an individual under an arrange-
ment with the owner or tenant of land pursuant to which—
(A) such individual undertakes to produce agricultural or
horticultural commodities (including livestock, bees, poultry,
and fur-bearing animals and wildlife) on such land,
(B) the agricultural or horticultural commodities produced
by such individual, or the proceeds therefrom, are to be di-
vided between such individual and such owner or tenant, and
(C) the amount of such individual's share depends on the
amount of the agricultural or horticultural commodities
produced;
(17) Service in the employ of any organization which is per-
formed (A) in any year during any part of which such orga-
nization is registered, or there is in effect a final order of the Sub-
versive Activities Control Board requiring such organization to
register, under the Internal Security Act of 1950, as amended, as
a Communist-action organization, a Communist-front organiza-
tion, or a Communist-infiltrated organization, and (B) after June
30, 1956;1
(18) Service performed in Guam by a resident of the Republic
of the Philippines while in Guam on a temporary basis as a non-
immigrant alien admitted to Guam pursuant to section 101 (a)
(15) (H)(ii) of the Immigration and Nationality Act (8 U.S.C.
1101(a) (15) (H) (ii));
1 Paragraph (17) was amended by sec. 351(a)(1) of Public Law 95-216.
105
Sec. 210(b)
(19) Service which is performed by a nonresident alien indi-
vidual for the period he is temporarily present in the United
States as a nonimmigrant under subparagraph (F) or (J) of
section 101 (a) (15) of the Immigration and Nationality Act, as
amended, and which is performed to carry out the purpose speci-
fied in subparagraph (F) or (J), as the case may be; or,
(20) Service performed by an individual on a boat engaged in
catching fish or other forms of aquatic animal life under an ar-
rangement with the owner or operator of such boat pursuant to
which—
(A) such individual does not receive any cash remunera-
tion (other than as provided in subparagraph (B)),
(B) such individual receives a share of the boat's (or the
boats' in the case of a fishing operation involving more than
one boat) catch of fish or other forms of aquatic animal life
or a share of the proceeds from the sale of such catch, and
(C) the amount of such individual's share depends on the
amount of the boat's (or boats' in the case of a fishing opera-
tion involving more than one boat) catch of fish or other
forms of aquatic animal life,
but only if the operating crew of such boat (or each boat from
which the individual receives a share in the case of a fishing opera-
tion involving more than one boat) is normally made up of fewer
than 10 individuals.¹
1
Included and Excluded Service
(b) If the services performed during one-half or more of any pay
period by an employee for the person employing him constitute em-
ployment, all the services of such employee for such period shall be
deemed to be employment; but if the services performed during more
than one-half of any such pay period by an employee for the person
employing him do not constitute employment, then none of the serv-
ices of such employee for such period shall be deemed to be employ-
ment. As used in this subsection, the term "pay period" means a period
(of not more than thirty-one consecutive days) for which a payment
of remuneration is ordinarily made to the employee by the person
employing him. This subsection shall not be applicable with respect to
services performed in a pay period by an employee for the person
employing him, where any of such service is expected by paragraph
(9) of subsection (a).
1 Paragraph (20) was added by section 1207 (e) (2) of Public Law 94-455 effective as
specified in section 1207 (f) (4) of that act which is printed in this document on page 783.
Sec. 210(e)
106
American Vessel
(c) The term "American vessel" means any vessel documented or
numbered under the laws of the United States; and includes any ves-
sel which is neither documented or numbered under the laws of the
United States or documented under the laws of any foreign country,
if its crew is employed solely by one or more citizens or residents of
the United States or corporations organized under the laws of the
United States or of any State.
American Aircraft
(d) The term "American aircraft" means an aircraft registered
under the laws of the United States.
American Employer
(e) The term "American employer" means an employer which is
(1) the United States or any instrumentality thereof, (2) a State or
any political subdivision thereof, or any instrumentality of any one or
more of the foregoing, (3) an individual who is a resident of the
United States, (4) a partnership, if two-thirds or more of the partners
are residents of the United States, (5) a trust, if all of the trustees are
residents of the United States, or (6) a corporation organized under
the laws of the United States or of any State.
Agricultural Labor
(f) The term "agricultural labor" includes all service performed-
(1) On a farm, in the employ of any person, in connection with
cultivating the soil, or in connection with raising or harvesting
any agricultural or horticultural commodity, including the rais-
ing, shearing, feeding, caring for, training, and management of
livestock, bees, poultry, and fur-bearing animals and wildlife.
(2) In the employ of the owner or tenant or other operator of a
farm in connection with the operation, management, conserva-
tion, improvement, or maintenance of such farm and its tools and
equipment, or in salvaging timber or clearing land of brush and
other debris left by a hurricane, if the major part of such serv-
ice is performed on a farm.
(3) In connection with the production or harvesting of any
commodity defined as an agricultural commodity in section 15 (g)
of the Agricultural Marketing Act, as amended, or in connection
with the ginning of cotton, or in connection with the operation
or maintenance of ditches, canals, reservoirs, or waterways, not
Revised April 1978
107
Sec. 210(j)
1
1
owned or operated for profit, used exclusively for supplying and
storing water for farming purposes.
(4) (A) In the employ of the operator of a farm in handling,
planting, drying, packing, packaging, processing, freezing, grad-
ing, storing, or delivering to storage or to market or to a carrier
for transportation to market in its unmanufactured state, any
agricultural or horticultural commodity; but only if such operator
produced more than one-half of the commodity with respect to
which such service is performed.
(B) In the employ of a group of operators of farms (other than
a cooperative organization) in the performance of service de-
scribed in subparagraph (A), but only if such operators produced
all of the commodity with respect to which such service is per-
formed. For the purposes of this subparagraph, any unincorpo-
rated group of operators shall be deemed a cooperative organiza-
tion if the number of operators comprising such group is more
than twenty at any time during the calendar year in which such
service is performed.¹
(5) On a farm operated for profit if such service is not in the
course of the employer's trade or business or is domestic service.
in a private home of the employer.
The provisions of subparagraphs (A) and (B) of paragraph (4)
shall not be deemed to be applicable with respect to service performed
in connection with commercial canning or commercial freezing or in
connection with any agricultural or horticultural commodity after its
delivery to a terminal market for distribution for consumption.
Farm
(g) The term "farm" includes stock, dairy, poultry, fruit, fur-bear-
ing animal and truck farms, plantations, ranches, nurseries, ranges,
greenhouses or other similar structures used primarily for the raising
of agricultural or horticultural commodities and orchards.
State
(h) The term "State" includes the District of Columbia, the Com-
monwealth of Puerto Rico, the Virgin Islands, Guam, and American
Samoa.
United States
(i) The term "United States" when used in a geographical sense
means the States, the District of Columbia, the Commonwealth of
Puerto Rico, the Virgin Islands, Guam, and American Samoa.
Employee
(j) The term "employee" means—
21-746 O - 78 - 9
(1) any officer of a corporation; or
¹ Subparagraph (B) was amended by sec. 351(a)(1) of Public Law 95–216.
Sec. 210(j)
108
Revised April 1978
(2) any individual who, under the usual common law rules
applicable in determining the employer-employee relationship,
has the status of an employee; or
(3) any individual (other than an individual who is an em-
ployee under paragraph (1) or (2) of this subsection) who per-
forms services for remuneration for any person-
(A) as an agent-driver or commission-driver engaged in
distributing meat products, vegetable products, fruit prod-
ucts, bakery products, beverages (other than milk), or laun-
dry or drycleaning services, for his principal;
A
(B) as a full-time life insurance salesman;
(C) as a home worker performing work, according to
specifications furnished by the person for whom the services
are performed, on materials or goods furnished by such per-
son which are required to be returned to such person or a
person designated by him; or
(D) as a traveling or city salesman, other than as an agent-
driver or commission-driver, engaged upon a full-time basis.
in the solicitation on behalf of, and the transmission to, his
principal (except for side-line sales activities on behalf of
some other person) of orders from wholesalers, retailers, con-
tractors, or operators of hotels, restaurants, or other similar
establishments for merchandise for resale or supplies for use
in their business operations;
if the contract of service contemplates that substantially all of
such services are to be performed personally by such individual;
except that an individual shall not be included in the term "em-
ployee" under the provisions of this paragraph if such individual
has a substantial investment in facilities used in connection with
the performance of such services (other than in facilities for
transportation), or if the services are in the nature of a single
transaction not part of a continuing relationship with the person
for whom the services are performed.
Covered Transportation Service
(k) (1) Except as provided in paragraph (2), all services per-
formed in the employ of a State or political subdivision in connection
with its operation of a public transportation system shall constitute
covered transportation service if any part of the transportation sys-
tem was acquired from private ownership after 1936 and prior to 1951.
(2) Service performed in the employ of a State or political subdivi-
sion in connection with the operation of its public transportation sys-
tem shall not constitute covered transportation service if-
109
Sec. 210(k)
(A) any part of the transportation system was acquired from
private ownership after 1936 and prior to 1951, and substantially
all service in connection with the operation of the transportation
system is, on December 31, 1950, covered under a general retire-
ment system providing benefits which, by reason of a provision
of the State's constitution dealing specifically with retirement sys-
tems of the State or political subdivisions thereof, cannot be
diminished or impaired; or
(B) no part of the transportation system operated by the State
or political subdivision on December 31, 1950, was acquired from
private ownership after 1936 and prior to 1951;
cxcept that if such State or political subdivision makes an acquisition
after 1950 from private ownership of any part of its transportation
system, then, in the case of any employee who—
(C) became an employee of such State or political subdivision
in connection with and at the time of its acquisition after 1950 of
such part, and
(D) prior to such acquisition rendered service in employment
in connection with the operation of such part of the transporta-
tion system acquired by the State or political subdivision,
the service of such employee in connection with the operation of the
transportation system shall constitute covered transportation service,
commencing with the first day of the third calendar quarter following
the calendar quarter in which the acquisition of such part took place,
unless on such first day such service of such employee is covered by a
general retirement system which does not, with respect to such em-
ployee, contain special provisions applicable only to employees de-
scribed in subparagraph (C).
(3) All service performed in the employ of a State or political sub-
division thereof in connection with its operation of a public trans-
portation system shall constitute covered transportation service if the
transportation system was not operated by the State or political sub-
division prior to 1951 and, at the time of its first acquisition (after
1950) from private ownership of any part of its transportation system,
the State or political subdivision did not have a general retirement
system covering substantially all service performed in connection with
the operation of the transportation system.
(4) For the purposes of this subsection-
(A) The term "general retirement system" means any pension,
annuity, retirement, or similar fund or system established by a
State or by a political subdivision thereof for employees of the
State, political subdivision, or both; but such term shall not in-
Sec. 210(k)
110
clude such a fund or system which covers only service performed
in positions connected with the operation of its public transporta-
tion system.
(B) A transportation system or a part thereof shall be con-
sidered to have been acquired by a State or political subdivision
from private ownership if prior to the acquisition service per-
formed by employees in connection with the operation of the
system or part thereof acquired constituted employment under
this title, and some of such employees become employees of the
State or political subdivision in connection with and at the time
of such acquisition.
(C) The term "political subdivision" includes an instrumen-
tality of (i) a State, (ii) one or more political subdivisions of a
State, or (iii) a State and one or more of its political subdivisions.
Kadaka
Service in the Uniformed Services
(1) (1) Except as provided in paragraph (4), the term "employ-
ment” shall, notwithstanding the provisions of subsection (a) of this
section, include service performed after December 1956 by an individ-
ual as a member of a uniformed service on active duty; but such term
shall not include any such service which is performed while on leave
without pay.
(2) The term “active duty" means "active duty" as described in
section 102 of the Servicemen's and Veterans' Survivor Benefits Act,
except that it shall also include "active duty for training" as described
in such section.
(3) The term "inactive duty training" means "inactive duty train-
ing" as described in such section 102.
(4)(A) Paragraph (1) of this subsection shall not apply in the
case of any service, performed by an individual as a member of a
uniformed service, which is creditable under section 3 (i) of the Rail-
road Retirement Act of 1974. The Railroad Retirement Board shall
notify the Secretary of Health, Education, and Welfare, with respect
to all such service which is so creditable.
(B) In any case where benefits under this title are already payable
on the basis of such individual's wages and self-employment income
at the time such notification (with respect to such individual) is re-
ceived by the Secretary, the Secretary shall certify no further bene-
fits for payment under this title on the basis of such individual's wages.
and self-employment income, or shall recompute the amount of any
further benefits payable on the basis of such wages and self-employ-
ment income, as may be required as a consequence of subparagraph
(A) of this paragraph. No payment of a benefit to any person on the
111
Sec. 210(m)
basis of such individual's wages and self-employment income, cer-
tified by the Secretary prior to the end of the month in which he
receives such notification from the Railroad Retirement Board, shall
be deemed by reason of this subparagraph to have been an erroneous
payment or a payment to which such person was not entitled. The
Secretary shall, as soon as possible after the receipt of such notifica-
tion from the Railroad Retirement Board, advise such Board whether
or not any such benefit will be reduced or terminated by reason of sub-
paragraph (A), and if any such benefit will be so reduced or ter-
minated, specify the first month with respect to which such reduction
or termination will be effective.
Member of a Uniformed Service
(m) The term "member of a uniformed service" means any person
appointed, enlisted, or inducted in a component of the Army, Navy,
Air Force, Marine Corps, or Coast Guard (including a reserve com-
ponent of a uniformed service as defined in section 102 (3) of the Serv-
icemen's and Veterans' Survivor Benefits Act) or in one of those
services without specification of component, or as a commissioned
officer of the Coast and Geodetic Survey or the Regular or Reserve
Corps of the Public Health Service, and any person serving in the
Army or Air Force under call or conscription. The term includes—
(1) a retired member of any of those services;
(2) a member of the Fleet Reserve or Fleet Marine Corps
Reserve;
(3) a cadet at the United States Military Academy, a midship-
man at the United States Naval Academy, and a cadet at the
United States Coast Guard Academy or United States Air Force
Academy;
(4) a member of the Reserve Officers' Training Corps, the
Naval Reserve Officers' Training Corps, or the Air Force Reserve
Officers' Training Corps, when ordered to annual training duty
for fourteen days or more, and while performing authorized
travel to and from that duty; and
(5) any person while en route to or from or at, a place for
final acceptance or for entry upon active duty in the military or
naval service-
(A) who has been provisionally accepted for such duty; or
(B) who, under the Universal Military Training and Serv-
ice Act, has been selected for active military or naval service;
and has been ordered or directed to proceed to such place.
The term does not include a temporary member of the Coast Guard
Reserve.
Sec. 210(n)
112
Crew Leader
(n) The term "crew leader" means an individual who furnishes
individuals to perform agricultural labor for another person, if such
individual pays (either on his own behalf or on behalf of such per-
son) the individuals so furnished by him for the agricultural labor
performed by them and if such individual has not entered into a writ-
ten agreement with such person whereby such individual has been des-
ignated as an employee of such person; and such individuals furnished
by the crew leader to perform agricultural labor for another person
shall be deemed to be the employees of such crew leader. A crew leader
shall, with respect to services performed in furnishing individuals to
perform agricultural labor for another person and service performed
as a member of the crew, be deemed not to be an employee of such
other person.
Peace Corps Volunteer Service
(o) The term “employment" shall, notwithstanding the provisions
of subsection (a), include service performed by an individual as a
volunteer or volunteer leader within the meaning of the Peace Corps
Act.
Self-Employment
Sec. 211. For the purposes of this title
Net Earnings From Self-Employment
(a) The term "net earnings from self-employment" means the gross
income, as computed under Subtitle A of the Internal Revenue Code
of 1954, derived by an individual from any trade or business carried
on by such individual, less the deductions allowed under such subtitle
which are attributable to such trade or business, plus his distribu-
tive share (whether or not distributed) of income or loss described
in section 702 (a) (9) of the Internal Revenue Code of 1954, from any
trade or business carried on by a partnership of which he is a member;
except that in computing such gross income and deductions and such
distributive share of partnership ordinary income or loss—
(1) There shall be excluded rentals from real estate and from
personal property leased with the real estate (including such
rentals paid in crop shares), together with the deductions at-
tributable thereto, unless such rentals are received in the course.
of a trade or business as a real estate dealer; except that the pre-
ceding provisions of this paragraph shall not apply to any income
derived by the owner or tenant of land if (A) such income is
derived under an arrangement, between the owner or tenant and
another individual which provides that such other individual
shall produce agricultural or horticultural commodities (includ-
ing livestock, bees, poultry, and fur-bearing animals and wild-
C
113
Sec. 211(a)
life) on such land, and that there shall be material participation
by the owner or tenant (as determined without regard to any activ-
ities of an agent of such owner or tenant) in the production or the
management of the production of such agricultural or horticul-
tural commodities, and (B) there is material participation by the
owner or tenant (as determined without regard to any activities.
of an agent of such owner or tenant) with respect to any such agri-
cultural or horticultural commodity;
(2) There shall be excluded dividends on any share of stock,
and interest on any bond, debenture, note, or certificate, or other
evidence of indebtedness, issued with interest coupons or in regis-
tered form by any corporation (including one issued by a govern-
ment or political subdivision thereof), unless such dividends and
interest (other than interest described in section 35 of the Internal
Revenue Code of 1954) are received in the course of a trade or
business as a dealer in stocks or securities;
(3) There shall be excluded any gain or loss (A) which is con-
sidered under Subtitle A of the Internal Revenue Code of 1954 as
gain or loss from the sale or exchange of a capital asset, (B) from
the cutting of timber or the disposal of timber, coal, or iron ore, if
section 631 of the Internal Revenue Code of 1954 applies to such
gain or loss, or (C) from the sale, exchange, involuntary conver-
sion, or other disposition of property if such property is neither
(i) stock in trade or other property of a kind which would prop-
erly be includible in inventory if on hand at the close of the tax-
able year, nor (ii) property held primarily for sale to customers
in the ordinary course of the trade or business;
(4) The deduction for net operating losses provided in section.
172 of such Code shall not be allowed;
(5) (A) If any of the income derived from a trade or business
(other than a trade or business carried on by a partnership) is
community income under community property laws applicable to
such income, all of the gross income and deductions attributable
to such trade or business shall be treated as the gross income and
deductions of the husband unless the wife exercises substantially
all of the management and control of such trade or business, in
which case all of such gross income and deductions shall be treated
as the gross income and deductions of the wife;
(B) If any portion of a partner's distributive share of the ordi-
nary net income or loss from a trade or business carried on by a
partnership is community income or loss under the community
property laws applicable to such share, all of such distributive
share shall be included in computing the net earnings from self-
employment of such partner, and no part of such share shall be
-
Sec. 211(a)
114
Revised April 1978
taken into account in computing the net earnings from self-em-
ployment of the spouse of such partner;
(6) A resident of the Commonwealth of Puerto Rico shall com-
pute his net earnings from self-employment in the same manner as
a citizen of the United States but without regard to the provisions.
of section 933 of the Internal Revenue Code of 1954;
(7) An individual who is a duly ordained, commissioned, or
licensed minister of a church or a member of a religious order
shall compute his net earnings from self-employment derived
from the performance of service described in subsection (c) (4)
without regard to section 107 (relating to rental value of par-
sonages), section 119 (relating to meals and lodging furnished
for the convenience of the employer) and section 911 (relating
to earned income from sources without the United States) and
section 931 (relating to income from sources within possessions
of the United States) of the Internal Revenue Code of 1954;
(8) The term "possession of the United States" as used in sec-
tions 931 (relating to income from sources within possessions of
the United States) and 932 (relating to citizens of possessions
of the United States) of the Internal Revenue Code of 1954 shall
be deemed not to include the Virgin Islands, Guam, or American
Samoa;
(9) There shall be excluded amounts received by a partner
pursuant to a written plan of the partnership, which meets such
requirements as are prescribed by the Secretary of the Treasury
or his delegate, and which provides for payments on account of
retirement, on a periodic basis, to partners generally or to a class
or classes of partners, such payments to continue at least until
such partner's death, if-
(A) such partner rendered no services with respect to
any trade or business carried on by such partnership (or its
successors) during the taxable year of such partnership (or
its successors), ending within or with his taxable year, in
which such amounts were received, and
(B) no obligation exists (as of the close of the partner-
ship's taxable year referred to in subparagraph (A)) from
the other partners to such partner except with respect to
retirement payments under such plan, and
(C) such partner's share, if any of the capital of the
partnership has been paid to him in full before the close of
the partnership's taxable year referred to in subparagraph
(A);
(10) In the case of an individual who has been a resident of the
United States during the entire taxable year, the exclusion from
Revised April 1978
115
Sec. 211(a)
gross income provided by section 911 (a) (2) of the Internal Rev-
enue Code of 1954 shall not apply; and
¿
(11) There shall be excluded the distributive share of any item
of income or loss of a limited partner, as such, other than guar-
anteed payments described in section 707 (c) of the Internal
Revenue Code of 1954 to that partner for services actually ren-
dered to or on behalf of the partnership to the extent that those
payments are established to be in the nature of remuneration for
those services.¹
1
If the taxable year of a partner is different from that of the partner-
ship, the distributive share which he is required to include in com-
puting his net earnings from self-employment shall be based upon
the ordinary net income or loss of the partnership for any taxable
year of the partnership (even though beginning prior to 1951) end-
ing within or with his taxable year. In the case of any trade or busi-
ness which is carried on by an individual or by a partnership and in
which, if such trade or business were carried on exclusively by em-
ployees, the major portion of the services would constitute agricul-
tural labor as defined in section 210 (f)-
Hje
(i) in the case of an individual, if the gross income derived by
him from such trade or business is not more than $2,400, the net
earnings from self-employment derived by him from such trade
or business may, at his option, be deemed to be 66% percent of
such gross income; or
(ii) in the case of an individual, if the gross income derived by
him from such trade or business is more than $2,400 and the net
earnings from self-employment derived by him from such trade
or business (computed under this subsection without regard to
this sentence) are less than $1,600, the net earnings from self-
employment derived by him from such trade or business may, at
his option, be deemed to be $1,600; and
(iii) in the case of a member of a partnership, if his distribu-
tive share of the gross income of the partnership derived from
such trade or business (after such gross income has been reduced
by the sum of all payments to which section 707 (c) of the In-
ternal Revenue Code of 1954 applies) is not more than $2,400,
his distributive share of income described in section 702(a) (9) of
such Code derived from such trade or business may, at his option,
be deemed to be an amount equal to 66% percent of his distribu-
tive share of such gross income (after such gross income has been
so reduced); or
(iv) in the case of a member of a partnership, if his distributive
share of the gross income of the partnership derived from such
1 Paragraph (11) was added by sec. 313(a) of Public Law 95-216.
Revised April 1978
115-A
Sec. 211(a)
trade or business (after such gross income has been reduced by
the sum of all payments to which section 707 (c) of the Internal
Revenue Code of 1954 applies) is more than $2,400 and his dis-
tributive share (whether or not distributed) of income described
in section 702(a)(9) of such Code derived from such trade or
business (computed under this subsection without regard to this
sentence) is less than $1,600, his distributive share of income de-
Sec. 211(a)
116
scribed in such section 702(a)(9) derived from such trade or
business may, at his option, be deemed to be $1,600.
For purposes of the preceding sentence, gross income means—
(v) in the case of any such trade or business in which the income
is computed under a cash receipts and disbursements method, the
gross receipts from such trade or business reduced by the cost or
other basis of property which was purchased and sold in carrying
on such trade or business, adjusted (after such reduction) in ac-
cordance with the provisions of paragraphs (1) through (6) and
paragraph (8) of this subsection; and
(vi) in the case of any such trade or business in which the in-
come is computed under an accrual method, the gross income
from such trade or business, adjusted in accordance with the pro-
visions of paragraphs (1) through (6) and paragraph (8) of this
subsection;
and, for purposes of such sentence, if an individual (including a mem-
ber of a partnership) derives gross income from more than one such
trade or business, such gross income (including his distributive share
of the gross income of any partnership derived from any such trade or
business) shall be deemed to have been derived from one trade or
business.
The preceding sentence and clauses (i) through (iv) of the second
preceding sentence shall also apply in the case of any trade or business
(other than a trade or business specified in such second preceding sen-
tence) which is carried on by an individual who is self-employed on a
regular basis as defined in subsection (g), or by a partnership of which
an individual is a member on a regular basis as defined in subsection
(g), but only if such individual's net earnings from self-employment
in the taxable year as determined without regard to this sentence are
less than $1,600 and less than 662 percent of the sum (in such taxable
year) of such individual's gross income derived from all trades or
businesses carried on by him and his distributive share of the income
or loss from all trades or businesses carried on by all of the partnerships
of which he is a member; except that this sentence shall not apply to
more than 5 taxable years in the case of any individual, and in no case
in which an individual elects to determine the amount of his net earn-
ings from self-employment for a taxable year under the provisions of
the two preceding sentences with respect to a trade or business to which
the second preceding sentence applies and with respect to a trade or
business to which this sentence applies shall such net earnings for
such year exceed $1,600.
Self-Employment Income
(b) The term "self-employment income" means the net earnings
from self-employment derived by an individual (other than a non-
Revised April 1978
117
Sec. 211(c)
resident alien individual) during any taxable year beginning after
1950; except that such term shall not include—
(1) That part of the net earnings from self-employment which
is in excess of—
(A) For any taxable year ending prior to 1955, (i) $3,600,
minus (ii) the amount of the wages paid to such individual
during the taxable year; and
(B) For any taxable year ending after 1954 and prior to
1959, (i) $4,200, minus (ii) the amount of the wages paid to
such individual during the taxable year; and
(C) For any taxable year ending after 1958 and prior to
1966, (i) $4,800, minus (ii) the amount of the wages paid to
such individual during the taxable year; and
(D) For any taxable year ending after 1965 and prior to
1968, (i) $6,600, minus (ii) the amount of the wages paid
to such individual during the taxable year; and
(E) For any taxable year ending after 1967 and beginning
prior to 1972, (i) $7,800, minus (ii) the amount of the wages
paid to such individual during the taxable year; and
(F) For any taxable year beginning after 1971 and prior
to 1973, (i) $9,000, minus (ii) the amount of the wages paid
to such individual during the taxable year; and
(G) For any taxable year beginning after 1972 and prior
to 1974, (i) $10,800, minus (ii) the amount of the wages paid
to such individual during the taxable year; and
(H) For any taxable year beginning after 1973 and prior
to 1975, (i) $13,200, minus (ii) the amount of the wages paid
to such individual during the taxable year; and
1
(I) For any taxable year beginning in any calendar year
after 1974, (i) an amount equal to the contribution and bene-
fit base (as determined under section 230) ¹ which is effective
for such calendar year, minus (ii) the amount of the wages
paid to such individual during such taxable year; or
(2) The net earnings from self-employment, if such net earn-
ings for the taxable year are less than $400.
An individual who is not a citizen of the United States but who is
a resident of the Commonwealth of Puerto Rico, the Virgin Islands,
Guam, or American Samoa shall not, for the purposes of this sub-
section, be considered to be a nonresident alien individual.
Trade or Business
(c) The term "trade or business", when used with reference to self-
employment income or net earnings from self-employment, shall have
1 See Appendix B.
Sec. 211(c)
118
the same meaning as when used in section 162 of the Internal Revenue
Code of 1954, except that such term shall not include-
(1) The performance of the functions of a public office, other
than the functions of a public office of a State or a political sub-
division thereof with respect to fees received in any period in
which the functions are performed in a position compensated
solely on a fee basis and in which such functions are not covered
under an agreement entered into by such State and the Secretary
pursuant to section 218; ¹
1
(2) The performance of service by an individual as an em-
ployee other than—
(A) service described in section 210(a) (14) (B) performed
by an individual who has attained the age of eighteen,
(B) service described in section 210 (a) (16),
(C) service described in section 210(a) (11), (12), or (15)
performed in the United States by a citizen of the United
States,
(D) service described in paragraph (4) of this subsection,
(E) service performed by an individual as an employee of
a State or a political subdivision thereof in a position com-
pensated solely on a fee basis with respect to fees received in
any period in which such service is not covered under an
agreement entered into by such State and the Secretary pur-
suant to section 218, and
(F) service described in section 210 (a) (20); 2
(3) The performance of service by an individual as an em-
ployee or employee representative as defined in section 3231 of the
Internal Revenue Code of 1954;
(4) The performance of service by a duly ordained, commis-
sioned, or licensed minister of a church in the exercise of his
ministry or by a member of a religious order in the exercise of
duties required by such order;
(5) The performance of service by an individual in the exer-
cise of his profession as a Christian Science practitioner; or
(6) The performance of service by an individual during the
period for which an exemption under section 1402 (h) of the In-
ternal Revenue Code of 1954 is effective with respect to him.
The provisions of paragraph (4) or (5) shall not apply to service
(other than service performed by a member of a religious order who
1 Sec. 122(c)(2) of the Social Security Amendments of 1967 provides: "Notwith-
standing the provisions of subsections (a) and (b) of this section, any individual who
in 1968 is in a position to which the amendments made by such subsections apply may
make an irrevocable election not to have such amendments apply to the fees he receives
in 1968 and every year thereafter, if on or before the due date of his income tax return
for 1968 (including any extensions thereof) he files with the Secretary of the Treasury
or his delegate, in such manner as the Secretary of the Treasury or his delegate shall
by regulations prescribe, a certificate of election of exemption from such amendments."
2 Clause (F) was added by section 1207 (e) (2) (B) of P.L. 94-455 effective as specified
in section 1207 (f) (4) of that act which is printed in this document on page 783.
119
Sec. 211(g)
*
has taken a vow of poverty as a member of such order) performed
by an individual unless an exemption under section 1402 (e) of the
Internal Revenue Code of 1954 is effective with respect to him.
Partnership and Partner
(d) The term “partnership” and the term "partner" shall have the
same meaning as when used in subchapter K of chapter 1 of the In-
ternal Revenue Code of 1954.
Taxable Year
(e) The term "taxable year" shall have the same meaning as when
used in subtitle A of the Internal Revenue Code of 1954; and the
taxable year of any individual shall be a calendar year unless he has
a different taxable year for the purposes of subtitle A of such Code, in
which case his taxable year for the purposes of this title shall be the
same as his taxable year under such subtitle A.
Partner's Taxable Year Ending as Result of Death
(f) In computing a partner's net earnings from self-employment
for his taxable year which ends as a result of his death (but only if
such taxable year ends within, and not with, the taxable year of the
partnership), there shall be included so much of the deceased partner's
distributive share of the partnership's ordinary income or loss for the
partnership taxable year as is not attributable to an interest in the
partnership during any period beginning on or after the first day of
the first calendar month following the month in which such partner
died. For purposes of this subsection—
(1) in determining the portion of the distributive share which
is attributable to any period specified in the preceding sentence,
the ordinary income or loss of the partnership shall be treated as
having been realized or sustained ratably over the partnership
taxable year; and
(2) the term "deceased partner's distributive share" includes
the share of his estate or of any other person succeeding, by
reason of his death, to rights with respect to his partnership
interests.
Regular Basis
(g) An individual shall be deemed to be self-employed on a regular
basis in a taxable year, or to be a member of a partnership on a regular
basis in such year, if he had net earnings from self-employment, as
defined in the first sentence of subsection (a), of not less than $400 in
at least two of the three consecutive taxable years immediately pre-
ceding such taxable year from trades or businesses carried on by such
individual or such partnership.
Sec. 212(a)
120
Revised April 1978
:
Crediting of Self-Employment Income to Calendar Years
Sec. 212. (a) For the purposes of determining average monthly
wage and quarters of coverage the amount of self-employment income
derived during any taxable year which begins before 1978 shall-
(1) in the case of a taxable year which is a calendar year, be
credited equally to each quarter of such calendar year; and
(2) in the case of any other taxable year, be credited equally
to the calendar quarter in which such taxable year ends and to
each of the next three or fewer preceding quarters any part of
which is in such taxable year.
(b) For the purposes of determining average indexed monthly
earnings, average monthly wage, and quarters of coverage the amount
of self-employment income derived during any taxable year which
begins after 1977 shall-
(1) in the case of a taxable year which is a calendar year or
which begins with or during a calendar year and ends with or
during such year, be credited to such calendar year; and
(2) in the case of any other taxable year, be allocated pro-
portionately to the two calendar years, portions of which are
included within such taxable year, on the basis of the number of
months in each such calendar year which are included completely
within the taxable year.
For purposes of clause (2), the calendar month in which a taxable
year ends shall be treated as included completely within that taxable
year.¹
Quarter and Quarter of Coverage
Definitions
Sec. 213. (a) For the purposes of this title-
(1) The term "quarter", and the term "calendar quarter",
means a period of three calendar months ending on March 31,
June 30, September 30, or December 31.
2
(2) (A) The term "quarters of coverage" means—
(i) for calendar years before 1978, and subject to the provi-
sions of subparagraph (B), a quarter in which an individual has
been paid $50 or more in wages (except wages for agricultural
labor paid after 1954) or for which he has been credited (as
determined under section 212) with $100 or more of self-employ-
ment income; and
(ii) for calendar years after 1977, and subject to the provi-
sions of subparagraph (B), each portion of the total of the
wages paid and the self-employment income credited (pursuant
¹ Sec. 212 was amended by sec. 351(b) of Public Law 95–216.
2 The word "quarters" appears in the law. It apparently should read "quarter".
1
1
ܐ
Revised April 1978
121
Sec. 213(a)
to section 212) to an individual in a calendar year which equals
the amount required for a quarter of coverage in that calendar
year (as determined under subsection (d)), with such quarter
of coverage being assigned to a specific calendar quarter in such
calendar year only if necessary in the case of any individual who
has attained age 62 or died or is under a disability and the re-
quirements for insured status in subsection (a) or (b) of section
214, the requirements for entitlement to a computation or recom-
putation of his primary insurance amount, or the requirements of
paragraph (3) of section 216 (i) would not otherwise be met.
(B) Notwithstanding the provisions of subparagraph (A)—
(i) no quarter after the quarter in which an individual dies
shall be a quarter of coverage, and no quarter any part of which
is included in a period of disability (other than the initial quar-
ter and the last quarter of such period) shall be a quarter of
coverage;
(ii) if the wages paid to an individual in any calendar year
equal to $3,000 in the case of a calendar year before 1951, or
$3,600 in the case of a calendar year after 1950 and before 1955, or
$4,200 in the case of a calendar year after 1954 and before 1959,
or $4,800 in the case of a calendar year after 1958 and before 1966,
or $6,600 in the case of a calendar year after 1965 and before 1968,
or $7,800 in the case of a calendar year after 1967 and before 1972,
or $9,000 in the case of the calendar year 1972, or $10,800 in the
case of the calendar year 1973, or $13,200 in the case of the
calendar year 1974, or an amount equal to the contribution and
benefit base (as determined under section 230) in the case of any
calendar year after 1974 and before 1978 with respect to which
such contribution and benefit base is effective, each quarter of
such year shall (subject to clauses (i) and (v)) be a quarter of
coverage;
(iii) if an individual has self-employment income for a taxable
year, and if the sum of such income and the wages paid to him
during such year equals $3,600 in the case of a taxable year begin-
ning after 1950 and ending before 1955, or $4,200 in the case of a
taxable year ending after 1954 and before 1959, or $4,800 in the
case of a taxable year ending after 1958 and before 1966, or
$6,600 in the case of a taxable year ending after 1965 and before
1968, or $7,800 in the case of a taxable year ending after 1967 and
before 1972, or $9,000 in the case of a taxable year beginning after
1971 and before 1973, or $10,800 in the case of a taxable year be-
ginning after 1972 and before 1974, or $13,200 in the case of a
taxable year beginning after 1973 and before 1975, or an amount
21-746 O - 78
-
10
Sec. 213(a)
122
Revised April 1978
equal to the contribution and benefit base (as determined under
section 230) which is effective for the calendar year in the case of
any taxable year beginning in any calendar year after 1974 and
before 1978, each quarter any part of which falls in such year shall
(subject to clauses (i) and (v)) be a quarter of coverage;
(iv) if an individual is paid wages for agricultural labor in a
calendar year after 1954 and before 1978, then, subject to clauses
(i) and (v), (I) the last quarter of such year which can be but is
not otherwise a quarter of coverage shall be a quarter of coverage
if such wages equal or exceed $100 but are less than $200; (II) the
last two quarters of such year which can be but are not otherwise
quarters of coverage shall be quarters of coverage if such wages
equal or exceed $200 but are less than $300; (III) the last three
quarters of such year which can be but are not otherwise quarters.
of coverage shall be quarters of coverage if such wages equal or
exceed $300 but are less than $400; and (IV) each quarter of such
year which is not otherwise a quarter of coverage shall be a quarter
of coverage if such wages are $400 or more;
(v) no quarter shall be counted as a quarter of coverage prior
to the beginning of such quarter;
(vi) not more than one quarter of coverage may be credited to
a calendar quarter; and
(vii) no more than four quarters of coverage may be credited
to any calendar year after 1977.
If in the case of an individual who has attained age 62 or died or is
under a disability and who has been paid wages for agricultural labor
in a calendar year after 1954 and before 1978, the requirements for
insured status in subsection (a) or (b) of section 214, the requirements
for entitlement to a computation or recomputation of his primary
insurance amount, or the requirements of paragraph (3) of section
216(i) are not met after assignment of quarters of coverage to quar-
ters in such year as provided in clause (iv) of the preceding sentence,
but would be met if such quarters of coverage were assigned to differ-
ent quarters in such year, then such quarters of coverage shall instead
be assigned, for purposes only of determining compliance with such
requirements, to such different quarters. If, in the case of an individual
who did not die prior to January 1, 1955, and who attained age 62
(if a woman) or age 65 (if a man) or died before July 1, 1957, the
requirements for insured status in section 214 (a) (3) ¹ are not met
because of his having too few quarters of coverage but would be met
if his quarters of coverage in the first calendar year in which he had
any covered employment had been determined on the basis of the
period during which wages were earned rather than on the basis of
the period during which wages were paid (any such wages paid that
1
1 This reference is to sec. 214(a)(3) as in effect prior to repeal by the Social Security
Amendments of 1960 (P.L. 86-778).
Revised April 1978
123
Sec. 213(d)
are reallocated on an earned basis shall not be used in determining
quarters of coverage for subsequent calendar years), then upon appli-
cation filed by the individual or his survivors and satisfactory proof
of his record of wages earned being furnished by such individual
or his survivors, the quarters of coverage in such calendar year may
be determined on the basis of the period during which wages were
earned.¹
1
Crediting of Wages Paid in 1937
(b) With respect to wages paid to an individual in the six-month
periods commencing either January 1, 1937, or July 1, 1937; (A) if
wages of not less than $100 were paid in any such period, one-half of
the total amount thereof shall be deemed to have been paid in each of
the calendar quarters in such period; and (B) if wages of less than
$100 were paid in any such period, the total amount thereof shall be
deemed to have been paid in the latter quarter of such period, except
that if in any such period, the individual attained age sixty-five, all of
the wages paid in such period shall be deemed to have been paid before
such age was attained.
Alternative Method for Determining Quarters of Coverage With Respect to
Wages in the Period From 1937 to 1950
(c) For purposes of section 214 (a), an individual shall be deemed
to have one quarter of coverage for each $400 of his total wages prior
to 1951 (as defined in section 215 (d) (1) (C)), except where—
(1) such individual is not a fully insured individual on the
basis of the number of quarters of coverage so derived plus the
number of quarters of coverage derived from the wages and self-
employment income credited to him for periods after 1950, or
(2) such individual's elapsed years (for purposes of section 214
(a) (1)) are less than 7.
-
Amount Required for a Quarter of Coverage
(d) (1) The amount of wages and self-employment income which
an individual must have in order to be credited with a quarter of
coverage in any year under subsection (a) (2) (A) (ii) shall be $250
in the calendar year 1978 and the amount determined under paragraph
(2) of this subsection for years after 1978.
(2) The Secretary shall, on or before November 1 of 1978 and of
every year thereafter, determine and publish in the Federal Register
the amount of wages and self-employment income which an individual
must have in order to be credited with a quarter of coverage in the
succeeding calendar year. The amount required for a quarter of cov-
erage shall be the larger of-
(A) the amount in effect in the calendar year in which the
determination under this subsection is made, or
1 Paragraph (2) was amended by secs. 351(c) and 352(a) of Public Law 95–216.
Sec. 213(d)
Revised April 1978
124
(B) the product of the amount prescribed in paragraph (1)
which is required for a quarter of coverage in 1978 and the ratio
of the average of the total wages (as defined in regulations of the
Secretary and computed without regard to the limitations speci-
fied in section 209 (a)) reported to the Secretary of the Treasury
or his delegate for the calendar year before the year in which the
determination under this paragraph is made to the average of the
total wages (as so defined and computed) reported to the Secre-
tary of the Treasury or his delegate for 1976 (as published in the
Federal Register in accordance with section 215 (a) (1) (D)),
with such product, if not a multiple of $10, being rounded to the next
higher multiple of $10 where such amount is a multiple of $5 but not
of $10 and to the nearest multiple of $10 in any other case.¹
Insured Status for Purposes of Old-Age and Survivors Insurance
Benefits
Sec. 214. For the purposes of this title-
Fully Insured Individual
(a) The term "fully insured individual" means any individual who
had not less than-
(1) one quarter of coverage (whenever acquired) for each
calendar year elapsing after 1950 (or, if later, the year in which
he attained age 21) and before the year in which he died or (if
earlier) the year in which he attained age 62, except that in
no case shall an individual be a fully insured individual unless
he has at least 6 quarters of coverage; or
2
(2) 40 quarters of coverage; or
(3) in the case of an individual who died before 1951, 6 quar-
ters of coverage;
not counting as an elapsed year for purposes of paragraph (1) any
year any part of which was included in a period of disability (as de-
fined in section 216(i)).
¹ Subsection (d) was added by sec. 352(b) of P.L. 95–216.
2 P.L. 92-603, section 104 (a), deleted-
(A) in the case of a woman, the year in which she died or (if earlier) the year
in which she attained age 62,
(B) in the case of a man who has died, the year in which he died or (if earlier)
the year in which he attained age 65, or
""
(C) in the case of a man who has not died, the year in which he attained (or
would attain) age 65, except”,
and inserted "the year in which he died or (if earlier) the year in which he attained
age 62, except". Applicable in the case of a man who attains (or would attain) age 62
after December 1974.
In the case of a man who attains age 62 prior to 1975, the number of his elapsed
years for purposes of section 215 (b) (3) shall be equal to (A) the number determined
under this section as in effect on September 1, 1972, or (B) if less, the number deter-
mined as though he attained age 65 in 1975, except that monthly benefits under title II
for months prior to January 1973 payable on the basis of his wages and self-employment
income shall be determined as though section 104 of P.L. 92-603 had not been enacted.
In the case of a man who attains or will attain age 62 in 1973, the figure "65" in
sections 214(a)(1), 223(c)(A), and 216(i) (3) (A), shall be deemed to read "64". In
the case of a man who attains or will attain age 62 in 1974, the figure "65" in sections
214(a) (1), 223 (c) (1) (A), and 216 (i)(3)(A) shall be deemed to read "63".
Revised April 1978
125
Sec. 215(a)
2
Currently Insured Individual
(b) The term "currently insured individual" means any individual
who had not less than six quarters of coverage during the thirteen-
quarter period ending with (1) the quarter in which he died, (2) the
quarter in which he became entitled to old-age insurance benefits, (3)
the quarter in which he became entitled to primary insurance benefits
under this title as in effect prior to the enactment of this section, or
(4) in the case of any individual entitled to disability insurance bene-
fits, the quarter in which he most recently became entitled to disability
insurance benefits, not counting as part of such thirteen-quarter period
any quarter any part of which was included in a period of disability
unless such quarter was a quarter of coverage.
Computation of Primary Insurance Amount ¹
Sec. 215. (a) (1) (A) The primary insurance amount of an indi-
vidual shall (except as otherwise provided in this section) be equal to
the sum of―
(i) 90 percent of the individual's average indexed monthly
earnings (determined under subsection (b)) to the extent that
such earnings do not exceed the amount established for purposes
of this clause by subparagraph (B),
(ii) 32 percent of the individual's average indexed monthly
earnings to the extent that such earnings exceed the amount estab-
lished for purposes of clause (i) but do not exceed the amount
established for purposes of this clause by subparagraph (B), and
(iii) 15 percent of the individual's average indexed monthly
earnings to the extent that such earnings exceed the amount
established for purposes of clause (ii),
rounded in accordance with subsection (g), and thereafter increased
as provided in subsection (i).
(B) (i) For individuals who initially become eligible for old-age
or disability insurance benefits, or who die (before becoming eligible
of such benefits), in the calendar year 1979, the amount established
for purposes of clause (i) and (ii) of subparagraph (A) shall be $180
and $1,085, respectively.
(ii) For individuals who initially become eligible for old-age or
disability insurance benefits, or who die (before becoming eligible for
such benefits), in any calendar year after 1979, each of the amounts so
established shall equal the product of the corresponding amount estab-
lished with respect to the calendar year 1979 under clause (i) of this
subparagraph and the quotient obtained by dividing—
1 Sec. 215, which provides the basic rules for computing social security benefits, was
substantially revised by the Social Security Amendments of 1977. For certain individuals.
the law prior to those amendments continues to apply and the former section 215 is printed
at the end of this document as Appendix F.
Sec. 215(a)
Revised April 1978
126
(I) the average of the total wages (as defined in regulations
of the Secretary and computed without regard to the limitations
specified in section 209 (a)) reported to the Secretary of the Treas-
ury or his delegate for the second calendar year preceding the
calendar year for which the determination is made, by
(II) the average of the total wages (as so defined and com-
puted) reported to the Secretary of the Treasury or his delegate
for the calendar year 1977.
(iii) Each amount established under clause (ii) for any calendar
year shall be rounded to the nearest $1, except that any amounts so
established which is a multiple of $0.50 but not of $1 shall be rounded
to the next higher $1.
(C)(i) No primary insurance amount computed under subpara-
graph (A) may be less than
(I) the dollar amount set forth on the first line of column IV
in the table of benefits contained in (or deemed to be contained in)
this subsection as in effect in December 1978, rounded (if not a
multiple of $1) to the next higher multiple of $1, or
(II) an amount equal to $11.50 multiplied by the individual's
years of coverage in excess of 10, or the increased amount deter-
mined for purposes of this subdivision under subsection (i),¹
whichever is greater. No increase under subsection (i), except as pro-
vided in subsection (i) (2) (A), shall apply to the dollar amount
specified in subdivision (I) of this clause.
(ii) For purposes of clause (i) (II), the term "years of coverage"
with respect to any individual means the number (not exceeding 30)
equal to the sum of (I) the number (not exceeding 14 and disregarding
any fraction) determined by dividing (a) the total of the wages
credited to such individual (including wages deemed to be paid prior
to 1951 to such individual under section 217, compensation under the
Railroad Retirement Act of 1937 prior to 1951 which is creditable to
such individual pursuant to this title, and wages deemed to be paid
prior to 1951 to such individual under section 231) for years after
1936 and before 1951 by (b) $900, plus (II) the number equal to
the number of years after 1950 each of which is a computation base
year (within the meaning of subsection (b) (2) (B) (ii)) and in each
of which he is credited with wages (including wages deemed to be paid
to such individual under section 217, compensation under the Railroad
Retirement Act of 1937 or 1974 which is creditable to such individual
pursuant to this title, and wages deemed to be paid to such individual
under section 229) and self-employment income of not less than 25
percent of the maximum amount which, pursuant to subsection (e),
may be counted for such year, or of not less than 25 percent of the
maximum amount which could be so counted for such year (in the case.
of a year after 1977) if section 230 as in effect immediately prior to the
Revised April 1978
127
Sec. 215(a)
enactment of the Social Security Amendments of 1977 had remained
in effect without change.¹
(D) In each calendar year after 1978 the Secretary shall publish
in the Federal Register, on or before November 1, the formula for
computing benefits under this paragraph and for adjusting wages and
self-employment income under subsection (b) (3) in the case of an
individual who becomes eligible for an old-age insurance benefit, or
(if earlier) becomes eligible for a disability insurance benefit or dies,
in the following year, and the average of the total wages (as described
in subparagraph (B) (ii) (I)) on which that formula is based. With
the initial publication required by this subparagraph, the Secretary
shall also publish in the Federal Register the average of the total
wages (as so described) for each calendar year after 1950.¹
(2)(A) A year shall not be counted as the year of an individual's
death or eligibility for purposes of this subsection or subsection (i)
in any case where such individual was entitled to a disability insur-
ance benefit for any of the 12 months immediately preceding the month
of such death or eligibility (but there shall be counted instead the year
of the individual's eligibility for the disability insurance benefit or
benefits to which he was entitled during such 12 months).
(B) In the case of an individual who was entitled to a disability
insurance benefit for any of the 12 months before the month in which
he became entitled to an old-age insurance benefit, became reentitled to
a disability insurance benefit, or died, the primary insurance amount
for determining any benefit attributable to that entitlement, reentitle-
ment, or death is the greater of-
(i) the primary insurance amount upon which such disability
insurance benefit was based, increased by the amount of each gen-
eral benefit increase (as defined in subsection (i) (3)), and each
increase provided under subsection (i) (2), that would have
applied to such primary insurance amount had the individual
remained entitled to such disability insurance benefit until the
month in which he became so entitled or reentitled or died, or
(ii) the amount computed under paragraph (1) (C).
(C) In the case of an individual who was entitled to a disability
insurance benefit for any month, and with respect to whom a primary
insurance amount is required to be computed at any time after the
close of the period of the individual's disability (whether because of
such individual's subsequent entitlement to old-age insurance benefits
or to a disability insurance benefit based upon a subsequent period of
disability, or because of such individual's death), the primary insur-
ance amount so computed may in no case be less than the primary
insurance amount with respect to which such former disability insur-
ance benefit was most recently determined.
1 See Appendix E.
Sec. 215(a)
Revised April 1978
128
(3)(A) Paragraph (1) applies only to an individual who was not
eligible for an old-age insurance benefit prior to January 1979 and
who in that or any succeeding month-
(i) becomes eligible for such a benefit,
(ii) becomes eligible for a disability insurance benefit, or
(iii) dies,
and (except for subparagraph (C) (i) (II) thereof) it applies to every
such individual except to the extent otherwise provided by paragraph
(4).
(B) For purposes of this title, an individual is deemed to be
eligible-
(i) for old-age insurance benefits, for months beginning with
the month in which he attains age 62, or
(ii) for disability insurance benefits, for months beginning
with the month in which his period of disability began as pro-
vided under section 216 (i) (2) (C),
except as provided in paragraph (2) (A) in cases where fewer than 12
months have elapsed since the termination of a prior period of
disability.
(4) Paragraph (1) (except for subparagraph (C) (i) (II) thereof)
does not apply to the computation or recomputation of a primary
insurance amount for-
(A) an individual who was eligible for a disability insurance
benefit for a month prior to January 1979 unless, prior to the
month in which occurs the event described in clause (i), (ii), or
(iii) of paragraph (3)(A), there occurs a period of at least 12
consecutive months for which he was not entitled to a disability
insurance benefit, or
1
(B) an individual who had wages or self-employment income
credited for one or more years prior to 1979, and who was not
eligible for an old-age or disability insurance benefit, and did not
die, prior to January 1979, if in the year for which the computa-
tion or recommendation ¹ would be made the individual's primary
insurance amount would be greater if computed or recomputed-
(i) under section 215 (a) as in effect in December 1978, for
purposes of old-age insurance benefits in the case of an indi-
vidual who becomes eligible for such benefits prior to 1984, or
(ii) as provided by section 215(d), in the case of an indi-
vidual to whom such section applies.
In determining whether an individual's primary insurance amount
would be greater if computed or recomputed as provided in subpara-
graph (B), (I) the table of benefits in effect in December 1978 shall
be applied without regard to any increases in that table which may
1 The word "recommendation" is a technical error in the law; it should read “recompu-
tation".
Revised April 1978
Sec. 215(b)
129
become effective (in accordance with subsection (i) (4)) for years after
1978 (subject to clause (iii) of subsection (i)(2)(A) but without
regard to clauses (iv) and (v) thereof) and (II) such individual's
average monthly wage shall be computed as provided by sub-
section (b)(4).
(5) For purposes of computing the primary insurance amount
(after December 1978) of an individual to whom paragraph (1) does
not apply (other than an individual described in paragraph (4) (B)),
this section as in effect in December 1978 shall remain in effect, except
that, effective for January 1979, the dollar amount specified in para-
graph (3) of subsection (a) shall be increased to $11.50. The table
for determining primary insurance amounts and maximum family
benefits contained in this section in December 1978 shall be revised as
provided by subsection (i) for each year after 1978.¹
Average Indexed Monthly Earnings; Average Monthly Wage
(b)(1) An individual's average indexed monthly earnings shall be
equal to the quotient obtained by dividing-
(A) the total (after adjustment under paragraph (3)) of his
wages paid in and self-employment income credited to his bene-
fit computation years (determined under paragraph (2)), by
(B) the number of months in those years.
(2) (A) The number of an individual's benefit computation years
equals the number of elapsed years, reduced by five, except that the
number of an individual's benefit computation years may not be less
than two.
(B) For purposes of this subsection with respect to any
individual-
(i) the term "benefit computation years" means those computa-
tion base years, equal in number to the number determined under
subparagraph (A), for which the total of such individual's wages
and self-employment income, after adjustment under paragraph
(3), is the largest;
(ii) the term "computation base years" means the calendar years
after 1950 and before-
P
(I) in the case of an individual entitled to old-age insur-
ance benefits the year in which occurred (whether by reason
of section 202 (j) (1) or otherwise) the first month of that
entitlement; or
(II) in the case of an individual who has died (without
having become entitled to old-age insurance benefits), the
year succeeding the year of his death;
except that such term excludes any calendar year entirely in-
cluded in a period of disability; and
1 Subsection (a) was amended by sec. 201(a) of P.L. 95-216.
Sec. 215(b)
Revised April 1978
130
(iii) the term "number of elapsed years" means (except as
otherwise provided by section 104(j) (2) of the Social Security
Amendments of 1972) the number of calendar years after 1950
(or, if later, the year in which the individual attained age 21) and
before the year in which the individual died, or, if it occurred
earlier (but after 1960), the year in which he attained age 62;
except that such term excludes any calendar year any part of
which is included in a period of disability.
(3) (A) Except as provided by subparagraph (B), the wages paid
in and self-employment income credited to each of an individual's com-
putation base years for purposes of the selection therefrom of benefit
computation years under paragraph (2) shall be deemed to be equal
to the product of—
(i) the wages and self-employment income paid in or credited
to such year (as determined without regard to this subpara-
graph), and
(ii) the quotient obtained by dividing-
(I) the average of the total wages (as defined in regula-
tions of the Secretary and computed without regard to the
limitations specified in section 209 (a)) reported to the Secre-
tary of the Treasury or his delegate for the second calendar
year (after 1976) preceding the earliest of the year of the
individual's death, eligibility for an old-age insurance bene-
fit, or eligibility for a disability insurance benefit (except
that the year in which the individual dies, or becomes eligible,
shall not be considered as such year if the individual was
entitled to disability insurance benefits for any month in
the 12-month period immediately preceding such death or
eligibility, but there shall be counted instead the year of the
individual's eligibility for the disability insurance benefit to
which he was entitled in such 12-month period), by
(II) the average of the total wages (as so defined and
computed) reported to the Secretary of the Treasury or his
delegate for the computation base year for which the deter-
mination is made.
(B) Wages paid in or self-employment income credited to an in-
dividual's computation base year which-
(i) occurs after the second calendar year specified in subpara-
graph (A) (ii) (I), or
(ii) is a year treated under subsection (f) (2) (C) as though
it were the last year of the period specified in paragraph (2)
(B) (ii),
shall be available for use in determining an individual's benefit com-
putation years, but without applying subparagraph (A) of this
paragraph.
P
Revised April 1978
131
Sec. 215(d)
(4) For purposes of determining the average monthly wage of an
individual whose primary insurance amount is computed (after 1978)
under section 215(a) or 215 (d) as in effect (except with respect to the
table contained therein) in December 1978, by reason of subsection (a)
(4) (B), this subsection as in effect in December 1978 shall remain in
effect, except that paragraph (2)(C) (as then in effect) shall be
deemed to provide that "computation base years" include only calendar
years in the period after 1950 (or 1936, if applicable) and prior to the
year in which occurred the first month for which the individual was
eligible (as defined in subsection (a) (3) (B) as in effect in January
1979) for an old-age or disability insurance benefit, or, if earlier, the
year in which he died. Any calendar year all of which is included in a
period of disability shall not be included as a computation base year
for such purposes.¹
Application of Prior Provisions in Certain Cases
(c) This subsection as in effect in December 1978 shall remain in
effect with respect to an individual to whom subsection (a) (1) does
not apply by reason of the individual's eligibility for an old-age or dis-
ability insurance benefit, or the individual's death, prior to 1979.²
Primary Insurance Benefit Under 1939 Act
(d) (1) For purposes of column I of the table appearing in sub-
section (a), as that subsection was in effect in December 1977, an indi-
vidual's primary insurance benefit shall be computed as follows:
(A) The individual's average monthly wage shall be deter-
mined as provided in subsection (b), as in effect in December 1977
(but without regard to paragraph (4) thereof), except that for
purposes of paragraphs (2) (C) and (3) of that subsection (as so
in effect) 1936 shall be used instead of 1950.
(B) For purposes of subparagraphs (B) and (C) of subsec-
tion (b) (2) (as so in effect)-
(i) the total wages prior to 1951 (as defined in subpara-
graph (C) of this paragraph) of an individual who attained
age 21 after 1936 and prior to 1950 shall be divided by the
number of years (hereinafter in this subparagraph referred
to as the "divisor") elapsing after the year in which the in-
dividual attained age 20 and prior to 1951;
and
(ii) the total wages prior to 1951 (as defined in subpara-
graph (C) of this paragraph) of an individual who attained
age 21 after 1949 shall be divided by the number of years
(hereinafter in this subparagraph referred to as the "divi-
sor") elapsing after 1949 and prior to 1951.
1 Subsection (b) was amended by sec. 201(b) of P.L. 95–216.
2 Subsection (c) was amended by sec. 201(c) of P.L. 95–216.
Sec. 215(d)
132
Revised April 1978
The quotient so obtained shall be deemed to be the individual's wages
credited to each of the years which were used in computing the amount
of the divisor, except that-
(iii) if the quotient exceeds $3,000, only $3,000 shall be
deemed to be the individual's wages for each of the years
which were used in computing the amount of the divisor, and
the remainder of the individual's total wages prior to 1951
(I) if less than $3,000, shall be deemed credited to the year
immediately preceding the earliest year used in computing
the amount of the divisor, or (II) if $3,000 or more, shall be
deemed credited, in $3,000 increments, to the year immediately
preceding the earliest year used in computing the amount of
the divisor and to each year consecutively preceding that year,
with any remainder less than $3,000 being credited to the
year immediately preceding the earliest year to which a full
$3,000 increment was credited; and
(iv) no more than $42,000 may be taken into account, for
purposes of this subparagraph, as total wages after 1936 and
prior to 1951.
(C) For the purposes of subparagraph (B), "total wages prior
to 1951" with respect to an individual means the sum of (i) re-
muneration credited to such individual prior to 1951 on the records
of the Secretary, (ii) wages deemed paid prior to 1951 to such
individual under section 217, (iii) compensation under the Rail-
road Retirement Act of 1937 prior to 1951 creditable to him pur-
suant to this title, and (iv) wages deemed paid prior to 1951 to
such individual under section 231.
R
(D) The individual's primary insurance benefit shall be 40 per-
cent of the first $50 of his average monthly wage as computed un-
der this subsection, plus 10 percent of the next $200 of his average
monthly wage, increased by 1 percent for each increment year.
The number of increment years is the number, not more than 14
nor less than 4, that is equal to the individual's total wages prior
to 1951 divided by $1,650 (disregarding any fraction).¹
(2) The provisions of this subsection shall be applicable only in the
case of an individual-
A
(A) with respect to whom at least one of the quarters elapsing
prior to 1951 is a quarter of coverage;
(B) except as provided in paragraph (3), who attained age
22 after 1950 and with respect to whom less than six of the quar-
ters elapsing after 1950 are quarters of coverage, or who attained
such age before 1951; and
(C)(i) who becomes entitled to benefits under section 202 (a)
or 223 after the date of the enactment of the Social Security
Amendments of 1967, or
¹ Paragraph (1) was amended by secs. 201(d) (1) and 201(d) (2) of P.L. 95-216.
Revised April 1978
Sec. 215(e)
133
(ii) who dies after such date without being entitled to benefits
under section 202 (a) or 223, or
(iii) whose primary insurance amount is required to be recom-
puted under section 215 (f) (2) or (6), or section 231.
(3) The provisions of this subsection as in effect prior to the enact-
ment of the Social Security Amendments of 1967 shall be applicable
in the case of an individual who had a period of disability which
began prior to 1951, but only if the primary insurance amount result-
ing therefrom is higher than the primary insurance amount resulting
from the application of this section (as amended by the Social Secu-
rity Amendments of 1967) and section 220.¹
1
(4) The provisions of this subsection as in effect in December 1977
shall be applicable to individuals who become eligible for old-age or
disability insurance benefits or die prior to 1978.2
Certain Wages and Self-Employment Income Not To Be Counted
(e) For the purposes of subsections (b) and (d)—
(1) in computing an individual's average indexed monthly
earnings or, in the case of an individual whose primary insurance
amount is computed under section 215 (a) as in effect prior to
January 1979, average monthly wage, there shall not be counted
the excess over $3,600 in the case of any calendar year after 1950
and before 1955, the excess over $4,200 in the case of any calendar
year after 1954 and before 1959, the excess over $4,800 in the case
of any calendar year after 1958 and before 1966, the excess over
$6,600 in the case of any calendar year after 1965 and before 1968,
the excess over $7,800 in the case of any calendar year after 1967
and before 1972, the excess over $9,000 in the case of any calendar
year after 1971 and before 1973, the excess over $10,800 in the case
of any calendar year after 1972 and before 1974, the excess over
$13,200 in the case of any calendar year after 1973 and before
1975, and the excess over an amount equal to the contribution
and benefit base (as determined under section 230) in the case of
any calendar year after 1974 with respect to which such contribu-
tion and benefit base is effective (before the application, in the
case of average indexed monthly earnings, of subsection (b) (3)
(A)) of (A) the wages paid to him in such year, plus (B) the
self-employment income credited to such year (as determined
under section 212) ; and
(2) if an individual's average indexed monthly earnings or, in
the case of an individual whose primary insurance amount is
computed under section 215 (a) as in effect prior to January 1979,
average monthly wage, computed under subsection (b) or for
the purposes of subsection (d) is not a multiple of $1, it shall be
reduced to the next lower multiple of $1.3
1 Paragraph (3) was amended by sec. 201 (d) (3) of P.L. 95-216.
2 Paragraph (4) was added by sec. 201 (d) (4) of P.L. 95-216.
3 Subsection (e) was amended by sec. 201(e) of P.L. 95-216.
Sec. 215(f)
Revised April 1978
134
Recomputation of Benefits
(f) (1) After an individual's primary insurance amount has been
determined under this section, there shall be no recomputation of such
individual's primary insurance amount except as provided in this sub-
section or, in the case of a World War II veteran who died prior to
July 27, 1954, as provided in section 217(b).
(2) (A) If an individual has wages or self-employment income for
a year after 1978 for any part of which he is entitled to old-age or
disability insurance benefits, the Secretary shall, at such time or times
and within such period as he may by regulation prescribe, recompute
the individual's primary insurance account for that year.
(B) For the purpose of applying subparagraph (A) of subsection
(a) (1) to the average indexed monthly earnings of an individual to
whom that subsection applies and who receives a recomputation under
this paragraph, there shall be used, in lieu of the amounts estab-
lished by subsection (a) (1) (B) for purposes of clauses (i) and (ii) of
subsection (a) (1) (A), the amounts so established that were (or, in
the case of an individual described in subsection (a)(4)(B), would
have been) used in the computation of such individual's primary in-
surance amount prior to the application of this subsection.
(C) A recomputation of any individual's primary insurance amount
under this paragraph shall be made as provided in subsection (a)(1)
as though the year with respect to which it is made is the last year of
the period specified in subsection (b) (2) (B)(ii); and subsection
(b) (3)(A) shall apply with respect to any such recomputation as it
applied in the computation of such individual's primary insurance
amount prior to the application of this subsection.
(D) A recomputation under this paragraph with respect to any
year shall be effective—
(i) in the case of an individual who did not die in that year,
for monthly benefits beginning with benefits for January of the
following year; or
(ii) in the case of an individual who died in that year, for
monthly benefits beginning with benefits for the month in which
he died.¹
(3) [Repealed.]²
(4) A recomputation shall be effective under this subsection only
if it increases the primary insurance amount by at least $1.3
(5) In the case of a man who became entitled to old-age insurance
benefits and died before the month in which he attained age 65, the
Secretary shall recompute his primary insurance amount as provided
in subsection (a) as though he became entitled to old-age insurance
1 Paragraph (2) was amended by sec. 201 (f) (1) of P.L. 95–216.
2 Paragraph (3) was repealed by sec. 201 (f) (2) of P.L. 95-216.
3 Paragraph (4) was amended by sec. 201(f)(3) of P.L. 95–216.
Revised April 1978
Sec. 215(h)
135
I
benefits in the month in which he died; except that (i) his computa-
tion base years referred to in subsection (b) (2) shall include the year
in which he died, and (ii) his elapsed years referred to in subsection
(b) (3) shall not include the year in which he died or any year there-
after. Such recomputation of such primary insurance amount shall be
effective for and after the month in which he died.
(6) Upon the death after 1967 of an individual entitled to benefits
under section 202(a) or section 223, if any person is entitled to
monthly benefits or a lump-sum death payment, on the wages and self-
employment income of such individual, the Secretary shall recompute
the decedent's primary insurance amount, but only if the decedent
during his lifetime was paid compensation which was treated under
section 205 (o) as remuneration for employment.
(7) This subsection as in effect in December 1978 shall continue to
apply to the recomputation of a primary insurance amount computed
under subsection (a) or (d) as in effect (without regard to the table
in subsection (a)) in that month, and, where appropriate, under sub-
section (d) as in effect in December 1977. For purposes of recomputing
a primary insurance amount determined under subsection (a) or (d)
(as so in effect) in the case of an individual to whom those subsections
apply by reason of subsection (a) (4) (B) as in effect after December
1978, no remuneration shall be taken into account for the year in which
the individual initially became eligible for an old-age or disability
insurance benefit or died, or for any year thereafter.¹
(8) The Secretary shall recompute the primary insurance amounts
applicable to beneficiaries whose benefits are based on a primary insur-
ance amount which was computed under subsection (a) (3) effective
prior to January 1979, or would have been so computed if the dollar
amount specified therein were $11.50. Such recomputation shall be
effective January 1979, and shall include the effect of the increase in
the dollar amount provided by subsection (a)(1) (C) (i) (II). Such
primary insurance amount shall be deemed to be provided under such
section for purposes of subsection (i).¹
1
Rounding of Benefits
(g) The amount of any primary insurance amount and the amount
of any monthly benefit computed under section 202 or 223 which (after
reduction under section 203 (a) and deductions under section 203 (b))
is not a multiple of $0.10 shall be raised to the next higher multiple
of $0.10.
(h) (1) Notwithstanding the provisions of subchapter III of chap-
ter 83 of title 5, United States Code, remuneration paid for services to
which the provisions of section 210(1) (1) of this Act are applicable
and which is performed by an individual as a commissioned officer of
1 Paragraphs (7) and (8) were added by sec. 201 (f) (4) of P.L. 95-216.
Sec. 215(h)
Revised April 1978
136
4
the Reserve Corps of the Public Health Service prior to July 1, 1960,
shall not be included in computing entitlement to or the amount of any
monthly benefit under this title, on the basis of his wages and self-
employment income, for any month after June 1960 and prior to the
first month with respect to which the Civil Service Commission certi-
fies to the Secretary that, by reason of a waiver filed as provided in
paragraph (2), no further annuity will be paid to him, his wife, and
his children, or, if he has died, to his widow and children, under sub-
chapter III of chapter 83 of title 5, United States Code, on the basis.
of such service.
(2) In the case of a monthly benefit for a month prior to that in
which the individual, on whose wages and self-employment income
such benefit is based, dies, the waiver must be filed by such individual;
and such waiver shall be irrevocable and shall constitute a waiver on
behalf of himself, his wife, and his children. If such individual did not
file such a waiver before he died, then in the case of a benefit for the
month in which he died or any month thereafter, such waiver must be
filed by his widow, if any, and by or on behalf of all his children, if
any; and such waivers shall be irrevocable. Such a waiver by a child
shall be filed by his legal guardian or guardians, or, in the absence
thereof, by the person (or persons) who has the child in his care.
Cost-of-Living Increases in Benefits
(i) (1) For purposes of this subsection—
(A) the term "base quarter" means (i) the calendar quarter
ending on March 31 in each year after 1974, or (ii) any other cal-
endar quarter in which occurs the effective month of a general
benefit increase under this title;
(B) the term "cost-of-living computation quarter" means a base
quarter, as defined in subparagraph (A) (i), in which the Con-
sumer Price Index prepared by the Department of Labor exceeds,
by not less than 3 per centum, such Index in the later of (i) the
last prior cost-of-living computation quarter which was estab-
lished under this subparagraph, or (ii) the most recent calendar
quarter in which occurred the effective month of a general benefit
increase under this title; except that there shall be no cost-of-
living computation quarter in any calendar year if in the year
prior to such year a law has been enacted providing a general
benefit increase under this title or if in such prior year such a
general benefit increase becomes effective; and
(C) the Consumer Price Index for a base quarter, a cost-of-
living computation quarter, or any other calendar quarter shall
be the arithmetical mean of such index for the 3 months in such
quarter.
Revised April 1978
137
Sec. 215(i)
(2) (A) (i) The Secretary shall determine each year beginning with
1975 (subject to the limitation in paragraph (1) (B)) whether the base
quarter (as defined in paragraph (1) (A) (i)) in such year is a cost-of-
living computation quarter.
(ii) If the Secretary determines that the base quarter in any year
is a cost-of-living computation quarter, he shall, effective with the
month of June of that year as provided in subparagraph (B),
increase
(I) the benefit amount to which individuals are entitled for
that month under section 227 or 228,
(II) the primary insurance amount of each other individual
on which benefit entitlement is based under this title (including
a primary insurance amount determined under subsection (a)
(1) (C) (i) (I), but subject to the provisions of such subsection (a)
(1) (C) (i) and clauses (iv) and (v) of this subparagraph), and
(III) the amount of total monthly benefits based on any pri-
mary insurance amount which is permitted under section 203
(and such total shall be increased, unless otherwise so increased
under another provision of this title, at the same time as such
primary insurance amount) or, in the case of a primary insurance
amount computed under subsection (a) as in effect without
regard to the table contained therein) prior to January 1979, the
amount to which the beneficiaries may be entitled under section
203 as in effect in December 1978, except as provided by section
203 (a) (6) and (7) as in effect after December 1978.
The increase shall be derived by multiplying each of the amounts
described in subdivisions (I), (II), and (III) (including each of
those amounts as previously increased under this subparagraph) by
the same percentage (rounded to the nearest one-tenth of 1 percent)
as the percentage by which the Consumer Price Index for that cost-of-
living computation quarter exceeds such index for the most recent
prior calendar quarter which was a base quarter under paragraph
(1)(A)(ii) or, if later, the most recent cost-of-living computation
quarter under paragraph (1) (B); and any amount so increased that
is not a multiple of $0.10 shall be increased to the next higher multiple
of $0.10. Any increase under this subsection in a primary insurance
amount determined under subparagraph (C) (i) (II) of subsection
(a) (1) shall be applied after the initial determination of such pri-
mary insurance amount under that subparagraph (with the amount of
such increase, in the case of an individual who becomes eligible for
old-age or disability insurance benefits or dies in a calendar year after
1979, being determined from the range of possible primary insurance
amounts published by the Secretary under the last sentence of sub-
paragraph (D)).¹
1 Clause (ii) was amended by sec. 201 (g) (1) of P.L. 95-216.
21-746 O 78 - 11
Sec. 215(i)
138
Revised April 1978
t
(iii) In the case of an individual who becomes eligible for an old-
age or disability insurance benefit, or who dies prior to becoming so
eligible, in a year in which there occurs an increase provided under
clause (ii), the individual's primary insurance amount (without
regard to the time of entitlement to that benefit) shall be increased.
(unless otherwise so increased under another provision of this title.
and, with respect to a primary insurance amount determined under
subsection (a)(1) (C) (i) (I), subject to the provisions of subsection
(a) (1) (C)(i) and clauses (iv) and (v) of this subparagraph) by the
amount of that increase and subsequent applicable increases, but only
with respect to benefits payable for months after May of that year.2
(iv) (I) In the case of an individual who is entitled to an old-age
insurance benefit that is based on a primary insurance amount deter-
mined under subsection (a) (1) (C) (i) (I), such primary insurance
amount shall not be increased under this subsection for any year before
the year in which occurs the first month with respect to which there is
payable to such individual all or some part of such benefit after
application of the provisions of section 203 relating to deductions on
account of work, or, if earlier, the year in which he attains age 65.
(II) In the case of an individual who is entitled to an insurance
benefit under subsection (e) or (f) of section 202 that is based on
a primary insurance amount determined under subsection (a) (1) (C)
(i) (I), such primary insurance amount shall not be increased under
this subsection for any year (except as provided in subdivision (III))
before the year in which occurs the first month with respect to which
there is payable to such individual all or some part of such benefit
after application of the provisions of section 203 relating to deduc-
tions on account of work, or, if earlier, the year in which he attains.
age 65.
(III) Any increase under this subsection which would otherwise
be applied to a primary insurance amount except for the provisions
of subdivision (II) of this clause, shall apply to such primary insur-
ance amount if, during any month of the year in which the increase
occurs, any individual is entitled to a benefit under subsection (d),
(g), or (h) of section 202 based on such primary insurance amount,
and such primary insurance amount is based upon the wages and self-
employment income of a deceased individual.
G
(IV) No primary insurance amount determined under subsection
(a) (1) (C) (i) (I) shall be increased under this subsection for any
year during which no individual was entitled to any benefit based
thereon under section 202 or 223 for any month of such year.
(V) In any case in which an increase under this subsection which
occurs during any year applies to a primary insurance amount deter-
2 Clauses (iii), (iv), and (v) were added by sec. 201(g) (2) of P.L. 95–216.
Revised April 1978
Sec. 215(i)
139
mined under subsection (a) (1) (C) (i) (I), and such an increase oc-
curring in a later year does not apply to such primary insurance
amount on account of the provisions of this clause, any such increase
which occurs in a later year which is applicable to such primary in-
surance amount shall be based upon such primary insurance amount
as previously increased under this subsection.¹
(v) Notwithstanding clause (iv), no primary insurance amount
shall be less than that provided under section 215 (a) (1) without
regard to subparagraph (C) (i) (I) thereof, as subsequently increased
by applicable increases under this section.¹
(B) The increase provided by subparagraph (A) with respect to a
particular cost-of-living computation quarter shall apply in the case
of monthly benefits under this title for months after May of the calen-
dar year in which occurred such cost-of-living computation quarter,
and in the case of lump-sum death payments with respect to deaths
occurring after May of such calendar year.
(C) (i) Whenever the level of the Consumer Price Index as pub-
lished for any month exceeds by 2.5 percent or more the level of such
index for the most recent base quarter (as defined in paragraph (1)
(A)(ii)) or, if later, the most recent cost-of-living computation quar-
ter, the Secretary shall (within 5 days after such publication) report
the amount of such excess to the House Committee on Ways and
Means and the Senate Committee on Finance.
(ii) Whenever the Secretary determines that a base quarter in a
calendar year is also a cost-of-living computation quarter, he shall
notify the House Committee on Ways and Means and the Senate Com-
mittee on Finance of such determination within 30 days after the close
of such quarter, indicating the amount of the benefit increase to be pro-
vided, his estimate of the extent to which the cost of such increase
would be met by an increase in the contribution and benefit base under
section 230 and the estimated amount of the increase in such base, the
actuarial estimates of the effect of such increase, and the actuarial as-
sumptions and methodology used in preparing such estimates.
(D) If the Secretary determines that a base quarter in a calendar
year is also a cost-of-living computation quarter, he shall publish in
the Federal Register within 45 days after the close of such quarter a
determination that a benefit increase is resultantly required and the
percentage thereof. He shall also publish in the Federal Register at
that time (i) a revision of the range of the primary insurance amounts.
which are possible after the application of this subsection based on the
dollar amount specified in subparagraph (C) (i) (II) of subsection (a)
(1) (with such revised primary insurance amounts constituting the
¹ Clauses (iii), (iv), and (v) were added by sec. 201(g) (2) of P.L. 95–216.
Revised April 1978
Sec. 215(i)
139-A
increased amounts determined for purposes of such subparagraph (C)
(i) (II) under this subsection), or specified in subsection (a)(3) as
in effect prior to 1979, and (ii) a revision of the range of maximum
family benefits which correspond to such primary insurance amounts
(with such maximum benefits being effective notwithstanding section
203 (a) except for paragraph (3) (B) thereof (or paragraph (2)
thereof as in effect prior to 1979)).¹
(3) As used in this subsection, the term "general benefit increase
under this title” means an increase (other than an increase under this
subsection) in all primary insurance amounts on which monthly
insurance benefits under this title are based.
(4) This subsection as in effect in December 1978 shall continue to
apply to subsections (a) and (d), as then in effect, for purposes of
computing the primary insurance amount of an individual to whom
subsection (a), as in effect after December 1978, does not apply
(including an individual to whom subsection (a) does not apply in
any year by reason of paragraph (4) (B) of that subsection (but the
application of this subsection in such cases shall be modified by the
application of subdivision (I) in the last sentence of paragraph (4)
of that subsection)). For purposes of computing primary insurance
amounts and maximum family benefits (other than primary insurance
amounts and maximum family benefits for individuals to whom such
paragraph (4) (B) applies), the Secretary shall publish in the Federal
Register revisions of the table of benefits contained in subsection (a),
as in effect in December 1978, as required by paragraph (2) (D) of
this subsection as then in effect.² 2
1 Subparagraph (D) was amended by sec. 201 (g) (3) of P.L. 95–216.
2 Paragraph (4) was added by sec. 201(g) (4) of P.L. 95-216. See Appendix F for law
as in effect on December, 1978.
Sec. 216(a)
Revised April 1978
140
Other Definitions
Sec. 216. For the purposes of this title-
(a) [Repealed.]
Wife
(b) The term "wife" means the wife of an individual, but only if
she (1) is the mother of his son or daughter, (2) was married to him
for a period of not less than one year immediately preceding the day
on which her application is filed, or (3) in the month prior to the
month of her marriage to him (A) was entitled to, or on application
therefor and attainment of age 62 in such prior month would have
been entitled to, benefits under subsection (b), (e), or (h) of section.
202, (B) had attained age eighteen and was entitled to, or on applica-
tion therefor would have been entitled to, benefits under subsection
(d) of such section (subject, however, to section 202 (s)), or (C) was
entitled to, or upon application there for and attainment of the re-
quired age (if any) would have been entitled to, a widow's, child's
(after attainment of age 18), or parent's insurance annuity under sec-
tion 2 of the Railroad Retirement Act of 1974, as amended.
Widow
(c) The term "widow" (except when used in section 202 (i)) means
the surviving wife of an individual, but only if (1) she is the mother
of his son or daughter, (2) she legally adopted his son or daughter
while she was married to him and while such son or daughter was
under the age of eighteen, (3) he legally adopted her son or daughter
while she was married to him and while such son or daughter was
under the age of eighteen, (4) she was married to him at the time.
both of them legally adopted a child under the age of eighteen, (5)
she was married to him for a period of not less than nine months
immediately prior to the day on which he died, or (6) in the month
prior to the month of her marriage to him (A) she was entitled to,
or on application therefor and attainment of age 62 in such prior
month would have been entitled to, benefits under subsection (b),
(e), or (h) of section 202, (B) she had attained age eighteen and
was entitled to, or on application therefor would have been entitled
to, benefits under subsection (d) of such section (subject, however,
to section 202 (s)), or (C) she was entitled to, or upon application
therefor and attainment of the required age (if any) would have
been entitled to, a widow's, child's (after attainment of age 18), or
parent's insurance annuity under section 2 of the Railroad Retirement
Act of 1974, as amended.
Divorced Wives; Divorce
(d) (1) The term "divorced wife" means a woman divorced from
an individual, but only if she had been married to such individual for
Revised April 1978
141
Sec. 216(e)
a period of 10 years immediately before the date the divorce became
effective.¹
(2) The term "surviving divorced wife" means a woman divorced
from an individual who has died, but only if she had been married
to the individual for a period of 10 years immediately before the date
the divorce became effective.¹
(3) The term "surviving divorced mother" means a woman di-
vorced from an individual who has died, but only if (A) she is the
mother of his son or daughter, (B) she legally adopted his son or
daughter while she was married to him and while such son or daughter
was under the age of 18, (C) he legally adopted her son or daughter
while she was married to him and while such son or daughter was
under the age of 18, or (D) she was married to him at the time both
of them legally adopted a child under the age of 18.
(4) The terms "divorce" and "divorced" refer to a divorce a vin-
culo matrimonii.
Child
(e) The term "child" means (1) the child or legally adopted child
of an individual, (2) a stepchild who has been such stepchild for
not less than one year immediately preceding the day on which appli-
cation for child's insurance benefits is filed or (if the insured individual
is deceased) not less than nine months immediately preceding the
day on which such individual died, and (3) a person who is the grand-
child or stepgrandchild of an individual or his spouse, but only if (A)
there was no natural or adoptive parent (other than such a parent
who was under a disability, as defined in section 223 (d)) of such per-
son living at the time (i) such individual became entitled to old-age
insurance benefits or disability insurance benefits or died, or (ii) if
such individual had a period of disability which continued until such
individual became entitled to old-age insurance benefits or disability
insurance benefits, or died, at the time such period of disability began,
or (B) such person was legally adopted after the death of such indi-
vidual by such individual's surviving spouse in an adoption that was
decreed by a court of competent jurisdiction within the United States
and such person's natural or adopting parent or stepparent was not
living in such individual's household and making regular contributions
toward such person's support at the time such individual died. For
purposes of clause (1), a person shall be deemed, as of the date of death
of an individual, to be the legally adopted child of such individual if
such person was at the time of such individual's death living in such
individual's household and was legally adopted by such individual's
¹ Paragraphs (1) and (2) were amended by sec. 337(a) of Public Law 95-216 effective
as specified in sec. 337 (c) which appears in this document on p. 811.
Revised April 1978
Sec. 216(g)
141-A
surviving spouse after such individual's death but only if (A) pro-
ceedings for the adoption of the child had been instituted by such indi-
vidual before his death, or (B) such child was adopted by such indi-
vidual's surviving spouse before the end of two years after (i) the
day on which such individual died or (ii) the date of enactment of
the Social Security Amendments of 1958; except that this sentence
shall not apply if at the time of such individual's death such person
was receiving regular contributions toward his support from someone
other than such individual or his spouse, or from any public or private
welfare organization which furnishes services or assistance for chil-
dren. For purposes of clause (2), a person who is not the stepchild
of an individual shall be deemed the stepchild of such individual if
such individual was not the mother or adopting mother or the father
or adopting father of such person and such individual and the mother
or adopting mother, or the father or adopting father, as the case may
be, of such person went through a marriage ceremony resulting in a
purported marriage between them which, but for a legal impediment
described in the last sentence of subsection (h) (1) (B), would have
been a valid marriage.
Husband
(f) The term "husband" means the husband of an individual, but
only if (1) he is the father of her son or daughter, (2) he was married
to her for a period of not less than one year immediately preceding the
day on which his application is filed, or (3) in the month prior to the
month of his marriage to her (A) he was entitled to, or on applica-
tion therefor and attainment of age 62 in such prior month would
have been entitled to, benefits under subsection (f), or (h) of section
202, (B) he had attained age eighteen and was entitled to, or on
application therefor would have been entitled to, benefits under sub-
section (d) of such section (subject, however, to section 202(s)),
(C) he was entitled to, or upon application there for and attainment of
the required age (if any) he would have been entitled to, a widower's,
child's (after attainment of age 18), or parent's insurance annuity
under section 2 of the Railroad Retirement Act of 1974, as amended.
or
Widower
(g) The term "widower" (except when used in section 202(i))
means the surviving husband of an individual, but only if (1) he is the
father of her son or daughter, (2) he legally adopted her son or daugh-
ter while he was married to her and while such son or daughter was
under the age of eighteen, (3) she legally adopted his son or daughter
while he was married to her and while such son or daughter was under
the age of eighteen, (4) he was married to her at the time both of them
Sec. 216(g)
142
legally adopted a child under the age of eighteen, (5) he was married
to her for a period of not less than nine months immediately prior
to the day on which she died, or (6) in the month before the month of
his marriage to her (A) he was entitled to, or on application there-
for and attainment of age 62 in such prior month would have been
entitled to, benefits under subsection (f), or (h) of section 202, (B)
he had attained age eighteen and was entitled to, or on application
therefor would have been entitled to, benefits under subsection (d)
of such section (subject, however, to section 202 (s)), or (C) he was
entitled to, or on application therefor and attainment of the required
age (if any) he would have been entitled to a widower's, child's
(after attainment of age 18), or parent's insurance annuity under sec-
tion 2 of the Railroad Retirement Act of 1974, as amended.
Determination of Family Status
(h)(1)(A) An applicant is the wife, husband, widow, or widower
of a fully or currently insured individual for purposes of this title if
the courts of the State in which such insured individual is domiciled
at the time such applicant files an application, or, if such insured indi-
vidual is dead, the courts of the State in which he was domiciled at the
time of death, or, if such insured individual is or was not so domiciled
in any State, the courts of the District of Columbia, would find that
such applicant and such insured individual were validly married at
the time such applicant files such application or, if such insured indi-
vidual is dead, at the time he died. If such courts would not find that
such applicant and such insured individual were validly married at
such time, such applicant shall, nevertheless be deemed to be the wife,
husband, widow, or widower, as the case may be, of such insured indi-
vidual if such applicant would, under the laws applied by such courts
in determining the devolution of interstate personal property, have the
same status with respect to the taking of such property as a wife, hus-
band, widow, or widower of such insured individual.
(B) In any case where under subparagraph (A) an applicant is not
(and is not deemed to be) the wife, widow, husband, or widower of a
fully or currently insured individual, or where under subsection (b),
(c), (f), or (g) such applicant is not the wife, widow, husband, or
widower of such individual, but it is established to the satisfaction of
the Secretary that such applicant in good faith went through a mar-
riage ceremony with such individual resulting in a purported mar-
riage between them which, but for a legal impediment not known to
the applicant at the time of such ceremony, would have been a valid
marriage, and such applicant and the insured individual were living
in the same household at the time of the death of such insured indi-
vidual or (if such insured individual is living) at the time such appli-
cant files the application, then, for purposes of subparagraph (A) and
143
Sec. 216(h)
subsections (b), (c), (f), and (g), such purported marriage shall be
deemed to be a valid marriage. The provisions of the preceding sen-
tence shall not apply (i) if another person is or has been entitled to
a benefit under subsection (b), (c), (e), (f), or (g) of section 202
on the basis of the wages and self-employment income of such insured
individual and such other person is (or is deemed to be) a wife, widow,
husband, or widower of such insured individual under subparagraph
(A) at the time such applicant files the application, or (ii) if the
Secretary determines, on the basis of information brought to his atten-
tion, that such applicant entered into such purported marriage with
such insured individual with knowledge that it would not be a valid
marriage. The entitlement to a monthly benefit under subsection (b),
(c), (e), (f), or (g) of section 202, based on the wages and self-em-
ployment income of such insured individual, of a person who would
not be deemed to be a wife, widow, husband, or widower of such in-
sured individual but for this subparagraph, shall end with the month
before the month (i) in which the Secretary certifies, pursuant to
section 205 (i), that another person is entitled to a benefit under sub-
section (b), (c), (e), (f), or (g) of section 202 on the basis of the
wages and self-employment income of such insured individual, if such
other person is (or is deemed to be) the wife, widow, husband, or
widower of such insured individual under subparagraph (A), or (ii)
if the applicant is entitled to a monthly benefit under subsection (b)
or (c) of section 202, in which such applicant entered into a mar-
riage, valid without regard to this subparagraph, with a person other
than such insured individual. For purposes of this subparagraph, a
legal impediment to the validity of a purported marriage includes.
only an impediment (i) resulting from the lack of dissolution of a pre-
vious marriage or otherwise arising out of such previous marriage or
its dissolution, or (ii) resulting from a defect in the procedure fol-
lowed in connection with such purported marriage.
(2) (A) In determining whether an applicant is the child or parent
of a fully or currently insured individual for purposes of this title,
the Secretary shall apply such law as would be applied in determining
the devolution of intestate personal property by the courts of the
State in which such insured individual is domiciled at the time such
applicant files application, or, if such insured individual is dead, by
the courts of the State in which he was domiciled at the time of his
death, or, if such insured individual is or was not so domiciled in any
State, by the courts of the District of Columbia. Applicants who ac-
cording to such law would have the same status relative to taking
intestate personal property as a child or parent shall be deemed such.
(B) If an applicant is a son or daughter of a fully or currently
insured individual but is not (and is not deemed to be) the child of
such insured individual under subparagraph (A), such applicant shall
سے
Sec. 216(h)
144
nevertheless be deemed to be the child of such insured individual if
such insured individual and the mother or father, as the case may be,
of such applicant went through a marriage ceremony resulting in a
purported marriage between them which, but for a legal impediment
described in the last sentence of paragraph (1)(B), would have been a
valid marriage.
(3) An applicant who is the son or daughter of a fully or currently
insured individual, but who is not (and is not deemed to be) the child
of such insured individual under paragraph (2), shall nevertheless be
deemed to be the child of such insured individual if :
(A) in the case of an insured individual entitled to old-age
insurance benefits (who was not, in the month preceding such
entitlement, entitled to disability insurance benefits) -
(i) such insured individual—
(I) has acknowledged in writing that the applicant is
his son or daughter,
(II) has been decreed by a court to be the father of
the applicant, or
(III) has been ordered by a court to contribute to the
support of the applicant because the applicant is his son
or daughter,
and such acknowledgement, court decree, or court order was
made not less than one year before such insured individual
became entitled to old-age insurance benefits or attained age
65, whichever is earlier; or
(ii) such insured individual is shown by evidence satisfac-
tory to the Secretary to be the father of the applicant and was
living with or contributing to the support of the applicant
at the time such insured individual became entitled to bene-
fits or attained age 65, whichever first occurred;
(B) in the case of an insured individual entitled to disability
insurance benefits, or who was entitled to such benefits in the
month preceding the first month for which he was entitled to old-
age insurance benefits-
(i) such insured individual-
(I) has acknowledged in writing that the applicant is
his son or daughter,
(II) has been decreed by a court to be the father of
the applicant, or
(III) has been ordered by a court to contribute to the
support of the applicant because the applicant is his son
or daughter,
and such acknowledgement, court decree, or court order was
made before such insured individual's most recent period of
disability began; or
145
Sec. 216(i)
(ii) such insured individual is shown by evidence satis-
factory to the Secretary to be the father of the applicant and
was living with or contributing to the support of that appli-
cant at the time such period of disability began;
(C) in the case of a deceased individual-
(i) such insured individual-
(I) had acknowledged in writing that the applicant is
his son or daughter,
(II) had been decreed by a court to be the father of
the applicant, or
(III) had been ordered by a court to contribute to the
support of the applicant because the applicant was his
son or daughter,
and such acknowledgement, court decree, or court order was
made before the death of such insured individual, or
(ii) such insured individual is shown by evidence satis-
factory to the Secretary to have been the father of the appli-
cant, and such insured individual was living with or contrib-
uting to the support of the applicant at the time such insured
individual died.
Disability; Period of Disability
(i) (1) Except for purposes of section 202 (d), 202(e), 202(f), 223,
and 225, the term "disability" means (A) 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 has lasted or can be expected to last for a continuous period
of not less than 12 months, or (B) blindness; and the term "blindness"
means central visual acuity of 20/200 or less in the better eye with the
use of correcting lens. An eye which is accompanied by a limitation
in the field of vision such that the widest diameter of the visual field
subtends an angle no greater than 20 degrees shall be considered for
purposes of this paragraph as having a central visual acuity of 20/200
or less. The provisions of paragraphs (2)(A), (3), (4), and (5) of
section 223 (d) shall be applied for purposes of determining whether
an individual is under a disability within the meaning of the first
sentence of this paragraph in the same manner as they are applied for
purposes of paragraph (1) of such section. Nothing in this title shall
be construed as authorizing the Secretary or any other officer or
employee of the United States to interfere in any way with the prac-
tice of medicine or with relationships between practitioners of medi-
cine and their patients, or to exercise any supervision or control over
the administration or operation of any hospital.
(2) (A) The term "period of disability" means a continuous period
(beginning and ending as hereinafter provided in this subsection)
during which an individual was under a disability (as defined in
Sec. 216(i)
146
paragraph (1)), but only if such period is of not less than five full
calendar months' duration or such individual was entitled to benefits
under section 223 for one or more months in such period.
(B) No period of disability shall begin as to any individual unless
such individual files an application for a disability determination with
respect to such period; and no such period shall begin as to any in-
dividual after such individual attains the age of 65.
In the case of a deceased individual, the requirement of an appli-
cation under the preceding sentence may be satisfied by an application
for a disability determination filed with respect to such individual
within 3 months after the month in which he died.
(C) A period of disability shall begin—
(i) on the day the disability began, but only if the individual
satisfies the requirements of paragraph (3) on such day; or
(ii) if such individual does not satisfy the requirements of
paragraph (3) on such day, then on the first day of the first quar-
ter thereafter in which he satisfies such requirements.
(D) A period of disability shall end with the close of whichever
of the following months is the earlier: (i) the month preceding the
month in which the individual attains age 65, or (ii) the second month
following the month in which the disability ceases.
(E) Except as is otherwise provided in subparagraph (F), no appli-
cation for a disability determination which is filed more than 12
months after the month prescribed by subparagraph (D) as the month
in which the period of disability ends (determined without regard to
subparagraph (B) and this subparagraph) shall be accepted as an ap-
plication for purposes of this paragraph.
(F) An application for a disability determination which is filed
more than 12 months after the month prescribed by subparagraph (D)
as the month in which the period of disability ends (determined with-
out regard to subparagraphs (B) and (E)) shall be accepted as an
application for purposes of this paragraph if-
(i) in the case of an application filed by or on behalf of an
individual with respect to a disability which ends after the month
in which the Social Security Amendments of 1967 is enacted, such
application is filed not more than 36 months after the month in
which such disability ended, such individual is alive at the time
the application is filed, and the Secretary finds in accordance
with regulations prescribed by him that the failure of such indi-
vidual to file an application for a disability determination within
the time specified in subparagraph (E) was attributable to a
physical or mental condition of such individual which rendered
him incapable of executing such an application, and
(ii) in the case of an application filed by or on behalf of an
individual with respect to a period of disability which ends in or
147
Sec. 216(i)
before the month in which the Social Security Amendments of
1967 as enacted,
(I) such application is filed not more than 12 months
after the month in which the Social Security Amendments of
1967 is enacted,
(II) a previous application for a disability determination
has been filed by or on behalf of such individual (1) in or
before the month in which the Social Security Amendments
of 1967 is enacted, and (2) not more than 36 months after the
month in which his disability ended, and
(III) the Secretary finds in accordance with regulations
prescribed by him, that the failure of such individual to file
an application within the then specified time period was at-
tributable to a physical or mental condition of such individ-
ual which rendered him incapable of executing such an
application.
•
In making a determination under this subsection, with respect to the
disability or period of disability of any individual whose application
for a determination thereof is accepted solely by reason of the provi-
sions of this subparagraph (F), the provisions of this subsection (other
than the provisions of this subparagraph) shall be applied as such
provisions are in effect at the time such determination is made.
(G) An application for a disability determination filed before the
first day on which the applicant satisfies the requirements for a
period of disability under this subsection shall be deemed a valid
application only if the applicant satisfies the requirements for a period
of disability before the Secretary makes a final decision on the ap-
plication. If upon final decision by the Secretary, or decision upon
judicial review thereof, such applicant is found to satisfy such re-
quirements, the application shall be deemed to have been filed on such
first day.
(3) The requirements referred to in clauses (i) and (ii) of para-
graph (2) (C) are satisfied by an individual with respect to any quar-
ter only if—
(A) he would have been a fully insured individual (as defined
in section 214) had he attained age 62 and filed application for
benefits under section 202 (a) on the first day of such quarter; and
(B) (i) he had not less than 20 quarters of coverage during the
40-quarter period which ends with such quarter, or
(ii) if such quarter ends before he attains (or would attain)
age 31 not less than one-half (and not less than 6) of the quarters
during the period ending with such quarter and beginning after
he attained the age of 21 were quarters of coverage, or (if the
number of quarters in such period is less than 12) not less than
6 of the quarters in the 12-quarter period ending with such quar-
Sec. 216(i)
148
ter were quarters of coverage, except that the provisions of sub-
paragraph (B) of this paragraph shall not apply in the case of
an individual who is blind (within the meaning of "blindness" as
defined in paragraph (1)).
For purposes of subparagraph (B) of this paragraph, when the
number of quarters in any period is an odd number, such number shall
be reduced by one, and a quarter shall not be counted as part of any
period if any part of such quarter was included in a prior period of
disability unless such quarter was a quarter of coverage.
(4) [Repealed.]
Periods of Limitations Ending on Nonwork Days
(j) Where this title, any provision of another law of the United
States (other than the Internal Revenue Code of 1954) relating to or
changing the effect of this title, or any regulation issued by the Secre-
tary pursuant thereto provides for a period within which an act is
required to be done which affects eligibility for or the amount of any
benefit or payment under this title or is necessary to establish or pro-
tect any rights under this title, and such period ends on a Satur-
day, Sunday, or legal holiday, or on any other day all or part of which
is declared to be a nonwork day for Federal employees by statute or
Executive order, then such act shall be considered as done within such
period if it is done on the first day thereafter which is not a Saturday,
Sunday, or legal holiday or any other day all or part of which is
declared to be a nonwork day for Federal employees by statute or
Executive order. For purposes of this subsection, the day on which a
period ends shall include the day on which an extension of such period,
as authorized by law or by the Secretary pursuant to law, ends. The
provisions of this subsection shall not extend the period during which
benefits under this title may (pursuant to section 202 (j) (1) or 223 (b) )
be paid for months prior to the day application for such benefits is
filed, or during which an application for benefits under this title
may (pursuant to section 202 (j) (2) or 223(b)) be accepted as such.
Waiver of Nine-Month Requirement for Widow, Stepchild, or Widower in Case
of Accidental Death or in Case of Serviceman Dying in Line of Duty, or in
Case of Remarriage to the Same Individual
(k) The requirement in clause (5) of subsection (c) or clause (5)
of subsection (g) that the surviving spouse of an individual have been
married to such individual for a period of not less than nine months
immediately prior to the day on which such individual died in order
to qualify as such individual's widow or widower, and the require-
ment in subsection (e) that the stepchild of a deceased individual have
been such stepchild for not less than nine months immediately preced-
ing the day on which such individual died in order to qualify as such
individual's child, shall be deemed to be satisfied, where such individ-
ual dies within the applicable nine-month period, if—
149
Sec. 217(a)
(1) his death-
(A) is accidental, or
(B) occurs in line of duty while he is a member of a uniformed
service serving on active duty (as defined in section 210 (1) (2)),
unless the Secretary determines that at the time of the marriage in-
volved the individual could not have reasonably been expected to live
for nine months, or
21-746 O - 78 12
(2) (A) the widow or widower of such individual had been previ-
ously married to such individual and subsequently divorced and such
requirement would have been satisfied at the time of such divorce if
such previous marriage had been terminated by the death of such
individual at such time instead of by divorce; or
(B) the stepchild of such individual had been the stepchild of such
individual during a previous marriage of such stepchild's parent to
such individual which ended in divorce and such requirement would
have been satisfied at the time of such divorce if such previous mar-
riage had been terminated by the death of such individual at such
time instead of by divorce; except that paragraph (2) of this sub-
section shall not apply if the Secretary determines that at the time of
the marriage involved the individual could not have reasonably been
expected to live for nine months. For purposes of paragraph (1)(A) of
this subsection, the death of an individual is accidental if he receives
bodily injuries solely through violent, external, and accidental means
and, as a direct result of the bodily injuries and independently of all
other causes, loses his life not later than three months after the day
on which he receives such bodily injuries.
Benefits in Case of Veterans
Sec. 217. (a) (1) For purposes of determining entitlement to and
the amount of any monthly benefit for any month after August 1950,
or entitlement to and the amount of any lump-sum death payment in
case of a death after such month, payable under this title on the basis
of the wages and self-employment income of any World War II vet-
eran, and for purposes of section 216 (i) (3), such veteran shall be
deemed to have been paid wages (in addition to the wages, if any,
actually paid to him) of $160 in each month during any part of which
he served in the active military or naval service of the United States
during World War II. This subsection shall not be applicable in the
case of any monthly benefit or lump-sum death payment if-
(A) a larger such benefit or payment, as the case may be, would
be payable without its application; or
(B) a benefit (other than a benefit payable in a lump sum
unless it is a commutation of, or a substitute for, periodic pay-
ments) which is based, in whole or in part, upon the active mili-
tary or naval service of such veteran during World War II is
determined by any agency or wholly owned instrumentality of the
Sec. 217(a)
Revised April 1978
150
United States (other than the Veterans' Administration) to be
payable by it under any other law of the United States or under
a system established by such agency or instrumentality. The pro-
visions of clause (B) shall not apply in the case of any monthly
benefit or lump-sum death payment under this title if its applica-
tion would reduce by $0.50 or less the primary insurance amount
(as computed under section 215 prior to any recomputation thereof
pursuant to subsection (f) of such section) of the individual on
whose wages and self-employment income such benefit or payment
is based. The provisions of clause (B) shall also not apply for
purposes of section 216 (i) (3).
(2) Upon application for benefits or a lump-sum death payment on
the basis of the wages and self-employment income of any World War
II veteran, the Secretary of Health, Education, and Welfare shall
make a decision without regard to clause (B) of paragraph (1) of this
subsection unless he has been notified by some other agency or instru-
mentality of the United States that, on the basis of the military or
naval service of such veteran during World War II, a benefit described
in clause (B) of paragraph (1) has been determined by such agency
or instrumentality to be payable by it. If he has not been so notified,
the Secretary of Health, Education, and Welfare shall then ascertain
whether some other agency or wholly owned instrumentality of the
United States has decided that a benefit described in clause (B) of
paragraph (1) is payable by it. If any such agency or instrumentality
has decided, or thereafter decides, that such a benefit is payable by it,
it shall so notify the Secretary of Health, Education, and Welfare, and
the Secretary shall certify no further benefits for payment or shall
recompute the amount of any further benefits payable, as may be
required by paragraph (1) of this subsection.
(3) Any agency or wholly owned instrumentality of the United
States which is authorized by any law of the United States to pay
benefits, or has a system of benefits which are based, in whole or in
part, on military or naval service during World War II shall, at the
request of the Secretary of Health, Education, and Welfare, certify
to him, with respect to any veteran, such information as the Secretary
deems necessary to carry out his functions under paragraph (2) of
this subsection.
(b) (1) Any World War II veteran who died during the period of
three years immediately following his separation from the active mili-
tary or naval service of the United States shall be deemed to have
died a fully insured individual whose primary insurance amount is
the amount determined under section 215 (c) as in effect in December
1978. Notwithstanding section 215 (d) as in effect in December 1978, the
primary insurance benefit (for purposes of section 215 (c) as in effect
in December 1978) of such veteran shall be determined as provided in
this title as in effect prior to the enactment of this section, except that
Revised April 1978
151
Sec. 217(c)
the 1 per centum addition provided for in section 209 (e) (2) of this Act
as in effect prior to the enactment of this section shall be applicable
only with respect to calendar years prior to 1951. This subsection shall
not be applicable in the case of any monthly benefit or lump-sum death
payment if
(A) a larger such benefit or payment, as the case may be, would
be payable without its application;
(B) any pension or compensation is determined by the Vet-
erans' Administration to be payable by it on the basis of the death
of such veteran;
(C) the death of the veteran occurred while he was in the active
military or naval service of the United States; or
(D) such veteran has been discharged or released from the
active military or naval service of the United States subsequent
to July 26, 1951.1
(2) Upon an application for benefits or a lump-sum death payment
on the basis of the wages and self-employment income of any World
War II veteran, the Secretary of Health, Education, and Welfare
shall make a decision without regard to paragraph (1) (B) of this sub-
section unless he has been notified by the Veterans' Administration
that pension or compensation is determined to be payable by the Vet-
erans' Administration by reason of the death of such veteran. The
Secretary of Health, Education, and Welfare shall thereupon report
such decision to the Veterans' Administration. If the Veterans' Ad-
ministration in any such case has made an adjudication or thereafter
makes an adjudication that any pension or compensation is payable
under any law administered by it, it shall notify the Secretary of
Health, Education, and Welfare, and the Secretary shall certify no
further benefits for payment, or shall recompute the amount of any
further benefits payable, as may be required by paragraph (1) of this
subsection. Any payment theretofore certified by the Secretary of
Health, Education, and Welfare on the basis of paragraph (1) of this
subsection to any individual, not exceeding the amount of any accrued
pension or compensation payable to him by the Veterans' Administra-
tion, shall (notwithstanding the provisions of section 3101 of title 38,
United States Code) be deemed to have been paid to him by such
Administration on account of such accrued pension or compensation.
No such payment certified by the Secretary of Health, Education, and
Welfare, and no payment certified by him for any month prior to the
first month for which any pension or compensation is paid by the
Veterans' Administration shall be deemed by reason of this subsection
to have been an erroneous payment.
(c) In the case of any World War II veteran to whom subsection
(a) is applicable, proof of support required under section 202(h) may
1 Paragraph (1) was amended by sec. 205 (c) of Public Law 95-216.
Sec. 217(c)
152
be filed by a parent at any time prior to July 1951 or prior to the
expiration of two years after the date of the death of such veteran,
whichever is the later.
(d) For the purposes of this section-
(1) The term "World War II" means the period beginning with
September 16, 1940, and ending at the close of July 24, 1947.
(2) The term "World War II veteran" means any individual
who served in the active military or naval service of the United
States at any time during World War II and who, if discharged
or released therefrom, was so discharged or released under condi-
tions other than dishonorable after active service of ninety days or
more or by reason of a disability or injury incurred or aggravated
in service in line of duty; but such term shall not include any indi-
vidual who died while in the active military or naval service of
燕
​the United States if his death was inflicted (other than by an
enemy of the United States) as lawful punishment for a military
or naval offense.
(e) (1) For purposes of determining entitlement to and the amount
of any monthly benefit or lump-sum death payment payable under this
title on the basis of the wages and self-employment income of any vet-
eran (as defined in paragraph (4)), and for purposes of section 216 (i)
(3), such veteran shall be deemed to have been paid wages (in addition
to the wages, if any, actually paid to him) of $160 in each month during
any part of which he served in the active military or naval service of
the United States on or after July 25, 1947, and prior to January 1,
1957. This subsection shall not be applicable in the case of any monthly
benefit or lump-sum death payment if—
(A) a larger such benefit or payment, as the case may be, would
be payable without its application; or
(B) a benefit (other than a benefit payable in a lump sum unless
it is a commutation of, or a substitute for, periodic payments)
which is based, in whole or in part, upon the active military or
naval service of such veteran on or after July 25, 1947, and prior
to January 1, 1957, is determined by an agency or wholly owned
instrumentality of the United States (other than the Veterans'
Administration) to be payable by it under any other law of the
United States or under a system established by such agency or
instrumentality.
The provisions of clause (B) shall not apply in the case of any monthly
benefit or lump-sum death payment under this title if its application
would reduce by $0.50 or less the primary insurance amount (as com-
puted under section 215 prior to any recomputation thereof pursuant
to subsection (f) of such section) of the individual on whose wages
and self-employment income such benefit or payment is based. The
153
Sec. 217(e)
provisions of clause (B) shall also not apply for purposes of section
216(i) (3). In the case of monthly benefits under this title for months
after December 1956 (and any lump-sum death payment under this
title with respect to a death occurring after December 1956) based on
the wages and self-employment income of a veteran who performed
service (as a member of a uniformed service) to which the provisions
of section 210 (1) (1) are applicable, wages which would, but for the
provisions of clause (B), be deemed under this subsection to have been
paid to such veteran with respect to his active military or naval service
performed after December 1950 shall be deemed to have been paid to
him with respect to such service notwithstanding the provisions of
such clause, but only if the benefits referred to in such clause which are
based (in whole or in part) on such service are payable solely by the
Army, Navy, Air Force, Marine Corps, Coast Guard, Coast and Geo-
detic Survey or Public Health Service.
(2) Upon application for benefits or a lump-sum death payment on
the basis of the wages and self-employment income of any veteran, the
Secretary of Health, Education, and Welfare shall make a decision
without regard to clause (B) of paragraph (1) of this subsection un-
less he has been notified by some other agency or instrumentality of the
United States that, on the basis of the military or naval service of
such veteran on or after July 25, 1947, and prior to January 1, 1957,
a benefit described in clause (B) of paragraph (1) has been deter-
mined by such agency or instrumentality to be payable by it. If he has
not been so notified, the Secretary of Health, Education, and Welfare
shall then ascertain whether some other agency or wholly owned in-
strumentality of the United States has decided that a benefit described
in clause (B) of paragraph (1) is payable by it. If any such agency or
instrumentality has decided, or thereafter decides, that such a benefit
is payable by it, it shall so notify the Secretary of Health, Education,
and Welfare, and the Secretary shall certify no further benefits for
payment or shall recompute the amount of any further benefits pay-
able as may be required by paragraph (1) of this subsection.
-
(3) Any agency or wholly owned instrumentality of the United
States which is authorized by any law of the United States to pay
benefits, or has a system of benefits which are based, in whole or in
part, on military or naval service on or after July 25, 1947, and prior
to January 1, 1957, shall, at the request of the Secretary of Health,
Education, and Welfare, certify to him, with respect to any veteran,
such information as the Secretary deems necessary to carry out his
functions under paragraph (2) of this subsection.
(4) For the purposes of this subsection, the term "veteran" means
any individual who served in the active military or naval service of
Sec. 217(e)
154
the United States at any time on or after July 25, 1947, and prior to
January 1, 1957, and who, if discharged or released therefrom, was
so discharged or released under conditions other than dishonorable
after active service of ninety days or more or by reason of a disability
or injury incurred or aggravated in service in line of duty; but such
term shall not include any individual who died while in the active
military or naval service of the United States if his death was inflicted
(other than by an enemy of the United States) as lawful punishment
for a military or naval offense.
(f) (1) In any case where a World War II veteran (as defined in
subsection (d) (2)) or a veteran (as defined in subsection (e) (4)) has
died or shall hereafter die, and his widow or child is entitled under
subchapter III of chapter 83 of title 5, United States Code, to an
annuity in the computation of which his active military or naval
service was included, clause (B) of subsection (a) (1) or clause (B)
of subsection (e)(1) shall not operate (solely by reason of such an-
nuity) to make such subsection inapplicable in the case of any monthly
benefit under section 202 which is based on his wages and self-employ-
ment income; except that no such widow or child shall be entitled
under section 202 to any monthly benefit in the computation of which
such service is included by reason of this subsection (A) unless such
widow or child after December 1956 waives his or her right to re-
ceive such annuity, or (B) for any month prior to the first month
with respect to which the Civil Service Commission certifies to the
Secretary of Health, Education, and Welfare that (by reason of such
waiver) no further annuity will be paid to such widow or child under
such subchapter III on the basis of such veteran's military or civilian
service. Any such waiver shall be irrevocable.
(2) Whenever a widow waives her right to receive such annuity
such waiver shall constitute a waiver on her own behalf; a waiver by
a legal guardian or guardians, or, in the absence of a legal guardian,
the person (or persons) who has the child in his care, of the child's
right to receive such annuity shall constitute a waiver on behalf of
such child. Such a waiver with respect to an annuity based on a vet-
eran's service shall be valid only if the widow and all children, or,
if there is no widow, all the children, waive their rights to receive
annuities under subchapter III of chapter 83 of title 5, United States
Code, based on such veteran's military or civilian service.
(g) (1) In September of 1965, 1970, and 1975, and in October 1980
and in every fifth October thereafter up to and including October 2010,
the Secretary shall determine the amount which, if paid in equal in-
stallments at the beginning of each fiscal year in the period beginning—
(A) with July 1, 1965, in the case of the first such determina-
tion, and
155
Sec. 217(h)
(B) with the beginning of the first fiscal year commencing after
the determination in the case of all other such determinations,
and ending with the close of September 30, 2015, would accumulate,
with interest compounded annually, to an amount equal to the amount
needed to place each of the Trust Funds and the Federal Hospital
Insurance Trust Fund in the same position at the close of September 30,
2015, as he estimates they would otherwise be in at the close of that
date if section 210 of this Act as in effect prior to the Social Security
Act Amendments of 1950, and this section, had not been enacted. The
rate of interest to be used in determining such amount shall be the
rato determined under section 201 (d) for public-debt obligations
which were or could have been issued for purchase by the Trust Funds
in the June preceding the September in which the determinations in
1965, 1970, and 1975 are made and in the September preceding the
October in which all other determinations are made.¹
(2) There are authorized to be appropriated to the Trust Funds
and the Federal Hospital Insurance Trust Fund-
(A) for the fiscal year ending June 30, 1966, an amount equal
to the amount determined under paragraph (1) in September
1965, and
(B) for each fiscal year in the period beginning with July 1,
1966, and ending with the close of September 30, 2015, an amount
equal to the annual installment for such fiscal year under the most
recent determination under paragraph (1) which precedes such
fiscal year.2
(3) For the fiscal year ending September 30, 2016, there is authorized
to be appropriated to the Trust Funds and the Federal Hospital In-
surance Trust Fund such sums as the Secretary determines would
place the Trust Funds and the Federal Hospital Insurance Trust Fund
in the same position in which they would have been at the close of
September 30, 2015, if section 210 of this Act as in effect prior to the
Social Security Act Amendments of 1950, and this section, had not
been enacted.2
(4) There are authorized to be appropriated to the Trust Funds
and the Federal Hospital Insurance Trust Fund annually, as benefits
under this title and part A of title XVIII are paid after September 30,
2015, such sums as the Secretary determines to be necessary to meet the
additional costs resulting from subsections (a), (b), and (e), of such
benefits (including lump-sum death payments).2
Gratuitous Wage Credits for American Citizens Who Served in the Armed
Forces of Allied Countries
(h) (1) For the purposes of this section, any individual who the
Secretary finds-
1 Paragraph (1) was amended by section 16 of P.L. 94–273.
2 Paragraphs (2) (B), (3), and (4) were amended by section 2(23) of P.L. 94–273.
Sec. 217(h)
156
(A) served during World War II (as defined in subsection
(d)(1)) in the active military or naval service of a country which
was on September 16, 1940, at war with a country with which the
United States was at war during World War II;
(B) entered into such active service on or before December 8,
1941;
(C) was a citizen of the United States throughout such period
of service or lost his United States citizenship solely because of
his entrance into such service;
(D) had resided in the United States for a period or periods
aggregating four years during the five-year period ending on the
day of, and was domiciled in the United States on the day of, such
entrance into such active service; and
(E) (i) was discharged or released from such service under con-
ditions other than dishonorable after active service of ninety days
or more or by reason of a disability or injury incurred or aggra-
vated in service in line of duty, or
(ii) died while in such service,
shall be considered a World War II veteran (as defined in subsection
(d) (2)) and such service shall be considered to have been performed
in the active military or naval service of the United States.
(2) In the case of any individual to whom paragraph (1) applies,
proof of support required under section 202 (f) or (h) may be filed
at any time prior to the expiration of two years after the date of such
individual's death or the date of the enactment of this subsection,
whichever is the later.
Voluntary Agreements for Coverage of State and Local
Employees
Purpose of Agreement
Sec. 218. (a) (1) The Secretary of Health, Education, and Welfare
shall, at the request of any State, enter into an agreement with such
State for the purpose of extending the insurance system established
by this title to services performed by individuals as employees of such
State or any political subdivision thereof. Each such agreement shall
contain such provisions, not inconsistent with the provisions of this
section, as the State may request.
(2) Notwithstanding section 210(a), for the purposes of this title
the term "employment" includes any service included under an agree-
ment entered into under this section.
Definitions
(b) For the purposes of this section—
(1) The term "State" does not include the District of Columbia,
Guam or American Samoa.
157
Sec. 218(c)
(2) The term "political subdivision" includes an instrumen-
tality of (A) a State, (B) one or more political subdivisions of a
State, or (C) a State and one or more of its political subdivisions.
(3) The term "employee" includes an officer of a State or politi-
cal subdivision.
(4) The term "retirement system" means a pension, annuity,
retirement, or similar fund or system established by a State or by
a political subdivision thereof.
(5) The term "coverage group" means (A) employees of the State
other than those engaged in performing service in connection with a
proprietary function; (B) employees of a political subdivision of a
State other than those engaged in performing service in connection
with a proprietary function; (C) employees of a State engaged in per-
forming service in connection with a single proprietary function; or
(D) employees of a political subdivision of a State engaged in per-
forming service in connection with a single proprietary function. If
under the preceding sentence an employee would be included in more
than one coverage group by reason of the fact that he performs service
in connection with two or more proprietary functions or in connection
with both a proprietary function and a nonproprietary function, he
shall be included in only one such coverage group. The determination
of the coverage group in which such employee shall be included shall
be made in such manner as may be specified in the agreement. Persons
employed under section 709 of title 32, United States Code, who elected
under section 6 of the National Guard Technicians Act of 1968 to
remain covered by an employee retirement system of, or plan sponsored
by, a State or the Commonwealth of Puerto Rico, shall, for the pur-
poses of this Act, be employees of the State or the Commonweath of
Puerto Rico and (notwithstanding the preceding provisions of this
paragraph), shall be deemed to be a separate coverage group. For pur-
poses of this section, individuals employed pursuant to an agreement,
entered into pursuant to section 205 of the Agricultural Marketing
Act of 1946 (7 U.S.C. 1624) or section 14 of the Perishable Agri-
cultural Commodities Act, 1930 (7 U.S.C. 499n), between a State and
the United States Department of Agriculture to perform services as
inspectors of agricultural products may be deemed, at the option of
the State, to be employees of the State and (notwithstanding the pre-
ceding provisions of this paragraph) shall be deemed to be a separate
coverage group.
Services Covered
(c) (1) An agreement under this section shall be applicable to any
one or more coverage groups designated by the State.
(2) In the case of each coverage group to which the agreement ap-
plies, the agreement must include all services (other than services
1
Sec. 218(c)
158
Revised April 1978
excluded by or pursuant to subsection (d) or paragraph (3), (5), or
(6) of this subsection) performed by individuals as members of such
group.
(3) Such agreement shall, if the State requests it, exclude (in the
case of any coverage group) any one or more of the following:
(A) All services in any class or classes of (i) elective positions,
(ii) part-time positions, or (iii) positions the compensation for
which is on a fee basis;
(B) All services performed by individuals as members of a
coverage group in positions covered by a retirement system on
the date such agreement is made applicable to such coverage group,
but only in the case of individuals who, on such date (or, if
later, the date on which they first occupy such positions), are
not eligible to become members of such system and whose services
in such positions have not already been included under such
agreement pursuant to subsection (d) (3).
(4) The Secretary of Health, Education, and Welfare shall, at the
request of any State, modify the agreement with such State so as to
(A) include any coverage group to which the agreement did not pre-
viously apply, or (B) include, in the case of any coverage group to
which the agreement applies, services previously excluded from the
agreement; but the agreement as so modified may not be inconsistent
with the provisions of this section applicable in the case of an original
agreement with a State. A modification of an agreement pursuant to
clause (B) of the preceding sentence may apply to individuals to
whom paragraph (3)(B) is applicable (whether or not the previous
exclusion of the service of such individuals was pursuant to such para-
graph), but only if such individuals are, on the effective date specified
in such modification, ineligible to be members of any retirement sys-
tem or if the modification with respect to such individuals is pursuant
to subsection (d)(3).
(5) Such agreement shall, if the State requests it, exclude (in the
case of any coverage group) any agricultural labor, or service per-
formed by a student, designated by the State. This paragraph shall
apply only with respect to service which is excluded from employment
by any provision of section 210(a) other than paragraph (7) of such
section and service the remuneration for which is excluded from wages
by paragraph (2) of section 209(h).
(6) Such agreement shall exclude—
(A) service performed by an individual who is employed to
relieve him from unemployment,
(B) service performed in a hospital, home, or other institution
by a patient or inmate thereof,
:
Revised April 1978
159
Sec. 218(d)
(C) covered transportation service (as determined under sec-
tion 210(k), and
(D) service (other than agricultural labor or service performed
by a student) which is excluded from employment by any pro-
vision of section 210 (a) other than paragraph (7) of such section,
and
(E) service performed by an individual as an employee serving
on a temporary basis in case of fire, storm, snow, earthquake,
flood, or other similar emergency.
(7) No agreement may be made applicable (either in the original
agreement or by any modification thereof) to service performed by
any individual to whom paragraph (3) (B) is applicable unless such
agreement provides (in the case of each coverage group involved)
either that the service of any individual to whom such paragraph is
applicable and who is a member of such coverage group shall con-
tinue to be covered by such agreement in case he thereafter becomes
eligible to be a member of a retirement system, or that such service
shall cease to be so covered when he becomes eligible to be a member
of such a system (but only if the agreement is not already applicable
to such system pursuant to subsection (d)(3)), whichever may be
desired by the State.
(8) Notwithstanding any other provision of this section, the agree-
ment with any State entered into under this section may at the
option of the State be modified on or after January 1, 1968, to exclude
service performed by election officials or election workers if the remu-
neration paid in a calendar year for such service is less than $100.
Any modification of an agreement pursuant to this paragraph shall
be effective with respect to services performed after an effective date,
specified in such modification, which shall not be earlier than the
last day of the calendar year in which the modification is mailed or
delivered by other means to the Secretary.¹
Positions Covered by Retirement Systems
(d) (1) No agreement with any State may be made applicable
(either in the original agreement or by any modification thereof) to
any service performed by employees as members of any coverage
group in positions covered by a retirement system either (A) on the
date such agreement is made applicable to such coverage group, or
(B) on the date of enactment of the succeeding paragraph of this sub-
section (except in the case of positions which are, by reason of action.
by such State or political subdivision thereof, as may be appropriate,
taken prior to the date of enactment of such succeeding paragraph,
no longer covered by a retirement system on the date referred to in
¹ Paragraph (8) was amended by sec. 353(b)(1) of Public Law 95–216.
Sec. 218(d)
160
Revised April 1978
clause (A), and except in the case of positions excluded by para-
graph (5)(A). The preceding sentence shall not be applicable to any
service performed by an employee as a member of any coverage
group in a position (other than a position excluded by paragraph
(5)(A)) covered by a retirement system on the date an agreement is
made applicable to such coverage group, if on such date (or, if later,
the date on which such individual first occupies such position), such
individual is ineligible to be a member of such system.
(2) It is hereby declared to be the policy of the Congress in enact-
ing the succeeding paragraphs of this subsection that the protection
afforded employees in positions covered by a retirement system on
the date an agreement under this section is made applicable to serv-
ice performed in such positions, or receiving periodic benefits under
such retirement system at such time, will not be impaired as a result.
of making the agreement so applicable or as a result of legislative
enactment in anticipation thereof.
(3) Nothwithstanding paragraph (1), an agreement with a State
may be made applicable (either in the original agreement or by any
modification thereof) to service performed by employees in positions
covered by a retirement system (including positions specified in para-
graph (4) but not including positions excluded by or pursuant to
paragraph (5)), if the governor of the State, or an official of the State
designated by him for the purpose, certifies to the Secretary of Health,
Education, and Welfare that the following conditions have been met:
(A) A referendum by secret written ballot was held on the
question of whether service in positions covered by such retire-
ment system should be excluded from or included under an
agreement under this section;
(B) An opportunity to vote in such referendum was given (and
was limited) to eligible employées;
(C) Not less than ninety days' notice of such referendum was
given to all such employees;
(D) Such referendum was conducted under the supervision of
the governor or an agency or individual designated by him;
and
(E) A majority of the eligible employees voted in favor of
including service in such positions under an agreement under this
section.
An employee shall be deemed an "eligible employee" for purposes of
any referendum with respect to any retirement system if, at the time
such referendum was held, he was in a position covered by such retire-
ment system and was a member of such system, and if he was in such
a position at the time notice of such referendum was given as required
Revised April 1978
161
Sec. 218(d)
by clause (C) of the preceding sentence; except that he shall not be
deemed an "eligible employee" if, at the time the referendum was held,
he was in a position to which the State agreement already applied,
or if he was in a position excluded by or pursuant to paragraph (5).
No referendum with respect to a retirement system shall be valid for
purposes of this paragraph unless held within the two-year period
which ends on the date of execution of the agreement or modification
which extends the insurance system established by this title to such
retirement system, nor shall any referendum with respect to a retire-
ment system be valid for purposes of this paragraph if held less than
one year after the last previous referendum held with respect to such
retirement system.
(4) For the purposes of subsection (c) of this section, the following
employees shall be deemed to be a separate coverage group-
(A) all employees in positions which were covered by the same
retirement system on the date the agreement was made applicable
to such system (other than employees to whose services the agree-
ment already applied on such date);
(B) all employees in positions which became covered by such
system at any time after such date; and
(C) all employees in positions which were covered by such
system at any time before such date and to whose services the
insurance system established by this title has not been extended
before such date because the positions were covered by such retire-
ment system (including employees to whose services the agree-
ment was not applicable on such date because such services were
excluded pursuant to subsection (c) (3) (B)).
(5)(A) Nothing in paragraph (3) of this subsection shall author-
ize the extension of the insurance system established by this title to
service in any policeman's or fireman's position.¹
1
(B) At the request of the State, any class or classes of positions
covered by a retirement system which may be excluded from the agrec-
ment pursuant to paragraph (3) or (5) of subsection (c), and to
which the agreement does not already apply, may be excluded from
the agreement at the time it is made applicable to such retirement sys-
tem; except that, notwithstanding the provisions of paragraph (3)
(B) of such subsection, such exclusion may not include any services.
to which such paragraph (3) (B) is applicable. In the case of any such
exclusion, each such class so excluded shall, for purposes of this sub-
section, constitute a separate retirement system in case of any modifi-
cation of the agreement thereafter agreed to.
Full
(6)(A) If a retirement system covers positions of employees of
the State and positions of employees of one or more political subdivi-
1 However, see sec. 218(k)(3) and sec. 218(p) of this title. Also see sec. 318(a) of
Public Law 95-216 which appears on pp. 808-809 of this document.
Sec. 218(d)
Revised April 1978
162
sions of the State, or covers positions of employees of two or more
political subdivisions of the State, then, for purposes of the preceding
paragraphs of this subsection, there shall, if the State so desires, be
deemed to be a separate retirement system with respect to any one
or more of the political subdivisions concerned and, where the retire-
ment system covers positions of employees of the State, a separate
retirement system with respect to the State or with respect to the State
and any one or more of the political subdivisions concerned. Where
a retirement system covering positions of employees of a State and
positions of employees of one or more political subdivisions of a State,
or covering positions of employees of two or more political subdivi-
sions of the State, is not divided into separate retirement systems pur-
suant to the preceding sentence or pursuant to subparagraph (C),
then the State may, for purposes of subsection (f) only, deem the
system to be a separate retirement system with respect to any one or
more of the political subdivisions concerned and, where the retirement
system covers positions of employees of the State, a separate retire-
ment system with respect to the State or with respect to the State and
any one or more of the political subdivisions concerned.
GRAN
(B) If a retirement system covers positions of employees of one or
more institutions of higher learning, then, for purposes of such pre-
ceding paragraphs there shall, if the State so desires, be deemed to be
a separate retirement system for the employees of each such institution
of higher learning. For the purposes of this subparagraph, the term
“institutions of higher learning" includes junior colleges and teachers
colleges. If a retirement system covers positions of employees of a
hospital which is an integral part of a political subdivision, then, for
purposes of the preceding paragraphs there shall, if the State so
desires, be deemed to be a separate retirement system for the employees
of such hospital.
(C) For the purposes of this subsection, any retirement system estab-
lished by the State of Alaska, California, Connecticut, Florida, Geor-
gia, Illinois, Massachusetts, Minnesota, Nevada, New Jersey, New Mex-
ico, New York, North Dakota, Pennsylvania, Rhode Island, Tennessee,
Texas, Vermont, Washington, Wisconsin, or Hawaii, or any political
subdivision of any such State, which, on, before, or after the date of
enactment of this subparagraph, is divided into two divisions or parts,
one of which is composed of positions of members of such system who
desire coverage under an agreement under this section and the other
of which is composed of positions of members of such system who do
not desire such coverage, shall, if the State so desires and if it is pro-
vided that there shall be included in such division or part composed
of members desiring such coverage the positions of individuals who
become members of such system after such coverage is extended, be
Revised April 1978
163
Sec. 218(d)
deemed to be a separate retirement system with respect to each such
division or part. If, in the case of a separate retirement system which
is deemed to exist by reason of subparagraph (A) and which has been
divided into two divisions or parts pursuant to the first sentence of
this subparagraph, individuals become members of such system by rea-
son of action taken by a political subdivision after coverage under an
agreement under this section has been extended to the division or part
thereof composed of positions of individuals who desire such cover-
age, the positions of such individuals who become members of such
retirement system by reason of the action so taken shall be included
in the division or part of such system composed of positions of mem-
bers who do not desire such coverage if (i) such individuals, on the
day before becoming such members, were in the division or part of an-
other separate retirement system (deemed to exist by reason of sub-
paragraph (A)) composed of positions of members of such system who
do not desire coverage under an agreement under this section, and (ii)
all of the positions in the separate retirement system of which such in-
dividuals so become members and all of the positions in the separate
retirement system referred to in clause (i) would have been covered
by a single retirement system if the State had not taken action to pro-
vide for separate retirement systems under this paragraph.¹
(D) (i) the position of any individual which is covered by any re-
tirement system to which subparagraph (C) is applicable shall, if such
individual is ineligible to become a member of such system on Au-
gust 1, 1956, or, if later, the day he first occupies such position, be
deemed to be covered by the separate retirement system consisting of
the positions of members of the division or part who do not desire
coverage under the insurance system established under this title.
(ii) Notwithstanding clause (i), the State may, pursuant to sub-
section (c)(4)(B) and subject to the conditions of continuation or
termination of coverage provided for in subsection (c) (7), modify its
agreement under this section to include services performed by all
individuals described in clause (i) other than those individuals to
whose services the agreement already applies. Such individuals shall
be deemed (on and after the effective date of the modification) to be
in positions covered by the separate retirement system consisting of
the positions of members of the division or part who desire coverage
under the insurance system established under this title.
(E) An individual who is in a position covered by a retirement
system to which subparagraph (C) is applicable and who is not a
member of such system but is eligible to become a member thereof
shall, for purposes of this subsection (other than paragraph (8)),
be
regarded as a member of such system; except that, in the case of
any retirement system a division or part of which is covered under
1 Subparagraph (C) was amended by sec. 320 of Public Law 95–216.
Sec. 218(d)
164
the agreement (either in the original agreement or by a modification
thereof), which coverage is agreed to prior to 1960, the preceding
provisions of this subparagraph shall apply only if the State so re-
quests and any such individual referred to in such preceding provi-
sions shall, if the State so requests, be treated, after division of the
retirement system pursuant to such subparagraph (C), the same as
individuals in positions referred to in subparagraph (F).
(F) In the case of any retirement system divided pursuant to sub-
paragraph (C), the position of any member of the division or part
composed of positions of members who do not desire coverage may be
transferred to the separate retirement system composed of positions
of members who desire such coverage if it is so provided in a modi-
fication of such agreement which is mailed, or delivered by other
means, to the Secretary prior to 1970 or, if later, the expiration of
two years after the date on which such agreement, or the modification
thereof making the agreement applicable to such separate retirement
system, as the case may be, is agreed to, but only if, prior to such
modification or such later modification, as the case may be, the in-
dividual occupying such position files with the State a written request
for such transfer. Notwithstanding subsection (f) (1), any such modi-
fication or later modification, providing for the transfer of additional
positions within a retirement system previously divided pursuant to
subparagraph (C) to the separate retirement system composed of
positions of members who desire coverage, shall be effective with
respect to services performed after the same effective date as that
which was specified in the case of such previous division.
(G) For the purposes of this subsection, in the case of any retire-
ment system of the State of Florida, Georgia, Minnesota, North
Dakota, Pennsylvania, Washington, or Hawaii which covers positions
of employees of such State who are compensated in whole or in part
from grants made to such State under title III, there shall be deemed
to be, if such State so desires, a separate retirement system with respect
to any of the following:
(i) the positions of such employees;
(ii) the positions of all employees of such State covered by such
retirement system who are employed in the department of such
State in which the employees referred to in clause (i) are em-
ployed; or
(iii) employees of such State covered by such retirement sys-
tem who are employed in such department of such State in posi-
tions other than those referred to in clause (i).
(7) The certification by the governor (or an official of the State
designated by him for the purpose) required under paragraph (3)
shall be deemed to have been made, in the case of a division or part
(created under subparagraph (C) of paragraph (6) or the corre-
165
Sec. 218(e)
sponding provision of prior law) consisting of the positions of mem-
bers of a retirement system who desire coverage under the agreement
under this section, if the governor (or the official so designated) certi-
fies to the Secretary of Health, Education, and Welfare that-
(A) an opportunity to vote by written ballot on the question of
whether they wish to be covered under an agreement under this
section was given to all individuals who were members of such
system at the time the vote was held;
(B) not less than ninety days' notice of such vote was given to
all individuals who were members of such system on the date the
notice was issued;
(C) the vote was conducted under the supervision of the gover-
nor or an agency or individual designated by him; and
(D) such system was divided into two parts or divisions in
accordance with the provisions of subparagraphs (C) and (D)
of paragraph (6) or the corresponding provision of prior law.
For purposes of this paragraph, an individual in a position to which
the State agreement already applied or in a position excluded by or
pursuant to paragraph (5) shall not be considered a member of the
retirement system.
(8) (A) Notwithstanding paragraph (1), if under the provisions of
this subsection an agreement is, after December 31, 1958, made appli-
cable to service performed in positions covered by a retirement system,
service performed by an individual in a position covered by such a
system may not be excluded from the agreement because such position.
is also covered under another retirement system.
(B) Subparagraph (A) shall not apply to service performed by an
individual in a position covered under a retirement system if such
individual, on the day the agreement is made applicable to service
performed in positions covered by such retirement system, is not a
member of such system and is a member of another system.
(C) If an agreement is made applicable, prior to 1959, to service in
positions covered by any retirement system, the preceding provisions
of this paragraph shall be applicable in the case of such system if the
agreement is modified to so provide.
(D) Except in the case of agreements with the States named in sub-
section (p) and agreements with interstate instrumentalities, nothing
in this paragraph shall authorize the application of an agreement to
service in any policeman's or fireman's position.
Payments and Reports by States
(e) (1) Each agreement under this section shall provide-
(A) that the State will pay to the Secretary of the Treasury,
at such time or times as the Secretary of Health, Education, and
Welfare may by regulations prescribe, amounts equivalent to the
sum of the taxes which would be imposed by sections 3101 and
21-746 O - 78
-
13
#
Sec. 218(e)
166
Revised April 1978
3111 of the Internal Revenue Code of 1954 if the services of em-
ployees covered by the agreement constituted employment as de-
fined in section 3121 of such code; and
(B) that the State will comply with such regulations relating
to payments and reports as the Secretary of Health, Education,
and Welfare may prescribe to carry out the purposes of this
section.¹
(2) Where-
(A) an individual in any calendar year performs services to
which an agreement under this section is applicable (i) as the
employee of two or more political subdivisions of a State or
(ii) as the employee of a State and one or more political sub-
divisions of such State; and
(B) such State provides all of the funds for the payment of
those amounts referred to in paragraph (1)(A) which are equiv-
alent to the taxes imposed by section 3111 of the Internal Revenue
Code of 1954 with respect to wages paid to such individual for
such services; and
(C) the political subdivision or subdivisions involved do not
reimburse such State for the payment of such amounts or, in the
case of services described in subparagraph (A) (ii), for the pay-
ment of so much of such amounts as is attributable to employ-
ment by such subdivision or subdivisions;
then, notwithstanding paragraph (1), the agreement under this sec-
tion with such State may provide (either in the original agreement
or by a modification thereof) that the amounts referred to in para-
graph (1)(A) may be computed as though the wages paid to such
individual for the services referred to in clause (A) of this paragraph
were paid by one political subdivision for services performed in its
employ; but the provisions of this paragraph shall be applicable only
where such State complies with such regulations as the Secretary
may prescribe to carry out the purposes of this paragraph. The pre-
ceding sentence shall be applicable with respect to wages paid after
an effective date specified in such agreement or modification, but in
no event with respect to wages paid before (i) January 1, 1957, in
the case of an agreement or modification which is mailed or delivered
by other means to the Secretary before January 1, 1962, or (ii) the
first day of the year in which the agreement or modification is mailed
or delivered by other means to the Secretary, in the case of an agree-
ment or modification which is so mailed or delivered on or after
January 1, 1962.
Effective Date of Agreement
(f) (1) Except as provided in subsection (e) (2), any agreement or
modification of an agreement under this section shall be effective with
¹ See section 7 of Public Law 94-202 (p. 772 of this document).
Revised April 1978
167
Sec. 218(g)
respect to services performed after an effective date specified in such
agreement or modification; except that such date may not be earlier
than the last day of the sixth calendar year preceding the year in
which such agreement or modification, as the case may be, is agreed
to by the Secretary and the State.
(2) In the case of service performed by members of any coverage
group-
(A) to which an agreement under this section is made applica-
ble, and
(B) with respect to which the agreement, or modification there-
of making the agreement so applicable, specifies an effective date
earlier than the date of execution of such agreement and such
modification, respectively,
the agreement shall, if so requested by the State, be applicable to such
services (to the extent the agreement was not already applicable)
performed before such date of execution and after such effective date
by any individual as a member of such coverage group if he is such a
member on a date, specified by the State, which is earlier than such
date of execution, except that in no case may the date so specified be
earlier than the date such agreement or such modification, as the case
may be, is mailed, or delivered by other means, to the Secretary.
(3) Notwithstanding the provisions of paragraph (2) of this sub-
section, in the case of services performed by individuals as members
of any coverage group to which an agreement under this section is
made applicable, and with respect to which there were timely paid
in good faith to the Secretary of the Treasury amounts equivalent to
the sum of the taxes which would have been imposed by sections 3101
and 3111 of the Internal Revenue Code of 1954 had such services.
constituted employment for purposes of chapter 21 of such Code at
the time they were performed, and with respect to which refunds were
not obtained, such individuals may, if so requested by the State, be
deemed to be members of such coverage group on the date designated
pursuant to paragraph (2).1
Termination of Agreement
(g) (1) Upon giving at least two years' advance notice in writing
to the Secretary of Health, Education, and Welfare, a State may ter-
minate, effective at the end of a calendar year specified in the
notice, its agreement with the Secretary either-
(A) in its entirety but only if the agreement has been in effect
from its effective date for not less than five years prior to the
receipt of such notice; or
(B) with respect to any coverage group designated by the
State, but only if the agreement has been in effect with respect to
1 See also sec. 318 (b) of Public Law 95-216 which appears in this document on p. 809.
Sec. 218(g)
168
Revised April 1978
such coverage group for not less than five years prior to the
receipt of such notice.¹
(2) If the Secretary, after reasonable notice and opportunity for
hearing to a State with whom he has entered into an agreement pur-
suant to this section, finds that the State has failed or is no longer
legally able to comply substantially with any provision of such agree-
ment or of this section, he shall notify such State that the agreement
will be terminated in its entirety, or with respect to any one or more
coverage groups designated by him, at such time, not later than two
years from the date of such notice, as he deems appropriate, unless
prior to such time he finds that there no longer is any such failure
or that the cause for such legal inability has been removed.
(3) If any agreement entered into under this section is terminated
in its entirety, the Secretary and the State may not again enter into
an agreement pursuant to this section. If any such agreement is termi-
nated with respect to any coverage group, the Secretary and the State
may not thereafter modify such agreement so as to again make the
agreement applicable with respect to such coverage group.
Deposits in Trust Funds; Adjustments
(h) (1) All amounts received by the Secretary of the Treasury under
an agreement made pursuant to this section shall be deposited in the
Trust Funds and the Federal Hospital Insurance Trust Fund in the
ratio in which amounts are appropriated to such Funds pursuant to
subsection (a)(3) of section 201, subsection (b)(1) of such section,
and subsection (a) (1) of section 1817, respectively.
(2) If more or less than the correct amount due under an agreement
made pursuant to this section is paid with respect to any payment of
remuneration, proper adjustments with respect to the amounts due
under such agreement shall be made, without interest, in such manner
and at such times as may be prescribed by regulations of the Secretary
of Health, Education, and Welfare.
(3) If an overpayment cannot be adjusted under paragraph (2),
the amount thereof and the time or times it is to be paid shall be certi-
fied by the Secretary of Health, Education, and Welfare to the Man-
aging Trustee, and the Managing Trustee, through the Fiscal Service
of the Treasury Department and prior to any action thereon by the
General Accounting Office, shall make payment in accordance with
such certification. The Managing Trustee shall not be held personally
liable for any payment or payments made in accordance with a certifi-
cation by the Secretary of Health, Education, and Welfare.
A
Regulations
(i) Regulations of the Secretary of Health, Education, and Welfare
to carry out the purposes of this section shall be designed to make the
1 Paragraph (1) was amended by sec. 353(b) of Public Law 95-216.
169
Sec. 218(k)
1
requirements imposed on States pursuant to this section the same, so
far as practicable, as those imposed on employers pursuant to this title
and chapter 21 and subtitle F of the Internal Revenue Code of 1954.¹
Failure to Make Payments
(j) In case any State does not make, at the time or times due, the
payments provided for under an agreement pursuant to this section
there shall be added, as part of the amounts due, interest at the rate of
6 per centum per annum from the date due until paid, and the Secre-
tary of Health, Education, and Welfare may, in his discretion, deduct
such amounts plus interest from any amounts certified by him to the
Secretary of the Treasury for payment to such State under any other
provision of this Act. Amounts so deducted shall be deemed to have
been paid to the State under such other provision of this Act. Amounts
equal to the amounts deducted under this subsection are hereby appro-
priated to the Trust Funds in the ratio in which amounts are deposited
in such Funds pursuant to subsection (h) (1).
Instrumentalities of Two or More States
(k) (1) The Secretary of Health, Education, and Welfare may, at
the request of any instrumentality of two or more States, enter into
an agreement with such instrumentality for the purpose of extending
the insurance system established by this title to services performed by
individuals as employees of such instrumentality. Such agreement, to
the extent practicable, shall be governed by the provisions of this sec-
tion applicable in the case of an agreement with a State.
(2) In the case of any instrumentality of two or more States, if—
(A) employees of such instrumentality are in positions covered
by a retirement system of such instrumentality or of any of such
States or any of the political subdivisions thereof, and
(B) such retirement system is (on, before, or after the date of
enactment of this paragraph) divided into two divisions or parts,
one of which is composed of positions of members of such system
who are employees of such instrumentality and who desire cover-
age under an agreement under this section and the other of which
is composed of positions of members of such system who are em-
ployees of such instrumentality and who do not desire such cover-
age, and
G
(C) it is provided that there shall be included in such division
or part composed of the positions of members desiring such cov-
erage the positions of employees of such instrumentality who be-
come members of such system after such coverage is extended,
then such retirement system shall, if such instrumentality so desires,
be deemed to be a separate retirement system with respect to each such
1 Sections 7 and 8(k) of Public Law 94-202 place certain limits on the discretion of
the Secretary of Health, Education, and Welfare to issue regulations under this sub-
section. These provisions appear in this document on pages 772-773.
Sec. 218(k)
170
division or part. An individual who is in a position covered by a
retirement system divided pursuant to the preceding sentence and
who is not a member of such system but is eligible to become a member
thereof shall, for purposes of this subsection, be regarded as a member
of such system. Coverage under the agreement of any such individual
shall be provided under the same conditions, to the extent prac-
ticable, as are applicable in the case of the States to which the pro-
visions of subsection (d) (6) (C) apply. The position of any employee
of any such instrumentality which is covered by any retirement
system to which the first sentence of this paragraph is applicable
shall, if such individual is ineligible to become a member of such
system on the date of enactment of this paragraph or, if later, the
day he first occupies such position, be deemed to be covered by the
separate retirement system consisting of the positions of members of
the division or part who do not desire coverage under the insurance.
system established under this title. Services in positions covered by
a separate retirement system created pursuant to this subsection (and
consisting of the positions of members who desire coverage under an
agreement under this section) shall be covered under such agreement
on compliance, to the extent practicable, with the same conditions as
are applicable to coverage under an agreement under this section of
services in positions covered by a separate retirement system created
pursuant to subparagraph (C) of subsection (d) (6) or the corre-
sponding provision of prior law (and consisting of the positions of
members who desire coverage under such agreement).
(3) Any agreement with any instrumentality of two or more States
entered into pursuant to this Act may, notwithstanding the provisions
of subsection (d)(5)(A) and the references thereto in subsections
(d) (1) and (d) (3), apply to service performed by employees of such
instrumentality in any policeman's or fireman's position covered by
a retirement system, but only upon compliance, to the extent prac-
ticable, with the requirements of subsection (d) (3). For the purpose
of the preceding sentence, a retirement system which covers positions
of policemen or firemen or both, and other positions shall, if the in-
strumentality concerned so desires, be deemed to be a separate retire-
ment system with respect to the positions of such policemen or firemen,
or both, as the case may be.
Delegation of Functions
(1) The Secretary of Health, Education, and Welfare is authorized
pursuant to agreement with the head of any Federal agency, to dele-
gate any of his functions under this section to any officer or employee
of such agency and otherwise to utilize the services and facilities
of such agency in carrying out such functions, and payment therefor
Revised April 1978
171
Sec. 218(0)
shall be in advance or by way of reimbursement, as may be provided
in such agreement.
Wisconsin Retirement Fund
(m) (1) Notwithstanding paragraph (1) of subsection (d), the
agreement with the State of Wisconsin may, subject to the provisions
of this subsection, be modified so as to apply to service performed by
employees in positions covered by the Wisconsin retirement fund
or any successor system.¹
(2) All employees in positions covered by the Wisconsin retirement
fund at any time on or after January 1, 1951, shall, for the purposes
of subsection (c) only, be deemed to be a separate coverage group; ex-
cept that there shall be excluded from such separate coverage group
all employees in positions to which the agreement applies without re-
gard to this subsection.
(3) The modification pursuant to this subsection shall exclude (in
the case of employees in the coverage group established by paragraph
(2) of this subsection) service performed by any individual during
any period before he is included under the Wisconsin retirement fund.
(4) The modification pursuant to this subsection shall, if the State
of Wisconsin requests it, exclude (in the case of employees in the
coverage group established by paragraph (2) of this subsection) all
service performed in policemen's positions, all service performed in
firemen's positions, or both.
Certain Positions No Longer Covered by Retirement Systems
(n) Notwithstanding subsection (d), an agreement with any State
entered into under this section prior to the date of the enactment of
this subsection may, prior to January 1, 1958, be modified pursuant
to subsection (c) (4) so as to apply to services performed by employees,
as members of any coverage group to which such agreement already
applies (and to which such agreement applied on such date of enact-
ment), in positions (1) to which such agreement does not already
apply, (2) which were covered by a retirement system on the date
such agreement was made applicable to such coverage group, and
(3) which, by reason of action by such State or political subdivision
thereof, as may be appropriate, taken prior to the date of the enact-
ment of this subsection, are no longer covered by a retirement system
on the date such agreement is made applicable to such services.
Certain Employees of the State of Utah
(0) Notwithstanding the provisions of subsection (d), the agree-
ment with the State of Utah entered into pursuant to this section may
be modified pursuant to subsection (c) (4) so as to apply to services
performed for any of the following, the employees performing serv-
1 Paragraph (1) was amended by sec. 321 of Public Law 95–216.
Sec. 218(0)
Revised April 1978
172
ices for each of which shall constitute a separate coverage group:
Weber Junior College, Carbon Junior College, Dixie Junior College,
Central Utah Vocational School, Salt Lake Area Vocational School,
Center for the Adult Blind, Union High School (Roosevelt, Utah),
Utah High School Activities Association, State Industrial School,
State Training School, State Board of Education, and Utah School
Employees Retirement Board. Any modification agreed to prior to
January 1, 1955, may be made effective with respect to services per-
formed by employees as members of any of such coverage groups
after an effective date specified therein, except that in no case may
any such date be earlier than December 31, 1950.
Policemen and Firemen in Certain States
(p) (1) Any agreement with the State of Alabama, California,
Florida, Georgia, Hawaii, Idaho, Kansas, Maine, Maryland, Missis-
sippi, Montana, New York, North Carolina, North Dakota, Oregon,
Puerto Rico, South Carolina, South Dakota, Tennessee, Texas, Ver-
mont, Virginia, or Washington entered into pursuant to this section
prior to the date of enactment of this subsection may, notwithstanding
the provisions of subsection (d) (5) (A) and the references thereto in
subsections (d) (1) and (d) (3), be modified pursuant to subsection (c)
(4) to apply to service performed by employees of such State or any
political subdivision thereof in any policeman's or fireman's position
covered by a retirement system in effect on or after the date of the en-
actment of this subsection, but only upon compliance with the require-
ments of subsection (d) (3). For the purposes of the preceding sentence,
a retirement system which covers positions of policemen or firemen, or
both, and other positions shall, if the State concerned so desires, be
deemed to be a separate retirement system with respect to the positions
of such policemen or firemen, or both, as the case may be.¹
1
(2) A State, not otherwise listed by name in paragraph (1), shall
be deemed to be a State listed in such paragraph for the purpose of
extending coverage under this title to service in firemen's positions
covered by a retirement system, if the Governor of the State, or an
official of the State designated by him for the purpose, certifies to
the Secretary of Health, Education, and Welfare that the overall bene-
fit protection of the employees in such positions would be improved by
reason of the extension of such coverage to such employees. Notwith-
standing the provisions of the second sentence of such paragraph (1),
such firemen's positions shall be deemed a separate retirement system
and no other positions shall be included in such system.2
1 Paragraph (1) was amended by sec. 319 of Public Law 95-216.
2 Public Law 90-248, sec. 120(a) (2), added paragraph (2) applicable in the case of any
State with respect to modifications of such State agreement under section 218 of the Social
Security Act made after January 2, 1968. Section 120 (b) of the Social Security Amend-
ments of 1967 provides: "Nothing in the amendments made by subsection (a) shall
authorize the extension of the insurance system established by title II of the Social Se-
curity Act under the provisions of section 218(d) (6) (C) of such Act to service in any
fireman's position."
Revised April 1978
Sec. 218(q)
173
Time Limitation on Assessments
(q) (1) Where a State is liable for an amount due under an agree-
ment pursuant to this section, such State shall remain so liable until
the Secretary is satisfied that the amount due has been paid to the
Secretary of the Treasury.
(2) Notwithstanding paragraph (1), a State shall not be liable for
an amount due under an agreement pursuant to this section, with re-
spect to the wages paid to individuals, after the expiration of the latest
of the following periods—
(A) three years, three months, and fifteen days after the year
in which such wages were paid, or
(B) three years after the date on which such amount became
due, or
(C) three years, three months, and fifteen days after the year
following the year in which this subsection is enacted,
unless prior to the expiration of such period the Secretary makes an
assessment of the amount due.
(3) For purposes of this subsection and section 205(c), an assess-
ment of an amount due is made when the Secretary mails or otherwise
delivers to the State a notice stating the amount he has determined to
be due under an agreement pursuant to this section and the basis for
such determination.
(4) An assessment of an amount due made by the Secretary after
the expiration of the period specified in paragraph (2) shall never-
theless be deemed to have been made within such period if—
(A) before the expiration of such period (or, if it has pre-
viously been extended under this paragraph, of such period as so
extended), the State and the Secretary agree in writing to an ex-
tension of such period (or extended period) and, subject to such
conditions as may be agreed upon, the Secretary makes the assess-
ment prior to the expiration of such extension; or
(B) within the 365 days immediately preceding the expiration
of such period (or extended period) the State pays to the Secre-
tary of the Treasury less than the correct amount due under an
agreement pursuant to this section with respect to wages paid to
individuals in a calendar year as members of a coverage
group, and the Secretary of Health, Education, and Welfare
makes the assessment, adjusted to take into account the amount
paid by the State, no later than the 365th day after the day the
State made payment to the Secretary of the Treasury; but the
Secretary of Health, Education, and Welfare, shall make such
assessment only with respect to the wages paid to such individ-
uals in such calendar year as members of such coverage group; or ¹
1
1 Subparagraph (B) was amended by sec. 353 (b)(3) of Public Law 95–216.
Sec. 218(q)
174
Revised April 1978
Į
(C) pursuant to subparagraph (A) or (B) of section 205 (c) (5)
he includes in his records an entry with respect to wages for an
individual, but only if such assessment is limited to the amount
due with respect to such wages and is made within the period such
entry could be made in such records under such subparagraph.
(5) If the Secretary allows a claim for a credit or refund of an
overpayment by a State under an agreement pursuant to this section,
with respect to wages paid or alleged to have been paid to an indi-
vidual in a calendar year for services as a member of a coverage
group, and if as a result of the facts on which such allowance is
based there is an amount due from the State, with respect to wages
paid to such individual in such calendar year for services performed
as a member of a coverage group, for which amount the State is not
liable by reason of paragraph (2) then notwithstanding paragraph
(2) the State shall be liable for such amount due if the Secretary
makes an assessment of such amount due at the time of or prior to
notification to the State of the allowance of such claim. For pur-
poses of this paragraph and paragraph (6), interest as provided for
in subsection (j) shall not be included in determining the amount due.
-
(6) The Secretary shall accept wage reports filed by a State under
an agreement pursuant to this section or regulations of the Secretary
thereunder, after the expiration of the period specified in paragraph
(2) or such period as extended pursuant to paragraph (4), with
respect to wages which are paid to individuals performing services
as employees in a coverage group included in the agreement and for
payment in connection with which the State is not liable by reasons.
of paragraph (2), only if the State—
(A) pays to the Secretary of the Treasury the amount due
under such agreement with respect to such wages, and
(B) agrees in writing with the Secretary of Health, Education,
and Welfare to an extension of the period specified in paragraph
(2) with respect to wages paid to all individuals performing
services as employees in such coverage group in the period or pe-
riods designated by the State in such wage reports as the period or
periods in which such wages were paid. If the State so agrees,
the period specified in paragraph (2), or such period as extended
pursuant to paragraph (4), shall be extended until such time as
the Secretary notifies the State that such wage reports have been
accepted.¹
1
(7) Notwithstanding the preceding provisions of this subsection,
where there is an amount due by a State under an agreement pur-
suant to this section and there has been a fraudulent attempt on the
part of an officer or employee of the State or any political subdivision
thereof to defeat or evade payment of such amount due, the State shall
1 Subparagraph (B) was amended by sec. 353 (b) (4) of Public Law 95-216.
Revised April 1978
Sec. 218(s)
175
be liable for such amount due without regard to the provisions of
paragraph (2), and the Secretary may make an assessment of such
amount due at any time.
Time Limitations on Credits and Refunds
(r) (1) No credit or refund of an overpayment by a State under
an agreement pursuant to this section with respect to wages paid or
alleged to have been paid to an individual as a member of a coverage
group in a calender year shall be allowed after the expiration of the
latest of the following periods—
(A) three years, three months, and fifteen days after the year
in which such wages were paid or alleged to have been paid, or
(B) three years after the date the payment which included
such overpayment became due under such agreement with respect
to the wages paid or alleged to have been paid to such individual
as a member of such coverage group in such calendar year, or
(C) two years after such overpayment was made to the Secre-
tary of the Treasury, or
(D) three years, three months, and fifteen days after the year
following the year in which this subsection is enacted,
unless prior to the expiration of such period a claim for such credit
or refund is filed with the Secretary of Health, Education, and Wel-
fare by the State.¹
(2) A claim for a credit or refund filed by a State after the ex-
piration of the period specified by paragraph (1) shall nevertheless
be deemed to have been filed within such period if—
(A) before the expiration of such period (or, if it has previ-
ously been extended under this subparagraph, of such period as
so extended) the State and the Secretary agreed in writing to an
extension of such period (or extended period) and the claim is
filed with the Secretary by the State prior to the expiration of
such extension; but any claim for a credit or refund valid be-
cause of this subparagraph shall be allowed only to the extent
authorized by the conditions provided for in the agreement for
such extension, or
(B) the Secretary deletes from his records an entry with re-
spect to wages of an individual pursuant to the provisions of sub-
paragraph (A), (B), or (E) of section 205 (c) (5), but only with
respect to the entry so deleted.
Review by Secretary
(s) Where the Secretary has made an assessment of an amount due
by a State under an agreement pursuant to this section, disallowed a
State's claim for a credit or refund of an overpayment under such
1 Paragraph (1) was amended by sec. 353 (b) (5) of Public Law 95–216.
Sec. 218(s)
176
agreement, or allowed a State a credit or refund of an overpayment
under such agreement, he shall review such assessment, disallowance,
or allowance if a written request for such review is filed with him by
the State within 90 days (or within such further time as he may allow)
after notification to the State of such assessment, disallowance, or
allowance. On the basis of the evidence obtained by or submitted to
the Secretary, he shall render a decision affirming, modifying, or re-
versing such assessment, disallowance, or allowance. In notifying the
State of his decision, the Secretary shall state the basis therefor.
Review By Court
(t) (1) Notwithstanding any other provision of this title any State,
irrespective of the amount in controversy, may file, within two years
after the mailing to such State of the notice of any decision by the
Secretary pursuant to subsection (s) affecting such State, or within
such further time as the Secretary may allow, a civil action for a re-
determination of the correctness of the assessment of the amount due,
the disallowance of the claim for a refund or credit, or the allowance
of the refund or credit, as the case may be, with respect to which the
Secretary has rendered such decision. Such action shall be brought in
the district court of the United States for the judicial district in which
is located the capital of such State, or, if such action is brought by an
instrumentality of two or more States, the principal office of such in-
strumentality. The judgment of the court shall be final, except that
it shall be subject to review in the same manner as judgments of such
court in other civil actions. Any action filed under this subsection
shall survive notwithstanding any change in the person occupying the
office of Secretary or any vacancy in such office.
(2) Notwithstanding the provisions of section 2411 of title 28,
United States Code, no interest shall accrue to a State after final
judgment with respect to a credit or refund of an overpayment made
under an agreement pursuant to this section.
(3) The first sentence of section 2414 of title 28, United States Code,
shall not apply to final judgments rendered by district courts of the
United States in civil actions filed under this subsection. In such cases,
the payment of amounts due to States pursuant to such final judg-
ments shall be adjusted in accordance with the provisions of this sec-
tion and with regulations promulgated by the Secretary.
Positions Compensated Solely on a Fee Basis
(u) (1) Notwithstanding any other provision in this section, an
agreement entered into under this section may be made applicable to
service performed after 1967 in any class or classes of positions com-
pensated solely on a fee basis to which such agreement did not apply
177
Sec. 221(b)
prior to 1968 only if the State specifically requests that its agreement
be made applicable to such service in such class or classes of positions.
(2) Notwithstanding any other provision in this section, an agree-
ment entered into under this section may be modified, at the option of
the State, at any time after 1967, so as to exclude services performed
in any class or classes of positions compensation for which is solely
on a fee basis.
(3) Any modification made under this subsection shall be effective
with respect to services performed after the last day of the calendar
year in which the modification is agreed to by the Secretary and the
State.
(4) If any class or classes of positions have been excluded from
coverage under the State agreement by a modification agreed to under
this subsection, the Secretary and the State may not thereafter modify
such agreement so as to again make the agreement applicable with
respect to such class or classes of positions.
Sec. 219. [Repealed.]
Disability Provisions Inapplicable if Benefit Rights Impaired
Sec. 220. None of the provisions of this title relating to periods of
disability shall apply in any case in which their application would
result in the denial of monthly benefits or a lump-sum death payment
which would otherwise be payable under this title; nor shall they
apply in the case of any monthly benefit or lump-sum death payment
under this title if such benefit or payment would be greater without
their application.
Disability Determinations
Sec. 221. (a) In the case of any individual, the determination of
whether or not he is under a disability (as defined in section 216(i)
or 223(d)) and of the day such disability began, and the determina-
tion of the day on which such disability ceases, shall, except as pro-
vided in subsection (g), be made by a State agency pursuant to an
agreement entered into under subsection (b). Except as provided in
subsection (c) and (d), any such determinations shall be the deter-
mination of the Secretary for purposes of this title.
(b) The Secretary shall enter into an agreement with each State
which is willing to make such an agreement under which the State
agency or agencies administering the State plan approved under the
Vocational Rehabilitation Act, or any other appropriate State agency
or agencies, or both, will make the determination referred to in sub-
section (a) with respect to all individuals in such State, or with respect
to such class or classes of individuals in the State as may be designated
in the agreement at the State's request.
Sec. 221(c)
178
(c) The Secretary may on his own motion review a determination,
made by a State agency pursuant to an agreement under this section,
that an individual is under a disability (as defined in section 216 (i)
or 223 (d)) and, as a result of such review, may determine that such
individual is not under a disability (as so defined) or that such dis-
ability began on a day later than that determined by such agency, or
that such disability ceased on a day earlier than that determined by
such agency.
(d) Any individual dissatisfied with any determination under sub-
section (a), (c), or (g) shall be entitled to a hearing thereon by the
Secretary to the same extent as is provided in section 205 (b) with
respect to decisions of the Secretary, and to judicial review of the
Secretary's final decision after such hearing as is provided in section
205 (g).
(e) Each State which has an agreement with the Secretary under
this section shall be entitled to receive from the Trust Funds, in ad-
vance or by way of reimbursement, as may be mutually agreed upon,
the cost to the State of carrying out the agreement under this section.
The Secretary shall from time to time certify such amount as is neces-
sary for this purpose to the Managing Trustee, reduced or increased,
as the case may be, by any sum (for which adjustment hereunder has
not previously been made) by which the amount certified for any prior
period was greater or less than the amount which should have been
paid to the State under this subsection for such period; and the Man-
aging Trustee, prior to audit or settlement by the General Accounting
Office, shall make payment from the Trust Funds at the time or times
fixed by the Secretary, in accordance with such certification. Ap-
propriate adjustments between the Federal Old-Age and Survivors
Insurance Trust Fund and the Federal Disability Insurance Trust
Fund with respect to the payments made under this subsection shall
be made in accordance with paragraph (1) of subsection (g) of sec-
tion 201 (but taking into account any refunds under subsection (f) of
this section) to insure that the Federal Disability Trust Fund is
charged with all expenses incurred which are attributable to the ad-
ministration of section 223 and the Federal Old-Age and Survivors
Insurance Trust Fund is charged with all other expenses.
(f) All money paid to a State under this section shall be used solely
for the purposes for which it is paid; and any money so paid which
is not used for such purposes shall be returned to the Treasury of the
United States for deposit in the Trust Funds.
(g) In the case of individuals in a State which has no agreement
under subsection (b), in the case of individuals outside the United
States, and in the case of any class or classes of individuals not in-
cluded in an agreement under subsection (b), the determinations re-
179
Sec. 222(b)
ferred to in subsection (a) shall be made by the Secretary in accord-
ance with regulations prescribed by him.
Rehabilitation Services
Referral for Rehabilitation Services
Sec. 222. (a) It is hereby declared to be the policy of the Congress
that disabled individuals applying for a determination of disability,
and disabled individuals who are entitled to child's insurance benefits,
widow's insurance benefits, or widower's insurance benefits, shall be
promptly referred to the State agency or agencies administering or
supervising the administration of the State plan approved under the
Vocational Rehabilitation Act for necessary vocational rehabilitation
services, to the end that the maximum number of such individuals may
be rehabilitated into productive activity.
Deductions on Account of Refusal To Accept Rehabilitation Services
(b) (1) Deductions, in such amounts and at such time or times as the
Secretary shall determine, shall be made from any payment or pay-
ments under this title to which an individual is entitled, until the total
of such deductions equals such individual's benefit or benefits under
sections 202 and 223 for any month in which such individual, if a child
who has attained the age of eighteen and is entitled to child's insurance
benefits, a widow, widower or surviving divorced wife who has not
attained age 60, or an individual entitled to disability insurance bene-
fits, refuses without good cause to accept rehabilitation services avail-
able to him under a State plan approved under the Vocational Re-
habilitation Act. Any individual who is a member or adherent of
any recognized church or religious sect which teaches its members or
adherents to rely solely, in the treatment and cure of any physical or
mental impairment, upon prayer or spiritual means through the appli-
cation and use of the tenets or teachings of such church or sect, and
who, solely because of his adherence to the teachings or tenets of such
church, or sect, refuses to accept rehabilitation services available to
him under a State plan approved under the Vocational Rehabilitation
Act, shall, for the purposes of the first sentence of this subsection, be
deemed to have done so with good cause.
(2) Deductions shall be made from any child's insurance benefit to
which a child who has attained the age of eighteen is entitled or from
any mother's insurance benefit to which a person is entitled, until the
total of such deductions equals such child's insurance benefit or benefits
or such mother's insurance benefit or benefits under section 202 for any
month in which such child or person entitled to mother's insurance
benefits is married to an individual who is entitled to disability insur-
ance benefits and in which such individual refuses to accept rehabilita-
Sec. 222(b)
180
tion services and a deduction, on account of such refusal, is imposed
under paragraph (1). If both this paragraph and paragraph (3) are
applicable to a child's insurance benefit for any month, only an amount
equal to such benefit shall be deducted.
(3) Deductions shall be made from any wife's, husband's, or child's
insurance benefit, based on the wages and self-employment income of
an individual entitled to disability insurance benefits, to which a wife,
divorced wife, husband, or child is entitled, until the total of such
deductions equal such wife's, husband's, or child's insurance benefit or
benefits under section 202 for any month in which the individual, on
the basis of whose wages and self-employment income such benefit was
payable, refuses to accept rehabilitation services and deductions, on
account of such refusal, are imposed under paragraph (1).
(4) The provisions of paragraph (1) shall not apply to any child
entitled to benefits under section 202(d), if he has attained the age of
18 but has not attained the age of 22, for any month during which he
is a full-time student (as defined and determined under section 202
(d)).
Period of Trial Work
(c) (1) The term "period of trial work", with respect to an individ-
ual entitled to benefits under section 223 or 202 (d), means a period of
months beginning and ending as provided in paragraphs (3) and (4).
(2) For purposes of sections 216 (i) and 223, any services rendered
by an individual during a period of trial work shall be deemed not to
have been rendered by such individual in determining whether his
disability has ceased in a month during such period. For purposes of
this subsection the term "services" means activity which is performed
for remuneration or gain or is determined by the Secretary to be of a
type normally performed for remuneration or gain.
(3) A period of trial work for any individual shall begin with the
month in which he becomes entitled to disability insurance benefits,
or, in the case of an individual entitled to benefits under section 202 (d)
who has attained the age of eighteen, with the month in which he be-
comes entitled to such benefits or the month in which he attains the age
of eighteen, whichever is later. Notwithstanding the preceding sen-
tence, no period of trial work may begin for any individual prior to
the beginning of the month following the month in which this para-
graph is enacted; and no such period may begin for an individual in
a period of disability of such individual in which he had a previous
period of trial work.
(4) A period of trial work for any individual shall end with the
close of whichever of the following months is the earlier:
(A) the ninth month, beginning on or after the first day of
such period, in which the individual renders services (whether or
181
Sec. 222(d)
not such nine months are consecutive); or
(B) the month in which his disability (as defined in section
223 (d)) ceases (as determined after application of paragraph (2)
of this subsection).
(5) In the case of an individual who becomes entitled to benefits
under section 223 for any month as provided in clause (ii) of subsec-
tion (a)(1) of such section, the preceding provisions of this subsec-
tion shall not apply with respect to services in any month beginning
with the first month for which he is so entitled and ending with the
first month thereafter for which he is not entitled to benefits under
section 223.
Costs of Rehabilitation Services From Trust Funds
(d) (1) For the purpose of making vocational rehabilitation services
more readily available to disabled individuals who are—
(A) entitled to disability insurance benefits under section 223, or
(B) entitled to child's insurance benefits under section 202 (d)
after having attained age 18 (and are under a disability), or
(C) entitled to widow's insurance benefits under section 202 (e)
prior to attaining age 60, or
(D) entitled to widower's insurance benefits under section 202
(f) prior to attaining age 60,
to the end that savings will result to the Trust Fund as a result of
rehabilitating the maximum number of such individuals into produc-
tive activity, there are authorized to be transferred from the Trust
Funds such sums as may be necessary to enable the Secretary to pay
the costs of vocational rehabilitation services for such individuals (in-
cluding (i) services during their waiting periods, and (ii) so much of
the expenditures for the administration of any State plan as is attrib-
utable to carrying out this subsection); except that the total amount
so made available pursuant to this subsection may not exceed—
(i) 1 percent in the fiscal year ending June 30, 1972,
(ii) 1.25 percent in the fiscal year ending June 30, 1973,
(iii) 1.5 percent in the fiscal year ending June 30, 1974, and
thereafter,
21-746 O - 78
of the total of the benefits under section 202 (d) for children who
have attained age 18 and are under a disability, the benefits under
section 202 (e) for widows and surviving divorced wives who have
not attained age 60 and are under a disability, the benefits under
section 202 (f) for widowers who have not attained age 60, and the
benefits under section 223, which were certified for payment in the
preceding year. The selection of individuals (including the order
in which they shall be selected) to receive such services shall be
made in accordance with criteria formulated by the Secretary
C
14
Sec. 222(d)
182
which are based upon the effect the provision of such services
would have upon the Trust Funds.
(2) In the case of each State which is willing to do so, such voca-
tional rehabilitation services shall be furnished under a State plan
for vocational rehabilitation services which-
(A) has been approved under section 5 of the Vocational Re-
habilitation Act,
(B) provides that, to the extent funds provided under this
subsection are adequate for the purpose, such services will be
furnished, to any individual in the State who meets the criteria
prescribed by the Secretary pursuant to paragraph (1), with rea-
sonable promptness and in accordance with the order of selec-
tion determined under such criteria, and
(C) provides that such services will be furnished to any indi-
vidual without regard to (i) his citizenship or place of residence,
(ii) his need for financial assistance except as provided in regula-
tions of the Secretary in the case of maintenance during rehabili-
tation, or (iii) any order of selection which would otherwise be
followed under the State plan pursuant to section 5(a) (4) of
the Vocational Rehabilitation Act.
(3) In the case of any State which does not have a plan which meets
the requirements of paragraph (2), the Secretary may provide such
services by agreement or contract with other public or private agencies,
organizations, institutions, or individuals.
(4) Payınents under this subsection may be made in installments,
and in advance or by way of reimbursement, with necessary adjust-
ments on account of overpayments or underpayments.
(5) Money paid from the Trust Funds under this subsection to pay
the costs of providing services to individuals who are entitled to bene-
fits under section 223 (including services during their waiting pe-
riods), or who are entitled to benefits under section 202 (d) on the basis
of the wages and self-employment income of such individuals shall be
charged to the Federal Disability Insurance Trust Fund, and all other
money paid out from the Trust Funds under this subsection shall be
charged to the Federal Old-Age and Survivors Insurance Trust Fund.
The Secretary shall determine according to such methods and pro-
cedures as he may deem appropriate―
(A) the total cost of the services provided under this subsection,
and
(B) subject to the provisions of the preceding sentence, the
amount of such cost which should be charged to each of such Trust
Funds.
(6) For the purposes of this subsection the term "vocational reha-
bilitation services" shall have the meaning assigned to it in the Voca-
183
Sec. 223(a)
tional Rehabilitation Act, except that such services may be limited in
type, scope, or amount in accordance with regulations of the Secretary
designed to achieve the purposes of this subsection.
Disability Insurance Benefit Payments
Disability Insurance Benefits
Sec. 223. (a) (1) Every individual who—
(A) is insured for disability insurance benefits (as determined
under subsection (c)(1)),
(B) has not attained the age of sixty-five,
(C) has filed application for disability insurance benefits, and
(D) is under a disability (as defined in subsection (d))
shall be entitled to a disability insurance benefit (i) for each month
beginning with the first month after his waiting period (as defined
in subsection (c) (2)) in which he becomes so entitled to such insurance
benefits, or (ii) for each month beginning with the first month during
all of which he is under a disability and in which he becomes so en-
titled to such insurance benefits, but only if he was entitled to disability
insurance benefits which terminated, or had a period of disability (as
defined in section 216(i)) which ceased, within the sixty-month period
preceding the first month in which he is under such disability, and
ending with the month preceding whichever of the following months
is the earliest: the month in which he dies, the month in which he at-
tains age 65, or the third month following the month in which his
disability ceases. No payment under this paragraph may be made to
an individual who would not meet the definition of disability in sub-
section (d) except for paragraph (1)(B) thereof for any month in
which he engages in substantial gainful activity, and no payment may
be made for such month under subsection (b), (c), or (d) of section
202 to any person on the basis of the wages and self-employment
income of such individual. In the case of a deceased individual, the
requirement of subparagraph (C) may be satisfied by an application
for benefits filed with respect to such individual within 3 months after
the month in which he died.
(2) Except as provided in section 202 (q), such individual's dis-
ability insurance benefit for any month shall be equal to his primary
insurance amount for such month determined under section 215 as
though he had attained age 62, in-
(A) the first month of his waiting period, or
(B) in any case in which clause (ii) of paragraph (1) of this
subsection is applicable, the first month for which he becomes
entitled to such disability insurance benefits,
and as though he had become entitled to old-age insurance benefits in
Sec. 223(a)
184
the month in which the application for disability insurance benefits
was filed and he was entitled to an old-age insurance benefit for each
month for which (pursuant to subsection (b)) he was entitled to a dis-
ability insurance benefit. For the purposes of the preceding sentence,
in the case of an individual who attained age 62 in or before the first
month referred to in subparagraph (A) or (B) of such sentence, as
the case may be, the elapsed years referred to in section 215 (b) (3)
shall not include the year in which he attained age 62, or any year
thereafter.
Filing of Application
(b) An application for disability insurance benefits filed before the
first month in which the applicant satisfies the requirements for such
benefits (as prescribed in subsection (a)(1)) shall be deemed a valid
application only if the applicant satisfies the requirements for such
benefits before the Secretary makes a final decision on the application.
If, upon final decision by the Secretary, or decision upon judicial
review thereof, such applicant is found to satisfy such requirements,
the application shall be deemed to have been filed in such first month.
An individual who would have been entitled to a disability insurance
benefit for any month had he filed application therefor before the
end of such month shall be entitled to such benefit for such month
if such application is filed before the end of the 12th month immedi-
ately succeeding such month.
Definitions of Insured Status and Waiting Period
(c) For purposes of this section-
(1) An individual shall be insured for disability insurance
benefits in any month if—
(A) he would have been a fully insured individual (as
defined in section 214) had he attained age 62 and filed ap-
plication for benefits under section 202 (a) on the first day
of such month, and
(B) (i) he had not less than 20 quarters of coverage during
the 40-quarter period which ends with the quarter in which
such month occurred, or
(ii) if such month ends before the quarter in which he at-
tains (or would attain) age 31, not less than one-half (and
not less than 6) of the quarters during the period ending
with the quarter in which such month occurred and begin-
ning after he attained age 21 were quarters of coverage,
or (if the number of quarters in such period is less than 12)
not less than 6 of the quarters in the 12-quarter period end-
ing with such quarter were quarters of coverage;
185
Sec. 223(d)
except that the provisions of subparagraph (B) of this para-
graph shall not apply in the case of an individual who is blind
(within the meaning of "blindness" as defined in section 216(i)
(1)). For purposes of subparagraph (B) of this paragraph,
when the number of quarters in any period is an odd number, such
number shall be reduced by one, and a quarter shall not be counted
as part of any period if any part of such quarter was included in a
period of disability unless such quarter was a quarter of coverage.
(2) The term "waiting period" means, in the case of any ap-
plication for disability insurance benefits, the earliest period of
five consecutive calendar months-
(A) throughout which the individual with respect to whom
such application is filed has been under a disability, and
(B) (i) which begins not earlier than with the first day of
the seventeenth month before the month in which such ap-
plication is filed if such individual is insured for disability
insurance benefits in such seventeenth month, or (ii) if he
is not so insured in such month, which begins not earlier than
the first day of the first month after such seventeenth month
in which he is so insured.
Notwithstanding the preceding provisions of this paragraph, no
waiting period may begin for any individual before January 1,
1957.
Definition of Disability
(d) (1) The term "disability” means-
(A) inability to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impair-
ment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than
12 months; or
(B) in the case of an individual who has attained the age of
55 and is blind (within the meaning of "blindness" as defined in
section 216 (i) (1)), inability by reason of such blindness to engage
in substantial gainful activity requiring skills or abilities com-
parable to those of any gainful activity in which he has previously
engaged with some regularity and over a substantial period of
time.
(2) For purposes of paragraph (1)(A)—
(A) an individual (except a widow, surviving divorced wife,
or widower for purposes of section 202 (e) or (f) shall be deter-
mined to be under a disability only if his physical or mental
impairment or impairments are of such severity that he is not
only unable to do his previous work but cannot, considering his
Sec. 223(d)
186
Revised April 1978
age, education, and work experience, engage in any other kind of
substantial gainful work which exists in the national economy, re-
gardless of whether such work exists in the immediate area in
which he lives, or whether a specific job vacancy exists for him,
or whether he would be hired if he applied for work. For pur-
poses of the preceding sentence (with respect to any individual),
"work which exists in the national economy" means work which
exists in significant numbers either in the region where such in-
dividual lives or in several regions of the country.
W
(B) A widow, surviving divorced wife, or widower shall not be
determined to be under a disability (for purposes of section 202
(e) or (f)) unless his or her physical or mental impairment or
impairments are of a level of severity which under regulations
prescribed by the Secretary is deemed to be sufficient to preclude
an individual from engaging in any gainful activity.
(3) For purposes of this subsection, a "physical or mental impair-
ment" is an impairment that results from anatomical, physiological,
or psychological abnormalities which are demonstrable by medically
acceptable clinical and laboratory diagnostic techniques.
(4) The Secretary shall by regulations prescribe the criteria for
determining when services performed or earnings derived from serv-
ices demonstrate an individual's ability to engage in substantial gain-
ful activity. No individual who is blind shall be regarded as having
demonstrated an ability to engage in substantial gainful activity on
the basis of earnings that do not exceed the exempt amount under
section 203 (f) (8) which is applicable to individuals described in sub-
paragraph (D) thereof. Notwithstanding the provisions of paragraph
(2), an individual whose services or earnings meet such criteria shall,
except for purposes of section 222 (c), be found not to be disabled.¹
(5) An individual shall not be considered to be under a disability
unless he furnishes such medical and other evidence of the existence
thereof as the Secretary may require.
Reduction of Benefits Based on Disability on Account of Receipt
of Workmen's Compensation
Sec. 224. (a) If for any month prior to the month in which an indi-
vidual attains the age of 62-
(1) such individual is entitled to benefits under section 223, and
(2) such individual is entitled for such month, under a work-
men's compensation law or plan of the United States or a State
to periodic benefits for a total or partial disability (whether or
not permanent), and the Secretary has, in a prior month, received
notice of such entitlement for such month,
the total of his benefits under section 223 for such month and of any
1 Paragraph (4) was amended by sec. 335 of Public Law 95-216.
Revised April 1978
187
Sec. 224(b)
benefits under section 202 for such month based on his wages and self-
employment income shall be reduced (but not below zero) by the
amount by which the sum of—
(3) such total of benefits under sections 223 and 202 for such
month, and
(4) such periodic benefits payable (and actually paid) for such
month to such individual under the workmen's compensation law
or plan,
exceeds the higher of-
(5) 80 per centum of his "average current earnings”, or
(6) the total of such individual's disability insurance benefits
under section 223 for such month and of any monthly insurance
benefits under section 202 for such month based on his wages and
self-employment income, prior to reduction under this section.
In no case shall the reduction in the total of such benefits under sec-
tions 223 and 202 for a month (in a continuous period of months)
reduce such total below the sum of
(7) the total of the benefits under sections 223 and 202, after
reduction under this section, with respect to all persons entitled
to benefits on the basis of such individual's wages and self-employ-
ment income for such month which were determined for such in-
dividual and such persons for the first month for which reduction
under this section was made (or which would have been so deter-
mined if all of them had been so entitled in such first month), and
(8) any increase in such benefits with respect to such individual
and such persons, before reduction under this section, which is
made effective for months after the first month for which reduc-
tion under this section is made.
For purposes of clause (5), an individual's average current earnings
means the largest of (A) the average monthly wage (determined under
section 215 (b) as in effect prior to January 1979) used for purposes
of computing his benefits under section 223, (B) one-sixtieth of the
total of his wages and self-employment income (computed without
regard to the limitations specified in sections 209 (a) and 211(b) (1))
for the five consecutive calendar years after 1950 for which such wages.
and self-employment income were highest, or (C) one-twelfth of the
total of his wages and self-employment income (computed without re-
gard to the limitations specified in sections 209 (a) and 211 (b) (1)) for
the calendar year in which he had the highest such wages and income
during the period consisting of the calendar year in which he became
disabled (as defined in section 223 (d)) and the five years preceding
that year.¹
(b) If any periodic benefit under a workmen's compensation law or
plan is payable on other than a monthly basis (excluding a benefit
1 Subsection (a) was amended by secs. 205(d) and 353 (c) (1) of Public Law 95-216.
Sec. 224(b)
Revised April 1978
188
payable as a lump sum except to the extent that it is a commutation of,
or a substitute for, periodic payments), the reduction under this sec-
tion shall be made at such time or times and in such amounts as the
Secretary finds will approximate as nearly as practicable the reduction
prescribed by subsection (a).
(c) Reduction of benefits under this section shall be made after any
reduction under subsection (a) of section 203, but before deductions
under such section and under section 222(b).
(d) The reduction of benefits required by this section shall not be
made if the workmen's compensation law or plan under which a peri-
odic benefit is payable provides for the reduction thereof when anyone
is entitled to benefits under this title on the basis of the wages and self-
employment income of an individual entitled to benefits under sec-
tion 223.
(e) If it appears to the Secretary that an individual may be eligible
for periodic benefits under a workmen's compensation law or plan
which would give rise to reduction under this section, he may require,
as a condition of certification for payment of any benefits under section
223 to any individual for any month and of any benefits under section
202 of such month based on such individual's wages and self-employ-
ment income, that such individual certify (i) whether he has filed or
intends to file any claim for such periodic benefits, and (ii) if he has so
filed, whether there has been a decision on such claim. The Secretary
may, in the absence of evidence to the contrary, rely upon such a certifi-
cation by such individual that he has not filed and does not intend to
file such a claim, or that he has so filed and no final decision thereon
has been made, in certifying benefits for payment pursuant to section
205 (i).
(f) (1) In the second calendar year after the year in which reduc-
tion under this section in the total of an individual's benefits under
section 223 and any benefits under section 202 based on his wages and
self-employment income was first required (in a continuous period
of months), and in each third year thereafter, the Secretary shall re-
determine the amount of such benefits which are still subject to reduc-
tion under this section; but such redetermination shall not result in
any decrease in the total amount of benefits payable under this title on
the basis of such individual's wages and self-employment income. Such
redetermined benefit shall be determined as of, and shall become effec-
tive with, the January following the year in which such redetermina-
tion was made.
<
(2) In making the redetermination required by paragraph (1), the
individual's average current earnings (as defined in subsection (a))
shall be deemed to be the product of-
Revised April 1978
189
Sec. 225
(A) his average current earnings as initially determined under
subsection (a);
(B) the ratio of (i) the average of the total wages (as defined
in regulations of the Secretary and computed without regard to
the limitations specified in section 209 (a)) reported to the Secre-
tary of the Treasury or his delegate for the calendar year before
the year in which such redetermination is made to (ii) the average
of the total wages (as so defined and computed) reported to the
Secretary of the Treasury or his delegate for calendar year 1977
or, if later, the calendar year before the year in which the reduc-
tion was first computed (but not counting any reduction made in
benefits for a previous period of disability); and
(C) in any case in which the reduction was first computed be-
fore 1978, the ratio of (i) the average of the taxable wages re-
ported to the Secretary for the first calendar quarter of 1977 to
(ii) the average of the taxable wages reported to the Secretary
for the first calendar quarter of the calendar year before the year
in which the reduction was first computed (but not counting any
reduction made in benefits for a previous period of disability).
Any amount determined under this paragraph which is not a
multiple of $1 shall be reduced to the next lower multiple of $1.¹
(g) Whenever a reduction in the total of benefits for any month
based on an individual's wages and self-employment income is made
under this section, each benefit, except the disability insurance benefit,
shall first be proportionately decreased, and any excess of such reduc-
tion over the sum of all such benefits other than the disability insur-
ance benefits shall then be applied to such disability insurance benefit.
Suspension of Benefits Based on Disability
Sec. 225. If the Secretary, on the basis of information obtained by
or submitted to him, believes that an individual entitled to benefits
under section 223, or that a child who has attained the age of eighteen
and is entitled to benefits under section 202(d), or that a widow or
surviving divorced wife who has not attained age 60 and is entitled
to benefits under section 202 (e), or that a widower who has not attained
age 60 and is entitled to benefits under section 202(f), may have
ceased to be under a disability, the Secretary may suspend the pay-
ment of benefits under such section 202 (d), 202 (e), 202(f), or 223,
until it is determined (as provided in section 221) whether or not such
individual's disability has ceased or until the Secretary believes that
such disability has not ceased. In the case of any individual whose dis-
ability is subject to determination under an agreement with a State
1 Sec. 224 (f) was amended by sec. 8(j) of Public Law 94-202 and by sec. 353(c) (2)
of Public Law 95-216.
Revised April 1978
Sec. 225
189-A
under section 221 (b), the Secretary shall promptly notify the appro-
priate State of his action under this section and shall request a prompt
determination of whether such individual's disability has ceased. For
purposes of this section, the term "disability” has the meaning assigned
to such term in section 223 (d). Whenever the benefits of an individual
entitled to a disability insurance benefit are suspended for any month,
the benefits of any individual entitled thereto under subsection (b),
(c), or (d) of section 202, on the basis of the wages and self-employ-
ment income of such individual, shall be suspended for such month.
The first sentence of this section shall not apply to any child entitled
to benefits under section 202(d), if he has attained the age of 18 but
has not attained the age of 22, for any month during which he is a full-
time student (as defined and determined under section 202 (d)).
Sec. 226
Revised August 1978
190
Sec. 226.
(a) Every individual who-
Entitlement to Hospital Insurance Benefits
dog
(1) has attained age 65, and
(2) is entitled to monthly insurance benefits under section 202
or is a qualified railroad retirement beneficiary,
shall be entitled to hospital insurance benefits under part A of title
XVIII for each month for which he meets the condition specified in
paragraph (1), beginning with the first month after June 1966 for
which he meets the conditions specified in paragraphs (1) and (2).¹
(b) Every individual who-
(1) has not attained age 65, and
(2) (A) is entitled to, and has for 24 consecutive calendar
months been entitled to, (i) disability insurance benefits under
section 223 or (ii) child's insurance benefits under section 202(d)
by reason of a disability (as defined in section 223(d)) or (iii)
widow's insurance benefits under section 202 (e) or widower's
insurance benefits under section 202(f) by reason of a disability
(as defined in section 223 (d)), or (B) is, and has been for not less
than 24 consecutive months a disabled qualified railroad retire-
ment beneficiary, within the meaning of section 7(d) of the
Railroad Retirement Act of 1974,
shall be entitled to hospital insurance benefits under part A of title
XVIII for each month beginning with the later of (I) July 1973 or
(II) the twenty-fifth consecutive month of his entitlement or status
as a qualified railroad retirement beneficiary described in paragraph
(2), and ending with the month following the month in which notice
of termination of such entitlement to benefits or status as a qualified
railroad retirement beneficiary described in paragraph (2) is mailed
to him, or if earlier, with the month before the month in which he
attains age 65.
(c) For purposes of subsection (a)-
(1) entitlement of an individual to hospital insurance benefits
for a month shall consist of entitlement to have payment made
under, and subject to the limitations in, part A of title XVIII on
his behalf for inpatient hospital services, post-hospital extended
care services, and post-hospital home health services (as such
terms are defined in part C of title XVIII) furnished him in the
United States (or outside the United States in the case of inpa-
tient hospital services furnished under the conditions described in
section 1814(f)) during such month; except that (A) no such pay-
ment may be made for post-hospital extended care services fur-
nished before January 1967, and (B) no such payment may be
1 Paragraph (2) was amended by sec. 3 (a) of P.L. 95-292.
Revised August 1978
191
Sec. 226(d)
made for post-hospital extended care services or post-hospital
home health services unless the discharge from the hospital re-
quired to qualify such services for payment under part A of title
XVIII occurred (i) after June 30, 1966, or on or after the first day
of the month in which he attains age 65, whichever is later, or (ii)
if he was entitled to hospital insurance benefits pursuant to sub-
section (b), at a time when he was so entitled; and
(2) an individual shall be deemed entitled to monthly insurance
benefits under section 202 or section 223, or to be a qualified rail-
road retirement beneficiary, for the month in which he died if he
would have been entitled to such benefits, or would have been a
qualified railroad retirement beneficiary, for such month had he
died in the next month.
(d) For purposes of this section, the term "qualified railroad retire-
ment beneficiary" means an individual whose name has been certified
to the Secretary by the Railroad Retirement Board under section
7(d) of the Railroad Retirement Act of 1974. An individual shall cease
to be a qualified railroad retirement beneficiary at the close of the
month preceding the month which is certified by the Railroad Retire-
ment Board as the month in which he ceased to meet the requirements
of section 7(d) of the Railroad Retirement Act of 1974.
}
Sec. 226(e)
192
Revised August 1978
(e) (1) For purposes of determining entitlement to hospital insur-
ance benefits under subsection (b) in the case of widows and widowers
described in paragraph (2) (A) (iii) thereof—
(A) the term “age 60” in sections 202(e) (1) (B) (ii), 202(e)
(5), 202(f) (1) (B) (ii), and 202 (f) (6) shall be deemed to read
“age 65"; and
(B) the phrase "before she attained age 60" in the matter follow-
ing subparagraph (F) of section 202(e) (1) and the phrase "be-
fore he attained age 60" in the matter following subparagraph
(F) of section 202 (f) (1) shall each be deemed to read "based on a
disability"¹
(2) For purposes of determining entitlement to hospital insurance
benefits under subsection (b) in the case of an individual under age
65 who is entitled to benefits under section 202, and who was entitled
to widow's insurance benefits or widower's insurance benefits based on
disability for the month before the first month in which such individ-
ual was so entitled to old-age insurance benefits (but ceased to be en-
titled to such widow's or widower's insurance benefits upon becoming
entitled to such old-age insurance benefits), such individual shall be
deemed to have continued to be entitled to such widow's insurance
benefits or widower's insurance benefits for and after such first month.
(3) For purposes of determining entitlement to hospital insurance
benefits under subsection (b) any disabled widow age 50 or older who
is entitled to mother's insurance benefits (and who would have been
entitled to widow's insurance benefits by reason of disability if she
had filed for such widow's benefits) shall, upon application, for such
hospital insurance benefits be deemed to have filed for such widow's
benefits and shall, upon furnishing proof of such disability prior to
¹ Subparagraph (B) was amended by sec. 334 (d) (4)(B) of Public Law 95–216.
Revised August 1978
193
Sec. 226A(a)
July 1, 1974, under such procedures as the Secretary may prescribe, be
deemed to have been entitled to such widow's benefits as of the time she
would have been entitled to such widow's benefits if she had filed a
timely application therefor.
(4) For purposes of determining entitlement to hospital insurance
benefits under subsection (b) in the case of an individual described in
clause (iii) of subsection (b)(2)(A), the entitlement of such indi-
vidual to widow's or widower's insurance benefits under section 202 (e)
or (f) by reason of a disability shall be deemed to be the entitlement
to such benefits that would result if such entitlement were determined
without regard to the provisions of section 202 (j) (4).¹ 2
(f) For entitlement to hospital insurance benefits in the case of
certain uninsured individuals, see section 103 of the Social Security
Amendments of 1965.2
Special Provisions Relating to Coverage Under Medicare Program
For End Stage Renal Disease 3
Sec. 226A. (a) Notwithstanding any provision to the contrary in
section 226 or title XVIII, every individual who-
(1) (A) is fully or currently insured (as such terms are defined
in section 214 of this Act) or would be fully or currently insured
if his service as an employee (as defined in the Railroad Retire-
ment Act of 1974) after December 31, 1936, were included in the
term "employment" as defined in this Act, or (B) is entitled to
monthly insurance benefits under title II of this Act or an annuity.
under the Railroad Retirement Act of 1974, or (C) is the spouse
or dependent child (as defined in regulations) of an individual.
who is fully or currently insured or would be fully or currently
insured if his service as an employee (as defined in the Railroad
Retirement Act of 1974) after December 31, 1936, were included
in the term “employment" as defined in this Act, or (D) is the
spouse or dependent child (as defined in regulations) of an indi-
vidual entitled to monthly insurance benefits under title II of this
Act or an annuity under the Railroad Retirement Act of 1974;
(2) is medically determined to have end stage renal disease;
and
(3) has filed an application for benefits under this section;
shall, in accordance with the succeeding provisions of this section, be
entitled to benefits under part A and eligible to enroll under part B of
title XVIII, subject to the deductible, premium, and coinsurance pro-
visions of that title.
1 Paragraph (4) was added by sec. 332(a)(3) of Public Law 95-216.
2 Subsections (e) and (f) were formerly (h) and (i). These subsections were redesignated
by sec. 1(b) of Public Law 95-292, which repealed former subsections (e), (f), and (g).
Subsection (e) also was amended by sec. 3(b) of Public Law 95-292.
3 Section 226A was added by sec. 1 of P.L. 95-292, effective as specified in sec. 6 of that
act, which is printed in this document on p. 820.
Sec. 226A(b)
193-A
Revised August 1978
(b) Subject to subsection (c), entitlement of an individual to bene-
fits under part A and eligibility to enroll under part B of title XVIII
by reasons of this section on the basis of end stage renal disease-
(1) shall begin with—
(A) the third month after the month in which a regular
course of renal dialysis is initiated, or
(B) the month in which such individual receives a kidney
transplant, or (if earlier) the first month in which such indi-
vidual is admitted as an inpatient to an institution which
is a hospital meeting the requirements of section 1861 (e) (and
such additional requirements as the Secretary may prescribe
under section 1881 (b) for such institutions) in preparation
for or anticipation of kidney transplantation, but only if such
transplantation occurs in that month or in either of the next
two months,
whichever first occurs (but no earlier than one year preceding the
month of the filing of an application for benefits under this sec-
tion); and
(2) shall end, in the case of an individual who receives a kidney
transplant, with the thirty-sixth month after the month in which
such individual receives such transplant or, in the case of an indi-
vidual who has not received a kidney transplant and no longer
requires a regular course of dialysis, with the twelfth month after
the month in which such course of dialysis is terminated.
(c) Notwithstanding the provisions of subsection (b)-
(1) in the case of any individual who participates in a self-care
dialysis training program prior to the third month after the
month in which such individual initiates a regular course of renal
dialysis in a renal dialysis facility or provider of services meeting
the requirements of section 1881 (b), entitlement to benefits under
part A and eligibility to enroll under part B of title XVIII shall
begin with the month in which such regular course of renal di-
alysis is initiated;
K
(2) in any case in which a kidney transplant fails (whether
during or after the thirty-six-month period specified in subsection
(b) (2)) and as a result the individual who received such trans-
plant initiates or resumes a regular course of renal dialysis, en-
titlement to benefits under part A and eligibility to enroll under
part B of title XVIII shall begin with the month in which such
course is initiated or resumed; and
(3) in any case in which a regular course of renal dialysis is re-
sumed subsequent to the termination of an earlier course, entitle-
ment to benefits under part A and eligibility to enroll under part
B of title XVIII shall begin with the month in which such regular
course of renal dialysis is resumed.
Revised August 1978
193-B
Sec. 227(b)
Transitional Insured Status
Sec. 227. (a) In the case of any individual who attains the age of
72 before 1969 but who does not meet the requirements of section
214(a), the 6 quarters of coverage referred to in paragraph (1) of
section 214(a) shall, instead, be 3 quarters of coverage for purposes
of determining entitlement of such individual to benefits under sec-
tion 202(a), and of his wife to benefits under section 202 (b), but, in
the case of such wife, only if she attains the age of 72 before 1969
and only with respect to wife's insurance benefits under section 202(b)
for and after the month in which she attains such age. For each month
before the month in which any such individual meets the requirements
of section 214(a), the amount of his old-age insurance benefit shall,
notwithstanding the provisions of section 202 (a), be the larger of
$64.40 or the amount most recently established in lieu thereof under
section 215 (i)¹ and the amount of the wife's insurance benefit of his
wife shall, notwithstanding the provisions of section 202(b), be the
larger of $32.20 or the amount most recently established in lieu thereof
under section 215 (i).¹
1
(b) In the case of any individual who has died, who does not meet
the requirements of section 214 (a), and whose widow attains age 72
before 1969, the 6 quarters of coverage referred to in paragraph (3)
of section 214(a) and in paragraph (1) thereof shall, for purposes of
determining her entitlement to widow's insurance benefits under sec-
tion 202(e), instead be-
(1) 3 quarters of coverage if such widow attains the age of 72
in or before 1966,
1 Sea AnDendix E.
Sec. 227(b)
194
Revised April 1978
(2) 4 quarters of coverage if such widow attains the age of 72
in 1967, or
(3) 5 quarters of coverage if such widow attains the age of 72
in 1968.
The amount of her widow's insurance benefit for each month shall,
notwithstanding the provisions of section 202 (e) (and section 202
(m)), be the larger of $64.40 or the amount most recently established
in lieu thereof under section 215 (i).¹
(c) In the case of any individual who becomes, or upon filing appli-
cation therefor would become, entitled to benefits under section 202 (a)
by reason of the application of subsection (a) of this section, who dies,
and whose widow attains the age of 72 before 1969, such deceased in-
dividual shall be deemed to meet the requirements of subsection (b)
of this section for purposes of determining entitlement of such widow
to widow's insurance benefits under section 202 (e).
Benefits at Age 72 for Certain Uninsured Individuals
Eligibility
Sec. 228. (a) Every individual who-
(1) has attained the age of 72,
(2) (A) attained such age before 1968, or (B) has not less than
3 quarters of coverage, whenever acquired, for each calendar year
elapsing after 1966 and before the year in which he attained such
age,
(3) is a resident of the United States (as defined in subsection
(e)), and is (A) a citizen of the United States or (B) an alien
lawfully admitted for permanent residence who has resided in the
United States (as defined in section 210(i)) continuously during
the 5 years immediately preceding the month in which he files
application under this section, and
(4) has filed application for benefits under this section,
shall (subject to the limitations in this section) be entitled to a benefit
under this section for each month beginning with the first month after
September 1966 in which he becomes so entitled to such benefits and
ending with the month preceding the month in which he dies. No
application under this section which is filed by an individual more
than 3 months before the first month in which he meets the require-
ments of paragraphs (1), (2), and (3) shall be accepted as an appli-
cation for purposes of this section.
Benefit Amount
(b) (1) Except as provided in paragraph (2), the benefit amount to
which an individual is entitled under this section for any month shall
1 See appendix E.
Revised April 1978
Sec. 228(c)
195
be the larger of $64.40 or the amount most recently established in lieu
thereof under section 215 (i).¹
(2) If both husband and wife are entitled (or upon application
would be entitled) to benefits under this section for any month, the
amount of the husband's benefit for such month shall be the larger of
$64.40 or the amount most recently established in lieu thereof under
section 215 (i)¹ and the amount of the wife's benefit for such month shall
be the larger of $32.20 or the amount most recently established in lieu
thereof under section 215 (i).¹
1
Reduction for Governmental Pension System Benefits
(c) (1) The benefit amount of any individual under this section for
any month shall be reduced (but not below zero) by the amount of any
periodic benefit under a governmental pension system for which he is
eligible for such month.
(2) In the case of a husband and wife only one of whom is entitled
to benefits under this section for any month, the benefit amount, after
any reduction under paragraph (1), shall be further reduced (but not
below zero) by the excess (if any) of (A) the total amount of any
periodic benefits under governmental pension systems for which the
spouse who is not entitled to benefits under this section is eligible for
such month, over (B) the larger of $32.20 or the amount most recently
established in lieu thereof under section 215(i).¹
(3) In the case of a husband and wife both of whom are entitled
to benefits under this section for any month-
(A) the benefit amount of the wife, after any reduction under
paragraph (1), shall be further reduced (but not below zero) by
the excess (if any) of (i) the total amount of any periodic benefits
under governmental pension systems for which the husband is
eligible for such month, over (ii) the larger of $64.40 or the
amount most recently established in lieu thereof under section.
215 (i)¹; and
1 See appendix E.
(B) the benefit amount of the husband, after any reduction
under paragraph (1), shall be further reduced (but not below
zero) by the excess (if any) of (i) the total amount of any pe-
riodic benefits under governmental pension systems for which the
wife is eligible for such month, over (ii) the larger of $32.20 or
the amount most recently established in lieu thereof under section
215 (i).¹
1
(4) For purposes of this subsection, in determining whether an
individual is eligible for periodic benefits under a governmental pen-
sion system-
21-746 0 - 78
-
15
Revised April 1978
Sec. 228(c)
195-A
(A) such individual shall be deemed to have filed application
for such benefits,
(B) to the extent that entitlement depends on an application
by such individual's spouse, such spouse shall be deemed to have
filed application, and
(C) to the extent that entitlement depends on such individual
or his spouse having retired, such individual and his spouse shall
be deemed to have retired before the month for which the deter-
mination of eligibility is being made.
(5) For purposes of this subsection, if any periodic benefit is pay-
able on any basis other than a calendar month, the Secretary shall
allocate the amount of such benefit to the appropriate calendar months.
(6) If, under the foregoing provisions of this section, the amount.
payable for any month would be less than $1, such amount shall be
Sec. 228(c)
196
reduced to zero. In the case of a husband and wife both of whom
are entitled to benefits under this section for the month, the preceding
sentence shall be applied with respect to the aggregate amount so pay-
able for such month.
(7) If any benefit amount computed under the foregoing provisions
of this section is not a multiple of $0.10, it shall be raised to the next
higher multiple of $0.10.
(8) Under regulations prescribed by the Secretary, benefit payments
under this section to an individual (or aggregate benefit payments
under this section in the case of a husband and wife) of less than $5
may be accumulated until they equal or exceed $5.
Suspension for Months in Which Cash Payments Are Made Under Public
Assistance
(d) The benefit to which any individual is entitled under this
section for any month shall not be paid for such month if-
(1) such individual receives aid or assistance in the form of
money payments in such month under a State plan approved
under title I, X, XIV, or XVI or part A of title IV, or
(2) such individual's husband or wife receives such aid or as-
sistance in such month, and under the State plan the needs of
such individual were taken into account in determining eligibility
for (or amount of) such aid or assistance,
unless the State agency administering or supervising the administra-
tion of such plan notifies the Secretary, at such time and in such
manner as may be prescribed in accordance with regulations of the
Secretary, that such payments to such individual (or such individual's
husband or wife) under such plan are being terminated with the pay-
ment or payments made in such month and such individual is not an
individual with respect to whom supplemental security income benefits
are payable pursuant to title XVI or section 211 of Public Law 93–66
for the following month, nor shall such benefit be paid for such month
if such individual is an individual with respect to whom supplemental
security income benefits are payable pursuant to title XVI or section
211 of Public Law 93-66 for such month, unless the Secretary deter-
mines that such benefits are not payable with respect to such indi-
vidual for the month following such month.
Suspension Where Individual Is Residing Outside the United States
(e) The benefit to which any individual is entitled under this sec-
tion for any month shall not be paid if, during such month, such
individual is not a resident of the United States. For purposes of this
subsection, the term "United States" means the 50 States and the
District of Columbia.
197
Sec. 228(h)
Treatment as Monthly Insurance Benefits
(f) For purposes of subsections (t) and (u) of section 202, and of
section 1840 a monthly benefit under this section shall be treated as a
monthly insurance benefit payable under section 202.
Annual Reimbursement of Federal Old-Age and Survivors Insurance
Trust Fund
(g) There are authorized to be appropriated to the Federal Old-
Age and Survivors Insurance Trust Fund for the fiscal year ending
June 30, 1969, and for each fiscal year thereafter, such sums as the
Secretary of Health, Education, and Welfare deems necessary on
account of—
(1) payments made under this section during the second pre-
ceding fiscal year and all fiscal years prior thereto to individuals
who, as of the beginning of the calendar year in which falls the
month for which payment was made, had less than 3 quarters of
coverage,
(2) the additional administrative expenses resulting from the
payments described in paragraph (1), and
(3) any loss in interest to such Trust Fund resulting from such
payments and expenses,
in order to place such Trust Fund in the same position at the end of
such fiscal year as it would have been in if such payments had not
been made.
Definitions
(h) For purposes of this section-
(1) The term "quarter of coverage" includes a quarter of cover-
age as defined in section 5(1) of the Railroad Retirement Act of
1937.
(2) The term "governmental pension system" means the in-
surance system established by this title or any other system or
fund established by the United States, a State, any political sub-
division of a State, or any wholly owned instrumentality of any
one or more of the foregoing which provides for payment of (A)
pensions, (B) retirement or retired pay, or (C) annuities or
similar amounts payable on account of personal services per-
formed by any individual (not including any payment under any
workmen's compensation law or any payment by the Veterans'
Administration as compensation for service-connected disability
or death).
(3) The term "periodic benefit" includes a benefit payable in
a lump sum if it is a commutation of, or a substitute for, periodic
payments.
Sec. 228(h)
198
Revised April 1978
(4) The determination of whether an individual is a husband
or wife for any month shall be made under subsection (h) of sec-
tion 216 without regard to subsections (b) and (f) of section 216.
Benefits in Case of Members of the Uniformed Services
Sec. 229. (a) For purposes of determining entitlement to and the
amount of any monthly benefit for any month after December 1972,
or entitlement to and the amount of any lump-sum death payment in
case of a death after such month, payable under this title on the basis of
the wages and self-employment income of any individual, and for
purposes of section 216 (i) (3), such individual, if he was paid wages
for service as a member of a uniformed service (as defined in section
210(m)) which was included in the term "employment" as defined in
section 210(a) as a result of the provisions of section 210 (1), shall be
deemed to have been paid-
(1) in each calendar quarter occurring after 1956 and before
1978 in which he was paid such wages, additional wages of $300,
and
(2) in each calendar year occurring after 1977 in which he
was paid such wages, additional wages of $100 for each $300 of
such wages, up to a maximum of $1,200 of additional wages for
any calendar year.¹
(b) There are authorized to be appropriated to the Federal Old-
Age and Survivors Insurance Trust Fund, the Federal Disability In-
surance Trust Fund, and the Federal Hospital Insurance Trust Fund
annually, as benefits under this title and part A of title XVIII are
paid after December 1967, such sums as the Secretary determines to
be necessary to meet (1) the additional costs, resulting from subsection
(a), of such benefits (including lump-sum death payments), (2) the
additional administrative expenses resulting therefrom, and (3) any
loss in interest to such trust funds resulting from the payment of such
amounts. Such additional costs shall be determined after any increases
in such benefits arising from the application of section 217 have been
made.
Adjustment of the Contribution and Benefit Base
Sec. 230. (a) Whenever the Secretary pursuant to section 215 (i)
increases benefits effective with the June following a cost-of-living
computation quarter, he shall also determine and publish in the Federal
Register on or before November 1 of the calendar year in which such
¹ Subsection (a) was amended by sec. 353 (d) of Public Law 95–216.
Revised April 1978
199
Sec. 230(c)
1
quarter occurs the contribution and benefit base determined under sub-
section (b) or (c) ¹ which shall be effective with respect to remunera-
tion paid after the calendar year in which such quarter occurs and
taxable years beginning after such year.²
2
(b) The amount of such contribution and benefit base shall (subject
to subsection (c)) be the amount of the contribution and benefit base
in effect in the year in which the determination is made or, if larger,
the product of-
(1) the contribution and benefit base which is in effect with
respect to remuneration paid in (and taxable years beginning in)
the calendar year in which the determination under subsection
(a) is made, and
(2) the ratio of (A) the average of the total wages (as defined
in regulations of the Secretary and computed without regard to
the limitations specified in section 209 (a)) reported to the Secre-
tary of the Treasury or his delegate for the calendar year before
the calendar year in which the determination under subsection
(a) is made to (B) the average of the total wages (as so defined
and computed) reported to the Secretary of the Treasury or his
delegate for the calendar year before the most recent calendar
year in which an increase in the contribution and benefit base was
enacted or a determination resulting in such an increase was made
under subsection (a),
with such product, if not a multiple of $300, being rounded to the next
higher multiple of $300 where such product is a multiple of $150 but
not of $300 and to the nearest multiple of $300 in any other case. ³
(c) For purposes of this section, and for purposes of determining
wages and self-employment income under sections 209, 211, 213, and
215 of this Act and sections 1402, 3121, 3122, 3125, 6413, and 6654 of
the Internal Revenue Code of 1954, (1) the "contribution and benefit
base" with respect to remuneration paid in (and taxable years begin-
ning in) any calendar year after 1973 and prior to the calendar year
with the June of which the first increase in benefits pursuant to section
215(i) of this Act becomes effective shall be $13,200 or (if applicable)
such other amount as may be specified in a law enacted subsequent to
the law which added this section, and (2) the "contribution and benefit
base" with respect to remuneration paid (and taxable years
beginning)—
(A) in 1978 shall be $17,700,
(B) in 1979 shall be $22,900,
(C) in 1980 shall be $25,900, and
(D) in 1981 shall be $29,700.
1 See Appendix E.
2 Subsection (a) was amended by sec. 103(a)(1) of Public Law 95-216.
8 Subsection (b) was amended by sec. 8(h) of Public Law 94-202, and by secs. 103 (a) (2)
and 353 (e) of Public Law 95-216.
f
Revised April 1978
199-A
Sec. 231(a)
For purposes of determining under subsection (b) the "contribution
and benefit base" with respect to remuneration paid (and taxable years
beginning) in 1982 and subsequent years, the dollar amounts specified
in clause (2) of the preceding sentence shall be considered to have
resulted from the application of such subsection (b) and to be the
amount determined (with respect to the years involved) under that
subsection. For purposes of determining employer tax liability under
section 3221 (a) of the Internal Revenue Code of 1954, for purposes of
determining the portion of the employee representative tax liability
under section 3211(a) of such Code which results from the applica-
tion of the 9.5 percent rate specified therein, and for purposes of com-
puting average monthly compensation under section 3(j) of the Rail-
road Retirement Act of 1974, except with respect to annuity amounts
determined under section 3 (a) or (3)(f)(3) of such Act, clause (2)
and the preceding sentence of this subsection shall be disregarded.¹
(d) Notwithstanding any other provision of law, the contribution
and benefit base determined under this section for any calendar year
after 1976 for purposes of section 4022 (b) (3) (B) of Public Law
93-406, with respect to any plan, shall be the contribution and benefit
base that would have been determined for such year if this section as
in effect immediately prior to the enactment of the Social Security
Amendments of 1977 had remained in effect without change.2
Benefits in Case of Certain Individuals Interned During World
War II
Sec. 231. (a) For the purposes of this section the term "internee"
means an individual who was interned during any period of time from
December 7, 1941, through December 31, 1946, at a place within the
United States operated by the Government of the United States for the
internment of United States citizens of Japanese ancestry.
1 Subsection (c) was amended by sec. 103(b) of Public Law 95–216.
2 Subsection (d) was added by sec. 103 (c) of Public Law 95–216.
Sec. 231(b)
200
+
(b) (1) For purposes of determining entitlement to and the amount
of any monthly benefit for any month after December 1972, or entitle-
ment to and the amount of any lump-sum death payment in the case of
a death after such month, payable under this title on the basis of the
wages and self-employment income of any individual, and for purposes
of section 216 (i) (3), such individual shall be deemed to have been paid
during any period after he attained age 18 and for which he was an
internee, wages (in addition to any wages actually paid to him) at a
weekly rate of basic pay during such period as follows—
(A) in the case such individual was not employed prior to the
beginning of such period, 40 multiplied by the minimum hourly
rate or rates in effect at any such time under section 206(a)(1) of
title 29, United States Code, for each full week during such pe-
riod; and
(B) in the case such individual who was employed prior to the
beginning of such period, 40 multiplied by the greater of (i) the
highest hourly rate received during any such employment, or (ii)
the minimum hourly rate or rates in effect at any such time under
section 206(a)(1) of title 29, United States Code, for each full
week during such period.
(2) This subsection shall not be applicable in the case of any
monthly benefit or lump-sum death payment if
(A) a larger such benefit or payment, as the case may be, would
be payable without its application; or
(B) a benefit (other than a benefit payable in a lump-sum unless
it is a commutation of, or a substitute for, periodic payments)
which is based, in whole or in part, upon internment during any
period from December 7, 1941, through December 31, 1946, at a
place within the United States operated by the Government of the
United States for the internment of United States citizens of Jap-
anese ancestry, is determined by any agency or wholly owned in-
strumentality of the United States to be payable by it under any
other law of the United States or under a system established by
such agency or instrumentality.
The provisions of clause (B) shall not apply in the case of any monthly
benefit or lump-sum death payment under this title if its application
would reduce by $0.50 or less the primary insurance amount (as com-
puted under section 215 prior to any recomputation thereof pursuant
to subsection (f) of such section) of the individual on whose wages and
self-employment income such benefit or payment is based. The provi-
sions of clause (B) shall also not apply for purposes of section 216
(i) (3).
(3) Upon application for benefits, a recalculation of benefits (by
reason of this section), or a lump-sum death payment on the basis of
201
Sec. 232
the wages and self-employment income of any individual who was an
internee, the Secretary of Health, Education, and Welfare shall accept
the certification of the Secretary of Defense or his designee concerning
any period of time for which an internee is to receive credit under para-
graph (1) and shall make a decision without regard to clause (B) of
paragraph (2) of this subsection unless he has been notified by some
other agency or instrumentality of the United States that, on the basis
of the period for which such individual was an internee, a benefit de-
scribed in clause (B) of paragraph (2) has been determined by such
agency or instrumentality to be payable by it. If the Secretary of
Health, Education, and Welfare has not been so notified, he shall then
ascertain whether some other agency or wholly owned instrumentality
of the United States has decided that a benefit described in clause (B)
of paragraph (2) is payable by it. If any such agency or instrumental-
ity has decided, or thereafter decides, that such a benefit is payable by
it, it shall so notify the Secretary of Health, Education, and Welfare,
and the Secretary shall certify no further benefits for payment or shall
recompute the amount of any further benefits payable, as may be re-
quired by this section.
(4) Any agency or wholly owned instrumentality of the United
States which is authorized by any law of the United States to pay
benefits, or has a system of benefits which are based, in whole or in
part, on any period for which any individual was an internee shall,
at the request of the Secretary of Health, Education, and Welfare,
certify to him, with respect to any individual who was an internee such
information as the Secretary deems necessary to carry out his func-
tions under paragraph (3) of this subsection.
(c) There are authorized to be appropriated to the Trust Funds and
the Federal Hospital Insurance Trust Fund for the fiscal year ending
June 30, 1978, such sums as the Secretary determines would place the
Trust Funds and the Federal Hospital Insurance Trust Fund in the
position in which they would have been if the preceding provisions
of this section had not been enacted.
Processing of Tax Data
Sec. 232. The Secretary of the Treasury shall make available infor-
mation returns filed pursuant to part III of subchapter A of chapter 61
of subtitle F of the Internal Revenue Code of 1954, to the Secretary
for the purposes of this title and title XI. The Secretary and the Sec-
retary of the Treasury are authorized to enter into an agreement for
the processing by the Secretary of information contained in returns
filed pursuant to part III of subchapter A of chapter 61 of subtitle F
of the Internal Revenue Code of 1954. Notwithstanding the provisions
Sec. 232
202
Revised April 1978
of section 6103 (a) of the Internal Revenue Code of 1954, the Secretary
of the Treasury shall make available to the Secretary such documents
as may be agreed upon as being necessary for purposes of such proc-
essing. The Secretary shall process any withholding tax statements or
other documents made available to him by the Secretary of the Treas-
ury pursuant to this section. Any agreement made pursuant to this
section shall remain in full force and effect until modified or otherwise
changed by mutual agreement of the Secretary and the Secretary of
the Treasury.¹
International Agreements 2
Purpose of Agreement
Sec. 233. (a) The President is authorized (subject to the succeeding
provisions of this section) to enter into agreements establishing totali-
zation arrangements between the social security system established
by this title and the social security system of any foreign country, for
the purposes of establishing entitlement to and the amount of old-
age, survivors, disability, or derivative benefits based on a combina-
tion of an individual's periods of coverage under the social security
system established by this title and the social security system of such
foreign country.
Definitions
(b) For the purposes of this section—
(1) the term "social security system" means, with respect to a
foreign country, a social insurance or pension system which is
of general application in the country and under which periodic
benefits, or the actuarial equivalent thereof, are paid on account
of old age, death, or disability; and
(2) the term "period of coverage” means a period of payment
of contributions or a period of earnings based on wages for
employment or on self-employment income, or any similar period
recognized as equivalent thereto under this title or under the
social security system of a country which is a party to an agree-
ment entered into under this section.
Crediting Periods of Coverage; Conditions of Payment of Benefits
(c) (1) Any agreement establishing a totalization arrangement pur-
suant to this section shall provide-
(A) that in the case of an individual who has at least 6 quar-
ters of coverage as defined in section 213 of this Act and periods of
GAM
¹ Section 232 was added by section 8(b) of Public Law 94-202 effective with respect
to income reports received after 1977.
2 Section 233 was added by sec. 317(a) of Public Law 95–216.
Revised April 1978
Sec. 233(c)
202-A
coverage under the social security system of a foreign country
which is a party to such agreement, periods of coverage of such
individual under such social security system of such foreign coun-
try may be combined with periods of coverage under this title and
otherwise considered for the purposes of establishing entitlement
to and the amount of old-age, survivors, and disability insurance
benefits under this title;
(B) (i) that employment or self-employment, or any service
which is recognized as equivalent to employment or self-employ-
ment under this title or the social security system of a foreign
country which is a party to such agreement, shall, on or after the
effective date of such agreement, result in a period of coverage
under the system established under this title or under the system
established under the laws of such foreign country, but not under
both, and (ii) the methods and conditions for determining under
which system employment, self-employment, or other service shall
result in a period of coverage; and
(C) that where an individual's periods of coverage are com-
bined, the benefit amount payable under this title shall be based
on the proportion of such individual's periods of coverage which
was completed under this title.
-
(2) Any such agreement may provide that-
(A) an individual who is entitled to cash benefits under this
title shall, notwithstanding the provisions of section 202(t),
receive such benefits while he resides in a foreign country which is
a party to such agreement; and
(B) the benefit paid by the United States to an individual who
legally resides in the United States shall, if less when added to the
benefit paid by such foreign country than the benefit amount
which would be payable to an entitled individual based on the
first figure in (or deemed to be in) column IV of the table in sec-
tion 215 (a) in the case of an individual becoming eligible for
such benefit before January 1, 1979, or based on a primary insur-
ance amount determined under section 215 (a) (1) (C) (i) (I)´ in
the case of an individual becoming eligible for such benefit on or
after that date, be increased so that the total of the two benefits.
is equal to the benefit amount which would be so payable.
(3) Section 226 shall not apply in the case of any individual to
whom it would not be applicable but for this section or any agreement
or regulation under this section.
(4) any such agreement may contain other provisions which are
not inconsistent with the other provisions of this title and which the
President deems appropriate to carry out the purposes of this section.
Sec. 233(d)
Revised April 1978
202-B
Regulations
(d) The Secretary of Health, Education, and Welfare shall make
rules and regulations and establish procedures which are reasonable
and necessary to implement and administer any agreement which has
been entered into in accordance with this section.
Reports to Congress; Effective Date of Agreements
(e) (1) Any agreement to establish a totalization arrangement
entered into pursuant to this section shall be transmitted by the Presi-
dent to the Congress together with a report on the estimated number
of individuals who will be affected by the agreement and the effect of
the agreement on the estimated income and expenditures of the pro-
grams established by this Act.
(2) Such an agreement shall become effective on any date,
provided in the agreement, which occurs after the expiration of the
period (following the date on which the agreement is transmitted in
accordance with paragraph (1)) during which each House of the Con-
gress has been in session on each of 90 days; except that such agree-
ment shall not become effective if, during such period, either House of
the Congress adopts a resolution of disapproval of the agreement.
TITLE III-GRANTS TO STATES FOR UNEMPLOYMENT
COMPENSATION ADMINISTRATION
Sec. 301. Appropriations_
Sec. 302. Payments to States__.
Sec. 303. Provisions of State Laws_
Sec. 304. Judicial Review___
Page 1
203
203
203
206
Appropriations
Section 301. The amounts made available pursuant to section
901(c)(1)(A) for the purpose of assisting the States in the adminis-
tration of their unemployment compensation laws shall be used as
hereinafter provided.
Payments to States
Sec. 302. (a) The Secretary of Labor shall from time to time certify
to the Secretary of the Treasury for payment to each State which has
an unemployment compensation law approved by the Secretary of
Labor under the Federal Unemployment Tax Act such amounts as
the Secretary of Labor determines to be necessary for the proper and
efficient administration of such law during the fiscal year for which
such payment is to be made. The Secretary of Labor's determination
shall be based on (1) the population of the State; (2) an estimate of
the number of persons covered by the State law and of the cost of
proper and efficient administration of such law; and (3) such other
factors as the Secretary of Labor finds relevant. The Secretary of
Labor shall not certify for payment under this section in any fiscal
year a total amount in excess of the amount appropriated therefor for
such fiscal year.
(b) Out of the sums appropriated therefor, the Secretary of the
Treasury shall, upon receiving a certification under subsection (a)
pay, through the Fiscal Service of the Treasury Department and prior
to audit or settlement by the General Accounting Office, to the State
agency charged with the administration of such law the amount so
certified.
Provisions of State Laws
Sec. 303. (a) The Secretary of Labor shall make no certification
for payment to any State unless he finds that the law of such State,
1 This table of contents does not appear in the law.
(203)
Sec. 303(a)
204
approved by him under the Federal Unemployment Tax Act, includes
provision for—
(1) Such methods of administration (including after Jan-
uary 1, 1940, methods relating to the establishment and mainte-
nance of personnel standards on a merit basis, except that the
Secretary of Labor shall exercise no authority with respect to the
selection, tenure of office, and compensation of any individual
employed in accordance with such methods) as are found by the
Secretary of Labor to be reasonably calculated to insure full
payment of unemployment compensation when due; and
(2) Payment of unemployment compensation solely through
public employment offices or such other agencies as the Secretary
of Labor may approve; and
(3) Opportunity for a fair hearing, before an impartial tri-
bunal, for all individuals whose claims for unemployment com-
pensation are denied; and
(4) The payment of all money received in the unemployment
fund of such State (except for refunds of sums erroneously paid
into such fund and except for refunds paid in accordance with
the provisions of section 3305 (b) of the Federal Unemployment
Tax Act), immediately upon such receipt, to the Secretary of the
Treasury to the credit of the Unemployment Trust Fund estab-
lished by section 904; and
(5) Expenditure of all money withdrawn from an unemploy-
ment fund of such State, in the payment of unemployment com-
pensation, exclusive of expenses of administration, and for refunds.
of sums erroneously paid into such fund and refunds paid in
accordance with the provisions of section 3305 (b) of the Federal
Unemployment Tax Act: Provided, That an amount equal to the
amount of employee payments into the unemployment fund of a
State may be used in the payment of cash benefits to individuals
with respect to their disability, exclusive of expenses of adminis-
tration: Provided further, That the amounts specified by section
903(c)(2) may, subject to the conditions prescribed in such sec-
tion, be used for expenses incurred by the State for administra-
tion of its unemployment compensation law and public employ-
ment offices; and
(6) The making of such reports in such form and containing
such information, as the Secretary of Labor may from time to
time require, and compliance with such provisions as the Secre-
tary of Labor may from time to time find necessary to assure the
correctness and verification of such reports; and
(7) Making available upon request to any agency of the United
States charged with the administration of public works or assist-
205
Sec. 303(c)
ance through public employment, the name, address, ordinary
occupation and employment status of each recipient of unem-
ployment compensation, and a statement of such recipient's rights
to further compensation under such law; and
(8) Effective July 1, 1941, the expenditure of all moneys re-
ceived pursuant to section 302 of this title solely for the purposes
and in the amounts found necessary by the Secretary of Labor for
the proper and efficient administration of such State law; and
(9) Effective July 1, 1941, the replacement, within a reasonable
time, of any moneys received pursuant to section 302 of this title,
which, because of any action or contingency, have been lost or
have been expended for purposes other than, or in amounts in
excess of, those found necessary by the Secretary of Labor for
the proper administration of such State law.
(b) Whenever the Secretary of Labor, after reasonable notice and
opportunity for hearing to the State agency charged with the admin-
istration of the State law, finds that in the administration of the law
there is
(1) a denial, in a substantial number of cases, of unemploy-
ment compensation to individuals entitled thereto under such
law; or
(2) a failure to comply substantially with any provision speci-
fied in subsection (a);
the Secretary of Labor shall notify such State agency that further
payments will not be made to the State until he is satisfied that there
is no longer any such denial or failure to comply. Until the Secretary
of Labor is so satisfied, he shall make no further certification to the
Secretary of the Treasury with respect to such State: Provided, That
there shall be no finding under clause (1) until the question of entitle-
ment shall have been decided by the highest judicial authority given
jurisdiction under such State law: Provided further, That any costs
may be paid with respect to any claimant by a State and included as
costs of administration of its law.
(c) The Secretary of Labor shall make no certification for pay-
ment to any State if he finds, after reasonable notice and opportunity
for hearing to the State agency charged with the administration of
the State law-
(1) That such State does not make its records available to
the Railroad Retirement Board, and furnish to the Railroad
Retirement Board at the expense of the Railroad Retirement
Board such copies thereof as the Railroad Retirement Board
deems necessary for its purposes; or
(2) That such State is failing to afford reasonable cooperation
with every agency of the United States charged with the admin-
istration of any unemployment insurance law.
21-746 0 - 78 - 16
Sec. 304(a)
206
Judicial Review
Sec. 304. (a) Whenever the Secretary of Labor—
(1) finds that a State law does not include any provision
specified in section 303 (a), or
(2) makes a finding with respect to a State under subsection
(b) or (c) of section 303,
such State may, within 60 days after the Governor of the State has
been notified of such action, file with the United States court of
appeals for the circuit in which such State is located or with the
United States Court of Appeals for the District of Columbia, a pe-
tition for review of such action. A copy of the petition shall be forth-
with transmitted by the clerk of the court to the Secretary of Labor.
The Secretary of Labor thereupon shall file in the court the record of
the proceedings on which he based his action as provided in section
2112 of title 28, United States Code.
(b) The findings of fact by the Secretary of Labor, if supported
by substantial evidence, shall be conclusive; but the court, for good
cause shown, may remand the case to the Secretary of Labor to take
further evidence and the Secretary of Labor may thereupon make new
or modified findings of fact and may modify his previous action, and
shall certify to the court the record of the further proceedings. Such
new or modified findings of fact shall likewise be conclusive if sup-
ported by substantial evidence.
(c) The court shall have jurisdiction to affirm the action of the
Secretary of Labor or to set it aside, in whole or in part. The judg-
ment of the court shall be subject to review by the Supreme Court
of the United States upon certiorari or certification as provided in
section 1254 of title 28 of the United States Code.
(d) (1) The Secretary of Labor shall not withhold any certifica-
tion for payment to any State under section 302 until the expiration
of 60 days after the Governor of the State has been notified of the
action referred to in paragraph (1) or (2) of subsection (a) or until
the State has filed a petition for review of such action, whichever
is earlier.
(2) The commencement of judicial proceedings under this section
shall stay the Secretary's action for a period of 30 days, and the court
may thereafter grant interim relief if warranted, including a further
stay of the Secretary's action and including such other relief as may
be necessary to preserve status or rights.
(e) Any judicial proceedings under this section shall be entitled to,
and, upon request of the Secretary or the State, shall receive a prefer-
ence and shall be heard and determined as expeditiously as possible.
Revised April 1978
TITLE IV-GRANTS TO STATES FOR AID AND SERVICES
TO NEEDY FAMILIES WITH CHILDREN AND FOR
CHILD-WELFARE SERVICES
PART A-AID TO FAMILIES WITII DEPENDENT CHILDREN
Sec. 401. Appropriation
Sec. 402. State Plans for Aid and Services to Needy Families With
Children
Sec. 403. Payment to States--
Sec. 404. Operation of State Plans_
Sec. 405. Use of Payments for Benefit of Child___
Sec. 406. Definitions
Sec. 407. Dependent Children of Unemployed Fathers__.
Sec. 408. Federal Payments for Foster Home Care of Dependent Children_
Sec. 409. Community Work and Training Programs….
Sec. 410. Food Stamp Distribution__
Sec. 411. Access to Wage Information___
PART B-CHILD-WELFARE SERVICES
Sec. 420. Appropriation
Sec. 421. Allotments to States___
Sec. 422. Payment to States-.
Sec. 423. Allotment Percentage and Federal Share_
Sec. 424. Reallotment
Sec. 425. Definition
Sec. 426. Research, Training, or Demonstration Projects_
PART C-WORK INCENTIVE PROGRAM FOR RECIPIENTS OF AID
UNDER STATE PLAN APPROVED UNDER PART A
Sec. 430. Purpose
Sec. 431. Appropriation
Sec. 432. Establishment of Programs-
Sec. 433. Operation of Program.
Sec. 434. Incentive Payment-
Sec. 435. Federal Assistance__
Sec. 436. Period of Enrollment_
Sec. 437. Relocation of Participants---
Sec. 438. Participants Not Federal Employees-
Sec. 439. Rules and Regulations.
Sec. 440. Annual Report----.
Sec. 441. Evaluation and Research__.
Sec. 442. Technical Assistance for Providers of Employment or Training--
Sec. 443. Collection of State Share__.
Sec. 444. Agreements With Other Agencies Providing Assistance to
Families of Unemployed Parents-----
Page 1
208
¹ This table of contents does not appear in the law.
208
217
222
223
225
226
229
231
233
234
234
234
234
237
238
238
239
240
240
241
242
245
245
246
246
246
246
247
247
247
247
248
(207)
Sec. 401
Revised April 1978
208
PART D-CHILD SUPPORT AND ESTABLISHMENT OF PATERNITY
Sec. 451. Appropriation
Sec. 452. Duties of the Secretary__
Sec. 453. Parent locator service_.
Sec. 454. State plan for child support.
Sec. 455. Payments to States----
Sec. 456. Support obligations_
Sec. 457. Distribution of proceeds__
I
Sec. 460. Civil actions to enforce child support obligations___
Sec. 461. Regulations Pertaining to Garnishments_
Sec. 462. Definitions
I
Sec. 458. Incentive payment to localities.
Sec. 459. Consent by the United States to garnishment and similar pro-
ceedings for enforcement of child support and alimony
obligations
Page ¹
1
249
249
251
253
255
256
256
258
258
258-B
258-B
258-C
Part A-Aid to Families With Dependent Children
Appropriation
Section 401. For the purpose of encouraging the care of dependent
children in their own homes or in the homes of relatives by enabling
each State to furnish financial assistance and rehabilitation and other
services, as far as practicable under the conditions in such State, to
needy dependent children and the parents or relatives with whom
they are living to help maintain and strengthen family life and to
help such parents or relatives to attain or retain capability for the
maximum self-support and personal independence consistent with the
maintenance of continuing parental care and protection, there is hereby
authorized to be appropriated for each fiscal year a sum sufficient to
carry out the purposes of this part. The sums made available under
this section shall be used for making payments to States which have
submitted, and had approved by the Secretary of Health, Education,
and Welfare, State plans for aid and services to needy families with
children.
State Plans for Aid and Services to Needy Families With
Children
Sec. 402. (a) A State plan for aid and services to needy families
with children must-
(1) provide that it shall be in effect in all political subdivisions
of the State, and, if administered by them, be mandatory upon them;
(2) provide for financial participation by the State;
(3) either provide for the establishment or designation of a single
State agency to administer the plan, or provide for the establishment
or designation of a single State agency to supervise the administration
of the plan;
1 This table of contents does not appear in the law.
209
Sec. 402(a)
(4) provide for granting an opportunity for a fair hearing before
the State agency to any individual whose claim for aid to families with
dependent children is denied or is not acted upon with reasonable
promptness;
(5) provide such methods of administration (including after
January 1, 1940, methods relating to the establishment and mainte-
nance of personnel standards on a merit basis, except that the Secre-
tary shall exercise no authority with respect to the selection, tenure of
office, and compensation of any individual employed in accordance
with such methods) as are found by the Secretary to be necessary for
the proper and efficient operation of the plan; and ¹
1
(6) provide that the State agency will make such reports, in
such form and containing such information, as the Secretary may
from time to time require, and comply with such provisions as the
Secretary may from time to time find necessary to assure the correct-
ness and verification of such reports;
(7) except as may be otherwise provided in clause (8), provide
that the State agency shall, in determining need, take into considera-
tion any other income and resources of any child or relative claiming
aid to families with dependent children, or of any other individual
(living in the same home as such child and relative) whose needs the
State determines should be considered in determining the need of the
child or relative claiming such aid, as well as any expenses reasonably
attributable to the earning of any such income; 2
1 In the case of Guam, Puerto Rico, and the Virgin Islands, Section 402(a)(5) reads
as follows:
"(5) provide (A) such methods of administration (including after January 1, 1940,
methods relating to the establishment and maintenance of personnel standards on a merit
basis, except that the Secretary shall exercise no authority with respect to the selection,
tenure of office, and compensation of any individual employed in accordance with such
methods) as are found by the Secretary to be necessary for the proper and efficient oper-
ation of the plan, and (B) for the training and effective use of paid subprofessional staff,
with particular emphasis on the full-time or part-time employment of recipients and
other persons of low income, as community services aides, in the administration of the
plan and for the use of nonpaid or partially paid volunteers in a social service volunteer
program in providing services to applicants and recipients and in assisting any advisory
committees established by the State agency; and”.
2 P.L. 90-248, sec. 248(c), provides:
"Effective July 1, 1969, neither the provisions of clauses (A) through (C) of section
402(a)(7) of such Act as in effect before the enactment of this Act nor the provisions
of section 402 (a) (8) of such Act as amended by section 202(b) of this Act shall apply
in the case of Puerto Rico, the Virgin Islands, or Guam. Effective no later than July 1,
1972, the State plans of Puerto Rico, the Virgin Islands, and Guam approved under sec-
tion 402 of such Act shall provide for the disregarding of income in making the deter-
mination under section 402(a)(7) of such Act in amounts (agreed to between the Secre-
tary and the State agencies involved) sufficiently lower than the amounts specified in
section 402 (a) (8) of such Act to reflect appropriately the applicable differences in income
levels.'
""
P.L. 93-647, sec. 101 (c) (1), provides :
"Notwithstanding the provisions of section 402(a) of the Social Security Act, in addition
to the amounts required to be disregarded under clause (8)(A) of such section, there is
imposed the requirement (and the State plan shall be deemed to include the requirement)
that for the 15 months beginning July 1, 1975, in making the determination under clause
7), the State agency shall with respect to any month in such year and in addition to the
amounts required to be disregarded under clause (8) (A), disregard amounts payable under
section 457(a) (1)."
Sec. 402(a)
210
(8) provide that, in making the determination under clause (7),
the State agency-
(A) shall with respect to any month disregard—
(i) all of the earned income of each dependent child re-
ceiving aid to families with dependent children who is (as
determined by the State in accordance with standards pre-
scribed by the Secretary) a full-time student or part-time
student who is not a full-time employee attending a school,
college, or university, or a course of vocational or technical
training designed to fit him for gainful employment, and
(ii) in the case of earned income of a dependent child not
included under clause (i), a relative receiving such aid, and
any other individual (living in the same home as such rela-
tive and child) whose needs are taken into account in making
such determination, the first $30 of the total of such earned
income for such month plus one-third of the remainder of
such income for such month (except that the provisions of
this clause (ii) shall not apply to earned income derived from
participation on a project maintained under the programs
established by section 432 (b) (2) and (3)); and
(B) (i) may, subject to the limitations prescribed by the
Secretary, permit all or any portion of the earned or other income
to be set aside for future identifiable needs of a dependent child,
and (ii) may, before disregarding the amounts referred to in sub-
paragraph (A) and clause (i) of this subparagraph, disregard
not more than $5 per month of any income; except that, with
respect to any month, the State agency shall not disregard any
earned income (other than income referred to in subparagraph
(B)) of—
(C) any one of the persons specified in clause (ii) of subpara-
graph (A) if such person—
(i) terminated his employment or reduced his earned in-
come without good cause within such period (of not less than
30 days) preceding such month as may be prescribed by the
Secretary; or
(ii) refused without good cause, within such period pre-
ceding such month as may be prescribed by the Secretary, to
accept employment in which he is able to engage which is
offered through the public employment offices of the State, or
is otherwise offered by an employer if the offer of such em-
ployer is determined by the State or local agency administer-
ing the State plan, after notification by him, to be a bona fide
offer of employment; or
(D) any of such persons specified in clause (ii) of subpara-
graph (A) if with respect to such month the income of the per-
211
Sec. 402(a)
1
sons so specified (within the meaning of clause (7)) was in excess
of their need as determined by the State agency pursuant to
clause (7) (without regard to clause (8)), unless, for any one of
the four months preceding such month, the needs of such person
were met by the furnishing of aid under the plan;
(9) provide safeguards which restrict the use of disclosure of
information concerning applicants or recipients to purposes directly
connected with (A) the administration of the plan of the State ap-
proved under this part, the plan or program of the State under part
B, C, or D of this title or under title I, X, XIV, XVI, XIX, or XX,
or the supplemental security income program established by title XVI,
(B) any investigation, prosecution, or criminal or civil proceeding,
conducted in connection with the administration of any such plan or
program, and (C) the administration of any other Federal or fed-
erally assigned program which provides assistance, in cash or in kind,
or services, directly to individuals on the basis of need; and the safe-
guards so provided shall prohibit disclosure, to any committee or a
legislative body, of any information which identifies by name or
address any such applicant or recipient; 2
(10) provide, effective July 1, 1951, that all individuals wishing to
make application for aid to families with dependent children shall
have opportunity to do so, and that aid to families with dependent
children shall, subject to paragraphs (25) and (26), be furnished with
reasonable promptness to all eligible individuals;
3
(11) provide for prompt notice (including the transmittal of all
relevant information) to the State child support collection agency
(established pursuant to part D of this title) of the furnishing of aid
to families with dependent children with respect to a child who has
been deserted or abandoned by a parent (including a child born out of
wedlock without regard to whether the paternity of such child has
been established); "
3
(12) provide, effective October 1, 1950, that no aid will be fur-
nished any individual under the plan with respect to any period with
respect to which he is receiving old-age assistance under the State
plan approved under section 2 of this Act;
(13) [Repealed].*
(14) [Repealed].*
(15) provide as part of the program of the State for the provision of
services under title XX (A) for the development of a program, for
each appropriate relative and dependent child receiving aid under the
plan and for each appropriate individual (living in the same home as a
relative and child receiving such aid) whose needs are taken into ac-
count in making the determination under clause (7), for preventing
¹ See also section 101(c)(1) of Public Law 93–647.
2 Section 402(a)(9) was amended by Public Laws 93-647 and 94-88.
3 Sections 402 (a) (10) and 402 (a) (11) were amended by Public Law 93-647.
* See footnote 1 on page 212.
Sec. 402(a)
212
or reducing the incidence of births out of wedlock and otherwise
strengthening family life, and for implementing such program by
assuring that in all appropriate cases (including minors who can be
considered to be sexually active) family planning services are offered
to them and are provided promptly (directly or under arrangements
with others) to all individuals voluntarily requesting such services,
but acceptance of family planning services provided under the plan
shall be voluntary on the part of such members and individuals and
shall not be a prerequisite to eligibility for or the receipt of any other
service under the plan; and (B) to the extent that services provided
under this clause or clause (14) are furnished by the staff of the State
agency or the local agency administering the State plan in each of the
political subdivisions of the State, for the establishment of a single
organizational unit in such State or local agency, as the case may be,
responsible for the furnishing of such services; 1
(16) provide that where the State agency has reason to believe that
the home in which a relative and child receiving aid reside is unsuit-
able for the child because of the neglect, abuse, or exploitation of such
child it shall bring such condition to the attention of the appropriate
court or law enforcement agencies in the State, providing such data
with respect to the situation it may have;
(17) [Repealed].
(18) [Repealed].
(19) provide―
1 In the case of Guam, Puerto Rico, and the Virgin Islands, section 402(a)(13), (14),
and (15) read as follows:
66
(13) provide a description of the services which the State agency makes available
to maintain and strengthen family life for children, including a description of the steps
taken to assure, in the provision of such services, maximum utilization of other agen-
cies providing similar or related services;
"(14) provide for the development and application of a program for such family serv-
Ices as defined in section 406(d) and child welfare services, as defined in section 425,
for each child and relative who receives aid to families with dependent children and
each appropriate individual (living in the same home as a relative and child receiving
such aid whose needs are taken into account in making the determination under clause
(7)), as may be necessary in the light of the particular home conditions and other needs
of such child, relative, and individuals, in order to assist such child, relative, and in-
dividuals to attain or retain capability for self-support and care and in order to main-
tain and strengthen family life and to foster child development;
“(15) provide (A) for the development of a program, for each appropriate relative and
dependent child receiving aid under the plan and for each appropriate individual (living
in the same home as a relative and child receiving such aid) whose needs are taken into
account in making the determination under clause (7), for preventing or reducing the
incidence of births out of wedlock and otherwise strengthening family life, and for
implementing such program by assuring that in all appropriate cases (including minors
who can be considered to be sexually active) family planning services are offered to
them and are provided promptly (directly or under arrangements with others) to all
individuals voluntarily requesting such services, but acceptance of family planning
services provided under the plan shall be voluntary on the part of such members and
individuals and shall not be a prerequisite to eligibility for or the receipt of any other
service under the plan; and (B) to the extent that services provided under this clause
or clause (14) are furnished by the staff of the State agency or the local agency ad-
ministering the State plan in each of the political subdivisions of the State, for the
establishment of a single organizational unit in such State or local agency, as the case
may be, responsible for the furnishing of such service;".
Revised April 1978
213
Sec. 402(a)
(A) that every individual, as a condition of eligibility for aid
under this part, shall register for manpower services, training,
and employment as provided by regulations of the Secretary of
Labor, unless such individual is-
(i) a child who is under age 16 or attending school full
time;
(ii) a person who is ill, incapacitated, or of advanced age;
(iii) a person so remote from a work incentive project
that his effective participation is precluded;
(iv) a person whose presence in the home is required be-
cause of illness or incapacity of another member of the house-
hold;
of
(v) a mother or other relative of a child under the age
six who is caring for the child; or
(vi) the mother or other female caretaker of a child, if
the father or another adult male relative is in the home and
not excluded by clause (i), (ii), (iii), or (iv) of this subpara-
graph (unless he has failed to register as required by this
subparagraph, or has been found by the Secretary of Labor
under section 433 (g) to have refused without good cause to
participate under a work incentive program or accept
employment as described in subparagraph (F) of this
paragraph);
and that any individual referred to in clause (v) shall be advised
of her option to register, if she so desires, pursuant to this para-
graph, and shall be informed of the child care services (if any)
which will be available to her in the event she should decide so
to register;
(B) that aid under the plan will not be denied by reason of
such registration or the individual's certification to the Secretary
of Labor under subparagraph (G) of this paragraph, or by
reason of an individual's participation on a project under the
program established by section 432 (b) (2) or (3);
(C) for arrangements to assure that there will be made a
non-Federal contribution to the work incentive programs estab-
lished by part C by appropriate agencies of the State or private
organizations of 10 per centum of the cost of such programs, as
specified in section 435 (b);
(D) that (i) training incentives authorized under section
434, and income derived from a special work project under the
program established by section 432 (b) (3) shall be disregarded
in determining the needs of an individual under section 402 (a)
(7), and (ii) in determining such individual's needs the addi-
tional expenses attributable to his participation in a program
J
Sec. 402(a)
214
established by section 432 (b) (2) or (3) shall be taken into
account;
(E) [Repealed].
(F) that if and for so long as any child, relative, or individual
(certified to the Secretary of Labor pursuant to subparagraph
(G)) has been found by the Secretary of Labor under section
433(g) to have refused without good cause to participate under a
work incentive program established by part C with respect to
which the Secretary of Labor has determined his participation is
consistent with the purposes of such part C, or to have refused
without good cause to accept employment in which he is able to
engage which is offered through the public employment offices of
the State, or is otherwise offered by an employer if the offer of
such employer is determined, after notification by him, to be a
bona fide offer of employment-
(i) if the relative makes such refusal, such relative's
needs shall not be taken into account in making the deter-
mination under clause (7), and aid for any dependent child
in the family in the form of payments of the type described
in section 406(b) (2) (which in such a case shall be without
regard to clauses (A) through (E) thereof) or section 408
will be made;
(ii) aid with respect to a dependent child will be denied
if a child who is the only child receiving aid in the family
makes such refusal;
(iii) if there is more than one child receiving aid in
the family, aid for any such child will be denied (and his
needs will not be taken into account in making the deter-
mination under clause (7)) if that child makes such refusal;
and
(iv) if such individual makes such refusal, such individ-
ual's needs shall not be taken into account in making the
determination under clause (7);
except that the State agency shall for a period of sixty days, make
payments of the type described in section 406 (b) (2) (without
regard to clauses (A) through (E) thereof) on behalf of the rela-
tive specified in clause (i), or continue aid in the case of a child
specified in clause (ii) or (iii), or take the individual's needs into
account in the case of an individual specified in clause (iv), but
only if during such period such child, relative, or individual ac-
cepts counseling or other services (which the State agency shall
make available to such child, relative, or individual) aimed at
persuading such relative, child, or individual, as the case may be,
Revised April 1978
215
Sec. 402(a)
to participate in such program in accordance with the determina-
tion of the Secretary of Labor; and
(G) that the State agency will have in effect a special program
which (i) will be administered by a separate administrative unit
and the employees of which will, to the maximum extent feasible,
perform services only in connection with the administration of
such program, (ii) will provide (through arrangements with
others or otherwise) for individuals who have been registered
pursuant to subparagraph (A), in accordance with the order of
priority listed in section 433 (a), such health, vocational rehabili-
tation, counseling, child care, and other social and supportive
services as are necessary to enable such individuals to accept em-
ployment or receive manpower training provided under part C,
and will, when arrangements have been made to provide necessary
supportive services, including child care, certify to the Secretary
of Labor those individuals who are ready for employment or train-
ing under part C, (iii) will participate in the development of
operational and employability plans under section 433(b); and
(iv) provides for purposes of clause (ii), that, when more than
one kind of child care is available, the mother may choose the type,
but she may not refuse to accept child care services if they are
available;
(21) [Repealed].
(22) [Repealed].
(20) effective July 1, 1969, provide for aid to families with de-
pendent children in the form of foster care in accordance with section
408;
All
¹ Section 402(a) (25) was added by Public Law 93–647.
G
(23) provide that by July 1, 1969, the amounts used by the State to
determine the needs of individuals will have been adjusted to reflect
fully changes in living costs since such amounts were established, and
any maximums that the State imposes on the amount of aid paid to
families will have been proportionately adjusted;
(24) provide that if an individual is receiving benefits under title.
XVI, then, for the period for which such benefits are received. such
individual shall not be regarded as a member of a family for purposes
of determining the amount of the benefits of the family under this title
and his income and resources shall not be counted as income and
resources of a family under this title ;
(25) provide (A) that, as a condition of eligibility under the plan,
each applicant for or recipient of aid shall furnish to the State agency
his social security account number (or numbers, if he has more than
one such number), and (B) that such State agency shall utilize such
account numbers, in addition to any other means of identification it
may determine to employ in the administration of such plan;¹
1
Sec. 402(a)
216
Revised April 1978
(26) provide that, as a condition of eligibility for aid, each applicant
or recipient will be required-
(A) to assign the State any rights to support from any other
person such applicant may have (i) in his own behalf or in behalf
of any other family member for whom the applicant is applying
for or receiving aid, and (ii) which have accrued at the time such
assignment is executed,
(B) to cooperate with the State (i) in establishing the pater-
nity of a child born out of wedlock with respect to whom aid is
claimed, and (ii) in obtaining support payments for such appli-
cant and for a child with respect to whom such aid is claimed, or
in obtaining any other payments or property due such applicant
or such child, unless (in either case) such applicant or recipient is
found to have good cause for refusing to cooperate as determined
by the State agency in accordance with standards prescribed by
the Secretary, which standards shall take into consideration the
best interests of the child on whose behalf aid is claimed; and
that, if the relative with whom a child is living is found to be
ineligible because of failure to comply with the requirements of
subparagraphs (A) and (B) of this paragraph, any aid for which
such child is eligible will be provided in the form of protective
payments as described in section 406 (b) (2) (without regard to
subparagraphs (A) through (E) of such section); 1 2
(27) provide, that the State has in effect a plan approved under
part D and operate a child support program in conformity with such
plan; 1 3
(28) provide that, in determining the amount of aid to which an
eligible family is entitled, any portion of the amounts collected in any
particular month as child support pursuant to a plan approved under
part D, and retained by the State under section 457, which (under the
State plan approved under this part as in effect both during July 1975
and during that particular month) would not have caused a reduction
in the amount of aid paid to the family if such amounts had been paid
directly to the family, shall be added to the amount of aid otherwise
payable to such family under the State plan approved under this part;
and 4
(29) effective October 1, 1979, provided that wage information
available from the Social Security Administration under the provi-
sions of section 411 of this Act, and wage information available (under
the provisions of section 3304(a)(16) of the Federal Unemployment
Tax Act) from agencies administering State unemployment compen-
sation laws, shall be requested and utilized to the extent permitted
1 Sections 402(a)(26) and 402(a) (27) were added by Public Law 93-647. The comma
in paragraph (27) is apparently a technical error.
Section 402 (á) (26) was amended by Public Law 94-88. See also sections 201(a),
201 (b), and 208 (d) of Public Law 94-88_printed in this document on pp. 765 and 766.
3 Section 402 (a) (27) was amended by Public Law 94-88. See also section 201(a) of
Public Law 94-88.
◄ Section 402(a) (28) added by Public Law 94–88.
Revised April 1978
217
Sec. 403(a)
·
under the provisions of such sections; except that the State shall not
be required to request such information from the Social Security
Administration where such information is available from the agency
administering the State unemployment compensation laws.¹
(b) The Secretary shall approve any plan which fulfills the condi-
tions specified in subsection (a), except that he shall not approve any
plan which imposes as a condition of eligibility for aid to families
with dependent children a residence requirement which denies aid
with respect to any child residing in the State (1) who has resided in
the State for one year immediately preceding the application for such
aid, or (2) who was born within one year immediately preceding the
application, if the parent or other relative with whom the child is liv-
ing has resided in the State for one year immediately preceding the
birth.
(c) The Secretary shall, on the basis of his review of the reports.
received from the States under clause (15) of subsection (a), compile
such data as he believes necessary and from time to time publish his
findings as to the effectiveness of the programs developed and admin-
istered by the States under such clause. The Secretary shall annually
report to the Congress (with the first such report being made on or
before July 1, 1970) on the programs developed and administered by
each State under such clause (15).
Payment to States
Sec. 403.2 (a) From the sums appropriated therefor, the Secre-
tary of the Treasury shall pay to each State which has an approved
plan for aid and services to needy families with children, for each
quarter, beginning with the quarter commencing October 1, 1958—
(1) in the case of any State other than Puerto Rico, the Virgin
Islands, and Guam, an amount equal to the sum of the following
proportions of the total amounts expended during such quarter
as aid to families with dependent children under the State plan
(including expenditures for premiums under part B of title
XVIII for individuals who are recipients of money payments un-
der such plan and other insurance premiums for medical or any
other type of remedial care or the cost thereof)-
(A) five-sixths of such expenditures, not counting so much
of any expenditure with respect to any month as exceeds the
product of $18 multiplied by the total number of recipients
of aid to families with dependent children for such month
(which total number, for purposes of this subsection, means
(i) the number of individuals with respect to whom such aid
in the form of money payments is paid for such month, plus
(ii) the number of other individuals with respect to whom
1 Paragraph (29) was added by sec. 403 (c) of P.L. 95-216. The word "provided" appar-
ently should be "provide".
2 See also sec. 508 of P.L. 94-566 which is printed in this document on p. 793.
Sec. 403(a)
218
Revised April 1978
expenditures were made in such month as aid to families with
dependent children in the form of medical or any other type
of remedial care, plus (iii) the number of individuals, not
counted under clause (i) or (ii), with respect to whom pay-
ments described in section 406 (b) (2) are made in such month
and included as expenditures for purposes of this paragraph
or paragraph (2)); plus
(B) the Federal percentage of the amount by which such
expenditures exceed the maximum which may be counted
under clause (A), not counting so much of any expenditure
with respect to any month as exceeds (i) the product of $32
multiplied by the total number of recipients of aid to families
with dependent children (other than such aid in the form
of foster care) for such month, plus (ii) the product of $100
multiplied by the total number of recipients of aid to families
with dependent children in the form of foster care for such
month; and
(2) in the case of Puerto Rico, the Virgin Islands, and Guam,
an amount equal to one-half of the total of the sums expended
during such quarter as aid to families with dependent children
under the State plan (including expenditures for premiums under
part B of title XVIII for individuals who are recipients of
money payments under such plan and other insurance premiums
for medical or any other type of remedial care or the cost thereof)
not counting so much of any expenditure with respect to any
month as exceeds $18 multiplied by the total number of recipients
of such aid for such month; and¹
1
(3) in the case of any State, an amount equal to the sum of
the following proportions of the total amounts expended during
such quarter as found necessary by the Secretary of Health, Edu-
cation, and Welfare for the proper and efficient administration
of the State plan-
(A) 75 per centum of so much of such expenditures as are
for the training (including both short- and long-term train-
ing at educational institutions through grants to such insti-
tutions or by direct financial assistance to students enrolled
in such institutions) of personnel employed or preparing for
employment by the State agency or by the local agency
administering the plan in the political subdivision, and 2
(B) one-half of the remainder of such expenditures,
except that no payment shall be made with respect to amounts ex-
¹ Pursuant to sec. 9 of the Act of April 19. 1950 (64 Stat. 44. 47), the Secretary of the
Treasury must also pay to the States, in addition to the amounts produced by sec. 403 (a)
of the Social Security Act. an amount ecual to 80 nercent of the State share of assistance
expenditures under the State plan with respect to Navajo and Hopi Indians. (See p. 757.)
2 The parenthetical phrase in subparagraph (A) was added by sec. 5(b) of P.L. 93-647.
A technical error in that Act indicated that the amendment was to sec. 403(a) (3) (A) (iii)
rather than to 403 (a) (3) (A).
219
Sec. 403(a)
pended in connection with the provision of any service described
in section 2002 (a) (1) of this Act other than services the provision of
which is required by section 402(a)(19) to be included in the plan
of the State; and ¹
(4) [Repealed].
¹ In the case of Guam, Puerto Rico, and the Virgin Islands, section 403(a)(3) reads
as follows:
"(3) in the case of any State, an amount equal to the sum of the following propor-
tions of the total amounts expended during such quarter as found necessary by the
Secretary of Health, Education, and Welfare for the proper and efficient administration
of the State plan-
“(A) 75 per centum of so much of such expenditures as are for-
64
(i) any of the services described in clauses (14) and (15) of section 402(a)
which are provided to any child or relative who is receiving aid under the plan,
or to any other individual (living in the same home as such relative and child)
whose needs are taken into account in making the determination under clause
(7) of such section,
"
(ii) any of the services described in clauses (14) and (15) of section 402(a)
which are provided to any child or relative who is applying for aid to families
with dependent children or who, within such period or periods as the Secre-
tary may prescribe, has been or is likely to become an applicant for or recipient
of such aid,
"(iii) the training (including both short- and long-term training at educa-
tional institutions through grants to such institutions or by direct financial
assistance to students enrolled in such institutions) of personnel employed or
preparing for employment by the State agency or by the local agency adminis-
tering the plan in the political subdivision.
"(B) one-half of the remainder of such expenditures.
"The services referred to in subparagraph (A) shall include only-
"(C) services provided by the staff of the State agency, or of the local agency
administering the State plan in the political subdivision: Provided, That no funds
authorized under this part shall be available for services defined as vocational re-
habilitation services under the Vocational Rehabilitation Act (i) which are available
to individuals in need of them under programs for their rehabilitation carried on
under a State plan approved under such Act, or (ii) which the State agency or agen-
cies administering or supervising the administration of the State plan approved
under such Act are able and willing to provide if reimbursed for the cost thereof
pursuant to agreement under subparagraph (D), if provided by such staff, and
"(D) under conditions which shall be prescribed by the Secretary, services which
in the judgment of the State agency cannot be as economically or as effectively pro-
vided by the staff of such State or local agency and are not otherwise reasonably
available to individuals in need of them, and which are provided, pursuant to agree-
ment with the State agency, by the State health authority or the State agency or
agencies administering or supervising the administration of the State plan for voca-
tional rehabilitation services approved under the Vocational Rehabilitation Act or by
any other State agency which the Secretary may determine to be appropriate (whether
provided by its staff or by contract with public (local) or nonprofit private agencies);
except that services described in clause (ii) of subparagraph (C) hereof may be provided
only pursuant to agreement with such State agency or agencies administering or super-
vising the administration of the State plan for vocational rehabilitation services so
approved; and except that, to the extent specified by the Secretary, child-welfare services,
family planning services, and family services may be provided from sources other than
those referred to in subparagraphs (C) and (D). The portion of the amount expended
for administration of the State plan to which subparagraph (A) applies and the portion
thereof to which subparagraph (B) applies shall be determined in accordance with such
methods and procedures as may be permitted by the Secretary.".
Section 248(b) of the Social Security Amendments of 1967 also applies :
"(b) Notwithstanding subparagraphs (A) and (B) of section 403(a)(3) of such
Act (as amended by this Act), the rate specified in such subparagraphs in the case of
Puerto Rico, the Virgin Islands, and Guam, shall be 60 per centum (rather than
75 or 85 per centum).".
Sec. 403(a)
220
Revised April 1978
(5) in the case of any State, an amount equal to 50 per centum
of the total amount expended under the State plan during such
quarter as emergency assistance to needy families with children.
The number of individuals with respect to whom payments de-
scribed in section 406 (b) (2) are made for any month, who may be
included as recipients of aid to families with dependent children for
purposes of paragraph (1) or (2), may not exceed 20 per centum of
the number of other recipients of aid to families with dependent chil-
dren for such month. In computing such 20 percent, there shall not
be taken into account individuals with respect to whom such pay-
ments are made for any month in accordance with section 402(a)(19)
(F) or section 402(a) (26).
In the case of calendar quarters beginning after September 30,
1977, and prior to April 1, 1978, the amount to be paid to each State
(as determined under the preceding provisions of this subsection or
section 1118, as the case may be) shall be increased in accordance with
the provisions of subsection (i) of this section.¹
(b) The method of computing and paying such amounts shall be
as follows:
Ch
Study
(1) The Secretary of Health, Education, and Welfare shall,
prior to the beginning of each quarter, estimate the amount to
be paid to the State for such quarter under the provisions of
subsection (a), such estimate to be based on (A) a report filed
by the State containing its estimate of the total sum to be ex-
pended in such quarter in accordance with the provisions of such
subsection and stating the amount appropriated or made available
by the State and its political subdivisions for such expenditures
in such quarters, and if such amount is less than the State's pro-
portionate share of the total sum of such estimated expenditures,
the source or sources from which the difference is expected to be
derived, (B) records showing the number of dependent children
in the State, and (C) such other investigation as the Secretary
may find necessary.
(2) The Secretary of Health, Education, and Welfare shall
then certify to the Secretary of the Treasury the amount so esti-
mated by the Secretary of Health, Education, and Welfare, (A)
reduced or increased, as the case may be, by any sum by which the
Secretary of Health, Education, and Welfare finds that his esti-
mate for any prior quarter was greater or less than the amount
which should have been paid to the State for such quarter, and
1 Subsection (a) was amended by P.L. 94-88, by sec. 3(a)(1) of P.L. 95–171, and by sec.
401 (1) of P.L. 95-216. See also sec. 3(b) of P.L. 95-171 which appears in this document
on p. 802.
Revised April 1978
220-A
Sec. 403(a)
(B) reduced by a sum equivalent to the pro rata share to which
the United States is equitably entitled, as determined by the Sec-
retary of Health, Education, and Welfare, of the net amount re-
covered during any prior quarter by the State or any political
subdivision thereof with respect to aid to families with dependent
children furnished under the State plan; except that such in-
creases or reductions shall not be made to the extent that such
21-746 O - 78 - 17
221
Sec. 403(f)
sums have been applied to make the amount certified for any
prior quarter greater or less than the amount estimated by the
Secretary of Health, Education, and Welfare for such prior
quarter.
(3) The Secretary of the Treasury shall thereupon, through
the Fiscal Service of the Treasury Department and prior to audit
or settlement by the General Accounting Office, pay to the State,
at the time or times fixed by the Secretary of Health, Education,
and Welfare, the amount so certified.
(c) Notwithstanding any other provision of this Act, the Federal
share of assistance payments under this part shall be reduced with
respect to any State for any fiscal year after June 30, 1973, by one per-
centage point for each percentage point by which the number of indi-
viduals certified, under the program of such State established pursuant
to section 402 (a) (19) (G), to the local employment office of the State
as being ready for employment or training under part C, is less than 15
per centum of the average number of individuals in such State who,
during such year, are required to be registered pursuant to section
402 (a) (19) (A).
(d) (1) Notwithstanding subparagraph (A) of subsection (a) (3)
the rate specified in such subparagraph shall be 90 per centum (rather
than 75 per centum) with respect to social and supportive services pro-
vided pursuant to section 402(a) (19) (G).
(2) Of the sums authorized by section 401 to be appropriated for
the fiscal year ending June 30, 1973, not more than $750,000,000 shall
be appropriated to the Secretary for payments with respect to services
to which paragraph (1) applies.
(e) [Repealed]. ¹
(f) Notwithstanding any other provision of this section, the
amount payable to any State under this part for quarters in a fiscal
year shall with respect to quarters in fiscal years beginning after
June 30, 1973, be reduced by 1 per centum (calculated without regard
to any reduction under section 403 (g)) of such amount if such State—
(1) in the immediately preceding fiscal year failed to carry
out the provisions of section 402(a) (15) (B) as pertain to requir-
ing the offering and arrangement for provision of family plan-
ning services; or
1 In the case of Guam, Puerto Rico, and the Virgin Islands, section 403 (e) reads as
follows:
"(e) Notwithstanding any other provision of subsection (a), with respect to expendi-
tures during any calendar quarter beginning after December 31, 1972 (as found neces-
sary by the Secretary for the proper and efficient administration of the plan) which are
attributable to the offering, arranging, and furnishing, directly or on a contract basis,
of family planning services and supplies, the amount payable to any State under this
part shall be 90 per centum of such expenditures.".
Sec. 403(f)
222
Revised April 1978
(2) in the immediately preceding fiscal year (but, in the case
of the fiscal year beginning July 1, 1972, only considering the third
and fourth quarters thereof), failed to carry out the provisions of
section 402(a)(15) (B) of the Social Security Act with respect
to any individual who, within such period or periods as the Secre-
tary may prescribe, has been an applicant for or recipient of aid
to families with dependent children under the plan of the State
approved under this part.
(g) Notwithstanding any other provision of this section, the
amount payable to any State under this part for quarters in a fiscal
year shall with respect to quarters in fiscal years beginning after
June 30, 1974, be reduced by 1 per centum (calculated without regard
to any reduction under section 403 (f)) of such amount if such State
fails to-
(1) inform all families in the State receiving aid to families
with dependent children under the plan of the State approved
under this part of the availability of child health screening serv-
ices under the plan of such State approved under title XIX,
(2) provide or arrange for the provision of such screening
services in all cases where they are requested, or
(3) arrange for (directly or through referral to appropriate
agencies, organizations, or individuals) corrective treatment the
need for which is disclosed by such child health screening services.
(h) Notwithstanding any other provision of this Act, the amount
payable to any State under this part for quarters in a fiscal year shall
with respect to quarters beginning after December 31, 1976, be reduced
by 5 per centum of such amount if such State is found by the Secre-
tary as the result of the annual audit to have failed to have an effective
program meeting the requirements of section 402 (a) (27) in any fiscal
year beginning after September 30, 1976 (but, in the case of the fiscal
year beginning October 1, 1976, only considering the second, third,
and fourth quarters thereof).
(i) (1) In the case of any calendar quarter which begins after Sep-
tember 30, 1977, and prior to April 1, 1978, the amount payable (as
determined under subsection (a) or section 1118, as the case may be)
to each State which has a State plan approved under this part shall
(subject to the succeeding paragraphs of this subsection) be increased
by an amount equal to the sum of the following:
(A) an amount which bears the same ratio to $46,750,000 as the
amount expended as aid to families with dependent children under
the State plan of such State during the month of December 1976
bears to the amount expended as aid to families with dependent
children under the State plans of all States during such month,
and
Revised April 1978
222-A
Sec. 403(j)
(B)(i) in the case of Puerto Rico, Guam, and the Virgin Is-
lands, an amount equal to the amount determined under sub-
paragraph (A) with respect to such State, or
(ii) in the case of any other State, an amount which bears the
same ratio to $46,750,000, minus the amounts determined under
clause (i) of this subparagraph, as the amount allocated to such
State under section 106 of the State and Local Fiscal Assistance
Act of 1972, for the most recent entitlement period for which
allocations have been made under such section prior to the date of
the enactment of this subsection, bears to the total of the amounts
allocated to all States under such section 106 for such period.
(2) As a condition of any State receiving an increase, by reason of
the application of the foregoing provisions of this subsection, in the
amount determined for such State pursuant to subsection (a) or under
section 1118 (as the case may be), such State must agree to pay to any
political subdivision thereof which participates in the cost of the
State's plan approved under this part, during any calendar quarter
with respect to which such increase applies, so much of such increase
as does not exceed 100 per centum of such political subdivision's finan-
cial contribution to the State's plan for such quarter.
(3) Notwithstanding any other provision of this part, the amount
payable to any State by reason of the preceding provisions of this sub-
section for calendar quarters prior to April 1, 1978, shall be made in a
single installment, which shall be payable as shortly after October 1,
1977, as is administratively feasible.¹
1
(j) If the dollar error rate of aid furnished by a State under its
State plan approved under this part with respect to any six-month
period, as based on samples and evaluations thereof, is—
(1) at least 4 per centum, the amount of the Federal financial
participation in the expenditures made by the State in carrying
out such plan during such period shall be determined without
regard to the provisions of this subsection; or
(2) less than 4 per centum, the amount of the Federal financial
participation in the expenditures made by the State in carrying
out such plan during such period shall be the amount determined
without regard to this subsection, plus, of the amount by which
such expenditures are less than they would have been if the
erroneous excess payments of aid had been at a rate of 4 per
centum-
(A) 10 per centum of the Federal share of such amount,
in case such rate is not less than 3.5 per centum,
(B) 20 per centum of the Federal share of such amount,
in case such rate is at least 3.0 per centum but less than 3.5
per centum,
1 Subsection (1) was added by sec. 401(2) of P.L. 95–216.
Sec. 403(j)
Revised April 1978
222-B
(C) 30 per centum of the Federal share of such amount,
in case such rate is at least 2.5 per centum but less than 3.0
per centum,
(D) 40 per centum of the Federal share of such amount,
in case such rate is at least 2.0 per centum but less than 2.5
per centum,
(E) 50 per centum of the Federal share of such amount,
in case such rate is less than 2.0 per centum.
For purposes of this subsection (i) the term "dollar error rate of aid"
means the total of the dollar error rates of aid for (I) payments to
ineligible families receiving assistance; (II) overpayments to eligible
families receiving assistance; (III) underpayments to eligible families
receiving assistance; and (IV) nonpayments to eligible families not
receiving assistance due to erroneous terminations or denials, and (ii)
the term "erroneous excess payments," means the total of (I) erro-
neous payments to ineligible families receiving assistance, and (II)
overpayments to eligible families receiving assistance."
Operation of State Plans
Sec. 404. (a) In the case of any State plan for aid and services.
to needy families with children which has been approved by the Sec-
retary of Health, Education, and Welfare, if the Secretary, after rea-
sonable notice and opportunity for hearing to the State agency ad-
ministering or supervising the administration of such plan, finds—
(1) that the plan has been so changed as to impose any resi-
dence requiremen; prohibited by section 402 (b), or that in the
administration of the plan any such prohibited requirement is
imposed, with the knowledge of such State agency, in a substan-
tial number of cases; or
1 Subsection (j) was added by sec. 402 (a) of P.L. 95-216.
223
Sec. 405
(2) that in the administration of the plan there is a failure to
comply substantially with any provision required by section 402
(a) to be included in the plan;
the Secretary shall notify such State agency that further payments
will not be made to the State (or, in his discretion, that payments will
be limited to categories under or parts of the State plan not affected
by such failure) until the Secretary is satisfied that such prohibited
requirement is no longer so imposed, and that there is no longer any
such failure to comply. Until he is so satisfied he shall make no fur-
ther payments to such State (or shall limit payments to categories
under or parts of the State plan not affected by such failure).
(b) No payment to which a State is otherwise entitled under this
title for any period before September 1, 1962, shall be withheld by
reason of any action taken pursuant to a State statute which requires
that aid be denied under the State plan approved under this part with
respect to a child because of the conditions in the home in which the
child resides; nor shall any such payment be withheld for any period
beginning on or after such date by reason of any action taken pursu-
ant to such a statute if provision is otherwise made pursuant to a State
statute for adequate care and assistance with respect to such child.
(c) No State shall be found, prior to January 1, 1977, to have
failed substantially to comply with the requirements of section 402
(a) (27) if, in the judgment of the Secretary, such State is making a
good faith effort to implement the program required by such section.
(d) After December 31, 1976, in the case of any State which is
found to have failed substantially to comply with the requirements of
section 402 (a) (27), the reduction in any amount payable to such State
required to be imposed under section 403 (h) shall be imposed in lieu
of any reduction, with respect to such failure, which would otherwise
be required to be imposed under this section.
Use of Payments for Benefit of Child
Sec. 405. Whenever the State agency has reason to believe that
any payments of aid to families with dependent children made with
respect to a child are not being or may not be used in the best interests
of the child, the State agency may provide for such counseling and
guidance services with respect to the use of such payments and the
management of other funds by the relative receiving such payments
as it deems advisable in order to assure use of such payments in the
best interests of such child, and may provide for advising such relative
that continued failure to so use such payments will result in substitu-
tion therefor of protective payments as provided under section 406
(b) (2), or in seeking appointment of a guardian or legal representa-
Sec. 405
Revised April 1978
224
tive as provided in section 1111, or in the imposition of criminal or
civil penalties authorized under State law if it is determined by a
court of competent jurisdiction that such relative is not using or has
not used for the benefit of the child any such payments made for that
purpose; and the provision of such services or advice by the State
agency (or the taking of the action specified in such advice) shall not
serve as a basis for withholding funds from such State under section
404 and shall not prevent such payments with respect to such child
from being considered aid to families with dependent children.
Definitions
Sec. 406. When used in this part-
(a) The term "dependent child” means a needy child (1) who has
been deprived of parental support or care by reason of the death, con-
tinued absence from the home, or physical or mental incapacity of a
parent, and who is living with his father, mother, grandfather, grand-
mother, brother, sister, stepfather, stepmother, stepbrother, stepsister,
uncle, aunt, first cousin, nephew, or niece in a place of residence main-
tained by one or more of such relatives as his or their own home, and
(2) who is (A) under the age of eighteen, or (B) under the age of
twenty-one and (as determined by the State in accordance with
standards prescribed by the Secretary) a student regularly attending
a school, college, or university, or regularly attending a course of
vocational or technical training designed to fit him for gainful
employment;
SİN
(b) The term "aid to families with dependent children" means
money payments with respect to, or (if provided in or after the third
month before the month in which the recipient makes application for
aid) medical care in behalf of or any type of remedial care recognized
under State law in behalf of, a dependent child or dependent children,
and includes (1) money payments or medical care or any type of
remedial care recognized under State law to meet the needs of the
relative with whom any dependent child is living (and the spouse of
such relative if living with him and if such relative is the child's
parent and the child is a dependent child by reason of the physical or
mental incapacity of a parent or is a dependent child under section
407), and (2) payments with respect to any dependent child (includ-
ing payments to meet the needs of the relative, and the relative's
spouse, with whom such child is living, and the needs of any other
individual living in the same home if such needs are taken into account
in making the determination under section 402 (a) (7)) which do not
meet the preceding requirements of this subsection but which would
meet such requirements except that such payments are made to another
Revised April 1978
225
Sec. 406(b)
individual who (as determined in accordance with standards prescribed
by the Secretary) is interested in or concerned with the welfare of
such child or relative, or are made on behalf of such child or relative
directly to a person furnishing food, living accommodations, or other
goods, services, or items to or for such child, relative, or other in-
dividual, but only with respect to a State whose State plan approval
under section 402 includes provision for-
(A) determination by the State agency that the relative of the
child with respect to whom such payments are made has such
inability to manage funds that making payments to him would
be contrary to the welfare of the child and, therefore, it is neces-
sary to provide such aid with respect to such child and relative
through payments described in this clause (2);
(B) undertaking and continuing special efforts to develop
greater ability on the part of the relative to manage funds in
such manner as to protect the welfare of the family;
(C) periodic review by such State agency of the determination
under clause (A) to ascertain whether conditions justifying such
determination still exist, with provision for termination of such
payments if they do not and for seeking judicial appointment of
a guardian or other legal representative, as described in section
1111, if and when it appears that the need for such payments is
continuing, or is likely to continue, beyond a period specified
by the Secretary;
(D) aid in the form of foster home care in behalf of children
described in section 408 (a); and
(E) opportunity for a fair hearing before the State agency on
the determination referred to in clause (A) for any individual
with respect to whom it is made.
Payments with respect to a dependent child which are intended to
enable the recipient to pay for specific goods, services, or items rec-
ognized by the State agency as a part of the child's need under the
State plan may (in the discretion of the State or local agency admin-
istering the plan in the political subdivision) be made, pursuant to a
determination referred to in clause (2) (A), in the form of checks
drawn jointly to the order of the recipient and the person furnishing
such goods, services, or items and negotiable only upon endorsement
by both such recipient and such person; and payments so made shall
be considered for all of the purposes of this part to be payments
described in clause (2). Whenever payments with respect to a depend-
ent child are made in the manner described in clause (2) (including
payments described in the preceding sentence), a statement of the
specific reasons for making such payments in that manner (on which
the determination under clause (2) (A) was based) shall be placed
Revised April 1978
Sec. 406(e)
225-A
1
in the file maintained with respect to such child by the State or local
agency administering the State plan in the political subdivision.¹
(c) The term "relative with whom any dependent child is living"
means the individual who is one of the relatives specified in subsection.
(a) and with whom such child is living (within the meaning of such
subsection) in a place of residence maintained by such individual
(himself or together with any one or more of the other relatives so
specified) as his (or their) own home.
(d) [Repealed].²
←
(e) (1) The term "emergency assistance to needy families with chil-
dren" means any of the following, furnished for a period not in ex-
cess of 30 days in any 12-month period, in the case of a needy child
-
¹ Subsection (b) was amended by sec. 3 (a) of P.L. 95–171.
2 In the case of Guam, Puerto Rico, and the Virgin Islands, section 406(d) reads as
follows:
"(d) The term 'family services' means services to a family or any member thereof for
the purposes of preserving, rehabilitating, reuniting, or strengthening the family, and
such other services as will assist members of a family to attain or retain capability for
the maximum self-support and personal independence.".
Sec. 406(e)
226
under the age of 21, who is (or, within such period as may be specified
by the Secretary, has been) living with any of the relatives specified
in subsection (a) (1) in a place of residence maintained by one or more
of such relatives as his or their own home, but only where such child
is without available resources, the payments, care, or services involved
are necessary to avoid destitution of such child or to provide living
arrangements in a home for such child, and such destitution or need
for living arrangements did not arise because such child or relative
refused without good cause to accept employment or training for
employment-
(A) money payments, payments in kind, or such other pay-
ments as the State agency may specify with respect to, or medical
care or any other type of remedial care recognized under State
law on behalf of, such child or any other member of the house-
hold in which he is living, and
(B) such services as may be specified by the Secretary;
but only with respect to a State whose State plan approved under sec-
tion 402 includes provision for such assistance.
(2) Emergency assistance as authorized under paragraph (1) may
be provided under the conditions specified in such paragraph to mi-
grant workers with families in the State or in such part or parts
thereof as the State shall designate.
(f) Notwithstanding the provisions of subsection (b), the term "aid
to families with dependent children" does not mean payments with
respect to a parent (or other individual whose needs such State deter-
mines should be considered in determining the need of the child or
relative claiming aid under the plan of such State approved under this
part) of a child who fails to cooperate with any agency or official of
the State in obtaining such support payments for such child. Nothing
in this subsection shall be construed to make an otherwise eligible
child ineligible for protective payments because of the failure of such
parent (or such other individual) to so cooperate.
Dependent Children of Unemployed Fathers
Sec. 407. (a) The term "dependent child" shall, notwithstand-
ing section 406 (a), include a needy child who meets the requirements
of section 406 (a) (2), who has been deprived of parental support or
care by reason of the unemployment (as determined in accordance.
with standards prescribed by the Secretary) of his father, and who
is living with any of the relatives specified in section 406(a)(1) in
a place of residence maintained by one or more of such relatives as
his (or their) own home.
(b) The provisions of subsection (a) shall be applicable to a State
if the State's plan approved under section 402—
227
Sec. 407(b)
(1) requires the payment of aid to families with dependent
children with respect to a dependent child as defined in subsection
(a) when-
(A) such child's father has not been employed (as deter-
mined in accordance with the standards prescribed by the Sec-
retary) for at least 30 days prior to the receipt of such aid,
(B) such father has not without good cause, within such
period (of not less than 30 days) as may be prescribed by the
Secretary, refused a bona fide offer of employment or training
for employment, and
(C) (i) such father has 6 or more quarters of work (as
defined in subsection (d) (1)) in any 13-calendar-quarter
period ending within one year prior to the application for
such aid or (ii) he received unemployment compensation
under an unemployment compensation law of a State or of
the United States, or he was qualified (within the meaning of
subsection (d) (3)) for unemployment compensation under
the unemployment compensation law of the State, within one
year prior to the application for such aid; and
(2) provides-
(A) for such assurances as will satisfy the Secretary that
fathers of dependent children as defined in subsection (a)
will be certified to the Secretary of Labor as provided in
section 402(a) (19) within thirty days after receipt of aid
with respect to such children;
(B) for entering into cooperative arrangements with the
State agency responsible for administering or supervising the
administration of vocational education in the State, designed
to assure maximum utilization of available public vocational
education services and facilities in the State in order to
encourage the retraining of individuals capable of being
retrained;
(C) for the denial of aid to families with dependent chil-
dren to any child or relative specified in subsection (a)-
(i) if and for so long as such child's father, unless
exempt under section 402 (a) (19) (A), is not registered
pursuant to such section for the work incentive program
established under part C of this title, or, if he is exempt
under such section by reason of clause (iii) thereof or
no such program in which he can effectively participate
has been established or provided under section 432 (a), is
not registered with the public employment offices in the
State, and
Sec. 407(b)
228
(ii) with respect to any week for which such child's
father qualifies for unemployment compensation under
an unemployment compensation law of a State or of the
United States, but refuses to apply for or accept such
unemployment compensation; and
(D) for the reduction of the aid to families with depend-
ent children otherwise payable to any child or relative speci-
fied in subsection (a) by the amount of any unemployment
compensation that such child's father receives under an un-
employment compensation law of a State or of the United
States.¹
(c) Notwithstanding any other provisions of this section, expendi-
tures pursuant to this section shall be excluded from aid to families
with dependent children (A) where such expenditures are made under
the plan with respect to any dependent child as defined in subsection
(a), (i) for any part of the 30-day period referred to in subparagraph
(A) of subsection (b)(1), or (ii) for any period prior to the time
when the father satisfies subparagraph (B) of such subsection, and
(B) if, and for as long as, no action is taken (after the 30-day period
referred to in paragraph (A) of subsection (b) (2)), under the pro-
gram therein specified, to certify such father to the Secretary of Labor
pursuant to section 402 (a) (19).
(d) For purposes of this section-
(1) the term "quarter of work" with respect to any individual
means a calendar quarter in which such individual received earned
income of not less than $50 (or which is a "quarter of coverage"
as defined in section 213 (a) (2)), or in which such individual
participated in a community work and training program under
section 409 or any other work and training program subject to the
limitations in section 409, or the work incentive program estab-
lished under part C;
(2) the term "calendar quarter" means a period of 3 consecu-
tive calendar months ending on March 31, June 30, Septem-
ber 30, or December 31; and
(3) an individual shall, for purposes of section 407 (b) (1) (C),
be deemed qualified for unemployment compensation under the
State's unemployment compensation law if—
(A) he would have been eligible to receive such unemploy-
ment compensation upon filing application, or
(B) he performed work not covered under such law and
such work, if it had been covered, would (together with any
1 Subsection (b) (2) was amended by section 507 (a) of P.L. 94-566.
229
Sec. 408(a)
covered work he performed) have made him eligible to
receive such unemployment compensation upon filing
application.¹
(e) The Secretary of Health, Education, and Welfare and the
Secretary of Labor shall jointly enter into an agreement with each
State which is able and willing to do so for the purpose of (1)
simplifying the procedures to be followed by unemployed fathers and
other unemployed persons in such State in registering pursuant to
section 402 (a) (19) for the work incentive program established by
part C of this title and in registering with public employment offices
(under this section and otherwise) or in connection with applications
for unemployment compensation, by reducing the number of locations
or agencies where such persons must go in order to register for such
programs and in connection with such applications, and (2) pro-
viding where possible for a single registration satisfying this section
and the requirements of both the work incentive program and the
applicable unemployment compensation laws.²
Federal Payments for Foster Home Care of Dependent Children
Sec. 408. Effective for the period beginning May 1, 1961—
(a) The term "dependent child" shall, notwithstanding section
406(a), also include a child (1) who would meet the requirements of
such section 406(a) or of section 407, except for his removal after
April 30, 1961, from the home of a relative (specified in such section
406(a)) as a result of a judicial determination to the effect that con-
tinuation therein would be contrary to the welfare of such child, (2)
whose placement and care are the responsibility of (A) the State or
local agency administering the State plan approved under section
402, or (B) any other public agency with whom the State agency ad-
ministering or supervising the administration of such State plan has
made an agreement which is still in effect and which includes provi-
sion for assuring development of a plan, satisfactory to such State
agency, for such child as provided in paragraph (f) (1) and such
other provisions as may be necessary to assure accomplishment of the
objectives of the State plan approved under section 402, (3) who has
been placed in a foster family home or child-care institution as a re-
sult of such determination, and (4) who (A) received aid under such
State plan in or for the month in which court proceedings leading to
such determination were initiated, or (B) (i) would have received
such aid in or for such month if application had been made therefor,
1 Paragraph (3) was amended by section 507 (b) of P.L. 94-566.
• Subsection (e) was added by section 507 (d) of P.L. 94-566.
Sec. 408(a)
230
or (ii) in the case of a child who had been living with a relative
specified in section 406 (a) within six months prior to the month in
which such proceedings were initiated, would have received such aid
in or for such month if in such month he had been living with (and
removed from the home of) such a relative and application had been
made therefor;
(b) the term "aid to families with dependent children" shall, not-
withstanding section 406 (b), include also foster care in behalf of a
child described in paragraph (a) of this section—
(1) in the foster family home of any individual, whether the
payment therefor is made to such individual or to a public or
nonprofit private child-placement or child-care agency, or
(2) in a child-care institution, whether the payment therefor
is made to such institution or to a public or nonprofit private
child-placement or child-care agency, but subject to limitations
prescribed by the Secretary with a view to including as "aid to
families with dependent children" in the case of such foster care
in such institutions only those items which are included in such
term in the case of foster care in the foster family home of an
individual;
(c) the number of individuals counted under clause (A) of sec-
tion 403 (a) (1) for any month shall include individuals (not other-
wise included under such clause) with respect to whom expenditures
were made in such month as aid to families with dependent children
in the form of foster care; and
(d) services described in paragraph (f) (2) of this section shall be
considered as part of the administration of the State plan for purposes
of section 403 (a) (3);
but only with respect to a State whose State plan approved under
section 402-
(e) includes aid for any child described in paragraph (a) of this
section, and
(f) includes provision for (1) development of a plan for each such
child (including periodic review of the necessity for the child's being
in a foster family home or child-care institution) to assure that
he receives proper care and that services are provided which are de-
signed to improve the conditions in the home from which he was re-
moved or to otherwise make possible his being placed in the home of a
relative specified in section 406 (a), and (2) use by the State or local
agency administering the State plan, to the maximum extent practi-
cable, in placing such a child in a foster family home or child-care
institution, of the services of employees, of the State public-welfare
231
Sec. 409(a)
agency referred to in section 522 (a) (relating to allotments to States
for any child welfare services under part 3 of title V) or any local
agency participating in the administration of the plan referred to in
such section, who perform functions in the administration of such
plan.
For the purposes of this section, the term "foster family home"
means a foster family home for children which is licensed by the State
in which it is situated or has been approved, by the agency of such
State responsible for licensing homes of this type as meeting the stand-
ards established for such licensing; and the term "child-care institu-
tion" means a nonprofit private child-care institution which is licensed
by the State in which it is situated or has been approved, by the agency
of such State responsible for licensing or approval of institutions of
this type, as meeting the standards established for such licensing.
Community Work and Training Programs
Sec. 409. (a) For the purpose of assisting the States in encour-
aging, through community work and training programs of a construc-
tive nature, the conservation of work skills and the development of
new skills for individuals who have attained the age of 18 and are
receiving aid to families with dependent children, under conditions
which are designed to assure protection of the health and welfare of
such individuals and the dependent children involved, expenditures
(other than for medical or any other type of remedial care) for any
month with respect to a dependent child (including payments to meet
the needs of any relative or relatives, specified in section 406 (a), with
whom he is living) under a State plan approved under section 402
shall not be excluded from aid to families with dependent children
because such expenditures are made in the form of payments for
work performed in such month by any one or more of the relatives
with whom such child is living if such work is performed for the
State agency or any other public agency under a program (which
need not be in effect in all political subdivisions of the State) admin-
istered by or under the supervision of such State agency, if there is
State financial participation in such expenditures, and if such State
plan includes-
(1) provisions which, in the judgment of the Secretary, pro-
vide reasonable assurance that—
(A) appropriate standards for health, safety, and other
conditions applicable to the performance of such work by
such relatives are established and maintained;
(B) payments for such work are at rates not less than
the minimum rate (if any) provided by or under State law
21-746 O - 78 - 18
Sec. 409(a)
232
for the same type of work and not less than the rates prevail-
ing on similar work in the community;
(C) such work is performed on projects which serve a
useful public purpose, do not result either in displacement of
regular workers or in the performance by such relatives of
work that would otherwise be performed by employees of
public or private agencies, institutions, or organizations, and
(except in cases of projects which involve emergencies or
which are generally of a nonrecurring nature) are of a type
which has not normally been undertaken in the past by the
State or community, as the case may be;
(D) in determining the needs of any such relative, any
additional expenses reasonably attributable to such work will
be considered;
(E) any such relative shall have reasonable opportunities
to seek regular employment and to secure any appropriate
training or retraining which may be available;
(F) any such relative will, with respect to the work so per-
formed, be covered under the State workmen's compensation
law or be provided comparable protection; and
(G) aid under the plan will not be denied with respect to
any such relative (or the dependent child) for refusal by such
relative to perform any such work if he has good cause for
such refusal;
(2) provision for entering into cooperative arrangements with
the system of public employment offices in the State looking to-
ward employment or occupational training of any such relatives
performing work under such program, including appropriate pro-
vision for registration and periodic reregistration of such relatives
and for maximum utilization of the job placement services and
other services and facilities of such offices;
(3) provision for entering into cooperative arrangements with
the State agency or agencies responsible for administering or su-
pervising the administration of vocational education and adult
education in the State, looking toward maximum utilization of
available public vocational or adult education services and facili-
ties in the State in order to encourage the training or retraining
of
any such relatives performing work under such program and
otherwise assist them in preparing for regular employment;
(4) provision for assuring appropriate arrangements for the
care and protection of the child during the absence from the home
of any such relative performing work under such program in
order to assure that such absence and work will not be inimical
to the welfare of the child;
Revised April 1978
Sec. 410(c)
233
(5) provision that there be no adjustment or recovery by the
State or any political subdivision thereof on account of any pay-
ments which are correctly made for such work; and
(6) such other provisions as the Secretary finds necessary to
assure that the operation of such program will not interfere with
achievement of the objectives set forth in section 401.
(b) In the case of any State which makes expenditures in the form
described in subsection (a) under its State plan approved under sec-
tion 402, the proper and efficient administration of the State plan, for
purposes of section 403 (a) (3) and (4), may not include the cost of
making or acquiring materials or equipment in connection with the
work performed under a program referred to in subsection (a) or the
cost of supervision of work under such program, and may include only
such other costs attributable to such programs as are permitted by the
Secretary.¹
Food Stamp Distribution
Sec. 410. (a) Any State plan for aid and services to needy families
with children may (but is not required under this title or any other
provision of Federal law to) provide for the institution of procedures,
in any or all areas of the State, by the State agency administering or
supervising the administration of such plan under which any house-
hold participating in the food stamp program established by the Food
Stamp Act of 1964, as amended, will be entitled, if it so elects, to have
the charges, if any, for its coupon allotment under such program
deducted from any aid, in the form of money payments, which is (or,
except for the deduction of such charge, would be) payable to or with
respect to such household (or any member or members thereof) under
such plan and have its coupon allotment distributed to it with such aid.
(b) Any deduction made pursuant to an option provided in accord-
ance with subsection (a) shall not be considered to be a payment de-
scribed in section 406 (b) (2).
(c) Notwithstanding any other provision of law, no agency which
is designated as a State agency for any State under or pursuant to the
Food Stamp Act of 1964, as amended, shall be regarded as having
failed to comply with any requirement imposed by or pursuant to such
Act solely because of the failure, of the State agency administering or
supervising the administration of the State plan (approved under this
part) of such State, to institute or carry out a procedure, described in
subsection (a).2
C
1 P.L. 90-248, sec. 204 (c) (2) provides:
"The provisions of section 409 of the Social Security Act shall not apply to any State
with respect to any quarter beginning after June 30, 1968."
2 Section 410 was added by section 1 (a) of P.L. 94-585. See also section 1(b) of P.L.
94-585 which is printed on page 794 of this document. Section 410 will be obsolete upon
implementation of P.L. 95-113 which eliminates the Food Stamp purchase requirements.
Sec. 411(a)
Revised April 1978
234
Access to Wage Information
Sec. 411. (a) Notwithstanding any other provision of law, the Sec-
retary shall make available to States and political subdivisions thereof
wage information contained in the records of the Social Security
Administration which is necessary (as determined by the Secretary
in regulations) for purposes of determining an individual's eligibility
for aid or services, or the amount of such aid or services, under a State
plan for aid and services to needy families with children approved
under this part, and which is specifically requested by such State or
political subdivision for such purposes.
(b) The Secretary shall establish such safeguards as are necessary
(as determined by the Secretary under regulations) to insure that
information made available under the provisions of this section is used
only for the purposes authorized by this section.¹
Part B-Child-Welfare Services
Appropriation
Sec. 420. For the purpose of enabling the United States, through
the Secretary, to cooperate with State public welfare agencies in
establishing, extending, and strengthening child-welfare services, the
following sums are hereby authorized to be appropriated: $196,000,000
for the fiscal year ending June 30, 1973, $211,000,000 for the fiscal year
ending June 30, 1974, $226,000,000 for the fiscal year ending June 30,
1975, $246,000,000 for the fiscal year ending June 30, 1976, and $266,-
000,000 for each fiscal year thereafter.
Allotments to States
Sec. 421. The sum appropriated pursuant to section 420 for each
fiscal year shall be allotted by the Secretary for use by cooperating
State public welfare agencies which have plans developed jointly by
the State agency and the Secretary, as follows: He shall allot $70,000
to each State, and shall allot to each State an amount which bears the
same ratio to the remainder of the sum so appropriated for such year
as the product of (1) the population of such State under the age of
21 and (2) the allotment percentage of such State (as determined
under section 423) bears to the sum of the corresponding products
of all the States.
Payment to States
Sec. 422. (a) From the sums appropriated therefor and the
allotment available under this part, the Secretary shall from time to
time pay to each State-
1 Section 411 was added by sec. 403 (a) of P.L. 95-216.
Revised April 1978
Sec. 422(a)
234-A
(1) that has a plan for child-welfare services which has been
developed as provided in this part and which-
(A) provides that (i) the individual or agency designated
pursuant to section 2003 (d) (1) (C) to administer or super-
vise the administration of the State's services program will
administer or supervise the administration of such plan for
child-welfare services and (ii) to the extent that child-welfare
services are furnished by the staff of the State agency or local
agency administering such plan for child-welfare services, a
single organizational unit in such State or local agency, as the
235
Sec. 422(a)
case may be, will be responsible for furnishing such child-
welfare services,¹
(B) provides for coordination between the services pro-
vided under such plan and the services provided for depend-
ent children under the State plan approved under part A
of this title, with a view to provision of welfare and related
services which will best promote the welfare of such children
and their families, and
(C) provides, with respect to day care services (includ-
ing the provision of such care) provided under this title
(i) for cooperative arrangements with the State
health authority and the State agency primarily respon-
sible for State supervision of public schools to assure
maximum utilization of such agencies in the provision of
necessary health services and education for children re-
ceiving day care,
(ii) for an advisory committee, to advise the State
public welfare agency on the general policy involved in
the provision of day care services under the plan, which
shall include among its members representatives of other
State agencies concerned with day care or services related
thereto and persons representative of professional or
civic or other public or nonprofit private agencies, orga-
nizations, or groups concerned with the provision of day
care,
(iii) for such safeguards as may be necessary to as-
sure provision of day care under the plan only in cases in
which it is in the best interest of the child and the mother
and only in cases in which it is determined, under criteria
established by the State, that a need for such care exists;
and, in cases in which the family is able to pay part or
all of the costs of such care, for payment of such fees as
may be reasonable in the light of such ability,
(iv) for giving priority, in determining the existence
of need for such day care, to members of low-income or
other groups in the population, and to geographical
¹In the case of Guam, Puerto Rico, and the Virgin Islands, section 422(a)(1)(A) reads
as follows:
"(A) provides that (1) the State agency designated pursuant to section 402(a)(3) to
administer or supervise the administration of the plan of the State approved under part
A of this title will administer or supervise the administration of such plan for child-
welfare services and (i) to the extent that child-welfare services are furnished by the
staff of the State agency or local agency administering such plan for child-welfare serv-
ices, the organizational unit in such State or local agency established pursuant to sec-
tion 402(a)(15) will be responsible for furnishing such child-welfare services,".
Sec. 422(a)
236
areas, which have the greatest relative need for extension
of such day care, and
(v) that day care provided under the plan will be
provided only in facilities (including private homes)
which are licensed by the State, or approved (as meeting
the standards established for such licensing) by the State
agency responsible for licensing facilities of this type,
and
(vi) for the development and implementation of ar-
rangements for the more effective involvement of the
parent or parents in the appropriate care of the child
and the improvement of the health and development of
the child, and
(2) that makes a satisfactory showing that the State is extend-
ing the provision of child-welfare services in the State, with
priority being given to communities with the greatest need for
such services after giving consideration to their relative financial
need, and with a view to making available by July 1, 1975, in
all political subdivisions of the State, for all children in need
thereof, child-welfare services provided by the staff (which shall
to the extent feasible be composed of trained child-welfare per-
sonnel) of the State public welfare agency or of the local agency
participating in the administration of the plan in the political
subdivision,
except that (effective July 1, 1969, or, if earlier, on the date as of
which the modification of the State plan to comply with this require-
ment with respect to subprofessional staff is approved) such plan
shall provide for the training and effective use of paid subprofessional
staff with particular emphasis on the full-time or part-time employ-
ment of persons of low income, as community service aides, in the
administration of the plan and for the use of nonpaid or partially
paid volunteers in providing services and in assisting any advisory
committees established by the State agency, an amount equal to the
Federal share (as determined under section 423) of the total sum
expended under such plan (including the cost of administration of
the plan) in meeting the costs of State, district, county, or other local
child-welfare services, in developing State services for the encourage-
ment and assistance of adequate methods of community child-welfare
organization, in paying the costs of returning any runaway child who
has not attained the age of eighteen to his own community in another
State, and of maintaining such child until such return (for a period
not exceeding fifteen days), in cases in which such costs cannot be met
237
Sec. 423(b)
by the parents of such child or by any person, agency, or institution
legally responsible for the support of such child. In developing such
services for children, the facilities and experience of voluntary agen-
cies shall be utilized in accordance with child-care programs and ar-
rangements in the State and local communities as may be authorized
by the State.
(b) The method of computing and paying such amounts shall be as
follows:
(1) The Secretary shall, prior to the beginning of each period
for which a payment is to be made, estimate the amount to be paid
to the State for such period under the provisions of subsection (a).
(2) From the allotment available therefor, the Secretary shall
pay the amount so estimated, reduced or increased, as the case may
be, by any sum (not previously adjusted under this section) by
which he finds that his estimate of the amount to be paid the State
for any prior period under this section was greater or less than
the amount which should have been paid to the State for such
prior period under this section.
(c) If on December 1, 1974, the agency of a State administering its
plan under this part was not the agency designated pursuant to section
402(a) (3), subsection (a) (1) (A) of this section shall not apply with
respect to such agency but only so long as such agency is not the
agency designated under section 2003 (d) (1) (C), and if on December
1, 1974, the local agency administering the plan of a State under this
part in a subdivision of the State is not the local agency in such sub-
division administering the plan of such State under part A of this
title, subsection (a) (1) (A) of this section shall not apply with respect
to such local agency but only so long as such local agency is not the
local agency administering the program of the State for the provision
of services under title XX.
Allotment Percentage and Federal Share
Sec. 423. (a) The "allotment percentage" for any State shall
be 100 per centum less the State percentage; and the State percentage
shall be the percentage which bears the same ratio to 50 per centum as
the per capita income of such State bears to the per capita income of
the United States; except that (1) the allotment percentage shall in
no case be less than 30 per centum or more than 70 per centum, and
(2) the alloment percentage shall be 70 per centum in the case of
Puerto Rico, the Virgin Islands, and Guam.
(b) The "Federal share" for any State for any fiscal year shall be
100 per centum less that percentage which bears the same ratio to
Sec. 423(b)
238
50 per centum as the per capita income of such States bears to the per
capita income of the United States, except that (1) in no case shall
the Federal share be less than 33% per centum or more than 6623 per
centum, and (2) the Federal share shall be 663 per centum in the case
of Puerto Rico, the Virgin Islands, and Guam.
(c) The Federal share and allotment percentage for each State
shall be promulgated by the Secretary between October 1 and Novem-
ber 30 of each even-numbered year, on the basis of the average per
capita income of each State and of the United States for the three
most recent calendar years for which satisfactory data are available
from the Department of Commerce. Such promulgation shall be con-
clusive for each of the two fiscal years in the period beginning October
1 next succeeding such promulgation: Provided, That the Federal
shares and allotment percentages promulgated under section 524 (c) of
the Social Security Act in 1966 shall be effective for purposes of this
section for the fiscal years ending June 30, 1968, and June 30, 1969.¹
(d) For purposes of this section, the term "United States" means
the fifty States and the District of Columbia.
Reallotment
Sec. 424. The amount of any allotment to a State under section
421 for any fiscal year which the State certifies to the Secretary will
not be required for carrying out the State plan developed as provided
in such section shall be available for reallotment from time to time, on
such dates as the Secretary may fix, to other States which the Secre-
tary determines (1) have need in carrying out their State plans so
developed for sums in excess of those previously allotted to them under
that section and (2) will be able to use such excess amounts during such
fiscal year. Such reallotments shall be made on the basis of the State
plans so developed, after taking into consideration the population
under the age of twenty-one, and the per capita income of each such
State as compared with the population under the age of twenty-one,
and the per capita income of all such States with respect to which such
a determination by the Secretary has been made. Any amount so real-
lotted to a State shall be deemed part of its allotment under section
421.
Definition
Sec. 425. For purposes of this title, the term "child-welfare
services" means public social services which supplement, or substitute
for, parental care and supervision for the purpose of (1) preventing or
1 Subsection (c) was amended by section 22 of Public Law 94-273.
•
239
Sec. 426(b)
(2)
remedying, or assisting in the solution of problems which may result
in, the neglect, abuse, exploitation, or delinquency of children, (
protecting and caring for homeless, dependent, or neglected children,
(3) protecting and promoting the welfare of children of working
mothers, and (4) otherwise protecting and promoting the welfare of
children, including the strengthening of their own homes where pos-
sible or, where needed, the provision of adequate care of children
away from their homes in foster family homes or day-care or other
child-care facilities.
Research, Training, or Demonstration Projects
Sec. 426. (a) There are hereby authorized to be appropriated for
each fiscal year such sums as the Congress may determine-
(1) for grants by the Secretary—
(A) to public or other nonprofit institutions of higher
learning, and to public or other nonprofit agencies and or-
ganizations engaged in research or child-welfare activities,
for special research or demonstration projects in the field of
child welfare which are of regional or national significance
and for special projects for the demonstration of new meth-
ods or facilities which show promise of substantial contri-
bution to the advancement of child welfare;
(B) to State or local public agencies responsible for admin-
istering, or supervising the administration of, the plan under
this part, for projects for the demonstration of the utilization
of research (including findings resulting therefrom) in the
field of child welfare in order to encourage experimental and
special types of welfare services; and
(C) to public or other nonprofit institutions of higher
learning for special projects for training personnel for work
in the field of child welfare, including traineeships with
such stipends and allowances as may be permitted by the
Secretary; and
(2) for contracts or jointly financed cooperative arrangements
with States and public and other organizations and agencies for
the conduct of research, special projects, or demonstration proj-
ects relating to such matters.
(b) Payments of grants or under contracts or cooperative arrange-
ments under this section may be made in advance or by way of reim-
bursement, and in such installments, as the Secretary may determine;
and shall be made on such conditions as the Secretary finds neces-
Sec. 426(b)
240
sary to carry out the purposes of the grants, contracts, or other
arrangements.
Part C-Work Incentive Program for Recipients of Aid Under
State Plan Approved Under Part A
Purpose
Sec. 430. The purpose of this part is to require the establishment
of a program utilizing all available manpower services, including
those authorized under other provisions of law, under which in-
dividuals receiving aid to families with dependent children will be
furnished incentives, opportunities, and necessary services in order for
(1) the employment of such individuals in the regular economy, (2)
the training of such individuals for work in the regular economy, and
(3) the participation of such individuals in public service employ-
ment, thus restoring the families of such individuals to independence
and useful roles in their communities. It is expected that the individ-
uals participating in the program established under this part will
acquire a sense of dignity, self-worth, and confidence which will flow
from being recognized as a wage-earning member of society and that
the example of a working adult in these families will have beneficial
effects on the children in such families.
Appropriation
Sec. 431. (a) There is hereby authorized to be appropriated to
the Secretary of Health, Education, and Welfare for each fiscal year a
sum sufficient to carry out the purposes of this part. The Secretary of
Health, Education, and Welfare shall transfer to the Secretary of
Labor from time to time sufficient amounts, out of the moneys appro-
priated pursuant to this section, to enable him to carry out such
purposes.
(b) Of the amounts expended from funds appropriated pursuant
to subsection (a) for any fiscal year (commencing with the fiscal year
ending June 30, 1973), not less than 3313 per centum thereof shall be
expended for carrying out the program of on-the-job training referred
to in section 432(b) (1) (B) and for carrying out the program of pub-
lic service employment referred to in section 432(b) (3).
(c) Of the sums appropriated pursuant to subsection (a) to carry
out the provisions of this part for any fiscal year (commencing with
the fiscal year ending June 30, 1973), not less than 50 percent shall be
allotted among the States in accordance with a formula under which
241
Sec. 432(c)
each State receives (from the total available for such allotment) an
amount which bears the same ratio to such total as—
(1) in the case of the fiscal year ending June 30, 1973, and the
fiscal year ending June 30, 1974, the average number of recipients
of aid to families with dependent children in such State during
the month of January last preceding the commencement of such
fiscal year bears to the average number of such recipients during
such month in all the States; and
(2) in the case of the fiscal year ending June 30, 1975, or in the
case of any fiscal year thereafter, the average number of individ-
uals in such State who, during the month of January last preced-
ing the commencement of such fiscal year, are registered pursuant
to section 402 (a) (19) (A) bears to the average number of individ-
uals in all States who, during such month, are so registered.
Establishment of Programs
Sec. 432. (a) The Secretary of Labor (hereinafter in this part
referred to as the Secretary) shall, in accordance with the provisions
of this part, establish work incentive programs (as provided for in
subsection (b) of this section) in each State and in each political
subdivision of a State in which he determines there is a significant
number of individuals who have attained age 16 and are receiving
aid to families with dependent children. In other political subdivi-
sions, he shall use his best efforts to provide such programs either
within such subdivisions or through the provision of transportation
for such persons to political subdivisions of the State in which such
programs are established.
S
(b) Such programs shall include, but shall not be limited to, (1)
(A) a program placing as many individuals as is possible in employ-
ment, and (B) a program utilizing on-the-job training positions for
others, (2) a program of institutional and work experience training
for those individuals for whom such training is likely to lead to regu-
lar employment, and (3) a program of public service employment
for individuals for whom a job in the regular economy cannot be
found.
(c) In carrying out the purposes of this part the Secretary may
make grants to, or enter into agreements with, public or private agen-
cies or organizations (including Indian tribes with respect to Indians
on a reservation), except that no such grant or agreement shall be
made to or with a private employer for profit or with a private non-
profit employer not organized for a public purpose for purposes of the
work experience program established by clause (2) of subsection (b).
Sec. 432(d)
242
(d) In providing the manpower training and employment services
and opportunities required by this part, the Secretary of Labor shall,
to the maximum extent feasible, assure that such services and opportu-
nities are provided by using all authority available to him under this
or any other Act. In order to assure that the services and opportunities
so required are provided, the Secretary of Labor shall use the funds
appropriated to him under this part to provide programs required by
this part through such other Act, to the same extent and under the
same conditions (except as regards the Federal matching percentage)
as if appropriated under such other Act and, in making use of the
programs of other Federal, State, or local agencies (public or pri-
vate), the Secretary of Labor may reimburse such agencies for services
rendered to persons under this part to the extent such services and
opportunities are not otherwise available on a nonreimbursable basis.
(e) The Secretary shall take appropriate steps to assure that the
present level of manpower services available under the authority of
other statutes to recipients of aid to families with dependent children
is not reduced as a result of programs under this part.
(f) (1) The Secretary of Labor shall establish in each State, munic-
ipality, or other appropriate geographic area with a significant num-
ber of persons registered pursuant to section 402(a) (19) (A) a Labor
Market Advisory Council the function of which will be to identify
and advise the Secretary of the types of jobs available or likely to
become available in the area served by the Council; except that if there
is already located in any area an appropriate body to perform such
function, the Secretary may designate such body as the Labor Market
Advisory Council for such area.
(2) Any such Council shall include representatives of industry,
labor, and public service employers from the area to be served by the
Council.
(3) The Secretary shall not conduct, in any area, institutional
training under any program established pursuant to subsection (b) of
any type which is not related to jobs of the type which are or are
likely to become available in such area as determined by the Secretary
after taking into account information provided by the Labor Market
Advisory Council for such area.
Operation of Program
Sec. 433. (a) The Secretary shall provide a program of testing
and counseling for all persons certified to him by a State, pursuant to
section 402(a) (19) (G), and shall select those persons whom he finds
suitable for the programs established by clauses (1) and (2) of section
243
Sec. 433(d)
432 (b). Those not so selected shall be deemed suitable for the program
established by clause (3) of such section 432 (b) unless the Secretary
finds that there is good cause for an individual not to participate in
such program. The Secretary, in carrying out such program for in-
dividuals certified to him under section 402 (a) (19) (G), shall accord
priority to such individuals in the following order, taking into account
employability potential: first, unemployed fathers; second, mothers,
whether or not required to register pursuant to section 402(a) (19)
(A), who volunteer for participation under a work incentive program;
third, other mothers, and pregnant women, registered pursuant to sec-
tion 402(a) (19) (A), who are under 19 years of age; fourth, depend-
ent children and relatives who have attained age 16 and who are not
in school or engaged in work or manpower training; and fifth, all
other individuals so certified to him.
(b) (1) For each State the Secretary shall develop jointly with the
administrative unit of such State administering the special program
referred to in section 402(a) (19) (G) a statewide operational plan.
(2) The statewide operational plan shall prescribe how the work
incentive program established by this part will be operated at the local
level, and shall indicate (i) for each area within the State the num-
ber and type of positions which will be provided for training, for
on-the-job training, and for public service employment, (ii) the man-
ner in which the information provided by the Labor Market Advisory
Council (established pursuant to section 432(f)) for any such area
will be utilized in the operation of such program, and (iii) the par-
ticular State agency or administrative unit thereof which will be
responsible for each of the various activities and functions to be per-
formed under such program. Any such operational plan for any State
must be approved by the Secretary, the administrative unit of such
State administering the special program referred to in section 402 (a)
(19) (G), and the regional joint committee (established pursuant to
section 439) for the area in which such State is located.
(3) The Secretary shall develop an employability plan for each
suitable person certified to him under section 402 (a) (19) (G) which
shall describe the education, training, work experience, and orienta-
tion which it is determined that such person needs to complete in
order to enable him to become self-supporting.
(c) The Secretary shall make maximum use of services available
from other Federal and State agencies and, to the extent not other-
wise available on a nonreimbursable basis, he may reimburse such
agencies for services rendered to persons under this part.
(d) To the extent practicable and where necessary, work incentive
programs established by this part shall include, in addition to the
Sec. 433(d)
244
regular counseling, testing, referral available through the Federal-
State Employment Service System, program orientation, basic educa-
tion, training in communications and employability skills, work
experience, institutional training, on-the-job training, job develop-
ment, and special job placement and followup services, required to
assist participant in securing and retaining employment and securing
possibilities for advancement.
(e) (1) In order to develop public service employment under the
program established by section 432 (b) (3), the Secretary shall enter
into agreements with (A) public agencies, (B) private nonprofit or-
ganizations established to serve a public purpose, and (C) Indian
tribes with respect to Indians on a reservation, under which individ-
uals deemed suitable for participation in such a program will be pro-
vided work which serves a useful public purpose and which would
not otherwise be performed by regular employees.
(2) Such agreements shall provide
(A) for the payment by the Secretary to each employer, with
respect to public service employment performed by any individual
for such employer, of an amount not exceeding 100 percent of the
cost of providing such employment to such individual during the
first year of such employment, an amount not exceeding 75 per-
cent of the cost of providing such employment to such individual
during the second year of such employment, and an amount not
exceeding 50 percent of the cost of providing such employment to
such individual during the third year of such employment;
(B) the hourly wage rate and the number of hours per week
individuals will be scheduled to work in public service employ-
ment for such employer;
(C) that the Secretary will have such access to the premises of
the employer as he finds necessary to determine whether such em-
ployer is carrying out his obligations under the agreement and
this part; and
(D) that the Secretary may terminate any agreement under
this subsection at any time.
(3) [Repealed.]
(4) No wage rates provided under any agreement entered into
under this subsection shall be lower than the applicable minimum wage
for the particular work concerned.
(f) Before entering into a project under section 432(b)(3), the
Secretary shall have reasonable assurances that-
(1) appropriate standards for the health, safety, and other
conditions applicable to the performance of work and training on
such project are established and will be maintained,
245
Sec. 435(b)
(2) such project will not result in the displacement of em-
ployed workers,
(3) with respect to such project the conditions of work, train-
ing, education, and employment are reasonable in the light of such
factors as the type of work, geographical region, and proficiency
of the participant,
(4) appropriate workmen's compensation protection is provided
to all participants.
(g) Where an individual certified to the Secretary of Labor pur-
suant to section 402 (a) (19) (G) refuses without good cause to accept
employment or participate in a project under a program established
by this part, the Secretary of Labor shall (after providing opportunity
for fair hearing) notify the State agency which certified such indi-
vidual and submit such other information as he may have with respect
to such refusal.
(h) With respect to individuals who are participants in public
service employment under the program established by section 432(b)
(3), the Secretary shall periodically (but at least once every six
months) review the employment record of each such individual while
on such special work project and on the basis of such record and such
other information as he may acquire determine whether it would be
feasible to place such individual in regular employment or on any of
the projects under the programs established by section 432(b) (1)
and (2).
Incentive Payment
Sec. 434. (a) The Secretary is authorized to pay to any par-
ticipant under a program established by section 432(b) (2) an incen-
tive payment of not more than $30 per month, payable in such
amounts and at such times as the Secretary prescribes.
(b) The Secretary of Labor is also authorized to pay, to any mem-
ber of a family participating in manpower training under this part,
allowances for transportation and other costs incurred by such mem-
ber, to the extent such costs are necessary to and directly related to the
participation by such member in such training.
Federal Assistance
Sec. 435. (a) Federal assistance under this part shall not exceed
90 per centum of the costs of carrying out this part. Non-Federal con-
tributions may be cash or in kind, fairly evaluated, including but not
limited to plant, equipment, and services.
(b) Costs of carrying out this part include costs of training, super-
vision, materials, administration, incentive payments, transportation,
21-746 O 78 19
-
Sec. 435(b)
246
and other items as are authorized by the Secretary, but may not in-
clude any reimbursement for time spent by participants in work,
training, or other participation in the program.
Period of Enrollment
Sec. 436. (a) The program established by section 432(b)(2)
shall be designed by the Secretary so that the average period of enroll-
ment under all projects under such program throughout any area of
the United States will not exceed one year.
(b) Services provided under this part may continue to be provided
to an individual for such period as the Secretary determines (in ac-
cordance with regulations prescribed jointly by him and the Secre-
tary of Health, Education, and Welfare) is necessary to qualify him
fully for employment even though his earnings disqualify him from
aid under a State plan approved under section 402.
Relocation of Participants
Sec. 437. The Secretary may assist participants to relocate their
place of residence when he determines such relocation is necessary in
order to enable them to become permanently employable and self-sup-
porting. Such assistance shall be given only to participants who con-
cur in their relocation and who will be employed at their place of
relocation at wage rates which will meet at least their full need as
determined by the State to which they will be relocated. Assistance
under this section shall not exceed the reasonable costs of transporta-
tion for participants, their dependents, and their household belong-
ings plus such relocation allowance as the Secretary determines to be
reasonable.
Participants Not Federal Employees
Sec. 438. Participants in programs established by this part shall
be deemed not to be Federal employees and shall not be subject to the
provisions of laws relating to Federal employment including those re-
lating to hours of work, rates of compensation, leave, unemployment
compensation, and Federal employee benefits.
Rules and Regulations
Sec. 439. The Secretary and the Secretary of Health, Education,
and Welfare, shall, not later than July 1, 1972, issue regulations
to carry out the purposes of this part. Such regulations shall provide
for the establishment, jointly by the Secretary and the Secretary of
Health, Education, and Welfare, of (1) a national coordination com-
mittee the duty of which shall be to establish uniform reporting and
similar requirements for the administration of this part, and (2) a
regional coordination committee for each region which shall be re-
247
Sec. 443
sponsible for review and approval of statewide operational plans de-
veloped pursuant to section 433 (b).
Annual Report
Sec. 440. The Secretary shall annually report to the Congress
(with the first such report being made on or before July 1, 1970) on
the work incentive programs established by this part.
Evaluation and Research
Sec. 441. (a) The Secretary shall (jointly with the Secretary
of Health, Education, and Welfare) provide for the continuing evalua-
tion of the work incentive programs established by this part, including
their effectiveness in achieving stated goals and their impact on other
related programs. He also may conduct research regarding ways to
increase the effectiveness of such programs. He may, for this purpose,
contract for independent evaluations of and research regarding such
programs or individual projects under such programs. For purposes of
sections 435 and 443, the cost of carrying out this section shall not be
regarded as costs of carrying out work incentive programs established
by this part. Nothing in this section shall be construed as authorizing
the Secretary to enter into any contract with any organization after
June 1, 1970, for the dissemination by such organization of informa-
tion about programs authorized to be carried on under this part.
Technical Assistance for Providers of Employment or Training
Sec. 442. The Secretary is authorized to provide technical assist-
ance to providers of employment or training to enable them to partici-
pate in the establishment and operation of programs authorized to be
established by section 432(b).
Collection of State Share
Sec. 443. If a non-Federal contribution of 10 per centum of the
costs of the work incentive programs established by this part is not
made in any State (as specified in section 402(a)), the Secretary of
Health, Education, and Welfare may withhold any action under sec-
tion 404 because of the State's failure to comply substantially with a
provision required by section 402. If the Secretary of Health, Educa-
tion, and Welfare does withhold such action, he shall, after reasonable
notice and opportunity for hearing to the appropriate State agency or
agencies, withhold any payments to be made to the State under sec-
tions 3(a), 403 (a), 1003 (a), 1403(a), 1603 (a), and 1903 (a) until the
amount so withheld (including any amounts contributed by the State
pursuant to the requirement in section 402 (a) (19) (C)) equals 10 per
centum of the costs of such work incentive programs. Such withhold-
Sec. 443
248
ing shall remain in effect until such time as the Secretary has assur-
ances from the State that such 10 per centum will be contributed as re-
quired by section 402. Amounts so withheld shall be deemed to have
been paid to the State under such sections and shall be paid by the
Secretary of Health, Education, and Welfare to the Secretary. Such
payment shall be considered a non-Federal contribution for purposes
of section 435.
Agreements With Other Agencies Providing Assistance to
Families of Unemployed Parents
Sec. 444. (a) The Secretary is authorized to enter into an agree-
ment (in accordance with the succeeding provisions of this section)
with any qualified State agency (as described in subsection (b)) under
which the program established by the preceding sections of this part
C will (except as otherwise provided in this section) be applicable to
individuals certified by such State agency in the same manner, to the
same extent, and under the same conditions as such program is appli-
cable with respect to individuals certified to the Secretary by a State
agency administering or supervising the administration of a State plan
approved by the Secretary of Health, Education, and Welfare under
part A of this title.
(b) A qualified State agency referred to in subsection (a) is a
State agency which is charged with the administration of a program-
(1) the purpose of which is to provide aid or assistance to the
families of unemployed parents,
(2) which is not established pursuant to part A of title IV of
the Social Security Act,
(3) which is financed entirely from funds appropriated by the
Congress, and
(4) none of the financing of which is made available under
any program established pursuant to title V of the Economic
Opportunity Act.
(c) (1) Any agreement under this section with a qualified State
agency shall provide that such agency, will, with respect to all individ-
uals receiving aid or assistance under the program of aid or assistance
to families of unemployed parents administered by such agency, com-
ply with the requirements imposed by section 402 (a) (19) in the
same manner and to the same extent as if (a) such qualified agency
were the agency in such State administering or supervising the ad-
ministration of a State plan approved under part A of this title, and
(B) individuals receiving aid or assistance under the program ad-
ministered by such qualified agency were recipients of aid under a
State plan which is so approved.
(2) Any agreement entered into under this section shall remain in
effect for such period as may be specified in the agreement by the Sec-
249
Sec. 452(a)
retary and the qualified State agency, except that, whenever the Secre-
tary determines, after reasonable notice and opportunity for hearing
to the qualified State agency, that such agency has failed substantially
to comply with its obligations under such agreement, the Secretary
may suspend operation of the agreement until such time as he is
satisfied that the State agency will no longer fail substantially to
comply with its obligations under such agreement.
(3) Any such agreement shall further provide that the agreement
will be inoperative for any calendar quarter if, for the preceding
calendar quarter, the maximum amount of benefits payable under the
program of aid or assistance to families of unemployed parents ad-
ministered by the qualified State agency which is a party to such
agreement is lower than the maximum amount of benefits payable
under such program for the quarter which ended September 30, 1967.
(d) The Secretary shall, at the request of any qualified State
agency referred to in subsection (a) of this section and upon receipt
from it of a list of the names of individuals rereferred to the Secre-
tary, furnish to such agency the names of each individual on such list
participating in public service employment under section 433 (a) (3)
whom the Secretary determines should continue to participate in such
employment. The Secretary shall not comply with any such request
with respect to an individual on such list unless such individual has
been certified to the Secretary by such agency under section 402 (a)
(19) (G) for a period of at least six months.
Part D-Child Support and Establishment of Paternity 1 2
Appropriation
Sec. 451. For the purpose of enforcing the support obligations
owed by absent parents to their children, locating absent parents,
establishing paternity, and obtaining child support, there is hereby
authorized to be appropriated for each fiscal year a sum sufficient to
carry out the purposes of this part.
Duties of the Secretary
Sec. 452. (a) The Secretary shall establish, within the Department
of Health, Education, and Welfare a separate organizational unit,
under the direction of a designee of the Secretary, who shall report
directly to the Secretary and who shall
(1) establish such standards for State programs for locating
absent parents, establishing paternity, and obtaining child sup-
port as he determines to be necessary to assure that such programs
will be effective;
¹ Part D was established by part B of Public Law 93-647 with an effective date of July 1,
1975 except for section 459 which was effective as of January 1, 1975.
* The effective date of July 1, 1975 was changed to August 1, 1975 by Public Law 94–46.
Sec. 452(a)
250
Revised April 1978
(2) establish minimum organizational and staffing requirements
for State units engaged in carrying out such programs under
plans approved under this part;
(3) review and approve State plans for such programs;
(4) evaluate the implementation of State programs established
pursuant to such plan, conduct such audits of State programs
established under the plan approved under this part as may be
necessary to assure their conformity with the requirements of this
part, and, not less often than annually, conduct a complete audit
of the programs established under such plan in each State and
determine for the purposes of the penalty provision of section
403 (h) whether the actual operation of such programs in each
State conforms to the requirements of this part;
(5) assist States in establishing adequate reporting procedures
and maintain records of the operations of programs established
pursuant to this part in each State;
(6) maintain records of all amounts collected and disbursed
under programs established pursuant to the provisions of this part
and of the costs incurred in collecting such amounts;
(7) provide technical assistance to the States to help them es-
tablish effective systems for collecting child support and estab-
lishing paternity;
(8) receive applications from States for permission to utilize
the courts of the United States to enforce court orders for support
against absent parents and, upon a finding that (A) another State
has not undertaken to enforce the court order of the originating
State against the absent parent within a reasonable time, and (B)
that utilization of the Federal courts is the only reasonable method
of enforcing such order, approve such applications;
(9) operate the Parent Locator Service established by section
453; and
(10) not later than three months after the end of each fiscal
year, beginning with the year 1977, submit to the Congress a full
and complete report on all activities undertaken pursuant to the
provisions of this part, which report shall include, but not be
limited to, the following:
(A) total program costs and collections set forth in
sufficient detail to show the cost to the States and the Federal
Government, the distribution of collections to families, State
and local governmental units, and the Federal Government;
and an identification of the financial impact of the provi-
sions of this part;
(B) costs and staff associated with the Office of Child
Support Enforcement;
Revised April 1978
250-A
Sec. 452(b)
(C) the number of child support cases in each State
during each quarter of the fiscal year last ending before the
report is submitted and during each quarter of the preceding
fiscal year (including the transitional period beginning
July 1, 1976, and ending September 30, 1976, in the case of
the first report to which this subparagraph applies), and the
disposition of such cases;
(D) the status of all State plans under this part as of the
end of the fiscal year last ending before the report is sub-
mitted, together with an explanation of any problems which
are delaying or preventing approval of State plans under
this part;
(E) data, by State, on the use of the Federal Parent
Locator Service, and the number of locate requests submitted
without the absent parent's social security account number;
(F) the number of cases, by State, in which an applicant
for or recipient of aid under a State plan approved under
part A has refused to cooperate in identifying and locating
the absent parent and the number of cases in which refusal
so to cooperate is based on good cause (as determined in
accordance with the standards referred to in section 402 (a)
(26) (B)(ii));
(G) data, by State, on the use of Federal courts and
on use of the Internal Revenue Service for collections, the
number of court orders on which collections were made, the
number of paternity determinations made and the number of
parents located, in sufficient detail to show the cost and bene-
fits to the States and to the Federal Government; and
(H) the major problems encountered which have delayed
or prevented implementation of the provisions of this part
during the fiscal year last ending prior to the submission of
such report.¹
(b) The Secretary shall, upon the request of any State having in
effect a State plan approved under this part, certify the amount of any
child support obligation assigned to such State to the Secretary of the
Treasury for collection pursuant to the provisions of section 6305 of the
Internal Revenue Code of 1954. No amount may be certified for collec-
tion under this subsection except the amount of the delinquency under
a court order for support and upon a showing by the State that such
State has made diligent and reasonable efforts to collect such amounts
utilizing its own collection mechanisms, and upon an agreement that
the State will reimburse the United States for any costs involved in
making the collection. The Secretary after consultation with the Sec-
1 Paragraph (10) was amended by sec. 504(a) of P.L. 95-30.
1
251
Sec. 453(b)
retary of the Treasury may, by regulation, establish criteria for ac-
cepting amounts for collection and for making certification under this
subsection including imposing such limitations on the frequency of
making such certifications under this subsection.
(c) (1) There is hereby established in the Treasury a revolving fund
which shall be available to the Secretary without fiscal year limitation,
to enable him to pay to the States for distribution in accordance with
the provisions of section 457 such amounts as may be collected and paid
(subject to paragraph (2)) into such fund under section 6305 of the
Internal Revenue Code of 1954.
(2) There is hereby appropriated to the fund, out of any moneys
in the Treasury not otherwise appropriated, amounts equal to the
amounts collected under section 6305 of the Internal Revenue Code
of 1954, reduced by the amounts credited or refunded as overpay-
ments of the amounts so collected. The amounts appropriated by the
preceding section shall be transferrred at least quarterly from the gen-
eral fund of the Treasury to the fund on the basis of estimates made
by the Secretary of the Treasury. Proper adjustments shall be made
in the amounts subsequently transferred to the extent prior estimates
were in excess of or less than the amounts required to be transferred.
Parent Locator Service
Sec. 453. (a) The Secretary shall establish and conduct a Parent
Locator Service, under the direction of the designee of the Secretary
referred to in section 452 (a), which shall be used to obtain and trans-
mit to any authorized person (as defined in subsection (c)) informa-
tion as to the whereabouts of any absent parent when such information
is to be used to locate such parent for the purpose of enforcing support
obligations against such parent.
(b) Upon request, filed in accordance with subsection (d) of any
authorized person (as defined in subsection (c)) for the most recent
address and place of employment of any absent parent, the Secretary
shall, notwithstanding any other provision of law, provide through the
Parent Locator Service such information to such person, if such
information-
(1) is contained in any files or records maintained by the Sec-
retary or by the Department of Health, Education, and Welfare;
or
(2) is not contained in such files or records, but can be obtained
by the Secretary, under the authority conferred by subsection (e),
from any other department, agency, or instrumentality, or the
United States or of any State.
No information shall be disclosed to any person if the disclosure of
such information would contravene the national policy or security
interests of the United States or the confidentiality of census data. The
Sec. 453(b)
252
Secretary shall give priority to requests made by any authorized per-
son described in subsection (c) (1).
(c) As used in subsection (a), the term "authorized person" means-
(1) any agent or attorney of any State having in effect a plan
approved under this part, who has the duty or authority under
such plans to seek to recover any amounts owed as child support
(including, when authorized under the State plan, any official of
a political subdivision);
(2) the court which has authority to issue an order against an
absent parent for the support and maintenance of a child, or any
agent of such court; and
(3) the resident parent, legal guardian, attorney, or agent of
a child (other than a child receiving aid under part A of this title)
(as determined by regulations prescribed by the Secretary) with-
out regard to the existence of a court order against an absent par-
ent who has a duty to support and maintain any such child.
(d) A request for information under this section shall be filed in
such manner and form as the Secretary shall by regulation prescribe
and shall be accompanied or supported by such documents as the
Secretary may determine to be necessary.
(e) (1) Whenever the Secretary receives a request submitted under
subsection (b) which he is reasonably satisfied meets the criteria estab-
lished by subsections (a), (b), and (c), he shall promptly undertake
to provide the information requested from the files and records main-
tained by any of the departments, agencies, or instrumentalities of the
United States or of any State.
(2) Notwithstanding any other provision of law, whenever the
individual who is the head of any department, agency, or instrumen-
tality of the United States receives a request from the Secretary for
information authorized to be provided by the Secretary under this
section, such individual shall promptly cause a search to be made of
the files and records maintained by such department, agency, or instru-
mentality with a view to determining whether the information
requested is contained in any such files or records. If such search
discloses the information requested, such individuals shall immediately
transmit such information to the Secretary, except that if any infor-
mation is obtained the disclosure of which would contravene national
policy or security interests of the United States or the confidentiality
of census data, such information shall not be transmitted and such
individual shall immediately notify the Secretary. If such search fails
to disclose the information requested, such individual shall immedi-
ately so notify the Secretary. The costs incurred by any such depart-
ment, agency, or instrumentality of the United States or of any State
in providing such information to the Secretary shall be reimbursed by
him. Whenever such services are furnished to an individual specified
253
Sec. 454
in subsection (c)(3), a fee shall be charged such individual. The fee
so charged shall be used to reimburse the Secretary or his delegate for
the expense of providing such services.
(f) The Secretary, in carrying out his duties and functions under
this section, shall enter into arrangements with State agencies admin-
istering State plans approved under this part for such State agencies
to accept from resident parents, legal guardians, or agents of a child
described in subsection (c) (3) and, after determining that the absent
parent cannot be located through the procedures under the control of
such State agencies, to transmit to the Secretary requests for informa-
tion with regard to the whereabouts of absent parents and otherwise to
cooperate with the Secretary in carrying out the purposes of this
section.
State Plan for Child Support
Sec. 454. A State plan for child support must-
(1) provide that it shall be in effect in all political subdivisions
of the State;
(2) provide for financial participation by the State;
(3) provide for the establishment or designation of a single
and separate organizational unit, which meets such staffing and
organizational requirements as the Secretary may by regulation
prescribe, within the State to administer the plan;
(4) provide that such State will undertake-
S
(A) in the case of a child born out of wedlock with respect
to whom an assignment under section 402 (a) (26) of this title
is effective, to establish the paternity of such child unless the
agency administering the plan of the State under part A of
this title determines in accordance with the standards pre-
scribed by the Secretary pursuant to section 402(a) (26) (B)
that it is against the best interests of the child to do so, and
(B) in the case of any child with respect to whom such
assignment is effective, to secure support for such child
from his parent (or from any other person legally liable for
such support), utilizing any reciprocal arrangements adopted
with other States (unless the agency administering the plan
of the State under part A of this title determines in accord-
ance with the standards prescribed by the Secretary pursuant
to section 402 (a) (26) (B) that it is against the best interests
of the child to do so), except that when such arrangements
and other means have proven ineffective, the State may utilize
the Federal courts to obtain or enforce court orders for
support; ¹
1
-
1 Section 454 (4) was amended by Public Law 94-88. See also section 203(b) of Public
Law 94-88 (p. 766 of this document).
Sec. 454
254
(5) provide that, in any case in which child support payments
are collected for a child with respect to whom an assignment under
section 402 (a) (26) is effective, such payments shall be made to the
State for distribution pursuant to section 457 and shall not be paid
directly to the family except that this paragraph shall not apply
to such payments (except as provided in section 457 (c)) for any
month in which the amount collected is sufficient to make such
family ineligible for assistance under the State plan approved
under part A;¹
1
(6) provide that (A) the child support collection or paternity
determination services established under the plan shall be made
available to any individual not otherwise eligible for such services
upon application filed by such individual with the State, (B) an
application fee for furnishing such services may be imposed, ex-
cept that the amount of any such application fee shall be reason-
able, as determined under regulations of the Secretary, and (C)
any costs in excess of the fee so imposed may be collected from such
individual by deducting such costs from the amount of any re-
covery made;
(7) provide for entering into cooperative arrangements with
appropriate courts and law enforcement officials (A) to assist the
agency administering the plan, including the entering into of fi-
nancial arrangements with such courts and officials in order to
assure optimum results under such program, and (B) with respect
to any other matters of common concern to such courts or officials
and the agency administering the plan;
(8) provide that the agency administering the plan will estab-
lish a service to locate absent parents utilizing—
(A) all sources of information and available records, and
(B) the Parent Locator Service in the Department of
Health, Education, and Welfare; 2
(9) provide that the State will, in accordance with standards
prescribed by the Secretary, cooperate with any other State-
(A) in establishing paternity, if necessary,
(B) in locating an absent parent residing in the State
(whether or not permanently) against whom any action is
being taken under a program established under a plan ap-
proved under this part in another State,
(C) in securing compliance by an absent parent residing
in such State (whether or not permanently) with an order
issued by a court of competent jurisdiction against such
parent for the support and maintenance of a child or chil-
dren of such parent with respect to whom aid is being pro-
vided under the plan of such other State, and
1 See also sections 201(b) and 203(b) of Public Law 94-88 (pp. 765 and 766 of this
document).
* See also section 6103 (1) (6) of the I.R.C. (p. 671 of this document).
Revised April 1978
255
Sec. 455(a)
(D) in carrying out other functions required under a plan
approved under this part;
(10) provide that the State will maintain a full record of
collections and disbursements made under the plan and have an
adequate reporting system;
(11) provide that amounts collected as child support shall be
distributed as provided in section 457;
(12) provide that any payment required to be made under
section 456 or 457 to a family shall be made to the resident parent,
legal guardian, or caretaker relative having custody of or respon-
sibility for the child or children;
(13) provide that the State will comply with such other re-
quirements and standards as the Secretary determines to be
necessary to the establishment of an effective program for locat-
ing absent parents, establishing paternity, obtaining support
orders, and collecting support payments;
(14) comply with such bonding requirements, for employees
who receive, disburse, handle, or have access to, cash, as the Sec-
retary shall by regulations prescribe; and 1
(15) maintain methods of administration which are designed
to assure that persons responsible for handling cash receipts shall
not participate in accounting or operating functions which would
permit them to conceal in the accounting records the misuse of
cash receipts (except that the Secretary shall by regulations pro-
vide for exceptions to this requirement in the case of sparsely pop-
ulated areas where the hiring of unreasonable additional staff
would otherwise be necessary).¹
Payments to States
Sec. 455. (a) From the sums appropriated therefor, the Secretary
shall pay to each State for each quarter, beginning with the quarter
commencing July 1, 1975, an amount-
(1) equal to 75 percent of the total amounts expended by such
State during such quarter for the operation of the plan approved
under section 454, and
(2) equal to 50 percent of the total amounts expended by such
State during such quarter for the operation of a plan which meets
the conditions of section 454 except as is provided by a waiver
by the Secretary which is granted pursuant to specific authority
set forth in the law;
except that no amount shall be paid to any State on account of furnish-
ing child support collection or paternity determination services (other
1 Paragraphs (14) and (15) were added by sec. 502(a) of P.L. 95–30.
Revised April 1978
Sec. 455(b)
255-A
than the parent locator services) to individuals under section 454 (6)
during any period beginning after September 30, 1978.¹
(b) (1) Prior to the beginning of each quarter, the Secretary shall
estimate the amount to which a State will be entitled under subsection
(a) for such quarter, such estimates to be based on (A) a report filed
by the State containing its estimate of the total sum to be expended
in such quarter in accordance with the provisions of such subsection,
and stating the amount appropriated or made available by the State
and its political subdivisions for such expenditures in such quarter,
and if such amount is less than the State's proportionate share of the
total sum of such estimated expenditures, the source or sources from
which the difference is expected to be derived, and (B) such other
investigation as the Secretary may find necessary.
1 Section 455 (a) was amended by secs. 201(c) and 205 of P.L. 94–88, by sec. 3 of P.L.
94-365, and by sec. 4 of P.L. 95-59. See also sec. 508 of P.L. 94-566 which is printed in
this document on p. 793.
Sec. 455(b)
256
(2) The Secretary shall then pay, in such installments as he may
determine, to the State the amount so estimated, reduced or increased
to the extent of any overpayment or underpayment which the Secretary
determines was made under this section to such State for any prior
quarter and with respect to which adjustment has not already been
made under this subsection.
(3) Upon the making of any estimate by the Secretary under this
subsection, any appropriations available for payments under this sec-
tion shall be deemed obligated.¹
Support Obligations
Sec. 456. (a) The support rights assigned to the State under section
402 (a) (26) shall constitute an obligation owed to such State by the
individual responsible for providing such support. Such obligation
shall be deemed for collection purposes to be collectible under all
applicable State and local processes.
(1) The amount of such obligation shall be-
(A) the amount specified in a court order which covers
the assigned support rights, or
(B) if there is no court order, an amount determined by
the State in accordance with a formula approved by the
Secretary, and
(2) Any amounts collected from an absent parent under the
plan shall reduce, dollar for dollar, the amount of his obligation
under paragraphs (1) (A) and (B).
(b) A debt which is a child support obligation assigned to a State
under section 402(a) (26) is not released by a discharge in bankruptcy
under the Bankruptcy Act.
Distribution of Proceeds
Sec. 457.2 (a) The amounts collected as child support by a State
pursuant to a plan approved under this part during the 15 months
beginning July 1, 1975, shall be distributed as follows:
(1) 40 per centum of the first $50 of such amounts as are col-
lected periodically which represent monthly support payments
shall be paid to the family without any decrease in the amount
paid as assistance to such family during such month;
(2) such amounts as are collected periodically which are in
excess of any amount paid to the family under paragraph (1)
which represent monthly support payments shall be retained by
the State to reimburse it for assistance payments to the family
during such period (with appropriate reimbursement of the
1 Section 455 (b) added by Public Law 94-88. See also section 206 of Public Law
94-88 (p. 766 of this document).
2 See section 402 (a) (28) (p. 220).
Revised April 1978
257
Sec. 457(c)
Federal Government to the extent of its participation in the
financing);
(3) such amounts as are in excess of amounts retained by the
State under paragraph (2) and are not in excess of the amount
required to be paid during such period to the family by a court
order shall be paid to the family; and
(4) such amounts as are in excess of amounts required to be
distributed under paragraphs (1), (2), and (3) shall be (A)
retained by the State (with appropriate reimbursement of the
Federal Government to the extent of its participation in the
financing) as reimbursement for any past assistance payments
made to the family for which the State has not been reimbursed or
(B) if no assistance payments have been made by the State which
have not been repaid, such amounts shall be paid to the family.
(b) The amounts collected as child support by a State pursuant to
a plan approved under this part during any fiscal year beginning after
September 30, 1976, shall be distributed as follows:
(1) such amounts as are collected periodically which represent
monthly support payments shall be retained by the State to reim-
burse it for assistance payments to the family during such period
(with appropriate reimbursement of the Federal Government to
the extent of its participation in the financing);
(2) such amounts as are in excess of amounts retained by the
State under paragraph (1) and are not in excess of the amount
required to be paid during such period to the family by a court
order shall be paid to the family; and
(3) such amounts as are in excess of amounts required to be
distributed under paragraphs (1) and (2) shall be (A) retained
by the State (with appropriate reimbursement of the Federal
Government to the extent of its participation in the financing) as
reimbursement for any past assistance payments made to the
family for which the State has not been reimbursed or (B) if no
assistance payments have been made by the State which have not
been repaid, such amounts shall be paid to the family.
(c) Whenever a family for whom child support payments have been
collected and distributed under the plan ceases to receive assistance
under part A of this title, the State may-
(1) continue to collect amounts of child support payments
which represent monthly support payments from the absent
parent for a period of not to exceed three months from the month
following the month in which such family ceased to receive assist-
ance under part A of this title, and pay all amounts so col-
lected, which represent monthly support payments, to the family;
and
(2) at the end of such three-month period, if the State is au-
thorized to do so by the individual on whose behalf the collection
21-746 O - 78 - 20
Sec. 457(c)
Revised April 1978
258
will be made, continue to collect amounts of child support pay-
ments which represent monthly support payments from the absent
parent and pay the net amount of any amount so collected, which
represents monthly support payments, to the family after de-
ducting any costs incurred in making the collection from the
amount of any recovery made,
and so much of any amounts of child support so collected as are in
excess of the payments required to be made in paragraph (1) shall be
distributed in the manner provided by subsection (b) (3) (A) and (B).
with respect to excess amounts described in subsection (b).¹
1
Incentive Payment to Localities
Sec. 458.2 (a) When a political subdivision of a State makes, for
the State of which it is a political subdivision, or one State makes, for
another State, the enforcement and collection of the support rights
assigned under section 402 (a) (26) (either within or outside of such
State), there shall be paid to such political subdivision or such other
State from amounts which would otherwise represent the Federal
share of assistance to the family of the absent parent an amount equal
to 15 per centum of any amount collected and require to be distrib-
uted as provided in section 457 to reduce or repay assistance
payments.3
(b) Where more than one jurisdiction is involved in such enforce-
ment or collection, the amount of the incentive payment determined
under subsection (a) shall be allocated among the jurisdictions in a
manner to be prescribed by the Secretary.*
Consent by the United States to Garnishment and Similar
Proceedings for Enforcement of Child Support and Alimony
Obligations
Sec. 459. (a) Notwithstanding any other provision of law, effective
January 1, 1975, moneys (the entitlement to which is based upon re-
muneration for employment) due from, or payable by, the United
States or the District of Columbia (including any agency, subdivision,
or instrumentality thereof) to any individual, including members of
the armed services, shall be subject, in like manner and to the same
extent as if the United States or the District of Columbia were a
private person, to legal process brought for the enforcement, against
such individual of his legal obligations to provide child support or
make alimony payments.
1 Subsection (c) was amended by sec. 11 of P.L. 95–171.
2 See sections 201(b) and 203(b) of Public Law 94-88 (pp. 765 and 766 of this
document).
3 Subsection (a) was amended by sec. 503(a)(1) of P.L. 95–30.
* Subsection (b) was amended by sec. 503 (a) (2) of P.L. 95-30.
Revised April 1978
Sec. 459(f)
258-A
(b) Service of legal process brought for the enforcement of an
individual's obligation to provide child support or make alimony
payments shall be accomplished by certified or registered mail, return
receipt requested, or by personal service, upon the appropriate agent
designated for receipt of such service of process pursuant to regula-
tions promulgated pursuant to section 461 (or, if no agent has been
designated for the governmental entity having payment responsibility
for the moneys involved, then upon the head of such governmental
entity). Such process shall be accompanied by sufficient data to permit
prompt identification of the individual and the moneys involved."
(c) No Federal employee whose duties include responding to inter-
rogatories pursuant to requirements imposed by section 461(b) (3)
shall be subject under any law to any disciplinary action or civil or
criminal liability or penalty for, or on account of, any disclosure of
information made by him in connection with the carrying out of any of
his duties which pertain (directly or indirectly) to the answering of
any such interrogatory.¹
(d) Whenever any person, who is designated by law or regulation
to accept service of process to which the United States is subject under
this section, is effectively served with any such process or with inter-
rogatories relating to an individual's child support or alimony pay-
ment obligations, such person shall respond thereto within thirty days
(or within such longer period as may be prescribed by applicable State
law) after the date effective service thereof is made, and shall, as soon
as possible but not later than fifteen days after the date effective service
is so made of any such process, send written notice that such process
has been so served (together with a copy thereof) to the individual
whose moneys are affected thereby at his duty station or last-known
home address.¹
(e) Governmental entities affected by legal processes served for the
enforcement of an individual's child support or alimony payment
obligations shall not be required to vary their normal pay and dis-
bursement cycles in order to comply with any such legal process.¹
1
(f) Neither the United States, any disbursing officer, nor govern-
mental entity shall be liable with respect to any payment made from
moneys due or payable from the United States to any individual pur-
suant to legal process regular on its face, if such payment is made in
accordance with this section and the regulations issued to carry out
this section.¹
1 Section 459 was amended by sec. 501 of P.L. 95-30.
Sec. 460
Revised April 1978
258-B
Civil Actions To Enforce Child Support Obligations
Sec. 460. The district courts of the United States shall have juris-
diction, without regard to any amount in controversy, to hear and de-
termine any civil action certified by the Secretary of Health, Educa-
tion, and Welfare under section 452 (a) (8) of this Act. A civil action
under this section may be brought in any judicial district in which the
claim arose, the plaintiff resides, or the defendant resides.
Regulations Pertaining to Garnishments ¹
1
Sec. 461. (a) Authority to promulgate regulations for the imple-
entation of the provisions of section 459 shall, insofar as the provi-
sions of such section are applicable to moneys due from (or payable
by)--
(1) the executive branch of the Government (including in such
branch, for the purposes of this subsection, the territories and
possessions of the United States, the United States Postal Service,
The Postal Rate Commission, any wholly owned Federal corpora-
tion created by an Act of Congress, and the government of the
District of Columbia), be vested in the President (or his
designee),
(2) the legislative branch of the Government, be vested jointly
in the President pro tempore of the Senate and the Speaker of
the House of Representatives (or their designees), and
(3) the judicial branch of the Government, be vested in the
Chief Justice of the United States (or his designee).
(b) Regulations promulgated pursuant to this section shall—
(1) in the case of those promulgated by the executive branch
of the Government, include a requirement that the head of each
agency thereof shall cause to be published, in the appendix of the
regulations so promulgated, (A) his designation of an agent or
agents to accept service of process, identified by title of position,
mailing address, and telephone number, and (B) an indication of
the data reasonably required in order for the agency promptly
to identify the individual with respect to whose moneys the legal
process is brought,
(2) in the case of regulations promulgated for the legislative
and judicial branches of the Government set forth, in the appendix
to the regulations so promulgated, (A) the name, position, ad-
dress, and telephone number of the agent or agents who have been
designated for service of process, and (B) an indication of the
1 Section 461 was added by sec. 501(c) of P.L. 95–30.
Revised April 1978
Sec. 462(b)
258-C
data reasonably required in order for such entity promptly to
identify the individual with respect to whose moneys the legal
process is brought, and
(3) provide that (A) in the case of regulations promulgated
by the executive branch of the Government, each head of a gov-
ernmental entity (or his designee) shall respond to relevant in-
terrogatories, if authorized by law of the State in which
legal process will issue, prior to formal issuance of such process,
upon a showing of the applicant's entitlement to child support
or alimony payments, and (B) in the case of regulations promul-
gated for the legislative and judicial branches of the Govern-
ment, the person or persons designated as agents for service of
process in accordance with paragraph (2) shall respond to rele-
vant interrogatories if authorized by the law of the State in
which legal process will issue, prior to formal issuance of legal
process, upon a showing of the applicant's entitlement to child
support or alimony payments.
(c) In the event that a governmental entity, which is authorized
under this section or regulations issued to carry out this section to
accept service of process, pursuant to the provisions of subsection (a),
is served with more than one legal process with respect to the same
moneys due or payable to any individual, then such moneys shall be
available to satisfy such processes on a first-come, first-served basis,
with any such process being satisfied out of such moneys as remain
after the satisfaction of all such processes which have been previously
served.
-
Definitions ¹
Sec. 462. For purposes of section 459-
(a) The term "United States" means the Federal Government of
the United States, consisting of the legislative branch, the judicial
branch, and the executive branch thereof, and each and every depart-
ment, agency, or instrumentality of any such branch, including the
United States Postal Service, the Postal Rate Commission, any wholly
owned Federal corporation created by an Act of Congress, any office,
commission, bureau, or other administrative subdivision or creature
thereof, and the governments of the territories and possessions of the
United States.
(b) The term "child support," when used in reference to the legal
obligations of an individual to provide such support, means periodic
payments of funds for the support and maintenance of a child or chil-
dren with respect to which such individual has such an obligation, and
(subject to and in accordance with State law) includes but is not
1 Section 462 was added by sec. 501 (d) of P.L. 95–30.
Sec. 462(b)
Revised April 1978
258-D
limited to, payments to provide for health care, education, recreation,
clothing, or to meet other specific needs of such a child or children;
such term also includes attorney's fees, interest, and court costs, when
and to the extent that the same are expressly made recoverable as such
pursuant to a decree, order, or judgment issued in accordance with
applicable State law by a court of competent jurisdiction.
(c) The term "alimony," when used in reference to the legal obliga-
tions of an individual to provide the same, means periodic payments
of funds for the support and maintenance of the spouse (or former
spouse) of such individual, and (subject to and in accordance with
State law) includes but is not limited to, separate maintenance, ali-
mony pendente lite, maintenance, and spousal support; such term also
includes attorney's fees, interest, and court costs when and to the extent
that the same are expressly made recoverable as such pursuant to a
decree, order, or judgment issued in accordance with applicable State
law by a court of competent jurisdiction. Such term does not include
any payment or transfer of property or its value by an individual to
his spouse or former spouse in compliance with any community prop-
erty settlement, equitable distribution of property, or other division
of property between spouses or former spouses.
(d) The term "private person" means a person who does not have
sovereign or other special immunity or privilege which causes such
person not to be subject to legal process.
(e) The term "legal process" means any writ, order, summons, or
other similar process in the nature of garnishment, which—
(1) is issued by (A) a court of competent jurisdiction within
any State, territory, or possession of the United States, (B) a
court of competent jurisdiction in any foreign country with which
the United States has entered into an agreement which requires
the United States to honor such process, or (C) an authorized
official pursuant to an order of such a court of competent juris-
diction or pursuant to State or local law, and
(2) is directed to, and the purpose of which is to compel, a
governmental entity, which holds moneys which are otherwise
payable to an individual, to make a payment from such moneys
to another party in order to satisfy a legal obligation of such
individual to provide child support or make alimony payments.
(f) Entitlement of an individual to any money shall be deemed
to be "based upon remuneration for employment," if such money
consists of-
(1) compensation paid or payable for personal services of such
individual, whether such compensation is denominated as wages,
salary, commission, bonus, pay, or otherwise, and includes but is
Revised April 1978
Sec. 462(g)
258-E
not limited to, severance pay, sick pay, and incentive pay, but does
not include awards for making suggestions, or
(2) periodic benefits (including a periodic benefit as defined in
section 228 (h) (3) of this Act) or other payments to such indi-
vidual under the insurance system established by title II of this
Act or any other system or fund established by the United States
(as defined in subsection (a)) which provides for the payment of
pensions, retirement or retired pay, annuities, dependents or sur-
vivors' benefits, or similar amounts payable on account of personal
services performed by himself or any other individual (not includ-
ing any payment as compensation for death under any Federal
program, any payment under any Federal program established
to provide "black lung" benefits, any payment by the Veterans'
Administration as pension, or any payments by the Veterans'
Administration as compensation for a service-connected disability
or death, except any compensation paid by the Veterans' Adminis-
tration to a former member of the Armed Forces who is in receipt
of retired or retainer pay if such former member has waived a
portion of his retired pay in order to receive such compensation),
and does not consist of amounts paid, by way of reimbursement or
otherwise, to such individual by his employer to defray expenses
incurred by such indivual in carrying out duties associated with
his employment.
Ga
(g) In determining the amount of any moneys due from, or pay-
able by, the United States to any individual, there shall be excluded
amounts which-
(1) are owed by such individual to the United States,
(2) are required by law to be, and are, deducted from the
remuneration or other payment involved, including but not limited
to, Federal employment taxes, and fines and forfeitures ordered
by court-martial,
(3) are properly withheld for Federal, State, or local income
tax purposes, if the withholding of such amounts is authorized or
required by law and if amounts withheld are not greater than
would be the case if such individual claimed all dependents to
which he was entitled (the withholding of additional amounts
pursuant to section 3402 (i) of the Internal Revenue Code of 1954
may be permitted only when such individual presents evidence
of a tax obligation which supports the additional withholding),
(4) are deducted as health insurance premiums,
(5) are deducted as normal retirement contributions (not in-
cluding amounts deducted for supplementary coverage), or
(6) are deducted as normal life insurance premiums from
salary or other remuneration for employment (not including
amounts deducted for supplementary coverage).
Revised April 1978
TITLE V-MATERNAL AND CHILD HEALTH AND
CRIPPLED CHILDREN'S SERVICES
Sec. 501. Authorization of Appropriations--.
Sec. 502. Purposes for Which Funds Are Available_
Sec. 503. Allotments to States for Maternal and Child Health Services__
Sec. 504. Allotments to States for Crippled Children's Services__
Sec. 505. Approval of State Plans.
Sec. 506. Payments
Sec. 507. Operation of State Plans___.
Sec. 508. Special Project Grants for Maternity and Infant Care_
Sec. 509. Special Project Grants for Health of School and Preschool
Children
I
I
Sec. 510. Special Project Grants for Dental Health of Children_
Sec. 511. Training of Personnel_.
Sec. 512. Research Projects Relating to Maternal and Child Health Serv-
ices and Crippled Children's Services_.
Sec. 513. Administration
Sec. 514. Definition
Sec. 515. Observance of Religious Beliefs__
Sec. 516. Supplemental Allotments--
Page 1
259
259
260
261
261
264
266
266
1 This table of contents does not appear in the law.
2 Section 501 was amended by sec. 309 (a) of P.L. 95-83.
267
268
269
269
269
270
270
270
Authorization of Appropriations
Sec. 501. For the purpose of enabling each State to extend and
improve (especially in rural areas and in areas suffering from severe
economic distress), as far as practicable under the conditions in such
State,
(1) services for reducing infant mortality and otherwise pro-
moting the health of mothers and children; and
(2) services for locating, and for medical, surgical, corrective,
and other services and care for and facilities for diagnosis, hos-
pitalization, and aftercare for, children who are crippled or who
are suffering from conditions leading to crippling,
there are authorized to be appropriated $250,000,000 for the fiscal
year ending June 30, 1969, $275,000,000 for the fiscal year ending
June 30, 1970, $300,000,000 for the fiscal year ending June 30, 1971,
$325,000,000 for the fiscal year ending June 30, 1972, $350,000,000 for
the fiscal year ending June 30, 1973, and for each of the next four fiscal
years, and $399,864,200 for the fiscal year ending September 30, 1978,
and for each fiscal year thereafter."
Purposes for Which Funds Are Available
Sec. 502. Appropriations pursuant to section 501 shall be available
for the following purposes in the following proportions:
(1) In the case of the fiscal year ending June 30, 1969, and each
of the next 5 fiscal years, (A) 50 percent of the appropriation
(259)
Sec. 502
260
for such year shall be for allotments pursuant to sections 503 and
504; (B) 40 percent thereof shall be for grants pursuant to sec-
tions 508, 509, and 510; and (C) 10 percent thereof shall be for
grants, contracts, or other arrangements pursuant to sections 511
and 512.
(2) In the case of the fiscal year ending June 30, 1975, and
each fiscal year thereafter, (A) 90 percent of the appropria-
tion for such years shall be for allotments pursuant to sections
503 and 504; and (B) 10 percent thereof shall be for grants, con-
tracts, or other arrangements pursuant to sections 511 and 512.
Not to exceed 5 percent of the appropriation for any fiscal year under
this section shall be transferred, at the request of the Secretary, from
one of the purposes specified in paragraph (1) or (2) to another
purpose or purposes so specified. For each fiscal year, the Secretary
shall determine the portion of the appropriation, within the percent-
age determined above to be available for sections 503 and 504, which
shall be available for allotment pursuant to section 503 and the por-
tion thereof which shall be available for allotment pursuant to sec-
tion 504. Notwithstanding the preceding provisions of this section,
of the amount appropriated for any fiscal year pursuant to section 501,
not less than 6 percent of the amount appropriated shall be available
for family planning services from allotments under section 503 and
for family planning services under projects under sections 508 and 512.
Allotments to States for Maternal and Child Health Services
Sec. 503. The amount determined to be available pursuant to sec-
tion 502 for allotments under this section shall be allotted for pay-
ments for maternal and child health services as follows:
(1) One-half of such amount shall be allotted by allotting to
each State $70,000 plus such part of the remainder of such one-
half as he finds that the number of live births in such State bore to
the total number of live births in the United States in the latest
calendar year for which he has statistics.
(2) The remaining one-half of such amount shall (in addition
to the allotments under paragraph (1)) be allotted to the States
from time to time according to the financial need of each State
for assistance in carrying out its State plan, as determined by the
Secretary after taking into consideration the number of live
births in such State; except that not more than 25 percent of such
one-half shall be available for grants to State agencies (admin-
istering or supervising the administration of a State plan ap-
proved under section 505), and to public or other nonprofit insti-
tutions of higher learning (situated in any State), for special
261
Sec. 505(a)
projects of regional or national significance which may contribute
to the advancement of maternal and child health.
Allotments to States for Crippled Children's Services
Sec. 504. The amount determined to be available pursuant to sec-
tion 502 for allotments under this section shall be allotted for pay-
ments for crippled children's services as follows:
(1) One-half of such amount shall be allotted by allotting to
each State $70,000 and allotting the remainder of such one-half
according to the need of each State as determined by him after
taking into consideration the number of crippled children in
such State in need of the services referred to in paragraph (2)
of section 501 and the cost of furnishing such services to them.
(2) The remaining one-half of such amount shall (in addition
to the allotments under paragraph (1)) be allotted to the States
from time to time according to the financial need of each State
for assistance in carrying out its State plan, as determined by the
Secretary after taking into consideration the number of crippled
children in each State in need of the services referred to in para-
graph (2) of section 501 and the cost of furnishing such serv-
ices to them; except that not more than 25 percent of such one-
half shall be available for grants to State agencies (administering
or supervising the administration of a State plan approved under
section 505), and to public or other nonprofit institutions of higher
learning (situated in any State), for special projects of regional
or national significance which may contribute to the advancement
of services for crippled children.
Approval of State Plans
Sec. 505. (a) In order to be entitled to payments from allotments
under section 502, a State must have a State plan for maternal and
child health services and services for crippled children which-
(1) provides for financial participation by the State;
(2) provides for the administration of the plan by the State
health agency or the supervision of the administration of the
plan by the State health agency; except that in the case of those
States which on July 1, 1967, provided for administration (or
supervision thereof) of the State plan approved under section
513 (as in effect on such date) by a State agency other than the
State health agency, the plan of such State may be approved
under this section if it would meet the requirements of this sub-
section except for provision of administration (or supervision
thereof) by such other agency for the portion of the plan relat-
Sec. 505(a)
262
?
ing to services for crippled children, and, in each such case, the
portion of such plan which each such agency administers, or the
administration of which each such agency supervises, shall be re-
garded as a separate plan for purposes of this title;
(3) provides (A) such methods of administration (including
methods relating to the establishment and maintenance of per-
sonnel standards on a merit basis, except that the Secretary shall
exercise no authority with respect to the selection, tenure of
office, and compensation of any individual employed in accord-
ance with such methods) as are necessary for the proper and effi-
cient operation of the plan and (B) provides for the training
and effective use of paid subprofessional staff, with particular
emphasis on the full-time or part-time employment of persons
of low income, as community service aides, in the administration
of the plan and for the use of nonpaid or partially paid volun-
teers in providing services and in assisting any advisory com-
mittees established by the State agency;
C
(4) provides that the State agency will make such reports, in
such form and containing such information, as the Secretary may
from time to time require, and comply with such provisions as he
may from time to time find necessary to assure the correctness and
verification of such reports;
(5) provides for cooperation with medical, health, nursing, ed-
ucational, and welfare groups and organizations and, with respect
to the portion of the plan relating to services for crippled chil-
dren, with any agency in such State charged with administering
State laws providing for vocational rehabilitation of physically
handicapped children;
(6) provides for payment of the reasonable cost of inpatient
hospital services provided under the plan, as determined in ac-
cordance with methods and standards, consistent with section
1122, which shall be developed by the State and included in the
plan, except that the reasonable cost of any such services as de-
termined under such methods and standards shall not exceed the
amount which would be determined under section 1861 (v) as the
reasonable cost of such services for purposes of title XVIII;
(7) provides, with respect to the portion of the plan relating
to services for crippled children, for early identification of chil-
dren in need of health care and services, and for health care and
treatment needed to correct or ameliorate defects or chronic con-
ditions discovered thereby, through provision of such periodic
screening and diagnostic services, and such treatment, care and
other measures to correct or ameliorate defects or chronic condi-
tions, as may be provided in regulations of the Secretary;
-
M
263
Sec. 505(a)
(8) effective July 1, 1974, provides a program (carried out
directly or through grants or contracts) of projects described
in section 508 which offers reasonable assurance, particularly in
areas with concentrations of low-income families, of satisfactorily
helping to reduce the incidence of mental retardation and other
handicapping conditions caused by complications associated with
child bearing and of satisfactorily helping to reduce infant and
maternal mortality;
(9) effective July 1, 1974, provides a program (carried out
directly or through grants or contracts) of projects described
in section 509 which offers reasonable assurance, particularly in
areas with concentrations of low-income families, of satisfactorily
promoting the health of children and youth of school or pre-
school age;
(10) effective July 1, 1974, provides a program (carried out
directly or through grants or contracts) of projects described
in section 510 which offers reasonable assurance, particularly in
areas with concentrations of low-income families, of satisfactorily
promoting the dental health of children and youth of school or
preschool age;
(11) provides for carrying out the purposes specified in sec-
tion 501;
(12) provides for the development of demonstration services
(with special attention to dental care for children and family
planning services for mothers) in needy areas and among groups
in special need;
Ad
(13) provides that, where payment is authorized under the
plan for services which an optometrist is licensed to perform, the
individual for whom such payment is authorized may, to the ex-
tent practicable, obtain such services from an optometrist licensed
to perform such services except where such services are rendered
in a clinic, or another appropriate institution, which does not have
an arrangement with optometrists so licensed;
(14) provides that acceptance of family planning services pro-
vided under the plan shall be voluntary on the part of the indi-
vidual to whom such services are offered and shall not be a pre-
requisite to eligibility for or the receipt of any service under the
plan; and
(15) provides-
(A) that the State health agency, or other appropriate
State medical agency, shall be responsible for establishing a
plan, consistent with regulations prescribed by the Secretary,
for the review by appropriate professional health personnel
of the appropriateness and quality of care and services fur-
Sec. 505(a)
264
nished to recipients of services under the plan and, where
applicable, for providing guidance with respect thereto to the
other State agency referred to in paragraph (2); and
(B) that the State or local agency utilized by the Secre-
tary for the purpose specified in the first sentence of section
1864 (a), or, if such agency is not the State agency which is
responsible for licensing health institutions, the State agency
responsible for such licensing, will perform the function of
determining whether institutions and agencies meet the re-
quirements for participation in the program under the plan
under this title.
(b) The Secretary shall approve any plan which meets the require-
ments of subsection (a).
Payments
Sec. 506. (a) From the sums appropriated therefor and the allot-
ments available under section 503 (1) or 504 (1), as the case may be, the
Secretary shall pay to each State which has a plan approved under
this title, for each quarter, beginning with the quarter commencing
July 1, 1968, an amount, which shall be used exclusively for carry-
ing out the State plan, equal to one-half of the total sum expended
during such quarter for carrying out such plan with respect to ma-
ternal and child health services and services for crippled children,
respectively.
Sta
(b) (1) Prior to the beginning of each quarter, the Secretary shall
estimate the amount to which a State will be entitled under subsection
(a) for such quarter, such estimates to be based on (A) a report filed
by the State containing its estimate of the total sum to be expended.
in such quarter in accordance with the provisions of such subsection,
and stating the amount appropriated or made available by the State
and its political subdivisions for such expenditures in such quarter,
and if such amount is less than the State's proportionate share of the
total sum of such estimated expenditures, the source or sources from
which the difference is expected to be derived, and (B) such other in-
vestigation as the Secretary may find necessary.
(2) The Secretary shall then pay to the State, in such installments
as he may determine, the amount so estimated, reduced or increased to
the extent of any overpayment or underpayment which the Secretary
determines was made under this section to such State for any prior
quarter and with respect to which adjustment has not already been
made under this subsection.
(3) Upon the making of an estimate by the Secretary under this
subsection, any appropriations available for payments under this sec-
tion shall be deemed obligated.
265
Sec 506(f)
:
(c) The Secretary shall also from time to time make payments to
the States from their respective allotments pursuant to section 503 (2)
or 504(2). Payments of grants under sections 503 (2), 504(2), 508,
509, 510, and 511, and of grants, contracts, or other arrangements
under section 512, may be made in advance or by way of reimburse-
ment, and in such installments, as the Secretary may determine; and
shall be made on such conditions as the Secretary finds necessary to
carry out the purposes of the section involved.
(d) The total amount determined under subsections (a) and (b)
and the first sentence of subsection (c) for any fiscal year ending after
June 30, 1968, shall be reduced by the amount by which the sum ex-
pended (as determined by the Secretary) from non-Federal sources
for maternal and child health services and services for crippled chil-
dren for such year is less than the sum expended from such sources.
for such services for the fiscal year ending June 30, 1968. In the case
of any such reduction, the Secretary shall determine the portion
thereof which shall be applied, and the manner of applying such re-
duction, to the amounts otherwise payable from allotments under sec-
tion 503 or section 504.
(e) Notwithstanding the preceding provisions of this section, no
payment shall be made to any State thereunder from the allotments
under section 503 or section 504 for any period after June 30, 1968,
unless the State makes a satisfactory showing that it is extending the
provisions of services, including services for dental care for children
and family planning for mothers, to which such State's plan applies
in the State with a view to making such services available by July 1,
1975, to children and mothers in all parts of the State.
(f) Notwithstanding the preceding provisions of this section, no
payment shall be made to any State thereunder-
(1) with respect to any amount paid for items or services fur-
nished under the plan after December 31, 1972, to the extent that
such amount exceeds the charge which would be determined to
be reasonable for such items or services under the fourth and fifth
sentences of section 1842 (b) (3) ; or
(2) with respect to any amount paid for services furnished
under the plan after December 31, 1972, by a provider or other
person during any period of time, if payment may not be made
under title XVIII with respect to services furnished by such pro-
vider or person during such period of time solely by reason of a
determination by the Secretary under section 1862(d) (1) or un-
der clause (D), (E), or (F) of section 1866 (b) (2) ; or
(3) with respect to any amount expended for inpatient hos-
pital services furnished under the plan to the extent that such
amount exceeds the hospital's customary charges with respect to
Sec. 506(f)
266
such services or (if such services are furnished under the plan
by a public institution free of charge or at nominal charges to the
public) exceeds an amount determined on the basis of those items
(specified in regulations prescribed by the Secretary) included
in the determination of such payment which the Secretary finds
will provide fair compensation to such institution for such serv-
ices; or
1
(4) with respect to any amount expended for services furnished
under the plan by a hospital unless such hospital has in effect a
utilization review plan which meets the requirement imposed by
section 1861 (k) for purposes of title XVIII; and if such hospital
has in effect such a utilization review plan for purposes of title
XVIII, such plan shall serve as the plan required by this subsec-
tion (with the same standards and procedures and the same review
committee or group) as a condition of payment under this title;
the Secretary is authorized to waive the requirements of this para-
graph in any State if the State agency demonstrates to his sat-
isfaction that it has in operation utilization review procedures
which are superior in their effectiveness to the procedures required
under section 1861(k).
(g) For limitation on Federal participation for capital expenditures
which are out of conformity with a comprehensive plan of a State or
areawide planning agency, see section 1122.
Operation of State Plans
Sec. 507. If the Secretary, after reasonable notice and opportunity
for hearing to the State agency administering or supervising the ad-
ministration of the State plan approved under this title, finds—
(1) that the plan has been so changed that it no longer com-
plies with the provisions of section 505; or
(2) that in the administration of the plan there is a failure
to comply substantially with any such provision;
the Secretary shall notify such State agency that further payments
will not be made to the State (or, in his discretion, that payments will
be limited to categories under or parts of the State plan not affected
by such failure), until the Secretary is satisfied that there will no
longer be any such failure to comply. Until he is so satisfied he shall
make no further payments to such State (or shall limit payments to
categories under or parts of the State plan not affected by such
failure).
Special Project Grants for Maternity and Infant Care
Sec. 508. (a) In order to help reduce the incidence of mental retarda-
tion and other handicapping conditions caused by complications as-
C
267
Sec. 509(a)
sociated with childbearing and to help reduce infant and maternal
mortality, the Secretary is authorized to make, from the sums avail-
able under clause (B) of paragraph (1) of section 502, grants to the
State health agency of any State and, with the consent of such agency,
to the health agency of any political subdivision of the State, and to
any other public or nonprofit private agency, institution, or organiza-
tion, to pay not to exceed 75 percent of the cost (exclusive of general
agency overhead) of any project for the provision of—
(1) necessary health care to prospective mothers (including,
after childbirth, health care to mothers and their infants) who
have or are likely to have conditions associated with childbearing
or are in circumstances which increase the hazards to the health
of the mothers or their infants (including those which may cause
physical or mental defects in the infants), or
(2) necessary health care to infants during their first year of
life who have any condition or are in circumstances which in-
crease the hazards to their health, or
(3) family planning services,
but only if the State or local agency determines that the recipient will
not otherwise receive such necessary health care or services because he
is from a low-income family or for other reasons beyond his control.
Acceptance of family planning services provided under a project
under this section (and section 512) shall be voluntary on the part of
the individual to whom such services are offered and shall not be a pre-
requisite to the eligibility for or the receipt of any service under such
project.
(b) No grant may be made under this section for any project for
any period after June 30, 1974.
Special Project Grants for Health of School and Preschool
Children
Sec. 509. (a) In order to promote the health of children and youth
of school or preschool age, particularly in areas with concentrations
of low-income families, the Secretary is authorized to make, from the
sums available under clause (B) of paragraph (1) of section 502,
grants to the State health agency of any State and (with the consent
of such agency) to the health agency of any political subdivision of
the State, to the State agency of the State administering or supervis-
ing the administration of the State plan approved under section 505,
to any school of medicine (with appropriate participation by a school
of dentistry), and to any teaching hospital affiliated with such a school,
to pay not to exceed 75 percent of the cost of projects of a comprehen-
sive nature for health care and services for children and youth of
school age or for preschool children (to help them prepare to start
21-746 O - 78
·
21
Sec. 509(a)
268
school). No project shall be eligible for a grant under this section
unless it provides (1) for the coordination of health care and services.
provided under it with, and utilization (to the extent feasible) of,
other State or local health, welfare, and education programs for such
children, (2) for payment of (A) the reasonable cost (as determined
in accordance with standards, consistent with section 1122, approved
by the Secretary) of inpatient hospital services provided under the
project, or (B) if less, the customary charges with respect to such
services provided under the project, or (C) if such services are fur-
nished under the project by a public institution free of charge or at
nominal charges to the public, an amount determined on the basis of
those items (specified in regulations prescribed by the Secretary) in-
·cluded in the determination of such reasonable cost which the Secre-
tary finds will provide fair compensation to such institution for such
services, and (3) that any treatment, correction of defects, or after-
care provided under the project is available only to children who
would not otherwise receive it because they are from low-income fam-
ilies or for other reasons beyond their control; and no such project
for children and youth of school age shall be considered to be of a
comprehensive nature for purposes of this section unless it includes
(subject to the limitation in the preceding provisions of this sentence)
at least such screening, diagnosis, preventive services, treatment, cor-
rection of defects, and aftercare, both medical and dental, as may be
provided for in regulations of the Secretary.
(b) No grant may be made under this section for any project for
any period after June 30, 1974.
Special Project Grants for Dental Health of Children
Sec. 510. (a) In order to promote the dental health of children
and youth of school or preschool age, particularly in areas with con-
centrations of low-income families, the Secretary is authorized to make
grants, from the sums available under clause (B) of paragraph (1)
of section 502, to the State health agency of any State and (with the
consent of such agency) to the health agency of any political subdi-
vision of the State, and to any other public or nonprofit private agency,
institution, or organization, to pay not to exceed 75 percent of the
cost of projects of a comprehensive nature for dental care and services.
for children and youth of school age or for preschool children. No
project shall be eligible for a grant under this section unless it pro-
vides that any treatment, correction of defects, or aftercare provided
under the project is available only to children who would not other-
wise receive it because they are from low-income families or for other
reasons beyond their control, and unless it includes (subject to the
limitation of the foregoing provisions of this sentence) at least such
269
Sec. 513(a)
I
preventive services, treatment, correction of defects, and aftercare,
for such age groups, as may be provided in regulations of the Secre-
tary. Such projects may also include research looking toward the de-
velopment of new methods of diagnosis or treatment, or demonstration
of the utilization of dental personnel with various levels of training.
(b) No grant may be made under this section for any project for
any period after June 30, 1974.
Training of Personnel
Sec. 511. From the sums available under clause (C) of paragraph
(1) or clause (B) of paragraph (2) of section 502, the Secretary is
authorized to make grants to public or nonprofit private institutions
of higher learning for training personnel for health care and related
services for mothers and children, particularly mentally retarded chil-
dren and children with multiple handicaps. In making such grants the
Secretary shall give special attention to programs providing training
at the undergraduate level.
Research Projects Relating to Maternal and Child Health
Services and Crippled Children's Services
Ma
Sec. 512. From the sums available under clause (C) of paragraph
(1) or clause (B) of paragraph (2) of section 502, the Secretary is
authorized to make grants to or jointly financed cooperative arrange-
ments with public or other nonprofit institutions of higher learning,
and public or nonprofit private agencies and organizations engaged in
research or in maternal and child health or crippled children's pro-
grams, and contracts with public or nonprofit private agencies and or-
ganizations engaged in research or in such programs, for research
projects relating to maternal and child health services or crippled
children's services which show promise of substantial contribution to
the advancement thereof. Effective with respect to grants made and
arrangements entered into after June 30, 1968, (1) special emphasis
shall be accorded to projects which will help in studying the need for,
and the feasibility, costs, and effectiveness of, comprehensive health
care programs in which maximum use is made of health personnel
with varying levels of training, and in studying methods of training
for such programs, and (2) grants under this section may also in-
clude funds for the training of health personnel for work in such
projects.
Administration
Sec. 513. (a) The Secretary of Health, Education, and Welfare
shall make such studies and investigations as will promote the efficient
administration of this title.
Sec. 513(b)
270
(b) Such portion of the appropriations for grants under section
501 as the Secretary may determine, but not exceeding one-half of
1 percent thereof, shall be available for evaluation by the Secretary
(directly or by grants or contracts) of the programs for which such
appropriations are made and, in the case of allotments from any such
appropriation, the amount available for allotments shall be reduced
accordingly.
-
(c) Any agency, institution, or organization shall, if and to the ex-
tent prescribed by the Secretary, as a condition to receipt of grants
under this title, cooperate with the State agency administering or
supervising the administration of the State plan approved under
title XIX in the provision of care and services, available under a plan
or project under this title, for children eligible therefor under such
plan approved under title XIX.
Definition
Sec. 514. For purposes of this title, a crippled child is an indi-
vidual under the age of 21 who has an organic disease, defect, or
condition which may hinder the achievement of normal growth and
development.
Observance of Religious Beliefs
Sec. 515. Nothing in this title shall be construed to require any
State which has any plan or program approved under, or receiving
financial support under, this title to compel any person to undergo any
medical screening, examination, diagnosis, or treatment or to accept
any other health care or services provided under such plan or program
for any purpose (other than for the purpose of discovering and pre-
venting the spread of infection or contagious disease or for the purpose
of protecting environmental health), if such person objects (or, in
case such person is a child, his parent or guardian objects) thereto on
religious grounds.
Supplemental Allotments
Sec. 516. (a) (1) For each fiscal year (commencing with the fiscal
year ending June 30, 1975), there shall (subject to paragraph (2)) be
allotted to each State (from funds appropriated for such fiscal year
pursuant to subsection (b)) an amount, which shall be in addition to
and available for the same purposes as the allotments of such State
(as determined under sections 503 and 504), equal to the excess (if
any) of—
(A) the amount of the allotment of such State (as determined
under sections 503 and 504) for the fiscal year ending June 30,
271
Sec. 516(b)
1973, plus the amounts of any grants to such States under sec-
tions 508, 509, and 510, over
(B) the amount of the allotment of such State (as determined
under sections 503 and 504) for such fiscal year which commences
after June 30, 1973.
(2) No State shall receive an allotment under this section for any
fiscal year, unless such State (in the administration of its State plan,
approved under section 505) has in effect arrangements which the
Secretary finds will provide for the continuation of appropriate serv-
ices to population groups previously receiving services from funds
made available (for the fiscal year ending June 30, 1974) to such State
pursuant to sections 508, 509, and 510.
(b)(1)(A) There are (subject to subparagraph (B)) hereby au-
thorized to be appropriated for each fiscal year (commencing with
the fiscal year ending June 30, 1975) such amounts as may be necessary
to enable the Secretary to make the allotments authorized under sub-
section (a).
(B) Nothing contained in subparagraph (A) shall be construed
to authorize, for any fiscal year, the appropriation under this sub-
section of any amount which is in excess of the amount by which—
(i) the amount authorized to be appropriated under section 501
for such year exceeds
(ii) the total amounts appropriated pursuant to section 501 for
such year.
(2) If, for any fiscal years, the total amount appropriated pursu-
ant to paragraph (1) is less than the total amount allotted to all States
under subsection (a), then the amount of the allotment of each State
(as determined under subsection (a)) shall be reduced to an amount
which bears the same ratio to the total amount appropriated pursuant
to paragraph (1) for such fiscal year as the amount of the allotment
of such State (as determined under subsection (a)) bears to the total
amount allotted to all States under subsection (a) for such fiscal year.
TITLE VI-GRANTS TO STATES FOR SERVICES TO THE
AGED, BLIND, OR DISABLED
=
[Title VI was repealed effective October 1, 1975 by Public Law
93-647. See title XX for social services.]
•
TITLE VII-ADMINISTRATION
Sec. 701. Office of Commissioner of Social Security
Sec. 702. Duties of the Secretery__.
[
Sec. 703. Expenses of the Secretary_-
Sec. 704. Reports
Sec. 705. Training Grants for Public Welfare Personnel.
Sec. 706. Advisory Council on Social Security---
Sec. 707. Grants for Expansion and Development of Undergraduate and
Graduate Programs--
Office of Commissioner of Social Security
Section 701. [Superseded by section 4 of Reorganization Plan No. 1
of 1953. Section 701 provided for an Office of Commissioner for Social
Security. Section 4 of the Plan provides: "There shall be in the De-
partment a Commissioner of Social Security who shall be appointed
by the President by and with the advice and consent of the Senate,
shall perform such functions concerning social security and public
welfare as the Secretary may prescribe, and shall receive compensa-
tion at the rate now or hereafter fixed by law for grade GS-18 of the
general schedule established by the Classification Act of 1949, as
amended." Under subsequent legislation (5 U.S.C. 5315 (97)), the posi-
tion of Commissioner of Social Security is established at level IV of
the Executive Schedule.]
រ
1 This table of contents does not appear in the law.
Page ¹
273
273
273
274
274
276
1
277
Duties of the Secretary
Sec. 702. The Secretary of Health, Education, and Welfare shall
perform the duties imposed upon him by this Act, shall also have
the duty of studying and making recommendations as to the most
effective methods of providing economic security through social in-
surance, and as to legislation and matters of administrative policy
concerning old-age pensions, unemployment compensation, accident
compensation, and related subjects.
Expenses of the Secretary
Sec. 703. The Secretary is authorized to appoint and fix the com-
pensation of such officers and employees, and to make such expendi-
tures, as may be necessary for carrying out his functions under this
Act. Appointments of attorneys and experts may be made without
regard to the civil service laws.
(273)
Sec. 704
274
Reports
Sec. 704. The Secretary shall make a full report to Congress, within
one hundred and twenty days after the beginning of each regular
session, of the administration of the functions with which he is
charged under this Act. In addition to the number of copies of such
report authorized by other law to be printed, there is hereby author-
ized to be printed not more than five thousand copies of such report for
use by the Secretary for distribution to Members of Congress and to
State and other public or private agencies or organizations participat-
ing in or concerned with the social security program.¹
1
Training Grants for Public Welfare Personnel
Sec. 705. (a) In order to assist in increasing the effectiveness and
efficiency of administration of public assistance programs by increas-
ing the number of adequately trained public welfare personnel avail-
able for work in public assistance programs, there are hereby author-
ized to be appropriated for the fiscal year ending June 30, 1963, the
sum of $3,500,000, and for each fiscal year thereafter the sum of
$5,000,000.
(b) Such portion of the sums appropriated pursuant to subsection
(a) for any fiscal year as the Secretary may determine, but not in
excess of $1,000,000 in the case of the fiscal year ending June 30, 1963,
and $2,000,000 in the case of any fiscal year thereafter, shall be avail-
able for carrying out subsection (f). From the remainder of the sums
so appropriated for any fiscal year, the Secretary shall make allot-
ments to the States on the basis of (1) population, (2) relative need
for trained public welfare personnel, particularly for personnel to
provide self-support and self-care services, and (3) financial need.
(c) From each State's allotment under subsection (b), the Secre-
tary shall from time to time pay to such State its costs of carrying out
the purposes of this section through (1) grants to public or other
nonprofit institutions of higher learning for training personnel em-
ployed or preparing for employment in public assistance programs,
(2) special courses of study or seminars of short duration conducted
for such personnel by experts hired on a temporary basis for the pur-
pose, and (3) establishing and maintaining, directly or through grants
to such institutions, fellowships or traineeships for such personnel at
such institutions, with such stipends and allowances as may be per-
mitted under regulations of the Secretary.
Ap
(d) Payments pursuant to subsection (c) shall be made in advance
on the basis of estimates by the Secretary and adjustments may be
made in future payments under this section to take account of over-
payments or underpayments in amounts previously paid.
1 Section 704 was amended by section 33 of P.L. 94–273.
275
Sec. 705(f)
(e) The amount of any allotment to a State under subsection (b)
for any fiscal year which the State certifies to the Secretary will not be
required for carrying out the purposes of this section in such State
shall be available for reallotment from time to time, on such dates as
the Secretary may fix, to other States which the Secretary determines
have need in carrying out such purposes for sums in excess of those
previously allotted to them under this section and will be able to use
such excess amounts during such fiscal year; such reallotments to be
made on the basis provided in subsection (b) for the initial allotments
to the States. Any amount so reallotted to a State shall be deemed part
of its allotment under such subsection.
(f) (1) The portion of the sums appropriated for any fiscal year
which is determined by the Secretary under the first sentence of sub-
section (b) to be available for carrying out this subsection shall be
available to enable him to provide (A) directly or through grants to
or contracts with public or nonprofit private institutions of higher
learning, for training personnel who are employed or preparing for
employment in the administration of public assistance programs, (B)
directly or through grants to or contracts with public or nonprofit
private agencies or institutions, for special courses of study or semi-
nars of short duration (not in excess of one year) for training of such
personnel, and (C) directly or through grants to or contracts with pub-
lic or nonprofit private institutions of higher learning, for establishing
and maintaining fellowships or traineeships for such personnel at
such institutions, with such stipends and allowances as may be per-
mitted by the Secretary.
(2) Payments under paragraph (1) may be made in advance on
the basis of estimates by the Secretary, or may be made by way of re-
imbursement, and adjustments may be made in future payments under
this subsection to take account of overpayments or underpayments in
amounts previously paid.
(3) The Secretary may, to the extent he finds such action to be nec-
essary, prescribe requirements to assure that any individual will repay
the amount of his fellowship or traineeship received under this sub-
section to the extent such individual fails to serve, for the period pre-
scribed by the Secretary, with a State or political subdivision thereof,
or with the Federal Government, in connection with administration
of any State or local public assistance program. The Secretary may
relieve any individual of his obligation to so repay, in whole or in part,
whenever and to the extent that requirement of such repayment would,
in his judgment, be inequitable or would be contrary to the purposes
of any of the public welfare programs established by this Act.
.
Sec. 706(a)
276
Advisory Council on Social Security
Sec. 706. (a) During 1969 (but not before February 1, 1969) and
every fourth year thereafter (but not before February 1 of such fourth
year), the Secretary shall appoint an Advisory Council on Social
Security for the purpose of reviewing the status of the Federal Old-
Age and Survivors Insurance Trust Fund, the Federal Disability
Insurance Trust Fund, the Federal Hospital Insurance Trust Fund,
and the Federal Supplementary Medical Insurance Trust Fund in
relation to the long-term commitments of the old-age, survivors, and
disability insurance program and the programs under parts A and B
of title XVIII, and of reviewing the scope of coverage and the ade-
quacy of benefits under, and all other aspects of, these programs, in-
cluding their impact on the public assistance programs under this Act.
(b) Each such Council shall consist of a Chairman and 12 other
persons, appointed by the Secretary without regard to the provisions
of title 5, United States Code, governing appointments in the competi-
tive service. The appointed members shall, to the extent possible, rep-
resent organizations of employers and employees in equal numbers
and represent self-employed persons and the public.
(c) (1) Any Council appointed hereunder is authorized to engage
such technical assistance, including actuarial services, as may be re-
quired to carry out its functions, and the Secretary shall, in addition,
make available to such Council such secretarial, clerical, and other
assistance and such actuarial and other pertinent data prepared by the
Department of Health, Education, and Welfare as it may require to
carry out such functions.
-
(2) Appointed members of any such Council, while serving on
business of the Council (inclusive of travel time) shall receive com-
pensation at rates fixed by the Secretary, but not exceeding $100 per
day and, while so serving away from their homes or regular places of
business, they may be allowed travel expenses, including per diem in
lieu of subsistence, as authorized by section 5703 of title 5, United
States Code, for persons in the Government employed intermittently.
(d) Each such Council shall submit reports (including any in-
terim reports such Council may have issued) of its findings and rec-
ommendations to the Secretary not later than January 1 of the second
year after the year in which it is appointed, and such reports and
recommendations shall thereupon be transmitted to the Congress and
to the Board of Trustees of each of the Trust Funds. The reports re-
quired by this subsection shall include
(1) a separate report with respect to the old-age, survivors,
and disability insurance program under title II and of the taxes
imposed under sections 1401 (a), 3101(a), and 3111(a) of the
Internal Revenue Code of 1954,
Revised April 1978
277
Sec. 707(d)
(2) a separate report with respect to the hospital insurance
program under part A of title XVIII and of the taxes imposed by
sections 1401 (b), 3101 (b), and 3111 (b) of the Internal Revenue
Code of 1954, and
(3) a separate report with respect to the supplementary medical
insurance program established by part B of title XVIII and of
the financing thereof.
After the date of the transmittal to the Congress of the reports required
by this subsection, the Council shall cease to exist.¹
Grants for Expansion and Development of Undergraduate and
Graduate Programs
Sec. 707. (a) There is authorized to be appropriated $5,000,000
for the fiscal year ending June 30, 1969, and $5,000,000 for each of
the three succeeding fiscal years, for grants by the Secretary to public
or nonprofit private colleges and universities and to accredited grad-
uate schools of social work or an association of such schools to meet
part of the costs of development, expansion, or improvement of (re-
spectively) undergraduate programs in social work and programs
for the graduate training of professional social work personnel, in-
cluding the costs of compensation of additional faculty and admin-
istrative personnel and minor improvements of existing facilities. Not
less than one-half of the sums appropriated for any fiscal year under
the authority of this subsection shall be used by the Secretary for
grants with respect to undergraduate programs.
(b) In considering applications for grants under this section, the
Secretary shall take into account the relative need in the States for
personnel trained in social work and the effect of the grants thereon.
(c) Payment of grants under this section may be made (after
necessary adjustments on account of previously made overpayments
or underpayments) in advance or by way of reimbursement, and on
such terms and conditions and in such installments, as the Secretary
may determine.
-
1 See also sec. 372 of P.L. 95-216 which is printed in this document on p. 816.
wal
(d) For purposes of this section-
(1) the term "graduate school of social work" means a de-
partment, school, division, or other administrative unit, in a
public or nonprofit private college or university, which provides,
primarily or exclusively, a program of education in social work
and allied subjects leading to a graduate degree in social work;
(2) the term "accredited" as applied to a graduate school of
social work refers to a school which is accredited by a body or
Sec. 707(d)
278
Revised April 1978
bodies approved for the purpose by the Commissioner of Educa-
tion or with respect to which there is evidence satisfactory to the
Secretary that it will be so accredited within a reasonable time;
and
(3) the term "nonprofit" as applied to any college or university
refers to a college or university which is a corporation or asso-
ciation, or is owned and operated by one or more corporations or
associations, no part of the net earnings of which inures, or may
lawfully inure, to the benefit of any private shareholder or
individual.
Delivery of Benefit Checks
Sec. 708. (a) If the day regularly designated for the delivery of
benefit checks under title II or title XVI falls on a Saturday, Sunday,
or legal public holiday (as defined in section 6103 of title 5, United
States Code) in any month, the benefit checks which would otherwise
be delivered on such day shall be mailed for delivery on the first day
preceding such day which is not a Saturday, Sunday, or legal public
holiday (as so defined), without regard to whether the delivery of
such checks would as a result have to be made before the end of the
month for which such checks are issued.
(b) If more than the correct amount of payment under title II or
XVI is made to any individual as a result of the receipt of a benefit
check pursuant to subsection (a) before the end of the month for
which such check is issued, no action shall be taken (under section
204 or 1631 (b) or otherwise) to recover such payment or the incor-
rect portion thereof."
TITLE VIII-TAXES WITH RESPECT TO EMPLOYMENT
[Note. The provisions of this title are now contained in, and are superseded
by, chapter 21 of the Internal Revenue Code of 1954.]
1 Section 708 was added by sec. 333 of P.L. 95-216.
1
TITLE IX—MISCELLANEOUS PROVISIONS RELATING TO
EMPLOYMENT SECURITY
Sec. 901. Employment Security Administration Account.
(a) Establishment of Account_
(b) Appropriations to Account.
(c) Administrative Expenditures_
(d) Additional Tax Attributable to Reduced Credits_.
(e) Revolving Fund_.
(f) Determination of Excess and Amount To Be Retained
in Employment Security Administration Account_.___.
Sec. 902. Transfers Between Federal Unemployment Account and Em-
ployment Security Administration Account_
(a) Transfers to Federal Unemployment Account__
(b) Transfers to Employment Security Administration Ac-
count
(c) Report to the Congress___
Sec. 903. Amounts Transferred to State Accounts__
(a) In General___.
(b) Limitations on Transfers_.
(c) Use of Transferred Amounts.
Sec. 904. Unemployment Trust Fund---
(a) Establishment, etc---
(b) Investments
I
Sec. 906. Unemployment Compensation Research Program_
Sec. 907. Personnel Training--
Sec. 908. Federal Advisory Council__.
I
I
1
(c) Sale or Redemption of Obligations_
(d) Treatment of Interest and Proceeds.
(e) Separate Book Accounts__.
(f) Payments to State Agencies and Railroad Retirement
Board
I
(g) Federal Unemployment Account__.
Sec. 905. Extended Unemployment Compensation Account-
(a) Establishment of Account..
(b) Transfers to Account__
(c) Transfers to State Accounts..
(d) Advances to Extended Unemployment Compensation
Account and Repayment..
1 This table of contents does not appear in the law.
Employment Security Administration Account
Page 1
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279
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280
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282
283
285
285
285
285
286
286
286
287
288
288
288
288
288
288
290
290
291
291
291
292
292
292
293
294
Establishment of Account
Section 901. (a) There is hereby established in the Unemployment
Trust Fund an employment security administration account.
Appropriations to Account
(b) (1) There is hereby appropriated to the Unemployment Trust
Fund for credit to the employment security administration account,
out of any moneys in the Treasury not otherwise appropriated, for
the fiscal year ending June 30, 1961, and for each fiscal year there-
after, an amount equal to 100 per centum of the tax (including inter-
(279)
Sec. 901(b)
280
est, penalties, and additions to the tax) received during the fiscal year
under the Federal Unemployment Tax Act and covered into the
Treasury.
(2) The amount appropriated by paragraph (1) shall be transferred
at least monthly from the general fund of the Treasury to the Unem-
ployment Trust Fund and credited to the employment security admin-
istration account. Each such transfer shall be based on estimates made
by the Secretary of the Treasury of the amounts received in the Treas-
ury. Proper adjustments shall be made in the amounts subsequently
transferred, to the extent prior estimates (including estimates for the
fiscal year ending June 30, 1960) were in excess of or were less than
the amounts required to be transferred.
(3) The Secretary of the Treasury is directed to pay from time to
time from the employment security administration account into the
Treasury, as repayments to the account for refunding internal revenue
collections, amounts equal to all refunds made after June 30, 1960, of
amounts received as tax under the Federal Unemployment Tax Act
(including interest on such refunds).
Administrative Expenditures
(c) (1) There are hereby authorized to be made available for expend-
iture out of the employment security administration account for the
fiscal year ending June 30, 1971, and for each fiscal year thereafter-
(A) such amounts (not in excess of the applicable limit pro-
vided by paragraph (3) and, with respect to clause (ii), not in
excess of the limit provided by paragraph (4)) as the Congress
may deem appropriate for the purpose of—
(i) assisting the States in the administration of their un-
employment compensation laws as provided in title III
(including administration pursuant to agreements under any
Federal unemployment compensation law),
(ii) the establishment and maintenance of systems of public
employment offices in accordance with the Act of June 6, 1933,
as amended (29 U.S.C., secs. 49-49n), and
(iii) carrying into effect section 2003 of title 38 of the
United States Code;
(B) such amounts (not in excess of the limit provided by para-
graph (4) with respect to clause (iii)) as the Congress may deem
appropriate for the necessary expenses of the Department of Labor
for the performance of its functions under-
(i) this title and titles III and XII of this Act,
(ii) the Federal Unemployment Tax Act,
(iii) the provisions of the Act of June 6, 1933, as amended,
(iv) chapter 41 (except section 2003) of title 38 of the
United States Code, and
281
Sec. 901(c)
(v) any Federal unemployment compensation law.
The term "necessary expenses" as used in this subparagraph (B)
shall include the expense of reimbursing a State for salaries and
other expenses of employees of such State temporarily assigned or
detailed to duty with the Department of Labor and of paying such
employees for travel expenses, transportation of household goods,
and per diem in lieu of subsistence while away from their regular
duty stations in the State, at rates authorized by law for civilian em-
ployees of the Federal Government.
(2) The Secretary of the Treasury is directed to pay from the em-
ployment security administration account into the Treasury as miscel-
laneous receipts the amount estimated by him which will be expended
during a three-month period by the Treasury Department for the
performance of its functions under-
(A) this title and titles III and XII of this Act, including the
expenses of banks for servicing unemployment benefit payment
and clearing accounts which are offset by the maintenance of
balances of Treasury funds with such banks,
(B) the Federal Unemployment Tax Act, and
(C) any Federal unemployment compensation law with re-
spect to which responsibility for administration is vested in the
Secretary of Labor.
If it subsequently appears that the estimates under this paragraph in
any particular period were too high or too low, appropriate adjust-
ments shall be made by the Secretary of the Treasury in future
payments.
(3)(A) For purposes of paragraph (1)(A), the limitation
on the amount authorized to be made available for any fiscal year after
June 30, 1970, is, except as provided in subparagraph (B) and in the
second sentence of section 901(f) (3) (A), an amount equal to 95 per-
cent of the amount estimated and set forth in the budget of the United
States Government for such fiscal year as the amount by which the net
receipts during such year under the Federal Unemployment Tax Act
will exceed the amount transferred under section 905 (b) during such
year to the extended unemployment compensation account.
(B) The limitation established by subparagraph (A) is increased
by any unexpended amount retained in the employment security ad-
ministration account in accordance with section 901(f) (2) (B).
(C) Each estimate of net receipts under this paragraph shall be
based upon (i) a tax rate of 0.5 percent in the case of any calendar
year for which the rate of tax under section 3301 of the Federal
Unemployment Tax Act is 3.2 percent, and (ii) a tax rate of 0.7 per-
cent in the case of any calendar year for which the rate of tax under
such section 3301 is 3.4 percent.¹
1 Subparagraph (C) was amended by section 211(e)(1) of P.L. 94–566.
Sec. 901(c)
282
(4) For purposes of paragraphs (1)(A)(ii) and (1)(B) (iii)
the amount authorized to be made available out of the employment
security administration account for any fiscal year after June 30, 1972,
shall reflect the proportion of the total cost of administering the sys-
tem of public employment offices in accordance with the Act of June 6,
1933, as amended, and of the necessary expenses of the Department
of Labor for the performance of its functions under the provisions of
such Act, as the President determines is an appropriate charge to the
employment security administration account, and reflects in his annual
budget for such year. The President's determination, after consulta-
tion with the Secretary, shall take into account such factors as the
relationship between employment subject to State laws and the total
labor force in the United States, the number of claimants and the
number of job applicants, and such other factors as he finds relevant.
Additional Tax Attributable to Reduced Credits
(d) (1) The Secretary of the Treasury is directed to transfer from
the employment security administration account—
(A) To the Federal unemployment account, an amount equal
to the amount by which-
(i) 100 per centum of the additional tax received under
the Federal Unemployment Tax Act with respect to any
State by reason of the reduced credits provisions of section
3302(c)(3) of such Act and covered into the Treasury for
the repayment of advances made to the State under section
1201, exceeds
(ii) the amount transferred to the account of such State
pursuant to subparagraph (B) of this paragraph.
Any amount transferred pursuant to this subparagraph shall be
credited against, and shall operate to reduce, that balance of
advances, made under section 1201 to the State, with respect to
which employers paid such additional tax.
(B) To the account (in the Unemployment Trust Fund) of
the State with respect to which employers paid such additional
tax an amount equal to the amount by which such additional tax
received and covered into the Treasury exceeds that balance of
advances, made under section 1201 to the State, with respect to
which employers paid such additional tax.
(2) Transfers under this subsection shall be as of the beginning of
the month succeeding the month in which the moneys were credited to
the employment security administration account pursuant to subsec-
tion (b)(2).
Revolving Fund
(e) (1) There is hereby established in the Treasury a revolving fund
which shall be available to make the advances authorized by this sub-
283
Sec. 901(f)
section. There are hereby authorized to be appropriated, without fiscal
year limitation, to such revolving fund such amounts as may be neces-
sary for the purposes of this section.
(2) The Secretary of the Treasury is directed to advance from time
to time from the revolving fund to the employment security admin-
istration account such amounts as may be necessary for the purposes
of this section. If the net balance in the employment security adminis-
tration account as of the beginning of any fiscal year equals 40 percent
of the amount of the total appropriation by the Congress out of the
employment security administration account for the preceding fiscal
year, no advance may be made under this subsection during such fiscal
year.
(3) Advances to the employment security administration account.
made under this subsection shall bear interest until repaid at a rate
equal to the average rate of interest (computed as of the end of the
calendar month next preceding the date of such advance) borne by all
interest-bearing obligations of the United States then forming a part
of the public debt; except that where such average rate is not a mul-
tiple of one-eighth of 1 per centum, the rate of interest shall be the
multiple of one-eighth of 1 per centum next lower than such average
rate.
(4) Advances to the employment security administration account
made under this subsection, plus interest accrued thereon, shall be
repaid by the transfer from time to time, from the employment
security administration account to the revolving fund, of such amounts
as the Secretary of the Treasury, in consultation with the Secretary
of Labor, determines to be available in the employment security ad-
ministration account for such repayment. Any amount transferred as
a repayment under this paragraph shall be credited against, and
shall operate to reduce, any balance of advances (plus accrued inter-
est) repayable under this subsection.
Determination of Excess Amount To Be Retained in Employment Security
Administration Account
(f) (1) The Secretary of the Treasury shall determine as of the
close of each fiscal year (beginning with the fiscal year ending June 30,
1961) the excess in the employment security administration account.
(2) (A) Except as provided in subparagraph (B), the excess in the
employment security administration account as of the close of any
fiscal year is the amount by which the net balance in such account as
of such time (after the application of section 902 (b) and section 901
(f) (3)(C)) exceeds the net balance in the employment security ad-
ministration account as of the beginning of that fiscal year (includ-
ing the fiscal year for which the excess is being computed) for which
21-746 O 78 22
-
-
Sec. 901(f)
284
the net balance was higher than as of the beginning of any other such
fiscal year.
(B) With respect to the fiscal years ending June 30, 1970, June 30,
1971, and June 30, 1972, the balance in the employment security
administration account at the close of each such fiscal year shall not
be considered excess but shall be retained in the account for use as
provided in paragraph (1) of subsection (c).
(3) (A) The excess determined as provided in paragraph (2) as of
the close of any fiscal year after June 30, 1972, shall be retained (as of
the beginning of the succeeding fiscal year) in the employment secu-
rity administration account until the amount in such account is equal
to 40 percent of the amount of the total appropriation by the Congress
out of the employment security administration account for the fiscal
year for which the excess is determined. Three-eighths of the amount
in the employment security administration account as of the beginning
of any fiscal year after June 30, 1972, or $150 million, whichever is the
lesser, is authorized to be made available for such fiscal year pursuant
to subsection (c) (1) for additional costs of administration due to an
increase in the rate of insured unemployment for a calendar quarter
of at least 15 percent over the rate of insured unemployment for the
corresponding calendar quarter in the immediately preceding year.¹
1
(B) If the entire amount of the excess determined as provided in
paragraph (2) as of the close of any fiscal year after June 30, 1972, is
not retained in the employment security administration account, there
shall be transferred (as of the beginning of the succeeding fiscal year)
to the extended unemployment compensation account the balance of
such excess or so much thereof as is required to increase the amount
in the extended unemployment compensation account to the limit pro-
vided in section 905 (b) (2).
(C) If as of the close of any fiscal year after June 30, 1972, the
amount in the extended unemployment compensation account exceeds
the limit provided in section 905(b)(2), such excess shall be trans-
ferred to the employment security administration account as of the
close of such fiscal year.
(4) For the purposes of this section, the net balance in the employ-
ment security administration account as of any time is the amount in
such account as of such time reduced by the sum of—
(A) the amounts then subject to transfer pursuant to subsec-
tion (d), and
(B) the balance of advances (plus interest accrued thereon)
then repayable to the revolving fund established by subsection
(e).
1 Subparagraph (A) was amended by section 39 of P.L. 94-273.
285
Sec. 902(c)
The net balance in the employment security administration account
as of the beginning of any fiscal year shall be determined after the
disposition of the excess in such account as of the close of the preced-
ing fiscal year.
Transfers Between Federal Unemployment Account and
Employment Security Administration Account
Transfers to Federal Unemployment Account
Sec. 902. (a) Whenever the Secretary of the Treasury determines
pursuant to section 901 (f) that there is an excess in the employment
security administration account as of the close of any fiscal year and
the entire amount of such excess is not retained in the employment
security administration account or transferred to the extended un-
employment compensation account as provided in section 901 (f) (3),
there shall be transferred (as of the beginning of the succeeding fiscal
year) to the Federal unemployment account the balance of such ex-
cess or so much thereof as is required to increase the amount in the
Federal unemployment account to whichever of the following is the
greater:
(1) $550 million, or
(2) the amount (determined by the Secretary of Labor and
certified by him to the Secretary of the Treasury) equal to one-
eighth of 1 percent of the total wages subject (determined with-
out any information on amount) to contributions under all State
unemployment compensation laws for the calendar year ending
during the fiscal year for which the excess is determined.
Transfers to Employment Security Administration Account
(b) The amount, if any, by which the amount in the Federal un-
employment account as of the close of any fiscal year exceeds the
greater of the amounts specified in paragraphs (1) and (2) of sub-
section (a) shall be transferred to the employment security adminis-
tration account as of the close of such fiscal year.
Report to the Congress
(c) Whenever the Secretary of Labor has reason to believe that
in the next fiscal year the employment security administration ac-
count will reach the limit provided for such account in section 901 (f)
(3) (A), and the Federal unemployment account will reach the limit
provided for such account in section 902 (a), and the extended unem-
ployment compensation account will reach the limit provided for such
account in section 905 (b) (2), he shall, after consultation with the
Secretary of the Treasury, so report to the Congress with a recom-
mendation for appropriate action by the Congress.
Sec. 903(a)
286
Amounts Transferred to State Accounts
In General
Sec. 903. (a) (1) If as of the close of any fiscal year after the
fiscal year ending June 30, 1972, the amount in the extended unem-
ployment compensation account has reached the limit provided in sec-
tion 905 (b) (2) and the amount in the Federal unemployment account
has reached the limit provided in section 902 (a) and all advances pur-
suant to section 905 (d) and section 1203 have been repaid, and there
remains in the employment security administration account any
amount over the amount provided in section 901 (f) (3) (A), such ex-
cess amount, except as provided in subsection (b), shall be transferred
(as of the beginning of the succeeding fiscal year) to the accounts of
the States in the Unemployment Trust Fund.
-
(2) Each State's share of the funds to be transferred under this
subsection as of any October 1-
(A) shall be determined by the Secretary of Labor and certi-
fied by him to the Secretary of the Treasury before that date on
the basis of reports furnished by the States to the Secretary of
Labor before September 1, and
(B) shall bear the same ratio to the total amount to be so
transferred as the amount of wages subject to contributions under
such State's unemployment compensation law during the preced-
ing calendar year which have been reported to the State before
August 1 bears to the total of wages subject to contributions under
all State unemployment compensation laws during such calendar
year which have been reported to the States before August 1.¹
gol
Limitation on Transfers
(b) (1) If the Secretary of Labor finds that on October 1 of any
fiscal year-
(A) a State is not eligible for certification under section 303, or
(B) the law of a State is not approvable under section 3304
of the Federal Unemployment Tax Act,
then the amount available for transfer to such State's account shall,
in lieu of being so transferred, be transferred to the Federal unem-
ployment account as of the beginning of such October 1. If, during the
fiscal year beginning on such October 1, the Secretary of Labor finds.
and certifies to the Secretary of the Treasury that such State is eligible
for certification under section 303, that the law of such State is ap-
provable under such section 3304, or both, the Secretary of the Treasury
1 Paragraph (2) was amended by sections 2(20), 3(23) and 23 of P.L. 94–273.
287
Sec. 903(c)
shall transfer such amount from the Federal unemployment account to
the account of such State. If the Secretary of Labor does not so find
and certify to the Secretary of the Treasury before the close of such
fiscal year then the amount which was available for transfer to such
State's account as of October 1 of such fiscal year shall (as of the close
of such fiscal year) become unrestricted as to use as part of the Federal
unemployment account.¹
1
(2) The amount which, but for this paragraph, would be trans-
ferred to the account of a State under subsection (a) or paragraph (1)
of this subsection shall be reduced (but not below zero) by the balance
of advances made to the State under section 1201. The sum by which
such amount is reduced shall-
(A) be transferred to or retained in (as the case may be) the
Federal unemployment account, and
(B) be credited against, and operate to reduce
(i) first, any balance of advances made before the date of
the enactment of the Employment Security Act of 1960 to
the State under section 1201, and
(ii) second, any balance of advances made on or after
such date to the State under section 1201.
(3) [Repealed.]
Use of Transferred Amounts
(c) (1) Except as provided in paragraph (2), amounts transferred
to the account of a State pursuant to subsections (a) and (b) shall be
used only in the payment of cash benefits to individuals with respect
to their unemployment, exclusive of expenses of administration.
(2) A State may, pursuant to a specific appropriation made by the
legislative body of the State, use money withdrawn from its account
in the payment of expenses incurred by it for the administration of
its unemployment compensation law and public employment offices if
and only if—
(A) the purposes and amounts were specified in the law mak-
ing the appropriation,
(B) the appropriation law did not authorize the obligation of
such money after the close of the two-year period which began on
the date of enactment of the appropriation law,
(C) the money is withdrawn and the expenses are incurred
after such date of enactment, and
(D) the appropriation law limits the total amount which may
be obligated during a twelve-month period (as prescribed in the
law of the State), or during a transitional period of less than
¹ Paragraph (1) was amended by section 3(23) of P.L. 94–273.
Sec. 903(c)
288
twelve months caused by a change in the twelve-month period (as
prescribed in the law of the State), to an amount which does not
exceed the amount by which (i) the aggregate of the amounts
transferred to the account of such State pursuant to subsections
(a) and (b) during such twelve-month period or transitional
period of less than twelve months and the twenty-four preceding
twelve-month periods (including the transitional period of less
than twelve months if it is within such twenty-four twelve-month
periods) exceeds (ii) the aggregate of the amounts used by the
State pursuant to this subsection and charged against the amounts
transferred to the account of such State during such twenty-four
twelve-month periods (and the transitional period of less than
twelve months if it is within the twenty-four twelve-month
periods).
For the purposes of subparagraph (D), amounts used by a State
during any twelve-month period or transitional period of less than
twelve months shall be charged against equivalent amounts which
were transferred and which have not previously been so charged;
except that no amount obligated for administration during any such
period may be charged against any amount transferred during a
twelve-month period or transitional period of less than twelve months
earlier than the twenty-fourth preceding twelve-month period (in-
cluding the transitional period of less than twelve months if it is
within such twenty-four twelve-month periods).¹
Unemployment Trust Fund
Establishment, etc.
Sec. 904. (a) There is hereby established in the Treasury of the
United States a trust fund to be known as the "Unemployment Trust
Fund", hereinafter in this title called the "Fund". The Secretary of
the Treasury is authorized and directed to receive and hold in the
Fund all moneys deposited therein by a State agency from a State
unemployment fund, or by the Railroad Retirement Board to the
credit of the railroad unemployment insurance account or the railroad
unemployment insurance administration fund, or otherwise deposited
in or credited to the Fund or any account therein. Such deposit may
be made directly with the Secretary of the Treasury, with any de-
positary designated by him for such purpose, or with any Federal
Reserve Bank.
Investments
(b) It shall be the duty of the Secretary of the Treasury to invest
such portion of the Fund as is not, in his judgment, required to meet
1 Paragraph (2) was amended by section 41 of P.L. 94–273.
289
Sec. 904(e)
current withdrawals. Such investments may be made only in interest-
bearing obligations of the United States or in obligations guaranteed
as to both principal and interest by the United States. For such pur-
pose such obligations may be acquired (1) on original issue at the
issue price, or (2) by purchase of outstanding obligations at the
market price. The purposes for which obligations of the United States
may be issued under the Second Liberty Bond Act, as amended, are
hereby extended to authorize the issuance at par of special obliga-
tions exclusively to the Fund. Such special obligations shall bear in-
terest at a rate equal to the average rate of interest, computed as of
the end of the calendar month next preceding the date of such issue,
borne by all interest-bearing obligations of the United States then
forming part of the public debt; except that where such average rate
is not a multiple of one-eighth of 1 per centum, the rate of interest
of such special obligations shall be the multiple of one-eighth of 1 per
centum next lower than such average rate. Obligations other than such
special obligations may be acquired for the Fund only on such terms
as to provide an investment yield not less than the yield which would
be required in the case of special obligations if issued to the Fund
upon the date of such acquisition. Advances made to the Federal un-
employment account pursuant to section 1203 shall not be invested.
Sale or Redemption of Obligations
(c) Any obligations acquired by the Fund (except special obliga-
tions issued exclusively to the Fund) may be sold at the market price,
and such special obligations may be redeemed at par plus accrued
interest.
Treatment of Interest and Proceeds
(d) The interest on, and the proceeds from the sale or redemption
of, any obligations held in the Fund shall be credited to and form a
part of the Fund.
Separate Book Accounts
(e) The Fund shall be invested as a single fund, but the Secretary
of the Treasury shall maintain a separate book account for each State
agency, the employment security administration account, the Federal
unemployment account, the railroad unemployment insurance account,
and the railroad unemployment insurance administration fund and
shall credit quarterly (on March 31, June 30, September 30, and De-
cember 31, of each year) to each account, on the basis of the average
daily balance of such account, a proportionate part of the earnings of
the Fund for the quarter ending on such date. For the purpose of this
subsection the average daily balance shall be computed-
(1) in the case of any State account, by reducing (but not below
K
Sec. 904(e)
290
zero) the amount in the account by the balance of advances made
to the State under section 1201, and
(2) in the case of the Federal unemployment account-
(A) by adding to the amount in the account the aggregate
of the reductions under paragraph (1), and
(B) by subtracting from the sum so obtained the balance
of advances made under section 1203 to the account.
Payments to State Agencies and Railroad Retirement Board
(f) The Secretary of the Treasury is authorized and directed to
pay out of the Fund to any State agency such amount as it may duly
requisition, not exceeding the amount standing to the account of such
State agency at the time of such payment. The Secretary of the
Treasury is authorized and directed to make such payments out of the
railroad unemployment insurance account for the payment of bene-
fits, and out of the railroad unemployment insurance administration
fund for the payment of administrative expenses, as the Railroad
Retirement Board may duly certify, not exceeding the amount stand-
ing to the credit of such account or such fund, as the case may be, at
the time of such payment.
Federal Unemployment Account
(g) There is hereby established in the Unemployment Trust Fund
a Federal unemployment account. There is hereby authorized to be
appropriated to such Federal unemployment account a sum equal to
(1) the excess of taxes collected prior to July 1, 1946, under title IX
of this Act or under the Federal Unemployment Tax Act, over the
total unemployment administrative expenditures made prior to
July 1, 1946, plus (2) the excess of taxes collected under the Federal
Unemployment Tax Act after June 30, 1946, and prior to July 1, 1953,
over the unemployment administrative expenditure made after
June 30, 1946, and prior to July 1, 1953. As used in this subsection, the
term "unemployment administrative expenditures" means expendi-
tures for grants under title III of this Act, expenditures for the
administration of that title by the Social Security Board, the Federal
Security Administrator, or the Secretary of Labor, and expenditures
for the administration of title IX of this Act, or of the Federal Un-
employment Tax Act, by the Department of the Treasury, the Social
Security Board, the Federal Security Administrator, or the Secretary
of Labor. For the purposes of this subsection, there shall be deducted
from the total amount of taxes collected prior to July 1, 1943, under
title IX of this Act, the sum of $40,561,886.43 which was authorized
to be appropriated by the Act of August 24, 1937 (50 Stat. 754), and
291
Sec. 905(b)
the sum of $18,451,846 which was authorized to be appropriated by
section 11(b) of the Railroad Unemployment Insurance Act.
Extended Unemployment Compensation Account
Establishment of Account
Sec. 905. (a) There is hereby established in the Unemployment
Trust Fund an extended unemployment compensation account. For
the purposes provided for in section 904(e), such account shall be
maintained as a separate book account.
Transfers to Account
(b) (1) Except as provided by paragraph (3), the Secretary of
the Treasury shall transfer (as of the close of July 1970, and each
month thereafter), from the employment security administration ac-
count to the extended unemployment compensation account estab-
lished by subsection (a), an amount determined by him to be equal,
in the case of any month before April 1972, to one-fifth, and in the
case of any month after March 1972, to one-tenth, of the amount by
which-
(A) transfers to the employment security administration ac-
count pursuant to section 901 (b) (2) during such month, exceed
(B) payments during such month from the employment secu-
rity administration account pursuant to section 901 (b) (3)
and (d).
If for any such month the payments referred to in subparagraph (B)
exceed the transfers referred to in subparagraph (A), proper adjust-
ments shall be made in the amounts subsequently transferred. In the
case of any month after March 1973 and before April of the first
calendar year to which paragraph (2) of section 3301 of the Federal
Unemployment Tax Act applies, the first sentence of this paragraph
shall be applied by substituting "five-fourteenths" for "one-tenth.” ¹
(2) Whenever the Secretary of the Treasury determines pursuant
to section 901(f) that there is an excess in the employment security
administration account as of the close of any fiscal year beginning
after June 30, 1972, there shall be transferred (as of the beginning
of the succeeding fiscal year) to the extended unemployment com-
pensation account the total amount of such excess or so much thereof
as is required to increase the amount in the extended unemployment
compensation account to whichever of the following is the greater:
(A) $750,000,000, or
(B) the amount (determined by the Secretary of Labor and
certified by him to the Secretary of the Treasury) equal to one-
eighth of 1 percent of the total wages subject (determined with-
1 Paragraph (1) was amended by section 211(e) (2) of P.L. 94-566.
Sec. 905(b)
292
out any limitation on amount) to contributions under all State
unemployment compensation laws for the calendar year ending
during the fiscal year for which the excess is determined.
(3) The Secretary of the Treasury shall make no transfer pursuant
to paragraph (1) as of the close of any month if he determines that
the amount in the extended unemployment compensation account is
equal to (or in excess of) the limitation provided in paragraph (2).
Transfers to State Accounts
(c) Amounts in the extended unemployment compensation account
shall be available for transfer to the accounts of the States in the Un-
employment Trust Fund as provided in section 204 (e) of the Federal-
State Extended Unemployment Compensation Act of 1970.
Advances to Extended Unemployment Compensation Account and Repayment
(d) There are hereby authorized to be appropriated, without fiscal
year limitation, to the extended unemployment compensation account,
as repayable advances (without interest), such sums as may be neces-
sary to carry out the purposes of the Federal-State Extended Un-
employment Compensation Act of 1970. Amounts appropriated as
repayable advances shall be repaid, without interest, by transfers
from the extended unemployment compensation account to the gen-
eral fund of the Treasury, at such times as the amount in the extended
unemployment compensation account is determined by the Secretary
of the Treasury, in consultation with the Secretary of Labor, to be
adequate for such purpose. Any amount transferred as a repayment
under this subsection shall be credited against, and shall operate to
reduce, any balance of advances repayable under this subsection.
Unemployment Compensation Research Program
Sec. 906. (a) The Secretary of Labor shall-
(1) establish a continuing and comprehensive program of
research to evaluate the unemployment compensation system.
Such research shall include, but not be limited to, a program of
factual studies covering the role of unemployment compensation
under varying patterns of unemployment including those in sea-
sonal industries, the relationship between the unemployment
compensation and other social insurance programs, the effect of
State eligibility and disqualification provisions, the personal
characteristics, family situations, employment background and
experience of claimants, with the results of such studies to be
made public; and
(2) establish a program of research to develop information
(which shall be made public) as to the effect and impact of ex-
293
Sec. 907(c)
tending coverage to excluded groups with first attention to agri-
cultural labor.
(b) To assist in the establishment and provide for the continua-
tion of the comprehensive research program relating to the unem-
ployment compensation system, there are hereby authorized to be ap-
propriated for the fiscal year ending June 30, 1971, and for each
fiscal year thereafter, such sums, not to exceed $8,000,000, as may
be necessary to carry out the purposes of this section. From the
sums authorized to be appropriated by this subsection the Secretary
may provide for the conduct of such research through grants or
contracts.
Personnel Training
Sec. 907. (a) In order to assist in increasing the effectiveness
and efficiency of administration of the unemployment compensation
program by increasing the number of adequately trained personnel,
the Secretary of Labor shall-
(1) provide directly, through State agencies, or through con-
tracts with institutions of higher education or other qualified
agencies, organizations, or institutions, programs and courses de-
signed to train individuals to prepare them, or improve their qual-
ifications, for service in the administration of the unemployment
compensation program, including claims determinations and ad-
judication, with such stipends and allowances as may be permitted
under regulations of the Secretary;
(2) develop training materials for and provide technical assist-
ance to the State agencies in the operation of their training
programs;
(3) under such regulations as he may prescribe, award fellow-
ships and traineeships to persons in the Federal-State employ-
ment security agencies, in order to prepare them or improve their
qualifications for service in the administration of the unemploy-
ment compensation program.
▸
(b) The Secretary may, to the extent that he finds such action to
be necessary, prescribe requirements to assure that any person receiv-
ing a fellowship, traineeship, stipend or allowance shall repay the
costs thereof to the extent that such person fails to serve in the Federal-
State employment security program for the period prescribed by the
Secretary. The Secretary may relieve any individual of his obligation
to so repay, in whole or in part, whenever and to the extent that such
repayment would, in his judgment, be inequitable or would be con-
trary to the purposes of any of the programs established by this
section.
(c) The Secretary, with the concurrence of the State, may detail
Federal employees to State unemployment compensation administra-
Sec. 907(c)
294
tion and the Secretary may concur in the detailing of State employees
to the United States Department of Labor for temporary periods for
training or for purposes of unemployment compensation administra-
tion, and the provisions of section 507 of the Elementary and Second-
ary Education Act of 1965 (79 Stat. 27) or any more general program
of interchange enacted by a law amending, supplementing or replac-
ing section 507 shall apply to any such assignment.
(d) There are hereby authorized to be appropriated for the fiscal
year ending June 30, 1971, and for each fiscal year thereafter such
sums, not to exceed $5,000,000, as may be necessary to carry out the
purposes of this section.
Federal Advisory Council
Sec. 908. (a) The Secretary of Labor shall establish a Federal
Advisory Council, of not to exceed 16 members including the chair-
man, for the purpose of reviewing the Federal-State program of un-
employment compensation and making recommendations to him for
improvement of the system.
(b) The Council shall be appointed by the Secretary without regard
to the civil service laws and shall consist of men and women who shall
be representatives of employers and employees in equal numbers, and
the public.
(c) The Secretary may make available to the Council an Executive
Secretary and secretarial, clerical, and other assistance, and such perti-
nent data prepared by the Department of Labor, as it may require to
carry out its functions.
(d) Members of the Council shall, while serving on business of the
Council, be entitled to receive compensation at rates fixed by the Sec-
retary, but not exceeding $100 per day, including travel time; and
while so serving away from their homes or regular places of business,
they may be allowed travel expenses, including per diem in lieu of
subsistence, as authorized by 5 U.S.C. 5703 (b) for persons in govern-
ment service employed intermittently.
(e) The Secretary shall encourage the organization of similar State
advisory councils.
(f) There are hereby authorized to be appropriated for the fiscal
year ending June 30, 1971, and for each fiscal year thereafter such
sums, not to exceed $100,000, as may be necessary to carry out the
purposes of this section.
TITLE X-GRANTS TO STATES FOR AID TO THE BLIND¹
Sec. 1001. Appropriation_
Sec. 1002. State Plans for Aid to the Blind_
Sec. 1003. Payment to States--
Sec. 1004. Operation of State Plans__
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295
295
297
302
302
302
Sec. 1005. Appropriation for Administration_
Sec. 1006. Definition of "Aid to the Blind".
Appropriation
Section 1001. For the purpose of enabling each State to furnish
financial assistance, as far as practicable under the conditions in such
State, to needy individuals who are blind and of encouraging each
State, as far as practicable under such conditions, to furnish rehabili-
tation and other services to help such individuals attain or retain.
capability for self-support or self-care, there is hereby authorized to
be appropriated for each fiscal year a sum sufficient to carry out the
purposes of this title. The sums made available under this section
shall be used for making payments to States which have submitted,
and had approved by the Secretary of Health, Education, and Wel-
fare, State plans for aid to the blind.
State Plans for Aid to the Blind
Sec. 1002. (a) A State plan for aid to the blind must (1) except
to the extent permitted by the Secretary with respect to services, pro-
vide that it shall be in effect in all political subdivisions of the State,
and, if administered by them, be mandatory upon them; (2) provide
for financial participation by the State; (3) either provide for the
establishment or designation of a single State agency to administer the
plan, or provide for the establishment or designation of a single State
agency to supervise the administration of the plan; (4) provide (A)
for granting an opportunity for a fair hearing before the State agency
to any individual whose claim for aid to the blind is denied or is not
acted upon with reasonable promptness, and (B) that if the State plan
is administered in each of the political subdivisions of the State by a
local agency and such local agency provides a hearing at which evi-
dence may be presented prior to a hearing before the State agency,
1 P.L. 92-603, sec. 303 repealed title X effective January 1, 1974, but such repeal does
not apply to Puerto Rico, Guam, and the Virgin Islands.
* This table of contents does not appear in the law.
(295)
Sec. 1002(a)
296
such local agency may put into effect immediately upon issuance its
decision upon the matter considered at such hearing; (5) provide
(A) such methods of administration (including after January 1, 1940,
methods relating to the establishment and maintenance of personnel
standards on a merit basis, except that the Secretary shall exercise no
authority with respect to the selection, tenure of office, and compensa-
tion of any individual employed in accordance with such methods) as
are found by the Secretary to be necessary for the proper and efficient
operation of the plan, and (B) for the training and effective use of
paid subprofessional staff, with particular emphasis on the full-time
or part-time employment of recipients and other persons of low-in-
come, as community service aides, in the administration of the plan
and for the use of nonpaid or partially paid volunteers in a social
service volunteer program in providing services to applicants and re-
cipients and in assisting any advisory committees established by the
State agency; (6) provide that the State agency will make such re-
ports, in such form and containing such information, as the Secretary
may from time to time require, and comply with such provisions as
the Secretary may from time to time find necessary to assure the cor-
rectness and verification of such reports; and (7) provide that no aid
will be furnished any individual under the plan with respect to any
period with respect to which he is receiving old-age assistance under
the State plan approved under section 2 of this Act or aid to families
with dependent children under the State plan approved under section
402 of this Act; (8) provide that the State agency shall, in determin-
ing need, take into consideration any other income and resources of the
individual claiming aid to the blind, as well as any expenses reason-
ably attributable to the earning of any such income, except that, in
making such determination, the State agency (A) shall disregard the
first $85 per month of earned income, plus one-half of earned income
in excess of $85 per month, (B) shall, for a period not in excess of
twelve months, and may, for a period not in excess of thirty-six months,
disregard such additional amounts of other income and resources, in
the case of an individual who has a plan for achieving self-support
approved by the State agency, as may be necessary for the fulfillment
of such plan, and (C) may, before disregarding the amounts referred
to in clauses (A) and (B), disregard not more than $7.50 of any
income; (9) provide safeguards which permit the use or disclosure
of information concerning applicants or recipients only (A) to public
officials who require such information in connection with their official
duties, or (B) to other persons for purposes directly connected with
the administration of the State plan; (10) provide that, in determin-
ing whether an individual is blind, there shall be an examination by a
physician skilled in diseases of the eye or by an optometrist, which-
ever the individual may select; (11) effective July 1, 1951, provide that
297
Sec. 1003 (a)
all individuals wishing to make application for aid to the blind shall
have opportunity to do so, and that aid to the blind shall be furnished
with reasonable promptness to all eligible individuals; (12) effective
July 1, 1953, provide, if the plan includes payments to individuals in
private or public institutions, for the establishment or designation of a
State authority or authorities which shall be responsible for establish-
ing and maintaining standards for such institutions; and (13) provide
a description of the services (if any) which the State agency makes
available (using whatever internal organizational arrangement it finds
appropriate for this purpose) to applicants for and recipients of aid
to the blind to help them attain self-support or self-care, including a
description of the steps taken to assure, in the provision of such serv-
ices, maximum utilization of other agencies providing similar or re-
lated services.
(b) The Secretary shall approve any plan which fulfills the condi-
tions specified in subsection (a), except that he shall not approve any
plan which imposes, as a condition of eligibility for aid to the blind
under the plan-
-
(1) Any residence requirement which excludes any resident of
the State who has resided therein five years during the nine years
immediately preceding the application for aid and has resided
therein continuously for one year immediately preceding the ap-
plication; or
(2) Any citizenship requirement which excludes any citizen of
the United States. At the option of the State, the plan may pro-
vide that manuals and other policy issuances will be furnished to
persons without charge for the reasonable cost of such materials,
but such provision shall not be required by the Secretary as a
condition for the approval of such plan under this title.
In the case of any State (other than Puerto Rico and the Virgin Is-
lands) which did not have on January 1, 1949, a State plan for aid
to the blind approved under this title, the Secretary shall approve a
plan of such State for aid to the blind for purposes of this title, even
though it does not meet the requirements of clause (8) of subsection
(a) of this section, if it meets all other requirements of this title for
an approved plan for aid to the blind; but payments under section
1003 shall be made, in the case of any such plan, only with respect
to expenditures thereunder which would be included as expenditures
for the purposes of section 1003 under a plan approved under this sec-
tion without regard to the provisions of this sentence.
Payments to States
Sec. 1003. (a) From the sums appropriated therefor, the Secretary
of the Treasury shall pay to each State which has an approved plan for
Sec. 1003 (a)
298
aid to the blind, for each quarter, beginning with the quarter commenc-
ing October 1, 1958—
(1) in the case of any State other than Puerto Rico, the Vir-
gin Islands, and Guam, an amount equal to the sum of the fol-
lowing proportions of the total amounts expended during such
quarter as aid to the blind under the State plan (including ex-
penditures for premiums under part B of title XVIII for indi-
viduals who are recipients of money payments under such plan
and other insurance premiums for medical or any other type of
remedial care or the cost thereof)-
(A) 3137 of such expenditures, not counting so much of
any expenditure with respect to any month as exceeds the
product of $37 multiplied by the total number of recipients
of aïd to the blind for such month (which total number, for
purposes of this subsection, means (i) the number of indi-
viduals who received aid to the blind in the form of money
payments for such month, plus (ii) the number of other in-
dividuals with respect to whom expenditures were made in
such month as aid to the blind in the form of medical or any
other type of remedial care); plus
(B) the Federal percentage of the amount by which such
expenditures exceed the maximum which may be counted
under clause (A), not counting so much of any expenditure
with respect to any month as exceeds the product of $75
multiplied by the total number of such recipients of aid to
the blind for such month; and
(2) in the case of Puerto Rico, the Virgin Islands, and Guam
an amount equal to one-half of the total of the sums expended
during such quarter as aid to the blind under the State plan (in-
cluding expenditures for premiums under part B of title XVIII
for individuals who are recipients of money payments under such
plan and other insurance premiums for medical or any other type
of remedial care or the cost thereof), not counting so much of any
expenditure with respect to any month as exceeds $37.50 multi-
plied by the total number of recipients of aid to the blind for such
month; and
(3) in the case of any State whose State plan approved under
section 1002 meets the requirements of subsection (c) (1) an
amount equal to the sum of the following proportions of the total
amounts expended during such quarter as found necessary by the
Secretary of Health, Education, and Welfare for the proper and
efficient administration of the State plan-
(A) 75 per centum of so much of such expenditures as are
for-
299
Sec. 1003 (a)
(i) services which are prescribed pursuant to subsec-
tion (c)(1) and are provided (in accordance with the
next sentence) to applicants for or recipients of aid to the
blind to help them attain or retain capability for self-
support or self-care, or
(ii) other services, specified by the Secretary as likely
to prevent or reduce dependency, so provided to such
applicants or recipients, or
21-746 O - 78
(iv) the training (including both short- and long-term
training at educational institutions through grants to
such institutions or by direct financial assistance to stu-
dents enrolled in such institutions) of personnel em-
ployed or preparing for employment by the State agency
or by the local agency administering the plan in the po-
litical subdivision; plus
(B) one-half of so much of such expenditures (not in-
cluded under subparagraph (A)) as are for services provided
(in accordance with the next sentence) to applicants for or
recipients of aid to the blind, and to individuals requesting
such services who (within such period or periods as the Secre-
tary may prescribe) have been or are likely to become appli-
cants for or recipients of such aid; plus
23
(iii) any of the services prescribed pursuant to sub-
section (c) (1), and of the services specified as provided
in clause (ii), which the Secretary may specify as ap-
propriate for individuals who, within such period or
periods as the Secretary may prescribe, have been or are
likely to become applicants for or recipients of aid to
the blind, if such services are requested by such individ-
uals and are provided to such individuals in accordance
with the next sentence, or
(C) one-half of the remainder of such expenditures.
The services referred to in subparagraph (A) and (B) shall, ex-
cept to the extent specified by the Secretary, include only—
(D) services provided by the staff of the State agency,
or of the local agency administering the State plan in the
political subdivision: Provided, That no funds authorized
under this title shall be available for services defined as voca-
tional rehabilitation services under the Vocational Rehabili-
tation Act (i) which are available to individuals in need of
them under programs for their rehabilitation carried on
under a State plan approved under such Act, or (ii) which
the State agency or agencies administering or supervising
Sec. 1003 (a)
300
the administration of the State plan approved under such Act
are able and willing to provide if reimbursed for the cost
thereof pursuant to agreement under subparagraph (E), if
provided by such staff, and
(E) prescribed by the Secretary, under conditions which
shall be services which in the judgment of the State agency
cannot be as economically or as effectively provided by the
staff of such State or local agency and are not otherwise rea-
sonably available to individuals in need of them, and which
are provided, pursuant to agreement with the State agency,
by the State health authority or the State agency or agencies
administering or supervising the administration of the State
plan for vocational rehabilitation services approved under
the Vocational Rehabilitation Act or by any other State
agency which the Secretary may determine to be appropriate
(whether provided by its staff or by contract with public
(local) or nonprofit private agencies);
except that services described in clause (ii) of subparagraph (D)
hereof may be provided only pursuant to agreement with such
State agency or agencies administering or supervising the admin-
istration of the State plan for vocational rehabilitation services.
so approved. The portion of the amount expended for administra-
tion of the State plan to which subparagraph (A) applies and the
portion thereof to which subparagraphs (B) and (C) apply
shall be determined in accordance with such methods and pro-
cedures as may be permitted by the Secretary; and
(4) in the case of any State whose State plan approved under
section 1002 does not meet the requirements of subsection (c) (1),
an amount equal to one-half of the total of the sums expended
during such quarter as found necessary by the Secretary for the
proper and efficient administration of the State plan, including
services referred to in paragraph (3) and provided in accordance
with the provisions of such paragraph.
(b) The method of computing and paying such amounts shall be
as follows:
(1) The Secretary of Health, Education, and Welfare shall,
prior to the beginning of each quarter, estimate the amount to be
paid to the State for such quarter under the provisions of subsec-
tion (a), such estimate to be based on (A) a report filed by the
State containing its estimate of the total sum to be expended in
such quarter in accordance with the provisions of such subsection,
and stating the amount appropriated or made available by the
State and its political subdivisions for such expenditures in such
quarter, and if such amount is less than the State's proportionate
301
Sec. 1003 (c)
share of the total sum of such estimated expenditures, the source
or sources from which the difference is expected to be derived,
(B) records showing the number of blind individuals in the State,
and (C) such other investigation as the Secretary may find
necessary.
(2) The Secretary of Health, Education, and Welfare shall
then certify to the Secretary of the Treasury the amount so esti-
mated by the Secretary of Health, Education, and Welfare, (A)
reduced or increased, as the case may be, by any sum by which the
Secretary of Health, Education, and Welfare finds that his esti-
mate for any prior quarter was greater or less than the amount
which should have been paid to the State under subsection (a) for
such quarter, and (B) reduced by a sum equivalent to the pro rata
share to which the United States is equitably entitled, as deter-
mined by the Secretary of Health, Education, and Welfare, of the
net amount recovered during a prior quarter by the State or any
political subdivision thereof with respect to aid to the blind fur-
nished under the State plan; except that such increases or reduc-
tions shall not be made to the extent that such sums have been
applied to make the amount certified for any prior quarter greater
or less than the amount estimated by the Secretary of Health,
Education, and Welfare for such prior quarter: Provided, That
any part of the amount recovered from the estate of a deceased
recipient which is not in excess of the amount expended by the
State or any political subdivision thereof for the funeral expenses
of the deceased shall not be considered as a basis for reduction
under clause (B) of this paragraph.
(3) The Secretary of the Treasury shall thereupon, through
the Fiscal Service of the Treasury Department, and prior to
audit or settlement by the General Accounting Office, pay to the
State, at the time or times fixed by the Secretary of Health,
Education, and Welfare, the amounts so certified.
(c) (1) In order for a State to qualify for payments under para-
graph (3) of subsection (a), its State plan approved under section
1002 must provide that the State agency shall make available to appli-
cants for or recipients of aid to the blind at least those services to
help them attain or retain capability for self-support or self-care
which are prescribed by the Secretary.
(2) In the case of any State whose State plan included a provision
meeting the requirements of paragraph (1), but with respect to which
the Secretary finds, after reasonable notice and opportunity for hear-
ings to the State agency administering or supervising the administra-
tion of such plan, that-
(A) the provision has been so changed that it no longer com-
plies with the requirements of paragraph (1), or
Sec. 1003 (c)
302
(B) in the administration of the plan there is a failure to com-
ply substantially with such provision,
the Secretary shall notify such State agency that further payments
will not be made to the State under paragraph (3) of subsection (a)
until he is satisfied that there will no longer be any such failure to
comply. Until the Secretary is so satisfied further payments with
respect to the administration of such State plan shall not be made
under paragraph (3) of subsection (a) but shall instead be made, sub-
ject to the other provisions of this title, under paragraph (4) of such
subsection.
Operation of State Plans
Sec. 1004. In the case of any State plan for aid to the blind which
has been approved by the Secretary of Health, Education, and Wel-
fare, if the Secretary, after reasonable notice and opportunity for
hearing to the State agency administering or supervising the adminis-
tration of such plan, finds—
(1) that the plan has been so changed as to impose any resi-
dence or citizenship requirement prohibited by section 1002 (b),
or that in the administration of the plan any such prohibited
requirement is imposed, with the knowledge of such State agency,
in a substantial number of cases; or
(2) that in the administration of the plan there is a failure
to comply substantially with any provision required by section
1002 (a) to be included in the plan;
the Secretary shall notify such State agency that further payments
will not be made to the State (or, in his discretion, that payments will
be limited to categories under or parts of the State plan not affected
by such failure) until the Secretary is satisfied that such prohibited
requirement is no longer so imposed, and that there is no longer any
such failure to comply. Until he is so satisfied he shall make no further
payments to such State (or shall limit payments to categories under
or parts of the State plan not affected by such failure).
Administration
Sec. 1005. Executed. Authorized appropriation for administrative
expenses of the Social Security Board for the fiscal year ending
June 30, 1936.
Definition
Sec. 1006. For the purpose of this title, the term "aid to the blind"
means money payments to, or (if provided in or after the third month
before the month in which the recipient makes application for aid)
medical care in behalf of or any type of remedial care recognized under
State law in behalf of, blind individuals who are needy, but does not
include any such payments to or care in behalf of any individual who
303
Sec. 1006
is an inmate of a public institution (except as a patient in a medical
institution) or any individual who is a patient in an institution for
tuberculosis or mental diseases. Such term also includes payments
which are not included within the meaning of such term under the
preceding sentence, but which would be so included except that they
are made on behalf of such a needy individual to another individual
who (as determined in accordance with standards prescribed by the
Secretary) is interested in or concerned with the welfare of such needy
individual, but only with respect to a State whose State plan approved
under section 1002 includes provision for-
(1) determination by the State agency that such needy indi-
vidual has, by reason of his physical or mental condition, such
inability to manage funds that making payments to him would
be contrary to his welfare and, therefore, it is necessary to provide
such aid through payments described in this sentence;
(2) making such payments only in cases in which such pay-
ments will, under the rules otherwise applicable under the State
plan for determining need and the amount of aid to the blind to
be paid (and in conjunction with other income and resources),
meet all the need of the individuals with respect to whom such
payments are made;
(3) undertaking and continuing special efforts to protect the
welfare of such individual and to improve, to the extent possible,
his capacity for self-care and to manage funds;
(4) periodic review by such State agency of the determina-
tion under paragraph (1) to ascertain whether conditions justify-
ing such determination still exist, with provision for termination
of such payments if they do not and for seeking judicial appoint-
ment of a guardian or other legal representative, as described in
section 1111, if and when it appears that such action will best
serve the interests of such needy individual; and
(5) opportunity for a fair hearing before the State agency on
the determination referred to in paragraph (1) for any indi-
vidual with respect to whom it is made.
At the option of a State (if its plan approved under this title so
provides), such term (i) need not include money payments to an indi-
vidual who has been absent from such State for a period in excess of
90 consecutive days (regardless of whether he has maintained his
residence in such State during such period) until he has been present
in such State for 30 consecutive days in the case of such an individual
who has maintained his residence in such State during such period or
90 consecutive days in the case of any other such individual and (ii)
may include rent payments made directly to a public housing agency
on behalf of a recipient or a group or groups of recipients of aid under
such plan.
:
7
Revised April 1978
TITLE XI-GENERAL PROVISIONS AND PROFESSIONAL
STANDARDS REVIEW
PART A-GENERAL PROVISIONS
Sec. 1101. Definitions
Sec. 1102. Rules and Regulations__
Sec. 1103. Separability
Sec. 1104. Reservation of Power.
Sec. 1105. Short Title__
Sec. 1106. Disclosure of Information in Possession of Department_.
Sec. 1107. Penalty for Fraud-.
Sec. 1108. Limitation on Payments to Puerto Rico, the Virgin Islands,
and Guam____
mat
Sec. 1109. Amounts Disregarded Not To Be Taken Into Account in
Determining Eligibility of Other Individuals___
Sec. 1110. Cooperative Research or Demonstration Projects___
Sec. 1111. Public Assistance Payments to Legal Representatives.
Sec. 1112. Medical Care Guides and Reports for Public Assistance and
Medical Assistance__.
Sec. 1113. Assistance for United States Citizens Returned From Foreign
Countries
Sec. 1114. Appointment of Advisory
Council and Other Advisory
Groups
Sec. 1115. Demonstration Projects__.
Sec. 1116. Administrative and Judicial Review of Certain Administrative
Determinations
SEC. 1117. [Repealed.]
Sec. 1118. Alternative Federal Payment With Respect to Public Assist-
ance Expenditures__
Sec. 1119. Federal Participation in Payments for Repairs to Home Owned
by Recipient of Aid or Assistance__.
Sec. 1120. Approval of Certain Projects__
Sec. 1121. Uniform Reporting Systems for Health Services Facilities and
Organizations
Sec. 1122. Limitation on Federal Participation for Capital Expenditures__
Sec. 1123. Program for Determining Qualifications for Certain Health Care
Personnel
Sec. 1124. Disclosure of Ownership and Related Information__
Sec. 1125. Issuance of Subpenas by Comptroller General_
Sec. 1126. Disclosure by Institutions, Organizations, and Agencies of
Owners and Certain Other Individuals Who Have Been
Convicted of Certain Offenses.
Sec. 1130. [Repealed]
Sec. 1131. Notification of Social Security Claimant With Respect to De-
ferred Vested Benefits___
PART B-PROFESSIONAL STANDARDS REVIEW
Sec. 1151. Declaration of Purpose___
Sec. 1152. Designation of Professional Standards Review Organizations__
Sec. 1153. Review Pending Designation of Professional Standards Review
Organizations
Sec. 1154. Trial Period for Professional Standards Review Organizations_
Sec. 1155. Duties and Functions of Professional Standards Review Or-
ganizations
1 This table of contents does not appear in the law.
Page 1
306
308
308
308
308
308
310
311
312
312
313
313
313
314
316
317
318
318
319
319
319
323
324
324
324
324
324
325
326
329
329
330
(305)
Sec. 1101(a)
Revised April 1978
306
Sec. 1156. Norms of Health Care Services for Various Illnesses or Health
Conditions
Sec. 1157. Submission of Reports by Professional Standards Review Or-
ganizations
Sec. 1158. Requirement of Review Approval as Condition of Payment of
Claims
Sec. 1159. Hearings and Review by Secretary.
Sec. 1160. Obligations of Health Care Practitioners and Providers of
Health Care Services; Sanctions and Penalties; Hearings
and Review_.
Sec. 1161. Notice to Practitioner or Provider_
Sec. 1162. Statewide Professional Standards Review Councils; Advisory
Groups to Such Councils____
Sec. 1163. National Professional Standards Review Council___
Sec. 1164. Application of This Part to Certain State Programs Receiving
Federal Financial Assistance__
Sec. 1165. Correlation of Functions Between Professional Standards Re-
view Organizations and Administrative Instrumentalities__
Sec. 1166. Prohibition Against Disclosure of Information_.
Sec. 1167. Limitation on Liability for Persons Providing Information, and
for Members and Employees of Professional Standards Re-
view Organizations, and for Health Care Practitioners and
Providers
Sec. 1168. Authorization for Use of Certain Funds to Administer the
Provisions of This Part..
Sec. 1169. Technical Assistance to Organizations Desiring To Be Desig-
nated as Professional Standards Review Organizations_
Sec. 1170. Exemptions of Christian Science Sanatoriums____
Sec. 1171. Memorandums of Understanding; Federal-State Relations
Generally
Sec. 1172. Annual Reports_.
Sec. 1173. Medical Officers in American Samoa, the Northern Mariana
Islands, and the Trust Territory of the Pacific Islands To
Be Included in the Professional Standards Review Program_
Part A-General Provisions
Page¹
333
335
335
336
337
339
339
341
342
343
343
343
344
345
345
346
346
346
Definitions
Sec. 1101. (a) When used in this Act-
(1) The term "State", except where otherwise provided, includes
the District of Columbia and the Commonwealth of Puerto Rico, and
when used in titles IV, V, VII, XI, and XIX includes the Virgin
Islands and Guam. Such term when used in titles III, IX, and XII
also includes the Virgin Islands. Such term when used in title V and
in part B of this title also includes American Samoa and the Trust Ter-
ritory of the Pacific Islands. In the case of Puerto Rico, the Virgin
Islands, and Guam, title I, X, and XIV, and title XVI, (as in effect
without regard to the amendment made by section 301 of the Social
Security Amendments of 1972) shall continue to apply, and the term
"States" when used in such titles (but not in title XVI as in effect
pursuant to such amendment after December 31, 1973) includes Puerto
Rico, the Virgin Islands, and Guam.2
GUN
¹ This table of contents does not appear in the law.
2 Paragraph (1) was amended by section 116(a) of P.L. 94-566 and by sec. 5(e) (2) of
P.L. 95-142.
Revised April 1978
307
Sec. 1101(a)
(2) The term "United States" when used in a geographical sense
means, except when otherwise provided, the States.
(3) The term "person" means an individual, a trust or estate, a
partnerhip, or a corporation.
(4) The term "corporation" includes associations, joint-stock com-
panies, and insurance companies.
(5) The term "shareholder" includes a member in an association,
joint-stock company, or insurance company.
(6) The term "Secretary", except when the context otherwise re-
quires, means the Secretary of Health, Education, and Welfare.
(7) The terms "physician" and "medical care" and "hospitaliza-
tion" include osteopathic practitioners or the services of osteopathic
practitioners and hospitals within the scope of their practice as de-
fined by State law.
(8) (A) The "Federal percentage" for any State (other than
Puerto Rico, the Virgin Islands, and Guam) shall be 100 per centum
less the State percentage; and the State percentage shall be that per-
centage which bears the same ratio to 50 per centum as the square of
the per capita income of such State bears to the square of the per
capita income of the United States; except that the Federal percent-
age shall in no case be less than 50 per centum or more than 65 per
centum.
(B) The Federal percentage for each State (other than Puerto
Rico, the Virgin Islands, and Guam) shall be promulgated by the
Secretary between October 1 and November 30 of each even-num-
bered year, on the basis of the average per capita income of each
State and of the United States for the three most recent calendar
years for which satisfactory data are available from the Department
of Commerce. Such promulgation shall be conclusive for each of the
eight quarters in the period beginning October 1 next succeeding
such promulgation: Provided, That the Secretary shall promulgate
such percentage as soon as possible after the enactment of the Social
Security Amendments of 1958, which promulgation shall be con-
clusive for each of the eleven quarters in the period beginning Octo-
ber 1, 1958, and ending with the close of June 30, 1961.1
(C) The term "United States" means (but only for purposes of
subparagraphs (A) and (B) of this paragraph) the fifty States and
the District of Columbia.
(D) Promulgations made before satisfactory data are available
from the Department of Commerce for a full year on the per capita
income of Alaska shall prescribe a Federal percentage for Alaska of
50 per centum and, for purposes of such promulgations, Alaska shall
not be included as part of the "United States." Promulgations made
thereafter but before per capita income data for Alaska for a full
¹ Paragraph (B) was amended by section 22 of P.L. 94-273.
!
⠀
Revised April 1978
Sec. 1101(c)
307-A
three-year period are available from the Department of Commerce
shall be based on satisfactory data available therefrom for Alaska for
such one full year or, when such data are available for a two-year
period, for such two years.
(9) The term "shared health facility" means any arrangement
whereby-
(A) two or more health care practitioners practice their pro-
fessions at a common physical location ;
(B) such practitioners share (i) common waiting areas, ex-
amining rooms, treatment rooms, or other space, (ii) the services
of supporting staff, or (iii) equipment;
(C) such practitioners have a person (who may himself be a
practitioner) -
(i) who is in charge of, controls, manages, or supervises
substantial aspects of the arrangement or operation for the
delivery of health or medical services at such common physi-
cal location, other than the direct furnishing of professional
health care services by the practitioners to their patients; or
(ii) who makes available to such practitioners the services
of supporting staff who are not employees of such practi-
tioners;
and who is compensated in whole or in part, for the use of such
common physical location or support services pertaining thereto,
on a basis related to amounts charged or collected for the services
rendered or ordered at such location or on any basis clearly
unrelated to the value of the services provided by the person; and
(D) at least one of such practitioners received payments on a
fee-for-service basis under titles V, XVIII, and XIX in an
amount exceeding $5,000 for any one month during the preceding
12 months or in an aggregate amount exceeding $40,000 during
the preceding 12 months;
except that such term does not include a provider of services (as de-
fined in section 1861 (u) of this Act), a health maintenance organiza-
tion (as defined in section 1301 (a) of the Public Health Service Act),
a hospital cooperative shared services organization meeting the re-
quirements of section 501 (e) of the Internal Revenue Code of 1954,
or any public entity.1
(b) The terms "includes" and "including" when used in a definition
contained in this Act shall not be deemed to exclude other things
otherwise within the meaning of the term defined.
(c) Whenever under this Act or any Act of Congress, or under the
law of any State, an employer is required or permitted to deduct any
amount from the remuneration of an employee and to pay the amount
1 Paragraph (9) was added by sec. 5(c) (2) of P.L. 95–142.
Sec. 1101(c)
308
deducted to the United States, a State, or any political subdivision
thereof, then for the purposes of this Act the amount so deducted shall
be considered to have been paid to the employee at the time of such
deduction.
(d) Nothing in this Act shall be construed as authorizing any Fed-
eral official, agent, or representative, in carrying out any of the pro-
visions of this Act, to take charge of any child over the objections of
either of the parents of such child, or of the person standing in loco
parentis to such child.
Rules and Regulations
Sec. 1102. The Secretary of the Treasury, the Secretary of Labor,
and the Secretary of Health, Education, and Welfare, respectively,
shall make and publish such rules and regulations, not inconsistent
with this Act, as may be necessary to the efficient administration of
the functions with which each is charged under this Act.
Separability
Sec. 1103. If any provision of this Act, or the application thereof to
any person or circumstance, is held invalid, the remainder of the Act
and the application of such provision to other persons or circum-
stances shall not be affected thereby.
Reservation of Power
Sec. 1104. The right to alter, amend, or repeal any provision of this
Act is hereby reserved to the Congress.
Short Title
Sec. 1105. This Act may be cited as the "Social Security Act."
Disclosure of Information in Possession of Department
Sec. 1106. (a) No disclosure of any return or portion of a return
(including information returns and other written statements) filed
with the Commissioner of Internal Revenue under title VIII of the
Social Security Act or under subchapter E of chapter 1 or subchapter
A of chapter 9 of the Internal Revenue Code of 1939, or under chapter
2 or 21 or, pursuant thereto, under subtitle F of the Internal Revenue
Code of 1954, or under regulations made under authority thereof,
which has been transmitted to the Secretary of Health, Education,
and Welfare by the Commissioner of Internal Revenue, or of any
file, record, report, or other paper, or any information, obtained at any
time by the Secretary or by any officer or employee of the Department
of Health, Education, and Welfare in the course of discharging the
309
Sec. 1106(d)
duties of the Secretary under this Act, and no disclosure of any such
file, record, report, or other paper, or information, obtained at any
time by any person from the Secretary or from any officer or employee
of the Department of Health, Education, and Welfare, shall be made
except as the Secretary may by regulations prescribe and except as
provided in part D of title IV of this Act. Any person who shall vio-
late any provision of this section shall be deemed guilty of a misde
meanor and, upon conviction thereof, shall be punished by a fine not
exceeding $1,000, or by imprisonment not exceeding one year, or both.
(b) Requests for information, disclosure of which is authorized by
regulations prescribed pursuant to subsection (a) of this section, and
requests for services, may, subject to such limitations as may be pre-
scribed by the Secretary to avoid undue interference with his func-
tions under this Act, be complied with if the agency, person, or organi-
zation making the request agrees to pay for the information or services
requested in such amount, if any (not exceeding the cost of furnishing
the information or services), as may be determined by the Secretary.
Payments for information or services furnished pursuant to this sec-
tion shall be made in advance or by way of reimbursement, as may be
requested by the Secretary, and shall be deposited in the Treasury as a
special deposit to be used to reimburse the appropriations (including
authorizations to make expenditures from the Federal Old-Age and
Survivors Insurance Trust Fund, the Federal Disability Insurance
Trust Fund, the Federal Hospital Insurance Trust Fund, and the Fed-
eral Supplementary Medical Insurance Trust Fund) for the unit or
units of the Department of Health, Education, and Welfare which
furnished the information or services. Notwithstanding the preceding
provisions of this subsection, requests for information made pursuant
to the provisions of part D of title IV of this Act for the purpose of
using Federal records for locating parents shall be complied with and
the cost incurred in providing such information shall be paid for as
provided in such part D of title IV.
(c) [Repealed.]
(d) Notwithstanding any other provision of this section the Sec-
retary shall make available to each State agency operating a program
under title XIX and shall, subject to the limitations contained in sub-
section (e), make available for public inspection in readily accessible
form and fashion, the following official reports (not including, how-
ever, references to any internal tolerance rules and practices that may
be contained therein, internal working papers or other informal memo-
randa) dealing with the operation of the health programs established
by titles XVIII and XIX-
(1) individual contractor performance reviews and other for-
mal evaluations of the performance of carriers, intermediaries,
+
Sec. 1106(d)
310
and State agencies, including the reports of follow-up reviews;
(2) comparative evaluations of the performance of such con-
tractors, including comparisons of either overall performance or
of any particular aspects of contractor operation; and
(3) program validation survey reports and other formal eval-
uations of the performance of providers of services, including
the reports of follow-up reviews, except that such reports shall
not identify individual patients, individual health care practition-
ers, or other individuals.
(e) No report described in subsection (d) shall be made public
by the Secretary or the State title XIX agency until the contractor
or provider of services whose performance is being evaluated has had
a reasonable opportunity (not exceeding 60 days) to review such
report and to offer comments pertinent parts of which may be incor-
porated in the public report; nor shall the Secretary be required to
include in any such report information with respect to any deficiency
(or improper practice or procedures) which is known by the Secre-
tary to have been fully corrected, within 60 days of the date such
deficiency was first brought to the attention of such contractor or
provider of services, as the case may be.
Penalty for Fraud
Sec. 1107. (a) Whoever, with the intent to defraud any person,
shall make or cause to be made any false representation concerning
the requirement of this Act, subchapter E of chapter 1 or subchapter
A, C, or E of chapter 9 of the Internal Revenue Code of 1939, or
chapter 2, 21, or 23 or section 6011(a), 6017, or 6051 (a) of the In-
ternal Revenue Code of 1954 or of any rules or regulations issued there-
under, knowing such representations to be false, shall be deemed
guilty of a misdemeanor, and upon conviction thereof, shall be pun-
ished by a fine not exceeding $1,000, or by imprisonment not exceeding
one year, or both.
(b) Whoever, with the intent to elicit information as to the date of
birth, employment, wages, or benefits of any individual (1) falsely
represents to the Secretary of Health, Education, and Welfare that he
is such individual, or the wife, husband, widow, widower, former wife
divorced, child, or parent of such individual, or the duly authorized
agent of such individual, or of the wife, husband, widow, widower,
former wife divorced, child, or parent of such individual, or (2)
falsely represents to any person that he is an employee or agent of
the United States, shall be deemed guilty of a misdemeanor, and,
upon conviction thereof, shall be punished by a fine not exceeding
$1,000, or by imprisonment not exceeding one year, or both.
311
Sec. 1108(d)
Limitation on Payments to Puerto Rico, the Virgin Islands,
and Guam
Sec. 1108. (a) Except as provided in 2002(a)(2) (D), the total
amount certified by the Secretary of Health, Education, and Welfare
under title I, X, XIV, and XVI, and under part A of title IV (exclu-
sive of any amounts on account of services and items to which subsec-
tion (b) applies)——
(1) for payment to Puerto Rico shall not exceed—
(A) $12,500,000 with respect to the fiscal year 1968,
(B) $15,000,000 with respect to the fiscal year 1969,
(C) $18,000,000 with respect to the fiscal year 1970,
(D) $21,000,000 with respect to the fiscal year 1971, or
(E) $24,000,000 with respect to the fiscal year 1972 and
each fiscal year thereafter;
(2) for payment to the Virgin Islands shall not exceed-
(A) $425,000 with respect to the fiscal year 1968,
(B) $500,000 with respect to the fiscal year 1969,
(C) $600,000 with respect to the fiscal year 1970,
(D) $700,000 with respect to the fiscal year 1971,
or
(E) $800,000 with respect to the fiscal year 1972 and each
fiscal year thereafter; and
(3) for payment to Guam shall not exceed-
(A) $575,000 with respect to the fiscal year 1968,
(B) $690,000 with respect to the fiscal year 1969,
(C) $825,000 with respect to the fiscal year 1970,
(D) $960,000 with respect to the fiscal year 1971, or
(E) $1,100,000 with respect to the fiscal year 1972 and each
fiscal year thereafter.
(b) The total amount certified by the Secretary under part A of
title IV, on account of family planning services and services provided
under section 402 (a) (19) with respect to any fiscal year-
(1) for payment to Puerto Rico shall not exceed $2,000,000,
(2) for payment to the Virgin Islands shall not exceed $65,000,
and
(3) for payment to Guam shall not exceed $90,000.
(c) The total amount certified by the Secretary under title XIX
with respect to any fiscal year-
(1) for payment to Puerto Rico shall not exceed $30,000,000,
(2) for payment to the Virgin Islands shall not exceed $1,000,000,
and
(3) for payment to Guam shall not exceed $900,000.
(d) Notwithstanding the provisions of section 502(a) and 512(a)
of this Act, and the provisions of sections 421, 503 (1), and 504(1) of
this Act as amended by the Social Security Amendments of 1967, and
Sec. 1108(d)
312
until such time as the Congress may by appropriation or other law
otherwise provide, the Secretary shall, in lieu of the initial allotment
specified in such sections, allot such smaller amounts to Guam, Ameri-
can Samoa, and the Trust Territory of the Pacific Islands as he may
deem appropriate.
Amounts Disregarded Not To Be Taken Into Account in Deter-
mining Eligibility of Other Individuals
Sec. 1109. Any amount which is disregarded (or set aside for future
needs) in determining the eligibility of and amount of the aid or assist-
ance for any individual under a State plan approved under title I, X,
XIV, XVI, or XIX, or part A of title IV, shall not be taken into
consideration in determining the eligibility of and amount of aid or
assistance for any other individual under a State plan approved under
any other of such titles.
Cooperative Research or Demonstration Projects
Sec. 1110. (a) There are hereby authorized to be appropriated for
the fiscal year ending June 30, 1957, $5,000,000 and for each fiscal
year thereafter such sums as the Congress may determine for (1)
making grants to States and public and other nonprofit organiza-
tions and agencies for payment part of the cost of research or demon-
stration projects such as those relating to the prevention and reduc-
tion of dependency, or which will aid in effecting coordination of
planning between private and public welfare agencies or which will
help improve the administration and effectiveness of programs car-
ried on or assisted under the Social Security Act and programs re-
lated thereto, and (2) making contracts or jointly financed cooperative
arrangements with States and public and other organizations and
agencies for the conduct of research or demonstration projects relating
to such matters.
(b) No contract or jointly financed cooperative arrangement shall
be entered into, and no grant shall be made, under subsection (a),
until the Secretary obtains the advice and recommendations of spe-
cialists who are competent to evaluate the proposed project as to
soundness of their design, the possibilities of securing productive re-
sults, the adequacy of resources to conduct the proposed research or
demonstrations, and their relationship to other similar research or
demonstrations already completed or in process.
(c) Grants and payments under contracts or cooperative arrange-
ments under subsection (a) may be made either in advance or by way
of reimbursement, as may be determined by the Secretary; and shall
be made in such installments and on such conditions as the Secretary
finds necessary to carry out the purposes of this section.
→
313
Sec. 1113(a)
Public Assistance Payments to Legal Representatives
Sec. 1111. For purposes of titles I, X, XIV, and XVI, and Part A
of title IV, payments on behalf of an individual, made to another
person who has been judicially appointed, under the law of the State
in which such individual resides, as legal representative of such indi-
vidual for the purpose of receiving and managing such payments
(whether or not he is such individual's legal representative for other
purposes), shall be regarded as money payments to such individual.
Medical Care Guides and Reports for Public Assistance and
Medical Assistance
Sec. 1112. In order to assist the States to extend the scope and
content, and improve the quality, of medical care and medical serv-
ices for which payments are made to or on behalf of needy and low-
income individuals under this Act and in order to promote better
public understanding about medical care and medical assistance for
needy and low-income individuals, the Secretary shall develop and
revise from time to time guides or recommended standards as to the
level, content, and quality of medical care and medical services for
the use of the States in evaluating and improving their public assist-
ance medical care programs and their programs of medical assistance;
shall secure periodic reports from the States on items included in,
and the quantity of, medical care and medical services for which ex-
penditures under such programs are made; and shall from time to
time publish data secured from these reports and other information
necessary to carry out the purposes of this section.
M
Assistance for United States Citizens Returned From Foreign
Countries
Sec. 1113. (a) (1) The Secretary is authorized to provide tempo-
rary assistance to citizens of the United States and to dependents of
citizens of the United States, if they (A) are identified by the De-
partment of State as having returned, or been brought, from a foreign
country to the United States because of the destitution of the citizen
of the United States or the illness of such citizen or any of his depend-
ents or because of war, threat of war, invasion, or similar crisis, and
(B) are without available resources.
(2) Except in such cases or classes of cases as are set forth in regu-
lations of the Secretary, provision shall be made for reimbursement
to the United States by the recipients of the temporary assistance to
cover the cost thereof.
21-746 O - 78
(3) The Secretary may provide assistance under paragraph (1)
directly or through utilization of the services and facilities of appro-
priate public or private agencies and organizations, in accordance
-
24
Sec. 1113(a)
314
with argeements providing for payment, in advance or by way of
reimbursement, as may be determined by the Secretary, of the cost
thereof. Such cost shall be determined by such statistical, sampling,
or other method as may be provided in the agreement.
(b) The Secretary is authorized to develop plans and make ar-
rangements for provision of temporary assistance within the United
States to individuals specified in subsection (a)(1). Such plans shall
be developed and such arrangements shall be made after consultation
with the Secretary of State, the Attorney General, and the Secretary
of Defense. To the extent feasible, assistance provided under sub-
section (a) shall be provided in accordance with the plans developed
pursuant to this subsection, as modified from time to time by the
Secretary.
(c) For purposes of this section, the term "temporary assistance”
means money payments, medical care, temporary billeting, transporta-
tion, and other goods and services necessary for the health or welfare
of individuals (including guidance, counseling, and other welfare
services) furnished to them within the United States upon their ar-
rival in the United States and for such period after their arrival, not
exceeding ninety days, as may be provided in regulations of the Secre-
tary; except that assistance under this section may be furnished beyond
such ninety-day period in the case of any citizen or dependent upon a
finding by the Secretary that the circumstances involved necessitate or
justify the furnishing of assistance beyond such period in that par-
ticular case.
(d) The total amount of temporary assistance provided under this
section shall not exceed-
(1) $8,000,000 during the fiscal years ending June 30, 1975,
and June 30, 1976, and the succeeding calendar quarter, or
(2) $300,000 during any fiscal year beginning on or after
October 1, 1976.1
Appointment of Advisory Council and Other Advisory Groups
Sec. 1114. (a) The Secretary shall, during 1964, appoint an Ad-
visory Council on Public Welfare for the purpose of reviewing the
administration of the public assistance and child welfare services pro-
grams for which funds are appropriated pursuant to this Act and
making recommendations for improvement of such administration,
and reviewing the status of and making recommendations with respect
to the public assistance programs for which funds are so appropriated,
especially in relation to the old-age, survivors, and disability insur-
ance program, with respect to the fiscal capacities of the States and
the Federal Government, and with respect to any other matters bear-
1 Section 1113 was amended by Public Law 94-44.
315
Sec. 1114(g)
ing on the amount and proportion of the Federal and State shares in
the public assistance and child welfare services programs.
(b) The Council shall be appointed by the Secretary without regard
to the provisions of title 5, United States Code, governing appoint-
ments in the competitive service and shall consist of twelve persons
who shall, to the extent possible, be representatives of employers and
employees in equal numbers, representatives of State or Federal agen-
cies concerned with the administration or financing of the public
assistance and child welfare services programs, representatives of non-
profit private organizations concerned with social welfare programs,
other persons with special knowledge, experience, or qualifications
with respect to such programs, and members of the public.
(c) The Council is authorized to engage such technical assistance
as may be required to carry out its functions, and the Secretary shall,
in addition, make available to the Council such secretarial, clerical,
and other assistance and such pertinent data prepared by the Depart-
ment of Health, Education, and Welfare as it may require to carry
out such functions.
(d) The Council shall make a report of its findings and recom-
mendations (including recommendations for changes in the provisions
of the Social Security Act) to the Secretary, such report to be sub-
mitted not later than July 1, 1966, after which date such Council
shall cease to exist.
(e) The Secretary shall also from time to time thereafter appoint an
Advisory Council on Public Welfare, with the same functions and
constituted in the same manner as prescribed for the Advisory Coun-
cil in the preceding subsections of this section. Each Council so ap-
pointed shall report its findings and recommendations, as prescribed
in subsection (d), not later than July 1 of the second year after the
year in which it is appointed, after which date such Council shall cease
to exist.
(f) The Secretary may also appoint, without regard to the provi-
sions of title 5, United States Code, governing appointments in the
competitive service, such advisory committees as he may deem ad-
visable to advise and consult with him in carrying out any of his func-
tions under this Act. The Secretary shall report to the Congress an-
nually on the number of such committees and on the membership and
activities of each such committee.
(g) Members of the Council or of any advisory committee appointed
under this section who are not regular full-time employees of the
United States shall, while serving on business of the Council or any
such committee be entitled to receive compensation at rates fixed by
the Secretary, but not exceeding $75 per day, including travel time;
and while so serving away from their homes or regular places of busi-
ness, they may be allowed travel expenses, including per diem in lieu
Sec. 1114(g)
316
Revised April 1978
of subsistence, as authorized by section 5703 of title 5, United States
Code for persons in Government service employed intermittently.
(h) (1) Any member of the Council or any advisory committee
appointed under this Act, who is not a regular full-time employee of
the United States, is hereby exempted, with respect to such appoint-
ment, from the operation of sections 281, 283, and 1914 of title 18 of
the United States Code, and section 190 of the Revised Statutes (5
U.S.C. 99), except as otherwise specified in paragraph (2) of this
subsection.
(2) The exemption granted by paragraph (1) shall not extend-
(A) to the receipt or payment of salary in connection with
the appointee's Government service from any source other than
the employer of the appointee at the time of his appointment, or
(B) during the period of such appointment, to the prosecu-
tion or participation in the prosecution, by any person so ap-
pointed, of any claim against the Government involving any
matter with which such person, during such period, is or was
directly connected by reason of such appointment.
Demonstration Projects¹
Sec. 1115. (a) In the case of any experimental, pilot, or demonstra-
tion project which, in the judgment of the Secretary, is likely to assist
in promoting the objectives of title I VI, X, XIV, XVI, XIX, or
XX, or part A of title IV, in a State or States-
(1) the Secretary may waive compliance with any of the re-
quirements of section 2, 402, 602, 1002, 1402, 1602, 1902, 2002, 2003,
or 2004, as the case may be, to the extent and for the period he
finds necessary to enable such State or States to carry out such
project, and
(2) costs of such project which would not otherwise be in-
cluded as expenditures under section 3, 403, 603, 1003, 1403, 1603,
1903, or 2002, as the case may be, and which are not included as
part of the costs of projects under section 1110, shall, to the extent
and for the period prescribed by the Secretary, be regarded as
expenditures under the State plan or plans approved under such
title, or for administration of such State plan or plans, or expendi-
tures with respect to which payment shall be made under section
2002, as may be appropriate.
In addition, not to exceed $4,000,000 of the aggregate amount appro-
priated for payments to States under such titles for any fiscal year
beginning after June 30, 1967, shall be available, under such terms
and conditions as the Secretary may establish, for payments to States
1 Section 1115 was amended by sec. 404 of P.L. 95–216.
Revised April 1978
Sec. 1115(b)
316-A
to cover so much of the cost of such project as is not covered by pay-
ments under such titles and is not included as part of the cost of
projects for purposes of section 1110.
(b) (1) In order to permit the States to achieve more efficient and
effective use of funds for public assistance, to reduce dependency, and
to improve the living conditions and increase the incomes of individ-
uals who are recipients of public assistance, any State having an
approved plan under part A of title IV may, subject to the provisions
of this subsection, establish and conduct not more than three demon-
stration projects. In establishing and conducting any such project the
State shall
S
(A) provide that not more than one such project be conducted
on a statewide basis;
(B) provide that in making arrangements for public service
employment—
(i) appropriate standards for the health, safety, and
other conditions applicable to the performance of work and
training on such project are established and will be
maintained,
(ii) such project will not result in the displacement of
employed workers,
(iii) each participant in such project shall be compensated
for work performed by him at an hourly rate equal to the
prevailing hourly wage for similar work in the locality where
the participant performs such work (and, for purposes of
this clause, benefits payable under the State's plan approved
under part A of title IV of the family of which such partic-
ipant is a member shall be regarded as compensation for work
performed by such participant),
(iv) with respect to such project the conditions of work,
training, education, and employment are reasonable in the
light of such factors as the type of work, geographical region,
and proficiency of the participant, and
(v) appropriate workmen's compensation protection is
provided to all participants; and
(C) provide that participation in such project by any indi-
vidual receiving aid to families with dependent children be
voluntary.
(2) Any State which establishes and conducts demonstration proj-
ects under this subsection may, subject to paragraph (3), with respect
to any such project—
(A) waive, subject to paragraph (3), any or all of the require-
ments of sections 402 (a) (1) (relating to statewide operation),
402(a)(3) (relating to administration by a single State agency),
Sec. 1115(b)
Revised April 1978
316-B
402 (a) (8) (relating to disregard of earned income), except that
no such waiver of 402 (a) (8) shall operate to waive any amount in
excess of one-half of the earned income of any individual, and
402(a) (19) (relating to the work incentive program);
(B) subject to paragraph (4), use to cover the costs of the proj-
ect such funds as are appropriated for payment to such State with
respect to the assistance which is or would, except for participa-
tion in a project under this subsection, be payable to individuals
participating in such projects under part A of title IV for any
fiscal year in which such projects are conducted; and
(C) use such funds as are appropriated for payments to States
under the State and Local Fiscal Assistance Act of 1972 for any
fiscal year in which the project is conducted to cover so much of
the costs of salaries for individuals participating in public serv-
ice employment as is not covered through the use of funds made
available under subparagraph (B).
(3) (A) Any State which wishes to establish and conduct demon-
stration projects under the provisions of this subsection shall submit
an application to the Secretary in such form and containing such
information as the Secretary may require. Whenever any State sub-
mits such an application to the Secretary, it shall at the same time.
issue public notice of that fact together with a general description of
the project with respect to which the application is submitted, and
shall invite comment thereon from interested parties and comments
thereon may be submitted, within the 30-day period beginning with
the date the application is submitted to the Secretary, to the State or
the Secretary by such parties. The State shall also make copies of the
application available for public inspection. The Secretary shall also
immediately publish a summary of the proposed project, make copies
of the application available for public inspection, and receive and
consider comments submitted with respect to the application. A State
shall be authorized to proceed with a project submitted under this
subsection
(i) when such application has been approved by the Secretary
(which shall be no earlier than 30 days following the date the
application is submitted to him), or
(ii) 60 days after the date on which such application is sub-
mitted to the Secretary unless, during such 60 day period, he denies
the application.
(B) Notwithstanding the provisions of paragraph (2) (A), the
Secretary may review any waiver made by a State under such para-
graph. Upon a finding that any such waiver is inconsistent with the
purposes of this subsection and the purposes of part A of title IV, the
Secretary may disapprove such waiver. The project with respect to
Revised April 1978
316-C
Sec. 1115(b)
which any such disapproved waiver was made shall be terminated by
such State not later than the last day of the month following the
month in which such waiver was disapproved.
(4) Any amount payable to a State under section 403 (a) on behalf
of an individual participating in a project under this section shall not
be increased by reason of the participation of such individual in any
demonstration project conducted under this subsection over the amount
which would be payable if such individual were receiving aid to fam-
ilies with dependent children and not participating in such project.
(5) Participation in a project established under this section shall
not be considered to constitute employment for purposes of any finding
with respect to "unemployment" as that term is used in section 407.
(6) Any demonstration project established and conducted pursuant
to the provisions of this subsection shall be conducted for not longer
than two years. All demonstration projects established and conducted
pursuant to the provisions of this subsection shall be terminated not
later than September 30, 1980.
317
Sec. 1116(a)
Administrative and Judicial Review of Certain Administrative
Determinations
Sec. 1116. (a) (1) Whenever a State plan is submitted to the Sec-
retary by a State for approval under title I, VI, X, XIV, XVI, XIX,
or XX, or part A of title IV, he shall not later than 90 days after the
date the plan is submitted to him, make a determination as to whether
it conforms to the requirements for approval under such title. The 90-
day period provided herein may be extended by written agreement of
the Secretary and the affected State.
(2) Any State dissatisfied with a determination of the Secretary
under paragraph (1) with respect to any plan may, within 60 days
after it has been notified of such determination, file a petition with the
Secretary for reconsideration of the issue of whether such plan con-
forms to the requirements for approval under such title. Within 30
days after receipt of such a petition, the Secretary shall notify the
State of the time and place at which a hearing will be held for the
purpose of reconsidering such issue. Such hearing shall be held not
less than 20 days nor more than 60 days after the date notice of such
hearing is furnished to such State, unless the Secretary and such
State agree in writing to holding the hearing at another time. The
Secretary shall affirm, modify, or reverse his original determination
within 60 days of the conclusion of the hearing.
(3) Any State which is dissatisfied with a final determination made
by the Secretary on such a reconsideration or a final determination of
the Secretary under section 4, 404, 604, 1004, 1404, 1604, 1904, or 2003
may, within 60 days after it has been notified of such determination, file
with the United States court of appeals for the circuit in which such
State is located a petition for review of such determination. A copy of
the petition shall be forthwith transmitted by the clerk of the court to
the Secretary. The Secretary thereupon shall file in the court the rec-
ord of the proceedings on which he based his determination as pro-
vided in section 2112 of title 28, United States Code.
(4) The findings of fact by the Secretary, if supported by substan-
tial evidence, shall be conclusive; but the court, for good cause shown,
may remand the case to the Secretary to take further evidence, and the
Secretary may thereupon make new or modified findings of fact and
may modify his previous action, and shall certify to the court the tran-
script and record of the further proceedings. Such new or modified
findings of fact shall likewise be conclusive if supported by substantial
evidence.
(5) The court shall have jurisdiction to affirm the action of the
Secretary or to set it aside, in whole or in part. The judgment of the
court shall be subject to review by the Supreme Court of the United
States upon certiorari or certification as provided in section 1254 of
title 28, United States Code.
Sec. 1116(b)
318
(b) For the purposes of subsection (a), any amendment of a State
plan approved under title I, VI, X, XIV, XVI, XIX, or XX, or part
A of title IV, may, at the option of the State, be treated as the sub-
mission of a new State plan.
(c) Action pursuant to an initial determination of the Secretary
described in subsection (a) shall not be stayed pending reconsidera-
tion, but in the event that the Secretary subsequently determines that
his initial determination was incorrect he shall certify restitution
forthwith in a lump sum of any funds incorrectly withheld or other-
wise denied.
(d) Whenever the Secretary determines that any item or class of
items on account of which Federal financial participation is claimed
under title I, VI, X, XIV, XVI, XIX, XX, or part A of title IV, shall
be disallowed for such participation, the State shall be entitled to and
upon request shall receive a reconsideration of the disallowance.
Sec. 1117. [Repealed.]
Alternative Federal Payment With Respect to Public
Assistance Expenditures
Sec. 1118. In the case of any State which has in effect a plan ap-
proved under title XIX for any calendar quarter, the total of the
payments to which such State is entitled for such quarter, and for each
succeeding quarter in the same fiscal year (which for purposes of this
section means the 4 calendar quarters ending with September 30),
under paragraphs (1) and (2) of sections 3(a), 403 (a), 1003 (a),
1403 (a), and 1603 (a) shall, at the option of the State, be determined
by application of the Federal medical assistance percentage (as de-
fined by section 1905), instead of the percentages provided under
each such section, to the expenditures under its State plans approved
under titles I, X, XIV, and XVI, and part A of title IV, which would
be included in determining the amounts of the Federal payments to
which such State is entitled under such sections, but without regard
to any maximum on the dollar amounts per recipient which may be
counted under such sections.¹
1
Federal Participation in Payments for Repairs to Home Owned
by Recipient of Aid or Assistance
Sec. 1119. In the case of an expenditure for repairing the home
owned by an individual who is receiving aid or assistance, other than
medical assistance to the aged under a State plan approved under
title I, X, XIV, or XVI, or part A of title IV if—
(1) the State agency or local agency administering the plan
approved under such title has made a finding (prior to making
such expenditure) that (A) such home is so defective that con-
1 Sec. 1118 was amended by section 2(23) of P.L. 94–273.
Revised April 1978
Sec. 1121(a)
319
tinued occupancy is unwarranted, (B) unless repairs are made to
such home, rental quarters will be necessary for such individual,
and (C) the cost of rental quarters to take care of the needs of
such individual (including his spouse living with him in such
home and any other individual whose needs were taken into ac-
count in determining the need of such individual) would exceed
(over such time as the Secretary may specify) the cost of repairs
needed to make such home habitable together with other costs
attributable to continued occupancy of such home, and
(2) no such expenditures were made for repairing such home
pursuant to any prior finding under this section,
the amount paid to any such State for any quarter under section 3(a),
403 (a), 1003 (a), 1403(a), or 1603 (a) 'shall be increased by 50 per
centum of such expenditures, except that the excess above $500 ex-
pended with respect to any one home shall not be included in deter-
mining such expenditures.
Approval of Certain Projects
Sec. 1120. (a) No payment shall be made under this Act with
respect to any experimental, pilot, demonstration, or other project
all or any part of which is wholly financed with Federal funds made
available under this Act (without any State, local, or other non-
Federal financial participation) unless such project shall have been
personally approved by the Secretary or Under Secretary of Health,
Education, and Welfare.
(b) As soon as possible after the approval of any project under
subsection (a), the Secretary shall submit to the Congress a descrip-
tion of such project including a statement of its purpose, probable
cost, and expected duration.
Uniform Reporting Systems for Health Services Facilities and
Organizations ¹
Sec. 1121. (a) For the purposes of reporting the cost of services
provided by, of planning, and of measuring and comparing the effi-
ciency of and effective use of services in, hospitals, skilled nursing
facilities, intermediate care facilities, home health agencies, health
maintenance organizations, and other types of health services facili-
ties and organizations to which payment may be made under this Act,
the Secretary shall establish by regulation, for each such type of
health services facility or organization, a uniform system for the
reporting by a facility or organization of that type of the following
information:
¹ Section 1121 was added by sec. 19(a) of P.L. 95-142. See also sec. 19(c) which is
printed in this document on p. 800.
Sec. 1121(a)
319-A
Revised April 1978
(1) The aggregate cost of operation and the aggregate volume
of services.
(2) The costs and volume of services for various functional
accounts and subaccounts.
(3) Rates, by category of patient and class of purchaser.
(4) Capital assets, as defined by the Secretary, including (as
appropriate) capital funds, debt service, lease agreements used
in lieu of capital funds, and the value of land, facilities, and
equipment.
(5) Discharge and bill data.
The uniform reporting system for a type of health services facility or
organization shall provide for appropriate variation in the applica-
tion of the system to different classes of facilities or organizations
within that type and shall be established, to the extent practicable,
consistent with the cooperative system for producing comparable and
uniform health information and statistics described in section 306 (e)
(1) of the Public Health Service Act. In reporting under such a sys-
tem, hospitals shall employ such chart of accounts, definitions, princi-
ples, and statistics as the Secretary may prescribe in order to reach
a uniform reconciliation of financial and statistical data for specified
uniform reports to be provided to the Secretary.
(b) The Secretary shall-
(1) monitor the operation of the systems established under
subsection (a);
(2) assist with and support demonstrations and evaluations
of the effectiveness and cost of the operation of such systems and
encourage State adoption of such systems; and.
(3) periodically revise such systems to improve their effec-
tiveness and diminish their cost.
(c) The Secretary shall provide information obtained through
use of the uniform reporting systems described in subsection (a) in a
useful manner and format to appropriate agencies and organizations,
including health systems agencies (designated under section 1515 of
the Public Health Service Act) and State health planning and devel-
opment agencies (designated under section 1521 of such Act), as may
be necessary to carry out such agencies' and organizations' functions.
G
Revised April 1978
319-B
Sec. 1122(a)
1
Limitation on Federal Participation for Capital Expenditures ¹
Sec. 1122. (a) The purpose of this section is to assure that Federal
funds appropriated under title V, XVIII, and XIX are not used to
1 P.L. 92–603, sec. 221(a), added sec. 1122. Applicable only to a capital expenditure the
obligation for which is incurred by or on behalf of a health care facility or health mainte-
nance organization subsequent to whichever of the following is earlier: (A) December 31,
1972, or (B) with respect to any State or any part thereof specified by such State, the last
day of the calendar quarter in which the State requests that the amendment made by sub-
section (a) of this section apply in such State or such part thereof.
P.L. 92-603, sec. 221(d), provides:
"In the case of a health care facility providing health care services as of December 18,
1970, which on such date is committed to a formal plan of expansion or replacement, the
amendments made by the preceding provisions of this section shall not apply with respect
to such expenditures as may be made or obligations incurred for capital items included in
such plan where preliminary expenditures toward the plan of expansion or replacement (in-
cluding payments for studies, surveys, designs, plans, working drawings, specifications,
and site acquisition, essential to the acquisition, improvement, expansion, or replacement
of the health care facility or equipment concerned) of $100,000 or more, had been made
during the three-year period ended December 17, 1970."
Sec. 1122(a)
320
support unnecessary capital expenditures made by or on behalf of
health care facilities or health maintenance organizations which are
reimbursed under any of such titles and that, to the extent possible,
reimbursement under such titles shall support planning activities with
respect to health services and facilities in the various States.
(b) The Secretary, after consultation with the Governor (or other
chief executive officer) and with appropriate local public officials, shall
make an agreement with any State which is able and willing to do
so under which a designated planning agency (which shall be an
agency described in clause (ii) of subsection (d) (1) (B) that has a
governing body or advisory board at least half of whose members
represent consumer interests) will-
(1) make, and submit to the Secretary together with such sup-
porting materials as he may find necessary, findings and recom-
mendations with respect to capital expenditures proposed by or
on behalf of any health care facility or health maintenance
organization in such State within the field of its responsibilities.
(2) receive from other agencies described in clause (ii) of
subsection (d) (1) (B), and submit to the Secretary together with
such supporting material as he may find necessary, the findings
and recommendations of such other agencies with respect to
capital expenditures proposed by or on behalf of health care
facilities or health maintenance organizations in such State within
the fields of their respective responsibilities, and
(3) establish and maintain procedures pursuant to which a
person proposing any such capital expenditure may appeal a
recommendation by the designated agency and will be granted
an opportunity for a fair hearing by such agency or person other
than the designated agency as the Governor (or other chief execu-
tive officer) may designate to hold such hearings,
whenever and to the extent that the findings of such designated agency
or any such other agency indicate that any such expenditure is not
consistent with the standards, criteria, or plans developed pursuant
to the Public Health Service Act (or the Mental Retardation Facil-
ities and Community Mental Health Centers Construction Act of
1963) to meet the need for adequate health care facilities in the area
covered by the plan or plans so developed.
(c) The Secretary shall pay any such State from the Federal
Hospital Insurance Trust Fund, in advance or by way of reimburse-
ment as may be provided in the agreement with it (and may make
adjustments in such payments on account of overpayments or under-
payments previously made), for the reasonable cost of performing the
functions specified in subsection (b).
Wha
(d) (1) Except as provided in paragraph (2), if the Secretary deter-
mines that-
321
Sec. 1122(d)
(A) neither the planning agency designated in the agreement
described in subsection (b) nor an agency described in clause (ii)
of subparagraph (B) of this paragraph had been given notice
of any proposed capital expenditure (in accordance with such
procedure or in such detail as may be required by such agency)
at least 60 days prior to obligation for such expenditure; or
(B)(i) the planning agency so designated or an agency so
described had received such timely notice of the intention to make
such capital expenditure and had, within a reasonable period
after receiving such notice and prior to obligation for such ex-
penditure, notified the person proposing such expenditure that
the expenditure would not be in conformity with the standards,
criteria, or plans developed by such agency or any other agency
described in clause (ii) for adequate health care facilities in such
State or in the area for which such other agency has responsibility,
and
(ii) the planning agency so designated had, prior to submit-
ting to the Secretary the findings referred to in subsection (b)—
(I) consulted with, and taken into consideration the find-
ings and recommendations of, the State planning agencies
established pursuant to sections 314(a) and 604 (a) of the
Public Health Service Act (to the extent that either such
agency is not the agency so designated) as well as the public
or nonprofit private agency or organization responsible for
the comprehensive regional, metropolitan area, or other local
area plan or plans referred to in section 314 (b) of the Public
Health Service Act and covering the area in which the health
care facility or health maintenance organization proposing
such capital expenditure is located (where such agency is not
the agency designated in the agreement), or, if there is no
such agency, such other public or nonprofit private agency
or organization (if any) as performs, as determined in accord-
ance with criteria included in regulations, similar functions,
and
(II) granted to the person proposing such capital expend-
iture an opportunity for a fair hearing with respect to such
findings;
then, for such period as he finds necessary in any case to effectuate the
purpose of this section, he shall, in determining the Federal payments
to be made under titles, V, XVIII, and XIX with respect to services
furnished in the health care facility for which such capital expendi-
ture is made, not include any amount which is attributable to deprecia-
tion, interest on borrowed funds, a return on equity capital (in the case
of proprietary facilities), or other expenses related to such capital
Sec. 1122(d)
322
expenditure. With respect to any organization which is reimbursed
on a per capita or a fixed fee or negotiated rate basis, in determining
the Federal payments to be made under titles V, XVIII, and XIX, the
Secretary shall exclude an amount which in his judgment is a reason-
able equivalent to the amount which would otherwise be excluded under
this subsection if payment were to be made on other than a per capita
or a fixed fee or negotiated rate basis.
(2) If the Secretary, after submitting the matters involved to the
advisory council established or designated under subsection (i), de-
termines that an exclusion of expenses related to any capital expendi-
ture of any health care facility or health maintenance organization
would discourage the operation or expansion of such facility or
organization, or of any facility of such organization, which has
demonstrated to his satisfaction proof of capability to provide compre-
hensive health care services (including institutional services) effi-
ciently, effectively, and economically, or would otherwise be incon-
sistent with the effective organization and delivery of health services
or the effective administration of title V, XVIII, or XIX, he shall
not exclude such expenses pursuant to paragraph (1).
(e) Where a person obtains under lease or comparable arrangement
any facility or part thereof, or equipment for a facility, which would
have been subject to an exclusion under subsection (d) if the person
had acquired it by purchase, the Secretary shall (1) in computing
such person's rental expense in determining the Federal payments
to be made under titles V, XVIII, and XIX with respect to services
furnished in such facility, deduct the amount which in his judgment
is a reasonable equivalent of the amount that would have been excluded
if the person had acquired such facility or such equipment by purchase,
and (2) in computing such person's return on equity capital deduct
any amount deposited under the terms of the lease or comparable
arrangement.
(f) Any person dissatisfied with a determination by the Secretary
under this section may within six months following notification of such
determination request the Secretary to reconsider such determination.
A determination by the Secretary under this section shall not be
subject to administrative or judicial review.
(g) For the purposes of this section, a "capital expenditure" is an
expenditure which, under generally accepted accounting principles,
is not properly chargeable as an expense of operation and mainte-
nance and which (1) exceeds $100,000, (2) changes the bed capacity of
the facility with respect to which such expenditure is made, or (3)
substantially changes the services of the facility with respect to which
such expenditure is made. For purposes of clause (1) of the preceding
sentence, the cost of the studies, surveys, designs, plans, working
drawings, specifications, and other activities essential to the acquisi-
323
Sec. 1123(a)
tion, improvement, expansion, or replacement of the plant and equip-
ment with respect to which such expenditure is made shall be in-
cluded in determining whether such expenditure exceeds $100,000.
(h) The provisions of this section shall not apply to Christian
Science sanatoriums operated, or listed and certified, by the First
Church of Christ, Scientist, Boston, Massachusetts.
(i) (1) The Secretary shall establish a national advisory council,
or designate an appropriate existing national advisory council, to
advise and assist him in the preparation of general regulations to carry
out the purposes of this section and on policy matters arising in the
administration of this section, including the coordination of activities.
under this section with those under other parts of this Act or under
other Federal or federally assisted health programs.
(2) The Secretary shall make appropriate provision for consulta-
tion between and coordination of the work of the advisory council
established or designated under paragraph (1) and the Federal Hos-
pital Council, the National Advisory Health Council, the Health
Insurance Benefits Advisory Council, and other appropriate national
advisory councils with respect to matters bearing on the purposes and
administration of this section and the coordination of activities under
this section with related Federal health programs.
(3) If an advisory council is established by the Secretary under
paragraph (1), it shall be composed of members who are not otherwise
in the regular full-time employ of the United States, and who shall
be appointed by the Secretary without regard to the civil service laws
from among leaders in the fields of the fundamental sciences, the med-
ical sciences, and the organization, delivery, and financing of health
care, and persons who are State or local officials or are active in com-
munity affairs or public or civic affairs or who are representative of
minority groups. Members of such advisory council, while attending
meetings of the council or otherwise serving on business of the council,
shall be entitled to receive compensation at rates fixed by the Secretary,
but not exceeding the maximum rate specified at the time of such serv-
ice for grade GS-18 in section 5332 of title 5, United States Code,
including traveltime, and while away from their homes or regular
places of business they may also be allowed travel expenses, including
per
diem in lieu of subsistence, as authorized by section 5703 (b) of such
title 5 for persons in the Government service employed intermittently.
Program for Determining Qualifications for Certain Health Care
Personnel
Sec. 1123. (a) The Secretary, in carrying out his functions relat-
ing to the qualifications for health care personnel under title XVIII,
shall develop (in consultation with appropriate professional health
21-746 O - 78 25
2
Sec. 1123(a)
324
Revised April 1978
organizations and State health and licensure agencies) and conduct (in
conjunction with State health and licensure agencies) until Decem-
ber 31, 1977, a program designed to determine the proficiency of
individuals (who do not otherwise meet the formal educational,
professional membership, or other specific criteria established for
determining the qualifications of practical nurses, therapists, labora-
tory technicians, and technologists, and cytotechnologists, X-ray tech-
nicians, psychiatric technicians, or other health care technicians and
technologists) to perform the duties and functions of practical nurses,
therapists, laboratory technicians, technologists, and cytotechnologists,
X-ray technicians, psychiatric technicians, or other health care tech-
nicians and technologists. Such program shall include (but not be
limited to) the employment of procedures for the formal testing of the
proficiency of individuals. In the conduct of such program, no indivi-
dual who otherwise meets the proficiency requirements for any health
care specialty shall be denied a satisfactory proficiency rating solely
because of his failure to meet formal educational or professional mem-
bership requirements.
(b) If any individual has been determined, under the program
established pursuant to subsection (a), to be qualified to perform the
duties and functions of any health care specialty, no person or pro-
vider utilizing the services of such individual to perform such duties
and functions shall be denied payment, under title XVIII or under
any State plan approved under title XIX, for any health care services
provided by such person on the grounds that such individual is not
qualified to perform such duties and functions.
Disclosure of Ownership and Related Information ¹
1
Sec. 1124. (a) (1) The Secretary shall by regulation or by con-
tract provision provide that each disclosing entity (as defined in para-
graph (2)) shall—
(A) as a condition of the disclosing entity's participation in,
or certification or recertification under, any of the programs
established by titles V, XVIII, XIX, and XX, or
(B) as a condition for the approval or renewal of a contract or
agreement between the disclosing entity and the Secretary or the
appropriate State agency under any of the programs established
under titles V, XVIII, XIX, and XX,
supply the Secretary or the appropriate State agency with full and
complete information as to the identity of each person with an owner-
ship or control interest (as defined in paragraph (3)) in the entity or
in any subcontractor (as defined by the Secretary in regulations) in
1 Section 1124 was added by sec. 3(a)(1) of P.L. 95–142.
Revised April 1978
Sec. 1124(b)
325
which the entity directly or indirectly has a 5 per centum or more
ownership interest.
(2) As used in this section, the term "disclosing entity" means an
entity which is—
(A) a provider of services (as defined in section 1861 (u), other
than a fund), an independent clinical laboratory, a renal disease
facility, or a health maintenance organization (as defined in sec-
tion 1301 (a) of the Public Health Service Act);
(B) an entity (other than an individual practitioner or group
of practitioners) that furnishes, or arranges for the furnishing of,
items or services with respect to which payment may be claimed
by the entity under any plan or program established pursuant to
title V or under a State plan approved under title XIX;
(C) a carrier or other agency or organization that is acting as
a fiscal intermediary or agent with respect to one or more pro-
viders of services (for purposes of part A or part B of title
XVIII, or both, or for purposes of a State plan approved under
title XIX) pursuant to (i) an agreement under section 1816, (ii)
a contract under section 1842, or (iii) an agreement with a single
State agency administering or supervising the administration of
a State plan approved under title XIX; or
(D) an entity (other than an individual practitioner or group
of practitioners) that furnishes, or arranges for the furnishing of,
health related services with respect to which payment may be
claimed by the entity under a State plan or program approved
under title XX.
(3) As used in this section, the term "person with an ownership or
control interest" means, with respect to an entity, a person who—
(A) (i) has directly or indirectly (as determined by the Sec-
retary in regulations) an ownership interest of 5 per centum or
more in the entity; or
(ii) is the owner (in whole or in part) of an interest of 5 per
centum or more in any mortgage, deed of trust, note, or other
obligation secured (in whole or in part) by the entity or any of
the property or assets thereof; or
(B) is an officer or director of the entity, if the entity is orga-
nized as a corporation; or
(C) is a partner in the entity, if the entity is organized as a
partnership.
(b) To the extent determined to be feasible under regulations of
the Secretary, a disclosing entity shall also include in the information.
supplied under subsection (a) (1), with respect to each person with an
ownership or control interest in the entity, the name of any other dis-
closing entity with respect to which the person is a person with an
ownership or control interest.
Sec. 1125(a)
Revised April 1978
326
Issuance of Subpenas by Comptroller General ¹
1
Sec. 1125. (a) For the purpose of any audit, investigation, exam-
ination, analysis, review, evaluation, or other function authorized by
law with respect to any program authorized under this Act, the Comp-
troller General of the United States shall have power to sign and issue
subpenas to any person requiring the production of any pertinent
books, records, documents, or other information. Subpenas so issued by
the Comptroller General shall be served by anyone authorized by him
(1) by delivering a copy thereof to the person named therein, or (2)
by registered mail or by certified mail addressed to such person at his
last dwelling place or principal place of business. A verified return
by the person so serving the subpena setting forth the manner of
service, or, in the case of service by registered mail or by certified mail,
the return post office receipt therefor signed by the person so served,
shall be proof of service.
(b) In case of contumacy by, or refusal to obey a subpena issued
pursuant to subsection (a) of this section and duly served upon, any
person, any district court of the United States for the judicial district
in which such person charged with contumacy or refusal to obey is
found or resides or transacts business, upon application by the Comp-
troller General, shall have jurisdiction to issue an order requiring such
person to produce the books, records, documents, or other information
sought by the subpena; and any failure to obey such order of the court
may be punished by the court as a contempt thereof. In proceedings
brought under this subsection, the Comptroller General shall be repre-
sented by attorneys employed in the General Accounting Office or by
counsel whom he may employ without regard to the provisions of
title 5, United States Code, governing appointments in the competitive
service, and the provisions of chapter 51 and subchapters III and VI
of chapter 53 of such title, relating to classification and General
Schedule pay rates.
(c) No personal medical record in the possession of the General
Accounting Office shall be subject to subpena or discovery proceedings
in a civil action.
Disclosure by Institutions, Organizations, and Agencies of Own-
ers and Certain Other Individuals Who Have Been Convicted
of Certain Offenses 2
Sec. 1126. (a) As a condition of participation in or certification
or recertification under the programs established by titles XVIII,
XIX, and XX, any hospital, nursing facility, or other institution,
1 Section 1125 was added by sec. 6 of P.L. 95–142.
2 Section 1126 was added by sec. 8(a) of P.L. 95–142.
Revised April 1978
327
Sec. 1131(a)
organization, or agency shall be required to disclose to the Secretary
or to the appropriate State agency the name of any person who-
(1) has a direct or indirect ownership or control interest of 5
percent or more in such institution, organization, or agency or is
an officer, director, agent, or managing employee (as defined in
subsection (b)) of such institution, organization, or agency, and
(2) has been convicted (on or after the date of the enactment
of this section, or within such period prior to that date as the Sec-
retary shall specify in regulations) of a criminal offense related
to the involvement of such person in any of such programs.
The Secretary or the appropriate State agency shall promptly notify
the Inspector General in the Department of Health, Education, and
Welfare of the receipt from any institution, organization, or agency
of any application or request for such participation, certification, or
recertification which discloses the name of any such person, and shall
notify the Inspector General of the action taken with respect to such
application or request.
(b) For the purposes of this section, the term "managing em-
ployee" means, with respect to an institution, organization, or agency,
an individual, including a general manager, business manager, admin-
istrator, and director, who exercises operational or managerial control
over the institution, organization, or agency, or who directly or in-
directly conducts the day-to-day operations of the institution, orga-
nization, or agency.
Sec. 1130. [Repealed.]
Notification of Social Security Claimant With Respect to Deferred
Vested Benefits
Sec. 1131. (a) Whenever-
(1) the Secretary makes a finding of fact and a decision as to—
(A) the entitlement of any individual to monthly benefits
under section 202, 223, or 228,
(B) the entitlement of any individual to a lump-sum
death payment payable under section 202 (i) on account of
the death of any person to whom such individual is related
by blood, marriage, or adoption, or
(C) the entitlement under section 226 of any individual
to hospital insurance benefits under part A of title XVIII, or
(2) the Secretary is requested to do so-
(A) by any individual with respect to whom the Secre-
tary holds information obtained under section 6057 of the
Internal Revenue Code of 1954, or
Sec. 1131(a)
Revised April 1978
328
(B) in the case of the death of the individual referred
to in subparagraph (A), by the individual who would be
entitled to payment under section 204 (d) of this Act,
he shall transmit to the individual referred to in paragraph (1)
or the individual making the request under paragraph (2) any
information, as reported by the employer, regarding any deferred
vested benefit transmitted to the Secretary pursuant to such sec-
tion 6057 with respect to the individual referred to in paragraph
(1) or (2) (A) or the person on whose wages and self-employment
income entitlement (or claim of entitlement) is based.
(b) (1) For purposes of section 201(g) (1), expenses incurred in
the administration of subsection (a) shall be deemed to be expenses
incurred for the administration of title II.
(2) There are hereby authorized to be appropriated to the Federal
Old-Age and Survivors Insurance Trust Fund for each fiscal year
(commencing with the fiscal year ending June 30, 1974) such sums
as the Secretary deems necessary on account of additional adminis-
trative expenses resulting from the enactment of the provisions of sub-
section (a).
Part B-Professional Standards Review
Declaration of Purpose
Sec. 1151. In order to promote the effective, efficient, and economi-
cal delivery of health care services of proper quality for which pay-
ment may be made (in whole or in part) under this Act and in
recognition of the interests of patients, the public, practitioners, and
providers in improved health care services, it is the purpose of this
part to assure, through the application of suitable procedures of pro-
fessional standards review, that the services for which payment may
be made under the Social Security Act will conform to appropriate
professional standards for the provision of health care and that pay-
ment for such services will be made-
(1) only when, and to the extent, medically necessary, as
determined in the exercise of reasonable limits of professional
discretion; and
(2) in the case of services provided by a hospital or other
health care facility on an inpatient basis, only when and for such
period as such services cannot, consistent with professionally
recognized health care standards, effectively be provided on an
outpatient basis or more economically in an inpatient health care
facility of a different type, as determined in the exercise of rea-
sonable limits of professional discretion.
Revised April 1978
329
Sec. 1152(b)
Designation of Professional Standards Review Organizations
Sec. 1152. (a) The Secretary shall (1) not later than January 1,
1974, establish throughout the United States appropriate areas with
respect to which Professional Standards Review Organizations may
be designated, and (2) at the earliest practicable date after designation
of an area enter into an agreement with a qualified organization
whereby such an organization shall be conditionally designated as
the Professional Standards Review Organization for such area. If, on
the basis of its performance during such period of conditional desig-
nation, the Secretary determines that such organization is capable of
fulfilling, in a satisfactory manner, the obligations and requirements
for a Professional Standards Review Organization under this part,
he shall enter into an agreement with such organization designating
it as the Professional Standards Review Organization for such area.
(b) For purposes of subsection (a), the term "qualified organiza-
tion" means-
(1) when used in connection with any area-
(A) an organization (i) which is a nonprofit professional
association (or a component organization thereof), (ii) which
is composed of licensed doctors of medicine or osteopathy
engaged in the practice of medicine or surgery in such area,
(iii) the membership of which includes a substantial propor-
tion of all such physicians in such area, (iv) which is orga-
nized in a manner which makes available professional com-
petence to review health care services of the types and kinds
with respect to which Professional Standards Review Orga-
nizations have review responsibilities under this part, (v) the
membership of which is voluntary and open to all doctors of
medicine or osteopathy licensed to engage in the practice of
medicine or surgery in such area without requirement of
membership in or payment of dues to any organized medical
society or association, and (vi) which does not restrict the
eligibility of any member for service as an officer of the Pro-
fessional Standards Review Organization or eligibility for
and assignment to duties of such Professional Standards Re-
view Organization, or, subject to subsection (c) (1),¹
(B) such other public, nonprofit private, or other agency
or organization, which the Secretary determines, in accord-
ance with criteria prescribed by him in regulations, to be of
professional competence and otherwise suitable; and
-
(2) an organization which the Secretary, on the basis of his
examination and evaluation of a formal plan which shall be de-
1 Subparagraph (A) was amended by sec. 5 (o) (1) of P.L. 95-142.
"
Sec. 1152(b)
330
Revised April 1978
veloped and submitted by the association, agency, or organization
in accordance with subsection (h) (as well as on the basis of other
relevant data and information), finds to be willing to per-
form and capable of performing, in an effective, timely, and
objective manner and at reasonable cost, the duties, functions, and
activities of a Professional Standards Review Organization re-
quired by or pursuant to this part.¹
(c) (1) The Secretary shall not enter into any agreement under this
part under which there is designated as the Professional Standards
Review Organization for any area any organization other than an
organization referred to in subsection (b)(1)(A) prior to January
1, 1978, nor after such date, unless, in such area, there is no organiza-
tion referred to in subsection (b)(1)(A) which meets the conditions
specified in subsection (b) (2).ª
(2) Whenever the Secretary shall have entered into an agreement
under this part under which there is designated as the Professional
Standards Review Organization for any area any organization other
than an organization referred to in subsection (b) (1) (A), he shall not
renew such agreements with such organization if he determines that—
(A) there is in such area an organization referred to in sub-
section (b)(1)(A) which (i) has not been previously designated
as a Professional Standards Review Organization, and (ii) is
willing to enter into an agreement under this part under which
such organization would be designated as the Professional Stand-
ards Review Organization for such area;
(B) such organization meets the conditions specified in sub-
section (b) (2); and
(C) the designation of such organization as the Professional
Standards Review Organization for such area is anticipated to
result in substantial improvement in the performance in such
area of the duties and functions required of such organizations
under this part.
(d) Any such agreement under this part with an organization
(other than an agreement established pursuant to section 1154) shall
be for a term of 12 months; except that, prior to the expiration of
such term such agreement may be terminated—
(1) by the organization at such time and upon such notice
to the Secretary as may be prescribed in regulations (except that
notice of more than 3 months may not be required); or
(2) by the Secretary at such time and upon such reasonable
notice to the organization as may be prescribed in regulations,
1 Paragraph (2) was amended by sec. 5(d) (2) (A) of P.L. 95–142.
2 Date in subsection (c) (1) changed from "January 1, 1976" to "January 1, 1978" by
section 108(a) of Public Law 94-182 subject to limitations specified in section 108(b)
of the same act, which is reprinted in this document on page 770.
Revised April 1978
331
Sec. 1152(g)
but only after the Secretary has determined (after providing
such organization with an opportunity for a formal hearing on
the matter) that such organization is not substantially complying
with or effectively carrying out the provisions of such agreement.
(e) Where the Secretary finds a Professional Standards Review
Organization (whether designated on a conditional basis or other-
wise) to be competent to perform review responsibilities, the review,
certification, and similar activities otherwise required pursuant to pro-
visions of this Act (other than this part) shall not be applicable with
respect to those providers, suppliers, and practitioners being reviewed
by such Professional Standards Review Organization, except to the
extent specified by the Secretary. Nothing in the preceding sentence
shall be construed as rendering inapplicable any provision of this Act
wherein requirements with respect to conditions for eligibility to or
payment of benefits (as distinct from reviews and certifications made
with respect to determinations of the kind made pursuant to para-
graphs (1) and (2) of section 1155 (a)) must be satisfied.1¹
(f) (1) In the case of agreements entered into prior to January 1,
1978, under this part under which any organization is designated as
the Professional Standards Review Organization for any area, the
Secretary shall, prior to entering into any such agreement with any
organization for any area, inform (under regulations of the Secretary)
the doctors of medicine or osteopathy who are in active practice in
such area of the Secretary's intention to enter into such an agreement
with such organization.²
(2) If, within a reasonable period of time following the serving of
such notice, more than 10 per centum of such doctors object to the
Secretary's entering into such an agreement with such organization
on the ground that such organization is not representative of doctors
in such area, the Secretary shall conduct a poll of such doctors to deter-
mine whether or not such organization is representative of such doctors
in such area. If more than 50 per centum of the doctors responding to
such poll indicate that such organization is not representative of such
doctors in such area the Secretary shall not enter into such an agree-
ment with such organization.
(g) (1) In any case in which the Secretary has established, within
a State, two or more appropriate areas with respect to which Profes-
sional Standards Review Organizations may be designated, he shall,
prior to designating a Professional Standards Review Organization
for any such area, conduct in each such area a poll in which the doc-
tors of medicine and doctors of osteopathy engaged in active practice
therein will be asked: "Do you support a change from the present local
and regional Professional Standards Review Organization area desig-
1 Subsection (e) was amended by sec. 5(a) of P.L. 95–142.
2 Date in subsection (f) (1) changed from "January 1, 1976" to "January 1, 1978" by
section 108(a) of Public Law 94-182 subject to limitations specified in section 108(b)
of the same act, which is reprinted in this document on page 770.
Sec. 1152(g)
332
Revised April 1978
nations to a single statewide area designation?". If, in each such area,
more than 50 per centum of the doctors responding to such question
respond in the affirmative, then the Secretary shall establish the entire
State as a single Professional Standards Review Organization area.
(2) The provisions of paragraph (1) shall not be applicable with
respect to the designation of Professional Standards Review Orga-
nization areas in any State, if, prior to the date of enactment of this
subsection, the Secretary has entered into an agreement (on a condi-
tional basis, or otherwise) with an organization designating it as the
Professional Standards Review Organization for any area in the
State.¹
(h) (1) During the development and preparation by an organiza-
tion of its formal plan under subsection (b) (2) or of any modifica-
tion of such plan to include review of services in skilled nursing
facilities (as defined in section 1861 (j)) or intermediate care facilities
(as defined in section 1905 (c)) or review of ambulatory care services,
the organization shall consult with the single State agency responsible
for administering or supervising the administration of the State plan
approved under title XIX for the State in which the organization is
located.
(2) Such plan and any such modification shall be submitted to the
Governor of such State, at the time of its submission to the Secretary,
for his comments.
(3) The Secretary, before making the findings described in sub-
section (b) (2) or a finding regarding the organization's capability to
perform review of such services (as the case may be), shall consider
any such comments submitted to him by such Governor before the end
of the thirty-day period beginning on the date of submission of the
plan or of any such modification (as the case may be).
(4) If, after considering such comments, the Secretary intends to
make findings which are adverse to such comments, the Secretary shall
provide the Governor making such comments with the opportunity to
submit additional evidence and comments on such intended findings
during a period of not less than thirty days ending before the findings
became effective.2
Review Pending Designation of Professional Standards Review
Organization
Sec. 1153. Pending the assumption by a Professional Standards
Review Organization for any area, of full review responsibility, and
pending a demonstration of capacity for improved review effort with
1 Subsection (g) was added by sec. 105 of P.L. 94–182.
2 Subsection (h) was added by sec. 5(d) (2) (B) of P.L. 95–142.
Revised April 1978
333
Sec. 1154(c)
respect to matters involving the provision of health care services in
such area for which payment (in whole or in part) may be made, under
this Act, any review with respect to such services which has not been
designated by the Secretary as the full responsibility of such organiza-
tion, shall be reviewed in the manner otherwise provided for under
law.
Trial Period for Professional Standards Review Organizations
Sec. 1154. (a) The Secretary shall initially designate an organiza-
tion as a Professional Standards Review Organization for any area
on a conditional basis with a view to determining the capacity of such
organization to perform the duties and functions imposed under this
part on Professional Standards Review Organizations. Such designa-
tion may not be made prior to receipt from such organization and
approval by the Secretary of a formal plan for the orderly assump-
tion and implementation of the responsibilities of the Professional
Standards Review Organization under this part.
(b) During any such trial period (which may not exceed 48
months except as provided in subsection (c)), the Secretary may re-
quire a Professional Standards Review Organization to perform, in
addition to review of health care services provided by or in institu-
tions, only such of the duties and functions required under this part of
Professional Standards Review Organization as he determines such.
organization to be capable of performing. The number and type of
such duties shall, during the trial period, be progressively increased
as the organization becomes capable of added responsibility so that,
by the end of such period, such organization shall be considered a
qualified organization only if the Secretary finds that it is sub-
stantially carrying out in a satisfactory manner, the activities and
functions required of Professional Standards Review Organizations
under this part with respect to the review of health care services pro-
vided by or in institutions (including ancillary services) and, in
addition, review of such other health care services as the Secretary
may require. Any of such duties and functions not performed by such
organization during such period shall be performed in the manner and
to the extent otherwise provided for under law.¹
(c) If the Secretary finds that an organization designated under
subsection (a) has been unable to perform satisfactorily all of the
duties and functions required under this part for reasons beyond the
organization's control, he may extend such organization's trial period
for an additional period not exceeding twenty-four months.²
1 Subsection (b) was amended by sec. 5(b) (1) of P.L. 95–142.
2 Subsection (c) was added (and the former subsection (c) was redesignated as sub-
section (d)) by sec. 5(b) (2) of P.L. 95-142.
Sec. 1154(d)
334
Revised April 1978
(d) Any agreement under which any organization is conditionally
designated as the Professional Standards Review Organization for
any area may be terminated by such organization upon 90 days notice
to the Secretary or by the Secretary upon 90 days notice to such
organization.¹
(e) In determining whether an organization designated on a con-
ditional basis as the Professional Standards Review Organization for
any area is substantially carrying out its duties in a satisfactory man-
ner and should be considered a qualified organization, the Secretary
shall follow the procedures specified in section 1152 (h) (concerning
the Secretary's consideration of comments of the Governor of the
State in which the organization is located).2
Duties and Functions of Professional Standards Review
Organizations
Sec. 1155. (a) (1) Notwithstanding any other provision of law, but
consistent with the provisions of this part, it shall be the duty and
function of each Professional Standards Review Organization for
any area to assume, at the earliest date practicable, responsibility for
the review of the professional activities in such area of physicians
and other health care practitioners and institutional and noninstitu-
tional providers of health care services (except as provided in para-
graph (7)) in the provision of health care services and items for
which payment may be made (in whole or in part) under this Act for
the purpose of determining whether-
(A) such services and items are or were medically necessary;
(B) the quality of such services meets professionally recog-
nized standards of health care; and
S
(C) in case such services and items are proposed to be pro-
vided in a hospital or other health care facility on an inpatient
basis, such services and items could, consistent with the provision
of appropriate medical care, be effectively provided on an out-
patient basis or more economically in an inpatient health care
facility of a different type.³
3
(2) Each Professional Standards Review Organization shall have
the authority to determine, in advance, in the case of-
(A) any elective admission to a hospital, or other health care
facility, or
(B) any other health care service which will consist of
extended or costly courses of treatment,
whether such service, if provided, or if provided by a particular health
1 Former subsection (c) was redesignated as subsection (d) by sec. 5(b) (2) of P.L.
95-142.
2 Subsection (e) was added by sec. 5(d)(2) (C) of P.L. 95–142.
3 Paragraph (1) was amended by sec. 5(d) (3) (B) (i) and sec. 5(o)(2) of P.L. 95-142.
Revised April 1978
335
Sec. 1155(a)
care practitioner or by a particular hospital or other health care
facility, organization, or agency, would meet the criteria specified in
clauses (A) and (C) of paragraph (1).
(3) Each Professional Standards Review Organization shall, in
accordance with regulations of the Secretary, determine and publish,
from time to time, the types and kinds of cases (whether by type of
health care or diagnosis involved, or whether in terms of other rele-
vant criteria relating to the provision of health care services) with
respect to which such organization will, in order most effectively to
carry out the purposes of this part, exercise the authority conferred
upon it under paragraph (2).
(4) Each Professional Standards Review Organization shall be
responsible for the arranging for the maintenance of and the regular
review of profiles of care and services received and provided with
respect to patients, utilizing to the greatest extent practicable in such
patient profiles, methods of coding which will provide maximum con-
fidentiality as to patient identity and assure objective evaluation con-
sistent with the purposes of this part. Profiles shall also be regularly
reviewed on an ongoing basis with respect to each health care prac-
titioner and provider to determine whether the care and services.
ordered or rendered are consistent with the criteria specified in clauses
(A), (B), and (C) of paragraph (1).
(5) Physicians assigned responsibility for the review of hospital
care may be only those having active hospital staff privileges in at
least one of the participating hospitals in the area served by the Pro-
fessional Standards Review Organization.¹
(6) No physician shall be permitted to review—
<
(A) health care services provided to a patient if he was di-
rectly responsible for providing such services, or
(B) health care services provided in or by an institution, or-
ganization, or agency, if he or any member of his family has,
directly or indirectly, a significant financial interest in such
institution, organization, or agency.
For purposes of this paragraph, a physician's family includes only his
spouse (other than a spouse who is legally separated from him under
a decree of divorce or separate maintenance), children (including
legally adopted children), grandchildren, parents, and grandparents.2
(7)(A) Except as provided in subparagraph (B), a Professional
Standards Review Organization located in a State has the function
and duty to assume responsibility for the review under paragraph (1)
of professional activities in intermediate care facilities (as defined in
section 1905 (c)) and in public institutions for the mentally retarded
1 Paragraph (5) was amended by sec. 5(p) of P.L. 95–142.
2 Paragraph (6) was amended by sec. 5(c) (1) (A) and (B) of P.L. 95-142.
Sec. 1155(a)
336
Revised April 1978
(described in section 1905 (d) (1)) only if (i) the Secretary finds, on
the basis of such documentation as he may require from the State, that
the single State agency which administers or supervises the adminis-
tration of the State plan approved under title XIX for that State is
not performing effective review of the quality and necessity of health
care services provided in such facilities and institutions, or (ii) the
State requests such organization to assume such responsibility.
(B) A Professional Standards Review Organization located in
a State has the function and duty to assume responsibility for the
review under paragraph (1) of professional activities in intermediate
care facilities in the State that are also skilled nursing facilities (as
defined in section 1861 (j)), to the extent that the Secretary finds
that the performance of such function by the single State agency
(described in subparagraph (A)) for that State is inefficient.¹
(b) To the extent necessary or appropriate for the proper perform-
ance of its duties and functions, the Professional Standards Review
Organization serving any area is authorized in accordance with regu-
lations prescribed by the Secretary to-
1
(1) make arrangements to utilize the services of persons who
are practitioners of or specialists in the various areas of medicine
(including dentistry), or other types of health care, which persons
shall, to the maximum extent practicable, be individuals engaged
in the practice of their profession within the area served by such
organization;
(2) undertake such professional inquiry either before or after,
or both before and after, the provision of services with respect to
which such organization has a responsibility for review under
subsection (a) (1);
(3) examine the pertinent records of any practitioner or pro-
vider of health care services providing services with respect to
which such organization has a responsibility for review under
subsection (a) (1); and
(4) inspect the facilities in which care is rendered or services
provided (which are located in such area) of any practitioner or
provider.
(c) No Professional Standards Review Organization shall utilize
the services of any individual who is not a duly licensed doctor of
medicine or osteopathy to make final determinations in accordance
with its duties and functions under this part with respect to the pro-
fessional conduct of any other duly licensed doctor of medicine or
osteopathy, or any act performed by any duly licensed doctor of
medicine or osteopathy in the exercise of his profession.
1 Paragraph (7) was added by sec. 5(d) (3) (ii) of P.L. 95–142.
Revised April 1978
337
Sec. 1155(f)
(d) In order to familiarize physicians with the review functions
and activities of Professional Standards Review Organizations and to
promote acceptance of such functions and activities by physicians,
patients, and other persons, each Professional Standards Review
Organization, in carrying out its review responsibilities, shall (to
the maximum extent consistent with the effective and timely perform-
ance of its duties and functions)-
(1) encourage all physicians practicing their profession in the
area served by such Organization to participate as reviewers in
the review activities of such Organizations;
(2) provide rotating physician membership of review com-
mittees on an extensive and continuing basis;
(3) assure that membership on review committees have the
broadest representation feasible in terms of the various types of
practice in which physicians engage in the area served by such
Organization; and
(4) utilize, whenever appropriate, medical periodicals and sim-
ilar publications to publicize the functions and activities of Pro-
fessional Standards Review Organizations.
(e) (1) Each Professional Standards Review Organization shall
utilize the services of, and accept the findings of, the review com-
mittees of a hospital (including any skilled nursing facility, as defined
in section 1861 (j), or intermediate care facility, as defined in section
1905 (c), which is also a part of such hospital) or other operating
health care facility or organization (other than such a skilled nursing
facility or intermediate care facility which is not a part of a hospital)
located in the areas served by such organization, but only when
and only to the extent and only for such time that such committees in
such hospital or other operating health care facility or organization
have demonstrated to the satisfaction of such organization their ca-
pacity effectively and in timely fashion to review activities in such
hospital or other operating health care facility or organization (in-
cluding the medical necessity of admissions, types and extent of
services ordered, and lengths of stay) so as to aid in accomplishing
the purposes and responsibilities described in subsection (a) (1), except
where the Secretary disapproves, for good cause, such acceptance.¹
(2) The Secretary may prescribe regulations to carry out the pro-
visions of this subsection.
(f) (1) An agreement entered into under this part between the
Secretary and any organization under which such organization is
designated as the Professional Standards Review Organization for
any area shall provide that such organization will—
1 Paragraph (1) was amended by sec. 5(d) (3) (A) of P.L. 95-142.
Sec. 1155(f)
Revised April 1978
338
(A) perform such duties and functions and assume such re-
sponsibilities and comply with such other requirements as may
be required by this part or under regulations of the Secretary pro-
mulgated to carry out the provisions of this part; and
(B) collect such data relevant to its functions and such infor-
mation and keep and maintain such records in such form as
the Secretary may require to carry out the purposes of this part
and to permit access to and use of any such records as the Secre-
tary may require for such purposes.
(2) Any such agreement with an organization under this part shall
provide that the Secretary make payments to such organization equal
to the amount of expenses reasonably and necessarily incurred, as
determined by the Secretary, by such organization in carrying out or
preparing to carry out the duties and functions required by such
agreement.
(3) Any such agreement with an organization under this part may
be in the form of a grant or an assistance agreement.¹
(g) (1) Where a Professional Standards Review Organization
(whether designated on a conditional basis or otherwise) requests
review responsibility with respect to services furnished in shared
health facilities, the Secretary must give priority to such request, with
the highest priority being assigned to requests from organizations
located in areas with substantial numbers of shared health facilties.
(2) The Secretary shall require any Professional Standards
Review Organization which is capable of exercising review responsi-
bility with respect to ambulatory care services to perform review
responsibility with respect to such services on and after a date not
earlier than the date the organization is designated as a Professional
Standards Review Organization (other than under section 1154) and
not later than two years after the date the organization has been so
designated, but any such designated Professional Standards Review
Organization may be approved to perform such review responsibility
at any earlier time if such organization applies for, and is found
capable of exercising, such responsibility.²
Norms of Health Care Services for Various Illnesses or Health
Conditions
Sec. 1156. (a) Each Professional Standards Review Organization
shall apply professionally developed norms of care, diagnosis, and
treatment based upon typical patterns of practice in its regions (in-
cluding typical lengths-of-stay for institutional care by age and diag-
1 Paragraph (3) was added by sec. 5(c) (1) (C) of P.L. 95–142.
2 Subsection (g) was amended by sec. 5(c) (1) (D) of P.L. 95–142.
Revised April 1978
Sec. 1156(c)
339
nosis) as principal points of evaluation and review. The National
Professional Standards Review Council and the Secretary shall pro-
vide such technical assistance to the organization as will be helpful
in utilizing and applying such norms of care, diagnosis, and treatment.
Where the actual norms of care, diagnosis, and treatment in a Profes-
sional Standards Review Organization area are significantly different
from professionally developed regional norms of care, diagnosis, and
treatment approved for comparable conditions, the Professional
Standards Review Organization concerned shall be so informed, and
in the event that appropriate consultation and discussion indicate
reasonable basis for usage of other norms in the area concerned, the
Professional Standards Review Organization may apply such norms
in such area as are approved by the National Professional Standards
Review Council.
(b) Such norms with respect to treatment for particular illnesses
or health conditions shall include (in accordance with regulations of
the Secretary)-
(1) the types and extent of the health care services which,
taking into account differing, but acceptable, modes of treatment
and methods of organizing and delivering care are considered
within the range of appropriate diagnosis and treatment of such
illness or health condition, consistent with professionally recog-
nized and accepted patterns of care;
(2) the type of health care facility which is considered, con-
sistent with such standards, to be the type in which health care
services which are medically appropriate for such illness or condi-
tion can most economically be provided.
S
(c) (1) The National Professional Standards Review Council shall
provide for the preparation and distribution, to each Professional
Standards Review Organization and to each other agency or person
performing review functions with respect to the provision of health
care services under this Act, of appropriate materials indicating the
regional norms to be utilized pursuant to this part. Such data concern-
ing norms shall be reviewed and revised from time to time. The
approval of the National Professional Standards Review Council of
norms of care, diagnosis, and treatment shall be based on its analysis
of appropriate and adequate data.
(2) Each review organization, agency, or person referred to in
paragraph (1) shall utilize the norms developed under this section as
a principal point of evaluation and review for determining, with re-
spect to any health care services which have been or are proposed to be
provided, whether such care and services are consistent with the cri-
teria specified in section 1155 (a) (1).
21-746 O - 78 - 26
Sec. 1156(d)
340
Revised April 1978
(d) (1) Each Professional Standards Review Organization shall-
(A) in accordance with regulations of the Secretary, specify
the appropriate points in time after the admission of a patient for
inpatient care in a health care institution, at which the physician
attending such patient shall execute a certification stating that
further inpatient care in such institution will be medically neces-
sary effectively to meet the health care needs of such patient; and
(B) require that there be included in any such certification
with respect to any patient such information as may be necessary
to enable such organization properly to evaluate the medical
necessity of the further institutional health care recommended by
the physician executing such certification.
(2) The points in time at which any such certification will be
required (usually, not later than the 50th percentile of lengths-of-stay
for patients in similar age groups with similar diagnosis) shall be
consistent with and based on professionally developed norms of care
and treatment and data developed with respect to length of stay in
health care institutions of patients having various illnesses, injuries,
or health conditions, and requiring various types of health care serv-
ices or procedures.
Submission of Reports by Professional Standards Review
Organizations
Sec. 1157. If, in discharging its duties and functions under this
part, any Professional Standards Review Organization determines
that any health care practitioner or any hospital, or other health care
facility, agency, or organization has violated any of the obligations
imposed by section 1160, such organization shall report the matter to
the Statewide Professional Standards Review Council for the State in
which such organization is located together with the recommendations
of such Organization as to the action which should be taken with
respect to the matter. Any Statewide Professional Standards Review
Council receiving any such report and recommendation shall review
the same and promptly transmit such report and recommendation to
the Secretary together with any additional comments or recommenda-
tions thereon as it deems appropriate.¹
Requirement of Review Approval as Condition of Payment of
Claims
Sec. 1158. (a) Except as provided for in section 1159 and subsection
(d), no Federal funds appropriated under any title of this Act (other
than title V) for the provision of health care services or items shall be
1 Section 1157 was amended by sec. 13(b) (4) of P.L. 95-142.
Revised April 1978
Sec. 1158(d)
341
used (directly or indirectly) for the payment, under such title or any
program established pursuant thereto, of any claim for the provision
of such services or items, unless the Secretary, pursuant to regulation
determines that the claimant is without fault if
M
(1) the provision of such services or items is subject to review
under this part by any Professional Standards Review Organiza-
tion, or other agency; and
(2) such organization or other agency has, in the proper exer-
cise of its duties and functions under or consistent with the pur-
poses of this part, disapproved of the services or items giving
rise to such claim, and has notified the practitioner or provider
who provided or proposed to provide such services or items and
the individual who would receive or was proposed to receive such
services or items of its disapproval of the provision of such serv-
ices or items.¹
(b) Whenever any Professional Standards Review Organization,
in the discharge of its duties and functions as specified by or pursuant
to this part, disapproves of any health care services or items furnished
or to be furnished by any practitioner or provider, such organiza-
tion shall, after notifying the practitioner, provider, or other organi-
zation or agency of its disapproval in accordance with subsection (a),
promptly notify the agency or organization having responsibility for
acting upon claims for payment for or on account of such services or
items.
(c) Where a Professional Standards Review Organization
(whether designated on a conditional basis or otherwise) has been
found competent by the Secretary to assume review responsibility with
respect to specified types of health care services or specified providers
or practitioners of such services and is performing such reviews, deter-
minations made pursuant to paragraphs (1) and (2) of section 1155
(a) in connection with such reviews shall constitute the conclusive
determination on those issues (subject to sections 1159, 1171(a)(1),
and 1171(d) (3)) for purposes of payment under this Act, and no
reviews with respect to those determinations shall be conducted, for
purposes of payment, by agencies and organizations which are parties
to agreements entered into by the Secretary pursuant to section 1816,
carriers which are parties to contracts entered into by the Secretary
pursuant to section 1842, or single State agencies administering or
supervising the administration of State plans approved under title
XIX.2
(d) In any case in which a Professional Standards Review Orga-
nization disapproves (under subsection (a)) of inpatient hospital
¹ Subsection (a) was amended by sec. 22(a) (1) of P.L. 95–142.
2 Subsection (c) was added by sec. 5(d) (1) of P.L. 95-142.
-
Sec. 1158(d)
342
Revised April 1978
services or posthospital extended care services, payment may be made
for such services furnished before the second day after the day on
which the provider received notice of such disapproval, or, if such
organization determines that more time is required in order to arrange
post discharge care, payment may be made for such services furnished
before the fourth day after the day on which the provider received
notice of such disapproval.¹
Hearings and Review by Secretary
Sec. 1159. (a) Any beneficiary or recipient who is entitled to ben-
efits under this Act (other than title V) or a provider or practitioner
who is dissatisfied with a determination with respect to a claim made
by a Professional Standards Review Organization in carrying out its
responsibilities for the review of professional activities in accordance
with paragraphs (1) and (2) of section 1155 (a) shall, after being
notified of such determination, be entitled to a reconsideration thereof
by the Professional Standards Review Organization and, where the
Professional Standards Review Organization reaffirms such deter-
mination in a State which has established a Statewide Professional
Standards Review Council, and where the matter in controversy is
$100 or more, such determination shall be reviewed by professional
members of such Council and, if the Council so determines, revised.
(b) Where the determination of the Statewide Professional Stand-
ards Review Council is adverse to the beneficiary or recipient (or, in
the absence of such Council in a State and where the matter in con-
troversy is $100 or more), such beneficiary or recipient shall be entitled
to a hearing thereon by the Secretary to the same extent as is provided
in section 205 (b), and, where the amount in controversy is $1,000 or
more, to judicial review of the Secretary's final decision after such
hearing as is provided in section 205 (g). The Secretary will render a
decision only after appropriate professional consultation on the
matter.
(c) Any review or appeals provided under this section shall be in
lieu of any review, hearing, or appeal under this Act with respect to
the same issue.
Obligations of Health Care Practitioners and Providers of Health
Care Services; Sanctions and Penalties; Hearings and Review
Sec. 1160. (a) (1) It shall be the obligation of any health care
practitioner and any other person (including a hospital or other
health care facility, organization, or agency) who provides health
care services for which payment may be made (in whole or in part)
under this Act, to assure that services or items ordered or provided by
1 Subsection (d) was added by sec. 22(a)(2) of P.L. 95–142.
Revised April 1978
343
Sec. 1160(b)
such practitioner or person to beneficiaries and recipients under this
Act-
(A) will be provided only when, and to the extent, medically
necessary; and
(B) will be of a quality which meets professionally recognized
standards of health care; and
(C) will be supported by evidence of such medical necessity
and quality in such form and fashion and at such time as may
reasonably be required by the Professional Standards Review
Organization in the exercise of its duties and responsibilities;
and it shall be the obligation of any health care practitioner in order-
ing, authorizing, directing, or arranging for the provision by any
other person (including a hospital or other health care facility, organi-
zation, or agency), of health care services for any patient of such prac-
titioner, to exercise his professional responsibility with a view to
assuring (to the extent of his influence or control over such patient,
such person, or the provision of such services) that such services or
items will be provided-
(D) only when, and to the extent, medically necessary; and
(E) will be of a quality which meets professionally recognized
standards of health care.
(2) Each health care practitioner, and each hospital or other pro-
vider of health care services, shall have an obligation, within reason-
able limits of professional discretion, not to take any action, in the
exercise of his profession (in the case of any health care practitioner),
or in the conduct of its business (in the case of any hospital or other
such provider), which would authorize any individual to be admitted
as an inpatient in or to continue as an inpatient in any hospital or other
health care facility unless-
(A) inpatient care is determined by such practitioner and by
such hospital or other provider, consistent with professionally
recognized health care standards, to be medically necessary for
the proper care of such individual; and
(B) (i) the inpatient care required by such individual can-
not, consistent with such standards, be provided more economi-
cally in a health care facility of a different type; or
(ii) (in the case of a patient who requires care which can,
consistent with such standards, be provided more economically
in a health care facility of a different type) there is, in the area
in which such individual is located, no such facility or no such
facility which is available to provide care to such individual at
the time when care is needed by him.
(b) (1) If after reasonable notice and opportunity for discussion
with the health care practitioner or hospital, or other health care
Sec. 1160(b)
344
Revised April 1978
facility, agency, or organization concerned, any Professional Stand-
ards Review Organization submits a report and recommendations to
the Secretary pursuant to section 1157 (which report and recom-
mendations shall be submitted through the Statewide Professional
Standards Review Council, if such Council has been established, which
shall promptly transmit such report and recommendations together
with any additional comments and recommendations thereon as it
deems appropriate) and if the Secretary determines that such health
care practitioner or hospital, or other health care facility, agency, or
organization, in providing health care services over which such orga-
nization has review responsibility and for which payment (in whole
or in part) may be made under this Act has
(A) by failing, in a substantial number of cases, substantially
to comply with any obligation imposed on him under subsection
(a), or
(B) by grossly and flagrantly violating any such obligation
in one or more instances,
demonstrated an unwillingness or a lack of ability substantially to
comply with such obligations, he (in addition to any other sanction
provided under law) may exclude (permanently or for such period
as the Secretary may prescribe) such health care practitioner or
hospital, or other health care facility, agency, or organization from
eligibility to provide such services on a reimbursable basis.¹
(2) A determination made by the Secretary under this subsection
shall be effective at such time and upon such reasonable notice to the
public and to the person furnishing the services involved as may be
specified in regulations. Such determination shall be effective with
respect to services furnished to an individual on or after the effective
date of such determination (except that in the case of institutional
health care services such determination shall be effective in the manner
provided in title XVIII with respect to terminations of provider
agreements), and shall remain in effect until the Secretary finds and
gives reasonable notice to the public that the basis for such determina-
tion has been removed and that there is reasonable assurance that it
will not recur.
(3) In lieu of the sanction authorized by paragraph (1), the Secre-
tary may require that (as a condition to the continued eligibility of
such practitioner or provider to provide such health care services on
a reimbursable basis) such practitioner or provider pay to the United
States, in case such acts or conduct involved the provision or ordering
by such practitioner or provider of health care services which were
medically improper or unnecessary, an amount not in excess of the
¹ Paragraph (1) was amended by secs. 5(e) and 5(o)(3) of P.L. 95–142.
Revised April 1978
Sec. 1162(b)
345
actual or estimated cost of the medically improper or unnecessary serv-
ices so provided, or (if less) $5,000. Such amount may be deducted
from any sums owing by the United States (or any instrumentality
thereof) to the person from whom such amount is claimed.
(4) Any person furnishing services described in paragraph (1)
who is dissatisfied with a determination made by the Secretary under
this subsection shall be entitled to reasonable notice and opportunity
for a hearing thereon by the Secretary to the same extent as is pro-
vided in section 205 (b), and to judicial review of the Secretary's final
decision after such hearing as is provided in section 205 (g).
(c) It shall be the duty of each Professional Standards Review
Organization and each Statewide Professional Standards Review
Council to use such authority or influence it may possess as a profes-
sional organization, and to enlist the support of any other professional
or governmental organization having influence or authority over
health care practitioners and any other person (including a hospital
or other health care facility, organization, or agency) providing health
care services in the area served by such review organization, in assur-
ing that each practitioner or provider (referred to in subsection (a))
providing health care services in such area shall comply with all obli-
gations imposed on him under subsection (a).
Notice to Practitioner or Provider
Sec. 1161. Whenever any Professional Standards Review Organi-
zation takes any action or makes any determination-
(a) which denies any request, by a health care practitioner or
other provider of health care services, for approval of a health
care service or item proposed to be ordered or provided by such
practitioner or provider; or
(b) that any such practitioner or provider has violated any
obligation imposed on such practitioner or provider under section
1160,
such organization shall, immediately after taking such action or mak-
ing such determination, give notice to such practitioner or provider of
such determination and the basis therefor, and shall provide him with
appropriate opportunity for discussion and review of the matter.
Statewide Professional Standards Review Councils; Advisory
Groups to Such Councils
Sec. 1162. (a) In any State in which there are located three or more
Professional Standards Review Organizations, the Secretary shall
establish a Statewide Professional Standards Review Council.
(b) The membership of any such Council for any State shall be
appointed by the Secretary and shall consist of—
Sec. 1162(b)
Revised April 1978
345-A
·
(1) one representative from and designated by each Profes-
sional Standards Review Organization in the State;
(2) four physicians, two of whom may be designated by the
State medical society and two of whom may be designated by the
State hospital association of such State to serve as members on
such Council; and
(3) four persons knowledgeable in health care from such State
whom the Secretary shall have selected as representatives of the
public in such State (at least two of whom shall have been recom-
mended for membership on the Council by the Governor of such
State).
(c) It shall be the duty and function of the Statewide Professional
Standards Review Council for any State, in accordance with regula-
tions of the Secretary, (1) to coordinate the activities of, and dissemi-
nate information and data among the various Professional Standards
Review Organizations within such State including assisting the Secre-
tary in development of uniform data gathering procedures and operat-
ing procedures applicable to the several areas in a State (including,
where appropriate, common data processing operations serving several
or all areas) to assure efficient operation and objective evaluation of
comparative performance of the several areas and, (2) to assist the
Secretary in evaluating the performance of each Professional Stand-
ards Review Organization, and (3) where the Secretary finds it neces-
sary to replace a Professional Standards Review Organization, to
assist him in developing and arranging for a qualified replacement
Professional Standards Review Organization.
(d) The Secretary is authorized to enter into an agreement with
any such Council under which the Secretary shall make payments to
such Council equal to the amount of expenses reasonably and neces-
sarily incurred, as determined by the Secretary, by such Council in
carrying out the duties and functions provided in this section.
(e) (1) The Statewide Professional Standards Review Council for
any State (or in a State which does not have such Council, the Profes-
sional Standards Review Organizations in such State which have
agreements with the Secretary) shall be advised and assisted in carry-
ing out its functions by an advisory group (of not less than seven nor
more than eleven members) which shall be made up of representatives
of health care practitioners (other than physicians) and hospitals and
other health care facilities which provide within the State health care
services for which payment (in whole or in part) may be made under
any program established by or pursuant to this Act.
(2) The Secretary shall by regulations provide the manner in which
members of such advisory group shall be selected by the Statewide
Revised April 1978
345-B
Sce. 1163(d)
Professional Standards Review Council (or Professional Standards
Review Organizations in States without such Councils).
(3) The expenses reasonably and necessarily incurred, as deter-
mined by the Secretary, by such group in carrying out its duties and
functions under this subsection shall be considered to be expenses nec-
essarily incurred by the Statewide Professional Standards Review
Council served by such group.
National Professional Standards Review Council
Sec. 1163. (a) (1) There shall be established a National Professional
Standards Review Council (hereinafter in this section referred to
as the "Council") which shall consist of eleven physicians, not other-
wise in the employ of the United States, appointed by the Secretary
without regard to the provisions of title 5, United States Code, govern-
ing appointments in the competitive service.
(2) Members of the Council shall be appointed for a term of three
years, except that the Secretary may provide, in the case of any terms.
scheduled to expire after January 1, 1978, for such shorter terms as
will ensure that (on a continuing basis) the terms of no more than
four members expire in any year. Members of the Council shall be
eligible for reappointment.¹
(3) The Secretary shall from time to time designate one of the
members of the Council to serve as Chairman thereof.
(b) Members of the Council shall consist of physicians of recog-
nized standing and distinction in the appraisal of medical practice.
A majority of such members shall be physicians who have been recom-
mended by the Secretary to serve on the Council by national orga-
nizations recognized by the Secretary as representing practicing
physicians. The membership of the Council shall include physicians
who have been recommended for membership on the Council by con-
sumer groups and other health care interests.
(c) The Council is authorized to utilize, and the Secretary shall make
available, or arrange for, such technical and professional consulta-
tive assistance as may be required to carry out its functions, and the
Secretary shall, in addition, make available to the Council such secre-
tarial, clerical and other assistance and such pertinent data prepared
by, for, or otherwise available to, the Department of Health, Educa-
tion, and Welfare as the Council may require to carry out its functions.
(d) Members of the Council, while serving on business of the Coun-
cil, shall be entitled to receive compensation at a rate fixed by the
Secretary (but not in excess of the daily rate paid under GS-18 of
the General Schedule under section 5332 of title 5, United States
1 Paragraph (2) was amended by sec. 5(f) of P.L. 95-142.
Sec. 1163(d)
345-C
Revised April 1978
Code), including travel time; and while so serving away from their
homes or regular places of business, they may be allowed travel ex-
penses, including per diem in lieu of subsistence, as authorized by
section 5703 of title 5, United States Code, for persons in Government
service employed intermittently.
(e) It shall be the duty of the Council to-
(1) advise the Secretary in the administration of this part;
(2) provide for the development and distribution, among
Statewide Professional Standards Review Councils and Profes-
sional Standards Review Organizations of information and data
which will assist such review councils and organizations in carry-
ing out their duties and functions;
(3) review the operations of Statewide Professional Standards
Review Councils and Professional Standards Review Organiza-
tions with a view to determining the effectiveness and compara-
tive performance of such review councils and organizations in
carrying out the purposes of this part; and
(4) make or arrange for the making of studies and investiga-
tions with a view to developing and recommending to the Secre-
tary and to the Congress measures designed more effectively to
accomplish the purposes and objectives of this part.
(f) [Repealed]
1
-
Application of This Part to Certain State Programs Receiving
Federal Financial Assistance
Sec. 1164. (a) In addition to the requirements imposed by law as a
condition of approval of a State plan approved under any title of
this Act under which health care services are paid for in whole or
part, with Federal funds, there is hereby imposed the requirement
that provisions of this part shall apply to the operation of such plan
or program.
(b) The requirement imposed by subsection (a) with respect to
such State plans approved under this Act shall apply—
(1) in the case of any such plan where legislative action by
the State legislature is not necessary to meet such requirement, on
and after January 1, 1974; and
(2) in the case of any such plan where legislative action by the
State legislature is necessary to meet such requirement, which-
ever of the following is earlier—
(A) on and after July 1, 1974, or
(B) on and after the first day of the calendar month which
first commences more than ninety days after the close of the
first regular session of the legislature of such State which
begins after December 31, 1973.
1 Subsection (f) was repealed by sec. 5(g) of P.L. 95–142.
Revised April 1978
345-D
Sec. 1166(b)
Correlation of Functions Between Professional Standards Re-
view Organizations and Administrative Instrumentalities
Sec. 1165. The Secretary shall by regulations provide for such cor-
relation of activities, such interchange of data and information, and
such other cooperation consistent with economical, efficient, coordi-
nated, and comprehensive implementation of this part (including, but
not limited to, usage of existing mechanical and other data-gathering
capacity) between and among—
(a) (1) agencies and organizations which are parties to agree-
ments entered into pursuant to section 1816, (2) carriers which
are parties to contracts entered into pursuant to section 1842,
and (3) any other public or private agency (other than a Profes-
sional Standards Review Organization) having review or con-
trol functions, or proved relevant data-gathering procedures and
experience, and
(b) Professional Standards Review Organizations, as may be
necessary or appropriate for the effective administration of title
XVIII, or State plans approved under this Act.
Prohibition Against Disclosure of Information ¹
Sec. 1166. (a) Any data or information acquired by any Profes-
sional Standards Review Organization, in the exercise of its duties
and functions, shall be held in confidence and shall not be disclosed
to any person except (1) to the extent that may be necessary to carry
out the purposes of this part, (2) in such cases and under such cir-
cumstances as the Secretary shall by regulations provide to assure
adequate protection of the rights and interests of patients, health
care practitioners, or providers of health care, or (3) in accordance
with subsection (b).
(b) A Professional Standards Review Organization shall provide,
in accordance with procedures established by the Secretary, data and
information-
(1) to assist Federal and State agencies recognized by the
Secretary as having responsibility for identifying and investi-
gating cases or patterns of fraud or abuse, which data and
information shall be provided by such organization to such
agencies at the request of such agencies at the discretion of such
Organization on the basis of its findings with respect to evidence
of fraud or abuse; and
(2) to assist the Secretary, and such Federal and State agen-
cies recognized by the Secretary as having health planning or
¹ Section 1166 was amended by sec. 5(h) of P.L. 95-142.
G
Sec. 1166(b)
345-E
Revised April 1978
related responsibilities under Federal or State law (including
health systems agencies and State health planning and develop-
ment agencies), in carrying out appropriate health care plan-
ning and related activities, which data and information shall be
provided in such format and manner as may be prescribed by the
Secretary or agreed upon by the responsible Federal and State
agencies and such Organization, and shall be in the form of
aggregate statistical data (without identifying any individual)
on a geographic, institutional, or other basis reflecting the vol-
ume and frequency of services furnished, as well as the demo-
graphic characteristics of the population subject to review by
such Organization.
-
The penalty provided in subsection (c) shall not apply to the disclo-
sure of any data and information received under this subsection,
except that such penalty shall apply to the disclosure (by the agency
receiving such data and information) of any such data and informa-
tion described in paragraph (1) unless such disclosure is made in a
judicial, administrative, or other formal legal proceeding resulting
from an investigation conducted by the agency receiving the data and
information.
(c) It shall be unlawful for any person to disclose any such infor-
mation other than for such purposes, and any person violating the
provisions of this section shall, upon conviction, be fined not more
than $1,000, and imprisoned for not more than six months, or both,
together with the costs of prosecution.
(d) No patient record in the possession of a Professional Stand-
ards Review Organization, a Statewide Professional Standards
Review Council, or the National Professional Standards Review
Council shall be subject to subpena or discovery proceedings in a civil
action.
Limitation on Liability for Persons Providing Information, and
for Members and Employees of Professional Standards Review
Organizations and Statewide Professional Standards Review
Councils, and for Health Care Practitioners and Providers ¹
Sec. 1167. (a) Notwithstanding any other provision of law, no
person providing information to any Professional Standards Review
Organization or to any Statewide Professional Standards Review
Council shall be held, by reason of having provided such informa-
tion, to have violated any criminal law, or to be civilly liable under
any law, of the United States or of any State (or political subdivision
thereof) unless—
1 Section 1167 was amended by sec. 5(n) of P.L. 95–142.
Revised April 1978
345--F
Sec. 1167(d)
(1) such information is unrelated to the performance of the
duties and functions of such Organization or such Council, or
(2) such information is false and the person providing such
information knew, or had reason to believe, that such information
was false.
(b) (1) No individual who, as a member or employee of any Pro-
fessional Standards Review Organization or of any Statewide Pro-
fessional Standards Review Council or who furnishes professional
counsel or services to such organization or council shall be held by
reason of the performance by him of any duty, function, or activity
authorized or required of Professional Standards Review Organiza-
tions or of Statewide Professional Standards Review Councils under
this part, to have violated any criminal law, or to be civilly liable
under any law, of the United States or of any State (or political sub-
division thereof) provided he has exercised due care.
(2) The provisions of paragraph (1) shall not apply with respect
to any action taken by any individual if such individual, in taking
such action, was motivated by malice toward any person affected by
such action.
(c) No doctor of medicine or osteopathy and no provider (includ-
ing directors, trustees, employees, or officials thereof) of health care
services shall be civilly liable to any person under any law of the
United States or of any State (or political subdivision thereof) on
account of any action taken by him in compliance with or reliance
upon professionally developed norms of care and treatment applied
by a Professional Standards Review Organization (which has been
designated in accordance with section 1152(b)(1)(A)) operating in
the area where such doctor of medicine or osteopathy or provider took
such action but only if—
(1) he takes such action (in the case of a health care practi-
tioner) in the exercise of his profession as a doctor of medicine
or osteopathy (or in the case of a provider of health care services)
in the exercise of his functions as a provider of health care serv-
ices, and
(2) he exercised due care in all professional conduct taken or
directed by him and reasonably related to, and resulting from,
the actions taken in compliance with or reliance upon such pro-
fessionally accepted norms of care and treatment.
(d) The Secretary shall make payment to a Professional Standards
Review Organization, whether conditionally designated or qualified,
or to any member or employee thereof, or to any person who furnishes
legal counsel or services to such organization, in an amount equal to
the reasonable amount of the expenses incurred, as determined by
Sec. 1167(d)
345-G
Revised April 1978
the Secretary, in connection with the defense of any suit, action, or
proceeding brought against such organization, member, or employee
related to the performance of any duty or function of such organiza-
tion, member, or employee (as described in section 1155).¹
Authorization for Use of Certain Funds to Administer the
Provisions of This Part
Sec. 1168. Expenses incurred in the administration of this part
shall be payable from—
(a) funds in the Federal Hospital Insurance Trust Fund;
(b) funds in the Federal Supplementary Medical Insurance
Trust Fund; and
(c) funds appropriated to carry out the health care provisions
of the several titles of this Act;
in such amounts from each of the sources of funds (referred to in sub-
sections (a), (b), and (c)) as the Secretary shall deem to be fair and
equitable after taking into consideration the costs attributable to the
administration of this part with respect to each of such plans and
programs. The Secretary shall make such transfers of moneys between
the funds, referred to in clauses (a), (b) and (c) of the preceding
sentence, as may be appropriate to settle accounts between them in
cases where expenses properly payable from the funds described in
one such clause have been paid from funds described in another of
such clauses. The Secretary shall make payments to Professional
Standards Review Organizations (whether designated on a conditional
basis or otherwise) from funds described in the first sentence of this
section (without any requirement for the contribution of funds by
any State or political subdivision thereof) for expenses incurred in
the performance of duties by such Organizations.2
Technical Assistance to Organizations Desiring To Be Designated
as Professional Standards Review Organizations
Sec. 1169. The Secretary is authorized to provide all necessary
technical and other assistance (including the preparation of prototype
plans of organization and operation) to organizations described in
section 1152 (b) (1) which—
(a) express a desire to be designated as a Professional Stand-
ards Review Organization; and
GRAN
(b) the Secretary determines have a potential for meeting the
requirements of a Professional Standards Review Organization;
to assist such organizations in developing a proper plan to be sub-
1 Subsection (d) was added by sec. 5(i) of P.L. 95–142.
2 Sec. 1168 was amended by sec. 112 of P.L. 94-182 and by sec. 5(j) of P.L. 95–142.
Revised April 1978
345-H
Sec. 1171(b)
mitted to the Secretary and otherwise in preparing to meet the require-
ments of this part for designation as a Professional Standards Review
Organization.
Exemptions of Christian Science Sanatoriums
Sec. 1170. The provisions of this part shall not apply with respect
to a Christian Science sanatorium operated, or listed and certified, by
the First Church of Christ, Scientist, Boston, Massachusetts.
Memorandums of Understanding; Federal-State Relations
Generally ¹
Sec. 1171. (a) (1) Except as provided in paragraph (2), no deter-
mination made by a Professional Standards Review Organization
pursuant to paragraphs (1) and (2) of section 1155 (a) in connection
with reviews shall constitute conclusive determinations under section
1158 (c) for purposes of payment under title XIX, unless such orga-
nization has entered into a memorandum of understanding, approved
by the Secretary, with the single State agency responsible for admin-
istering or supervising the administration of the State plan approved
under title XIX for the State in which the organization is located
(hereinafter in this section referred to as the "State agency") for the
purpose of delineating the relationship between the organization and
the State agency and of providing for the exchange of data or infor-
mation, and for administrative procedures, coordination mechanisms,
and modification of the memorandum at any time that additional
responsibility for review by the organization is authorized by the
Secretary.
(2) The requirement of paragraph (1) may be waived by the
Secretary if (A) the State agency indicates to the Secretary that it
does not wish to enter into a memorandum of understanding with the
organization involved, or (B) the Secretary finds that the State agency
has refused to negotiate in good faith or in a timely manner with the
organization involved.
(b) (1) The State agency may request a Professional Standards
Review Organization which is entering into such a memorandum of
understanding with the agency to include in the memorandum a
specification of review goals or methods (additional to any such goals
or methods contained in the organization's formal plan) for the per-
formance of the organization's duties and functions under this part.
(2) If the agency and the organization cannot reach agreement re-
1 Section 1171 was added by sec. 5(d) (2) (D) of P.L. 95-142.
Sec. 1171(b)
Revised April 1978
345-I
garding the inclusion of any such requested specification, the Secre-
tary shall review such specification and shall require that the specifi-
cation be included in the memorandum to the extent that the Secretary
determines that such specification of goals or methods (A) is con-
sistent with the functions of the organization under this part and with
the provisions of title XIX and the State's plan approved under such
title, and (B) does not seriously impact on the effectiveness and uni-
formity of the organization's review of health care services paid for
under title XVIII and title XIX of this Act.
(c) Notwithstanding any other provision of this Act, the State
agency may contract with any Professional Standards Review Orga-
nization located in the State for the performance of review responsi-
bilities in addition to those performed pursuant to this part (and the
cost of performance of such additional responsibilities is reimburs-
able as an expense of the State agency under section 1903 (a)) if-
(1) the State agency formally requests the performance of
such additional responsibilities, and
(2) the performance of such additional responsibilities is not
inconsistent with this part and is provided for in an amendment
to the State's plan which is approved by the Secretary under
title XIX.
(d) (1) Each State agency may monitor the performance of review
responsibilities by Professional Standards Review Organizations
located within the State, in accordance with a State monitoring plan
which is developed after review and comment by such organizations
and is approved by the Secretary. The costs of activities of the State
agency under and in accordance with such plan are reimbursable as
an expense of the State agency under section 1903 (a).
(2) A monitoring plan developed and approved under paragraph
(1) may include a specification of performance criteria for judging
the effectiveness of the review performance of the Professional Stand-
ards Review Organizations. If the State agency and the Professional
Standards Review Organizations cannot reach agreement regarding
such criteria, the Secretary shall assist the agency and organizations
in resolving the matters in dispute.
(3) (A) Whenever a State agency monitoring the performance of
review responsibilities by a Professional Standards Review Organiza-
tion under a plan developed and approved under paragraph (1) sub-
mits to the Secretary reasonable documentation that the review deter-
minations of such organization have caused an unreasonable and detri-
mental impact on total State expenditures under title XIX and on
the appropriateness of care received by individuals under the State's
plan approved under such title, and requests the Secretary to act, the
doda
Revised April 1978
Sec. 1171(e)
345-J
Secretary shall, within thirty days from the date of receipt of the docu-
mentation, make a determination as to the reasonableness of the allega-
tion by the State agency. If the Secretary determines that the review
determinations of such organization have caused an unreasonable and
detrimental impact on total State expenditures under title XIX and
on the appropriateness of care received by individuals under the State's
plan approved under such title, unless the Secretary determines that
the organization has taken appropriate corrective action, he shall
immediately suspend such organization's authority in whole or in part
under section 1158 (c) to make conclusive determinations for purposes
of payment under title XIX (and he may suspend such authority for
purposes of payment under title XVIII) until he (i) reevaluates such
organization's performance of the responsibilities involved and deter-
mines that such performance does not have such unreasonable and
detrimental impact, or (ii) determines that the organization has taken
appropriate corrective action. Any determination made by the Secre-
tary under this subparagraph shall be final and shall not be subject to
judicial review.
(B) The Secretary shall notify the State agency submitting such
documentation, and the organization involved, in writing, of his deter-
mination, any subsequent actions taken, and the basis thereof, and shall
notify the appropriate committees of the United States House of Rep-
resentatives and the Senate of any such documentation submitted and
the actions taken.
(e) (1) The Secretary shall in a timely manner establish procedures
and mechanisms to govern his relationships with State agencies under
this part (specifically including his relationships with such agencies in
connection with their respective functions under the preceding provi-
sions of this section). Such mechanisms shall include periodic con-
sultation by the Secretary with State agency representatives and
representatives of Professional Standards Review Organizations re-
garding relationships between such agencies and such organizations
(including the appropriate exchange of data and information between
such agencies and such organizations) and other problems of mutual
concern, and such procedures shall permit the State agency to be repre-
sented on any project assessments conducted by the Secretary with
respect to a Professional Standards Review Organization located
within its State.
(2) Each Professional Standards Review Organization shall pro-
vide to the State agency for the State in which it is located, upon
request, data or information which the Secretary requires such organi-
zations to report to him routinely on a periodic basis, and such other
data or information as the Secretary authorizes to be disclosed.
21-746 O - 78 27
-
Sec. 1172
Revised April 1978
346
Annual Reports ¹
Sec. 1172. The Secretary shall submit to the Congress not later
than April 1, 1978, and not later than April 1 of each year thereafter,
a full and complete report on the administration, impact, and cost of
the program under this part during the preceding fiscal year, includ-
ing data and information on—
(1) the number, status (conditional or otherwise), and service
areas of, and review methodologies employed by, all Professional
Standards Review Organizations participating in the program;
(2) the number of health care institutions and practitioners
whose services are subject to review by Professional Standards
Review Organizations, and the number of beneficiaries and recip-
ients who received services subject to such review during such
year;
(3) The imposition of penalties and sanctions under this title
for violations of law and for failure to comply with the obliga-
tions imposed by this part;
(4) the total costs incurred under titles V, XI, XVIII, and
XIX of this Act in the implementation and operation of all pro-
cedures required by such titles for the review of services to deter-
mine their medical necessity, appropriateness of use, and quality;
(5) changes in utilization rates and patterns, and changes in
medical procedures and practices, attributable to the activities of
Professional Standards Review Organizations;
(6) the results of program evaluation activities, including the
operation of data collection systems and the status of Profes-
sional Standards Review Organization data policy and imple-
mentation;
(7) the extent to which Professional Standards Review Orga-
nizations are performing reviews of services for other govern-
mental or private health insurance programs; and
(8) recommendations for legislative changes.
Medical Officers in American Samoa, the Northern Mariana Is-
lands, and the Trust Territory of the Pacific Islands To Be In-
cluded in the Professional Standards Review Program 2
Sec. 1173. For purposes of applying this part (except sections
1155(c) and 1163) to American Samoa, the Northern Mariana Islands,
and the Trust Territory of the Pacific Islands, individuals licensed to
practice medicine in those places shall be considered to be physicians
and doctors of medicine.
1 Section 1172 was added by sec. 5(k) of P.L. 95-142.
2 Section 1173 was added by sec. 5 (1) (1) of P.L. 95–142.
TITLE XII—ADVANCES TO STATE UNEMPLOYMENT
FUNDS
Sec. 1201. Advance to State Unemployment Funds..
Sec. 1202. Repayment by States of Advances to State Unemployment
Funds
Sec. 1203. Advances to Federal Unemployment Account--
Sec. 1204. Definition of Governor_
I
I
Page ¹
347
1 This table does not appear in the law.
2 Section 1201 was amended by section 213 of P.L. 94-566.
348
348
349
Advance to State Unemployment Funds 2
Section 1201. (a) (1) Advances shall be made to the States from
the Federal unemployment account in the Unemployment Trust
Fund as provided in this section, and shall be repayable, without in-
terest, in the manner provided in sections 901 (d) (1), 903 (b) (2), and
1202. An advance to a State for the payment of compensation in any
3-month period may be made if-
(A) the Governor of the State applies therefor no earlier than
the first day of the month preceding the first month of such 3-
month period, and
(B) he furnishes to the Secretary of Labor his estimate of the
amount of an advance which will be required by the State for
the payment of compensation in each month of such 3-month
period.
(2) In the case of any application for an advance under this sec-
tion to any State for any 3-month period, the Secretary of Labor
shall-
(A) determine the amount (if any) which he finds will be
required by such State for the payment of compensation in each
month of such 3-month period, and
(B) certify to the Secretary of the Treasury the amount (not
greater than the amount estimated by the Governor of the State)
determined under subparagraph (A).
The aggregate of the amounts certified by the Secretary of Labor
with respect to any 3-month period shall not exceed the amount
which the Secretary of the Treasury reports to the Secretary of
Labor is available in the Federal unemployment account for
advances with respect to each month of such 3-month period.
(3) For purposes of this subsection-
(A) an application for an advance shall be made on such forms,
and shall contain such information and data (fiscal and other-
(347)
Sec. 1201 (a)
348
wise) concerning the operation and administration of the State
unemployment compensation law, as the Secretary of Labor
deems necessary or relevant to the performance of his duties
under this title,
(B) the amount required by any State for the payment of
compensation in any month shall be determined with due allow-
ance for contingencies and taking into account all other amounts
that will be available in the State's unemployment fund for the
payment of compensation in such month, and
(C) the term "compensation" means cash benefits payable to
individuals with respect to their unemployment, exclusive of ex-
penses of administration.
(b) The Secretary of the Treasury shall, prior to audit or settle-
ment by the General Accounting Office, transfer in monthly install-
ments from the Federal unemployment account to the account of the
State in the Unemployment Trust Fund the amount certified under
subsection (a) by the Secretary of Labor (but not exceeding that
portion of the balance in the Federal unemployment account at the
time of the transfer which is not restricted as to use pursuant to
section 903 (b) (1)). The amount of any monthly installment so trans-
ferred shall not exceed the amount estimated by the State to be
required for the payment of compensation for the month with respect
to which such installment is made.
Repayment by States of Advances to State Unemployment Funds
Sec. 1202. The Governor of any State may at any time request that
funds be transferred from the account of such State to the Federal
unemployment account in repayment of part or all of that balance
of advances, made to such State under section 1201, specified in the
request. The Secretary of Labor shall certify to the Secretary of the
Treasury the amount and balance specified in the request; and the
Secretary of the Treasury shall promptly transfer such amount in
reduction of such balance.
Advances to Federal Unemployment Account
Sec. 1203. There are hereby authorized to be appropriated to the
Federal unemployment account, as repayable advances (without in-
terest), such sums as may be necessary to carry out the purposes of
this title. Whenever, after the application of sections 901 (f) (3) and
902(a) with respect to the excess in the employment security admin-
istration account as of the close of any fiscal year, there remains any
portion of such excess, so much of such remainder as does not exceed
the balance of advances made pursuant to this section shall be trans-
ferred to the general fund of the Treasury and shall be credited
against, and shall operate to reduce, such balance of advances.
349
Sec. 1204
Definition of Governor
Sec. 1204. When used in this title, the term "Governor” includes
the Commissioners of the District of Columbia.
TITLE XIII-RECONVERSION UNEMPLOYMENT
BENEFITS FOR SEAMEN
[This title was added by the 1946 Amendment; however, the
program provided by this title has expired.]
TITLE XIV-GRANTS TO STATES FOR AID TO THE
PERMANENTLY AND TOTALLY DISABLED ¹
1
Page 2
351
351
353
358
358
Sec. 1401. Appropriation
Sec. 1402. State Plans for Aid to the Permanently and Totally Disabled__
Sec. 1403. Payments to States-
Sec. 1404. Operation of the State Plans-
Sec. 1405. Definition of Aid to the Permanently and Totally Disabled……..
Appropriation
Section 1401. For the purpose of enabling each State to furnish
financial assistance, as far as practicable under the conditions in such
State, to needy individuals eighteen years of age and older who are
permanently and totally disabled and of encouraging each State, as
far as practicable under such conditions, to furnish rehabilitation
and other services to help such individuals attain or retain capability
for self-support or self-care, there is hereby authorized to be appro-
priated for each fiscal year a sum sufficient to carry out the purposes
of this title. The sums made available under this section shall be used
for making payments to States which have submitted, and had ap-
proved by the Secretary of Health, Education, and Welfare, State
plans for aid to the permanently and totally disabled.
State Plans for Aid to the Permanently and Totally Disabled
Sec. 1402. (a) A State plan for aid to the permanently and totally
disabled must (1) except to the extent permitted by the Secretary
with respect to services, provide that it shall be in effect in all political
subdivisions of the State, and, if administered by them, be mandatory
upon them; (2) provide for financial participation by the State; (3)
either provide for the establishment or designation of a single State
agency to administer the plan, or provide for the establishment or
designation of a single State agency to supervise the administration
of the plan; (4) provide (A) for granting an opportunity for a fair
hearing before the State agency to any individual whose claim for aid
to the permanently and totally disabled is denied or is not acted upon
with reasonable promptness, and (B) that if the State plan is admin-
1 P.L. 92-603, sec. 303, repealed title XIV effective January 1, 1974, but such repeal
does not apply to Puerto Rico, Guam, and the Virgin Islands.
2 This table of contents does not appear in the law.
(351)
Sec. 1402(a)
352
Istered in each of the political subdivisions of the State by a local
agency and such local agency provides a hearing at which evidence
may be presented prior to a hearing before the State agency, such
local agency may put into effect immediately upon issuance its deci-
sion upon the matter considered at such hearing; (5) provide (A)
such methods of administration (including methods relating to the
establishment and maintenance of personnel standards on a merit basis
except that the Secretary shall exercise no authority with respect to
the selection, tenure of office, and compensation of any individual em-
ployed in accordance with such methods) as are found by the Secre-
tary to be necessary for the proper and efficient operation of the plan,
and (B) for the training and effective use of paid subprofessional staff.
with particular emphasis on the full-time or part-time employment
of recipients and other persons of low income, as community service
aides, in the administration of the plan and for the use of nonpaid or
partially paid volunteers in a social service volunteer program in
providing services to applicants and recipients and in assisting any
advisory committees established by the State agency; (6) provide that
the State agency will make such reports, in such form and containing
such information, as the Secretary may from time to time require, and
comply with such provisions as the Secretary may from time to time
find necessary to assure the correctness and verification of such re-
ports; (7) provide that no aid will be furnished any individual under
the plan with respect to any period with respect to which he is receiv-
ing old-age assistance under the State plan approved under section 2
of this Act, aid to families with dependent children under the State
plan approved under section 402 of this Act, or aid to the blind
under the State plan approved under section 1002 of this Act;
(8) provide that the State agency shall, in determining need, take into
consideration any other income and resources of an individual claim-
ing aid to the permanently and totally disabled, as well as any ex-
penses reasonably attributable to the earning of any such income;
except that, in making such determination, (A) the State agency
may disregard not more than $7.50 of any income, (B) of the first
$80 per month of additional income which is earned the State agency
may disregard not more than the first $20 thereof plus one-half of
the remainder, and (C) the State agency may, for a period not in
excess of 36 months, disregard such additional amounts of other in-
come and resources, in the case of an individual who has a plan for
achieving self-support approved by the State agency, as may be neces-
sary for the fulfillment of such plan, but only with respect to the part.
or parts of such period during substantially all of which he is actually
undergoing vocational rehabilitation; (9) provide safeguards which
permit the use or disclosure of information concerning applicants or
recipients only (A) to public officials who require such information
353
Sec. 1403(a)
in connection with their official duties, or (B) to other persons for
purposes directly connected with the administration of the State
plan; (10) provide that all individuals wishing to make applica-
tion for aid to the permanently and totally disabled shall have oppor-
tunity to do so, and that aid to the permanently and totally disabled
shall be furnished with reasonable promptness to all eligible indi-
viduals; (11) effective July 1, 1953, provide, if the plan includes pay-
ments to individuals in private or public institutions, for the establish-
ment or designation of a State authority or authorities which shall be
responsible for establishing and maintaining standards for such in-
stitutions; and (12) provide a description of the services (if any)
which the State agency makes available (using whatever internal orga-
nizational arrangement it finds appropriate for this purpose) to appli-
cants for and recipients of aid to the permanently and totally disabled
to help them attain self-support or self-care, including a description
of the steps taken to assure, in the provision of such services, maxi-
mum utilization of other agencies providing similar or related
services.
(b) The Secretary shall approve any plan which fulfills the condi-
tions specified in subsection (a), except that he shall not approve any
plan which imposes, as a condition of eligibility for aid to the perma-
nently and totally disabled under the plan-
(1) Any residence requirement which excludes any resident of
the State who has resided therein five years during the nine years
immediately preceding the application for aid to the permanently
and totally disabled and has resided therein continuously for one
year immediately preceding the application;
(2) Any citizenship requirement which excludes any citizen of
the United States.
At the option of the State, the plan may provide that manuals and
other policy issuances will be furnished to persons without charge for
the reasonable cost of such materials, but such provision shall not be
required by the Secretary as a condition for the approval of such plan
under this title.
Payments to States
Sec. 1403. (a) From the sums appropriated therefor, the Secretary
of the Treasury shall pay to each State which has an approved plan
for aid to the permanently and totally disabled, for each quarter, be-
ginning with the quarter commencing October 1, 1958—
(1) in the case of any State other than Puerto Rico, the Virgin
Islands, and Guam, an amount equal to the sum of the following
proportions of the total amounts expended during such quarter
as aid to the permanently and totally disabled under the State
plan (including expenditures for premiums under part B of title
Sec. 1403(a)
354
XVIII for individuals who are recipients of money payments un-
der such plan and other insurance premiums for medical or any
other type of remedial care or the cost thereof)—
(A) 337 of such expenditures, not counting so much of
any expenditure with respect to any month as exceeds the
product of $37 multiplied by the total number of recipients of
aid to the permanently and totally disabled for such month
(which total number, for purposes of this subsection, means
(i) the number of individuals who received aid to the perma-
nently and totally disabled in the form of money payments
for such month, plus (ii) the number of other individuals
with respect to whom expenditures were made in such month
as aid to the permanently and totally disabled in the form of
medical or any other type of remedial care); plus
(B) the Federal percentage of the amount by which such
expenditures exceed the maximum which may be counted
under clause (A), not counting so much of any expenditure
with respect to any month as exceeds the product of $75 mul-
tiplied by the total number of such recipients of aid to the
permanently and totally disabled for such month; and
(2) in the case of Puerto Rico, and Virgin Islands, and Guam, an
amount equal to one-half of the total of the sums expended during
such quarter as aid to the permanently and totally disabled under the
State plan (including expenditures for premiums under part B of title
XVIII for individuals who are recipients of money payments under
such plan and other insurance premiums for medical or any other type
of remedial care or the cost thereof), not counting so much of any
expenditure with respect to any month as exceeds $37.50 multiplied by
the total number of recipients of aid to the permanently and totally
disabled for such months; and
(3) in the case of any State whose State plan approved under section
1402 meets the requirements of subsection (c) (1), an amount equal to
the sum of the following proportions of the total amounts expended
during such quarter as found necessary by the Secretary of Health,
Education, and Welfare for the proper and efficient administration of
the State plan-
(A) 75 per centum of so much of such expenditures as are for-
(i) services which are prescribed pursuant to subsection
(c) (1) and are provided (in accordance with the next sen-
tence) to applicants for or recipients of aid to the permanently
and totally disabled to help them attain or retain capability
of self-support or self-care, or
(ii) other services, specified by the Secretary as likely to
prevent or reduce dependency, so provided to such applicants
or recipients, or
355
Sec. 1403(a)
(iii) any of the services prescribed pursuant to subsection
(c) (1), and of the services specified as provided in clause
(ii), which the Secretary may specify as appropriate for in-
dividuals who, within such period or periods as the Secretary
may prescribe, have been or are likely to become applicants
for or recipients of aid to the permanently and totally dis-
abled, if such services are requested by such individuals and
are provided to such individuals in accordance with the next
sentence, or
(iv) the training (including both short- and long-term
training at educational institutions through grants to such
institutions or by direct financial assistance to students en-
rolled in such institutions) of personnel employed or prepar-
ing for employment by the State agency or by the local agency
administering the plan in the political subdivision; plus
(B) one-half of so much of such expenditures (not in-
cluded under subparagraph (A)) as are for services pro-
vided (in accordance with the next sentence) to applicants for
or recipients of aid to the permanently and totally disabled,
and to individuals requesting such services who (within such
period or periods as the Secretary may prescribe) have been
or are likely to become applicants for or recipients of such
aid; plus
(C) one-half of the remainder of such expenditures.
The services referred to in subparagraphs (A) and (B) shall,
except to the extent specified by the Secretary, include only—
(D) services provided by the staff of the State agency, or
of the local agency administering the State plan in the politi-
cal subdivision: Provided, That no funds authorized under
this title shall be available for services defined as vocational
rehabilitation services under the Vocational Rehabilitation
Act (i) which are available to individuals in need of them
under programs for their rehabilitation carried on under a
State plan approved under such Act, or (ii) which the State
agency or agencies administering or supervising the adminis-
tration of the State plan approved under such Act are able
and willing to provide if reimbursed for the cost thereof pur-
suant to agreement under subparagraph (E), if provided by
such staff, and
(E) Under conditions which shall be prescribed by the
Secretary, services which in the judgment of the State agency
cannot be as economically or as effectively provided by the
staff of such State or local agency and are not otherwise
reasonably available to individuals in need of them, and
Sec. 1403(a)
356
which are provided, pursuant to agreement with the State
agency, by the State health authority or the State agency or
agencies administering or supervising the administration of
the State plan for vocational rehabilitation services approved
under the Vocational Rehabilitation Act or by any other State
agency which the Secretary may determine to be appropriate
(whether provided by its staff or by contract with public
(local) or nonprofit private agencies);
except that services described in clause (ii) of subparagraph (D)
hereof may be provided only pursuant to agreement with such
State agency or agencies administering or supervising the admin-
istration of the State plan for vocational rehabilitation services
so approved. The portion of the amount expended for administra-
tion of the State plan to which subparagraph (A) applies and the
portion thereof to which subparagraphs (B) and (C) apply shall
be determined in accordance with such methods and procedures
as may be permitted by the Secretary; and
(4) in the case of any State whose State plan approved under
section 1402 does not meet the requirements of subsection (c) (1),
an amount equal to one-half of the total of the sums expended
during such quarter as found necessary by the Secretary for the
proper and efficient administration of the State plan, including
services referred to in paragraph (3) and provided in accordance
with the provisions of such paragraph.
(b) The method of computing and paying such amounts shall be
as follows:
(1) The Secretary of Health, Education, and Welfare shall,
prior to the beginning of each quarter, estimate the amount to
be paid to the State for such quarter under the provisions of sub-
section (a), such estimate to be based on (A) a report filed by the
State containing its estimate of the total sum to be expended in
such quarter in accordance with the provisions of such subsection,
and stating the amount appropriated or made available by the
State and its political subdivisions for such expenditures in such
quarter, and if such amount is less than the State's proportionate
share of the total sum of such estimated expenditures, the source
or sources from which the difference is expected to be derived,
(B) records showing the number of permanently and totally dis-
abled individuals in the State, and (C) such other investigation
as the Secretary may find necessary.
(2) The Secretary of Health, Education, and Welfare shall
then certify to the Secretary of the Treasury the amount so esti-
mated by the Secretary of Health, Education, and Welfare, (A)
reduced or increased, as the case may be, by any sum by which
357
Sec. 1403(c)
the Secretary of Health, Education, and Welfare finds that his
estimate for any prior quarter was greater or less than the amount
which should have been paid to the State under subsection (a)
for such quarter, and (B) reduced by a sum equivalent to the
pro rata share to which the United States is equitably entitled,
as determined by the Secretary of Health, Education, and Wel-
fare, of the net amount recovered during a prior quarter by the
State or any political subdivision thereof with respect to aid to
the permanently and totally disabled furnished under the State
plan; except that such increases or reductions shall not be made.
to the extent that such sums have been applied to make the amount
certified for any prior quarter greater or less than the amount
estimated by the Secretary of Health, Education, and Welfare for
such prior quarter: Provided, That any part of the amount re-
covered from the estate of a deceased recipient which is not in
excess of the amount expended by the State or any political sub-
division thereof for the funeral expenses of the deceased shall not
be considered as a basis for reduction under clause (B) of this
paragraph.
(3) The Secretary of the Treasury shall thereupon, through the
Fiscal Service of the Treasury Department, and prior to audit or
settlement by the General Accounting Office, paid to the State,
at the time or times fixed by the Secretary of Health, Education,
and Welfare, the amount so certified.
(c) (1) In order for a State to qualify for payments under para-
graph (3) of subsection (a), its State plan approved under section
1402 must provide that the State agency shall make available to appli-
cants for or recipients of aid to the permanently and totally disabled
at least those services to help them attain or retain capability for self-
support or self-care which are prescribed by the Secretary.
(2) In the case of any State whose State plan included a provision
meeting the requirements of paragraph (1), but with respect to which
the Secretary finds, after reasonable notice and opportunity for hear
ing to the State agency administering or supervising the administra-
tion of such plan, that—
(A) the provision has been so changed that it no longer com-
plies with the requirements of paragraph (1), or
(B) in the administration of the plan there is a failure to com-
ply substantially with such provision,
the Secretary shall notify such State agency that further payments
will not be made to the State under paragraph (3) of subsection (a)
until he is satisfied that there will no longer be any such failure to
comply. Until the Secretary is so satisfied further payments with
respect to the administration of such State plan shall not be made
under paragraph (3) of subsection (a) but shall instead be made,
Sec. 1403(c)
358
subject to the other provisions of this title, under paragraph (4) of
such subsection.
Operation of State Plans
Sec. 1404. In the case of any State plan for aid to the permanently
and totally disabled which has been approved by the Secretary of
Health, Education, and Welfare, if the Secretary after reasonable
notice and opportunity for hearing to the State agency administering
or supervising the administration of such plan, finds—
(1) that the plan has been so changed as to impose any resi-
dence or citizenship requirement prohibited by section 1402(b),
or that in the administration of the plan any such prohibited re-
quirement is imposed, with the knowledge of such State agency, in
a substantial number of cases; or
:
(2) that in the administration of the plan there is a failure to
comply substantially with any provision required by section 1402
(a) to be included in the plan;
""
the Secretary shall notify such State agency for further payments
will not be made to the State (or, in his discretion, that payments will
be limited to categories under or parts of the State plan not affected by
such failure) until he is satisfied that such prohibited requirement
is no longer so imposed and that there is no longer any such failure to
comply. Until he is so satisfied he shall make no further payments to
such State (or shall limit payments to categories under or parts of the
State plan not affected by such failure).
Definition
Sec. 1405. For the purposes of this title, the term "aid to the per-
manently and totally disabled" means money payments to, or (if pro-
vided in or after the third month before the month in which the
recipient makes application for aid) medical care in behalf of, or any
type of remedial care recognized under State law in behalf of, needy
individuals eighteen years of age or older who are permanently and
totally disabled, but does not include any such payments to or care in
behalf of any individual who is an inmate of a public institution.
(except as a patient in a medical institution) or any individual who
is a patient in an institution for tuberculosis or mental diseases. Such
term also includes payments which are not included within the mean-
ing of such term under the preceding sentence, but which would be
so included except that they are made on behalf of such a needy indi-
vidual to another individual who (as determined in accordance with
standards prescribed by the Secretary) is interested in or concerned
with the welfare of such needy individual, but only with respect to a
State whose State plan approved under section 1402 includes provision
for-
359
Sec. 1405
(1) determination by the State agency that such needy indi-
vidual has, by reason of his physical or mental condition, such
inability to manage funds that making payments to him would
be contrary to his welfare and, therefore, it is necessary to pro-
vide such aid through payments described in this sentence;
(2) making such payments only in cases in which such pay-
ments will, under the rules otherwise applicable under the State
plan for determining need and the amount of aid to the perma-
nently and totally disabled to be paid (and in conjunction with
other income and resources), meet all the need of the individuals
with respect to whom such payments are made;
(3) undertaking and continuing special efforts to protect the
welfare of such individual and to improve, to the extent possible,
his capacity for self-care and to manage funds;
C
(4) periodic review by such State agency of the determination
under paragraph (1) to ascertain whether conditions justifying
such determination still exist, with provision for termination of
such payments if they do not and for seeking judicial appoint-
ment of a guardian or other legal representative, as described in
section 1111, if and when it appears that such action will best
serve the interests of such needy individual; and
(5) opportunity for a fair hearing before the State agency on
the determination referred to in paragraph (1) for any individ-
ual with respect to whom it is made.
At the option of a State (if its plan approved under this title so
provides), such term (i) need not include money payments to an
individual who has been absent from such State for a period in excess
of ninety consecutive days (regardless of whether he has maintained
his residence in such State during such period) until he has been
present in such State for thirty consecutive days in the case of such
an individual who has maintained his residence in such State during
such period or ninety consecutive days in the case of any other such
individual, and (ii) may include rent payments made directly to a
public housing agency on behalf of a recipient or a group or groups
of recipients of aid under such plan.
TITLE XV—UNEMPLOYMENT COMPENSATION FOR FED-
ERAL EMPLOYEES AND THE EX-SERVICEMEN'S UN-
EMPLOYMENT COMPENSATION PROGRAM
-
[P.L. 89-554, 80 Stat. 378, approved September 6, 1966, repealed
title XV of the Social Security Act (68 Stat. 1130; 72 Stat. 1087),
and codified the provisions thereof as chapter 85 of title 5 of the
United States Code.]
TITLE XVI-GRANTS TO STATES FOR AID TO THE AGED,
BLIND, OR DISABLED, OR FOR SUCH AID AND MEDI-
CAL ASSISTANCE FOR THE AGED¹
Sec. 1601. Appropriation
Sec. 1602. State Plans for Aid to Aged, Blind, or Disabled, or for Such
Aid and Medical Assistance for the Aged___
Sec. 1603. Payments to States___
Sec. 1604. Operation of State Plans_.
Sec. 1605. Definitions
1
1
Page
-
21-746 O - 78 28
361
361
367
373
373
Appropriation
Section 1601. For the purpose (a) of enabling each State, as far as
practicable under the conditions in such State, to furnish financial
assistance to needy individuals who are 65 years of age or over, are
blind, or are 18 years of age or over and permanently and totally
disabled, (b) of enabling each State, as far as practicable under the
conditions in such State, to furnish medical assistance on behalf of
individuals who are 65 years of age or over and who are not recipients
of aid to the aged, blind, or disabled but whose income and resources
are insufficient to meet the costs of necessary medical services, and (c)
of encouraging each State, as far as practicable under the conditions
in such State, to furnish rehabilitation and other services to help
individuals referred to in clause (a) or (b) to attain or retain capa-
bility for self-support or self-care, there is hereby authorized to be
appropriated for each fiscal year a sum sufficient to carry out the pur-
poses of this title. The sums made available under this section shall
be used for making payments to States which have submitted, and
had approved by the Secretary of Health, Education, and Welfare,
State plans for aid to the aged, blind, or disabled, or for aid to the
aged, blind, or disabled and medical assistance for the aged.
State Plans for Aid to the Aged, Blind, or Disabled, or for Such
Aid and Medical Assistance for the Aged
Sec. 1602. (a) A State plan for aid to the aged, blind, or dis-
abled, or for aid to the aged, blind, or disabled and medical assistance
for the aged, must-
1 P.L. 92-603, section 301, amended title XVI in its entirety under the title "Supple-
mental Security Income for the Aged, Blind, and Disabled," effective January 1, 1974, but
pursuant to P.L. 92-603, sec. 303(b), such amendment does not apply to Puerto Rico,
Guam, and the Virigin Islands. The amended title starts on page 377, this volume.
2 This table of contents does not appear in the law.
(361)
Sec. 1602(a)
362
(1) except to the extent permitted by the Secretary with re-
spect to services, provide that it shall be in effect in all political
subdivisions of the State, and if administered by them, be manda-
tory upon them;
(2) provide for financial participation by the State;
(3) either provide for the establishment or designation of a
single State agency to administer the plan, or provide for the
establishment or designation of a single State agency to supervise
the administration of the plan;
(4)(A) provide for granting an opportunity for a fair hear-
ing before the State agency to any individual whose claim for aid
or assistance under the plan is denied or is not acted upon with
reasonable promptness, and (B) that if the State plan is admin-
istered in each of the political subdivisions of the State by a local
agency and such local agency provides a hearing at which evi-
dence may be presented prior to a hearing before the State agency,
such local agency may put into effect immediately upon issuance
its decision upon the matter considered at such hearing;
(5) provide (A) such methods of administration (including
methods relating to the establishment and maintenance of per-
sonnel standards on a merit basis, except that the Secretary shall
exercise no authority with respect to the selection, tenure of office,
and compensation of any individual employed in accordance with
such methods) as are found by the Secretary to be necessary for
the proper and efficient operation of the plan, and (B) for the
training and effective use of paid subprofessional staff, with par-
ticular emphasis on the full-time or part-time employment of
recipients and other persons of low income, as community serv-
ice aides, in the administration of the plan and for the use of
nonpaid or partially paid volunteers in a social service volunteer
program in providing services to applicants and recipients and in
assisting any advisory committees established by the State agency;
(6) provide that the State agency will make such reports, in
such form and containing such information, as the Secretary may
from time to time require, and comply with such provisions as
the Secretary may from time to time find necessary to assure the
correctness and verification of such reports;
(7) provide safeguards which permit the use or disclosure of
information concerning applicants or recipients only (A) to pub-
lic officials who require such information in connection with their
official duties, or (B) to other persons for purposes directly con-
nected with the administration of the State plan;
(8) provide that all individuals wishing to make application
for aid or assistance under the plan shall have opportunity to
363
Sec. 1602(a)
do so, and that such aid or assistance shall be furnished with
reasonable promptness to all eligible individuals;
(9) provide, if the plan includes aid or assistance to or on be-
half of individuals in private or public institutions, for the estab-
lishment or designation of a State authority or authorities which
shall be responsible for establishing and maintaining standards
for;
(10) provide a description of the services (if any) which the
State agency makes available (using whatever internal organiza-
tional arrangement it finds appropriate for this purpose) to ap-
plicants for or recipients of aid or assistance under the plan to
help them attain self-support or self-care, including a description
of the steps taken to assure, in the provision of such services, maxi-
mum utilization of other agencies providing similar or related
services;
(11) provide that no aid or assistance will be furnished any
individual under the plan with respect to any period with respect
to which he is receiving assistance under the State plan approved
under title I or aid under the State plan approved under part A
of title IV or under title X or XIV;
(12) provide that, in determining whether an individual is
blind, there shall be an examination by a physician skilled in
the diseases of the eye or by an optometrist, whichever the indi-
vidual may select;
(13) include reasonable standards, consistent with the objec-
tives of this title, for determining eligibility for and the extent
of aid or assistance under the plan;
(14) provide that the State agency shall, in determining need
for aid to the aged, blind, or disabled, take into consideration
any other income and resources of an individual claiming such
aid as well as any expenses reasonably attributable to the earn-
ing of any such income; except that, in making such determina-
tion with respect to any individual-
(A) if such individual is blind, the State agency (i) shall
disregard the first $85 per month of earned income plus one-
half of earned income in excess of $85 per month, and (ii)
shall, for a period not in excess of 12 months, and may, for
a period not in excess of 36 months, disregard such additional
amounts of other income and resources, in the case of any
such individual who has a plan for achieving self-support
approved by the State agency, as may be necessary for the
fulfillment of such plan,
(B) if such individual is not blind but is permanently and
totally disabled, (i) of the first $80 per month of earned
Sec. 1602(a)
364
income, the State agency may disregard not more than the
first $20 thereof plus one-half of the remainder, and (ii) the
State agency may, for a period not in excess of 36 months,
disregard such additional amounts of other income and re-
sources, in the case of any such individual who has a plan
for achieving self-support approved by the State agency,
as may be necessary for the fulfillment of such plan, but only
with respect to the part or parts of such period during sub-
stantially all of which he is actually undergoing vocational
rehabilitation,
(C) if such individual has attained age 65 and is neither
blind nor permanently and totally disabled, of the first $80
per month of earned income the State agency may disregard
not more than the first $20 thereof plus one-half of the
remainder, and
(D) the State agency may, before disregarding the
amounts referred to above in this paragraph (14), disregard
not more than $7.50 of any income;
(15) if the State plan includes medical assistance for the aged—
(A) provide for inclusion of some institutional and some
noninstitutional care and services;
(B) provide that no enrollment fee, premium, or similar
charge will be imposed as a condition of any individual's
eligibility for medical assistance for the aged under the plan;
(C) provide for inclusion, to the extent required by regu-
lations prescribed by the Secretary, of provisions (conform-
ing to such regulations) with respect to the furnishing of
such assistance to individuals who are residents of the State
but are absent therefrom; and
(D) provide that no lien may be imposed against the
property of any individual prior to his death on account of
medical assistance for the aged paid or to be paid on his be-
half under the plan (except pursuant to the judgment of a
court on account of benefits incorrectly paid on behalf of
such individual), and that there shall be no adjustment or
recovery (except, after the death of such individual and his
surviving spouse, if any, from such individual's estate) of
any medical assistance for the aged correctly paid on behalf
of such individual under the plan;
(16) if the State plan includes aid or assistance to or in behalf
of individuals 65 years of age or older who are patients in institu-
tions for mental diseases-
(A) provide for having in effect such agreements or other
arrangements with State authorities concerned with mental
365
Sec. 1602(a)
diseases, and where appropriate, with such institutions, as
may be necessary for carrying out the State plan, including
arrangements for joint planning and for development of
alternate methods of care, arrangements providing assurance
of immediate readmittance to institutions where needed for
individuals under alternate plans of care, and arrangements
providing for access to patients and facilities for furnishing
information, and for making reports;
(B) provide for an individual plan for each such patient
to assure that the institutional care provided to him is in his
best interests, including, to that end, assurances that there
will be initial and periodic review of his medical and other
needs, that he will be given appropriate medical treatment
within the institution, and that there will be a periodic
determination of his need for continued treatment in the
institution;
(C) provide for the development of alternate plans of
care, making maximum utilization of available resources, for
recipients 65 years of age or older who would otherwise need
care in such institutions, including appropriate medical
treatment and other aid or assistance; for services referred
to in section 1603(a)(4)(A) (i) and (ii) which are appro-
priate for such recipients and for such patients; and for
methods of administration necessary to assure that the re-
sponsibilities of the State agency under the State plan with
respect to such recipients and such patients will be effectively
carried out; and
(D) provide methods of determining the reasonable cost
of institutional care for such patients; and
(17) if the State plan includes aid or assistance to or in behalf
of individuals 65 years of age or older who are patients in public
institutions for mental diseases, show that the State is making
satisfactory progress toward developing and implementing a
comprehensive mental health program, including provision for
utilization of community mental health centers, nursing homes,
and other alternatives to care in public institutions for mental
diseases;
Notwithstanding paragraph (3), if on January 1, 1962, and on the
date on which a State submits its plan for approval under this title,
the State agency which administered or supervised the administration
of the plan of such State approved under title X was different from
the State agency which administered or supervised the administration
of the plan of such State approved under title I and the State agency
which administered or supervised the administration of the plan
Sec. 1602(a)
366
of such State approved under title XIV, the State agency which
administered or supervised the administration of such plan approved
under title X may be designated to administer or supervise the admin-
istration of the portion of the State plan for aid to the aged, blind,
or disabled (or for aid to the aged, blind, or disabled and medical
assistance for the aged) which relates to blind individuals and a
separate State agency may be established or designated to administer
or supervise the administration of the rest of such plan; and in such
case the part of the plan which each such agency administers, or the
administration of which each such agency supervises, shall be regarded
as a separate plan for purposes of this title.
(b) The Secretary shall approve any plan which fulfills the condi-
tions specified in subsection (a), except that he shall not approve any
plan which imposes, as a condition of eligibility for aid or assistance
under the plan-
K
(1) an age requirement of more than sixty-five years; or
(2) any residence requirement which (A) in the case of appli-
cants for aid to the aged, blind, or disabled excludes any resident
of the State who has resided therein five years during the nine
years immediately preceding the application for such aid and has
resided therein continuously for one year immediately preceding
the application, and (B) in the case of applicants for medical
assistance for the aged, excludes any individual who resides in
the State; or
(3) any citizenship requirement which excludes any citizen of
the United States.
At the option of the State, the plan may provide that manuals and
other policy issuances will be furnished to persons without charge for
the reasonable cost of such materials, but such provision shall not be
required by the Secretary as a condition for the approval of such plan
under this title. In the case of any State to which the provisions of
section 344 of the Social Security Act Amendments of 1950 were
applicable on January 1, 1962, and to which the sentence of section
1002 (b) following paragraph (2) thereof is applicable on the date on
which its State plan for aid to the aged, blind or disabled (or for aid
to the aged, blind, or disabled and medical assistance for the aged)
was submitted for approval under this title, the Secretary shall ap-
prove the plan of such State for aid to the aged, blind, or disabled.
(or for aid to the aged, blind, or disabled and medical assistance for
the aged) for purposes of this title, even though it does not meet the
requirements of paragraph (14) of subsection (a) if it meets all other
requirements of this title for an approved plan for aid to the aged,
blind, or disabled (or for aid to the aged, blind, or disabled and med-
ical assistance for the aged); but payments under section 1603 shall
367
Sec. 1603(a)
be made, in the case of any such plan, only with respect to expendi-
tures thereunder which would be included as expenditures for the
purposes of section 1603 under a plan approved under this section
without regard to the provisions of this sentence.
(c) Subject to the last sentence of subsection (a), nothing in this
title shall be construed to permit a State to have in effect with respect.
to any period more than one State plan approved under this title.
Payments to States
Sec. 1603. (a) From the sums appropriated therefor, the Sec-
retary shall pay to each State which has a plan approved under this
title, for each quarter, beginning with the quarter commencing October
1, 1962—
(1) in the case of any State other than Puerto Rico, the Virgin
Islands, and Guam, an amount equal to the sum of the following
proportions of the total amounts expended during each month of
such quarters to the aged, blind, or disabled under the State plan
(including expenditures for premiums under Part B of title
XVIII for individuals who are recipients of money payments
under such plan and other insurance premiums for medical or
any other type of remedial care or the cost thereof)-
(A) 337 of such expenditures, not counting so much of
any expenditure with respect to such month as exceeds the
product of $37 multiplied by the total number of recipients of
such aid for such month (which total number, for purposes
of this subsection means (i) the number of individuals who
received such aid in the form of money payments for such
month, plus (ii) the number of other individuals with re-
spect to whom expenditures were made in such month as aid
to the aged, blind, or disabled in the form of medical or any
other type of remedial care); plus
(B) the larger of the following:
(i) (I) the Federal percentage (as defined in section
1101(a)(8)) of the amount by which such expenditures
exceed the amount which may be counted under clause
(A), not counting so much of such excess with respect
to such month as exceeds the product of $38 multiplied
by the total number of recipients of aid to the aged, blind,
or disabled for such month, plus (II) 15 per centum of
the total expended during such month as aid to the aged,
blind, or disabled under the State plan in the form of
medical or any other type of remedial care, not counting
so much of such expenditure with respect to such month
Sec. 1603(a)
368
as exceeds the product of $15 multiplied by the total
number of recipients of aid to the aged, blind, or disabled
for such month, or
(ii) (I) the Federal medical percentage (as defined
in section 6(c)) of the amount by which such expendi-
tures exceed the maximum which may be counted under
clause (A), not counting so much of any expenditure
with respect to such month as exceeds (a) the product of
$52 multiplied by the total number of such recipients of
aid to the aged, blind, or disabled for such month, or (b)
if smaller, the total expended as aid to the aged, blind, or
disabled in the form of medical or any other type of
remedial care with respect to such month plus the prod-
uct of $37 multiplied by such total number of such re-
cipients plus (II) the Federal percentage of the amount
by which the total expended during such month as aid to
the aged, blind, or disabled under the State plan exceeds
the amount which may be counted under clause (A) and
the preceding provisions of this clause (B)(ii), not
counting so much of such excess with respect to such
month as exceeds the product of $38 multiplied by the
total number of such recipients of aid to the aged, blind,
or disabled for such month;
(2) in the case of Puerto Rico, the Virgin Islands, and Guam,
an amount equal to—
(A) one-half of the total of the sums expended during such
quarter as aid to the aged, blind, or disabled under the State
plan (including expenditures for premiums under part B of
title XVIII for individuals who are recipients of money pay-
ments under such plan and other insurance premiums for
medical or any other type of remedial care or the cost there-
of), not counting so much of any expenditure with respect to
any month as exceeds $37.50 multiplied by the total number
of recipients of aid to the aged, blind, or disabled for such
month; plus
(B) the larger of the following amounts: (i) one-half of
the amount by which such expenditures exceed the maximum
which may be counted under clause (A), not counting so
much of any expenditure with respect to any month as ex-
ceeds (I) the product of $45 multiplied by the total number
of such recipients of aid to the aged, blind, or disabled for
such month, or (II) if smaller, the total expended as aid to
the aged, blind, or disabled in the form of medical or any
other type of remedial care with respect to such month plus
369
Sec. 1603(a)
400
the product of $37.50 multiplied by the total number of such
recipients, or (ii) 15 per centum of the total of the sums ex-
pended during such quarter as aid to the aged, blind, or dis-
abled under the State plan in the form of medical or any
other type of remedial care, not counting so much of any ex-
penditure with respect to any month as exceeds the product
of $7.50 multiplied by the total number of such recipients of
aid to the aged, blind, or disabled for such month;
(3) in the case of any State, an amount equal to the Federal
medical percentage (as defined in section 61 (c)) of the total
amounts expended during such quarter as medical assistance for
the aged under the State plan (including expenditures for in-
surance premiums for medical or any other type of remedial care
or the cost thereof); and
(4) in the case of any State whose State plan approved under
section 1602 meets the requirements of subsection (c) (1), an
amount equal to the sum of the following proportions of the total
amounts expended during such quarter as found necessary by the
Secretary of Health, Education, and Welfare for the proper and
efficient administration of the State plan-
(A) 75 per centum of so much of such expenditures as are
for-
S
(i) services which are prescribed pursuant to subsec-
tion (c)(1) and are provided (in accordance with the
next sentence) to applicants for or recipients of aid or
assistance under the plan to help them attain or retain
capability for self-support or self-care, or
(ii) other services, specified by the Secretary as likely
to prevent or reduce dependency, so provided to such
applicants or recipients, or
(iii) any of the services prescribed pursuant to sub-
section (c) (1), and of the services specified as provided
in clause (ii), which the Secretary may specify as ap-
propriate for individuals who, within such period or pe-
riods as the Secretary may prescribe, have been or are
likely to become applicants for or recipients of aid or
assistance under the plan if such services are requested
by such individuals and are provided to such individuals
in accordance with the next sentence, or
(iv) the training (including both short- and long-term
training at educational institutions through grants to
such institutions or by direct financial assistance to stu-
dents enrolled in such institutions) of personnel employed
or preparing for employment by the State agency or by
Sec. 1603(a)
370
the local agency administering the plan in the political
subdivision; plus
B) one-half of so much of such expenditures (not in-
cluded under subparagraph (A)) as are for services pro-
vided (in accordance with the next sentence) to applicants
for or recipients of aid or assistance under the plan, and to
individuals requesting such services who (within such pe-
riod or periods as the Secretary may prescribe) have been or
are likely to become applicants for or recipients of such aid
or assistance;
(C) one-half of the remainder of such expenditures. The
services referred to in subparagraphs (A) and (B) shall,
except to the extent specified by the Secretary, include only-
(D) services provided by the staff of the State agency, or
of the local agency administering the State plan in the polit-
ical subdivision: Provided, That no funds authorized under
this title shall be available for services defined as vocational
rehabilitation services under the Vocational Rehabilitation
Act (i) which are available to individuals in need of them
under programs for their rehabilitation carried on under a
State plan approved under such Act, or (ii) which the State
agency or agencies administering or supervising the adminis-
tration of the State plan approved under such Act are able
and willing to provide if reimbursed for the cost thereof pur-
suant to agreement under subparagraph (E), if provided by
such staff, and
(E) under conditions which shall be prescribed by the
Secretary, services which in the judgment of the State agency
cannot be as economically or as effectively provided by the
staff of such State or local agency and are not otherwise
reasonably available to individuals in need of them, and
which are provided, pursuant to agreement with the State
agency, by the State health authority or the State agency or
agencies administering or supervising the administration of
the State plan for vocational rehabilitation services approved
under the Vocational Rehabilitation Act or by any other State
agency which the Secretary may determine to be appropriate
(whether provided by its staff or by contract with public
(local) or nonprofit private agencies);
except that services described in clause (ii) of subparagraph (D)
hereof may be provided only pursuant to agreement with such
State agency or agencies administering or supervising the admin-
istration of the State plan for vocational rehabilitation services
so approved. The portion of the amount expended for administra-
371
Sec. 1603(c)
tion of the State plan to which subparagraph (A) applies and the
portion thereof to which subparagraphs (B) and (C) apply shall
be determined in accordance with such methods and procedures as
may be permitted by the Secretary; and
(5) in the case of any State whose State plan approved under
section 1602 does not meet the requirements of subsection (c) (1),
an amount equal to one-half of the total of the sums expended dur-
ing such quarter as found necessary by the Secretary for the
proper and efficient administration of the State plan, including.
services referred to in paragraph (4) and provided in accordance
with the provisions of such paragraph.
(b) (1) Prior to the beginning of each quarter, the Secretary shall
estimate the amount to which a State will be entitled under subsection
(a) for such quarter, such estimates to be based on (A) a report filed
by the State containing its estimate of the total sum to be expended in
such quarter in accordance with the provisions of such subsection, and
stating the amount appropriated or made available by the State and
its political subdivisions for such expenditures in such quarter, and
if such amount is less than the State's proportionate share of the total
sum of such estimated expenditures, the source or sources from which
the difference is expected to be derived, and (B) such other investiga-
tion as the Secretary may find necessary.
(2) The Secretary shall then pay, in such installments as he may
determine, to the State the amount so estimated, reduced or increased
to the extent of any overpayment or underpayment which the Sec-
retary determines was made under this section to such State for any
prior quarter and with respect to which adjustment has not already
been made under this subsection.
(3) The pro rata share to which the United States is equitably
entitled, as determined by the Secretary, of the net amount recovered
during any quarter by the State or any political subdivision thereof
with respect to aid or assistance furnished under the State plan, but
excluding any amount of such aid or assistance recovered from the
estate of a deceased recipient which is not in excess of the amount
expended by the State or any political subdivision thereof for the
funeral expenses of the deceased, shall be considered an overpayment
to be adjusted under this subsection.
(4) Upon the making of any estimate by the Secretary under this
subsection, any appropriations available for payments under this sec-
tion shall be deemed obligated.
(c) (1) In order for a State to qualify for payments under para-
graph (4) of subsection (a), its State plan approved under section
1602 must provide that the State agency shall make available to
applicants for or recipients of aid to the aged, blind, or disabled under
Sec. 1603(c)
372
such State plan at least those services to help them attain or retain
capability for self-support or self-care which are prescribed by the
Secretary.
(2) In the case of any State whose State plan included a provision
meeting the requirements of paragraph (1), but with respect to
which the Secretary finds, after reasonable notice and opportunity
for hearing to the State agency, administering or supervising the
administration of such plan, that-
(A) the provision has been so changed that it no longer com-
plies with the requirements of paragraph (1), or
(B) in the administration of the plan there is a failure to
comply substantially with such provision,
the Secretary shall notify such State agency that further payments
will not be made to the State under paragraph (4) of subsection (a)
until he is satisfied that there will no longer be any such failure to
comply. Until the Secretary is so satisfied further payments with re-
spect to the administration of such State plan shall not be made under
paragraph (4) of subsection (a) but shall instead be made, subject
to the other provisions of this title, under paragraph (5) of such
subsection.
(d) Notwithstanding the preceding provisions of this section, the
amount determined under such provisions for any State for any
quarter which is attributable to expenditures with respect to indi-
viduals 65 years of age or older who are patients in institutions for
mental diseases shall be paid only to the extent that the State makes
a showing satisfactory to the Secretary that total expenditures in the
State from Federal, State, and local sources for mental health serv-
ices (including payments to or in behalf of individuals with mental
health problems) under State and local public health and public
welfare programs for such quarter exceed the average of the total
expenditures in the State from such sources for such services under
such programs for each quarter of the fiscal year ending June 30,
1965. For purposes of this subsection, expenditures for such services
for each quarter in the fiscal year ending June 30, 1965, in the case
of any State shall be determined on the basis of the latest data, satis-
factory to the Secretary, available to him at the time of the first
determination by him under this subsection for such State; and ex-
penditures for such services for any quarter beginning after Decem-
ber 31, 1965, in the case of any State shall be determined on the basis
of the latest data, satisfactory to the Secretary, available to him at
the time of the determination under this subsection for such State
for such quarter; and determinations so made shall be conclusive for
purposes of this subsection.
373
Sec. 1605(a)
Operation of State Plans
Sec. 1604. If the Secretary, after reasonable notice and opportunity
for hearing to the State agency administering or supervising the ad-
ministration of the State plan approved under this title, finds—
(1) that the plan has been so changed that it no longer com-
plies with the provisions of section 1602; or
(2) that in the administration of the plan there is a failure to
comply substantially with any such provision;
the Secretary shall notify such State agency that further payments
will not be made to the State (or, in his discretion, that payments will
be limited to categories under or parts of the State plan not affected
by such failure), until the Secretary is satisfied that there will no
longer be any such failure to comply. Until he is so satisfied he shall
make no further payments to such State (or shall limit payments to
categories under or parts of the State plan not affected by such
failure).
Definitions
Sec. 1605. (a) For purposes of this title, the term "aid to the
aged, blind, or disabled" means money payments to, or (if provided
in or after the third month before the month in which the recipient
makes application for aid) medical care in behalf of or any type of
remedial care recognized under State law in behalf of, needy individ-
uals who are 65 years of age or older, are blind, or are 18 years of age
or over and permanently and totally disabled, but such term does not
include-
(1) any such payments to or care in behalf of any individual
who is an inmate of a public institution (except as a patient in a
medical institution); or
(2) any such payments to or care in behalf of any individual
who has not attained 65 years of age and who is a patient in an
institution for tuberculosis or mental diseases.
Such term also includes payments which are not included within the
meaning of such term under the preceding sentence, but which would
be so included except that they are made on behalf of such a needy
individual to another individual who (as determined in accordance
with standards prescribed by the Secretary) is interested in or con-
cerned with the welfare of such needy individual, but only with re-
spect to a State whose State plan approved under section 1602 includes
provision for-
(A) determination by the State agency that such needy indi-
vidual has, by reason of his physical or mental condition, such
inability to manage funds that making payments to him would
be contrary to his welfare and, therefore, it is necessary to provide
such aid through payments described in this sentence;
Sec. 1605(a)
374
(B) making such payments only in cases in which such pay-
ments will, under the 'rules otherwise applicable under the State
plan for determining need and the amount of aid to the aged,
blind, or disabled to be paid (and in conjunction with other in-
come and resources), meet all the need of the individuals with
respect to whom such payments are made;
(C) undertaking and continuing special efforts to protect the
welfare of such individual and to improve, to the extent possible,
his capacity for self-care and to manage funds;
(D) periodic review by such State agency of the determination
under clause (A) to ascertain whether conditions justify such de-
termination still exist, with provision for termination of such
payments if they do not and for seeking judicial appointment of
a guardian or other legal representative, as described in section
1111, if and when it appears that such action will best serve the
interests of such needy individual; and
(E) opportunity for a fair hearing before the State agency on
the determination referred to in clause (A) for any individual
with respect to whom it is made.
At the option of a State (if its plan approved under this title so pro-
vides), such term (i) need not include money payments to an individ-
ual who has been absent from such State for a period in excess of ninety
consecutive days (regardless of whether he has maintained his resi-
dence in such State during such period) until he has been present in
such State for thirty consecutive days in the case of such an individual
who has maintained his residence in such State during such period or
ninety consecutive days in the case of any other such individual, and
(ii) may include rent payments made directly to a public housing
agency on behalf of a recipient or a group or groups of recipients of
aid under such plan.
(b) For purposes of this title, the term "medical assistance for the
aged" means payment of part or all of the cost of the following care
and services (if provided in or after the third month before the month
in which the recipient makes application for assistance) for individ-
uals who are sixty-five years of age or older and who are not recipients
of aid to the aged, blind, or disabled (except, for any month, for recipi-
ents of aid to the aged, blind, or disabled who are admitted to or dis-
charged from a medical institution during such month) but whose
income and resources are insufficient to meet all of such cost-
(1) inpatient hospital services;
(2) skilled nursing-home services;
(3) physicians' services;
(4) outpatient hospital or clinic services;
4
375
Sec. 1605(b)
(5) home health care services;
(6) private duty nursing services;
(7) physical therapy and related services;
(8) dental services;
(9) laboratory and X-ray services;
(10) prescribed drugs, eyeglasses, dentures, and prosthetic de-
vices;
(11) diagnostic, screening, and preventive services; and
(12) any other medical care or remedial care recognized under
State law;
except that such term does not include any such payments with respect
to care or services for any individual who is an inmate of a public
institution (except as a patient in a medical institution).
TITLE XVI—SUPPLEMENTAL SECURITY INCOME FOR
THE AGED, BLIND, AND DISABLED
Sec. 1601. Purpose; appropriations--
Sec. 1602. Basic eligibility for benefits__
Sec. 1611. Eligibility for and amount of benefits.
(a) Definition of eligible individual_
(b) Amount of benefits__.
(c) Period for determination of benefits.
Sec. 1612. Income
(d) Special limits on gross income_
(e) Limitation on eligibility of certain individuals_
(f) Suspension of payments to individuals who are outside
the United States_
(g) Certain individuals deemed to meet resources test_.
(h) Certain individuals deemed to meet income test.
Sec. 1613. Resources
PART A-DETERMINATION OF BENEFITS
(a) Meaning of income_
(b) Exclusions from income.
Sec. 1614. Meaning of terms__
(a) Exclusions from resources.
(b) Disposition of resources_
21-746 O 78
(a) Aged, blind, or disabled individual.
(b) Eligible spouse
(c) Definition of child___.
(d) Determination of marital relationships_.
(e) United States_.
(f) Income and resources of individuals other than eli-
gible individuals and eligible spouses_
Sec. 1615. Rehabilitation services for blind and disabled individuals..
Sec. 1616. Optional State Supplementation____
Sec. 1617. Cost-of-living adjustments in benefits____
Sec. 1618. Operation of State supplementation programs-.
Sec. 1631. Payments and procedures___
-
PART B-PROCEDURAL AND GENERAL PROVISIONS
Sec. 1632. Penalties for fraud__
Sec. 1633. Administration
Sec. 1634. Determinations of medicaid eligibility.
(a) Payment of benefits___
(b) Overpayments and underpayments.
(c) Hearings and review.
(d) Procedures; prohibitions of assignments; representa-
tion of claimants..
(e) Applications and furnishing of information….
(f) Furnishing of information by other agencies.
(g) Reimbursement to States for interim assistance pay-
ments
1 This table of contents does not appear in the law.
1
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377
378
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378
378
379
379
379
381
381
381
382
382
384
386
386
386
386
386
389
389
389
389
390
390
392
395
395
396
396
397
397
Purpose; Appropriations
Section 1601. For the purpose of establishing a national program to
provide supplemental security income to individuals who have attained
age 65 or are blind or disabled, there are authorized to be appropriated
sums sufficient to carry out this title.
398
399
400
400
401
402
402
(377)
Sec. 1602
Revised April 1978
378
Basic Eligibility for Benefits
Section 1602. Every aged, blind, or disabled individual who is deter-
mined under part A to be eligible on the basis of his income and
resources shall, in accordance with and subject to the provisions of
this title, be paid benefits by the Secretary of Health, Education, and
Welfare.
Part A-Determination of Benefits
Eligibility for and Amount of Benefits
Definition of Eligible Individual
Sec. 1611. (a) (1) Each aged, blind, or disabled individual who does
not have an eligible spouse and-
(A) whose income, other than income excluded pursuant to
section 1612 (b), is at a rate of not more than $1,752 (or, if greater,
the amount determined under section 1617)¹ for the calendar year
1974 or any calendar year thereafter, and
(B) whose resources, other than resources excluded pursuant
to section 1613(a), are not more than (i) in case such individual
has a spouse with whom he is living, $2,250, or (ii) in case such
individual has no spouse with whom he is living, $1,500,
shall be an eligible individual for purposes of this title.
(2) Each aged, blind, or disabled individual who has an eligible
spouse and-
(A) whose income (together with the income of such spouse),
other than income excluded pursuant to section 1612(b), is at a
rate of not more than $2,628 (or, if greater, the amount deter-
mined under section 1617)¹ for the calendar year 1974, or any
calendar year thereafter, and
(B) whose resources (together with the resources of such
spouse), other than resources excluded pursuant to section 1613
(a), are not more than $2,250,
shall be an eligible individual for purposes of this title.
Amounts of Benefits
(b) (1) The benefit under this title for an individual who does not
have an eligible spouse shall be payable at the rate of $1,752 (or, if
greater, the amount determined under section 1617)¹ for the calendar
year 1974 and any calendar year thereafter, reduced by the amount
of income, not excluded pursuant to section 1612(b), of such
individual.
(2) The benefit under this title for an individual who has an
eligible spouse shall be payable at the rate of $2,628 (or, if greater, the
amount determined under section 1617)¹ for the calendar year 1974 and
1 See Appendix E.
379
Sec. 1611(e)
any calendar year thereafter, reduced by the amount of income, not
excluded pursuant to section 1612(b), of such individual and spouse.
Period for Determination of Benefits
(c)(1) An individual's eligibility for benefits under this title and
the amount of such benefits shall be determined for each quarter of a
calendar year except that, if the initial application for benefits is filed
in the second or third month of a calendar quarter, such determina-
tions shall be made for each month in such quarter. Eligibility for and
the amount of such benefits for any quarter shall be redetermined at
such time or times as may be provided by the Secretary.
(2) For purposes of this subsection an application shall be con-
sidered to be effective as of the first day of the month in which it was
actually filed.
Special Limits on Gross Income
(d) The Secretary may prescribe the circumstances under which,
consistently with the purposes of this title, the gross income from a
trade or business (including farming) will be considered sufficiently
large to make an individual ineligible for benefits under this title. For
purposes of this subsection, the term "gross income" has the same
meaning as when used in chapter 1 of the Internal Revenue Code of
1954.
Limitation on Eligibility of Certain Individuals
(e) (1) (A) Except as provided in subparagraph (B) and (C), no
person shall be an eligible individual or eligible spouse for purposes
of this title with respect to any month if throughout such month he is
an inmate of a public institution.¹
(B) In any case where an eligible individual or his eligible spouse
(if any) is, throughout any month, in a hospital, extended care
facility, nursing home, or intermediate care facility receiving pay-
ments (with respect to such individual or spouse) under a State plan
approved under title XIX, the benefit under this title for such indi-
vidual for such month shall be payable-
1
(i) at a rate not in excess of $300 per year (reduced by the
amount of any income not excluded pursuant to section 1612(b))
in the case of an individual who does not have an eligible spouse;
1 Subparagraph (A) was amended by section 505(a) of P.L. 94–566.
Sec. 1611(e)
380
(ii) in the case of an individual who has an eligible spouse, if
only one of them is in such a hospital, home or facility through-
out such month, at a rate not in excess of the sum of—
(I) the rate of $300 per year (reduced by the amount of
any income, not excluded pursuant to section 1612(b), of the
one who is in such hospital, home, or facility), and
(II) the applicable rate specified in subsection (b) (1)
(reduced by the amount of any income, not excluded pur-
suant to section 1612(b), of the other); and ¹
(iii) at a rate not in excess of $600 per year (reduced by the
amount of any income not excluded pursuant to section 1612(b))
in the case of an individual who has an eligible spouse, if both of
them are in such a hospital, home, or facility throughout such
month.
(C) As used in subparagraph (A), the term "public institution"
does not include a publicly operated community residence which serves
no more than 16 residents.2
(2) No person shall be an eligible individual or eligible spouse for
purposes of this title if, after notice to such person by the Secre-
tary that it is likely that such person is eligible for any payments of
the type enumerated in section 1612(a) (2) (B), such person fails
within 30 days to take all appropriate steps to apply for and (if
eligible) obtain any such payments.
(3) (A) No person who is an aged, blind, or disabled individual
solely by reason of disability (as determined under section 1614 (a)
(3)) shall be an eligible individual or eligible spouse for purposes of
this title with respect to any month if such individual is medically
determined to be a drug addict or an alcoholic unless such individual
is undergoing any treatment that may be appropriate for his condition
as a drug addict or alcoholic (as the case may be) at an institution
or facility approved for purposes of this paragraph by the Secretary
(so long as such treatment is available) and demonstrates that he is
complying with the terms, conditions, and requirements of such treat-
ment and with requirements imposed by the Secretary under subpara-
graph (B).
(B) The Secretary shall provide for the monitoring and testing
of all individuals who are receiving benefits under this title and who
as a condition of such benefits are required to be undergoing treat-
ment and complying with the terms, conditions, and requirements
thereof as described in subparagraph (A), in order to assure such
compliance and to determine the extent to which the imposition of
such requirement is contributing to the achievement of the purposes
1 Clause (ii) was amended by section 502 of P.L. 94–566.
2 Subparagraph (C) was added by section 505 (a) of P.L. 94-566.
381
Sec. 1611(h)
of this title. The Secretary shall annually submit to the Congress a
full and complete report on his activities under this paragraph.
Suspension of Payments to Individuals Who Are Outside the United States
(f) Notwithstanding any other provision of this title, no indi-
vidual shall be considered an eligible individual for purposes of this
title for any month during all of which such individual is outside the
United States (and no person shall be considered the eligible spouse
of an individual for purposes of this title with respect to any month
during all of which such person is outside the United States). For
purposes of the preceding sentence, after an individual has been outside
the United States for any period of 30 consecutive days, he shall be
treated as remaining outside the United States until he has been in
the United States for a period of 30 consecutive days.
Certain Individuals Deemed To Meet Resources Test
(g) In the case of any individual or any individual and his spouse
(as the case may be) who—
(1) received aid or assistance for December 1973 under a plan
of a State approved under title I, X, XIV, or XVI,
(2) has, since December 31, 1973, continuously resided in the
State under the plan of which he or they received such aid or
assistance for December 1973, and
(3) has, since December 31, 1973, continuously been (except for
periods not in excess of six consecutive months) an eligible
individual or eligible spouse with respect to whom supplemental
security income benefits are payable,
the resources of such individual or such individual and his spouse (as
the case may be) shall be deemed not to exceed the amount specified in
sections 1611(a)(1) (B) and 1611(a)(2)(B) during any period that
the resources of such individual or individuals and his spouse (as the
case may be) does not exceed the maximum amount of resources speci-
fied in the State plan, as in effect for October 1972, under which he or
they received such aid or assistance for December 1973.
Certain Individuals Deemed To Meet Income Test
(h) In determining eligibility for, and the amount of, benefits
payable under this section in the case of any individual or any indi-
vidual and his spouse (as the case may be) who-
(1) received aid or assistance for December 1973 under a plan
of a State approved under title X or XVI,
(2) is blind under the definition of that term in the plan, as
in effect for October 1972, under which he or they received such
aid or assistance for December 1973,
M
Sec. 1611(h)
382
(3) has, since December 31, 1973, continuously resided in the
State under the plan of which he or they received such aid or
assistance for December 1973, and
(4) has, since December 31, 1973, continuously been (except
for periods not in excess of six consecutive months) an eligible
individual or an eligible spouse with respect to whom supple-
mental security income benefits are payable,
there shall be disregarded an amount equal to the greater of (A) the
maximum amount of any earned or unearned income which could have
been disregarded under the State plan, as in effect for October 1972,
under which he or they received such aid or assistance for December
1973, and (B) the amount which would be required to be disregarded
under section 1612 without application of this subsection.
Income
Meaning of Income
Sec. 1612. (a) For purposes of this title, income means both earned
income and unearned income; and-
(1) earned income means only-
(A) wages as determined under section 203 (f) (5) (C) ; and
(B) net earnings from self-employment, as defined in sec-
tion 211 (without the application of the second and third
sentences following subsection (a)(10), and the last para-
graph of subsection (a)), including earnings for services
described in paragraphs (4), (5), and (6) of subsection (c);
and
K
1
(2) unearned income means all other income, including--
(A) support and maintenance furnished in cash or kind;
except that (i) in the case of any individual (and his eligible
spouse, if any) living in another person's household and
receiving support and maintenance in kind from such person,
the dollar amounts otherwise applicable to such individual
(and spouse) as specified in subsections (a) and (b) of sec-
tion 1611 shall be reduced by 33% percent in lieu of including
such support and maintenance in the unearned income of
such individual (and spouse) as otherwise required by this
subparagraph, (ii) in the case of any individual or his
eligible spouse who resides in a nonprofit retirement home or
similar nonprofit institution, support and maintenance shall
not be included to the extent that it is furnished to such in-
dividual or such spouse without such institution receiving
payment therefor (unless such institution has expressly
undertaken an obligation to furnish full support and main-
tenance to such individual or spouse without any current or
-
Revised April 1978
383
Sec. 1612(a)
future payment therefor) or payment there for is made by
another nonprofit organization, and (iii) support and
maintenance shall not be included and the provisions of
clause (i) shall not be applicable in the case of any indi-
vidual (and his eligible spouse, if any) for the period which
begins with the month in which such individual (or such
individual and his eligible spouse) began to receive sup-
port and maintenance while living in a residential facility
(including a private household) maintained by another
person and ends with the close of the month in which such
individual (or such individual and his eligible spouse)
ceases to receive support and maintenance while living in
such a residential facility (or, if earlier, with the close of
the seventeenth month following the month in which such
period began), if, not more than 30 days prior to the date
on which such individual (or such individual and his eligi-
ble spouse) began to receive support and maintenance while
living in such a residential facility, (I) such individual (or
such individual and his eligible spouse) were residing in a
household maintained by such individual (or by such indi-
vidual and others) as his or their own home, (II) there
occurred within the area in which such household is located
(and while such individual, or such individual and his
spouse, were residing in the household referred to in sub-
clause (I)) a catastrophe on account of which the President
declared a major disaster to exist therein for purposes of
the Disaster Relief Act of 1974, and (III) such individual
declares that he (or he and his eligible spouse) ceased to
continue living in the household referred to in subclause
(II) because of such catastrophe; ¹
1
(B) any payments received as an annuity, pension, retire-
ment, or disability benefit, including veterans' compensation
and pensions, workmen's compensation payments, old-age,
survivors, and disability insurance benefits, railroad retire-
ment annuities and pensions, and unemployment insurance
benefits;
(C) prizes and awards;
(D) the proceeds of any life insurance policy to the extent
that they exceed the amount expended by the beneficiary for
purposes of the insured individual's last illness and burial
or $1,500, whichever is less;
G
C
¹ Clause (iii) was added by section 4 of P.L. 94-331 and amended by section 2125 of
P.L. 94-455. It is effective only in the case of catastrophes which occur on or after June 1,
1976. See excerpt from P.L. 94-331 on page 777.
Sec. 1612(a)
Revised April 1978
384
(E) gifts (cash or otherwise), support and alimony pay-
ments, and inheritances; and
(F) rents, dividends, interest, and royalties.
1
Exclusions From Income ¹
(b) In determining the income of an individual (and his eligible
spouse) there shall be excluded—
(1) subject to limitations (as to amount or otherwise) pre-
scribed by the Secretary, if such individual is a child who is, as
determined by the Secretary, a student regularly attending a
school, college, or university, or a course of vocational or technical
training designed to prepare him for gainful employment, the
earned income of such individual;
(2)(A) the first $240 per year (or proportionately smaller
amounts for shorter periods) of income (whether earned or un-
earned) other than income which is paid on the basis of the need
of the eligible individual;
(B) Monthly (or other periodic) payments received by any
in-
dividual, under a program established prior to July 1, 1973, if such
payments are made by the State of which the individual receiving
such payments is a resident, and if eligibility of any individual
for such payments is not based on need and is based solely on at-
tainment of age 65 and duration of residence in such State by such
individual.2
(3)(A) the total unearned income of such individual (and
such spouse, if any) in a calendar quarter which, as determined in
accordance with criteria prescribed by the Secretary, is received
too infrequently or irregularly to be included, if such income so
received does not exceed $60 in such quarter, and (B) the total
earned income of such individual (and such spouse, if any) in a
calendar quarter which, as determined in accordance with such
criteria, is received too infrequently or irregularly to be included,
if such income so received does not exceed $30 in such quarter;
(4) (A) if such individual (or such spouse) is blind (and has
not attained age 65, or received benefits under this title (or aid
under a State plan approved under section 1002 or 1602) for the
month before the month in which he attained age 65), (i) the first
$780 per year (or proportionately smaller amounts for shorter
periods) of earned income not excluded by the preceding para-
graphs of this subsection, plus one-half of the remainder thereof,
(ii) an amount equal to any expenses reasonably attributable to
the earning of any income, and (iii) such additional amounts of
¹ In addition to the exclusions specified here, see section 2(h) of the Housing Author-
ization Act of 1976 which appears in this document on page 778.
2 Subparagraph (B) added by section 9 of Public Law 94-202. The capitalization of
the first word is a technical error.
Revised April 1978
385
Sec. 1612(b)
other income, where such individual has a plan for achieving
self-support approved by the Secretary, as may be necessary for
the fulfillment of such plan,
(B) if such individual (or such spouse) is disabled but not
blind (and has not attained age 65, or received benefits under this
title (or aid under a State plan approved under section 1402 or
1602) for the month before the month in which he attained age
65), (i) the first $780 per year (or proportionately smaller
amounts for shorter periods) of earned income not excluded by
the preceding paragraphs of this subsection, plus one-half of the
remainder thereof, and (ii) such additional amounts of other in-
come, where such individual has a plan for achieving self-support
approved by the Secretary, as may be necessary for the fulfillment
of such plan, or
(C) if such individual (or such spouse) has attained age 65
and is not included under subparagraph (A) or (B), the first
$780 per year (or proportionately smaller amounts for shorter
periods) of earned income not excluded by the preceding para-
graphs of this subsection, plus one-half of the remainder thereof;
(5) any amount received from any public agency as a return
or refund of taxes paid on real property or on food purchased
by such individual (or such spouse);
(6) assistance, furnished to or on behalf of such individual
(and spouse), which is based on need and furnished by any State
or political subdivision of a State; ¹
1
(7) any portion of any grant, scholarship, or fellowship
received for use in paying the cost of tuition and fees at any edu-
cational (including technical or vocational education) institution;
(8) home produce of such individual (or spouse) utilized by the
household for its own consumption;
(9) if such individual is a child one-third of any payment for
his support received from an absent parent;
(10) any amounts received for the foster care of a child who
is not an eligible individual but who is living in the same home
as such individual and was placed in such home by a public or
nonprofit private child-placement or child-care agency;
(11) assistance received under the Disaster Relief Act of 1974
or other assistance provided pursuant to a Federal statute on
account of a catastrophe which is declared to be a major disaster
by the President; and 2
(12) interest income received on assistance funds referred to
in paragraph (11) within the 9-month period beginning on the
1 Paragraph (6) was amended by section 505 (b) of P.L. 94-566.
2 Paragraph (11) was added by section 2 of P.L. 94-331 and is effective only in the case
of catastrophies taking place after June 1, 1976. See excerpt from P.L. 94-331 on page 777.
Sec. 1612(b)
386
Revised April 1978
date such funds are received (or such longer periods as the Sec-
retary shall by regulations prescribe in cases where good cause
is shown by the individual concerned for extending such period).¹
Resources
Exclusions From Resources
Sec. 1613. (a) In determining the resources of an individual (and
his eligible spouse, if any) there shall be excluded-
(1) the home (including the land that appertains thereto);´
(2) household goods, personal effects, and an automobile, to
the extent that their total value does not exceed such amount as
the Secretary determines to be reasonable;
(3) other property which, as determined in accordance with
and subject to limitations prescribed by the Secretary, is so essen-
tial to the means of self-support of such individual (and such
spouse) as to warrant its exclusion;
(4) such resources of an individual who is blind or disabled
and who has a plan for achieving self-support approved by the
Secretary, as may be necessary for the fulfillment of such plan;
(5) in the case of Natives of Alaska, shares of stock held in a
Regional or a Village Corporation, during the period of twenty
years in which such stock is inalienable, as provided in section
7(h) and section 8(c) of the Alaska Native Claims Settlement
Act; and
2
(6) assistance referred to in section 1612 (b) (11) for the
9-month period beginning on the date such funds are received
(or for such longer period as the Secretary shall by regulations
prescribe in cases where good cause is shown by the individual
concerned for extending such period); and, for purposes of this
paragraph, the term "assistance" includes interest thereon which
is excluded from income under section 1612(b) (12).³
In determining the resources of an individual (or eligible spouse) an
insurance policy shall be taken into account only to the extent of its
cash surrender value; except that if the total face value of all life
insurance policies on any person is $1,500 or less, no part of the value
of any such policy shall be taken into account.
Disposition of Resources
(b) The Secretary shall prescribe the period or periods of time
within which, and the manner in which, various kinds of property
must be disposed of in order not to be included in determining an indi-
vidual's eligibility for benefits. Any portion of the individual's bene-
1 Paragraph (12) was added by sec. 8(a) of P.L. 95-171.
2 Paragraph (1) was amended by section 5 of P.L. 94–569.
³ Paragraph (6) was added by sec. 9(a) of P.L. 95–171.
Revised April 1978
Sec. 1614(a)
386-A
fits paid for any such period shall be conditioned upon such disposal;
and any benefits so paid shall (at the time of the disposal) be con-
sidered overpayments to the extent they would not have been paid
had the disposal occurred at the beginning of the period for which
such benefits were paid.
Meaning of Terms
Aged, Blind, or Disabled Individual
Sec. 1614. (a) (1) For purposes of this title, the term "aged, blind,
or disabled individual" means an individual who-
387
Sec. 1614(a)
(A) is 65 years of age or older, is blind (as determined under
paragraph (2)), or is disabled (as determined under paragraph
(3)), and
(B) is a resident of the United States, and is either (i) a
citizen or (ii) an alien lawfully admitted for permanent residence
or otherwise permanently residing in the United States under
color of law (including any alien who is lawfully present in the
United States as a result of the application of the provisions of
section 203 (a) (7) or section 212(d) (5) of the Immigration and
Nationality Act).
(2) An individual shall be considered to be blind for purposes
of this title if he has central visual acuity of 20/200 or less in the
better eye with the use of a correcting lens. An eye which is accom-
panied by a limitation in the fields of vision such that the widest diam-
eter of the visual field subtends an angle no greater than 20 degrees
shall be considered for purposes of the first sentence of this sub-
section as having a central visual acuity of 20/200 or less. An individ-
ual shall also be considered to be blind for purposes of this title if
he is blind as defined under a State plan approved under title X or
XVI as in effect for October 1972 and received aid under such plan
(on the basis of blindness) for December 1973, so long as he is con-
tinuously blind as so defined.
(3) (A) An individual shall be considered to be disabled for pur-
poses of this title if he is unable 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 which has
lasted or can be expected to last for a continuous period of not less
than twelve months (or, in the case of a child under the age of 18,
if he suffers from any medically determinable physical or mental
impairment of comparable severity).
(B) For purposes of subparagraph (A), an individual shall be
determined to be under a disability only if his physical or mental
impairment or impairments are of such severity that he is not only
unable to do his previous work but cannot, considering his age, educa-
tion, and work experience, engage in any other kind of substantial
gainful work which exists in the national economy, regardless of
whether such work exists in the immediate area in which he lives, or
whether a specific job vacancy exists for him, or whether he would
be hired if he applied for work. For purposes of the preceding sen-
tence (with respect to any individual), "work which exists in the
national economy" means work which exists in significant numbers
either in the region where such individual lives or in several regions
of the country.
C
Sec. 1614(a)
388
(C) For purposes of this paragraph, a physical or mental impair-
ment is an impairment that results from anatomical, physiological, or
psychological abnormalities which are demonstrable by medically ac-
ceptable clinical and laboratory diagnostic techniques.
(D) The Secretary shall by regulations prescribe the criteria for
determining when services performed or earnings derived from serv-
ices demonstrate an individual's ability to engage in substantial gain-
ful activity. Notwithstanding the provisions of subparagraph (B), an
individual whose services or earnings meet such criteria, except for
purposes of paragraph (4), shall be found not to be disabled.
(E) Notwithstanding the provisions of subparagraphs (A)
through (D), an individual shall also be considered to be disabled
for purposes of this title if he is permanently and totally disabled
as defined under a State plan approved under title XIV or XVI
as in effect for October 1972 and received aid under such plan (on
the basis of disability) for December 1973 (and for at least one month
prior to July 1973), so long as he is continuously disabled as so
defined.
(4) (A) For purposes of this title, any services rendered during a
period of trial work (as defined in subparagraph (B)) by an indi-
vidual who is an aged, blind, or disabled individual solely by reason
of disability (as determined under paragraph (3) of this subsection)
shall be deemed not to have been rendered by such individual in de-
termining whether his disability has ceased in a month during such
period. As used in this paragraph, the term "services" means activity
which is performed for remuneration or gain or is determined by the
Secretary to be of a type normally performed for remuneration or
gain.
(B) The term "period of trial work”, with respect to an individual
who is an aged, blind, or disabled individual solely by reason of dis-
ability (as determined under paragraph (3) of this subsection), means
a period of months beginning and ending as provided in subpara-
graphs (C) and (D).
(C) A period of trial work for any individual shall begin with the
month in which he becomes eligible for benefits under this title on the
basis of his disability; but no such period may begin for an individual
who is eligible for benefits under this title on the basis of a disability
if he has had a previous period of trial work while eligible for benefits
on the basis of the same disability.
(D) A period of trial work for any individual shall end with the
close of whichever of the following months is the earlier:
(i) the ninth month, beginning on or after the first day of
such period, in which the individual renders services (whether
or not such nine months are consecutive); or
389
Sec. 1614(e)
(ii) the month in which his disability (as determined under
paragraph (3) of this subsection) ceases (as determined after
the application of subparagraph (A) of this paragraph).
Eligible Spouse
(b) For purposes of this title, the term "eligible spouse" means an
aged, blind, or disabled individual who is the husband or wife of
another aged, blind, or disabled individual and who has not been
living apart from such other aged, blind, or disabled individual for
more than six months. If two aged, blind, or disabled individuals are
husband and wife as described in the preceding sentence, only one of
them may be an "eligible individual" within the meaning of section
1611(a).
Definition of Child
(c) For purposes of this title, the term "child" means an individual
who is neither married nor (as determined by the Secretary) the head
of a household, and who is (1) under the age of eighteen, or (2) under
the age of twenty-two and (as determined by the Secretary) a student.
regularly attending a school, college, or university, or a course of
vocational or technical training designed to prepare him for gainful
employment.
Determination of Marital Relationships
(d) In determining whether two individuals are husband and wife
for purposes of this title, appropriate State law shall be applied;
except that
(1) if a man and woman have been determined to be husband
and wife under section 216 (h) (1) for purposes of title II they
shall be considered (from and after the date of such determina-
tion or the date of their application for benefits under this title,
whichever is later) to be husband and wife for purposes of this
title, or
(2) if a man and woman are found to be holding themselves
out to the community in which they reside as husband and wife,
they shall be so considered for purposes of this title notwith-
standing any other provision of this section.
United States
(e) For purposes of this title, the term "United States", when used
in a geographical sense, means the 50 States and the District of
Columbia.
Sec. 1614(f)
390
Income and Resources of Individuals Other Than Eligible Individuals and
Eligible Spouses
(f) (1) For purposes of determining eligibility for and the amount
of benefits for any individual who is married and whose spouse is liv-
ing with him in the same household but is not an eligible spouse, such
individual's income and resources shall be deemed to include any
income and resources of such spouse, whether or not available to
such individual, except to the extent determined by the Secretary to
be inequitable under the circumstances.
(2) For purposes of determining eligibility for and the amount of
benefits for any individual who is a child under age 21, such indi-
vidual's income and resources shall be deemed to include any income
and resources of a parent of such individual (or the spouse of such a
parent) who is living in the same household as such individual,
whether or not available to such individual, except to the extent de-
termined by the Secretary to be inequitable under the circumstances.
Rehabilitation Services for Blind and Disabled Individuals ¹
Sec. 1615. (a) In the case of any blind or disabled individual who—
(1) has not attained age 65, and
(2) is receiving benefits (or with respect to whom benefits are
paid) under this title,
the Secretary shall make provision for referral of such individual to
the appropriate State agency administering the State plan for voca-
tional rehabilitation services approved under the Vocational Rehabili-
tation Act, or, in the case of any such individual who has not attained
age 16, to the appropriate State agency administering the State plan
under subsection (b) of this section, and (except in such cases as he
may determine) for a review not less often than quarterly of such indi-
vidual's blindness or disability and his need for and utilization of the
services made available to him under such plan.
(b) (1) The Secretary shall by regulation prescribe criteria for
approval of State plans for-
<la
(A) assuring appropriate counseling for disabled children
referred pursuant to subsection (a) and their families,
(B) establishment of individual service plans for such dis-
abled children, and prompt referral to appropriate medical,
educational, and social services,
(C) monitoring to assure adherence to such service plans, and
(D) provision for such disabled children who are 6 years of
age and under, or who have never attended public school and
require preparation to take advantage of public educational serv-
¹ Section 1615 was amended by section 501 of P.L. 94–566.
391
Sec. 1615(c)
ices, of medical, social, developmental, and rehabilitative services,
in cases where such services reasonably promise to enhance the
child's ability to benefit from subsequent education or training,
or otherwise to enhance his opportunities for self-sufficiency or
self-support as an adult.
(2) Such criteria shall include-
(A) administration—
(i) by the agency administering the State plan for
crippled children's services under title V of this Act, or
(ii) by another agency which administers programs
providing services to disabled children and which the
Governor of the State concerned has determined is
capable of administering the State plan described in the
first sentence of this subsection in a more efficient and
effective manner than the agency described in clause (i)
(with the reasons for such determination being set forth
in the State plan described in the first sentence of this
subsection);
(B) coordination with other agencies serving disabled
children; and
(C) establishment of an identifiable unit within such
agency which shall be responsible for carrying out the plan.
(c) Every individual age 16 or over with respect to whom the Secre-
tary is required to make provision for referral under subsection (a)
shall accept such services as are made available to him under the State
plan for vocational and rehabilitation services approved under the
Vocational Rehabilitation Act; and no such individual shall be an
eligible individual or eligible spouse for purposes of this title if he
refuses without good cause to accept services for which he is referred
under subsection (a).
(d) The Secretary is authorized to pay to the State agency adminis-
tering or supervising the administration of a State plan for vocational
rehabilitation services approved under the Vocational Rehabilitation
Act the costs incurred under such plan in the provision of rehabilita-
tion services to individuals referred for such services pursuant to sub-
section (a).
(c) (1) The Secretary shall, subject to the limitations imposed by
paragraphs (2) and (3), pay to the State agency administering a State
plan of a State under subsection (b) of this section, the costs incurred
each fiscal year which begins after September 30, 1976, and ends prior
to October 1, 1979, in carrying out the State plan approved pursuant
to such subsection (b).
(2) (A) Of the funds paid by the Secretary with respect to costs,
incurred in any State, to which paragraph (1) applies, not more than
21-746 O
-
78
C
30
Sec. 1615(c)
392
10 per centum thereof shall be paid with respect to costs incurred with
respect to activities described in subsection (b)(1) (A), (B), and (C).
(B) Whenever there are provided pursuant to this section to any
child services of a type which is appropriate for children who are not
blind or disabled, there shall be disregarded for purposes of com-
puting any payment with respect thereto under this subsection, so
much of the costs of such services as would have been incurred if the
child involved had not been blind or disabled.
(C) The total amount payable under this subsection for any fiscal
year, with respect to services provided in any State, shall be reduced
by the amount by which the sum of the public funds expended (as
determined by the Secretary) from non-Federal sources for services
of the type involved for such fiscal year is less than the sum of such
funds expended from such sources for services of such type for the fis-
cal year ending June 30, 1976.
1
(3) No payment under this subsection with respect to costs incurred
in providing services in any State for any fiscal year shall exceed an
amount which bears the same ratio to $30,000,000 as the under age 7
population of such State (and for purposes of this section the District
of Columbia shall be regarded as a State) bears to the under age 7
population of the fifty States and the District of Columbia. The Sec-
retary shall promulgate the limitation applicable to each State for
each fiscal year under this paragraph on the basis of the most recent
satisfactory data available from the Department of Commerce not
later than 90 nor earlier than 270 days before the beginning of such
year.
Optional State Supplementation
Sec. 1616. (a) Any cash payments which are made by a State
(or political subdivision thereof) on a regular basis to individuals
who are receiving benefits under this title or who would but for their
income be eligible to receive benefits under this title, as assistance
based on need in supplementation of such benefits (as determined
by the Secretary), shall be excluded under section 1612(b)(6) in de-
termining the income of such individuals for purposes of this title
and the Secretary and such State may enter into an agreement which
satisfies subsection (b) under which the Secretary will, on behalf of
such State (or subdivision) make such supplementary payments to all
such individuals.
(b) Any agreement between the Secretary and a State entered into
under subsection (a) shall provide-
(1) that such payments will be made (subject to subsection
(c)) to all individuals residing in such State (or subdivision) who
are receiving benefits under this title, and
393
Sec. 1616(d)
(2) such other rules with respect to eligibility for or amount
of the supplementary payments, and such procedural or other gen-
eral administrative provisions, as the Secretary finds necessary
(subject to subsection (c)) to achieve efficient and effective admin-
istration of both the program which he conducts under this title
and the optional State supplementation.
(c) (1) Any State (or political subdivision) making supplementary
payments described in subsection (a) may at its option impose as a
condition of eligibility for such payments, and include in the State's
agreement with the Secretary under such subsection, a residence re-
quirement which excludes individuals who have resided in the State
(or political subdivision) for less than a minimum period prior to
application for such payments.
(2) Any State (or political subdivision), in determining the eligi-
bility of any individual for supplementary payments described in sub-
section (a), may disregard amounts of earned and unearned income in
addition to other amounts which it is required or permitted to dis-
regard under this section in determining such eligibility, and shall in-
clude a provision specifying the amount of any such income that will
be disregarded, if any.
(d) Any State which has entered into an agreement with the Sec-
retary under this section which provides that the Secretary will, on
behalf of the State (or political subdivision), make the supplemen-
tary payments to individuals who are receiving benefits under this title
(or who would but for their income be eligible to receive such bene-
fits), shall, at such times and in such installments as may be agreed
upon between the Secretary and such State, pay to the Secretary an
amount equal to the expenditures made by the Secretary as such sup-
plementary payments.¹
1 The liability of certain States under this section is limited by section 401 of Public
Law 92-603 as follows:
SEC. 401. (a) (1) The amount payable to the Secretary by a State for any fiscal year
pursuant to its agreement or agreements under section 1616 of the Social Security Act
shall not exceed the non-Federal share of expenditures as aid or assistance for quarters
in the calendar year 1972 under the plans of the State approved under titles I, X,
XIV, and XVI of the Social Security Act (as defined in subsection (c) of this section).
(2) Paragraph (1) of this subsection shall only apply with respect to that portion
of the supplementary payments made by the Secretary on behalf of the State under
such agreements in any fiscal year which does not exceed in the case of any individual
the difference between-
(A) the adjusted payment level under the appropriate approved plan of such
State as in effect for January 1972 (as defined in subsection (b) of this section),
and
(B) the benefits under title XVI of the Social Security Act, (subject to the
second sentence of this paragraph) (subject to the second sentence of this para-
graph) plus income not excluded under section 1612(b) of such Act in determin-
Ing such benefits, paid to such individual in such fiscal year.
and shall not apply with respect to supplementary payments to any individual whọ (i)
is not required by section 1616 of such Act to be included in any such agreement ad-
ministered by the Secretary and (ii) would have been ineligible (for reasons other
than_income) for payments under the appropriate approved State plan as in effect
for January 1972. In determining the difference between the level specified in sub-
paragraph (A) and the benefits and income described in subparagraph (B) there shall
be excluded any part of anv such benefit which results from (and would not be pay-
able but for) any cost-of-living increase in such benefits under section 1617 of such
Act (or any general increase enacted by law in the dollar amounts referred to in such
section) becoming effective after June 30, 1977, and before July 1, 1979. In determin-
Sec. 1616(e)
394
(e) (1) Each State shall establish or designate one or more State
or local authorities which shall establish, maintain, and insure the
enforcement of standards for any category of institutions, foster
homes, or group living arrangements in which (as determined by the
State) a significant number of recipients of supplemental security
income benefits is residing or is likely to reside. Such standards shall
be appropriate to the needs of such recipients and the character of the
facilities involved, and shall govern such matters as admission poli-
cies, safety, sanitation, and protection of civil rights.
(2) Each State shall annually make available for public review,
as a part of the services program planning procedures established
pursuant to section 2004 of this Act, a summary of the standards
established pursuant to paragraph (1), and shall make available to
•
ing the difference between the level specified in subparagraph (A) and the benefits and
income descrived in subparagraph (B) there shall be excluded any part of any such
benefit which results from (and would not be payable but for) any cost-of-living in-
crease in such benefits under section 1617 of such Act (or any general increase enacted
by law in the dollar amounts referred to in such section) becoming effective after
June 30, 1977.¹
(b) (1) For purposes of subsection (a), the term "adjusted payment level under the
appropriate approved plan of a State as in effect for January 1972" means the amount
of the money payment which an individual with no other income would have received
under the plan of such State approved under title I, X, XIV, or XVI of the Social
Security Act, as may be appropriate, and in effect for January 1972; except that the
State may, at its option, increase such payment level with respect to any such plan
by an amount which does not exceed the sum of—
(A) a payment level modification (as defined in paragraph (2) of this subsec-
tion) with respect to such plan, and
(B) the bonus value of food stamps in such State for January 1972 (as defined
in paragraph (3) of this subsection).
(2) For purposes of paragraph (1), the term "payment level modification" with
respect to any State plan means that amount by which a State which for January
1972 made money payments under such plan to individuals with no other income which
were less than 100 per centum of its standard of need could have increased such money
payments without increasing (if it reduced its standard of need under such plan so
that such increased money payments equaled 100 per centum of such standard of need)
the non-Federal share of expenditures as aid or assistance for quarters in calendar
year 1972 under the plans of such State approved under titles I, X, XIV, and XVI of
the Social Security Act.
(3) For purposes of paragraph (1), the term "bonus value of food stamps in a
State for January 1972" (with respect to an individual) means—
(A) the face value of the coupon allotment which would have been provided to
such an individual under the Food Stamp Act of 1964 for January 1972, reduced
by
(B) the charge which such an individual would have paid for such coupon
allotment,
if the income of such individual, for purposes of determining the charge it would have
paid for its coupon allotment, had been equal to the adjusted payment level under the
State plan (including any payment level modification with respect to the plan adopted
pursuant to paragraph (2) (but not including any amount under this paragraph)).
The total face value of food stamps and the cost thereof in January 1972 shall be
determined in accordance with rules prescribed by the Secretary of Agriculture in effect
in such month.
(c) For purposes of this section, the term "non-Federal share of expenditures as aid
or assistance for quarters in the calendar year 1972 under the plans of a State ap-
proved under titles I, X, XIV, and XVI of the Social Security Act" means the differ-
ence between-
(1) the total expenditures in such quarters under such plans for aid or as-
sistance (expenditures authorized under section 1119 of such Act for repairing the
home of an individual who was receiving aid or assistance under one of such
plans (as such section was in effect prior to the enactment of this Act)), and
(2) the total of the amounts determined under sections 3, 1003, 1403, and
1603 of the Social Security Act, under section 1118 of such Act, and under section
9 of the Act of April 19, 1950, for such State with respect to such expenditures in
such quarters.
1 Paragraph (2) was amended by section 504 of P.L. 94-566 and by section 2(b) of
P.L. 94-585.
395
Sec. 1618(a)
any interested individual a copy of such standards, along with the pro-
cedures available in the State to insure the enforcement of such stand-
ards and a list of any waivers of such standards and any violations of
such standards which have come to the attention of the authority re-
sponsible for their enforcement.
(3) Each State shall certify annually to the Secretary that it is in
compliance with the requirements of this subsection.
(4) Payments made under this title with respect to an individual
shall be reduced by an amount equal to the amount of any supplemen-
tary payment (as described in subsection (a)) or other payment made
by a State (or political subdivision thereof) which is made for or on
account of any medical or any other type of remedial care provided by
an institution of the type described in paragraph (1) to such indi-
vidual as a resident or an inpatient of such institution if such institu-
tion is not approved as meeting the standards described in such
paragraph by the appropriate State or local authorities.¹
Cost-of-Living Adjustments in Benefits
Sec. 1617. Whenever benefit amounts under title II are increased
by any percentage effective with any month as a result of determina-
tion made under section 215 (i), each of the dollar amounts in effect
for such month under subsections (a)(1)(A), (a)(2)(A), (b)(1),
(b) (2) of section 1611, and subsection (a)(1)(A) of section 211 of
Public Law 93-66, as specified in such subsections or as previously
increased under this section, shall be increased by the same percentage
(and rounded, when not a multiple of $1.20, to the next higher multi-
ple of $1.20), effective with respect to benefits for months after such
month; and such dollar amounts as so increased shall be published in
the Federal Register together with, and at the same time as, the mate-
rial required by section 215 (i) (2) (D) to be published therein by
reason of such determination.
Operation of State Supplementation Programs
Sec. 1618. (a) In order for any State which makes supplementary
payments of the type described in section 1616(a) (including pay-
ments pursuant to an agreement entered into under section 212(a)
of Public Law 93-66), on or after June 30, 1977, to be eligible for
payments pursuant to title XIX with respect to expenditures for
any calendar quarter which begins—
(1) after June 30, 1977, or, if later,
(2) after the calendar quarter in which it first makes such
supplementary payments,
1 Subsection (e) was added effective October 1, 1977 by section 505(d) of P.L. 94–566.
Sec. 1618(a)
396
such State must have in effect an agreement with the Secretary
whereby the State will-
(3) continue to make such supplementary payments, and
(4) maintain such supplementary payments at levels which
are not lower than the levels of such payments in effect in Decem-
ber 1976, or, if no such payments were made in that month, the
levels for the first subsequent month in which such payments
were made.
(b) The Secretary shall not find that a State has failed to meet
the requirements imposed by paragraph (4) of subsection (a) with
respect to the levels of its supplementary payments for a particular
month or months if the State's expenditures for such payments in
the twelve-month period (within which such month or months fall)
beginning on the effective date of any increase in the level of sup-
plemental security income benefits pursuant to section 1617 are not
less than its expenditures for such payments in the preceding twelve-
month period.¹
Part B-Procedural and General Provisions
Payments and Procedures
Payment of Benefits
Sec. 1631. (a) (1) Benefits under this title shall be paid at such
time or times and in such installments as will best effectuate the pur-
poses of this title, as determined under regulations (and may in any
case be paid less frequently than monthly where the amount of the
monthly benefit would not exceed $10).
(2) Payments of the benefit of any individual may be made to any
such individual or to his eligible spouse (if any) or partly to each, or,
if the Secretary deems it appropriate to any other person (including
an appropriate public or private agency) who is interested in or con-
cerned with the welfare of such individual (or spouse). Notwith-
standing the provisions of the preceding sentence, in the case of any
individual or eligible spouse referred to in section 1611(e) (3) (A), the
Secretary shall provide for making payments of the benefit to any
other person (including an appropriate public or private agency) who
is interested in or concerned with the welfare of such individual (or
spouse).
(3) The Secretary may by regulation establish ranges of incomes
within which a single amount of benefits under this title shall apply.
(4) The Secretary-
P
1 Section 1618 was added by section 2(a) of P.L. 94–585.
King
397
Sec. 1631(c)
(A) may make to any individual initially applying for bene-
fits under this title who is presumptively eligible for such benefits
and who is faced with financial emergency a cash advance against
such benefits in an amount not exceeding $100; and
(B) may pay benefits under this title to an individual apply-
ing for such benefits on the basis of disability or blindness for
a period not exceeding 3 months prior to the determination of
such individual's disability or blindness, if such individual is
presumptively disabled or blind and is determined to be other-
wise eligible for such benefits, and any benefits so paid prior
to such determination shall in no event be considered overpay-
ments for purposes of subsection (b) solely because such indi-
vidual is determined not to be disabled or blind.¹
(5) Payment of the benefit of any individual who is an aged, blind,
or disabled individual solely by reason of blindness (as determined
under section 1614(a)(2)) or disability (as determined under section
1614(a) (3)), and who ceases to be blind or to be under such disability,
shall continue (so long as such individual is otherwise eligible)
through the second month following the month in which such blind-
ness or disability ceases.
Goo
Overpayments and Underpayments
(b) Whenever the Secretary finds that more or less than the correct
amount of benefits has been paid with respect to any individual, proper
adjustment or recovery shall, subject to the succeeding provisions of
this subsection, be made by appropriate adjustments in future pay-
ments to such individual or by recovery from or payment to such indi-
vidual or his eligible spouse (or by recovery from the estate of either).
The Secretary shall make such provision as he finds appropriate in
the case of payment of more than the correct amount of benefits with
respect to an individual with a view to avoiding penalizing such indi-
vidual or his eligible spouse who was without fault in connection with
the overpayment, if adjustment or recovery on account of such over-
payment in such case would defeat the purposes of this title, or be
against equity or good conscience, or (because of the small amount
involved) impede efficient or effective administration of this title.
Hearings and Review
(c) (1) The Secretary is directed to make findings of fact, and
decisions as to the rights of any individual applying for payment
under this title. The Secretary shall provide reasonable notice and op-
portunity for a hearing to any individual who is or claims to be an eli-
1 Subparagraph (B) was amended by section 4 of P.L. 94-569.
Sec. 1631(c)
398
gible individual or eligible spouse and is in disagreement with any
determination under this title with respect to eligibility of such indi-
vidual for benefits, or the amount of such individual's benefits, if such
individual requests a hearing on the matter in disagreement within
sixty days after notice of such determination is received, and, if a hear-
ing is held, shall, on the basis of evidence adduced at the hearing
affirm, modify, or reverse his findings of fact and such decision. The
Secretary is further authorized, on his own motion, to hold such hear-
ings and to conduct such investigations and other proceedings as he
may deem necessary or proper for the administration of this title.
In the course of any hearing, investigation, or other proceeding, he
may administer oaths and affirmations, examine witnesses, and receive
evidence. Evidence may be received at any hearing before the Secre-
tary even though inadmissible under the rules of evidence applicable
to court procedure.
(2) Determination on the basis of such hearing, except to the extent
that the matter in disagreement involves a disability (within the mean-
ing of section 1614(a) (3)), shall be made within ninety days after the
individual requests the hearing as provided in paragraph (1).
(3) The final determination of the Secretary after a hearing under
paragraph (1) shall be subject to judicial review as provided in sec-
tion 205 (g) to the same extent as the Secretary's final determinations
under section 205.1
Procedures; Prohibitions of Assignments; Representation of Claimants
(d) (1) The provisions of section 207 and subsections (a), (d),
(e), and (f) of section 205 shall apply with respect to this part to the
same extent as they apply in the case of title II.
(2) The Secretary may prescribe rules and regulations governing
the recognition of agents or other persons, other than attorneys, as
hereinafter provided, representing claimants before the Secretary
under this title, and may require of such agents or other persons, before
being recognized as representatives of claimants, that they shall show
that they are of good character and in good repute, possessed of the
necessary qualifications to enable them to render such claimants valu-
able service, and otherwise competent to advise and assist such claim-
ants in the presentation of their cases. An attorney in good standing
who is admitted to practice before the highest court of the State,
Territory, District, or insular possession of his residence or before the
Supreme Court of the United States or the inferior Federal courts,
shall be entitled to represent claimants before the Secretary. The Sec-
retary may, after due notice and opportunity for hearing, suspend or
prohibit from further practice before him any such person, agent, or
¹ Section 1631(c) was amended by section 1 of Public Law 94–202.
399
Sec. 1631(e)
attorney who refuses to comply with the Secretary's rules and regula-
tions or who violates any provision of this paragraph for which a
penalty is prescribed. The Secretary may, by rule and regulation,
prescribe the maximum fees which may be charged for services per-
formed in connection with any claim before the Secretary under this
title, and any agreement in violation of such rules and regulations
shall be void. Any person who shall, with intent to defraud, in any
manner willfully and knowingly deceive, mislead, or threaten any
claimant or prospective claimant or beneficiary under this title by
word, circular, letter, or advertisement, or who shall knowingly charge
or collect directly or indirectly any fee in excess of the maximum fee,
or make any agreement directly or indirectly to charge or collect any
fee in excess of the maximum fee, prescribed by the Secretary, shall be
deemed guilty of a misdemeanor and, upon conviction thereof, shall
for each offense be punished by a fine not exceeding $500 or by im-
prisonment not exceeding one year, or both.¹
Applications and Furnishing of Information
(e) (1) (A) The Secretary shall, subject to subparagraph (B), pre-
scribe such requirements with respect to the filing of applications,
the suspension or termination of assistance, the furnishing of other
data and material, and the reporting of events and changes in circum-
stances, as may be necessary for the effective and efficient administra-
tion of this title.
(B) The requirements prescribed by the Secretary pursuant to
subparagraph (A) shall require that eligibility for benefits under this
title will not be determined solely on the basis of declarations by the
applicant concerning eligibility factors or other relevant facts, and
that relevant information will be verified from independent or col-
lateral sources and additional information obtained as necessary in
order to assure that such benefits are only provided to eligible indi-
viduals (or eligible spouses) and that the amounts of such benefits are
correct.
H
(2) In case of the failure by any individual to submit a report of
events and changes in circumstances relevant to eligibility for or
amount of benefits under this title as required by the Secretary under
paragraph (1), or delay by any individual in submitting a report as
so required, the Secretary (in addition to taking any other action he
may consider appropriate under paragraph (1)) shall reduce any
benefits which may subsequently become payable to such individual
under this title by-
1 Section 1631 (d) was amended by section 2 of Public Law 94-202. See excerpt from
section 3 of Public Law 94-202 (page 771 of this document) with respect to hearing ex-
aminers appointed under former section 1631(a)(2).
Sec. 1631(e)
400
(A) $25 in the case of the first such failure or delay,
(B) $50 in the case of the second such failure or delay, and
(C) $100 in the case of the third or a subsequent such failure
or delay,
except where the individual was without fault or good cause for such
failure or delay existed.
Furnishing of Information by Other Agencies
(f) The head of any Federal agency shall provide such informa-
tion as the Secretary needs for purposes of determining eligibility for
or amount of benefits, or verifying other information with respect
thereto.
Reimbursement to States for Interim Assistance Payments
(g) (1) Notwithstanding subsection (d) (1) and subsection (b) as
it relates to the payment of less than the correct amount of benefits,
the Secretary may, upon written authorization by an individual, with-
hold benefits due with respect to that individual and may pay to a
State (or a political subdivision thereof if agreed to by the Secretary
and the State) from the benefits withheld an amount sufficient to reim-
burse the State (or political subdivision) for interim assistance
furnished on behalf of the individual by the State (or political
subdivision).
-
(2) For purposes of this subsection, the term "benefits" with respect
to any individual means supplemental security income benefits under
this title, and any State supplementary payments under section 1616
or under section 212 of Public Law 93-66 which the Secretary makes
on behalf of a State (or political subdivision thereof), that the Secre-
tary has determined to be due with respect to the individual at the
time the Secretary makes the first payment of benefits. A cash advance
made pursuant to subsection (a) (4) (A) shall not be considered as the
first payment of benefits for purposes of the preceding sentence.
(3) For purposes of this subsection, the term "interim assistance"
with respect to any individual means assistance financed from State
or local funds and furnished for meeting basic needs during the period,
beginning with the month in which the individual filed an application
for benefits (as defined in paragraph (2)), for which he was eligible
for such benefits.
(4) In order for a State to receive reimbursement under the pro-
visions of paragraph (1), the State shall have in effect an agreement
with the Secretary which shall provide-
401
Sec. 1632
(A) that if the Secretary makes payment to the State (or a
political subdivision of the State as provided for under the agree-
ment) in reimbursement for interim assistance (as defined in
paragraph (3)) for any individual in an amount greater than
the reimbursable amount authorized by paragraph (1), the State
(or political subdivision) shall pay to the individual the balance
of such payment in excess of the reimbursable amount as expedi-
tiously as possible, but in any event within ten working days or
a shorter period specified in the agreement; and
(B) that the State will comply with such other rules as the
Secretary finds necessary to achieve efficient and effective admin-
istration of this subsection and to carry out the purposes of the
program established by this title, including protection of hearing
rights for any individual aggrieved by action taken by the State
(or political subdivision) pursuant to this subsection.
(5) The provisions of subsection (c) shall not be applicable to any
disagreement concerning payment by the Secretary to a State pur-
suant to the preceding provisions of this subsection nor the amount
retained by the State (or political subdivision).
1
(6) [Repealed] ¹
Penalties for Fraud
Sec. 1632. Whoever—
(1) knowingly and willfully makes or causes to be made any
false statement or representation of a material fact in any appli-
cation for any benefit under this title,
(2) at any time knowingly and willfully makes or causes to be
made any false statement or representation of a material fact for
use in determining rights to any such benefit,
(3) having knowledge of the occurrence of any event affecting
(A) his initial or continued right to any such benefit, or (B) the
initial or continued right to any such benefit of any other indi-
vidual in whose behalf he has applied for or is receiving such
benefit, conceals or fails to disclose such event with an intent
fraudulently to secure such benefit either in a greater amount or
quantity than is due or when no such benefit is authorized, or
(4) having made application to receive any such benefit for
the use and benefit of another and having received it, knowingly
and willfully converts such benefit or any part thereof to a use
other than for the use and benefit of such other person,
shall be guilty of a misdemeanor and upon conviction thereof shall
be fined not more than $1,000 or imprisoned for not more than one
year, or both.
1 Paragraph (6) repealed by sec. 1 of P.L. 94-365.
Sec. 1633(a)
402
Administration
Sec. 1633. (a) Subject to subsection (b), the Secretary may make
such administrative and other arrangements (including arrangements
for the determination of blindness and disability under section 1614 (a)
(2) and (3) in the same manner and subject to the same conditions as
provided with respect to disability determinations under section 221)
as may be necessary or appropriate to carry out his functions under
this title.
(b) In determining, for purposes of this title, whether an individual
is blind, there shall be an examination of such individual by a physi-
cian skilled in the diseases of the eye or by an optometrist, whichever
the individual may select.
Determinations of Medicaid Eligibility
Sec. 1634. The Secretary may enter into an agreement with any
State which wishes to do so under which he will determine eligibility
for medical assistance in the case of aged, blind, or disabled individ-
uals under such State's plan approved under title XIX. Any such
agreement shall provide for payments by the State, for use by the
Secretary in carrying out the agreement, of an amount equal to one-
half of the cost of carrying out the agreement, but in computing such
cost with respect to individuals eligible for benefits under this title,
the Secretary shall include only those costs which are additional to
the costs incurred in carrying out this title.
TITLE XVII-GRANTS FOR PLANNING COMPREHENSIVE
ACTION TO COMBAT MENTAL RETARDATION
Sec. 1701. Authorization of Appropriations….
Sec. 1702. Grants to States--
Sec. 1703. Applications…….
Sec. 1704. Payments--.
Page¹
403
403
404
404
Authorization of Appropriations
Section 1701. For the purpose of assisting the States (including the
District of Columbia, the Commonwealth of Puerto Rico, the Virgin
Islands, Guam, and American Samoa) to plan for and take other steps
leading to comprehensive State and community action to combat
mental retardation, there is authorized to be appropriated the sum
of $2,200,000. There are also authorized to be appropriated, for assist-
ing such States in initiating the implementation and carrying out of
planning and other steps to combat mental retardation, $2,750,000 for
the fiscal year ending June 30, 1966, and $2,750,000 for the fiscal year
ending June 30, 1967.
1 This table of contents does not appear in the law.
Grants to States
Sec. 1702. The sums appropriated pursuant to the first sentence
of section 1701 shall be available for grants to States by the Secretary
during the fiscal year ending June 30, 1964, and the succeeding fiscal
year; and the sums appropriated pursuant to the second sentence of
such section for the fiscal year ending June 30, 1966, shall be available
for such grants during such year and the next two fiscal years, and
sums appropriated pursuant thereto for the fiscal year ending June 30,
1967, shall be available for such grants during such year and the suc-
ceeding fiscal year. Any such grant to a State, which shall not ex-
ceed 75 per centum of the cost of the planning and related activities
involved; may be used by it to determine what action is needed to
combat mental retardation in the State and the resources available for
this purpose, to develop public awareness of the mental retardation
problem and of the need for combating it, to coordinate State and lo-
cal activities relating to the various aspects of mental retardation and
its prevention, treatment, or amelioration, and to plan other activities
leading to comprehensive State and community action to combat men-
tal retardation.
(403)
Sec. 1703
404
Applications
Sec. 1703. In order to be eligible for a grant under section 1702, a
State must submit an application therefor which-
(1) designates or establishes a single State agency, which may
be an interdepartmental agency, as the sole agency for carrying
out the purposes of this title;
(2) indicates the manner in which provision will be made to
assure full consideration of all aspects of services essential to plan-
ning for comprehensive State and community action to combat
mental retardation, including services in the fields of education,
employment, rehabilitation, welfare, health, and the law, and
services provided through community programs for and institu-
tions for the mentally retarded;
(3) sets forth its plan for expenditure of such grant, which
plans provide reasonable assurance of carrying out the purposes
of this title;
(4) provides for submission of a final report of the activities
of the State agency in carrying out the purposes of this title, and
for submission of such other reports, in such form and containing
such information, as the Secretary may from time to time find
necessary for carrying out the purposes of this title and for keep-
ing such records and affording such access thereto as he may find
necessary to assure the correctness and verification of such re-
ports; and
(5) provides for such fiscal control and fund accounting pro-
cedures as may be necessary to assure proper disbursement of and
accounting for funds paid to the State under this title.
Payments
Sec. 1704. Payment of grants under this title may be made (after
necessary adjustment on account of previously made underpayments
or overpayments) in advance or by way of reimbursement, and in such
installments and on such conditions, as the Secretary may determine.
Revised April 1978
TITLE XVIII-HEALTH INSURANCE FOR THE AGED AND
DISABLED
Sec. 1801. Prohibition Against Any Federal Interference_
Sec. 1802. Free Choice by Patient Guaranteed_
Sec. 1803. Option to Individuals To Obtain Other Health Insurance Pro-
tection__
PART A-HOSPITAL INSURance BenefitS FOR THE AGED AND DISABLED
Sec. 1811. Description of Program_
Sec. 1812. Scope of Benefits...
(a) Services Included.
(b) Services Excluded..
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Sec. 1813. Deductibles and Coinsurance_
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(f) Terms Defined in Section 1861.
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(c) Limitation on Psychiatric Hospital Services-
(d) Limitation on Post-Hospital Home Health Services.
(e) Service Not Taken Into Account for Purposes of Limita-
tion...
(a) Requirement of Requests and Certifications..
(b) Amount Paid to Providers-
Sec. 1838. Coverage Period.
Sec. 1839. Amounts of Premiums..
Sec. 1840. Payment of Premiums.
Sec. 1832. Scope of Benefits--
Sec. 1833. Payment of Benefits-
Sec. 1834. Limitation on Home Health Services_
(a) Reduction for Inpatient Hospital Deductible and Co-
insurance Amounts.
(b) Amount of Inpatient Hospital Deductible___
Sec. 1814. Conditions of and Limitations on Payment for Services..
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(c) No Payments to Federal Providers of Services..
(d) Payments for Emergency Hospital Services_
(e) Payment for Inpatient Hospital Services Prior to Notifi-
cation of Noneligibility--
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(f) Payment for Certain Inpatient Hospital Services Fur-
nished Outside the United States_
(g) Payment for Services of a Physician Rendered in a
Teaching Hospital.
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(h) Payment for Posthospital Extended Care Services...
(i) Payment for Posthospital Home Health Services.
(j) Payment for Certain Hospital Services Provided in
Veterans' Administration Hospitals
Sec. 1815. Payment to Providers of Services..
Sec. 1816. Use of Public Agencies or Private Organizations To Facilitate
Payment to Providers of Services..
Sec. 1817. Federal Hospital Insurance Trust Fund.
Sec. 1818. Hospital Insurance Benefits for Uninsured Individuals Not
Otherwise Eligible-----
Part B-SUPPLEMENTARY MEDICAL INSURANCE BENEFITS FOR THE
AGED AND DISABLED
Sec. 1831. Establishment of Supplementary Medical Insurance Program
for the Aged and the Disabled...
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Sec. 1835 Procedure for Payment of Claims of Froviders of Services...
Sec. 1836. Eligible Individuals.
Sec. 1837. Enrollment Periods.
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Revised August 1978
PART B-SUPPLEMENTARY MEDICAL INSURANCE BENEFITS
FOR THE AGED AND DISABLED-Continued
Sec. 1841. Federal Supplementary Medical Insurance Trust Fund_.
Sec. 1842. Use of Carriers for Administration of Benefits_
Sec. 1843. State Agreements for Coverage of Eligible Individuals Who Are
Receiving Money Payments Under Public Assistance Pro-
grams (or Are Eligible for Medical Assistance)
Sec. 1844. Appropriations To Cover Government Contributions and
Contingency Reserve...
PART C-MISCELLANEOUS PROVISIONS
(e) Hospital.
(f) Psychiatric Hospital_
(g) Tuberculosis Hospital.
(h) Extended Care Services__
Sec. 1861. Definition of Services, Institutions, etc.
(a) Spell of Illness...
(b) Inpatient Hospital Services -
(c) Inpatient Psychiatric Hospital Services__.
Inpatient Tuberculosis Hospital Services.
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(i) Post-Hospital Extended Care Services_
(j) Skilled Nursing Facility_
(k) Utilization Review___
(m) Home Health Services..
(n) Post-Hospital Home Health Services-
(0) Home Health Agency-
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(z) Institutional Planning--
(aa) Rural Health Clinic Services.
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Drugs and Biologicals..
Provider of Services.
Reasonable Cost__
(w) Arrangements for Certain Services_
State and United States_.
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Outpatient Physical Therapy Services-
Physicians' Services__
Physician.
Medical and Other Health Services_
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(1) Agreements for Transfer Between Skilled Nursing
Facilities and Hospitals..
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(y) Post-Hospital Extended Care in Christian Science
Skilled Nursing Facilities_
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Sec. 1862. Exclusions From Coverage_
Sec. 1863. Consultation With State Agencies and Other Organizations To
Develop Conditions of Participation for Providers of Services-
Sec. 1864. Use of State Agencies To Determine Compliance by Providers
of Services With Conditions of Participation_.
Sec. 1865. Effect of Accreditation……….
Sec. 1866. Agreements With Providers of Services_-
Sec. 1867. Health Insurance Benefits Advisory Council.
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Sec. 1868. [Repealed.]
Sec. 1869. Determinations; Appeals.
Sec. 1870. Overpayments on Behalf of Individuals and Settlement of
Claims for Benefits on Behalf of Deceased Individuals_
Sec. 1871. Regulations__
Sec. 1872. Application of Certain Provisions of Title II.
Sec. 1873. Designation of Organization or Publication by Name_
Sec. 1874. Administration___
Sec. 1875. Studies and Recommendations_.
Sec. 1876. Payments to Health Maintenance Organizations.
Sec. 1877. Penalties_
Sec. 1878. Provider Reimbursement Review Board__
Sec. 1879. Limitation on Liability of Beneficiary Where Medicare Claims
Are Disallowed_
Sec. 1880. Indian Health Service Facilities-
Sec. 1881. Medicare Coverage for End Stage Renal Disease Patients---- 506-A
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Revised August 1978
Sec. 1812(a)
407
Prohibition Against Any Federal Interference
Section 1801. Nothing in this title shall be construed to authorize any
Federal officer or employee to exercise any supervision or control over
the practice of medicine or the manner in which medical services are
provided, or over the selection, tenure, or compensation of any officer
or employee of any institution, agency, or person providing health
services; or to exercise any supervision or control over the administra-
tion or operation of any such institution, agency, or person.
Free Choice by Patient Guaranteed
Sec. 1802. Any individual entitled to insurance benefits under this
title may obtain health services from any institution, agency, or per-
son qualified to participate under this title if such institution, agency,
or person undertakes to provide him such services.
Option to Individuals To Obtain Other Health Insurance
Protection
Sec. 1803. Nothing contained in this title shall be construed to
preclude any State from providing, or any individual from purchas-
ing or otherwise securing, protection against the cost of any health
services.
Part A-Hospital Insurance Benefits for the Aged and Disabled
Description of Program
Sec. 1811. The insurance program for which entitlement is estab-
lished by sections 226 and 226A provides basic protection against the
costs of hospital and related post-hospital services in accordance with
this part for (1) individuals who are age 65 or over and are entitled to
retirement benefits under title II of this Act or under the railroad
retirement system, (2) individuals under age 65 who have been en-
titled for not less than 24 consecutive months to benefits under title
II of this Act or under the railroad retirement system on the basis of
a disability, and (3) certain individuals who do not meet the condi-
tions specified in either clause (1) or (2) but who are medically
determined to have end stage renal disease.¹
Scope of Benefits
Sec. 1812. (a) The benefits provided to an individual by the insur-
ance program under this part shall consist of entitlement to have pay-
ment made on his behalf or, in the case of payments referred to in
section 1814(d) (2) to him (subject to the provisions of this part)
for-
30-975 O
(1) inpatient hospital services for up to 150 days during any
spell of illness minus one day for each day of inpatient hospital
¹ Section 1811 was amended by sec. 4(a) of P.L. 95–292.
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78 - 2
Sec. 1812(a)
408
services in excess of 90 received during any preceding spell of ill-
ness (if such individual was entitled to have payment for such
services made under this part unless he specifies in accordance
with regulations of the Secretary that he does not desire to have
such payment made);
(2) post-hospital extended care services for up to 100 days
during any spell of illness; and
(3) post-hospital home health services for up to 100 visits (dur-
ing the one-year period described in section 1861 (n)) after the
beginning of one spell of illness and before the beginning of the
next.
(b) Payment under this part for services furnished an individual
during a spell of illness may not (subject to subsection (c)) be made
for-
(1) inpatient hospital services furnished to him during such
spell after such services have been furnished to him for 150 days
during such spell minus 1 day for each day of inpatient hospital
services in excess of 90 received during any preceding spell of
illness (if such individual was entitled to have payment for such
services made under this part unless he specifies in accordance
with regulations of the Secretary that he does not desire to have
such payment made);
(2) post-hospital extended care services furnished to him dur-
ing such spell after such services have been furnished to him for
100 days during such spell; or
(3) inpatient psychiatric hospital services furnished to him
after such services have been furnished to him for a total of 190
days during his lifetime.
(c) If an individual is an inpatient of a psychiatric hospital on the
first day of the first month for which he is entitled to benefits under
this part, the days on which he was an inpatient of such a hospital in
the 150-day period immediately before such first day shall be included
in determining the number of days limit under subsection (b) (1) in-
sofar as such limit applies to (1) inpatient psychiatric hospital serv-
ices, or (2) inpatient hospital services for an individual who is an
inpatient primarily for the diagnosis or treatment of mental illness
(but shall not be included in determining such number of days limit.
insofar as it applies to other inpatient hospital services or in deter-
mining the 190-day limit under subsection (b)(3)).
(d) Payment under this part may be made for post-hospital home
health services furnished an individual only during the one-year
period described in section 1861 (n) following his most recent hospital
discharge which meets the requirements of such section, and only for
the first 100 visits in such period. The number of visits to be charged
for purposes of the limitation in the preceding sentence, in connection
409
Sec. 1813(a)
with items or services described in section 1861 (m), shall be deter-
mined in accordance with regulations.
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(e) For purposes of subsections (b), (c), and (d), inpatient hos-
pital services, inpatient psychiatric hospital services, post-hospital ex-
tended care services, and post-hospital home health services shall be
taken into account only if payment is or would be, except for this sec-
tion or the failure to comply with the request and certification require-
ments of or under section 1814(a), made with respect to such services
under this part.
(f) For definition of "spell of illness”, and for definitions of other
terms used in this part, see section 1861.
Deductibles and Coinsurance
Sec. 1813. (a) (1) The amount payable for inpatient hospital services
furnished an individual during any spell of illness shall be reduced
by a deduction equal to the inpatient hospital deductible or, if less,
the charges imposed with respect to such individual for such services,
except that, if the customary charges for such services are greater
than the charges so imposed, such customary charges shall be con-
sidered to be the charges so imposed. Such amount shall be further
reduced by a coinsurance amount equal to—
(A) one-fourth of the inpatient hospital deductible for each day
(before the 91st day) on which such individual is furnished such
services during such spell of illness after such services have been
furnished to him for 60 days during such spell; and
(B) one-half of the inpatient hospital deductible for each day
(before the day following the last day for which such individual
is entitled under section 1812 (a) (1) to have payment made on
his behalf for inpatient hospital services during such spell of
illness) on which such individual is furnished such services dur-
ing such spell of illness after such services have been furnished
to him for 90 days during such spell;
except that the reduction under this sentence for any day shall not ex-
ceed the charges imposed for that day with respect to such individual
for such services (and for this purpose, if the customary charges for
such services are greater than the charges so imposed, such customary
charges shall be considered to be the charges so imposed).
(2) The amount payable to any provider of services under this part
for services furnished an individual during any spell of illness shall
be further reduced by a deduction equal to the cost of the first three
pints of whole blood (or equivalent quantities of packed red blood
cells, as defined under regulations) furnished to him as part of such
services during such spell of illness.
(3) The amount payable for post-hospital extended care services
furnished an individual during any spell of illness shall be reduced by
Sec. 1813(a)
410
a coinsurance amount equal to one-eighth of the inpatient hospital
deductible for each day (before the 101st day) on which he is fur-
nished such services after such services have been furnished to him for
20 days during such spell.
(b)(1) The inpatient hospital deductible which shall be applicable
for the purposes of subsection (a) shall be $40 in the case of any spell
of illness beginning before 1969.
(2) The Secretary shall, between July 1 and October 1 of 1968, and
of each year thereafter, determine and promulgate the inpatient hos-
pital deductible which shall be applicable for the purposes of subsec-
tion (a) in the case of any spell of illness beginning during the suc-
ceeding calendar year. Such inpatient hospital deductible shall be equal
to $40 multiplied by the ratio of (A) the current average per diem rate
for inpatient hospital services for the calendar year preceding the
promulgation, to (B) the current average per diem rate for such serv-
ices for 1966. Any amount determined under the preceding sentence
which is not a multiple of $4 shall be rounded to the nearest multiple
of $4 (or, if it is midway between two multiples of $4, to the next
higher multiple of $4). The current average per diem rate for any
year shall be determined by the Secretary on the basis of the best in-
formation available to him (at the time the determination is made) as
to the amounts paid under this part on account of inpatient hospital
services furnished during such year, by hospitals which have agree-
ments in effect under section 1866, to individuals who are entitled to
hospital insurance benefits under section 226, plus the amount which
would have been so paid but for subsection (a) (1) of this section.
Conditions of and Limitations on Payment for Services
Requirement of Requests and Certifications
Sec. 1814. (a) Except as provided in subsections (d) and (g) and
in section 1876, payment for services furnished an individual may be
made only to providers of services which are eligible therefor under
section 1866 and only if—
(1) written request, signed by such individual, except in cases
in which the Secretary finds it impracticable for the individual
to do so, is filed for such payment in such form, in such manner,
and by such person or persons as the Secretary may by regulation
prescribe, no later than the close of the period of 3 calendar years
following the year in which such services are furnished (deem-
ing any services furnished in the last 3 calendar months of any
calendar year to have been furnished in the succeeding calendar
year) except that where the Secretary deems that efficient admin-
istration so requires, such period may be reduced to not less than
1 calendar year;
411
Sec. 1814(a)
(2) physician certifies (and recertifies, where such services
are furnished over a period of time, in such cases, with such fre-
quency, and accompanied by such supporting material, appro-
priate to the case involved, as may be provided by regulations,
except that the first of such recertifications shall be required in
each case of inpatient hospital services not later than the 20th
day of such period) that—
(A) in the case of inpatient psychiatric hospital services,
such services are or were required to be given on an inpatient
basis, by or under the supervision of a physician, for the
psychiatric treatment of an individual; and (i) such treat-
ment can or could reasonably be expected to improve the
condition for which such treatment is or was necessary or
(ii) inpatient diagnostic study is or was medically required
and such services are or were necessary for such purposes;
(B) in the case of inpatient tuberculosis hospital services,
such services are or were required to be given on an inpatient
basis, by or under the supervision of a physician, for the treat-
ment of an individual for tuberculosis; and such treatment
can or could reasonably be expected to (i) improve the con-
dition for which such treatment is or was necessary or (ii)
render the condition noncommunicable;
(C) in the case of post-hospital extended care services,
such services are or were required to be given because the
individual needs or needed on a daily basis skilled nursing
care (provided directly by or requiring the supervision of
skilled nursing personnel) or other skilled rehabilitation
services, which as a practical matter can only be provided in
a skilled nursing facility on an inpatient basis, for any of
the conditions with respect to which he was receiving in-
patient hospital services (or services which would constitute
inpatient hospital services if the institution met the require-
ments of paragraphs (6) and (9) of section 1861(e)) prior
to transfer to the skilled nursing facility or for a condition
requiring such extended care services which arose after such
transfer and while he was still in the facility for treatment
of the condition or conditions for which he was receiving such
inpatient hospital services;
(D) in the case of post-hospital home health services, such
services are or were required because the individual is or was
confined to his home (except when receiving items and serv-
ices referred to in section 1861 (m) (7)) and needed skilled
nursing care on an intermittent basis, or physical or speech
therapy, for any of the conditions with respect to which he
was receiving inpatient hospital services (or services which
Sec. 1814(a)
412
would constitute inpatient hospital services if the institution
met the requirements of paragraphs (6) and (9) of section
1861 (e)) or post-hospital extended care services; a plan for
furnishing such services to such individual has been estab-
lished and is periodically reviewed by a physician; and such
services are or were furnished while the individual was under
the care of a physician; or
(E) in the case of inpatient hospital services in connection
with the care, treatment, filling, removal, or replacement of
teeth or structures directly supporting teeth, the individual,
because of his underlying medical condition and clinical
status, requires hospitalization in connection with the provi-
sion of such dental services;
(3) with respect to inpatient hospital services (other than in-
patient psychiatric hospital services and inpatient tuberculosis
hospital services) which are furnished over a period of time, a
physician certifies that such services are required to be given on
an inpatient basis for such individual's medical treatment, or that
inpatient diagnostic study is medically required and such services
are necessary for such purpose, except that (A) such certification
shall be furnished only in such cases, with such frequency, and
accompanied by such supporting material, appropriate to the
cases involved, as may be provided by regulations, and (B) the
first such certification required in accordance with clause (A)
shall be furnished no later than the 20th day of such period;
(4) in the case of inpatient psychiatric hospital services, the
services are those which the records of the hospital indicate were
furnished to the individual during periods when he was receiving
(A) intensive treatment services, (B) admission and related serv-
ices necessary for a diagnostic study, or (C) equivalent services;
(5) in the case of inpatient tuberculosis hospital services, the
services are those which the records of the hospital indicate were
furnished to the individual during periods when he was receiving
treatment which could reasonably be expected to (A) improve his
condition or (B) render it noncommunicable;
(6) with respect to inpatient hospital services furnished such
individual after the 20th day of a continuous period of such serv-
ices and with respect to post-hospital extended care services fur-
nished after such day of a continuous period of such services as
may be prescribed in or pursuant to regulations, there was not in
effect, at the time of admission of such individual to the hospital
or skilled nursing facility, as the case may be, a decision under
section 1866 (d) (based on a finding that utilization review of
long-stay cases is not being made in such hospital or facility);
and
Revised August 1978
413
Sec. 1814(c)
(7) with respect to inpatient hospital services or post-hospital
extended care services furnished such individual during a con-
tinuous period, a finding has not been made (by the physician
members of the committee or group, as described in section
1861 (k) (4), including any finding made in the course of a sample
or other review of admissions to the institution) pursuant to the
system of utilization to review that further inpatient hospital
services or further post-hospital extended care services, as the
case may be, are not medically necessary; except that, if such a
finding has been made, payment may be made for such services
furnished before the 4th day after the day on which the hospital
or skilled nursing facility, as the case may be, received notice of
such finding.
To the extent provided by regulations, the certification and recertifica-
tion requirements of paragraph (2) shall be deemed satisfied where,
at a later date, a physician makes certification of the kind provided in
subparagraph (A), (B), (C), (D), or (E) of paragraph (2) (which-
ever would have applied), but only where such certification is accom-
panied by such medical and other evidence as may be required by such
regulations.
Amount Paid to Providers
(b) The amount paid to any provider of services with respect
to services for which payment may be made under this part shall,
subject to the provisions of section 1813, be—
(1) the lesser of (A) the reasonable cost of such services, as
determined under section 1861 (v) and as further limited by sec-
tion 1881 (b) (2) (B), or (B) the customary charges with respect
to such services; or 1
(2) if such services are furnished by a public provider of
services free of charge or at nominal charges to the public, the
amount determined on the basis of those items (specified in regu-
lations prescribed by the Secretary) included in the determination
of such reasonable cost which the Secretary finds will provide
fair compensation to such provider for such services.
No Payments to Federal Providers of Services
(c) Subject to section 1880, no payment may be made under this
part (except under subsection (d) or subsection (j)) to any Federal
provider of services, except a provider of services which the Secretary
determines is providing services to the public generally as a commu-
nity institution or agency; and no such payment may be made to any
provider of services for any item or service which such provider is
obligated by a law of, or a contract with, the United States to render
at public expense.2
C
1 Paragraph (1) was amended by sec. 4(f) of P.L. 95–292.
2 Subsection (c) was amended by sec. 401(a) of P.L. 94-437 and by sec. 23(a) of P.L.
95-142.
Sec. 1814(d)
414
Payments for Emergency Hospital Services
(d) (1) Payments shall also be made to any hospital for inpatient
hospital services furnished in a calendar year by the hospital or
under arrangements (as defined in section 1861 (w)) with it, to an indi-
vidual entitled to hospital insurance benefits under section 226 even
though such hospital does not have an agreement in effect under this
title if (A) such services were emergency services, (B) the Secretary
would be required to make such payment if the hospital had such an
agreement in effect and otherwise met the conditions of payment here-
under, and (C) such hospital has elected to claim payments for all
such inpatient emergency services and for the emergency outpatient
services referred to in section 1835 (b) furnished during such year.
Such payments shall be made only in the amounts provided under sub-
section (b) and then only if such hospital agrees to comply, with
respect to the emergency services provided, with the provisions of
section 1866 (a).
K
(2) Payment may be made on the basis of an itemized bill to an
individual entitled to hospital insurance benefits under section 226 for
services described in paragraph (1) which are emergency services if
(A) payment cannot be made under paragraph (1) solely because the
hospital does not elect to claim such payment, and (B) such individual
files application (submitted within such time and in such form and
manner and by such person, and containing and supported by such
information as the Secretary shall by regulations prescribe) for
reimbursement.
(3) The amounts payable under the preceding paragraph with re-
spect to services described therein shall, subject to the provisions of
section 1813, be equal to 60 percent of the hospital's reasonable charges
for routine services furnished in the accommodations occupied by the
individual or in semiprivate accommodations (as defined in section
1861 (v) (4)), whichever is less, plus 80 percent of the hospital's rea-
sonable charges for ancillary services. If separate charges for routine
and ancillary services are not made by the hospital, reimbursement
may be based on two-thirds of the hospital's reasonable charges for the
services received but not to exceed the charges which would have been
made if the patient had occupied semiprivate accommodations. For
purposes of the preceding provisions of this paragraph, the term "rou-
tine services" shall mean the regular room, dietary and nursing serv-
ices, minor medical and surgical supplies, and the use of equipment and
facilities for which a separate charge is not customarily made; the
term "ancillary services" shall mean those special services for which
charges are customarily made in addition to routine services.
Payment for Inpatient Hospital Services Prior to Notification of Noneligibility
(e) Notwithstanding that an individual is not entitled to have pay-
ment made under this part for inpatient hospital services furnished
•
415
Sec. 1814(f)
by any hospital, payment shall be made to such hospital (unless it
elects not to receive such payment or, if payment has already been
made by or on behalf of such individual, fails to refund such payment
within the time specified by the Secretary) for such services which
are furnished to the individual prior to notification to such hospital
from the Secretary of his lack of entitlement, if such payments are
precluded only by reason of section 1812 and if such hospital complies
with the requirements of and regulations under this title with respect
to such payments, has acted in good faith and without knowledge of
such lack of entitlement, and has acted reasonably in assuming entitle-
ment existed. Payment under the preceding sentence may not be made
for the services furnished an individual pursuant to any admission
after the 6th elapsed day (not including as an elapsed day Saturday,
Sunday, or legal holiday) after the day on which such admission
occurred.
Payment for Certain Inpatient Hospital Services Furnished Outside the
United States
(f) (1) Payment shall be made for inpatient hospital services fur-
nished to an individual entitled to hospital insurance benefits under
section 226 by a hospital located outside the United States, or under
arrangements (as defined in section 1861 (w)) with it, if—
(A) such individual is a resident of the United States, and
(B) such hospital was closer to, or substantially more acces-
sible from, the residence of such individual than the nearest hos-
pital within the United States which was adequately equipped
to deal with, and was available for the treatment of, such indi-
vidual's illness or injury.
(2) Payment may also be made for emergency inpatient hospital
services furnished to an individual entitled to hospital insurance bene-
fits under section 226 by a hospital located outside the United States.
if-
+
(A) such individual was physically present-
(i) in a place within the United States; or
(ii) at a place within Canada while traveling without un-
reasonable delay by the most direct route (as determined by
the Secretary) between Alaska and another State;
A
at the time the emergency which necessitated such inpatient hos-
pital services occurred, and
(B) such hospital was closer to, or substantially more acces-
sible from, such place than the nearest hospital within the United
States which was adequately equipped to deal with, and was avail-
able for the treatment of, such individual's illness or injury.
(3) Payment shall be made in the amount provided under sub-
section (b) to any hospital for the inpatient hospital services de-
scribed in paragraph (1) or (2) furnished to an individual by the
al
Sec. 1814(f)
416
hospital or under arrangements (as defined in section 1861(w)) with
it if (A) the Secretary would be required to make such payment if
the hospital had an agreement in effect under this title and otherwise
met the conditions of payment hereunder, (B) such hospital elects
to claim such payment, and (C) such hospital agrees to comply, with
respect to such services, with the provisions of section 1866 (a).
(4) Payment for the inpatient hospital services described in para-
graph (1) or (2) furnished to an individual entitled to hospital insur-
ance benefits under section 226 may be made on the basis of an itemized
bill to such individual if (A) payment for such services cannot be
made under paragraph (3) solely because the hospital does not elect
to claim such payment, and (B) such individual files application
(submitted within such time and in such form and manner and by
such person, and continuing and supported by such information as
the Secretary shall by regulations prescribe) for reimbursement. The
amount payable with respect to such services shall, subject to the
provisions of section 1813, be equal to the amount which would be
payable under subsection (d) (3).
Payment for Services of a Physician Rendered in a Teaching Hospital
(g) For purposes of services for which the reasonable cost thereof
is determined under section 1861 (v) (1) (D), payment under this part
shall be made to such fund as may be designated by the organized
medical staff of the hospital in which such services were furnished or,
if such services were furnished in such hospital by the faculty of a
medical school, to such fund as may be designated by such faculty,
but only if-
(1) such hospital has an agreement with the Secretary under
section 1866, and
(2) the Secretary has received written assurances that (A)
such payment will be used by such fund solely for the improve-
ment of care of hospital patients or for educational or charitable
purposes and (B) the individuals who were furnished such serv-
ices or any other persons will not be charged for such services (or
if charged, provision will be made for return of any moneys
incorrectly collected).
Payment for Posthospital Extended Care Services
(h) (1) An individual shall be presumed to require the care spec-
ified in subsection (a) (2) (C) of this section for purposes of making
payment to an extended care facility (subject to the provisions of
section 1812) for posthospital extended care services which are fur-
nished by such facility to such individual if—
(A) the certification referred to in subsection (a)(2)(C) of
this section is submitted prior to or at the time of admission of
such individual to such extended care facility,
417
Sec. 1814(i)
(B) such certification states that the medical condition of the
individual is a condition designated in regulations,
(C) such certification is accompanied by a plan of treatment
for providing such services, and
(D) there is compliance with such other requirements and pro-
cedures as may be specified in regulations,
but only for services furnished during such limited periods of time
with respect to such conditions of the individual as may be prescribed
in regulations by the Secretary, taking into account the medical se-
verity of such conditions, the degree of incapacity, and the minimum
length of stay in an institution generally needed for such conditions,
and such other factors affecting the type of care to be provided as
the Secretary deems pertinent.
(2) If the Secretary determines with respect to a physician that
such physician is submitting with some frequency (A) erroneous cer-
tifications that individuals have conditions designated in regulations
as provided in this subsection or (B) plans for providing services
which are inappropriate, the provisions of paragraph (1) shall not
apply, after the effective date of such determination, in any case in
which such physician submits a certification or plan referred to in sub-
paragraph (A), (B), or (C) of paragraph (1).
Payment for Posthospital Home Health Services
(i) (1) An individual shall be presumed to require the services
specified in subsection (a) (2) (D) of this section for purposes of mak-
ing payment to a home health agency (subject to the provisions of
section 1812) for posthospital home health services furnished by such
agency to such individual if—
(A) the certification and plan referred to in subsection (a) (2)
(D) of this section are submitted in timely fashion prior to the
first visit by such agency,
(B) such certification states that the medical condition of the
individual is a condition designated in regulations, and
(C) there is compliance with such other requirements and
procedures may be specified in regulations,
but only for services furnished during such limited numbers of visits
with respect to such conditions of the individual as may be prescribed
in regulations by the Secretary, taking into account the medical sever-
ity of such conditions, the degree of incapacity, and the minimum
period of home confinement generally needed for such conditions, and
such other factors affecting the type of care to be provided as the
Secretary deems pertinent.
(2) If the Secretary determines with respect to a physician that
such physician is submitting with some frequency (A) erroneous cer-
tifications that individuals have conditions designated in regulations
as provided in this subsection or (B) plans for providing services
Sec. 1814(i)
Revised April 1978
418
which are inappropriate, the provisions of paragraph (1) shall not
apply after the effective date of such determination, in any case in
which such physician submits a certification or plan referred to in
subparagraph (A) or (B) of paragraph (1).
Payment for Certain Hospital Services Provided in Veterans'
Administration Hospitals
(j) (1) Payments shall also be made to any hospital operated by the
Veterans' Administration for inpatient hospital services furnished in
a calendar year by the hospital, or under arrangements (as defined in
section 1861 (w)) with it, to an individual entitled to hospital benefits
under section 226 even though the hospital is a Federal provider of
services if (A) the individual was not entitled to have the services fur-
nished to him free of charge by the hospital, (B) the individual was
admitted to the hospital in the reasonable belief on the part of the
admitting authorities that the individual was a person who was en-
titled to have the services furnished to him free of charge, (C) the
authorities of the hospital, in admitting the individual, and the indi-
vidual, acted in good faith, and (D) the services were furnished dur-
ing a period ending with the close of the day on which the authorities
operating the hospital first became aware of the fact that the individ-
ual was not entitled to have the services furnished to him by the hos-
pital free of charge, or (if later) ending with the first day on which it
was medically feasible to remove the individual from the hospital by
discharging him therefrom or transferring him to a hospital which has
in effect an agreement under this title.
A
(2) Payment for services described in paragraph (1) shall be in an
amount equal to the charge imposed by the Veterans' Administration
for such services, or (if less) the reasonable costs for such services (as
estimated by the Secretary). Any such payment shall be made to the
entity to which payment for the services involved would have been
payable, if payment for such services had been made by the individual
receiving the services involved (or by another private person acting on
behalf of such individual)."
Payment to Providers of Services
Sec. 1815. (a) The Secretary shall periodically determine the
amount which should be paid under this part to each provider of serv-
ices with respect to the services furnished by it, and the provider of
services shall be paid, at such time or times as the Secretary believes
appropriate (but not less often than monthly) and prior to audit or
1 Subsection (j) was added by sec. 23(b) of P.L. 95-142 effective for services furnished
on and after July 1, 1974.
Revised April 1978
Sec. 1815(c)
419
settlement by the General Accounting Office, from the Federal Hos-
pital Insurance Trust Fund, the amounts so determined, with neces-
sary adjustments on account of previously made overpayments or
underpayments; except that no such payments shall be made to any
provider unless it has furnished such information as the Secretary
may request in order to determine the amounts due such provider
under this part for the period with respect to which the amounts are
being paid or any prior period.
(b) No payment shall be made to a provider of services which is a
hospital for or with respect to services furnished by it for any period
with respect to which it is deemed, under section 1861 (w) (2), to have
in effect an arrangement with a Professional Standards Review Orga-
nization for the conduct of utilization review activities by such orga-
nization unless such hospital has paid to such organization the amount
due (as determined pursuant to such section) to such organization for
the review activities conducted by it pursuant to such arrangements or
such hospital has provided assurances satisfactory to the Secretary
that such organization will promptly be paid the amount so due to it
from the proceeds of the payment claimed by the hospital. Payment
under this title for utilization review activities provided by a Profes-
sional Standards Review Organization pursuant to an arrangement or
deemed arrangement with a hospital under section 1861 (w) (2) shall
be calculated without any requirement that the reasonable cost of such
activities be apportioned among the patients of such hospital, if any,
to whom such activities were not applicable.¹
(c) No payment which may be made to a provider of services
under this title for any service furnished to an individual shall be
made to any other person under an assignment or power of attorney;
but nothing in this subsection shall be construed (1) to prevent the
making of such a payment in accordance with an assignment from
the provider if such assignment is made to a governmental agency
or entity or is established by or pursuant to the order of a court of
competent jurisdiction, or (2) to preclude an agent of the provider
of services from receiving any such payment if (but only if) such
agent does so pursuant to an agency agreement under which the com-
pensation to be paid to the agent for his services for on² in connection
with the billing or collection of payments due such provider under this
title is unrelated (directly or indirectly) to the amount of such pay-
ments or the billings therefor, and is not dependent upon the actual
collection of any such payment.³
2
1 Subsection (b) was added by section 112 of Public Law 94-182 effective February 1,
1976.
2 The word "on" is a technical error in the law. It apparently should read "or".
3 Subsection (c) was added by sec. 2(a) (2) of P.L. 95–142.
Sec. 1816(a)
Revised April 1978
420
Use of Public Agencies or Private Organizations To Facilitate
Payment to Providers of Services.
Sec. 1816. (a) If any group or association of providers of services
wishes to have payments under this part to such providers made
through a national, State, or other public or private agency or orga-
nization and nominates such agency or organization for this purpose,
the Secretary is authorized to enter into an agreement with such
agency or organization providing for the determination by such
agency or organization (subject to the provisions of section 1878 and
to such review by the Secretary as may be provided for by the agree-
ment) of the amount of the payments required pursuant to this part
to be made to such providers (and to providers assigned to such
agency or organization under subsection (e)), and for the making of
such payments by such agency or organization to such providers (and
to providers assigned to such agency or organization under subsection
(e)). Such agreement may also include provision for the agency or
organization to do all or any part of the following: (1) to provide con-
sultative services to institutions or agencies to enable them to establish
and maintain fiscal records necessary for purposes of this part and
otherwise to qualify as hospitals, extended care facilities, or home
health agencies, and (2) with respect to the providers of services
which are to receive payments through it (A) to serve as a center for,
and communicate to providers, any information or instructions fur-
nished to it by the Secretary, and serve as a channel of communication
from providers to the Secretary; (B) to make such audits of the rec-
ords of providers as may be necessary to insure that proper payments
are made under this part; and (C) to perform such other functions ast
are necessary to carry out this subsection.¹
(b) The Secretary shall not enter into or renew an agreement with
any agency or organization under this section unless-
(1) he finds-
K
(A) after applying the standards, criteria, and procedures.
developed under subsection (f), that to do so is consistent
with the effective and efficient administration of this part,
and
(B) that such agency or organization is willing and able to
assist the providers to which payments are made through it
under this part in the application of safeguards against unnec-
essary utilization of services furnished by them to individuals
entitled to hospital insurance benefits under section 226, and
the agreement provides for such assistance; and
(2) such agency or organization agrees-
1 Subsection (a) was amended by sec. 14(a) (1) of P.L. 95-142.
Revised April 1978
420-A
Sec. 1816(e)
(A) to furnish to the Secretary such of the information
acquired by it in carrying out its agreement under this sec-
tion, and
(B) to provide the Secretary with access to all such data,
information, and claims processing operations,
as the Secretary may find necessary in performing his functions
under this part.¹
(c) An agreement with any agency or organization under this sec-
tion may contain such terms and conditions as the Secretary finds
necessary or appropriate, may provide for advances of funds to the
agency or organization for the making of payments by it under sub-
section (a), and shall provide for payment of so much of the cost of
administration of the agency or organization as is determined by the
Secretary to be necessary and proper for carrying out the functions
covered by the agreement.
(d) If the nomination of an agency or organization as provided in
this section is made by a group or association of providers of services,
it shall not be binding on members of the group or association which
notify the Secretary of their election to that effect. Any provider may,
upon such notice as may be specified in the agreement under this sec-
tion with an agency or organization, withdraw its nomination to re-
ceive payments through such agency or organization. Any provider
which has withdrawn its nomination, and any provider which has
not made a nomination, may elect to receive payments from any agency
or organization which has entered into an agreement with the Secre-
tary under this section if the Secretary and such agency or organiza-
tion agree to it.
(e) (1) Notwithstanding subsections (a) and (d), the Secretary,
after taking into consideration any preferences of providers of serv-
ices, may assign or reassign any provider of services to any agency or
organization which has entered into an agreement with him under this
section, if he determines, after applying the standards, criteria, and
procedures developed under subsection (f), that such assignment or
reassignment would result in the more effective and efficient adminis-
tration of this part.
(2) Notwithstanding subsections (a) and (d), the Secretary may
designate a national or regional agency or organization which has
entered into an agreement with him under this section to perform
functions under the agreement with respect to a class of providers of
services in the Nation or region (as the case may be), if he determines,
after applying the standards, criteria, and procedures developed under
subsection (f), that such designation would result in more effective.
and efficient administration of this part.
1 Subsection (b) was amended by sec. 14 (a) (2) of P.L. 95-142 effective as specified in
subsections (c) and (d) of sec. 14 which are printed in this document on p. 798.
¡
!
Sec. 1816(e)
Revised April 1978
420-B
(3) (A) Before the Secretary makes an assignment or reassignment
under paragraph (1) of a provider of services to other than the agency
or organization nominated by the provider, he shall furnish (i) the
provider and such agency or organization with a full explanation of
the reasons for his determination as to the efficiency and effectiveness
of the agency or organization to perform the functions required under
this part with respect to the provider, and (ii) such agency or organi-
zation with opportunity for a hearing, and such determination shall be
subject to judicial review in accordance with chapter 7 of title 5,
United States Code.
(B) Before the Secretary makes a designation under paragraph
(2) with respect to a class of providers of services, he shall furnish (i)
such providers and the agencies and organizations adversely affected
by such designation with a full explanation of the reasons for his
determination as to the efficiency and effectiveness of such agencies and
organizations to perform the functions required under this part with
respect to such providers, and (ii) the agencies and organizations
adversely affected by such designation with opportunity for a hearing,
and such determination shall be subject to judicial review in accord-
ance with chapter 7 of title 5, United States Code.¹
1
(f) In order to determine whether the Secretary should enter into,
renew, or terminate an agreement under this section with an agency or
organization, whether the Secretary should assign or reassign a pro-
vider of services to an agency or organization, and whether the Secre-
tary should designate an agency or organization to perform services
with respect to a class of providers of services, the Secretary shall
develop standards, criteria, and procedures to evaluate such agency's
or organization's (1) overall performance of claims processing and
other related functions required to be performed by such an agency or
organization under an agreement entered into under this section, and
(2) performance of such functions with respect to specific providers of
services, and the Secretary shall establish, by regulation, standards
and criteria with respect to the efficient and effective administration
of this part. No agency or organization shall be found under such
standards and criteria not to be efficient or effective or to be less efficient
or effective solely on the ground that the agency or organization serves
only providers located in a single State.2
(g) An agreement with the Secretary under this section may be
terminated--
1 Subsection (e) was added (and the former subsection (e) was redesignated (g)) by
sec. 14(a) (4) and (5) of P.L. 95-142.
2 Subsection (f) was added (and former subsection (f) was redesignated (h)) by
sec. 14(a) (4) and (5) of P.L. 95-142 effective as specified in sec. 14(b) which is printed
in this document on p. 798.
Revised April 1978
Sec. 1817(a)
420-C
(1) by the agency or organization which entered into such
agreement at such time and upon such notice to the Secretary,
to the public, and to the providers as may be provided in regula-
tions, or
(2) by the Secretary at such time and upon such notice to the
agency or organization, to the providers which have nominated it.
for purposes of this section, and to the public, as may be provided
in regulations, but only if he finds, after applying the standards,
criteria, and procedures developed under subsection (f) and after
reasonable notice and opportunity for hearing to the agency or
organization, that (A) the agency or organization has failed sub-
stantially to carry out the agreement, or (B) the continuation of
some or all of the functions provided for in the agreement with the
agency or organization is disadvantageous or is inconsistent with
the efficient administration of this part.¹
(h) An agreement with an agency or organization under this section
may require any of its officers or employees certifying payments or
disbursing funds pursuant to the agreement, or otherwise participating
in carrying out the agreement, to give surety bond to the United States
in such amount as the Secretary may deem appropriate.2
(i) (1) No individual designated pursuant to an agreement under
this section as a certifying officer shall, in the absence of gross negli-
gence or intent to defraud the United States, be liable with respect to
any payments certified by him under this section.
(2) No disbursing officer shall, in the absence of gross negligence
or intent to defraud the United States, be liable with respect to any
payment by him under this section if it was based upon a voucher
signed by a certifying officer designated as provided in paragraph (1)
of this subsection.
(3) No such agency or organization shall be liable to the United
States for any payments referred to in paragraph (1) or (2).²
Federal Hospital Insurance Trust Fund
Sec. 1817. (a) There is hereby created on the books of the Treasury
of the United States a trust fund to be known as the "Federal Hos-
pital Insurance Trust Fund" (hereinafter in this section referred to as
the "Trust Fund"). The Trust Fund shall consist of such gifts and
bequests as may be made as provided in section 201(i) (1), and such
1 Subsection (g) was formerly subsection (e) and was redesignated by sec. 14(a) (4) of
P.L. 95-142. The subsection was amended by sec. 14(a)(3) of P.L. 95-142 effective as
specified in sec. 14(c) which is printed in this document on p. 798.
2 Subsections (h) and (i) were formerly (f) and (g) respectively and were redesignated
by sec. 14(a) (4) of P.L. 95-142.
21-746 O - 78 32
Revised August 1978
Sec. 1817(b)
421
amounts as may be deposited in, or appropriated to, such fund as
provided in this part. There are hereby appropriated to the Trust
Fund for the fiscal year ending June 30, 1966, and for each fiscal year
thereafter, out of any moneys in the Treasury not otherwise appro-
priated, amounts equivalent to 100 per centum of—
(1) the taxes imposed by section 3101(b) and 3111(b) of the
Internal Revenue Code of 1954 with respect to wages reported
to the Secretary of the Treasury or his delegate pursuant to sub-
title F of such Code after December 31, 1965, as determined by
the Secretary of the Treasury by applying the applicable rates of
tax under such sections to such wages, which wages shall be cer-
tified by the Secretary of Health, Education, and Welfare on the
basis of records of wages established and maintained by the Sec-
retary of Health, Education, and Welfare in accordance with such
reports; and
(2) the taxes imposed by section 1401 (b) of the Internal Rev-
enue Code of 1954 with respect to self-employment income re-
ported to the Secretary of the Treasury or his delegate on tax
returns under subtitle F of such Code, as determined by the Secre-
tary of the Treasury by applying the applicable rate of tax under
such section to such self-employment income, which self-employ-
ment income shall be certified by the Secretary of Health, Edu-
cation, and Welfare on the basis of records of self-employment
established and maintained by the Secretary of Health, Educa-
tion, and Welfare in accordance with such returns.
The amounts appropriated by the preceding sentence shall be trans-
ferred from time to time from the general fund in the Treasury to the
Trust Fund, such amounts to be determined on the basis of estimates
by the Secretary of the Treasury of the taxes, specified in the preceding
sentence, paid to or deposited into the Treasury; and proper adjust-
ments shall be made in amounts subsequently transferred to the extent
prior estimates were in excess of or were less than the taxes specified
in such sentence.
(b) With respect to the Trust Fund, there is hereby created a body
to be known as the Board of Trustees of the Trust Fund (hereinafter
in this section referred to as the "Board of Trustees") composed of the
Secretary of the Treasury, the Secretary of Labor, and the Secretary
of Health, Education, and Welfare, all ex officio. The Secretary of
the Treasury shall be the Managing Trustee of the Board of Trustees
(hereinafter in this section referred to as the "Managing Trustee").
The Administrator of the Health Care Financing Administration
shall serve as the Secretary of the Board of Trustees. The Board of
Trustees shall meet not less frequently than once each calendar year.
It shall be the duty of the Board of Trustees to—
(1) Hold the Trust Fund;
Sec. 1817(b)
Revised August 1978
422
(2) Report to the Congress not later than the first day of April
of each year on the operation and status of the Trust Fund dur-
ing the preceding fiscal year and on its expected operation and
status during the current fiscal year and the next 2 fiscal years;
(3) Report immediately to the Congress whenever the Board
is of the opinion that the amount of the Trust Fund is unduly
small; and
(4) Review the general policies followed in managing the Trust
Fund, and recommend changes in such policies, including neces-
sary changes in the provisions of law which govern the way in
which the Trust Fund is to be managed.
The report provided for in paragraph (2) shall include a statement of
the assets of, and the disbursements made from, the Trust Fund
during the preceding fiscal year, an estimate of the expected income
to, and disbursements to be made from, the Trust Fund during the
current fiscal year and each of the next 2 fiscal years, and a statement
of the actuarial status of the Trust Fund. Such report shall be printed
as a House document of the session of the Congress to which the report
is made.¹
(c) It shall be the duty of the Managing Trustee to invest such por-
tion of the Trust Fund as is not, in his judgment, required to meet
current withdrawals. Such investments may be made only in interest-
bearing obligations of the United States or in obligations guaranteed
as to both principal and interest by the United States. For such pur-
pose such obligations may be acquired (1) on original issue at the issue
price, or (2) by purchase of outstanding obligations at the market
price. The purposes for which obligations of the United States may be
issued under the Second Liberty Bond Act, as amended, are hereby
extended to authorize the issuance at par of public-debt obligations for
purchase by the Trust Fund. Such obligations issued for purchase by
the Trust Fund shall have maturities fixed with due regard for the
needs of the Trust Fund and shall bear interest at a rate equal to the
average market yield (computed by the Managing Trustee on the basis
of market quotations as of the end of the calendar month next preced-
ing the date of such issue) on all marketable interest-bearing obliga-
tions of the United States then forming a part of the public debt
which are not due or callable until after the expiration of 4 years from
the end of such calendar month; except that where such average
market yield is not a multiple of one-eighth of 1 per centum, the rate
of interest on such obligations shall be the multiple of one-eighth of 1
per centum nearest such market yield. The managing Trustee may
1 Subsection (b) was amended by sec. 5 of P.L. 95–292.
Revised August 1978
Sec. 1817(c)
422-A
purchase other interest-bearing obligations of the United States or
obligations guaranteed as to both principal and interest by the United
States, on original issue or at the market price, only where he deter-
mines that the purchase of such other obligations is in the public
interest.
423
Sec. 1817(h)
(d) Any obligations acquired by the Trust Fund (except public-
debt obligations issued exclusively to the Trust Fund) may be sold by
the Managing Trustee at the market price, and such public-debt obli-
gations may be redeemed at par plus accrued interest.
(e) The interest on, and the proceeds from the sale or redemption
of, any obligations held in the Trust Fund shall be credited to and
form a part of the Trust Fund.
(f) (1) The Managing Trustee is directed to pay from time to time
from the Trust Fund into the Treasury the amount estimated by him
as taxes imposed under section 3101 (b) which are subject to refund
under section 6413 (c) of the Internal Revenue Code of 1954 with
respect to wages paid after December 31, 1965. Such taxes shall be
determined on the basis of the records of wages established and main-
tained by the Secretary of Health, Education, and Welfare in accord-
ance with the wages reported to the Secretary of the Treasury or his
delegate pursuant to subtitle F of the Internal Revenue Code of 1954,
and the Secretary of Health, Education, and Welfare shall furnish the
Managing Trustee such information as may be required by the Manag-
ing Trustee for such purpose. The payments by the Managing Trustee
shall be covered into the Treasury as repayments to the account for
refunding internal revenue collections.
(2) Repayments made under paragraph (1) shall not be available
for expenditures but shall be carried to the surplus fund of the Treas-
ury. If it subsequently appears that the estimates under such para-
graph in any particular period were too high or too low, appropriate
adjustments shall be made by the Managing Trustee in future
payments.
(g) There shall be transferred periodically (but not less often than
once each fiscal year) to the Trust Fund from the Federal Old-Age
and Survivors Insurance Trust Fund and from the Federal Disability
Insurance Trust Fund amounts equivalent to the amounts not previ-
ously so transferred which the Secretary of Health, Education, and
Welfare shall have certified as overpayments (other than amounts
so certified to the Railroad Retirement Board) pursuant to section
1870 (b) of this Act. There shall be transferred periodically (but not
less often than once each fiscal year) to the Trust Fund from the
Railroad Retirement Account amounts equivalent to the amounts not
previously so transferred which the Secretary of Health, Education,
and Welfare shall have certified as overpayments to the Railroad
Retirement Board pursuant to section 1870 (b) of this Act.
(h) The Managing Trustee shall also pay from time to time from
the Trust Fund such amounts as the Secretary of Health, Education,
and Welfare certifies are necessary to make the payments provided
for by this part, and the payments with respect to administrative
expenses in accordance with section 201 (g) (1).
Sec. 1818(a)
424
Hospital Insurance Benefits for Uninsured Individuals Not
Otherwise Eligible
Sec. 1818. (a) Every individual who-
(1) has attained the age of 65,
(2) is enrolled under part B of this title,
(3) is a resident of the United States, and is either (A) a
citizen or (B) an alien lawfully admitted for permanent residence
who has resided in the United States continuously during the 5
years immediately preceding the month in which he applies for
enrollment under this section, and
(4) is not otherwise entitled to benefits under this part,
shall be eligible to enroll in the insurance program established by this
part.
(b) An individual may enroll under this section only in such man-
ner and form as may be prescribed in regulations, and only during
an enrollment period prescribed in or under this section.
(c) The provisions of section 1837 (except subsection (f) thereof).
section 1838, subsection (c) of section 1839, and subsections (f) and
(h) of section 1840 shall apply to persons authorized to enroll under
this section except that—
(1) individuals who meet the conditions of subsection (a) (1),
(3), and (4) on or before the last day of the seventh month after
the month in which this section is enacted may enroll under this
part and (if not already so enrolled) may also enroll under part
B during an initial general enrollment period which shall begin
on the first day of the second month which begins after the date
on which this section is enacted and shall end on the last day of
the tenth month after the month in which this Act is enacted;
(2) in the case of an individual who first meets the conditions
of eligibility under this section on or after the first day of the
eighth month after the month in which this section is enacted, the
initial enrollment period shall begin on the first day of the third
month before the month in which he first becomes eligible and
shall end 7 months later;
(3) in the case of an individual who enrolls pursuant to para-
graph (1) of this subsection, entitlement to benefits shall begin
on
(A) the first day of the second month after the month in
which he enrolls,
(B) July 1, 1973, or
(C) the first day of the first month in which he meets the
requirements of subsection (a),
whichever is the latest;
(4) termination of coverage under this section by the filing of
notice that the individual no longer wishes to participate in the
425
Sec. 1831
hospital insurance program shall take effect at the close of the
month following the month in which such notice is filed;
(5) an individual's entitlement under this section shall termi-
nate with the month before the first month in which he becomes
eligible for hospital insurance benefits under section 226 of this
Act or section 103 of the Social Security Amendments of 1965;
and upon such termination, such individual shall be deemed,
solely for purposes of hospital insurance entitlement, to have filed
in such first month the application required to establish such
entitlement; and
(6) termination of coverage for supplementary medical insur-
ance shall result in simultaneous termination of hospital insur-
ance benefits for uninsured individuals who are not otherwise
entitled to benefits under this Act.
(d) (1) The monthly premium of each individual for each month
in his coverage period before July 1974 shall be $33.
(2) The Secretary shall, during the last calendar quarter of each
year, beginning in 1973, determine and promulgate the dollar amount
(whether or not such dollar amount was applicable for premiums for
any prior month) which shall be applicable for premiums for months.
occurring in the 12-month period commencing July 1 of the next year.
Such amount shall be equal to $33, multiplied by the ratio of (A)
the inpatient hospital deductible for such next year, as promulgated
under section 1813 (b) (2), to (B) such deductible promulgated for
1973. Any amount determined under the preceding sentence which is
not a multiple of $1 shall be rounded to the nearest multiple of $1, or
if midway between multiples of $1 to the next higher multiple of $1.
(e) Payment of the monthly premiums on behalf of any individual
who meets the conditions of subsection (a) may be made by any pub-
lic or private agency or organization under a contract or other
arrangement entered into between it and the Secretary if the Secre-
tary determines that payment of such premiums under such contract
or arrangement is administratively feasible.
-
(f) Amounts paid to the Secretary for coverage under this section
shall be deposited in the Treasury to the credit of the Federal Hos-
pital Insurance Trust Fund.
Part B-Supplementary Medical Insurance Benefits for the Aged
and Disabled
Establishment of Supplementary Medical Insurance Program for
the Aged and the Disabled
Sec. 1831. There is hereby established a voluntary insurance pro-
gram to provide medical insurance benefits in accordance with the pro-
Sec. 1831
426
Revised April 1978
visions of this part for aged and disabled individuals who elect to
enroll under such program, to be financed from premium payments
by enrollees together with contributions from funds appropriated by
the Federal Government.
Scope of Benefits
Sec. 1832. (a) The benefits provided to an individual by the insur-
ance program established by this part shall consist of—
(1) entitlement to have payment made to him or on his behalf
(subject to the provisions of this part) for medical and other
health services, except those described in subparagraphs (B) and
(D) of paragraph (2); and
(2) entitlement to have payment made on his behalf (subject to
the provisions of this part) for-
(A) home health services for up to 100 visits during a
calendar year;
(B) medical and other health services furnished by a
provider of services or by others under arrangement with
them made by a provider of services, excluding—
(i) physician services except where furnished by-
(I) a resident or intern of a hospital, or
(II) a physician to a patient in a hospital which
has a teaching program approved as specified in
paragraph (6) of section 1861 (b) (including serv-
ices in conjunction with the teaching programs of
such hospital whether or not such patient is an in-
patient of such hospital), unless either clause (A)
or (B) of paragraph (7) of such section is met, and
(ii) services for which payment may be made pur-
suant to section 1835 (b) (2); and
(C) outpatient physical therapy services, other than serv-
ices to which the next to last sentence of section 1861 (p)
applies; and
(D) rural health clinic services.¹
(b) For definitions of "spell of illness", "medical and other health
services", and other terms used in this part, see section 1861.
Payment of Benefits
Sec. 1833. (a) Except as provided in section 1876, and subject to
the succeeding provisions of this section, there shall be paid from the
Federal Supplementary Medical Insurance Trust Fund, in the case of
each individual who is covered under the insurance program estab-
lished by this part and incurs expenses for services with respect to
which benefits are payable under this part, amounts equal to—
1 Subsection (a) was amended by section 1(a) of P.L. 95–210.
Revised August 1978
427
Sec. 1833(a)
(1) in the case of services described in section 1832 (a) (1)-
80 percent of the reasonable charges for the services; except that
(A) an organization which provides medical and other health
services (or arranges for their availability) on a prepayment
basis may elect to be paid 80 percent of the reasonable cost of
services for which payment may be made under this part on
behalf of individuals enrolled in such organization in lieu of 80
percent of the reasonable charges for such services if the orga-
nization undertakes to charge such individuals no more than 20
percent of such reasonable cost plus any amounts payable by them
as a result of subsection (b), (B) with respect to expenses in-
curred for radiological or pathological services for which pay-
ment may be made under this part, furnished to an inpatient of
a hospital by a physician in the field of radiology or pathology,
the amounts paid shall be equal to 100 percent of the reasonable
charges for such services, (C) with respect to expenses incurred
for those physicians' services for which payment may be made un-
der this part that are described in section 1862 (a) (4), the amounts
paid shall be subject to such limitations as may be prescribed by
regulations, (D) with respect to diagnostic tests performed
in a laboratory for which payment is made under this part to the
laboratory, the amounts paid shall be equal to 100 percent of the
negotiated rate for such tests (as determined pursuant to subsec-
tion (g) of this section), and (E) with respect to services fur-
nished to individuals who have been determined to have end
stage renal disease, the amounts paid shall be determined subject
to the provisions of section 1881, and
(2) in the case of services described in section 1832 (a) (2) (ex-
cept those services described in subparagraph (D) of section 1832
(a) (2))—with respect to home health services, 100 percent, and
with respect to other services (unless otherwise specified in sec-
tion 1881), 80 percent of-
(A) the lesser of (i) the reasonable cost of such services, as
determined under section 1861(v), or (ii) the customary
charges with respect to such services; or
(B) if such services are furnished by a public provider of
services free of charge or at nominal charges to the public,
the amount determined in accordance
accordance with section
1814(b) (2); or
(C) if such services are services to which the next to last
sentence of section 1861 (p) applies, the reasonable charges
for such services.
Revised August 1978
Sec. 1833(a)
427-A
(3) in the case of services described in section 1832 (a) (2) (D),
80 percent of costs which are reasonable and related to the cost of
furnishing such services or on such other tests of reasonableness as
the Secretary may precribe in regulations, including those author-
ized under section 1861 (v) (1) (A).¹
1 Subsection (a) was amended by section 1(b) of P.L. 95-210; see also section 1 (c) of
that law which is printed in this document on p. 802. Subsection (a) was also amended
by secs. 4(b) and 4(c) of P.L. 95–292.
Sec. 1833(b)
428
Revised April 1978
(b) Before applying subsection (a) with respect to expenses in-
curred by an individual during any calendar year, the total amount
of the expenses incurred by such individual during such year (which
would, except for this subsection, constitute incurred expenses from
which benefits payable under subsection (a) are determinable) shall
be reduced by a deductible of $60; except that (1) the amount of
the deductible for such calendar year as so determined shall first be
reduced by the amount of any expenses incurred by such individual
in the last three months of the preceding calendar year and applied
toward such individual's deductible under this section for such pre-
ceding year, and (2) such total amount shall not include expenses
incurred for radiological or pathological services furnished to such
individual as an inpatient of a hospital by a physician in the field of
radiology or pathology. The total amount of the expenses incurred by
an individual as determined under the preceding sentence shall, after
the reduction specified in such sentence, be further reduced by an
amount equal to the expenses incurred for the first three pints of
whole blood (or equivalent quantities of packed red blood cells, as
defined under regulations) furnished to the individual during the
calendar year, except that such deductible for such blood shall in
accordance with regulations be appropriately reduced to the extent
that there has been a replacement of such blood (or equivalent quan-
tities of packed red blood cells, as so defined); and for such purposes
blood (or equivalent quantities of packed red blood cells, as so defined)
furnished such individual shall be deemed replaced when the institu-
tion or other person furnishing such blood (or such equivalent quanti-
ties of packed red blood cells, as so defined) is given one pint of blood
for each pint of blood (or equivalent quantities of packed red blood
cells, as so defined) furnished such individual with respect to which
a deduction is made under this sentence.
(c) Notwithstanding any other provision of this part, with respect
to expenses incurred in any calendar year in connection with the treat-
ment of mental, psychoneurotic, and personality disorders of an indi-
vidual who is not an inpatient of a hospital at the time such expenses
are incurred, there shall be considered as incurred expenses for pur-
poses of subsections (a) and (b) only whichever of the following
amounts is the smaller:
(1) $312.50, or
(2) 6212 percent of such expenses.
(d) No payment may be made under this part with respect to any
services furnished an individual to the extent that such individual is
entitled (or would be entitled except for section 1813) to have pay-
ment made with respect to such services under part A.
Revised April 1978
Sec. 1833 (f)
428-A
(e) No payment shall be made to any provider of services or other
person under this part unless there has been furnished such informa-
tion as may be necessary in order to determine the amounts due such
provider or other person under this part for the period with respect to
which the amounts are being paid or for any prior period.
(f) (1) In the case of durable medical equipment to be furnished an
individual as described in section 1861 (s) (6), the Secretary shall
determine, on the basis of such medical and other evidence as he finds
appropriate (including certification by the attending physician with
respect to expected duration of need), whether the expected duration
of the medical need for the equipment warrants a presumption that
purchase of the equipment would be less costly or more practical than
rental. If the Secretary determines that such a presumption does exist,
he shall require that the equipment be purchased, on a lease-purchase
basis or otherwise, and shall make payment in accordance with the
lease-purchase agreement (or in a lump sum amount if the equipment
is purchased other than on a lease-purchase basis); except that the
Secretary may authorize the rental of the equipment notwithstand-
ing such determination if he determines that the purchase of the equip-
ment would be inconsistent with the purposes of this title or would
create an undue financial hardship on the individual who will use it.
(2) with respect to purchases of used durable medical equipment,
the Secretary may waive the 20 percent coinsurance amount applicable
under subsection (a) whenever the purchase price of the used equip-
ment is at least 25 percent less than the reasonable charge for com-
parable new equipment.
(3) For purposes of paragraph (1), the Secretary may, pursuant
to agreements made with suppliers of durable medical equipment,
establish reimbursement procedures which he finds to be equitable,
economical, and feasible.
(4) The Secretary shall encourage suppliers of durable medical
equipment to make their equipment available to individuals entitled
to benefits under this title on a lease-purchase basis whenever
possible.
1
1 Subsection (f) was amended by section 16 of P.L. 95-142.
Revised August 1978
Sec. 1835(a)
429
(g) In the case of services described in the next to last sentence
of section 1861 (p), with respect to expenses incurred in any calendar
year, no more than $100 shall be considered as incurred expenses for
purposes of subsections (a) and (b).¹
1
(g) With respect to diagnostic tests performed in a laboratory for
which payment is made under this part to the laboratory, the Secre-
tary is authorized to establish a payment rate which is acceptable to
the laboratory and which would be considered the full charge for such
tests. Such negotiated rate shall be limited to an amount not in excess
of the total payment that would have been made for the services in the
absence of such a rate.¹
Limitation on Home Health Services
Sec. 1834. (a) Payment under this part may be made for home
health services furnished an individual during any calendar year only
for 100 visits during such year. The number of visits to be charged for
purposes of the limitation in the preceding sentence, in connection
with items and services described in section 1861 (m), shall be deter-
mined in accordance with regulations.
(b) For purposes of subsection (a), home health services shall be
taken into account only if payment under this part is or would be,
except for this section or the failure to comply with the request and
certification requirements of or under section 1835 (a), made with
respect to such services.
Procedure for Payment of Claims of Providers of Services
Sec. 1835. (a) Except as provided in subsections (b), (c), and (e),
payment for services described in section 1832 (a) (2) furnished an
individual may be made only to providers of services which are eligible
therefor under section 1866 (a), and only if—
1 The two subsections (g) were added by sections 251(a)(2) and 279 (b) of Public Law
92-603.
Sec. 1835 (a)
430
(1) written request, signed by such individual, except in cases
in which the Secretary finds it impracticable for the individual
to do so, is filed for such payment in such form, in such manner
and by such person or persons as the Secretary may by regula-
tion prescribe, no later than the close of the period of 3 calendar
years following the year in which such services are furnished
(deeming any services furnished in the last 3 calendar months
of any calendar year to have been furnished in the succeeding
calendar year) except that, where the Secretary deems that effi-
cient administration so requires, such period may be reduced to
not less than 1 calendar year; and
(2) a physician certifies (and recertifies, where such services are
furnished over a period of time, in such cases, with such frequency,
and accompanied by such supporting material, appropriate to the
case involved, as may be provided by regulations) that-
(A) in the case of home health services (i) such services
are or were required because the individual is or was confined
to his home (except when receiving items and services referred
to in section 1861 (m) (7)) and needed skilled nursing care on
an intermittent basis, or physical or speech therapy, (ii) a
plan for furnishing such services to such individual has been
established and is periodically reviewed by a physician, and
(iii) such services are or were furnished while the individual
is or was under the care of a physician;
(B) in the case of medical and other health services except
services described in subparagraphs (B), (C), and (D) of
section 1861(s) (2), such services are or were medically re-
quired; and
(C) in the case of outpatient physical therapy services,
(i) such services are or were required because the individual
needed physical therapy services, (ii) a plan for furnishing
such services has been established, and is periodically re-
viewed by a physician, and (iii) such services are or were
furnished while the individual is or was under the care of a
physician;
(D) in the case of outpatient speech pathology services, (i)
such services are or were required because the individual
needed speech pathology services, (ii) a plan for furnishing
such services has been established and is periodically reviewed
by a physician, and (iii) such services are or were furnished
while the individual is or was under the care of a physician.
To the extent provided by regulations, the certification and re-
certification requirements of paragraph (2) shall be deemed satisfied
where at a later date, a physician makes a certification of the kind
provided in subparagraph (A) or (B) of paragraph (2) (which-
431
Sec. 1835(c)
ever would have applied), but only where such certification is
accompanied by such medical and other evidence as may be required
by such regulations. For purposes of this section, the term "provider
of services" shall include a clinic, rehabilitation agency, or public
health agency if, in the case of a clinic or rehabilitation agency, such
clinic or agency meets the requirements of section 1861 (p) (4) (A),
or if, in the case of a public health agency, such agency meets the
requirements of section 1861 (p) (4) (B), but only with respect to the
furnishing of outpatient physical therapy services (as therein
defined).
(b) (1) Payment may also be made to any hospital for services
described in section 1861 (s) furnished as an outpatient service by a
hospital or by others under arrangements made by it to an individual
entitled to benefits under this part even though such hospital does
not have an agreement in effect under this title if (A) such services
were emergency services, (B) the Secretary would be required to
make such payment if the hospital had such an agreement in effect
and otherwise met the conditions of payment hereunder, and (C)
such hospital has made an election pursuant to section 1814(d) (1) (C)
with respect to the calendar year, in which such emergency services
are provided. Such payments shall be made only in the amounts pro-
vided under section 1833 (a) (2) and then only if such hospital agrees
to comply, with respect to the emergency services provided, with the
provisions of section 1866 (a).
(2) Payment may also be made on the basis of an itemized bill to
an individual for services described in paragraph (1) of this sub-
section if (A) payment cannot be made under such paragraph (1)
solely because the hospital does not elect, in accordance with section
1814(d) (1) (C), to claim such payments and (B) such individual files
application (submitted within such time and in such form and man-
ner, and containing and supported by such information as the Secre-
tary shall by regulations prescribe) for reimbursement. The amounts
payable under this paragraph shall, subject to the provisions of sec-
tion 1833, be equal to 80 percent of the hospital's reasonable charges
for such services.
(c) Notwithstanding the provisions of this section and sections
1832, 1833, and 1866 (a) (1) (A), a hospital may, subject to such limi-
tations as may be prescribed by regulations, collect from an individual
the customary charges for services specified in secton 1861 (s) and
furnished to him by such hospital as an outpatient, but only if such
charges for such services do not exceed the applicable supplementary
medical insurance deductible, and such customary charges shall be
regarded as expenses incurred by such individual with respect to which
benefits are payable in accordance with section 1833 (a) (1). Payments
Sec. 1835(c)
432
under this title to hospitals which have elected to make collections
from individuals in accordance with the preceding sentence shall be
adjusted periodically to place the hospital in the same position it
would have been had it instead been reimbursed in accordance with
section 1833 (a) (2).
(d) Subject to section 1880, no payment may be made under this
part to any Federal provider of services or other Federal agency,
except a provider of services which the Secretary determines is pro-
viding services to the public generally as a community institution or
agency; and no such payment may be made to any provider of services
or other person for any item or service which such provider or person
is obligated by a law of, or a contract with, the United States to render
at public expense.¹
(e) For purposes of services (1) which are inpatient hospital
services by reason of paragraph (7) of section 1861(b) or for which
entitlement exists by reason of clause (II) of section 1832 (a) (2) (B)
(i), and (2) for which the reasonable cost thereof is determined under
section 1861 (v) (1) (D), payment under this part shall be made to
such fund as may be designated by the organized medical staff of
the hospital in which such services were furnished or, if such services
were furnished in such hospital by the faculty of a medical school,
to such fund as may be designated by such faculty, but only if—
(1) such hospital has an agreement with the Secretary under
section 1866, and
(2) the Secretary has received written assurances that such
payment will be used by such fund solely for the improvement
of care to patients in such hospital or for educational or chari-
table purposes and (B) the individuals who were furnished such
services or any other persons will not be charged for such services
(or if charged provision will be made for return for any moneys
incorrectly collected).
Eligible Individuals
Sec. 1836. Every individual who-
(1) is entitled to hospital insurance benefits under part A, or
(2) has attained age 65 and is a resident of the United States,
and is either (A) a citizen or (B) an alien lawfully admitted for
permanent residence who has resided in the United States continu-
ously during the 5 years immediately preceding the month in
which he applies for enrollment under this part,
is eligible to enroll in the insurance program established by this part.
1 Subsection (d) was amended by section 401(a) of P.L. 94–437.
433
Sec. 1837(f)
Enrollment Periods
Sec. 1837. (a) An individual may enroll in the insurance program
established by this part only in such manner and form as may be pre-
scribed by regulations, and only during an enrollment period pre-
scribed in or under this section.
(b) No individual may enroll under this part more than twice.
(c) In the case of individuals who first satisfy paragraph (1) or
(2) of section 1836 before March 1, 1966, the initial general enroll-
ment period shall begin on the first day of the second month which
begins after the date of enactment of this title and shall end on May 31,
1966. For purposes of this subsection and subsection (d), an in-
dividual who has attained age 65 and who satisfies paragraph (1) of
section 1836 but not paragraph (2) of such section shall be treated
as satisfying such paragraph (1) on the first day on which he is (or
on filing application would have been) entitled to hospital insurance
benefits under part A.
(d) In the case of an individual who first satisfies paragraph (1)
or (2) of section 1836 on or after March 1, 1966, his initial enroll-
ment period shall begin on the first day of the third month before the
month in which he first satisfies such paragraphs and shall end seven
months later. Where the Secretary finds that an individual who has
attained age 65 failed to enroll under this part during his initial en-
rollment period (based on a determination by the Secretary of the
month in which such individual attained age 65), because such in-
dividual (relying on documentary evidence) was mistaken as to his
correct date of birth, the Secretary shall establish for such individual
an initial enrollment period based on his attaining age 65 at the time
shown in such documentary evidence (with a coverage period deter-
mined under section 1838 as though he had attained such age at that
time).
(e) There shall be a general enrollment period, after the period
described in subsection (c), during the period beginning on January 1
and ending on March 31 of each year beginning with 1969.
(f) Any individual-
21-746 O - 78
(1) who is eligible under section 1836 to enroll in the medical
insurance program by reason of entitlement to hospital insurance
benefits as described in paragraph (1) of such section, and
(2) whose initial enrollment period under subsection (d)
begins after March 31, 1973, and
(3) who is residing in the United States, exclusive of Puerto
Rico,
shall be deemed to have enrolled in the medical insurance program
established by this part.
J
33
Sec. 1837(g)
434
(g) All of the provisions of this section shall apply to individuals
satisfying subsection (f), except that—
(1) in the case of an individual who satisfies subsection (f)
by reason of entitlement to disability insurance benefits described
in section 226(a)(2)(B), his initial enrollment period shall
begin on the first day of the later of (A) April 1973 or (B)
the third month before the 25th consecutive month of such entitle-
ment, and shall reoccur with each continuous period of eligibility
(as defined in section 1839 (e)) and upon attainment of age 65;
(2) (A) in the case of an individual who is entitled to monthly
benefits under section 202 or 223 on the first day of his initial
enrollment period or becomes entitled to monthly benefits under
section 202 during the first 3 months of such period, his enroll-
ment shall be deemed to have occurred in the third month of his
initial enrollment period, and
(B) in the case of an individual who is not entitled to bene-
fits under section 202 on the first day of his initial enrollment
period and does not become so entitled during the first 3 months
of such period, his enrollment shall be deemed to have occurred in
the month in which he files the application establishing his entitle-
ment to hospital insurance benefits provided such filing occurs
during the last 4 months of his initial enrollment period; and
(3) in the case of an individual who would otherwise satisfy
subsection (f) but does not establish his entitlement to hospital
insurance benefits until after the last day of his initial enroll-
ment period (as defined in subsection (d) of this section), his
enrollment shall be deemed to have occurred on the first day of
the earlier of the then current or immediately succeeding general
enrollment period (as defined in subsection (e) of this section).
(h) In any case where the Secretary finds that an individual's
enrollment or nonenrollment in the insurance program established by
this part or part A pursuant to section 1818 is unintentional, inad-
vertent, or erroneous and is the result of the error, misrepresentation,
or inaction of an officer, employee, or agent of the Federal Govern-
ment, or its instrumentalities, the Secretary may take such action (in-
cluding the designation for such individual of a special initial or sub-
sequent enrollment period, with a coverage period determined on the
basis thereof and with appropriate adjustments of premiums) as may
be necessary to correct or eliminate the effects of such error, misrep-
resentation, or inaction.
-
Coverage Period
Sec. 1838. (a) The period during which an individual is entitled to
benefits under the insurance program established by this part (herein-
435
Sec. 1838(b)
after referred to as his "coverage period") shall begin on whichever
of the following is the latest :
(1) July 1, 1966 or (in the case of a disabled individual who
has not attained age 65) July 1, 1973, or
(2)(A) in the case of an individual who enrolls pursuant to
subsection (d) of section 1837 before the month in which he first
satisfies paragraph (1) or (2) of section 1836, the first day of
such month, or
(B) in the case of an individual who enrolls pursuant to such
subsection (d) in the month in which he first satisfies such para-
graph, the first day of the month following the month in which
he so enrolls, or
(C) in the case of an individual who enrolls pursuant to such
subsection (d) in the month following the month in which he first
satisfies such paragraph, the first day of the second month follow-
ing the month in which he so enrolls, or
(D) in the case of an individual who enrolls pursuant to such
subsection (d) more than one month following the month in which
he satisfies such paragraph, the first day of the third month fol-
lowing the month in which he so enrolls, or
(E) in the case of an individual who enrolls pursuant to sub-
section (e) of section 1837, the July 1 following the month in
which he so enrolls; or
(3)(A) in the case of an individual who is deemed to have
enrolled on or before the last day of the third month of his initial
enrollment period, the first day of the month in which he first
meets the applicable requirements of section 1836 or July 1, 1973,
whichever is later, or
(B) in the case of an individual who is deemed to have enrolled
on or after the first day of the fourth month of his initial enroll-
ment period, as prescribed under subparagraphs (B), (C), (D),
and (E) of paragraph (2) of this subsection.
(b) An individual's coverage period shall continue until his enroll-
ment has been terminated-
C
(1) by the filing of notice that the individual no longer wishes
to participate in the insurance program established by this part,
or
(2) for nonpayment of premiums.
The termination of a coverage period under paragraph (1) shall take
effect at the close of the calendar quarter following the calendar quar-
ter in which the notice is filed. The termination of a coverage period
under paragraph (2) shall take effect on a date determined under regu-
lations, which may be determined so as to provide a grace period in
which overdue premiums may be paid and coverage continued. The
Sec. 1838(b)
436
grace period determined under the preceding sentence shall not exceed
90 days; except that it may be extended to not to exceed 180 days in
any case where the Secretary determines that there was good cause for
failure to pay the overdue premiums within such 90-day period.
Where an individual who is deemed to have enrolled for medical
insurance pursuant to section 1837 (f) files a notice before the first day
of the month in which his coverage period begins advising that he
does not wish to be so enrolled, the termination of the coverage period
resulting from such deemed enrollment shall take effect with the first
day of the month the coverage would have been effective and such
notice shall not be considered a disenrollment for the purposes of
section 1837 (b). Where an individual who is deemed enrolled for medi-
cal insurance benefits pursuant to section 1837 (f) files a notice request-
ing termination of his deemed coverage in or after the month in which
such coverage becomes effective, the termination of such coverage
shall take effect at the close of the calendar quarter following the calen-
dar quarter in which the notice is filed.
(c) In the case of an individual satisfying paragraph (1) of section
1836 whose entitlement to hospital insurance benefits under part A
is based on a disability rather than on his having attained the age of
65, his coverage period (and his enrollment under this part) shall be
terminated as of the close of the last month for which he is entitled to
hospital insurance benefits.
(d) No payments may be made under this part with respect to the
expenses of an individual unless such expenses were incurred by such
individual during a period which, with respect to him, is a coverage
period.
Amounts of Premiums
Sec. 1839. (a) The monthly premium of each individual enrolled
under this part for each month before 1968 shall be $3.
(b) (1) The monthly premium of each individual enrolled under
this part for each month after 1967 and before July 1, 1973, shall be
the amount determined under paragraph (2).
(2) The Secretary shall, during December 1968 and of each year
ending on or before December 31, 1971, determine and promulgate the
dollar amount (whether or not such dollar amount was applicable for
premiums for any prior month) which shall be applicable for pre-
miums for months occurring in the 12-month period commencing
July 1 in each succeeding year. Such dollar amount shall be such
amount as the Secretary estimates to be necessary so that the aggregate
premiums for such 12-month period will equal one-half of the total of
the benefits and administrative costs which he estimates will be pay-
able from the Federal Supplementary Medical Insurance Trust Fund
Revised April 1978
Sec. 1839 (c)
437
for such 12-month period. In estimating aggregate benefits payable for
any period, the Secretary shall include an appropriate amount for a
contingency margin. Whenever the Secretary, pursuant to the preced-
ing sentence, promulgates the dollar amount which shall be applicable
for premiums for any period, he shall, at the time such promulgation
is announced, issue a public statement setting forth the actuarial as-
sumptions and bases employed by him in arriving at the amount of
premiums so promulgated.
(c) (1) The Secretary shall, during December of 1972 and of each
year thereafter, determine the monthly actuarial rate for enrollees age
65 and over which shall be applicable for the 12-month period com-
mencing July 1 in the succeeding year. Such actuarial rate shall be the
amount the Secretary estimates to be necessary so that the aggregate
amount for such 12-month period with respect to those enrollees age 65
and over will equal one-half of the total of the benefits and administra-
tive costs which he estimates will be payable from the Federal Supple-
mentary Medical Insurance Trust Fund for services performed and
related administrative costs incurred in such 12-month period. In cal-
culating the monthly actuarial rate, the Secretary shall include an
appropriate amount for a contingency margin.
(2) The monthly premium of each individual enrolled under this
part for each month after June 1973 shall, except as provided in sub-
section (d), be the amount determined under paragraph (3).
(3) The Secretary shall, during December of 1972 and of each year
thereafter, determine and promulgate the monthly premium applicable
for the individuals enrolled under this part for the 12-month period
commencing July 1 in the succeeding year. The monthly premium shall
be equal to the smaller of—
(A) the monthly actuarial rate for enrollees age 65 and over,
determined according to paragraph (1) of this subsection, for that
12-month period, or
(B) the monthly premium rate most recently promulgated by
the Secretary under this paragraph, increased by a percentage
determined as follows: The Secretary shall ascertain the primary
insurance amount computed under section 215 (a) (1), based upon
average indexed monthly earnings of $900, that applied to indi-
viduals who became eligible for and entitled to old-age insurance
benefits on May 1 of the year of the promulgation. He shall in-
crease the monthly premium rate by the same percentage by which
that primary insurance amount is increased when, by reason of the
law in effect at the time the promulgation is made, it is so com-
puted to apply to those individuals on the following May 1.¹
1 Subparagraph (B) was amended by section 205 (e) of P.L. 95-216, effective with respect
to social security benefits payable for months after December 1978.
Sec. 1839 (c)
438
Whenever the Secretary promulgates the dollar amount which shall
be applicable as the monthly premium for any period, he shall, at the
time such promulgation is announced, issue a public statement setting
forth the actuarial assumptions and bases employed by him in arriving
at the amount of an adequate actuarial rate for enrollees age 65 and
over as provided in paragraph (1) and the derivation of the dollar
amounts specified in this paragraph.¹
(4) The Secretary shall also, during December of 1972 and of each
year thereafter, determine the monthly actuarial rate for disabled en-
rollees under age 65 which shall be applicable for the 12-month period
commencing July 1 in the succeeding year. Such actuarial rate shall
be the amount the Secretary estimates to be necessary so that the ag-
gregate amount for such 12-month period with respect to disabled en-
rollees under age 65 will equal one-half of the total of the benefits and
administrative costs which he estimates will be incurred in the
Federal Supplementary Medical Insurance Trust Fund for such 12-
month period with respect to such enrollees. In calculating the
monthly actuarial rate under this paragraph, the Secretary shall in-
clude an appropriate amount for a contingency margin.
(d) In the case of an individual whose coverage period began pur-
suant to an enrollment after his initial enrollment period (determined
pursuant to subsection (c) or (d) of section 1837), the monthly pre-
mium determined under subsection (b) or (c) shall be increased by
10 percent of the monthly premium so determined for each full 12
months (in the same continuous period of eligibility) in which he
could have been but was not enrolled. For purposes of the preceding
sentence, there shall be taken into account (1) the months which
elapsed between the close of his initial enrollment period and the close
of the enrollment period in which he enrolled, plus (in the case of an
individual who enrolls for a second time) (2) the months which
elapsed between the date of the termination of his first coverage period
and the close of the enrollment period in which he enrolled for the sec-
ond time. Any increase in an individual's monthly premium under the
first sentence of this subsection with respect to a particular con-
tinuous period of eligibility shall not be applicable with respect to any
other continuous period of eligibility which such individual may have.
(e) If any monthly premium determined under the foregoing pro-
visions of this section is not a multiple of 10 cents, such premium shall
be rounded to the nearest multiple of 10 cents.
(f) For purposes of subsection (c) (and section 1837 (g) (1)), an
individual's "continuous period of eligibility" is the period beginning
with the first day on which he is eligible to enroll under section 1836
and ending with his death; except that any period during all of which
an individual satisfied paragraph (1) of section 1836 and which termi-
1 Subsection (c) (3) was amended by section 104 of Public Law 94–182.
439
Sec. 1840(c)
nated in or before the month preceding the month in which he attained
age 65 shall be a separate "continuous period of eligibility" with re-
spect to such individual (and each such period which terminates shall
be deemed not to have existed for purposes of subsequently applying
this section).
Payment of Premiums
Sec. 1840. (a) (1) In the case of an individual who is entitled to
monthly benefits under section 202 or 223, his monthly premiums
under this part shall (except as provided in subsections (b) (1) and
(c)) be collected by deducting the amount thereof from the amount
of such monthly benefits. Such deduction shall be made in such manner
and at such times as the Secretary shall by regulation prescribe.
(2) The Secretary of the Treasury shall, from time to time, transfer
from the Federal Old-Age and Survivors Insurance Trust Fund or the
Federal Disability Insurance Trust Fund to the Federal Supplemen-
tary Medical Insurance Trust Fund the aggregate amount deducted
under paragraph (1) for the period to which such transfer relates
from benefits under section 202 or 223 which are payable from such
Trust Fund. Such transfer shall be made on the basis of a certification.
by the Secretary of Health, Education, and Welfare and shall be
appropriately adjusted to the extent that prior transfers were too
great or too small.
(b) (1) In the case of an individual who is entitled to receive for a
month an annuity under the Railroad Retirement Act of 1974
(whether or not such individual is also entitled for such month to a
monthly insurance benefit under section 202), his monthly premiums
under this part shall (except as provided in subsection (c)) be col-
lected by deducting the amount thereof from such annuity or pension.
Such deduction shall be made in such manner and at such times as
the Secretary shall by regulations prescribe. Such regulations shall
be prescribed only after consultation with the Railroad Retirement
Board.
-
(2) The Secretary of the Treasury shall, from time to time, trans-
fer from the Railroad Retirement Account to the Federal Supplemen-
tary Medical Insurance Trust Fund the aggregate amount deducted
under paragraph (1) for the period to which such transfer re-
lates. Such transfers shall be made on the basis of a certification by
the Railroad Retirement Board and shall be appropriately adjusted
to the extent that prior transfers were too great or too small.
(c) If an individual to whom subsection (a) or (b) applies esti-
mates that the amount which will be available for deduction under
such subsection for any premium payment period will be less than
the amount of the monthly premiums for such period, he may (under
regulations) pay to the Secretary such portion of the monthly pre-
miums for such period as he desires.
!
Sec. 1840(d)
440
(d) (1) In the case of an individual receiving an annuity under
subchapter III of chapter 83 of title 5, United States Code, or any
other law administered by the Civil Service Commission providing
retirement or survivorship protection, to whom neither subsection (a)
nor subsection (b) applies, his monthly premiums under this part
(and the monthly premiums of the spouse of such individual under
this part if neither subsection (a) nor subsection (b) applies to such
spouse and if such individual agrees) shall, upon notice from the Sec-
retary of Health, Education, and Welfare to the Civil Service Com-
mission, be collected by deducting the amount thereof from each
installment of such annuity. Such deduction shall be made in such
manner and at such times as the Civil Service Commission may deter-
mine. The Civil Service Commission shall furnish such information
as the Secretary of Health, Education, and Welfare may reasonably
request in order to carry out his functions under this part with respect
to individuals to whom this subsection applies. A plan described in
section 8903 of title 5, United States Code, may reimburse each an-
nuitant enrolled in such plan an amount equal to the premiums paid
by him under this part if such reimbursement is paid entirely from
funds of such plan which are derived from sources other than the
contributions described in section 8906 of such title.
(2) The Secretary of the Treasury shall, from time to time, but not
less often than quarterly, transfer from the Civil Service Retirement
and Disability Fund, or the account (if any) applicable in the case
of such other law administered by the Civil Service Commission, to
the Federal Supplementary Medical Insurance Trust Fund, the aggre-
gate amount deducted under paragraph (1) for the period to which
such transfer relates. Such transfer shall be made on the basis of a
certification by the Civil Service Commission and shall be appropri-
ately adjusted to the extent that prior transfers were too great or too
small.
(e) In the case of an individual who participates in the insurance
program established by this part but with respect to whom none of
the preceding provisions of this section applies, or with respect to
whom subsection (c) applies, the premiums shall be paid to the Sec-
retary at such times, and in such manner, as the Secretary shall by
regulations prescribe.
(f) Amounts paid to the Secretary under subsection (c) or (e) shall
be deposited in the Treasury to the credit of the Federal Supplemen-
tary Medical Insurance Trust Fund.
(g) In the case of an individual who participates in the insurance
program established by this part, premiums shall be payable for the
period commencing with the first month of his coverage period and
ending with the month in which he dies or, if earlier, in which his
coverage under such program terminates.
Revised August 1978
441
Sec. 1841(b)
(h) In the case of an individual who is enrolled under the program
established by this part as a member of a coverage group to which an
agreement with a State entered into pursuant to section 1843 is
applicable, subsection (a), (b), (c), and (d) of this section shall not
apply to his monthly premium for any month in his coverage period
which is determined under section 1843 (d).
Federal Supplementary Medical Insurance Trust Fund
Sec. 1841. (a) There is hereby created on the books of the Treasury
of the United States a trust fund to be known as the "Federal Supple-
mentary Medical Insurance Trust Fund" (hereinafter in this section
referred to as the "Trust Fund"). The Trust Fund shall consist of
such gifts and bequests as may be made as provided in section 201
(i)(1), and such amounts as may be deposited in, or appropriated
to, such fund as provided in this part.
(b) With respect to the Trust Fund, there is hereby created a body
to be known as the Board of Trustees of the Trust Fund (hereinafter
in this section referred to as the "Board of Trustees") composed of the
Secretary of the Treasury, the Secretary of Labor and the Secretary
of Health, Education, and Welfare, all ex officio. The Secretary of the
Treasury shall be the Managing Trustee of the Board of Trustees
(hereinafter in this section referred to as the "Managing Trustee").
The Administrator of the Health Care Financing Administration
shall serve as the Secretary of the Board of Trustees. The Board of
Trustees shall meet not less frequently than once each calendar year.
It shall be the duty of the Board of Trustees to-
(1) Hold the Trust Fund;
(2) Report to the Congress not later than the first day of April
of each year on the operation and status of the Trust Fund during
the preceding fiscal year and on its expected operation and status
during the current fiscal year and the next 2 fiscal years;
(3) Report immediately to the Congress whenever the Board
is of the opinion that the amount of the Trust Fund is unduly
small; and
(4) Review the general policies followed in managing the
Trust Fund, and recommend changes in such policies, including
necessary changes in the provisions of law which govern the way
in which the Trust Fund is to be managed.
The report provided for in paragraph (2) shall include a statement
of the assets of, and the disbursements made from, the Trust Fund
during the preceding fiscal year, an estimate of the expected income
to, and disbursements to be made from, the Trust Fund during the
current fiscal year and each of the next 2 fiscal years, and a statement
of the actuarial status of the Trust Fund. Such report shall be printed
Sec. 1841(b)
Revised August 1978
442
as a House document of the session of the Congress to which the report
is made.¹
(c) It shall be the duty of the Managing Trustee to invest such por-
tion of the Trust Fund as is not, in his judgment, required to meet
current withdrawals. Such investments may be made only in interest-
bearing obligations of the United States or in obligations guaranteed
as to both principal and interest by the United States. For such pur-
pose such obligations may be acquired (1) on original issue at the issue
price, or (2) by purchase of outstanding obligations at the market
price. The purposes for which obligations of the United States may be
issued under the Second Liberty Bond Act, as amended, are hereby ex-
tended to authorize the issuance at par of public-debt obligations for
purchase by the Trust Fund. Such obligations issued for purchase by
the Trust Fund shall have maturities fixed with due regard for the
needs of the Trust Fund and shall bear interest at a rate equal to the
average market yield (computed by the Managing Trustee on the
basis of market quotations as of the end of the calendar month next
preceding the date of such issue) on all marketable interest-bearing
obligations of the United States then forming a part of the public
debt which are not due or callable until after the expiration of 4 years
from the end of such calendar month; except that where such average
market yield is not a multiple of one-eighth of 1 per centum, the rate
of interest on such obligations shall be the multiple of one-eighth of
1 per centum nearest such market yield. The Managing Trustee may
purchase other interest-bearing obligations of the United States or
obligations guaranteed as to both principal and interest by the United
States, on original issue or at the market price, only where he deter-
mines that the purchase of such other obligations is in the public
interest.
(d) Any obligations acquired by the Trust Fund (except public
debt obligations issued exclusively to the Trust Fund) may be sold by
the Managing Trustee at the market price, and such public-debt
obligations may be redeemed at par plus accrued interest.
(e) The interest on, and the proceeds from the sale or redemption of,
any obligations held in the Trust Fund shall be credited to and form
a part of the Trust Fund.
(f) There shall be transferred periodically (but not less often than
once each fiscal year) to the Trust Fund from the Federal Old-Age
and Survivors Insurance Trust Fund and from the Federal Disability
Insurance Trust Fund amounts equivalent to the amounts not pre-
viously so transferred which the Secretary of Health, Education, and
Welfare shall have certified as overpayments (other than amounts so
certified to the Railroad Retirement Board) pursuant to section
1870 (b) of this Act. There shall be transferred periodically (but not
less often than once each fiscal year) to the Trust Fund from the Rail-
1 Subsection (b) was amended by sec. 5 of P.L. 95-292.
443
Sec. 1842(a)
road Retirement Account amounts equivalent to the amounts not pre-
viously so transferred which the Secretary of Health, Education, and
Welfare shall have certified as overpayments to the Railroad Retire-
ment Board pursuant to section 1870 (b) of this Act.
(g) The Managing Trustee shall pay from time to time from the
Trust Fund such amounts as the Secretary of Health, Education, and
Welfare certifies are necessary to make the payments provided for
by this part, and the payments with respect to administrative expenses
in accordance with section 201 (g) (1).
(h) The Managing Trustee shall pay from time to time from the
Trust Fund such amounts as the Secretary of Health, Education, and
Welfare certifies are necessary to pay the costs incurred by the Civil
Service Commission in making deductions pursuant to section 1840
(d) During each fiscal year, or after the close of such fiscal year,
the Civil Service Commission shall certify to the Secretary the amount
of the costs it incurred in making such deductions, and such certified
amount shall be the basis for the amount of such costs certified by the
Secretary to the Managing Trustee.
(i) The Managing Trustee shall pay from time to time from the
Trust Fund such amounts as the Secretary of Health, Education, and
Welfare certifies are necessary to pay the costs incurred by the Rail-
road Retirement Board for services performed pursuant to section
1840 (b) (1) and section 1842 (g). During each fiscal year or after the
close of such fiscal year, the Railroad Retirement Board shall certify
to the Secretary the amount of the costs it incurred in performing
such services and such certified amount shall be the basis for the
amount of such costs certified by the Secretary to the Managing
Trustee.
Use of Carriers for Administration of Benefits
Sec. 1842. (a) In order to provide for the administration of the bene-
fits under this part with maximum efficiency and convenience for in-
dividuals entitled to benefits under this part and for providers of
services and other persons furnishing services to such individuals, and
with a view to furthering coordination of the administration of the
benefits under part A and under this part, the Secretary is authorized
to enter into contracts with carriers, including carriers with which
agreements under section 1816 are in effect, which will perform some or
all of the following functions (or, to the extent provided in such con-
tracts, will secure performance thereof by other organizations); and,
with respect to any of the following functions which involve payments
for physicians' services on a reasonable charge basis, the Secretary
shall to the extent possible enter into such contracts:
(1) (A) make determinations of the rates and amounts of pay-
ments required pursuant to this part to be made to providers of
•
Sec. 1842(a)
444
services and other persons on a reasonable cost or reasonable
charge basis (as may be applicable);
(B) receive, disburse, and account for funds in making such
payments; and
(C) make such audits of the records of providers of services as
may be necessary to assure that proper payments are made under
this part;
(2)(A) determine compliance with the requirements of section
1861 (k) as to utilization review; and
(B) assist providers of services and other persons who furnish
services for which payment may be made under this part in the
development of procedures relating to utilization practices, make
studies of the effectiveness of such procedures and methods for
their improvement, assist in the application of safeguards against
unnecessary utilization of services furnished by providers of serv-
ices and other persons to individuals entitled to benefits under
this part, and provide procedures for and assist in arranging,
where necessary, the establishment of groups outside hospitals
(meeting the requirements of section 1861 (k) (2)) to make re-
views of utilization;
(3) serve as a channel of communication of information relating
to the administration of this part; and
(4) otherwise assist, in such manner as the contract may pro-
vide, in discharging administrative duties necessary to carry out
the purposes of this part.
(b) (1) Contracts with carriers under subsection (a) may be entered
into without regard to section 3709 of the Revised Statutes or any
other provision of law requiring competitive bidding.
(2) No such contract shall be entered into with any carrier unless
the Secretary finds that such carrier will perform its obligations under
the contract efficiently and effectively and will meet such requirements
as to financial responsibility, legal authority, and other matters as he
finds pertinent.
(3) Each such contract shall provide that the carrier-
(A) will take such action as may be necessary to assure that,
where payment under this part for a service is on a cost basis, the
cost is reasonable cost (as determined under section 1861 (v));
(B) will take such action as may be necessary to assure that,
where payment under this part for a service is on a charge basis,
such charge will be reasonable and not higher than the charge
applicable, for a comparable service and under comparable cir-
cumstances, to the policyholders and subscribers of the carrier,
and such payment will (except as otherwise provided in section
1870 (f)) be made—
(i) on the basis of an itemized bill; or
445
Sec. 1842(b)
(ii) on the basis of an assignment under the terms of which
(I) the reasonable charge is the full charge for the service.
(except in the case of physicians' services and ambulance
service furnished as described in section 1862 (a) (4), other
than for purposes of section 1870 (f)) and (II) the physi-
cian or other person furnishing such service agrees not to
charge for such service if payment may not be made there-
for by reason of the provisions of paragraph (1) of section
1862, and if the individual to whom such service was fur-
nished was without fault in incurring the expenses of such
service, and if the Secretary's determination that payment
(pursuant to such assignment) was incorrect and was made
subsequent to the third year following the year in which
notice of such payment was sent to such individual; except
that the Secretary may reduce such three-year period to not
less than one year if he finds such reduction is consistent with
the objectives of this title;
but (in the case of bills submitted, or requests for payment made,
after March 1968) only if the bill is submitted, or a written re-
quest for payment is made in such other form as may be permit-
ted under regulations, no later than the close of the calendar
year following the year in which such service is furnished (deem-
ing any service furnished in the last 3 months of any calendar year
to have been furnished in the succeeding calendar year);
(C) will establish and maintain procedures pursuant to which
an individual enrolled under this part will be granted an oppor-
tunity for a fair hearing by the carrier, in any case where the
amount in controversy is $100 or more when requests for pay-
ment under this part with respect to services furnished him are
denied or are not acted upon with reasonable promptness or when
the amount of such payment is in controversy;
(D) will furnish to the Secretary such timely information and
reports as he may find necessary in performing his functions un-
der this part; and
(E) will maintain such records and afford such access thereto as
the Secretary finds necessary to assure the correctness and verifi-
cation of the information and reports under subparagraph (D)
and otherwise to carry out the purposes of this part;
and shall contain such other terms and conditions not inconsistent with
this section as the Secretary may find necessary or appropriate. In
determining the reasonable charge for services for purposes of this
paragraph, there shall be taken into consideration the customary
charges for similar services generally made by the physician or other
person furnishing such services, as well as the prevailing charges in
the locality for similar services.
-
-
Sec. 1842(b)
Revised April 1978
446
No charge may be determined to be reasonable in the case of bills
submitted or requests for payment made under this part after Decem-
ber 31, 1970, if it exceeds the higher of (i) the prevailing charge recog-
nized by the carrier and found acceptable by the Secretary for similar
services in the same locality in administering this part on December
31, 1970, or (ii) the prevailing charge level that, on the basis of
statistical data and methodology acceptable to the Secretary, would
cover 75 percent of the customary charges made for similar services in
the same locality during the last preceding calendar year elapsing
prior to the start of the twelve-month period (beginning July 1 of
each year) in which the bill is submitted or the request for pay-
ment is made. In the case of physician services the prevailing charge
level determined for purposes of clause (ii) of the preceding sentence
for any twelve-month period (beginning after June 30, 1973) speci-
fied in clause (ii) of such sentence may not exceed (in the aggre-
gate) the level determined under such clause for the fiscal year end-
ing June 30, 1973, except to the extent that the Secretary finds, on
the basis of appropriate economic index data, that such higher
level is justified by economic changes. With respect to power-operated
wheelchairs for which payment may be made in accordance with
section 1861 (s) (6), charges determined to be reasonable may not
exceed the lowest charge at which power-operated wheelchairs are
available in the locality. In the case of medical services, supplies,
and equipment (including equipment servicing) that, in the judg-
ment of the Secretary, do not generally vary significantly in quality
from one supplier to another, the charges incurred after Decem-
ber 31, 1972, determined to be reasonable may not exceed the low-
est charge levels at which such services, supplies, and equipment
are widely and consistently available in a locality except to the extent
and under the circumstances specified by the Secretary. The require-
ment in subparagraph (B) that a bill be submitted or request for pay-
ment be made by the close of the following calendar year shall not
apply if (i) failure to submit the bill or request the payment by the
close of such year is due to the error or misrepresentation of an officer,
employee, fiscal intermediary, carrier, or agent of the Department of
Health, Education, and Welfare performing functions under this title
and acting within the scope of his or its authority, and (ii) the bill is
submitted or the payment is requested promptly after such error or
misrepresentation is eliminated or corrected. Notwithstanding the
provisions of the third and fourth sentences preceding this sentence,
the prevailing charge level in the case of a physician service in a par-
ticular locality determined pursuant to such third and fourth sentences
for the twelve-month period beginning on July 1 in any calendar
year after 1974 shall, if lower than the prevailing charge level for
the fiscal year ending June 30, 1975, in the case of a similar physi-
Revised April 1978
Sec. 1842(b)
447
cian service in the same locality by reason of the application of eco-
nomic index data, be raised to such prevailing charge level for the
fiscal year ending June 30, 1975.1 2
(4) Each contract under this section shall be for a term of at least
one year, and may be made automatically renewable from term to
term in the absence of notice by either party of intention to terminate
at the end of the current term; except that the Secretary may termi-
nate any such contract at anytime (after such reasonable notice and
opportunity for hearing to the carrier involved as he may provide in
regulations) if he finds that the carrier has failed substantially to
carry out the contract or is carrying out the contract in a manner
inconsistent with the efficient and effective administration of the insur-
ance program established by this part.
(5) No payment under this part for a service provided to any indi-
vidual shall (except as provided in section 1870) be made to anyone
other than such individual or (pursuant to an assignment described in
subparagraph (B) (ii) of paragraph (3)) the physician or other per-
son who provided the service, except that payment may be made (A)
to the employer of such physician or other person if such physician or
other person is required as a condition of his employment to turn over
his fee for such service to his employer, or (B) (where the service was
provided in a hospital, clinic, or other facility) to the facility in which
the service was provided if there is a contractual arrangement between
such physician or other person and such facility under which such
facility submits the bill for such service. No payment which under
the preceding sentence may be made directly to the physician or other
person providing the service involved (pursuant to an assignment de-
scribed in subparagraph (B)(ii) of paragraph (3)) shall be made
to anyone else under a reassignment or power of attorney (except to
an employer or facility as described in clause (A) or (B) of such sen-
tence); but nothing in this subsection shall be construed (i) to pre-
vent the making of such a payment in accordance with an assignment
from the individual to whom the service was provided or a reassign-
ment from the physician or other person providing such service if such
assignment or reassignment is made to a governmental agency or en-
tity or is established by or pursuant to the order of a court of com-
petent jurisdiction, or (ii) to preclude an agent of the physician or
other person providing the service from receiving any such payment
if (but only if) such agent does so pursuant to an agency agreement
under which the compensation to be paid to the agent for his services
ܚ
1 The last sentence of paragraph (3) was added by section 101(a) of Public Law
94-182 subject to limitations specified in section 101 (b) of that act which is reprinted
in this document on page 768.
2 Paragraph (3) was amended by sections 2 and 3 of P.L. 94-368 effective as specified
in section 4 of that act. Section 4 appears in this document on page 778. Paragraph (3)
was also amended by section 501 (b) of P.L. 95-216.
Revised April 1978
Sec. 1842(e)
447-A
for or in connection with the billing or collection of payments due
such physician or other person under this title is unrelated (directly
or indirectly) to the amount of such payments or the billings therefor,
and is not dependent upon the actual collection of any such payment.¹
(c) Any contract entered into with a carrier under this section shall
provide for advances of funds to the carrier for the making of pay-
ments by it under this part, and shall provide for payment of the cost
of administration of the carrier, as determined by the Secretary to be
necessary and proper for carrying out the functions covered by the
contract.
(d) Any contract with a carrier under this section may require such
carrier or any of its officers or employees certifying payments or dis-
bursing funds pursuant to the contract, or otherwise participating in
carrying out the contract, to give surety bond to the United States in
such amount as the Secretary may deem appropriate.
(e) (1) No individual designated pursuant to a contract under this
section as a certifying officer shall, in the absence of gross negligence
or intent to defraud the United States, be liable with respect to any
payments certified by him under this section.
(2) No disbursing officer shall, in the absence of gross negligence or
intent to defraud the United States, be liable with respect to any pay-
1 The last sentence of paragraph (5) was added by section 2(a)(1) of P.L. 95-142.
21-746 O - 78
-
34
Sec. 1842(e)
448
ment by him under this section if it was based upon a voucher signed
by a certifying officer designated as provided in paragraph (1) of this
subsection.
(3) No such carrier shall be liable to the United States for any pay-
ments referred to in paragraph (1) or (2).
(f) For purpose of this part, the term "carrier" means-
(1) with respect to providers of services and other persons, a
voluntary association, corporation, partnership, or other nongov-
ernmental organization which is lawfully engaged in providing,
paying for, or reimbursing the cost of, health services under
group insurance policies or contracts, medical or hospital service
agreements, membership or subscription contracts, or similar
group arrangements, in consideration of premiums or other peri-
odic charges payable to the carrier, including a health benefits
plan duly sponsored or underwritten by an employee organiza-
tion; and
(2) with respect to providers of services only, any agency or
organization (not described in paragraph (1)) with which an
agreement is in effect under section 1816.
(g) The Railroad Retirement Board shall, in accordance with such
regulations as the Secretary may prescribe, contract with a carrier
or carriers to perform the functions set out in this section with respect
to individuals entitled to benefits as qualified railroad retirement bene-
ficiaries pursuant to section 226 (a) of this Act and section 7(d) of
the Railroad Retirement Act of 1974.
State Agreements for Coverage of Eligible Individuals Who Are
Receiving Money Payments Under Public Assistance Programs
(or Are Eligible for Medical Assistance)
Sec. 1843. (a) The Secretary shall, at the request of a State made
before January 1, 1970, enter into an agreement with such State pur-
suant to which all eligible individuals in either of the coverage groups
described in subsection (b) (as specified in the agreement) will be
enrolled under the program established by this part.
(b) An agreement entered into with any State pursuant to subsec-
tion (a) may be applicable to either of the following coverage groups:
(1) individuals receiving money payments under the plan of
such State approved under title I or title XVI; or
(2) individuals receiving money payments under all of the
plans of such State approved under titles I, X, XIV, and XVI,
and part A of title IV.
Except as provided in subsection (g), there shall be excluded from
any coverage group any individual who is entitled to monthly in-
surance benefits under title II or who is entitled to receive an annuity
under the Railroad Retirement Act of 1974. Effective January 1, 1974,
449
Sec. 1843(e)
and subject to section 1902(f), the Secretary shall, at the request of
any State not eligible to participate in the State plan program estab-
lished under title XVI, continue in effect the agreement entered into
under this section with such State subject to such modifications as the
Secretary may by regulations provide to take account of the termina-
tion of any plans of such State approved under titles I, X, XIV, and
XVI and the establishment of the supplemental security income pro-
gram under title XVI.
(c) For purposes of this section, an individual shall be treated as an
eligible individual only if he is an eligible individual (within the
meaning of section 1836) on the date an agreement covering him is
entered into under subsection (a) or he becomes an eligible individual
(within the meaning of such section) at any time after such date; and
he shall be treated as receiving money payments described in subsec-
tion (b) if he receives such payments for the month in which the
agreement is entered into or any month thereafter.
(d) In the case of any individual enrolled pursuant to this section-
(1) the monthly premium to be paid by the State shall be deter-
mined under section 1839 (without any increase under subsection
(c) thereof);
(2) his coverage period shall begin on whichever of the follow-
ing is the latest :
(A) July 1, 1966;
(B) the first day of the third month following the month
in which the State agreement is entered into;
(C) the first day of the first month in which he is both an
eligible individual and a member of a coverage group speci-
fied in the agreement under this section; or
(D) such date as may be specified in the agreement; and
(3) his coverage period attributable to the agreement with the
State under this section shall end on the last day of whichever
of the following first occurs:
(A) the month in which he is determined by the State
agency to have become ineligible both for money payments
of a kind specified in the agreement and (if there is in effect
a modification entered into under subsection (h)) for medical
assistance, or
(B) the month preceding the first month for which he
becomes entitled to monthly benefits under title II or to an
annuity or pension under the Railroad Retirement Act of
1937.
(e) Any individual whose coverage period attributable to the State
agreement is terminated pursuant to subsection (d)(3) shall be
deemed for purposes of this part (including the continuation of his
Sec. 1843(e)
450
coverage period under this part) to have enrolled under section 1837
in the initial general enrollment period provided by section 1837 (c).
(f) With respect to eligible individuals receiving money payments
under the plan of a State approved under title I, X, XIV, or XVI or
part A of title IV, or eligible to receive medical assistance under the
plan of such State approved under title XIX, if the agreement entered
into under this section so provides the term "carrier" as defined in
section 1842(f) also includes the State agency, specified in such agree-
ment, which administers or supervises the administration of the plan
of such State approved under title I, XVI, or XIX. The agreement
shall also contain such provisions as will facilitate the financial trans-
actions of the State and the carrier with respect to deductions, coin-
surance, and otherwise, and as will lead to economy and efficiency of
operation, with respect to individuals receiving money payments under
plans of the State approved under titles I, X, XIV, and XVI, and
part A of title IV, and individuals eligible to receive medical assist-
ance under the plan of the State approved under title XIX.
(g) (1) The Secretary shall, at the request of a State made before
January 1, 1970, enter into a modification of an agreement entered
into with such State pursuant to subsection (a) under which the sec-
ond sentence of subsection (b) shall not apply with respect to such
agreement.
(2) In the case of any individual who would (but for this subsec-
tion) be excluded from the applicable coverage group described in
subsection (b) by the second sentence of such subsection-
(A) subsections (c) and (d) (2) shall be applied as if such
subsections referred to the modification under this subsection (in
lieu of the agreement under subsection (a)),
(B) subsection (d) (3) (B) shall not apply so long as there is
in effect a modification entered into by the State under this sub-
section, and
(C) notwithstanding subsection (e), in the case of any termi-
nation described in such subsection, such individual may termi-
nate his enrollment under this part by the filing of a notice, before
the close of the third month which begins after the date of such
termination, that he no longer wishes to participate in the insur-
ance program established by this part (and in such a case, the
termination of his coverage period under this part shall take
effect as of the close of such third month).
(h) (1) The Secretary shall, at the request of a State made before
January 1, 1970, enter into a modification of an agreement entered
into with such State pursuant to subsection (a) under which the cov-
erage group described in subsection (b) and specified in such agree-
ment is broadened to include individuals who are eligible to receive.
451
Sec. 1844(a)
medical assistance under the plan of such State approved under title
XIX.
(2) For purposes of this section, an individual shall be treated as
eligible to receive medical assistance under the plan of the State
approved under title XIX if, for the month in which the modifica-
tion is entered into under this subsection or for any month thereafter,
he has been determined to be eligible to receive medical assistance
under such plan. In the case of any individual who would (but for
this subsection) be excluded from the agreement, subsections (c) and
(d)(2) shall be applied as if they referred to the modification under
this subsection (in lieu of the agreement under subsection (a)), and
subsection (d) (2) (C) shall be applied by substituting "second month
following the first month" for "first month."
Appropriations to Cover Government Contributions and
Contingency Reserve
A
Sec. 1844. (a) There are authorized to be appropriated from time
to time out of any moneys in the Treasury not otherwise appropriated,
to the Federal Supplementary Medical Insurance Trust Fund-
(1) (A) A Government contribution equal to the aggregate
premiums payable for a month for enrollees age 65 and over
under this part and deposited in the Trust Fund, multiplied by
the ratio of-
(i) twice the dollar amount of the actuarially adequate rate
per enrollee age 65 and over as determined under section
1839 (c) (1) for such month, minus the dollar amount of the
premium per enrollee for such month as determined under
section 1839 (c)(3), to
(ii) the dollar amount of the premium per enrollee for
such month, plus
(B) a Government contribution equal to the aggregate premi-
ums payable for a month for enrollees under age 65 under this
part and deposited in the Trust Fund, multiplied by the ratio of
(i) twice the dollar amount of the actuarially adequate rate
per enrollee under age 65 as determined under section 1839
(c) (4) for such month, minus the dollar amount of the pre-
mium per enrollee for such month, as determined under sec-
tion 1839 (c) (3), to
(ii) the dollar amount of the premium per enrollee for such
month.
(2) such sums as the Secretary deems necessary to place the
Trust Fund, at the end of any fiscal year occurring after June 30,
1967, in the same position in which it would have been at the end
of such fiscal year if (A) a Government contribution represent-
Sec. 1844(a)
452
ing the excess of the premiums deposited in the Trust Fund dur-
ing the fiscal year ending June 30, 1967, over the Government
contribution actually appropriated to the Trust Fund during such
fiscal year had been appropriated to it on June 30, 1967, and (B)
the Government contribution for premiums deposited in the Trust
Fund after June 30, 1967, had been appropriated to it when such
premiums were deposited.
(b) In order to assure prompt payment of benefits provided under
this part and the administrative expenses thereunder during the early
months of the program established by this part, and to provide a con-
tingency reserve, there is also authorized to be appropriated, out of
any moneys in the Treasury not otherwise appropriated, to remain
available through the calendar year 1969 for repayable advances
(without interest) to the Trust Fund, an amount equal to $18 mul-
tiplied by the number of individuals (as estimated by the Secretary)
who could be covered in July 1966 by the insurance program estab-
lished by this part if they had theretofore enrolled under this part.
Part C-Miscellaneous Provisions
Definition of Services, Institutions, etc.
-
Sec. 1861. For purposes of this title—
Spell of Illness
(a) The term "spell of illness" with respect to any individual means
a period of consecutive days—
(1) beginning with the first day (not included in a previous
spell of illness) (A) on which such individual is furnished in-
patient hospital services or extended care services, and (B) which
occurs in a month for which he is entitled to benefits under part A,
and
(2) ending with the close of the first period of 60 consecutive
days thereafter on each of which he is neither an inpatient of a
hospital nor an inpatient of a skilled nursing facility.
Inpatient Hospital Services
(b) The term "inpatient hospital services" means the following
items and services furnished to an inpatient of a hospital and (except
as provided in paragraph (3)) by the hospital—
(1) bed and board;
(2) such nursing services and other related services, such use
of hospital facilities, and such medical social services as are
ordinarily furnished by the hospital for the care and treatment
of inpatients, and such drugs, biologicals, supplies, appliances,
and equipment, for use in the hospital, as are ordinarily furnished
by such hospital for the care and treatment of inpatients; and
453
Sec. 1861(e)
(3) such other diagnostic or therapeutic items or services, fur-
nished by the hospital or by others under arrangements with them
made by the hospital, as are ordinarily furnished to inpatients
either by such hospital or by others under such arrangements;
excluding, however-
(4) medical or surgical services provided by a physician, resi-
dent, or intern; and
(5) the services of a private-duty nurse or other private-duty
attendant.
Paragraph (4) shall not apply to services provided in a hospital by—
(6) an intern or a resident-in-training under a teaching pro-
gram approved by the Council on Medical Education of the
American Medical Association or, in the case of an osteopathic
hospital, approved by the Committee on Hospitals of the Bureau
of Professional Education of the American Osteopathic Associa-
tion, or, in the case of services in a hospital or osteopathic hospital
by an intern or resident-in-training in the field of dentistry, ap-
proved by the Council on Dental Education of the American
Dental Association, or in the case of services in a hospital or
osteopathic hospital by an intern or resident-in-training in the
field of podiatry, approved by the Council on Podiatry Education
of the American Podiatry Association; or
(7) a physician where the hospital has a teaching program
approved as specified in paragraph (6), unless (A) such inpatient
is a private patient (as defined in regulations), or (B) the hos-
pital establishes that during the two-year period ending Decem-
ber 31, 1967, and each year thereafter all inpatients have been
regularly billed by the hospital for services rendered by physi-
cians and reasonable efforts have been made to collect in full
from all patients and payment of reasonable charges (including
applicable deductibles and coinsurance) has been regularly col-
lected in full or in substantial part from at least 50 percent of all
inpatients.
10
Inpatient Psychiatric Hospital Services
(c) The term "inpatient psychiatric hospital services" means inpa-
tient hospital services furnished to an inpatient of a psychiatric hos-
pital.
Inpatient Tuberculosis Hospital Services
(d) The term "inpatient tuberculosis hospital services" means in-
patient hospital services furnished to an inpatient of a tuberculosis
hospital.
Hospital
(e) The term "hospital" (except for purposes of sections 1814(d),
1814(f) and 1835 (b), subsection (a) (2) of this section, paragraph
Sec. 1861(e)
454
(7) of this subsection, and subsections (i) and (n) of this section)
means an institution which—
(1) is primarily engaged in providing, by or under the super-
vision of physicians, to inpatients (A) diagnostic services and
therapeutic services for medical diagnosis, treatment, and care of
injured, disabled, or sick persons, or (B) rehabilitation services.
for the rehabilitation of injured, disabled, or sick persons;
(2) maintains clinical records on all patients;
(3) has bylaws in effect with respect to its staff or physicians;
(4) has a requirement that every patient must be under the
care of a physician;
(5) provides 24-hour nursing service rendered or supervised by
a registered professional nurse, and has a licensed practical nurse
or registered professional nurse on duty at all times except that
until January 1, 1979, the Secretary is authorized to waive the re-
quirement of this paragraph for any one-year period with respect
to any institution, insofar as such requirement relates to the pro-
vision of twenty-four-hour nursing service rendered or supervised
by a registered professional nurse (except that in any event a
registered professional nurse must be present on the premises to
render or supervise the nursing service provided, during at least
the regular daytime shift), where immediately preceding such
one-year period he finds that—
(A) such institution is located in a rural area and the sup-
ply of hospital services in such area is not sufficient to meet
the needs of individuals residing therein,
(B) the failure of such institution to qualify as a hospital
would seriously reduce the availability of such services to
such individual, and
(C) such institution has made and continues to make a
good faith effort to comply with this paragraph, but such
compliance is impeded by the lack of qualified nursing per-
sonnel in such area; 1
(6) has in effect a hospital utilization review plan which meets.
the requirements of subsection (k);
(7) in the case of an institution in any State in which State or
applicable local law provides for the licensing of hospitals, (A)
is licensed pursuant to such law or (B) is approved, by the agency
of such State or locality responsible for licensing hospitals, as
meeting the standards established for such licensing;
(8) has in effect an overall plan and budget that meets the re-
quirements of subsection (z); and
1 Paragraph (5) was amended by section 102 of Public Law 94-182.
455
Sec. 1861(f)
(9) meets such other requirements as the Secretary finds neces-
sary in the interest of the health and safety of the individuals who
are furnished services in the institution.
For purposes of subsection (a) (2), such term includes any institution.
which meets the requirements of paragraph (1) of this subsection. For
purposes of sections 1814(d) and 1835(b) (including determination
of whether an individual received inpatient hospital services or diag-
nostic services for purposes of such sections), section 1814(f) (2), and
subsections (i) and (n) of this section, such term includes any institu-
tion which (i) meets the requirements of paragraphs (5) and (7) of
this subsection, (ii) is not primarily engaged in providing the services
described in section 1861 (j) (1)(A) and (iii) is primarily engaged in
providing, by or under the supervision of individuals referred to in
paragraph (1) of section 1861 (r) to inpatients diagnostic services and
therapeutic services for medical diagnosis, treatment, and care of
injured, disabled, or sick persons, or rehabilitation services for the re-
habilitation of injured, disabled, or sick persons. For purposes of sec-
tion 1814(f) (1), such term includes an institution which (i) is a hos-
pital for purposes of sections 1814(d), 1814(f) (2), and 1835(b) and
(ii) is accredited by the Joint Commission on Accreditation of Hospi-
tals, or is accredited by or approved by a program of the country in
which such institution is located if the Secretary finds the accredita-
tion or comparable approval standards of such program to be essen-
tially equivalent to those of the Joint Commission on Accreditation
of Hospitals. Notwithstanding the preceding provisions of this sub-
section, such term shall not, except for purposes of subsection (a) (2),
include any institution which is primarily for the care and treatment
of mental diseases or tuberculosis unless it is a tuberculosis hospital
(as defined in subsection (g)) or unless it is a psychiatric hospital (as
defined in subsection (f)). The term "hospital" also includes a Chris-
tian Science sanatorium operated, or listed and certified, by the First
Church of Christ, Scientist, Boston, Massachusetts, but only with
respect to items and services ordinarily furnished by such institution
to inpatients, and payment may be made with respect to services
provided by or in such an institution only to such extent and under
such conditions, limitations, and requirements (in addition to or in
lieu of the conditions, limitations, and requirements otherwise applica-
ble) as may be provided in regulations. For provisions deeming cer-
tain requirements of this subsection to be met in the case of accredited
institutions, see section 1865.
Psychiatric Hospital
(f) The term "psychiatric hospital" means an institution which-
(1) is primarily engaged in providing, by or under the super-
vision of a physician, psychiatric services for the diagnosis and
treatment of mentally ill persons;
Sec. 1861(f)
456
(2) satisfies the requirements of paragraphs (3) through (9)
of subsection (e);
(3) maintains clinical records on all patients and maintains
such records as the Secretary finds to be necessary to determine
the degree and intensity of the treatment provided to individuals
entitled to hospital insurance benefits under part A;
(4) meets such staffing requirements as the Secretary finds nec-
essary for the institution to carry out an active program of treat-
ment for individuals who are furnished services in the institution;
and
(5) is accredited by the Joint Commission on Accreditation of
Hospitals.
In the case of an institution which satisfies paragraphs (1) and (2)
of the preceding sentence and which contains a distinct part which also
satisfies paragraphs (3) and (4) of such sentence, such distinct part
shall be considered to be a "psychiatric hospital" if the institution is
accredited by the Joint Commission on Accreditation of Hospitals or
if such distinct part meets requirements equivalent to such accredita-
tion requirements as determined by the Secretary.
Tuberculosis Hospital
(g) The term "tuberculosis hospital" means an institution which-
(1) is primarily engaged in providing, by or under the super-
vision of a physician, medical services for the diagnosis and treat-
ment of tuberculosis;
(2) satisfies the requirements of paragraphs (3) through (9)
of subsection (e);
(3) maintains clinical records on all patients and maintains
such records as the Secretary finds to be necessary to determine
the degree and intensity of the treatment provided to individuals
covered by the insurance program established by part A;
(4) meets such staffing requirements as the Secretary finds nec-
essary for the institution to carry out an active program of treat-
ment for individuals who are furnished services in the institution;
and
(5) is accredited by the Joint Commission on Accreditation of
Hospitals.
In the case of an institution which satisfies paragraphs (1) and (2) of
the preceding sentence and which contains a distinct part which also
satisfies paragraphs (3) and (4) of such sentence, such distinct part
shall be considered to be a "tuberculosis hospital" if the institution is
accredited by the Joint Commission on Accreditation of Hospitals or
if such distinct part meets requirements equivalent to such accredita-
tion requirements as determined by the Secretary.
G
457
Sec. 1861 (i)
Extended Care Services
(h) The term "extended care services" means the following items
and services furnished to an inpatient of a skilled nursing facility and
(except as provided in paragraphs (3) and (6)) by such skilled nurs-
ing facility-
(1) nursing care provided by or under the supervision of a
registered professional nurse;
(2) bed and board in connection with the furnishing of such
nursing care;
(3) physical, occupational, or speech therapy furnished by the
skilled nursing facility or by others under arrangements with
them made by the facility;
(4) medical social services;
(5) such drugs, biologicals, supplies, appliances, and equip-
ment, furnished for use in the skilled nursing facility as are
ordinarily furnished by such facility for the care and treatment
of inpatients;
(6) medical services provided by an intern or resident-in-
training of a hospital with which the facility has in effect a trans-
fer agreement (meeting the requirements of subsection (1)),
under a teaching program of such hospital approved as provided
in the last sentence of subsection (b), and other diagnostic or
therapeutic services provided by a hospital with which the facility
has such an agreement in effect; and
(7) such other services necessary to the health of the patients.
as are generally provided by skilled nursing facilities;
excluding, however, any item or service if it would not be included
under subsection (b) if furnished to an inpatient of a hospital.
Post-Hospital Extended Care Services
(i) The term "post-hospital extended care services" means extended
care services furnished an individual after transfer from a hospital in
which he was an inpatient for not less than 3 consecutive days before
his discharge from the hospital in connection with such transfer. For
purposes of the preceding sentence, items and services shall be deemed
to have been furnished to an individual after transfer from a hospital,
and he shall be deemed to have been an inpatient in the hospital im-
mediately before transfer therefrom, if he is admitted to the skilled
nursing facility--
(A) within 14 days after discharge from such hospital, or (B)
within 28 days after such discharge, in the case of an individual
who was unable to be admitted to a skilled nursing facility within
such 14 days because of a shortage of appropriate bed space in
the geographic area in which he resides, or (C) within such time
Sec. 1861(i)
458
as it would be medically appropriate to begin an active course of
treatment, in the case of an individual whose condition is such
that skilled nursing facility care would not be medically appro-
priate within 14 days after discharge from a hospital;
an individual shall be deemed not to have been discharged from a
skilled nursing facility if, within 14 days after discharge therefrom,
he is admitted to such facility or any other skilled nursing facility.
Skilled Nursing Facility
(j) The term "skilled nursing facility" means (except for purposes
of subsection (a) (2)) an institution (or a distinct part of an institu-
tion) which has in effect a transfer agreement (meeting the require-
ments of subsection (1)) with one or more hospitals having agree-
ments in effect under section 1866 and which-
p
(1) is primarily engaged in providing to inpatients (A)
skilled nursing care and related services for patients who require
medical or nursing care, or (B) rehabilitation services for the re-
habilitation of injured, disabled, or sick persons;
(2) has policies, which are developed with the advice of (and
with provision of review of such policies from time to time by)
a group of professional personnel, including one or more physi-
cians and one or more registered professional nurses, to govern
the skilled nursing care and related medical or other services it.
provides;
(3) has a physician, a registered professional nurse, or a medi-
cal staff responsible for the execution of such policies;
(4) (A) has a requirement that the health care of every patient
must be under the supervision of a physician, and (B) provides
for having a physician available to furnish necessary medical care
in case of emergency;
(5) maintains clinical records on all patients;
(6) provides 24-hour nursing service which is sufficient to meet
nursing needs in accordance with the policies developed as pro-
vided in paragraph (2), and has at least one registered profes-
sional nurse employed full time;
(7) provides appropriate methods and procedures for the dis-
pensing and administering of drugs and biologicals;
(8) has in effect a utilization review plan which meets the re-
quirements of subsection (k);
(9) in the case of an institution in any State in which State or
applicable local law provides for the licensing of institutions of
this nature, (A) is licensed pursuant to such law, or (B) is
approved, by the agency of such State or locality responsible for
licensing institutions of this nature, as meeting the standards
established for such licensing;
Revised April 1978
Sec. 1861(j)
459
(10) has in effect an overall plan and budget that meets
the requirements of subsection (z);
(11) complies with the requirements of section 1124; 1
(12) cooperates in an effective program which provides for a
regular program of independent medical evaluation and audit of
the patients in the facility to the extent required by the programs
in which the facility participates (including medical evaluation of
each patient's need for skilled nursing facility care);
(13) meets such provisions of the Life Safety Code of the
National Fire Protection Association (23d edition, 1973)² as are
applicable to nursing homes; except that the Secretary may waive,
for such periods as he deems appropriate, specific provisions of
such Code which if rigidly applied would result in unreasonable
hardship upon a nursing home, but only if such waiver will not
adversely affect the health and safety of the patients; except that
the provisions of such Code shall not apply in any State if the
Secretary finds that in such State there is in effect a fire and safety
code, imposed by State law, which adequately protects patients in
nursing facilities;
(14) establishes and maintains a system that (A) assures a
full and complete accounting of its patients' personal funds, and
(B) includes the use of such separate account for such funds as
will preclude any commingling of such funds with facility funds
or with the funds of any person other than another such patient;
and 3
(15) meets such other conditions relating to the health and
safety of individuals who are furnished services in such institution
or relating to the physical facilities thereof as the Secretary may
find necessary (subject to the second sentence of section 1863),
except that the Secretary shall not require as a condition of
participation that medical social services be furnished in any
such institution. Notwithstanding any other provision of law, all
information concerning skilled nursing facilities required by this
subsection to be filed with the Secretary shall be made available to
Federal or State employees for purposes consistent with the ef-
fective administration of programs established under titles
XVIII and XIX of this Act;
¹ Paragraph (11) was amended by section 3(a)(2) of P.L. 95–142.
2 Changed from "(21st edition, 1967)" by section 106(a) of Public Law 94-182 effec-
tive June 1, 1976, subject to limitations specified in section 106(c) of that act which is
reprinted in this document on page 769.
@
3 Paragraph (14) was added by section 21(a) of P.L. 95–142. See also secs. 21 (b) and
(c) which are printed in this document on p. 801.
Sec. 1861(j)
460
except that such term shall not (other than for purposes of subsection
(a)(2)) include any institution which is primarily for the care and
treatment of mental diseases or tuberculosis. For purposes of subsec-
tion (a) (2), such term includes any institution which meets the re-
quirements of paragraph (1) of this subsection. The term "skilled
nursing facility" also includes an institution described in paragraph
(1) of subsection (y), to the extent and subject to the limitations pro-
vided in such subsection.
To the extent that paragraph (6) of this subsection may be
deemed to require that any skilled nursing facility engage the
services of a registered professional nurse for more than 40 hours
a week, the Secretary is authorized to waive such requirement if
he finds that—
(A) such facility is located in a rural area and the supply
of skilled nursing facility services in such area is not sufficient
to meet the needs of individuals residing therein,
(B) such facility has one full-time registered professional
nurse who is regularly on duty at such facility 40 hours a
week, and
(C) such facility (i) has only patients whose physicians
have indicated (through physicians' orders or admission
notes) that each such patient does not require the services of
a registered nurse or a physician for a 48-hour period, or (ii)
has made arrangements for a registered professional nurse or
a physician to spend such time at such facility as may be
indicated as necessary by the physician to provide necessary
skilled nursing services on days when the regular full-time
registered professional nurse is not on duty.
Utilization Review
(k) A utilization review plan of a hospital or skilled nursing facility
shall be considered sufficient if it is applicable to services furnished by
the institution to individuals entitled to insurance benefits under this
title and if it provides-
(1) for the review, on a sample or other basis, of admissions to
the institution, the duration of stays therein, and the professional
services (including drugs and biologicals) furnished, (A) with
respect to the medical necessity of the services, and (B) for the
purpose of promoting the most efficient use of available health
facilities and services;
(2) for such review to be made by either (A) a staff commit-
tee of the institution composed of two or more physicians, with
or without participation of other professional personnel, or (B) a
group outside the institution which is similarly composed and (i)
which is established by the local medical society and some or all
461
Sec. 1861(1)
of the hospitals and skilled nursing facilities in the locality, or
(ii) if (and for as long as) there has not been established such a
group which serves such institution, which is established in such
other manner as may be approved by the Secretary;
(3) for such review, in each case of inpatient hospital services
or extended care services furnished to such an individual during a
continuous period of extended duration, as of such days of such
period (which may differ for different classes of cases) as may be
specified in regulations, with such review to be made as promptly
as possible, after each day so specified, and in no event later than
one week following such day; and
(4) for prompt notification to the institution, the individual,
and his attending physician of any finding (made after oppor-
tunity for consultation to such attending physician) by the physi-
cian members of such committee or group that any further stay
in the institution is not medically necessary.
The review committee must be composed as provided in clause (B)
of paragraph (2) rather than as provided in clause (A) of such para-
graph in the case of any hospital or skilled nursing facility where, be-
cause of the small size of the institution, or (in the case of a skilled
nursing facility) because of lack of an organized medical staff, or for
such other reason or reasons as may be included in regulations, it is
impracticable for the institution to have a properly functioning staff
committee for the purposes of this subsection. If the Secretary deter-
mines that the utilization review procedures established pursuant to
title XIX are superior in their effectiveness to the procedures required
under this section, he may, to the extent that he deems it appropriate,
require for purposes of this title that the procedures established pur-
suant to title XIX be utilized instead of the procedures required by
this section.
Agreements for Transfer Between Skilled Nursing Facilities and Hospitals
(1) A hospital and a skilled nursing facility shall be considered to
have a transfer agreement in effect if, by reason of a written agree-
ment between them or (in case the two institutions are under common
control) by reason of a written undertaking by the person or body
which controls them, there is reasonable assurance that-
(1) transfer of patients will be effected between the hospital
and the skilled nursing facility whenever such transfer is medi-
cally appropriate as determined by the attending physician; and
(2) there will be interchange of medical and other information
necessary or useful in the care and treatment of individuals trans-
ferred between the institutions, or in determining whether such
individuals can be adequately cared for otherwise than in either
of such institutions.
Sec. 1861(1)
462
Any skilled nursing facility which does not have such an agreement in
effect, but which is found by a State agency (of the State in which
such facility is situated) with which an agreement under section 1864
is in effect (or, in the case of a State in which no such agency has an
agreement under section 1864, by the Secretary) to have attempted in
good faith to enter into such an agreement with a hospital sufficiently
close to the facility to make feasible the transfer between them of
patients and the information referred to in paragraph (2), shall be
considered to have such an agreement in effect if and for so long as
such agency (or the Secretary, as the case may be) finds that to do so
is in the public interest and essential to assuring extended care serv-
ices for persons in the community who are eligible for payments with
respect to such services under this title.
Home Health Services
(m) The term "home health services" means the following items
and services furnished to an individual, who is under the care of a
physician, by a home health agency or by others under arrangements
with them made by such agency, under a plan (for furnishing such
items and services to such individual) established and periodically
reviewed by a physician, which items and services are, except as pro-
vided in paragraph (7), provided on a visiting basis in a place of
residence used as such individual's home-
(1) part-time or intermittent nursing care provided by or under
the supervision of a registered professional nurse;
(2) physical, occupational, or speech therapy;
(3) medical social services under the direction of a physician;
(4) to the extent permitted in regulations, part-time or inter-
mittent services of a home health aide;
(5) medical supplies (other than drugs and biologicals), and the
use of medical appliances, while under such a plan;
(6) in the case of a home health agency which is affiliated or
under common control with a hospital, medical services provided.
by an intern or resident-in-training of such hospital under a teach-
ing program of such hospital approved as provided in the last
sentence of subsection (b); and
(7) any of the foregoing items and services which are provided
on an outpatient basis, under arrangements made by the home
health agency, at a hospital or skilled nursing facility, or at a
rehabilitation center which meets such standards as may be pre-
scribed in regulations, and-
(A) the furnishing of which involves the use of equipment
of such a nature that the items and services cannot readily be
made available to the individual in such place of residence, or
463
Sec. 1861 (0)
(B) which are furnished at such facility while he is there
to receive any such item or service described in clause (A),
but not including transportation of the individual in connec-
tion with any such item or service;
excluding, however, any item or service if it would not be included
under subsection (b) if furnished to an inpatient of a hospital.
Post-Hospital Home Health Services
(n) The term "post-hospital home health services" means home
health services furnished an individual within one year after his most
recent discharge from a hospital of which he was an inpatient for not
less than 3 consecutive days or (if later) within one year after his most
recent discharge from a skilled nursing facility of which he was an
inpatient entitled to payment under part A for post-hospital extended
care services, but only if the plan covering the home health services (as
described in subsection (m)) is established within 14 days after his
discharge from such hospital or skilled nursing facility.
Home Health Agency
(0) The term "home health agency" means a public agency or pri-
vate organization, or a subdivision of such an agency or organization,
which-
(1) is primarily engaged in providing skilled nursing services
and other therapeutic services;
(2) has policies, established by a group of professional person-
nel (associated with the agency or organization), including one
or more physicians and one or more registered professional nurses,
to govern the services (referred to in paragraph (1)) which it
provides, and provides for supervision of such services by a phy-
sician or registered professional nurse;
(3) maintains clinical records on all patients;
(4) in the case of an agency or organization in any State in
which State or applicable local law provides for the licensing of
agencies or organizations of this nature, (A) is licensed pursuant
to such law, or (B) is approved, by the agency of such State or
locality responsible for licensing agencies or organizations of this
nature, as meeting the standards established for such licensing;
(5) has in effect an overall plan and budget that meets the re-
quirements of subsection (z); and
(6) meets such other conditions of participation as the Secre-
tary may find necessary in the interest of the health and safety
of individuals who are furnished services by such agency or
organization;
21-746 O
78
-
35
Sec. 1861 (0)
464
except that such term shall not include a private organization which
is not a nonprofit organization exempt from Federal income taxation
under section 501 of the Internal Revenue Code of 1954 (or a subdivi-
sion of such organization) unless it is licensed pursuant to State law
and it meets such additional standards and requirements as may be
prescribed in regulations; and except that for purposes of part A
such term shall not include any agency or organization which is pri-
marily for the care and treatment of mental diseases.
G
Outpatient Physical Therapy Services
(p) The term "outpatient physical therapy services" means physi-
cal therapy services furnished by a provider of services, a clinic, re-
habilitation agency, or a public health agency, or by others under an
arrangement with, and under the supervision of, such provider, clinic,
rehabilitation agency, or public health agency to an individual as an
outpatient-
(1) who is under the care of a physician (as defined in section
1861 (r) (1)), and
(2) with respect to whom a plan prescribing the type, amount,
and duration of physical therapy services that are to be furnished
such individual has been established, and is periodically reviewed,
by a physician (as so defined);
excluding, however-
(3) any item or service if it would not be included under sub-
section (b) if furnished to an inpatient of a hospital; and
(4) any such service-
(A) if furnished by a clinic or rehabilitation agency, or
by others under arrangements with such clinic or agency,
unless such clinic or rehabilitation agency-
(i) provides an adequate program of physical therapy
services for outpatients and has the facilities and per-
sonnel required for such program or required for the
supervision of such a program, in accordance with such
requirements as the Secretary may specify,
(ii) has policies, established by a group of professional
personnel, including one or more physicians (associated
with the clinic or rehabilitation agency) and one or more
qualified physical therapists, to govern the services (re-
ferred to in clause (i)) it provides,
(iii) maintains clinical records on all patients,
(iv) if such clinic or agency is situated in a State in
which State or applicable local law provides for the
licensing of institutions of this nature, (I) is licensed
pursuant to such law, or (II) is approved by the agency
of such State or locality responsible for licensing insti-
465
Sec. 1861 (r)
tutions of this nature, as meeting the standards estab-
lished for such licensing; and
(v) meets such other conditions relating to the health
and safety of individuals who are furnished services by
such clinic or agency on an outpatient basis, as the
Secretary may find necessary, or
(B) if furnished by a public health agency, unless such
agency meets such other conditions relating to health and
safety of individuals who are furnished services by such
agency on an outpatient basis, as the Secretary may find
necessary.
The term "outpatient physical therapy services" also includes
physical therapy services furnished an individual by a physical thera-
pist (in his office or in such individual's home) who meets licensing
and other standards prescribed by the Secretary in regulations, other-
wise than under an arrangement with and under the supervision of a
provider of services, clinic, rehabilitation agency, or public health
agency, if the furnishing of such services meets such conditions relat-
ing to health and safety as the Secretary may find necessary. In addi-
tion, such term includes physical therapy services which meet the
requirements of the first sentence of this subsection except that they
are furnished to an individual as an inpatient of a hospital or extended
care facility. The term "outpatient physical therapy services” also.
includes speech pathology services furnished by a provider of serv-
ices, a clinic, rehabilitation agency, or by a public health agency, or
by others under an arrangement with, and under the supervision of,
such provider, clinic, rehabilitation agency, or public health agency to.
an individual as an outpatient, subject to the conditions prescribed in
this subsection.
Physicians' Services
(q) The term "physicians' services" means professional services
performed by physicians, including surgery, consultation, and home,
office, and institutional calls (but not including services described in
subsection (b)(6)).
Physician
(r) The term "physician," when used in connection with the per-
formance of any function or action, means (1) a doctor of medicine.
or osteopathy legally authorized to practice medicine and surgery by
the State in which he performs such function or action (including a
physician within the meaning of section 1101 (a) (7)), (2) a doctor of
dentistry or of dental or oral surgery who is legally authorized to
practice dentistry by the State in which he performs such function
Sec. 1861 (r)
466
but only with respect to (A) surgery related to the jaw or any struc-
ture contiguous to the jaw or (B) the reduction of any fracture of the
jaw or any facial bone, or (C) the certification required by section
1814(a)(2) (E) of this Act, (3) except for the purposes of sec-
tion 1814(a), section 1835, and subsections (j), (k), (m), and (o) of
this section, a doctor of podiatry or surgical chiropody, but (unless
clause (1) of this subsection also applies to him) only with respect to
functions which he is legally authorized to perform as such by the
State in which he performs them, or (4) a doctor of optometry who is
legally authorized to practice optometry by the State in which he per-
forms such function, but only with respect to establishing the necessity
for prosthetic lenses, or (5) a chiropractor who is licensed as such
by the State (or in a State which does not license chiropractors as
such, is legally authorized to perform the services of a chiropractor in
the jurisdiction in which he performs such services), and who meets
uniform minimum standards promulgated by the Secretary, but only
for the purpose of sections 1861 (s) (1) and 1861(s) (2) (A) and only
with respect to treatment by means of manual manipulation of the
spine (to correct a subluxation demonstrated by X-ray to exist) which
he is legally authorized to perform by the State or jurisdiction in
which such treatment is provided. For the purposes of section 1862 (a)
(4) and subject to the limitations and conditions provided in the
previous sentence, such term includes a doctor of one of the arts, speci-
fied in such previous sentence, legally authorized to practice such art
in the country in which the inpatient hospital services (referred to in
such section 1862(a)(4)) are furnished.
Medical and Other Health Services
(s) The term "medical and other health services" means any of the
following items or services:
(1) physicians' services;
(2) (A) services and supplies (including drugs and biologicals
which cannot, as determined in accordance with regulations, be
self-administered) furnished as an incident to a physician's pro-
fessional service, of kinds which are commonly furnished in
physicians' offices and are commonly either rendered without
charge or included in the physicians' bills;
(B) hospital services (including drugs and biologicals which
cannot, as determined in accordance with regulations, be self-
administered) incident to physicians' services rendered to out-
patients;
(C) diagnostic services which are-
(i) furnished to an individual as an outpatient by a hos-
pital or by others under arrangements with them made by a
hospital, and
Revised August 1978
467
Sec. 1861(s)
(ii) ordinarily furnished by such hospital (or by others
under such arrangements) to its outpatients for the purpose
of diagnostic study;
(D) outpatient physical therapy services;
(E) rural health clinic services; ¹ and
1
2
(F) home dialysis supplies and equipment, self-care home di-
alysis services, and institutional dialysis services and supplies;
(3) diagnostic X-ray tests (including tests under the super-
vision of a physician, furnished in a place of residence used as
the patient's home, if the performance of such tests meets such
conditions relating to health and safety as the Secretary may find
necessary), diagnostic laboratory tests, and other diagnostic tests;
(4) X-ray, radium, and radioactive isotope therapy, including
materials and services of technicians;
(5) surgical dressings, and splints, casts, and other devices used
for a reduction of fractures and dislocations;
(6) durable medical equipment, including iron lungs, oxygen
tents, hospital beds, and wheelchairs (which may include a
power-operated vehicle that may be appropriately used as a
wheelchair, but only where the use of such a vehicle is determined
to be necessary on the basis of the individual's medical and phys-
ical condition and the vehicle meets such safety requirements as
the Secretary may prescribe) used in the patient's home
(including an institution used as his home other than an institu-
tion that meets the requirements of subsection (e) (1) or (j) (1)
of this section), whether furnished on a rental basis or pur-
chased; 3
(7) ambulance service where the use of other methods of
transportation is contraindicated by the individual's condition,
but only to the extent provided in regulations;
(8) prosthetic devices (other than dental) which replace all or
part of an internal body organ (including colostomy bags and
supplies directly related to colostomy care) including replace-
ment of such devices; and
(9) leg, arm, back, and neck braces, and artificial legs, arms,
and eyes, including replacements if required because of a change
in the patient's physical condition.
No diagnostic tests performed in any laboratory which is independent
of a physician's office, a rural health clinic, or a hospital (which, for
purposes of this sentence, means an institution considered a hospital
for purposes of section 1814(d)) shall be included within paragraph
(3) unless such laboratory-
1 Subparagraph (E) was added by section 1(g) of P.L. 95-210.
2 Subparagraph (F) was added by section 4 (d) of P.L. 95–292.
3 Paragraph (6) was amended by section 501 (a) of P.L. 95–216.
30-975 O - 78 - 3
Revised August 1978
Sec. 1861 (s)
467-A
(10) if situated in any State in which State or applicable local
law provides for licensing of establishments of this nature, (A)
is licensed pursuant to such law, or (B) is approved, by the agency
of such State or locality responsible for licensing establishments
of this nature, as meeting the standards established for such
licensing; and
(11) meets such other conditions relating to the health and
safety of individuals with respect to whom such tests are per-
formed as the Secretary may find necessary.¹
There shall be excluded from the diagnostic services specified in
paragraph (2) (C) any item or service (except services referred to
in paragraph (1)) which—
1 This sentence was amended by section 1 (h) of P.L. 95-210.
Sec. 1861(s)
468
(12) would not be included under subsection (b) if it were fur-
nished to an inpatient of a hospital; or
(13) is furnished under arrangements referred to in such para-
graph (2) (C) unless furnished in the hospital or in other facili-
ties operated by or under the supervision of the hospital or its
organized medical staff.
None of the items and services referred to in the preceding paragraphs
(other than paragraphs (1) and (2) (A)) of this subsection which are
furnished to a patient of an institution which meets the definition of
a hospital for purposes of section 1814(d) shall be included unless
such other conditions are met as the Secretary may find necessary
relating to health and safety of individuals with respect to whom such
items and services are furnished.
Drugs and Biologicals
(t) The term "drugs" and the term "biologicals," except for pur-
poses of subsection (m) (5) of this section, include only such drugs
and biologicals, respectively, as are included (or approved for inclu-
sion) in the United States Pharmacopoeia, the National Formulary,
or the United States Homeopathic Pharmacopoea, or in New Drugs
or Accepted Dental Remedies (except for any drugs and biologicals
unfavorably evaluated therein), or as are approved by the pharmacy
and drug therapeutics committee (or equivalent committee) of the
medical staff of the hospital furnishing such drugs and biologicals
for use in such hospital.
Provider of Services
(u) The term "provider of services" means a hospital, skilled nurs-
ing facility, home health agency, or, for purposes of section 1814 (g)
and section 1835 (e), a fund.
Reasonable Cost
(v) (1) (A) The reasonable cost of any services shall be the cost ac-
tually incurred, excluding therefrom any part of incurred cost found
to be unnecessary in the efficient delivery of needed health services,
and shall be determined in accordance with regulations establishing
the method or methods to be used, and the items to be included, in
determining such costs for various types or classes of institutions,
agencies, and services; except that in any case to which paragraph
(2) or (3) applies, the amount of the payment determined under
such paragraph with respect to the services involved shall be con-
sidered the reasonable cost of such services. In prescribing the regula-
tions referred to in the preceding sentence, the Secretary shall
consider, among other things, the principles generally applied by na-
tional organizations or established prepayment organizations (which
have developed such principles) in computing the amount of payment,
to be made by persons other than the recipients of services, to providers
469
Sec. 1861 (v)
of services on account of services furnished to such recipients by
such providers. Such regulations may provide for determination of
the costs of services on a per diem, per unit, per capita, or other basis,
may provide for using different methods in different circumstances,
may provide for the use of estimates of costs of particular items or
services, may provide for the establishment of limits on the direct or
indirect overall incurred costs or incurred costs of specific items or
services or groups of items or services to be recognized as reasonable
based on estimates of the costs necessary in the efficient delivery of
needed health services to individuals covered by the insurance pro-
grams established under this title, and may provide for the use of
charges or a percentage of charges where this method reasonably
reflects the costs. Such regulations shall (i) take into account both
direct and indirect costs of providers of services (excluding therefrom
any such costs, including standby costs, which are determined in ac-
cordance with regulations to be unnecessary in the efficient delivery of
services covered by the insurance programs established under this
title) in order that, under the methods of determining costs, the neces-
sary costs of efficiently delivering covered services to individuals cov-
ered by the insurance programs established by this title will not be
borne by individuals not so covered, and the costs with respect to in-
dividuals not so covered will not be borne by such insurance programs,
and (ii) provide for the making of suitable retroactive corrective ad-
justments where, for a provider of services for any fiscal period, the
aggregate reimbursement produced by the methods of determining
costs proves to be either inadequate or excessive.
(B) Such regulations in the case of extended care services furnished
by proprietary facilities shall include provision for specific recogni-
tion of a reasonable return on equity capital, including necessary
working capital, invested in the facility and used in the furnishing
of such services, in lieu of other allowances to the extent that they
reflect similar items. The rate of return recognized pursuant to the
preceding sentence for determining the reasonable cost of any serv-
ices furnished in any fiscal period shall not exceed one and one-half
times the average of the rates of interest, for each of the months any
part of which is included in such fiscal period, on obligations issued
for purchase by the Federal Hospital Insurance Trust Fund.
(C) Where a hospital has an arrangement with a medical school
under which the faculty of such school provides services at such hos-
pital, an amount not in excess of the reasonable cost of such services
to the medical school shall be included in determining the reasonable
cost to the hospital of furnishing services-
(i) for which payment may be made under part A, but only if
(I) payment for such services as furnished under such
arrangement would be made under part A to the hospital
had such services been furnished by the hospital, and
Sec. 1861 (v)
470
(II) such hospital pays to the medical school at least the
reasonable cost of such services to the medical school, or
(ii) for which payment may be made under part B, but only
if such hospital pays to the medical school at least the reasonable
cost of such services to the medical school.
(D) Where (i) physicians furnish services which are either in-
patient hospital services (including services in conjunction with the
teaching programs of such hospital) by reason of paragraph (7) of
subsection (b) or for which entitlement exists by reason of clause (II)
of section 1832(a)(2)(B) (i) and (ii) such hospital (or medical
school under arrangement with such hospital) incurs no actual cost
in the furnishing of such services, the reasonable cost of such serv-
ices shall (under regulations of the Secretary) be deemed to be the
cost such hospital or medical school would have incurred had it paid a
salary to such physicians rendering such services approximately equiv-
alent to the average salary paid to all physicians employed by such
hospital (or if such employment does not exist, or is minimal in such
hospital, by similar hospitals in a geographic area of sufficient size to
assure reasonable inclusion of sufficient physicians in development of
such average salary).
(E) Such regulations may, in the case of skilled nursing facilities
in any State, provide for the uses of rates, developed by the State in
which such facilities are located, for the payment of the cost of skilled
nursing facility services furnished under the State's plan approved
under title XIX (and such rates may be increased by the Secretary
on a class or size of institution or on a geographical basis by a per-
centage factor not in excess of 10 percent to take into account deter-
minable items or services or other requirements under this title not
otherwise included in the computation of such State rates), if the Sec-
retary finds that such rates are reasonably related to (but not neces-
sarily limited to) analyses undertaken by such State of costs of care
in comparable facilities in such State; except that the foregoing pro-
visions of this subparagraph shall not apply to any skilled nursing
facility in such State if—
(i) such facility is a distinct part of or directly operated by
a hospital, or
(ii) such facility operates in a close, formal satellite relation-
ship (as defined in regulations of the Secretary) with a partici-
pating hospital or hospitals.
Notwithstanding the previous provisions of this paragraph in the
case of a facility specified in clause (ii) of this subparagraph, the rea-
sonable cost of any services furnished by such facility as determined
by the Secretary under this subsection shall not exceed 150 percent of
Revised April 1978
Sec. 1861 (v)
471
the costs determined by the application of this subparagraph (with-
out regard to such clause (ii)).
(F) Such regulations shall require each provider of services (other
than a fund) to make reports to the Secretary of information described
in section 1121 (a) in accordance with the uniform reporting system
(established under such section) for that type of provider.¹
Certification and Approval of Skilled Nursing Facilities
(2)(A) If the bed and board furnished as part of inpatient hospital
services (including inpatient tuberculosis hospital services and in-
patients psychiatric hospital services) or post-hospital extended care
services is in accommodations more expensive than semi-private ac-
commodations, the amount taken into account for purposes of payment
under this title with respect to such services may not exceed an amount
equal to the reasonable cost of such services if furnished in such semi-
private accommodations unless the more expensive accommodations
were required for medical reasons.
(B) Where a provider of services which has an agreement in effect
under this title furnishes to an individual items or services which are
in excess of or more expensive than the items or services with respect
to which payment may be made under part A or part B, as the case
may be, the Secretary shall take into account for purposes of payment
to such provider of services only the equivalent of the reasonable cost
of the items or services with respect to which such payment may be
made.
(3) If the bed and board furnished as part of inpatient hospital
services (including inpatient tuberculosis hospital services and inpa-
tient psychiatric hospital services) or post-hospital extended care serv-
ices is in accommodations other than, but not more expensive than,
semi-private accommodations and the use of such other accommoda-
tions rather than semi-private accommodations was neither at the re-
quest of the patient nor for a reason which the Secretary determines is
consistent with the purposes of this title, the amount of the payment
with respect to such bed and board under part A shall be the reasonable
cost of such bed and board furnished in semi-private accommodations
(determined pursuant to paragraph (1)) minus the difference between
the charge customarily made by the hospital or skilled nursing facility
for bed and board in semi-private accommodations and the charge
customarily made by it for bed and board in the accommodations
furnished.
(4) If a provider of services furnishes items or services to an indi-
vidual which are in excess of or more expensive than the items or serv-
ices determined to be necessary in the efficient delivery of needed health
services and charges are imposed for such more expensive items or
1 Subparagraph (F) was added by section 19(b)(1) of P.L. 95-142, effective as specified
in section 19 (c) which is printed in this document on p. 800.
Sec. 1861 (v)
Revised April 1978
472
3
services under the authority granted in section 1866 (a) (2) (B) (ii),
the amount of payment with respect to such items or services other-
wise duc such provider in any fiscal period shall be reduced to the ex-
tent that such payment plus such charges exceed the cost actually
incurred for such items or services in the fiscal period in which such
charges are imposed.
(5) (A) Where physical therapy services, occupational therapy
services, speech therapy services, or other therapy services or services
of other health-related personnel (other than physicians) are fur-
nished under an arrangement with a provider of services or other
organizations, specified in the first sentence of section 1861 (p) the
amount included in any payment to such provider or other organiza-
tion under this title as the reasonable cost of such services (as fur-
nished under such arrangements) shall not exceed an amount equal to
the salary which would reasonably have been paid for such services
(together with any additional costs that would have been incurred
by the provider or other organization) to the person performing them
if they had been performed in an employment relationship with such
provider or other organization (rather than under such arrangement)
plus the cost of such other expenses (including a reasonable allow-
ance for traveltime and other reasonable types of expense related to
any differences in acceptable methods of organization for the provi-
sion of such therapy) incurred by such person, as the Secretary may
in regulations determine to be appropriate.
(B) Notwithstanding the provisions of subparagraph (A), if a
provider of services or other organization specified in the first sen-
tence of section 1861 (p) requires the services of a therapist on a
limited part-time basis, or only to perform intermittent services, the
Secretary may make payment on the basis of a reasonable rate per
unit of service, even though such rate is greater per unit of time than
salary related amounts, where he finds that such greater payment is,
in the aggregate, less than the amount that would have been paid if
such organization had employed a therapist on a full- or part-time
salary basis.
(6) For purposes of this subsection, the term "semi-private accom-
modations" means two-bed, three-bed, or four-bed accommodations.
(7) For limitation on Federal participation for capital expenditures
which are out of conformity with a comprehensive plan of a State or
areawide planning agency, see section 1122.
Arrangements for Certain Services
(w) (1) The term "arrangements" is limited to arrangements under
which receipt of payment by the hospital, a skilled nursing facility, or
home health agency (whether in its own right or as agent), with re-
spect to services for which an individual is entitled to have payment
Revised April 1978
Sec. 1861 (y)
473
made under this title, discharges the liability of such individual or
any other person to pay for the services.
(2) Utilization review activities conducted, in accordance with the
requirements of the program established under part B of title XI
of the Social Security Act with respect to services furnished by a hos-
pital to patients insured under part A of this title or entitled to have
payment made for such services under part B of this title or under
a State plan approved under title V or XIX, by a Professional Stand-
ards Review Organization designated for the area in which such
hospital is located shall be deemed to have been conducted pursuant
to arrangements between such hospital and such organization under
which such hospital is obligated to pay to such organization, as a con-
dition of receiving payment for hospital services so furnished under
this part or under such a State plan, such amount as is reasonably in-
curred and requested (as determined under regulations of the Secre-
tary) by such organization in conducting such review activities with
respect to services furnished by such hospital to such patients.¹
State and United States
(x) The terms "State" and "United States" have the meaning given
to them by subsections (h) and (i), respectively, of section 210.
Post-Hospital Extended Care in Christian Science Skilled Nursing Facilities
(y) (1) The term "skilled nursing facility" also includes a Christian
Science sanatorium operated, or listed and certified, by the First
Church of Christ, Scientist, Boston, Massachusetts, but only (except
for purposes of subsection (a) (2)) with respect to items and services
ordinarily furnished by such an institution to inpatients, and pay-
ment may be made with respect to services provided by or in such an
institution only to such extent and under such conditions, limitations,
and requirements (in addition to or in lieu of the conditions, limita-
tions, and requirements otherwise applicable) as may be provided in
regulations.
(2) Notwithstanding any other provision of this title, payment un-
der part A may not be made for services furnished an individual in a
skilled nursing facility to which paragraph (1) applies unless such
individual elects, in accordance with regulations, for a spell of ill-
ness to have such services treated as post-hospital extended care serv-
ices for purposes of such part; and payment under part A may not
be made for post-hospital extended care services-
G
(A) furnished an individual during such spell of illness in a
skilled nursing facility to which paragraph (1) applies after-
(i) such services have been furnished to him in such a
facility for 30 days during such spell, or
1 Paragraph (2) was added by section 112 of P.L. 94-182 and was amended by section
5(m) of P.L. 95-142.
Sec. 1861 (y)
474
Revised April 1978
(ii) such services have been furnished to him during such
spell in a skilled nursing facility to which such paragraph
does not apply; or
(B) furnished an individual during such spell of illness in a
skilled nursing facility to which paragraph (1) does not apply
after such services have been furnished to him during such spell
in a skilled nursing facility to which such paragraph applies.
(3) The amount payable under part A for post-hospital extended
care services furnished an individual during any spell of illness in a
skilled nursing facility to which paragraph (1) applies shall be re-
duced by a coinsurance amount equal to one-eighth of the inpatient
hospital deductible for each day before the 31st day on which he is
furnished such services in such a facility during such spell (and the
reduction under this paragraph shall be in lieu of any reduction under
section 1813 (a) (3)).
(4) For purposes of subsection (i), the determination of whether
services furnished by or in an institution described in paragraph (1)
constitute post-hospital extended care services shall be made in ac-
cordance with and subject to such conditions, limitations, and require-
ments as may be provided in regulations.
Institutional Planning
(z) An overall plan and budget of a hospital, extended care fa-
cility, or home health agency shall be considered sufficient if it—
(1) provides for an annual operating budget which includes
all anticipated income and expenses related to items which would,
under generally accepted accounting principles, be considered
income and expense items (except that nothing in this paragraph
shall require that there be prepared, in connection with any
budget an item-by-item identification of the components of each
type of anticipated expenditure or income);
(2) provides for a capital expenditures plan for at least a 3-
year period (including the year to which the operating budget
described in subparagraph (1) is applicable) which includes and
identifies in detail the anticipated sources of financing for, and
the objectives of, each anticipated expenditure in excess of $100,-
000 related to the acquisition of land, the improvement of land,
buildings, and equipment, and the replacement, modernization,
and expansion of the buildings and equipment which would,
under generally accepted accounting principles, be considered
capital items;
(3) provides for review and updating at least annually; and
(4) is prepared, under the direction of the governing body of
the institution or agency, by a committee consisting of representa-
tives of the governing body, the administrative staff, and the
medical staff (if any) of the institution or agency.
Revised April 1978
Sec. 1861 (aa)
475
Rural Health Clinic Services
(aa) (1) The term "rural health clinic services" means-
(A) physicians' services and such services and supplies as are
covered under section 1861 (s) (2) (A) if furnished as an incident
to a physician's professional service,
(B) such services furnished by a physician assistant or by a
nurse practitioner and such services and supplies furnished as an
incident to his service as would otherwise be covered if furnished
by a physician or as an incident to a physician's service, and
(C) in the case of a rural health clinic located in an area in
which there exists a shortage of home health agencies, part-time
or intermittent nursing care and related medical supplies (other
than drugs and biologicals) furnished by a registered professional
nurse or licensed practical nurse to a homebound individual under
a written plan of treatment (i) established and periodically
reviewed by a physician described in paragraph (2) (B), or (ii)
established by a nurse practitioner or physician assistant and
periodically reviewed and approved by a physician described in
paragraph (2) (B),
When furnished to an individual as an outpatient of a rural health
clinic.
(2) The term "rural health clinic” means a facility which—
(A) is primarily engaged in furnishing to outpatients services
described in subparagraphs (A) and (B) of paragraph (1);
(B) in the case of a facility which is not a physician-directed
clinic, has an arrangement (consistent with the provisions of State
and local law relative to the practice, performance, and delivery of
health services) with one or more physicians (as defined in sub-
section (r)(1)) under which provision is made for the periodic
review by such physicians of covered services furnished by physi-
cian assistants and nurse practitioners, the supervision and guid-
ance by such physicians of physician assistants and nurse practi-
tioners, the preparation by such physicians of such medical orders
for care and treatment of clinic patients as may be necessary, and
the availability of such physicians for such referral of and
consultation for patients as is necessary and for advice and
assistance in the management of medical emergencies; and, in the
case of a physician-directed clinic, has one or more of its staff
physicians perform the activities accomplished through such an
arrangement;
(C) maintains clinical records on all patients;
(D) has arrangements with one or more hospitals, having
agreements in effect under section 1866, for the referral and ad-
mission of patients requiring inpatient services or such diagnostic
or other specialized services as are not available at the clinic;
Sec. 1861 (aa)
Revised April 1978
476
(E) has written policies, which are developed with the advice
of (and with provision for review of such policies from time to
time by) a group of professional personnel, including one or more
physicians and one or more physician assistants or nurse practi-
tioners, to govern those services described in paragraph (1) which
it furnishes;
(F) has a physician, physician assistant, or nurse practitioner
responsible for the execution of policies described in subpara-
graph (E) and relating to the provision of the clinic's services;
(G) directly provides routine diagnostic services, including
clinical laboratory services, as prescribed in regulations by the
Secretary, and has prompt access to additional diagnostic services.
from facilities meeting requirements under this title;
(H) in compliance with State and Federal law, has available
for administering to patients of the clinic at least such drugs and
biologicals as are determined by the Secretary to be necessary for
the treatment of emergency cases (as defined in regulations) and
has appropriate procedures or arrangements for storing, admin-
istering, and dispensing any drugs and biologicals;
(I) has appropriate procedures for review of utilization of
clinic services to the extent that the Secretary determines to be
necessary and feasible; and
(J) meets such other requirements as the Secretary may find
necessary in the interest of the health and safety of the individuals
K
who are furnished services by the clinic.
For the purposes of this title, such term includes only a facility which
(i) is located in an area that is not an urbanized area (as defined by
the Bureau of the Census) and that is designated by the Secretary
either (I) as an area with a shortage of personal health services under
section 1302 (7) of the Public Health Service Act or (II) as a health
manpower shortage area described in section 332(a)(1)(A) of that
Act because of its shortage of primary medical care manpower, (ii)
has filed an agreement with the Secretary by which it agrees not to
charge any individual or other person for items or services for which
such individual is entitled to have payment made under this title,
except for the amount of any deductible or coinsurance amount im-
posed with respect to such items or services (not in excess of the
amount customarily charged for such items and services by such
clinic), pursuant to subsections (a) and (b) of section 1833, (iii)
employs a physician assistant or nurse practitioner, and (iv) is not a
rehabilitation agency or a facility which is primarily for the care and
treatment of mental diseases. A facility that is in operation and quali-
fies as a rural health clinic under this title or title XIX and that
subsequently fails to satisfy the requirement of clause (i) shall be
considered, for purposes of this title and title XIX, as still satisfying
the requirement of such clause.
}
Revised April 1978
Sec. 1862(a)
477
(3) The term "physician assistant" and the term "nurse practi-
tioner" mean, for the purposes of paragraphs (1) and (2), a physician
assistant or nurse practitioner who performs such services as such indi-
vidual is legally authorized to perform (in the State in which the
individual performs such services) in accordance with State law (or
the State regulatory mechanism provided by State law), and who
meets such training, education, and experience requirements (or any
combination thereof) as the Secretary may prescribe in regulations.¹
Exclusions From Coverage
Sec. 1862. (a) Notwithstanding any other provisions of this title, no
payment may be made under part A or part B for any expenses in-
curred for items or services—
(1) which are not reasonable and necessary for the diagnosis
or treatment of illness or injury or to improve the functioning of
a malformed body member;
(2) for which the individual furnished such items or services.
has no legal obligation to pay, and which no other person (by
reason of such individual's membership in a prepayment plan or
otherwise) has a legal obligation to provide or pay for;
(3) which are paid for directly or indirectly by a governmental
entity (other than under this Act and other than under a health
benefits or insurance plan established for employees of such an
entity), except in the case of rural health clinic services, as de-
fined in section 1861 (aa) (1), and in such other cases as the Sec-
retary may specify;
2
(4) which are not provided within the United States (except
for inpatient hospital services furnished outside the United
States under the conditions described in section 1814 (f) and, sub-
ject to such conditions, limitations, and requirements as are pro-
vided under or pursuant to this title, physicians' services and am-
bulance services furnished an individual in conjunction with such
inpatient hospital services but only for the period during which
such inpatient hospital services were furnished);
(5) which are required as a result of war, or of an act of war,
occurring after the effective date of such individual's current
coverage under such part;
(6) which constitute personal comfort items;
(7) where such expenses are for routine physical checkups, eye-
glasses or eye examinations for the purpose of prescribing, fitting,
or changing eyeglasses, procedures performed (during the course
of any eye examination) to determine the refractive state of the
eyes, hearing aids or examinations therefor, or immunizations;
1 Subsection (aa) was added by sec. 1(d) of P.L. 95-210. See also sec. 1(e) of that law
which is printed in this document on pp. 802-803.
2 Paragraph (3) was amended by sec. 1(b) of P.L. 95-210.
21-746 O - 78 36
Sec. 1862(a)
Revised April 1978
478
(8) where such expenses are for orthopedic shoes or other sup-
portive devices for the feet;
(9) where such expenses are for custodial care;
(10) where such expenses are for cosmetic surgery or are in-
curred in connection therewith, except as required for the prompt
repair of accidental injury or for improvement of the functioning
of a malformed body member;
(11) where such expenses constitute charges imposed by im-
mediate relatives of such individual or members of his household;
(12) where such expenses are for services in connection with the
care, treatment, filling, removal, or replacement of teeth or struc-
tures directly supporting teeth, except that payment may be made
under part A in the case of inpatient hospital services in connec-
tion with the provision of such dental services if the individual,
because of his underlying medical condition and clinical status,
requires hospitalization in connection with the provision of such
services; or
(13) where such expenses are for-
(A) the treatment of flat foot conditions and the prescrip-
tion of supporting devices therefor,
(B) the treatment of subluxations of the foot, or
(C) routine foot care (including the cutting or removal of
corns, warts, or calluses, the trimming of nails, and other
routine hygienic care).
(b) Payment under this title may not be made with respect to any
item or service to the extent that payment has been made, or can rea-
sonably be expected to be made (as determined in accordance with
regulations), with respect to such item or service, under a workmen's
compensation law or plan of the United States or a State. Any pay-
ment under this title with respect to any item or service shall be con-
ditioned on reimbursement to the appropriate Trust Fund established
by this title when notice or other information is received that payment
for such item or service has been made under such a law or plan.
1
(c) [Repealed.]
(d) (1) No payment may be made under this title with respect to
any item or services furnished to an individual by a person where the
Secretary determines under this subsection that such person—
(A) has knowingly and willfully made, or caused to be made,
any false statement or representation of a material fact for use
in an application for payment under this title or for use in deter-
mining the right to a payment under this title;
(B) has submitted or caused to be submitted (except in the
case of a provider of services), bills or requests for payment under
this title containing charges (or in applicable cases requests for
payment of costs to such person) for services rendered which the
1 Subsection (c) was repealed by section 103 of Public Law 94-182.
Revised April 1978
Sec. 1862(e)
479
Secretary finds to be substantially in excess of such person's
customary charges (or in applicable cases substantially in excess
of such person's costs) for such services, unless the Secretary
finds there is good cause for such bills or requests containing
such charges (or in applicable cases, such costs); or ¹
1
(C) has furnished services or supplies which are determined
by the Secretary, on the basis of reports transmitted to him in
accordance with section 1157 of this Act (or, in the absence of any
such report, on the basis of such data as he acquires in the admin-
istration of the program under this title), to be substantially in
excess of the needs of individuals or to be of a quality which fails
to meet professionally recognized standards of health care.²
(2) A determination made by the Secretary under this subsection
shall be effective at such time and upon such reasonable notice to the
public and to the person furnishing the services involved as may be
specified in regulations. Such determination shall be effective with
respect to services furnished to an individual on or after the effective
date of such determination (except that in the case of inpatient hospital
services, posthospital extended care services, and home health services
such determination shall be effective in the manner provided in sec-
tion 1866 (b) (3) and (4) with respect to terminations of agreements),
and shall remain in effect until the Secretary finds and gives reasonable
notice to the public that the basis for such determination has been
removed and that there is reasonable assurance that it will not recur.
(3) Any person furnishing services described in paragraph (1)
who is dissatisfied with a determination made by the Secretary under
this subsection shall be entitled to reasonable notice and opportunity
for a hearing thereon by the Secretary to the same extent as is pro-
vided in section 205 (b), and to judicial review of the Secretary's final
decision after such hearing as is provided in section 205 (g).
(4) [Repealed.]
(e) (1) Whenever the Secretary determines that a physician or
other individual practitioner has been convicted (on or after the date
of the enactment of this subsection, or within such period prior to that
date as the Secretary shall specify in regulations) of a criminal offense
related to such physician's or practitioner's involvement in the pro-
grams under this title or the program under title XIX, the Secretary
shall suspend such physician or practitioner from participation in the
program under this title for such period as he may deem appropriate;
and no payment may be made under this title with respect to any item
or service furnished by such physician or practitioner during the
period of such suspension. The provisions of paragraphs (2) and
(3) of subsection (d) shall apply with respect to determinations made
by the Secretary under this subsection.
3
1 Subparagraph (B) was amended by section 13(b)(1) of P.L. 95-142.
2 Subparagraph (C) was amended by section 13(b) (2) of P.L. 95-142.
3 Paragraph (4) was struck out by section 13(a) of P.L. 95–142.
Sec. 1862(e)
Revised April 1978
480
(2) In any case where the Secretary under paragraph (1) suspends
any physician or other individual practitioner from participation in
the program under this title, he shall-
(A) promptly notify each single State agency which admin-
isters or supervises the administration of a State plan approved
under title XIX of the fact, circumstances, and period of such
suspension; and
(B) promptly notify the appropriate State or local agency
or authority having responsibility for the licensing or certification
of such physician or practitioner of the fact and circumstances of
such suspension, request that appropriate investigations be made
and sanctions invoked in accordance with applicable State law
and policy, and request that such State or local agency or author-
ity keep the Secretary and the Inspector General of the Depart-
ment of Health, Education, and Welfare fully and currently
informed with respect to any actions taken in response to such
request.¹
Consultation With State Agencies and Other Organizations To
Develop Conditions of Participation for Providers of Services
Sec. 1863. In carrying out his functions, relating to determination of
conditions of participation by providers of services, under subsections
(e) (9), (f) (4), (g) (4), (j) (11), and (o) (6) of section 1861, the Sec-
retary shall consult with the Health Insurance Benefits Advisory
Council established by section 1867, appropriate State agencies, and
recognized national listing or accrediting bodies, and may consult with
appropriate local agencies. Such conditions prescribed under any of
such subsections may be varied for different areas or different classes
of institutions or agencies and may, at the request of a State, provide
higher requirements for such State than for other States; except
that, in the case of any State or political subdivision of a State which
imposes higher requirements on institutions as a condition to the pur-
chase of services (or of certain specified services) in such institutions
under a State plan approved under title I, XVI, orXIX, the Secretary
shall impose like requirements as a condition to the payment for serv-
ices (or for the services specified by the State or subdivision) in such
institutions in such State or subdivision.
Use of State Agencies To Determine Compliance by Providers of
Services With Conditions of Participation
Sec. 1864. (a) The Secretary shall make an agreement with any
State which is able and willing to do so under which the services of the
State health agency or other appropriate State agency (or the ap-
propriate local agencies) will be utilized by him for the purpose of
1 Subsection (e) was added by section 7(a) of P.L. 95-142.
Revised April 1978
481
Sec. 1864 (c)
G
determining whether an institution therein is a hospital or skilled
nursing facility, or whether an agency therein is a home health agency,
or whether a facility therein is a rural health clinic as defined in sec-
tion 1861 (aa) (2), or whether a laboratory meets the requirements of
paragraphs (10) and (11) of section 1861 (s), or whether a clinic, re-
habilitation agency or public health agency meets the requirements of
subparagraph (A) or (B), as the case may be, of section 1861 (p) (4).
To the extent that the Secretary finds it appropriate, an institution
or agency which such a State (or local) agency certifies is a hos-
pital, skilled nursing facility, rural health clinic, or home health
agency (as those terms are defined in section 1861) may be treated
as such by the Secretary. Any State agency which has such an agree-
ment may (subject to approval of the Secretary) furnish to a skilled
nursing facility after proper request by such facility, such special-
ized consultative services (which such agency is able and willing
to furnish in a manner satisfactory to the Secretary) as such fa-
cility may need to meet one or more of the conditions specified in
section 1861 (j). Any such services furnished by a State agency shall
be deemed to have been furnished pursuant to such agreement. With-
in 90 days following the completion of each survey of any health
care facility, rural health clinic, laboratory, clinic, agency, or organi-
zation by the appropriate State or local agency described in the first
sentence of this subsection, the Secretary shall make public in readily
available form and place the pertinent findings of each such survey
relating to the compliance of each such health care facility, rural
health clinic, laboratory, clinic, agency, or organization with (1) the
statutory conditions of participation imposed under this title and (2)
the major additional conditions which the Secretary finds necessary
in the interest of health and safety of individuals who are furnished
care or services by any such health care facility, rural health clinic,
laboratory, clinic, agency, or organization.¹
(b) The Secretary shall pay any such State, in advance or by way
of reimbursement, as may be provided in the agreement with it (and
may make adjustments in such payments on account of overpayments
or underpayments previously made), for the reasonable cost of per-
forming the functions specified in subsection (a), and for the Federal
Hospital Insurance Trust Fund's fair share of the costs attributable
to the planning and other efforts directed toward coordination of activ-
ities in carrying out its agreement and other activities related to the
provision of services similar to those for which payment may be made
under part A, or related to the facilities and personnel required for
the provision of such services, or related to improving the quality of
such services.
(c) The Secretary is authorized to enter into an agreement with
any State under which the appropriate State or local agency which
¹ Subsection (a) was amended by section 1(i) of P.L. 95-210.
Sec. 1864 (c)
482
Revised April 1978
performs the certification function described in subsection (a) will
survey, on a selective sample basis (or where the Secretary finds that
a survey is appropriate because of substantial allegations of the exist-
ence of a significant deficiency or deficiencies which would, if found to
be present, adversely affect health and safety of patients), hospitals
which have an agreement with the Secretary under section 1866 and
which are accredited by the Joint Commission on the Accreditation of
Hospitals. The Secretary shall pay for such services in the manner
prescribed in subsection (b).
Effect of Accreditation
Sec. 1865. (a) Except as provided in subsection (b) and the second
sentence of section 1863, if-—
(1) an institution is accredited as a hospital by the Joint Com-
mission on Accreditation of Hospitals, and
(2) such institution (if it is included within a survey described
in section 1864 (c)) authorizes the Commission to release to the
Secretary (on a confidential basis) upon his request (or such
State agency as the Secretary may designate) a copy of the most
current accreditation survey of such institution made by such
Commission,
then, such institution shall be deemed to meet the requirements of the
numbered paragraphs of section 1861 (e); except—
(3) paragraph (6) thereof, and
(4) any standard, promulgated by the Secretary pursuant to
paragraph (9) thereof, which is higher than the requirements
prescribed for accreditation by such Commission.
If such Commission, as a condition for accreditation of a hospital,
requires a utilization review plan (or imposes another requirement,
which serves substantially the same purpose) or imposes a standard
which the Secretary determines is at least equivalent to the standard
promulgated by the Secretary as described in paragraph (4) of this
subsection, the Secretary is authorized to find that all institutions so
accredited by such Commission comply also with section 1861 (e) (6)
or the standard described in such paragraph (4), as the case may be.
In addition, if the Secretary finds that accreditation of an institution
or agency by the American Osteopathic Association or any other
national accreditation body provides reasonable assurance that any or
all of the conditions of section 1861 (e), (j), or (o), as the case may be,
are met, he may, to the extent he deems it appropriate, treat such
institution or agency as meeting the condition or conditions with
respect to which he made such finding.
(b) Notwithstanding any other provision of this title, if the Secre-
tary finds following a survey made pursuant to section 1864 (c) that
an institution has significant deficiencies (as defined in regulations
I
Revised April 1978
483
Sec. 1866(a)
pertaining to health and safety), such institution shall, after the date
of notice of such finding to the hospital and for such period as may be
prescribed in regulations, be deemed not to meet the requirements of
the numbered paragraphs of section 1861 (e).
Agreements With Providers of Services
Sec. 1866. (a) (1) Any provider of services (except a fund desig-
nated for purposes of section 1814(g) and section 1835 (e)) shall be
qualified to participate under this title and shall be eligible for pay-
ments under this title if it files with the Secretary an agreement-
(A) not to charge, except as provided in paragraph (2), any
individual or any other person for items or services for which such
individual is entitled to have payment made under this title (or
for which he would be so entitled if such provider of services had
complied with the procedural and other requirements under or
pursuant to this title or for which such provider is paid pursuant
to the provisions of section 1814(e)), and
(B) not to charge any individual or any other person for
items or services for which such individual is not entitled to have
payment made under this title because payment for expenses in-
curred for such items or services may not be made by reason of
the provisions of paragraph (1) or (9), but only if (i) such
individual was without fault in incurring such expenses and (ii)
the Secretary's determination that such payment may not be made
for such items and services was made after the third year follow-
ing the year in which notice of such payment was sent to such
individual; except that the Secretary may reduce such three-year
period to not less than one year if he finds such reduction is con-
sistent with the objectives of this title, and
(C) to make adequate provision for return (or other disposi-
tion, in accordance with regulations) of any moneys incorrectly
collected from such individual or other person, and
(D) to promptly notify the Secretary of its employment of an
individual who, at any time during the year preceding such em-
ployment, was employed in a managerial, accounting, auditing,
or similar capacity (as determined by the Secretary by regula-
tion) by an agency or organization which serves as a fiscal inter-
mediary or carrier (for purposes of part A or part B, or both, of
this title) with respect to the provider. 1
An agreement under this paragraph with a skilled nursing facility
shall be for a term of not exceeding 12 months, except that the Secre-
tary may extend such term for a period not exceeding 2 months, where
the health and safety of patients will not be jeopardized thereby, if he
finds that such extension is necessary to prevent irreparable harm to
1 Subparagraph (D) was added by section 15 of P.L. 95–142.
Sec. 1866 (a)
483-A
Revised August 1978
such facility or hardship to the individuals being furnished items or
services by such facility or if he finds it impracticable within such 12-
month period to determine whether such facility is complying with
the provisions of this title and regulations thereunder.
(2) (A) A provider of services may charge such individual or other
person (i) the amount of any deduction or coinsurance amount im-
posed pursuant to section 1813 (a) (1) or (a) (3), section 1833(b), or
section 1861 (y) (3) with respect to such items and services (not in
excess of the amount customarily charged for such items and services
by such provider), and (ii) an amount equal to 20 per centum of the
reasonable charges for such items and services (not in excess of 20 per
centum of the amount customarily charged for such items and services
by such provider) for which payment is made under part B (but in
the case of items and services furnished to individuals with end-stage
renal disease, an amount equal to 20 percent of the estimated amounts
for such items and services calculated on the basis established by the
Secretary). In the case of items and services described in section
1833 (c), clause (ii) of the preceding sentence shall be applied by sub-
stituting for 20 per centum the proportion which is appropriate under
such section.¹ 1
(B) (i) Where a provider of services has furnished, at the request of
such individual, items or services which are in excess of or more ex-
pensive than the items or services with respect to which payment may
be made under this title, such provider of services may also charge such
individual or other person for such more expensive items or services
to the extent that the amount customarily charged by it for the items
or services furnished at such request exceeds the amount customarily
charged by it for the items or services with respect to which payment
may be made under this title.
(ii) Where a provider of services customarily furnishes an indi-
vidual items or services which are more expensive than the items or
services determined to be necessary in the efficient delivery of needed
health services under this title and which have not been requested by
such individual, such provider may (except with respect to emergency
services) also charge such individual or other person for such more
expensive items or services to the extent that the costs of (or, if less,
the customary charges for) such more expensive items or services ex-
perienced by such provider in the second fiscal period immediately
preceding the fiscal period in which such charges are imposed exceed
the cost of such items or services determined to be necessary in the
efficient delivery of needed health services, but only if—
1 Subparagraph (A) was amended by sec. 4(e) of P.L. 95-292, effective as specified
in sec. 6 of that act, which is printed in this document on p. 810.
Revised August 1978
Sec. 1866(a)
483-B
(I) the Secretary has provided notice to the public of any
charges being imposed on individuals entitled to benefits under
this title on account of costs in excess of the costs determined to
be necessary in the efficient delivery of needed health services
under this title by particular providers of services in the area in
which such items or services are furnished, and
(II) the provider of services has identified such charges to
such individual or other person, in such manner as the Secretary
Revised April 1978
484-A
Sec. 1866(b)
may prescribe, as charges to meet costs in excess of the cost deter-
mined to be necessary in the efficient delivery of needed health
services under this title.
(C) A provider of services may in accordance with its customary
practice also appropriately charge any such individual for any whole
blood (or equivalent quantities of packed red blood cells, as defined
under regulations) furnished him with respect to which a deductible
is imposed under section 1813 (a) (2), except that (i) any excess of
such charge over the cost to such provider for the blood (or equivalent
quantities of packed red blood cells, as so defined) shall be deducted
from any payment to such provider under this title, (ii) no such
charge may be imposed for the cost of administration of such blood
(or equivalent quantities of packed red blood cells, as so defined) and
(iii) such charge may not be made to the extent such blood (or equiva-
lent quantities of packed red blood cells, as so defined) has been re-
placed on behalf of such individual or arrangements have been made
for its replacement on his behalf.
For purposes of subparagraph (C), whole blood (or equivalent
quantities of packed red blood cells, as so defined) furnished an in-
dividual shall be deemed replaced when the provider of services is
given one pint of blood for each pint of blood (or equivalent quanti-
ties of packed red blood cells, as so defined) furnished such individual
with respect to which a deduction is imposed under section 1813
(a) (2).
(D) Where a provider of services customarily furnishes items or
services which are in excess of or more expensive than the items or
services with respect to which payment may be made under this title,
such provider, notwithstanding the preceding provisions of this para-
graph, may not, under the authority of section 1866 (a) (2) (B) (ii),
charge any individual or other person any amount for such items or
services in excess of the amount of the payment which may otherwise
be made for such items or services under this title if the admitting
physician has a direct or indirect financial interest in such provider.
(3) The Secretary may refuse to enter into or renew an agreement
under this section with a provider of services if any person who has a
direct or indirect ownership or control interest of 5 percent or more in
such provider, or who is an officer, director, agent, or managing
employee (as defined in section 1126 (b)) of such provider, is a person
described in section 1126 (a).¹
(b) An agreement with the Secretary under this section may be
terminated (and in the case of a skilled nursing facility, prior to the
end of the term specified in subsection (a) (1))—
(1) by the provider of services at such time and upon such
notice to the Secretary and the public as may be provided in
¹ Paragraph (3) was added by section 8(b)(1) of P.L. 95-142.
Sec. 1866(b)
484-B
Revised April 1978
regulations, except that notice of more than 6 months shall not
be required, or
(2) by the Secretary at such time and upon such reasonable
notice to the provider of services and the public as may be speci-
fied in regulations, but only after the Secretary has determined
(A) that such provider of services is not complying substantially
with the provisions of such agreement, or with the provisions of
this title and regulations thereunder, or (B) that such provider
of services no longer substantially meets the applicable provisions
of section 1861, or (C) that such provider of services has failed
(i) to provide such information as the Secretary finds necessary to
determine whether payments are or were due under this title and
the amounts thereof, or has refused to permit such examination
of its fiscal and other records by or on behalf of the Secretary as
may be necessary to verify such information, or (ii) to supply
(within such period as may be specified by the Secretary in regu-
lations) upon request specifically addressed to such provider by
the Secretary (I) full and complete information as to the own-
ership of a subcontractor (as defined by the Secretary in regula-
tions) with whom such provider has had, during the previous
twelve months, business transactions in an aggregate amount in
excess of $25,000, and (II) full and complete information as to
any significant business transactions (as defined by the Secretary
in regulations), occurring during the five-year period ending on
the date of such request, between such provider and any wholly
owned supplier or between such provider and any subcontractor,
or (D) that such provider has made, or caused to be made, any
false statement or representation of a material fact for use in an
application for payment under this title or for use in determining
the right to a payment under this title, or (E) that such provider
has submitted, or caused to be submitted, requests for payment
under this title of amounts for rendering services substantially in
excess of the costs incurred by such provider for rendering such
services, or (F) that such provider has furnished services or sup-
plies which are determined by the Secretary to be substantially in
excess of the needs of individuals or to be of a quality which fails
to meet professionally recognized standards of health care, or
(G) that such provider (at the time the agreement was entered
into) did not fully and accurately make any disclosure required
of it by section 1126 (a).¹
1
Any termination shall be applicable—
(3) in the case of inpatient hospital services (including tuber-
culosis hospital services and inpatient psychiatric hospital serv-
1 Paragraph (2) was amended by sections 3(b), 8(b)(2), and 13(b)(3) of P.L. 95–142.
Revised April 1978
Sec. 1866(d)
484-C
ices) or post-hospital extended care services, with respect to
services furnished after the effective date of such termination,
except that payment may be made for up to thirty days with
respect to inpatient institutional services furnished to any eligible
individual who was admitted to such institution prior to the
effective date of such termination,
(4) (A) with respect to home health services furnished to an
individual under a plan therefor established on or after the effec-
tive date of such termination, or (B) if a plan is established
before such effective date, with respect to such services furnished
to such individual after the calendar year in which such termina-
tion is effective, and
(5) with respect to any other items and services furnished on or
after the effective date of such termination.
(c) (1) Where an agreement filed under this title by a provider of
services has been terminated by the Secretary, such provider may not
file another agreement under this title unless the Secretary finds that
the reason for the termination has been removed and that there is
reasonable assurance that it will not recur.
(2) In the case of a skilled nursing facility participating in the
programs established by this title and title XIX, the Secretary may
enter into an agreement under this section only if such facility has
been approved pursuant to section 1910 (a), and the term of any such
agreement shall be in accordance with the period of approval of eligi-
bility specified by the Secretary pursuant to such section.¹
(d) If the Secretary finds that there is a substantial failure to make
timely review in accordance with section 1861 (k) of long-stay cases in
1 Paragraph (2) was amended by section 2 (e) of P.L. 95-210.
V
485
Sec. 1867(a)
a hospital or skilled nursing facility, he may, in lieu of terminating
his agreement with such hospital or facility, decide that, with respect
to any individual admitted to such hospital or facility after a subse-
quent date specified by him, no payment shall be made under this title
for inpatient hospital services (including inpatient tuberculosis hos-
pital services and inpatient psychiatric hospital services) after the
20th day of a continuous period of such services or for post-hospital
extended care services after such day of a continuous period of such
care as is prescribed in or pursuant to regulations, as the case may be.
Such decision may be made effective only after such notice to the hos-
pital, or (in the case of a skilled nursing facility) to the facility and
the hospital or hospitals with which it has a transfer agreement, and
to the public, as may be prescribed by regulations, and its effectiveness
shall terminate when the Secretary finds that the reason therefor has
been removed and that there is reasonable assurance that it will not
recur. The Secretary shall not make any such decision except after
reasonable notice and opportunity for hearing to the institution or
agency affected thereby.
(e) For purposes of this section, the term "provider of services"
shall include a clinic, rehabilitation agency or public health agency if,`
in the case of a clinic or rehabilitation agency, such clinic or agency
meets the requirements of section 1861 (p) (4) (A), or if, in the case
of a public health agency, such agency meets the requirements of
section 1861 (p) (4) (B), but only with respect to the furnishing of
outpatient physical therapy services (as therein defined).
Health Insurance Benefits Advisory Council
Sec. 1867. (a) There is hereby created a Health Insurance Benefits
Advisory Council which shall consist of 19 persons, not otherwise in
the employ of the United States, appointed by the Secretary without
regard to the provisions of title 5, United States Code, governing ap-
pointments in the competitive services. The Secretary shall from time
to time appoint one of the members to serve as Chairman. The mem-
bers shall include persons who are outstanding in fields related to
hospital, medical, and other health activities, persons who are repre-
sentative of organizations and associations of professional personnel
in the field of medicine, and at least one person who is representative
of the general public. Each member shall hold office for a term of four
years, except that any member appointed to fill a vacancy occurring
prior to the expiration of the term for which his predecessor was ap-
pointed shall be appointed for the remainder of such term. A member
shall not be eligible to serve continuously for more than two terms.
Members of the Advisory Council, while attending meetings or con-
Sec. 1867(a)
486
·
ferences thereof or otherwise serving on business of the Advisory
Council, shall be entitled to receive compensation at rates fixed by the
Secretary, but not exceeding $100 per day, including traveltime, and
while so serving away from their homes or regular places of business.
they may be allowed travel expenses, including per diem in lieu of
subsistence, as authorized by section 5703 of title 5, United States
Code, for persons in the Government service employed intermittently.
The Advisory Council shall meet as the Secretary deems necessary,
but not less than annually.
(b) It shall be the function of the Advisory Council to provide
advice and recommendations for the consideration of the Secretary on
matters of general policy with respect to this title and title XIX.
Sec. 1868. [Repealed.]
Determinations; Appeals
Sec. 1869. (a) The determination of whether an individual is en-
titled to benefits under part A or part B, and the determination of the
amount of benefits under part A, shall be made by the Secretary in
accordance with regulations prescribed by him.
(b) (1) Any individual dissatisfied with any determination under
subsection (a) as to-
(A) whether he meets the conditions of section 226 of this Act
or section 103 of the Social Security Amendments of 1965, or
(B) whether he is eligible to enroll and has enrolled pursuant
to the provisions of part B of this title, or section 1818, or section
1819, or
(C) the amount of benefits under part A (including a deter-
mination where such amount is determined to be zero).
shall be entitled to a hearing thereon by the Secretary to the same.
extent as is provided in section 205 (b) and to judicial review of the
Secretary's final decision after such hearing as is provided in section
205 (g).
(2) Notwithstanding the provisions of subparagraph (C) of para-
graph (1) of this subsection, a hearing shall not be available to an
individual by reason of such subparagraph (C) if the amount in con-
troversy is less than $100; nor shall judicial review be available to an
individual by reason of such subparagraph (C) if the amount in con-
troversy is less than $1,000.
(c) Any institution or agency dissatisfied with any determination.
by the Secretary that it is not a provider of services, or with any de-
termination described in section 1866 (b) (2), shall be entitled to a
hearing thereon by the Secretary (after reasonable notice and op-
portunity for hearing) to the same extent as is provided in section
487
Sec. 1870(a)
205(b), and to judicial review of the Secretary's final decision after
such hearing as is provided in section 205 (g).
Overpayments on Behalf of Individuals and Settlement of Claims
for Benefits on Behalf of Deceased Individuals
Sec. 1870. (a) Any payment under this title to any provider of serv-
ices or other person with respect to any items or services furnished
any individual shall be regarded as a payment to such individual.
(b) Where-
(1) more than the correct amount is paid under this title to a
provider of services or other person for items or services furnished
an individual and the Secretary determines (A) that, within
such period as he may specify, the excess over the correct amount
cannot be recouped from such provider of services or other person,
or (B) that such provider of services or other person was without
fault with respect to the payment of such excess over the correct
amount, or
(2) any payment has been made under section 1814(e) to a
provider of services or other person for items or services furnished
an individual,
proper adjustments shall be made, under regulations prescribed (after
consultation with the Railroad Retirement Board) by the Secretary,
by decreasing subsequent payments—
(3) to which such individual is entitled under title II of this
Act or under the Railroad Retirement Act of 1974, as the case
may be, or
(4) if such individual dies before such adjustment has been
completed, to which any other individual is entitled under title II
of this Act or under the Railroad Retirement Act of 1974, as
the case may be, with respect to the wages and self-employment
income or the compensation constituting the basis of the benefits
of such deceased individual under title II of such Act.
As soon as practicable after any adjustment under paragraph (3) or
(4) is determined to be necessary, the Secretary, for purposes of this
section, section 1817(g), and section 1841 (f), shall certify (to the
Railroad Retirement Board if the adjustment is to be made by de-
creasing subsequent payments under the Railroad Retirement Act of
1974) the amount of the overpayment as to which the adjustment
is to be made. For purposes of clause (B) of paragraph (1), such
provider of services or such other person shall, in the absence of evi-
dence to the contrary, be deemed to be without fault if the Secretary's
determination that more than such correct amount was paid was made
subsequent to the third year following the year in which notice was
Sec. 1870(a)
488
sent to such individual that such amount had been paid; except that
the Secretary may reduce such three-year period to not less than one
year if he finds such reduction is consistent with the objectives of this
title.
(c) There shall be no adjustment as provided in subsection (b) (nor
shall there be recovery) in any case where the incorrect payment has
been made (including payments under section 1814(e)) with respect.
to an individual who is without fault or where the adjustment (or
recovery) would be made by decreasing payments to which another
person who is without fault is entitled as provided in subsection
(b) (4), if such adjustment (or recovery) would defeat the purposes
of title II or title XVIII or would be against equity and good con-
science. Adjustment or recovery of an incorrect payment (or only
such part of an incorrect payment as the Secretary determines to be
inconsistent with the purposes of this title) against an individual who
is without fault shall be deemed to be against equity and good con-
science if (A) the incorrect payment was made for expenses incurred
for items or services for which payment may not be made under this
title by reason of the provisions of paragraph (1) or (9) of section
1862 and (B) if the Secretary's determination that such payment was
incorrect was made subsequent to the third year following the year in
which notice of such payment was sent to such individual; except that
the Secretary may reduce such three-year period to not less than one
year if he finds such reduction is consistent with the objectives of this
title.
(d) No certifying or disbursing officer shall be held liable for any
amount certified or paid by him to any provider of services or other
person where the adjustment or recovery of such amount is waived
under subsection (c) or where adjustment under subsection (b) is not
completed prior to the death of all persons against whose benefits such
adjustment is authorized.
(e) If an individual, who received services for which payment
may be made to such individual under this title, dies, and payment for
such services was made (other than under this title), and the indi-
vidual died before any payments due him under this title with respect
to such services was completed, payment of the amount due (including
the amount of any unnegotiated checks) shall be made-
(1) if the payment for such services was made (before or
after such individual's death) by a person other than the deceased
individual, to the person or persons determined by the Secretary
under regulations to have paid for such services, or if the pay-
ment for such services was made by the deceased individual be-
fore his death, to the legal representative of the estate of such
deceased individual, if any;
489
Sec. 1870(e)
(2) if there is no person who meets the requirements of para-
graph (1), to the person, if any, who is determined by the Secre-
tary to be the surviving spouse of the deceased individual and
who was either living in the same household with the deceased
at the time of his death or was, for the month in which the
deceased individual died, entitled to a monthly benefit on the
basis of the same wages and self-employment income as was the
deceased individual;
(3) if there is no person who meets the requirements of para-
graph (1) or (2), or if the person who meets such requirements
dies before the payment due him under this title is completed,
to the child or children, if any, of the deceased individual who
were, for the month in which the deceased individual died,
entitled to monthly benefits on the basis of the same wages and
self-employment income as was the deceased individual (and,
in case there is more than one such child, in equal parts to each
such child);
(4) if there is no person who meets the requirements of para-
graph (1), (2), or (3), or if each person who meets such require-
ments dies before the payment due him under this title is com-
pleted, to the parent or parents, if any, of the deceased individual
who were, for the month in which the deceased individual died,
entitled to monthly benefits on the basis of the same wages and
self-employment income as was the deceased individual (and, in
case there is more than one such parent, in equal parts to each
such parent);
(5) if there is no person who meets the requirements of para-
graph (1), (2), (3), or (4), or if each person who meets such
requirements dies before the payment due him under this title
is completed, to the person, if any, determined by the Secretary
to be the surviving spouse of the deceased individual;
(6) if there is no person who meets the requirements of para-
graph (1), (2), (3), (4), or (5), or if each person who meets such
requirements dies before the payment due him under this title is
completed, to the person or persons, if any, determined by the
Secretary to be the child or children of the deceased individual
(and, in case there is more than one such child, in equal parts to
each such child);
(7) if there is no person who meets the requirements of para-
graph (1), (2), (3), (4), (5), or (6), or if each person who meets
such requirements dies before the payment due him under this
title is completed, to the parent or parents, if any, of the deceased
individual (and, in case there is more than one such parent, in
equal parts to each such parent); or
21-746 0 - 78
-
37
Sec. 1870(e)
490
(8) if there is no person who meets the requirements of para-
graph (1), (2), (3), (4), (5), (6), or (7), or if each person who
meets such requirements dies before the payment due him under
this title is completed, to the legal representatives of the estate
of the deceased individual, if any.
(f) If an individual who received medical and other health serv-
ices for which payment may be made under section 1832 (a) (1) dies,
and-
S
(1) no assignment of the right to payments was made by such
individual before his death, and
(2) payment for such services has not been made,
payment for such services shall be made to the physician or other
person who provided such services, but payment shall be made under
this subsection only in such amount and subject to such conditions
as would have been applicable if the individual who received the
services had not died, and only if the person or persons who provided
the services agrees that the reasonable charge is the full charge for the
services.
(g) If an individual, who is enrolled under section 1818 (c) of the
Social Security Act or under section 1837, dies, and premiums with
respect to such enrollment have been received with respect to such
individual for any month after the month of his death, such premiums
shall be refunded to the person or persons determined by the Secretary
under regulations to have paid such premiums or if payment for such
premiums was made by the deceased individual before his death, to
the legal representative of the estate of such deceased individual, if
any. If there is no person who meets the requirements of the preceding
sentence such premiums shall be refunded to the person or persons
in the priorities specified in paragraphs (2) through (7) of subsec-
tion (e).
Regulations
Sec. 1871. The Secretary shall prescribe such regulations as may
be necessary to carry out the administration of the insurance pro-
grams under this title. When used in this title, the term "regulations"
means, unless the context otherwise requires, regulations prescribed
by the Secretary.
Application of Certain Provisions of Title II
Sec. 1872. The provisions of sections 206 and 216(j), and of sub-
sections (a), (d), (e), (f), (h), (i), (j), (k), and (1) of section 205,
shall also apply with respect to this title to the same extent as they
are applicable with respect to title II.
491
Sec. 1875(b)
Designation of Organization or Publication by Name
Sec. 1873. Designation in this title, by name, of any nongovern-
mental organization or publication shall not be affected by change of
name of such organization or publication, and shall apply to any
successor organization or publication which the Secretary finds serves
the purpose for which such designation is made.
Administration
Sec. 1874. (a) Except as otherwise provided in this title and in the
Railroad Retirement Act of 1974, the insurance programs established
by this title shall be administered by the Secretary. The Secretary
may perform any of his functions under this title directly, or by con-
tract providing for payment in advance or by way of reimbursement,
and in such installments, as the Secretary may deem necessary.
(b) The Secretary may contract with any person, agency, or insti-
tution to secure on a reimbursable basis such special data, actuarial
information, and other information as may be necessary in the carry-
ing out of his functions under this title.
(c) In the course of any hearing, investigation, or other proceeding
that he is authorized to conduct under this title, the Secretary may
administer oaths and affirmations.
Studies and Recommendations
Sec. 1875. (a) The Secretary shall carry on studies and develop rec-
ommendations to be submitted from time to time to the Congress
relating to health care of the aged and the disabled, including studies
and recommendations concerning (1) the adequacy of existing per-
sonnel and facilities for health care for purposes of the programs
under parts A and B; (2) methods for encouraging the further de-
velopment of efficient and economical forms of health care which are
a constructive alternative to inpatient hospital care; and (3) the
effects of the deductibles and coinsurance provisions upon benefici-
aries, persons who provide health services, and the financing of the
program.
(b) The Secretary shall make a continuing study of the operation
and administration of the insurance programs under parts A and B
(including a validation of the accreditation process of the Joint Com-
mission on the Accreditation of Hospitals, the operation and admin-
istration of health maintenance organizations authorized by section
226 of the Social Security Amendments of 1972, the experiments and
demonstration projects authorized by section 402 of the Social Se-
Sec. 1875(b)
492
curity Amendments of 1967, and the experiments and demonstra-
tion projects authorized by section 222(a) of the Social Security
Amendments of 1972), and shall transmit to the Congress annually
a report concerning the operation of such programs.
Payments to Health Maintenance Organizations
Sec. 1876. (a) (1) In lieu of amounts which would otherwise be
payable pursuant to sections 1814(b) and 1833 (a), the Secretary is
authorized to determine, by actuarial methods, as provided in this
section, but only with respect to a health maintenance organization
with which he has entered into a contract under subsection (i), a per
capita rate of payment-
(A) for services provided under parts A and B for individuals
enrolled with such organization pursuant to subsection (e) who
are entitled to hospital insurance benefits under part A and en-
rolled for medical insurance benefits under part B, and
K
(B) for services provided under part B for individuals en-
rolled with such organization pursuant to subsection (e) who are
not entitled to benefits under part A but who are enrolled for
benefits under Part B.
(2) An interim per capita rate of payment for each health mainte-
nance organization shall be determined annually by the Secretary on
the basis of each organization's annual operating budget and enroll-
ment forecast which shall be submitted (in such form and in such de-
tail as the Secretary may prescribe) at least 90 days before the begin-
ning of each contract year. Each interim rate shall be equal to the esti-
mated per capita cost (based upon types and components of expenses
otherwise reimbursable under this title) of providing services defined
in paragraph (3)(A)(iii). In the event that the data requested to
be furnished by a health maintenance organization are not furnished
timely, such reduction in interim payments may be made by the Secre-
tary as is appropriate, until such time as a reasonable estimate of per
capita costs can be made. Each month, the Secretary shall pay each
such organization its interim per capita rate, in advance, for each
individual enrolled with it pursuant to subsection (e). Each such or-
ganization shall submit interim estimated cost reports and enrollment
data on a quarterly basis in such form and manner satisfactory to the
Secretary, and the Secretary shall adjust each interim per capita rate
to the extent necessary to maintain interim payments at the level of
current costs. Interim payments made under this paragraph shall be
subject to retroactive adjustment at the end of each contract year as
provided in paragraph (3).
(3)(A) With respect to any health maintenance organization
which has entered into a risk sharing contract with the Secretary pur-
493
Sec. 1876(a)
suant to subsection (i) (2) (A), payments made to such organization
shall be subject to the following adjustments at the end of each con-
tract year:
(i) if the Secretary determines that the per capita incurred
cost of any such organization in any contract year for providing
services described in paragraph (1) is less than the adjusted aver-
age per capita incurred cost (as defined herein) of providing
such services, the resulting difference (hereinafter referred to as
"savings") shall be apportioned following the close of a contract
year for such year between such organization and the Federal
Hospital Insurance Trust Fund and the Federal Supplementary
Medical Insurance Trust Fund (hereinafter collectively referred
to as the "Medicare Trust Funds") as follows:
(I) savings up to 20 percent of the adjusted average per
capita cost shall be apportioned equally between such orga-
nization and the Medicare Trust Funds;
(II) savings in excess of 20 percent of the adjusted aver-
age per capita cost shall be apportioned entirely to such Trust
Funds;
(ii) if the Secretary determines that the per capita incurred
cost of any such organization in any contract year for providing
services described in paragraph (1) is greater than the adjusted
average per capita incurred cost of providing such services, the
resulting difference (hereinafter referred to as "losses"), shall be
absorbed by such organization, and shall be carried forward and
offset from savings realized in later years;
(iii) determination of any amounts payable at the close of the
contract year to such organization or to the Trust Funds shall be
made as follows:
(I) within in 90 days after close of a contract year, interim
determination of the amount of estimated savings and appor
tionment thereof shall be made, actuarially, on the basis of
interim reports of costs incurred by an organization, and ad-
justed average per capita costs incurred (as defined herein),
and other evidence acceptable to the Secretary and one-half
of any amounts deemed payable to such organization or the
Trust Funds shall be paid by such organization or the Secre-
tary as appropriate;
(II) final settlement and payment by the Secretary or or-
ganization, as appropriate, of any additional amounts due
on basis of such final settlement will be made where adequate
data for actuarial computation are available, in timely fash-
ion following submission by such organization of reports
specified in subparagraph (C) of this paragraph; and
Sec. 1876(a)
494
(III) where such final settlement is reached more than 90
days following submission of reports specified in subpara-
graph (C) of this paragraph, any amount payable by the
Secretary or organization shall be increased by an interest
amount, accruing from the 91st day following submission of
such report, equal to the average rate of interest payable on
Federal obligations if issued on such 91st day for purchase by
the Trust Funds.
(iv) The term "adjusted average per capita cost" means the
average per capita amount that the Secretary determines (on the
basis of actual experience, or retrospective actuarial equivalent
based upon an adequate sample and other information and data,
in the geographic area served by a health maintenance organiza-
tion or in a similar area, with appropriate adjustment to assure
actuarial equivalence, including adjustments relating to age dis-
tribution, sex, race, institutional status, disability status, and any
other relevant factors) would be payable in any contract year for
services covered under this title and types of expenses otherwise
reimbursable under this title (including administrative costs.
incurred by organizations described in sections 1816 and 1842) if
such services were to be furnished by other than such health main-
tenance organization.
S
(B) With respect to any health maintenance organization which
has entered into a reasonable cost reimbursement contract with the
Secretary pursuant to subsection (i)(2)(B), payments made to such
organization shall be subject to suitable retroactive corrective adjust-
ments at the end of each contract year so as to assure that such orga-
nization is paid for the reasonable cost actually incurred (excluding
therefrom any part of incurred cost found to be unnecessary in the
efficient delivery of health services) for the types of expenses otherwise
reimbursable under this title for providing services covered under this
title to individuals described in paragraph (1).
(C) Any contract with a health maintenance organization under
this title shall provide that the Secretary shall require, at such time
following the expiration of each accounting period of a health main-
tenance organization (and in such form and in such detail) as he may
prescribe:
H
(i) that such health maintenance organization report to him
in an independently certified financial statement its per capita
incurred cost based on the types and components of expenses
otherwise reimbursable under this title for providing services.
described in paragraph (1), including therein, in accordance with
accounting procedures prescribed by the Secretary, its methods
of allocating costs between individuals enrolled under this section.
and other individuals enrolled with such organization;
Revised April 1977
Sec. 1876(b)
495
(ii) that failure to report such information as may be required
may be deemed to constitute evidence of likely overpayment on
the basis of which appropriate collection action may be taken;
(iii) that in any case in which a health maintenance organiza-
tion is related to another organization by common ownership or
control, a consolidated financial statement shall be filed and that
the allowable costs for such organization may not include costs
for the types of expense otherwise reimbursable under this title,
in excess of those which would be determined to be reasonable in
accordance with regulations (providing for limiting reimburse-
ment to costs rather than charges to the health maintenance orga-
nization by related organizations and owners) issued by the
Secretary in accordance with section 1861 (v) of the Social
Security Act; and
(iv) that in any case in which compensation is paid by a health
maintenance organization substantially in excess of what is nor-
mally paid for similar services by similar practitioners (regard-
less of method of compensation), such compensation may as
appropriate be considered to constitute a distribution of profits.
(4) The payments to health maintenance organizations under this
subparagraph with respect to individuals described in subsection (a)
(1) (A) shall be made from the Federal Hospital Insurance Trust
Fund and the Federal Supplementary Medical Insurance Trust Fund.
The portion of such payment to such an organization for a month to
be paid by the latter trust fund shall be equal to 200 percent of the
sum of—
(A) the product of (i) the number of covered enrollees of such
organization for such month (as described in paragraph (1))
who have attained age 65, and (ii) the monthly actuarial rate
for supplementary medical insurance for such month as deter-
mined under section 1839 (c) (1), and
(B) the product of (i) the number of covered enrollees of such
organization for such month (as described in paragraph (1))
who have not attained age 65, and (ii) the monthly actuarial rate
for supplementary medical insurance for such month as deter-
mined under section 1839 (c) (4).
The remainder of such payment shall be paid by the former trust
fund. For limitation on Federal participation for capital expenditures
which are out of conformity with a comprehensive plan of a State or
area wide planning agency, see section 1122.
(b) (1) The term "health maintenance organization” means a legal
entity which provides health services on a prepayment basis to indi-
viduals enrolled with such organizations and which-
(A) provides to its enrollees who are insured for benefits under
parts A and B of this title or for benefits under part B alone,
-
j
Sec. 1876(b)
Revised August 1978
496
through institutions, entities, and persons meeting the applicable
requirements of section 1861, all of the services and benefits
covered under such parts (to the extent applicable under subpara-
graph (A) or (B) of subsection (a)(1)) which are available to
individuals residing in the geographic area served by the
organization;
(B) provides such services in the manner prescribed by section
1301 (b) of the Public Health Service Act, except that solely for
the purposes of this section—
(i) the term "basic health services" and references thereto
shall be deemed to refer to the services and benefits included
under parts A and B of this title;
(ii) the organization shall not be required to fix the basic
health services payment under a community rating system;
(iii) the additional nominal payments authorized by sec-
tion 1301(b) (1) (D) of such Act shall not exceed the limits
applicable under subsection (g) of this section; and
(iv) payment for basic health services provided by the
organization to its enrollees under this section or for serv-
ices such enrollees receive other than through the organiza-
tion shall be made as provided for by this title;
(C) is organized and operated in the manner prescribed by sec-
tion 1301(c) of the Public Health Service Act, except that solely
for the purposes of this section-
(i) the term "basic health services" and references thereto
shall be deemed to refer to the services and benefits included
under parts A and B of this title;
(ii) the organization shall not be reimbursed for the cost
of reinsurance except as permitted by subsection (i) of this
section; and
(iii) the organization shall have an open enrollment period
as provided for in subsection (k) of this section.
(2) (A) The duties and functions of the Secretary, insofar as they
involve making determinations as to whether an organization is a
"health maintenance organization" within the meaning of paragraph
(1), shall be administered through the Assistant Secretary for Health
and in the Office of the Assistant Secretary for Health, and the admin-
istration of such duties and functions shall be integrated with the
administration of section 1312 (a) and (b) of the Public Health
Service Act.
(B) Except as provided in subparagraph (A), the Secretary shall
administer the provisions of this section through the Administrator of
the Health Care Financing Administration.¹
1 Subsection (b) was amended by section 201(a) of P.L. 94-460 and by section 5 of
P.L. 95-2y2.
Revised April 1977
Sec. 1876(f)
497
(c) The benefits provided under this section to enrollees of an
organization which has entered into a risk sharing contract with the
Secretary pursuant to subsection (i) (2) (A) shall consist of—
(1) in the case of an individual who is entitled to hospital in-
surance benefits under part A and enrolled for medical insur-
ance benefits under part B-
(A) entitlement to have payment made on his behalf for
all services described in section 1812 and section 1832 which
are furnished to him by the health maintenance organization
with which he is enrolled pursuant to subsection (e) of this
section; and
(B) entitlement to have payment made by such health
maintenance organization to him or on his behalf for (i)
such emergency services (as defined in regulations), (ii) such
urgently needed services (as defined in regulations) fur-
nished to him during a period of temporary absence (as de-
fined in regulations) from the geographic area served by
the health maintenance organization with which he is en-
rolled, and (iii) such other services as may be determined,
in accordance with subsection (f), to be services which the
individual was entitled to have furnished by the health
maintenance organization, as may be furnished to him by a
physician, supplier, or provider of services, other than the
health maintenance organization with which he is enrolled;
and
(2) in the case of an individual who is not entitled to hospital
insurance benefits under part A but who is enrolled for medical
insurance benefits under part B, entitlement to have payment
made for services described in paragraph (1), but only to the
extent that such services are also described in section 1832.
(d) Subject to the provisions of subsection (e), every individual
described in subsection (c) shall be eligible to enroll with any health
maintenance organization (as defined in subsection (b)) which serves
the geographic area in which such individual resides.
(e) An individual may enroll with a health maintenance organiza-
tion under this section, and may terminate such enrollment, as may
be prescribed by regulations.
(f) Any individual enrolled with a health maintenance organiza-
tion under this section who is dissatisfied by reason of his failure to
receive without additional cost to him any health service to which he
believes he is entitled shall, if the amount in controversy is $100 or
more, be entitled to a hearing before the Secretary to the same extent
as is provided in section 205 (b) and in any such hearing the Secretary
shall make such health maintenance organization a party thereto. If
Sec. 1876(f)
498
Revised April 1977
the amount in controversy is $1,000 or more, such individual or health
maintenance organization shall be entitled to judicial review of the
Secretary's final decision after such hearing as is provided in section.
205 (g).
•
(g) (1) If the health maintenance organization provides its en-
rollees under this section only the services described in subsection (c),
its premium rate or other charges for such enrollees shall not exceed
the actuarial value of the deductible and coinsurance which would
otherwise be applicable to such enrollees under part A and part B, if
they were not enrolled under this section.
(2) If the health maintenance organization provides to its enrollees
under this section services in addition to those described in subsection.
(c), election of coverage for such additional services shall be optional
for such enrollees and such organization shall furnish such enrollees
with information on the portion of its premium rate or other charges
applicable to such additional services. The portion of its premium rate
or other charges applicable to the services described in subsection (c)
shall not exceed the actuarial value of the deductible and coinsurance
which would otherwise be applicable to such enrollees under part A
and part B if they were not enrolled under this section.
(h) (1) Except as provided in paragraph (2), each health mainte-
nance organization with which the Secretary enters into a contract
under this section shall have an enrolled membership at least half of
which consists of individuals who have not attained age 65.
(2) The Secretary may waive the requirement imposed in para-
graph (1) for a period of not more than three years from the date a
health maintenance organization first enters into an agreement with
the Secretary pursuant to subsection (i), but only for so long as such
organization demonstrates to the satisfaction of the Secretary by the
submission of its plan for each year that it is making continuous efforts.
and progress toward compliance with the provisions of paragraph
(1) within such three-year period.¹
(i) (1) Subject to the limitations contained in subparagraphs (A)
and (B) of paragraph (2), the Secretary is authorized to enter into
a contract with any health maintenance organization which under-
takes to provide, on an interim per capita prepayment basis, the serv-
ices described in section 1832 (and section 1812, in the case of indi-
viduals who are entitled to hospital insurance benefits under part A)
to individuals enrolled with such organization pursuant to subsec-
tion (e).
(2)(A) If the health maintenance organization (i) has a current
enrollment of not less than 25,000 members on a prepaid capitation
1 Subsection (h) was amended by section 201 (b) of P.L. 94-460.
Revised April 1977
499
Sec. 1876 (i)
basis and has been the primary source of health care of at least 8,000
persons in each of the two years immediately preceding the contract.
year, or (ii) serves a nonurban geographic area, has a current enroll-
ment of not less than 5,000 members on a prepaid capitation basis
and has been the primary source of health care for at least 1,500 per-
sons in each of the three years immediately preceding the contract
year, the Secretary may enter into a risk sharing contract with such
organization pursuant to which any savings, as determined pursuant
to subsection (a) (3) (A), are shared between such organization and
the Medicare Trust Funds in the manner prescribed in such subsec-
tion. For purposes of this subparagraph, a health maintenance orga-
nization shall be considered to serve a nonurban geographic area if it
is located in a nonmetropolitan county (that is, a county with fewer
than 50,000 inhabitants), or if it has at least one such county in its
normal service area, or if it is located outside of a metropolitan area
and its facilities are within reasonable travel distance (as defined
by the Secretary) of fewer than 50,000 individuals. No health main-
tenance organization which has entered into a risk-sharing contract
with the Secretary under this subparagraph and has voluntarily ter-
minated such contract may again enter into such a contract.
(B) If the health maintenance organization does not meet the re-
quirements of subparagraph (A), or if the Secretary is not satisfied
that the health maintenance organization has the capacity to bear the
risk of potential losses as determined under clause (ii) of subsection
(a) (3) (A), or if the health maintenance organization meeting the re-
quirements of subparagraph (A) so elects, or if an organization does
not fully meet the requirements of section 1876 (b) but has demon-
strated to the satisfaction of the Secretary that it is making reasonable
efforts to meet, and is developing the capability to fully meet, such
requirements, and that it fully meets such basic requirements as the
Secretary shall prescribe in regulations, the Secretary may, if he is
otherwise satisfied that the health maintenance organization or other
organization is able to perform its contractual obligations effectively
and efficiently, enter into a contract with such organization pursuant to
which such organization is reimbursed on the basis of its reasonable
cost (as defined in section 1861 (v)) in the manner prescribed in sub-
section (a) (3) (B).
(3) Such contract may, at the option of such organization, pro-
vide that the Secretary (A) will reimburse hospitals and skilled
nursing facilities for the reasonable cost (as determined under section
1861 (v) of services furnished to individuals enrolled with such orga-
nization pursuant to subsection (e), and (B) will deduct the amount
of such reimbursement from payments which would otherwise be made
to such organization. If a health maintenance organization pays a
G
Sec. 1876(i)
500
Revised April 1977
hospital or skilled nursing facility directly, the amount paid shall not
exceed the reasonable cost of the services (as determined under sec-
tion 1861 (v)) unless such organization demonstrates to the satisfac-
tion of the Secretary that such excess payments are justified on the
basis of advantages gained by the organization.
(4) Each contract under this section shall be for a term of at least
one year, as determined by the Secretary, and may be made auto-
matically renewable from term to term in the absence of notice by
either party of intention to terminate at the end of the current term;
except that the Secretary may terminate any such contract at any time
(after such reasonable notice and opportunity for hearing to the health
maintenance organization involved as he may provide in regulations),
if he finds that the organization (A) has failed substantially to carry
out the contract, (B) is carrying out the contract in a manner incon-
sistent with the efficient and effective administration of this section, or
(C) no longer substantially meets the applicable conditions of
subsection (b).
(5) The effective date of any contract executed pursuant to this sub-
section shall be specified in such contract pursuant to the regulations.
(6) Each contract under this section-
(A) shall provide that the Secretary, or any person or organi-
zation designated by him-
(i) shall have the right to inspect or otherwise evaluate
the quality, appropriateness, and timeliness of services per-
formed under such contract; and
(ii) shall have the right to audit and inspect any books and
records of such health maintenance organization which per-
tain to services performed and determinations of amounts
payable under such contract;
(B) shall provide that no reinsurance costs (other than costs
with respect to out-of-area services and, in the case of an organi-
zation which has entered into a risk-sharing contract with the
Secretary pursuant to paragraph (2)(A), the cost of providing
any member with basic health services the aggregate value of
which exceeds $5,000 in any year), including any underwriting
of risk relating to costs in excess of adjusted average per capita
cost, as defined in clause (iii) of subsection (a) (3) (A), shall be
allowed for purposes of determining payments authorized under
this section; and ¹
(C) shall contain such other terms and conditions not incon-
sistent with this section as the Secretary may find necessary.
(j) The function vested in the Secretary by subsection (i) may
be performed without regard to such provisions of law or of other
1 Subparagraph (B) was amended by section 201(c) of P.L. 94-460.
Revised April 1978
501
Sec. 1877(a)
regulations relating to the making, performance, amendment, or modi-
fication of contracts of the United States as the Secretary may deter-
mine to be inconsistent with the furtherance of the purpose of this
title.
(k) Each health maintenance organization with which the Secre-
tary enters into a contract under this section shall have an open enroll-
ment period at least every year under which it accepts up to the limits
of its capacity and without restrictions, except as may be authorized
in regulations, individuals who are eligible to enroll under subsection
(d) in the order in which they apply for enrollment (unless to do so
would result in failure to meet the requirements of subsection (h))
or would result in enrollment of enrollees substantially nonrepresenta-
tive, as determined in accordance with regulations of the Secretary,
of the population in the geographic area served by such health main-
tenance organization.¹
Penalties 2
Sec. 1877. (a) Whoever-
(1) knowingly and willfully makes or causes to be made any
false statement or representation of a material fact in any appli-
cation for any benefit or payment under this title,
(2) at any time knowingly and willfully makes or causes to be
made any false statement or representation of a material fact for
use in determining rights to any such benefit or payment,
(3) having knowledge of the occurrence of any event affect-
ing (A) his initial or continued right to any such benefit or pay-
ment, or (B) the initial or continued right to any such benefit or
payment of any other individual in whose behalf he has applied
for or is receiving such benefit or payment, conceals or fails to
disclose such event with an intent fraudulently to secure such bene-
fit or payment either in a greater amount or quantity than is due.
or when no such benefit or payment is authorized, or
(4) having made application to receive any such benefit or
payment for the use and benefit of another and having received it,
knowingly and willfully converts such benefit or payment or any
part thereof to a use other than for the use and benefit of such
other person,
shall (i) in the case of such a statement, representation, concealment,
failure, or conversion by any person in connection with the furnishing
(by that person) of items or services for which payment is or may be
made under this title, be guilty of a felony and upon conviction thereof
fined not more than $25,000 or imprisoned for not more than five years
or both, or (ii) in the case of such a statement, representation, conceal-
ment, failure, or conversion by any other person, be guilty of a mis-
1 Subsection (k) was added by section 201(d) of P.L. 94–460.
2 Section 1877 was amended, in its entirety, by section 4(a) of P.L. 95-142.
Sec. 1877(a)
Revised April 1978
502
demeanor and upon conviction thereof fined not more than $10,000 or
imprisoned for not more than one year, or both.
(b) (1) Whoever solicits or receives any remuneration (including
any kickback, bribe, or rebate) directly or indirectly, overtly or
covertly, in cash or in kind-
(A) in return for referring an individual to a person for the
furnishing or arranging for the furnishing of any item or service
for which payment may be made in whole or in part under this
title, or
(B) in return for purchasing, leasing, ordering, or arranging
for or recommending purchasing, leasing, or ordering any good,
facility, service, or items for which payment may be made in whole
or in part under this title,
shall be guilty of a felony and upon conviction thereof, shall be fined
not more than $25,000 or imprisoned for not more than five years, or
both.
(2) Whoever offers or pays any remuneration (including any kick-
back, bribe, or rebate) directly or indirectly, overtly or covertly, in
cash or in kind to any person to induce such person—
(A) to refer an individual to a person for the furnishing or
arranging for the furnishing of any item or service for which
payment may be made in whole or in part under this title, or
(B) to purchase, lease, order, or arrange for or recommend
purchasing, leasing, or ordering any good, facility, service, or
item for which payment may be made in whole or in part under
this title,
shall be guilty of a felony and upon conviction thereof, shall be fined
not more than $25,000 or imprisoned for not more than five years, or
both.
(3) Paragraphs (1) and (2) shall not apply to
(A) a discount or other reduction in price obtained by a pro-
vider of services or other entity under this title if the reduction in
price is properly disclosed and appropriately reflected in the costs
claimed or charges made by the provider or entity under this title;
and
(B) any amount paid by an employer to an employee (who
has a bona fide employment relationship with such employer) for
employment in the provision of covered items or services.
(c) Whoever knowingly and willfully makes or causes to be made,
or induces or seeks to induce the making of, any false statement or
representation of a material fact with respect to the conditions or
operation of any institution or facility in order that such institution
or facility may qualify (either upon initial certification or upon re-
certification) as a hospital, skilled nursing facility, or home health
agency (as those terms are defind in section 1861), shall be guilty of a
Revised April 1978
Sec. 1878(c)
502-A
felony and upon conviction thereof shall be fined not more than
$25,000 or imprisoned for not more than five years, or both.
(d) Whoever accepts assignments described in section 1842 (b) (3)
(B)(ii) and knowingly, willfully, and repeatedly violates the term
of such assignments specified in subclause (I) of such section, shall
be guilty of a misdemeanor and upon conviction thereof shall be fined
not more than $2,000 or imprisoned for not more than six months, or
both.
Provider Reimbursement Review Board
Sec. 1878. (a) Any provider of services which has filed a required
cost report within the time specified in regulations may obtain a hear-
ing with respect to such cost report by a Provider Reimbursement
Review Board (hereinafter referred to as the "Board") which shall be
established by the Secretary in accordance with subsection (h), if—
(1) such provider—
(A) is dissatisfied with a final determination of the orga-
nization serving as its fiscal intermediary pursuant to sec-
tion 1816 as to the amount of total program reimbursement
due the provider for the items and services furnished to indi-
viduals for which payment may be made under this title for
the period covered by such report,
(B) has not received such final determination from such
intermediary on a timely basis after filing such report, where
such report complied with the rules and regulations of the
Secretary relating to such report, or
(C) has not received such final determination on a timely
basis after filing a supplementary cost report, where such
cost report did not so comply and such supplementary cost
report did so comply,
(2) the amount in controversy is $10,000 or more, and
(3) such provider files a request for a hearing within 180 days
after notice of the intermediary's final determination under para-
graph (1)(A) or with respect to appeals pursuant to paragraph
(1) (B) or (C), within 180 days after a notice of such determina-
tion would have been received if such determination had been
made on a timely basis.
(b) The provisions of subsection (a) shall apply to any group of
providers of services if each provider of services in such group would,
upon the filing of an appeal (but without regard to the $10,000 limi-
tation), be entitled to such a hearing, but only if the matters in con-
troversy involve a common question of fact or interpretation of law or
regulations and the amount in controversy is, in the aggregate $50,000
or more.
(c) At such hearing, the provider of services shall have the right
to be represented by counsel, to introduce evidence, and to examine and
霍
​Revised April 1978
Sec. 1878(f)
503
cross-examine witnesses. Evidence may be received at any such hearing
even though inadmissable under rules of evidence applicable to court
procedure.
(d) A decision by the Board shall be based upon the record made
at such hearing, which shall include the evidence considered by the
intermediary and such other evidence as may be obtained or received
by the Board, and shall be supported by substantial evidence when the
record is viewed as a whole. The Board shall have the power to affirm,
modify, or reverse a final determination of the fiscal intermediary with
respect to a cost report and to make any other revisions on matters
covered by such cost report (including revisions adverse to the pro-
vider of services) even though such matters were not considered by the
intermediary in making such final determination.
(e) The Board shall have full power and authority to make rules
and establish procedures, not inconsistent with the provisions of this
title or regulations of the Secretary, which are necessary or appropri-
ate to carry out the provisions of this section. In the course of any
hearing the Board may administer oaths and affirmations. The provi-
sions of subsections (d), (e), and (f) of section 205 with respect to
subpenas shall apply to the Board to the same extent as they apply to
the Secretary with respect to title II.
(f) (1) A decision of the Board shall be final unless the Secretary,
on his own motion, and within 60 days after the provider of services is
notified of the Board's decision, reverses, affirms, or modifies the
Board's decision. Providers shall have the right to obtain judicial
review of any final decision of the Board, or of any reversal, affirm-
ance, or modification by the Secretary, by a civil action commenced
within 60 days of the date on which notice of any final decision by
the Board or of any reversal, affirmance, or modification by the Secre-
tary is received. Such action shall be brought in the district court of
the United States for the judicial district in which the provider is
located or in the District Court for the District of Columbia and
shall be tried pursuant to the applicable provisions under chapter 7
of title 5, United States Code, notwithstanding any other provisions
in section 205.
(2) Where a provider seeks judicial review pursuant to paragraph
(1), the amount in controversy shall be subject to annual interest
beginning on the first day of the first month beginning after the 180-
day period as determined pursuant to subsection (a) (3) and equal to
the rate of return on equity capital established by regulation pursuant
to section 1861 (v) (1) (B) and in effect at the time the civil action
authorized under paragraph (1) is commenced, to be awarded by the
reviewing court in favor of the prevailing party.
(3) No interest awarded pursuant to paragraph (2) shall be deemed
income or cost for the purposes of determining reimbursement due
providers under this Act.
21-746 O - 78 38
Sec. 1878(g)
504
(g) The finding of a fiscal intermediary that no payment may be
made under this title for any expenses incurred for items or services
furnished to an individual because such items or services are listed in
section 1862 shall not be reviewed by the Board, or by any court pur-
suant to an action brought under subsection (f).
(h) The Board shall be composed of five members appointed by
the Secretary without regard to the provisions of title 5, United States
Code, governing appointments in the competitive services. Two of
such members shall be representative of providers of services. All of
the members of the Board shall be persons knowledgeable in the field
of cost reimbursement, and at least one of them shall be a certified
public accountant. Members of the Board shall be entitled to receive
compensation at rates fixed by the Secretary, but not exceeding the
rate specified (at the time the service involved is rendered by such
members) for grade GS-18 in section 5332 of title 5, United States
Code. The term of office shall be three years, except that the Secretary
shall appoint the initial members of the Board for shorter terms to
the extent necessary to permit staggered terms of office.
(i) The Board is authorized to engage such technical assistance as
may be required to carry out its functions, and the Secretary shall, in
addition, make available to the Board such secretarial, clerical, and
other assistance as the Board may require to carry out its functions.
Limitation on Liability of Beneficiary Where Medicare Claims
Are Disallowed
Sec. 1879. (a) Where-
(1) a determination is made that, by reason of section 1862 (a)
(1) or (9), payment may not be made under part A or part B
of this title for any expenses incurred for items or services fur-
nished an individual by a provider of services or by another per-
son pursuant to an assignment under section 1842 (b) (3) (B) (ii),
and
(2) both such individual and such provider of services or such
other person, as the case may be, did not know, and could not
reasonably have been expected to know, that payment would not
be made for such items or services under such part A or part B,
then to the extent permitted by this title, payment shall, notwithstand-
ing such determination, be made for such items or services (and for
such period of time as the Secretary finds will carry out the objectives
of this title), as though section 1862(a)(1) and section 1862(a) (9)
did not apply. In each such case the Secretary shall notify both such
individual and such provider of services or such other person, as the
case may be, of the conditions under which payment for such items
or services was made and in the case of comparable situations arising
505
Sec. 1879 (d)
thereafter with respect to such individual or such provider or such
other person, each shall, by reason of such notice (or similar notices
provided before the enactment of this section), be deemed to have
knowledge that payment cannot be made for such items or services or
reasonably comparable items or services.
(b) In any case in which the provisions of paragraphs (1) and
(2) of subsection (a) are met, except that such provider or such other
person, as the case may be, knew, or could be expected to know, that
payment for such services or items could not be made under such
part A or part B, then the Secretary shall, upon proper application
filed within such time as may be prescribed in regulations, indemnify
the individual (referred to in such paragraphs), subject to the deducti-
ble and coinsurance provisions of this title, for any payments received
from such individual by such provider or such other person, as the
case may be, for such items or services. Any payments made by the
Secretary as indemnification shall be deemed to have been made to
such provider or such other person, as the case may be, and shall be
treated as overpayments, recoverable from such provider or such other
person, as the case may be, under applicable provisions of law. In
each such case the Secretary shall notify such individual of the con-
ditions under which indemnification is made and in the case of com-
parable situations arising thereafter with respect to such individual,
he shall, by reason of such notice (or similar notices provided before
the enactment of this section), be deemed to have knowledge that pay-
ment cannot be made for such items or services.
B
(c) No payments shall be made under this title in any cases in
which the provisions of paragraph (1) of subsection (a) are met,
but both the individual to whom the items or services were furnished
and the provider of service or other person, as the case may be, who
furnished the items or services knew, or could reasonably have been
expected to know, that payment could not be made for items or serv-
ices under part A or part B by reason of section 1862 (a) (1) or (a) (9).
(d) In any case arising under subsection (b) (but without regard
to whether payments have been made by the individual to the provider
or other person) or subsection (c), the provider or other person shall
have the same rights that an individual has under section 1869 (b)
(when the determination is under part A) or section 1842 (b) (3) (C)
(when the determination is under part B) when the amount of benefit
or payments is in controversy, except that such rights may, under pre-
scribed regulations, be exercised by such provider or other person only
after the Secretary determines that the individual will not exercise
such rights under such sections.
Sec. 1880(a)
Revised April 1978
506
Indian Health Service Facilities
Sec. 1880. (a) A hospital or skilled nursing facility of the Indian
Health Service, whether operated by such Service or by an Indian
tribe or tribal organization (as those terms are defined in section 4
of the Indian Health Care Improvement Act), shall be eligible for
payments under this title, notwithstanding sections 1814 (c) and
1835 (d), if and for so long as it meets all of the conditions and re-
quirements for such payments which are applicable generally to hos-
pitals or skilled nursing facilities (as the case may be) under this title.
(b) Notwithstanding subsection (a), a hospital or skilled nursing
facility of the Indian Health Service which does not meet all of the
conditions and requirements of this title which are applicable gen-
erally to hospitals or skilled nursing facilities (as the case may be),
but which submits to the Secretary within six months after the date of
the enactment of this section an acceptable plan for achieving com-
pliance with such conditions and requirements, shall be deemed to meet
such conditions and requirements (and to be eligible for payments
under this title), without regard to the extent of its actual compliance
with such conditions and requirements, during the first 12 months
after the month in which such plan is submitted.
(c) Notwithstanding any other provision of this title, payments to
which any hospital or skilled nursing facility of the Indian Health
Service is entitled by reason of this section shall be placed in a special
fund to be held by the Secretary and used by him (to such extent or
in such amounts as are provided in appropriation Acts) exclusively
for the purpose of making any improvements in the hospitals and
skilled nursing facilities of such Service which may be necessary to
achieve compliance with the applicable conditions and requirements
of this title. The preceding sentence shall cease to apply when the
Secretary determines and certifies that substantially all of the hospi-
tals and skilled nursing facilities of such Service in the United States
are in compliance with such conditions and requirements.
(d) The annual report of the Secretary which is required by sec-
tion 701 of the Indian Health Care Improvement Act shall include
(along with the matters specified in section 403 of such Act) a detailed
statement of the status of the hospitals and skilled nursing facilities
of the Service in terms of their compliance with the applicable condi-
tions and requirements of this title and of the progress being made by
such hospitals and facilities (under plans submitted under subsection
(b) and otherwise) toward the achievement of such compliance.¹
1 Section 1880 was added by section 401 (b) of P.L. 94-437 subject to the limitation in
section 401 (c)-401 (d) of that act. These provisions are printed in this document on
page 781.
Revised August 1978
506-A
Sec. 1881 (b)
Medicare Coverage For End Stage Renal Disease Patients¹
Sec. 1881. (a) The benefits provided by parts A and B of this title
shall include benefits for individuals who have been determined to
have end-stage renal disease as provided in section 226A, and benefits
for kidney donors as provided in subsection (d) of this section. Not-
withstanding any other provision of this title, the type, duration, and
scope of the benefit provided by parts A and B with respect to indi-
viduals who have been determined to have end-stage renal disease and
who are entitled to such benefits without regard to section 226A shall
in no case be less than the type, duration, and scope of the benefits so
provided for individuals entitled to such benefits solely by reason of
that section.
(b) (1) Payments under this title with respect to services, in addi-
tion to services for which payment would otherwise be made under
this title, furnished to individuals who have been determined to have
end-stage renal disease shall include (A) payments on behalf of such
individuals to providers of services and renal dialysis facilities which
meet such requirements as the Secretary shall by regulation prescribe
for institutional dialysis services and supplies (including self-dialysis
services in a self-care dialysis unit maintained by the provider or facil-
ity), transplantation services, self-care home dialysis support services
which are furnished by the provider or facility, and routine profes-
sional services performed by a physician during a maintenance dialysis
episode if payments for his other professional services furnished to an
individual who has end-stage renal disease are made on the basis spec-
ified in paragraph (3)(A) of this subsection, and (B) payments to
or on behalf of such individuals for home dialysis supplies and equip-
ment. The requirements prescribed by the Secretary under subpara-
graph (A) shall include requirements for a minimum utilization rate
for covered procedures and for self-dialysis training programs.
(2)(A) With respect to payments for dialysis services furnished
by providers of services and renal dialysis facilities to individuals
determined to have end-stage renal disease for which payments may
be made under part B of this title, such payments (unless otherwise
provided in this section) shall be equal to 80 percent of the amounts
determined in accordance with subparagraph (B); and with respect
to payments for services for which payments may be made under part
A of this title, the amounts of such payments (which amounts shall
not exceed, in respect to costs in procuring organs attributable to pay-
ments made to an organ procurement agency or histocompatibility
laboratory, the costs incurred by that agency or laboratory) shall be
determined in accordance with section 1861 (v). Payments shall be
made to a renal dialysis facility only it if agrees to accept such pay-
1 Sec. 1881 was added by sec. 2 of P.L. 95-292 effective as specified in sec. 6 of that act,
which is printed in this document on p. 820.
Sec. 1881(b)
Revised August 1978
506-B
ments as payment in full for covered services, except for payment by
the individual of 20 percent of the estimated amounts for such services
calculated on the basis established by the Secretary under subpara-
graph (B) and the deductible amount imposed by section 1833 (b).
(B) The Secretary shall prescribe in regulations any methods and
procedures to (i) determine the costs incurred by providers of services
and renal dialysis facilities in furnishing covered services to indi-
viduals determined to have end-stage renal disease, and (ii) deter-
mine, on a cost-related basis or other economical and equitable basis
(including any basis authorized under section 1861 (v)), the amounts
of payments to be made for part B services furnished by such providers
and facilities to such individuals. Such regulations shall provide for
the implementation of appropriate incentives for encouraging more
efficient and effective delivery of services (consistent with quality
care), and shall include, to the extent determined feasible by the Sec-
retary, a system for classifying comparable providers and facilities,
and prospectively set rates or target rates with arrangements for
sharing such reductions in costs as may be attributable to more efficient
and effective delivery of services.
<
(C) Such regulations, in the case of services furnished by proprie-
tary providers and facilities may include, if the Secretary finds it
feasible and appropriate, provision for recognition of a reasonable
rate of return on equity capital, providing such rate of return does not
exceed the rate of return stipulated in section 1861 (v) (1) (B).
(D) For purposes of section 1878, a renal dialysis facility shall be
treated as a provider of services.
(3) With respect to payments for physicians' services furnished to
individuals determined to have end-stage renal disease, the Secretary
shall pay 80 percent of the amounts calculated for such services—
(A) on a reasonable charge basis (but may, in such case, make
payment on the basis of the prevailing charges of other physicians
for comparable services) except that payment may not be made
under this subparagraph for routine services furnished during a
maintenance dialysis episode, or
(B) on a comprehensive monthly fee or other basis for an
aggregate of services provided over a period of time (as defined
in regulations).
(4) Pursuant to agreements with approved providers of services
and renal dialysis facilities, the Secretary may make payments to such
providers and facilities for the cost of home dialysis supplies and
equipment and self-care home dialysis support services furnished to
patients whose self-care home dialysis is under the direct supervision
of such provider or facility, on the basis of a target reimbursement
ratc (as defined in paragraph (6)).
(5) An agreement under paragraph (4) shall require, in accord-
Revised August 1978
Sec. 1881(b)
506-C
ance with regulations prescribed by the Secretary, that the provider
or facility will-
(A) assume full responsibility for directly obtaining or ar-
ranging for the provision of—
(i) such medically necessary dialysis equipment as is pre-
scribed by the attending physician;
(ii) dialysis equipment maintenance and repair services;
(iii) the purchase and delivery of all necessary medical
supplies; and
(iv) where necessary, the services of trained home dialysis
aides;
(B) perform all such administrative functions and maintain
such information and records as the Secretary may require to
verify the transactions and arrangements described in subpara-
graph (A);
(C) submit such cost reports, data, and information as the
Secretary may require with respect to the costs incurred for equip-
ment, supplies, and services furnished to the facility's home dial-
ysis patient population; and
(D) provide for full access for the Secretary to all such rec-
ords, data, and information as he may require to perform his
functions under this section.
(6) The Secretary shall establish, for each calendar year, com-
mencing with January 1, 1979, a target reimbursement rate for home
dialysis which shall be adjusted for regional variations in the cost of
providing home dialysis. In establishing such a rate, the Secretary
shall include-
(A) the Secretary's estimate of the cost of providing medically
necessary home dialysis supplies and equipment;
(B) an allowance, in an amount determined by the Secretary,
to cover the cost of providing personnel to aid in home dialysis;
and
(C) an allowance, in an amount determined by the Secretary,
to cover administrative costs and to provide an incentive for the
efficient delivery of home dialysis;
but in no event shall such target rate exceed 70 percent of the national
average payment, adjusted for regional variations, for maintenance
dialysis services furnished in approved providers and facilities during
the preceding fiscal year. Any such target rate so established shall be
utilized, without renegotiation of the rate, throughout the calendar
year for which it is established. During the last quarter of each cal-
endar year, the Secretary shall establish a home dialysis target reim-
bursement rate for the next calendar year based on the most recent
data available to the Secretary at the time. In establishing any rate
30-975 O - 78 4
Sec. 1881(b)
Revised August 1978
506-D
under this paragraph, the Secretary may utilize a competitive-bid
procedure, a prenegotiated rate procedure, or any other procedure
which the Secretary determines is appropriate and feasible in order
to carry out this paragraph in an effective and efficient manner.
(7) For purposes of this title, the term "home dialysis supplies and
equipment" means medically necessary supplies and equipment (in-
cluding supportive equipment) required by an individual suffering
from end-stage renal disease in connection with renal dialysis carried
out in his home (as defined in regulations), including obtaining, in-
stalling, and maintaining such equipment.
(8) For purposes of this title, the term "self-care home dialysis
support services," to the extent permitted in regulation, means-
(A) periodic monitoring of the patient's home adaptation, in-
cluding visits by qualified provider or facility personnel (as de-
fined in regulations), so long as this is done in accordance with
a plan prepared and periodically reviewed by a professional team
(as defined in regulations) including the individual's physician;
(B) installation and maintenance of dialysis equipment;
(C) testing and appropriate treatment of the water; and
(D) such additional supportive services as the Secretary finds
appropriate and desirable.
(9) For purposes of this title, the term "self-care dialysis unit"
means a renal dialysis facility or a distinct part of such facility or of
a provider of services, which has been approved by the Secretary to
make self-dialysis services, as defined by the Secretary in regulations,
available to individuals who have been trained for self-dialysis. A self-
care dialysis unit must, at a minimum, furnish the services, equipment
and supplies needed for self-care dialysis, have patient-staff ratios
which are appropriate to self-dialysis (allowing for such appropriate
lesser degree of ongoing medical supervision and assistance of ancillary
personnel than is required for full care maintenance dialysis), and
meet such other requirements as the Secretary may prescribe with
respect to the quality and cost-effectiveness of services.
(c) (1) (A) For the purpose of assuring effective and efficient ad-
ministration of the benefits provided under this section, the Secretary
shall establish, in accordance with such criteria as he finds appropri-
ate, renal disease network areas, such network organizations (includ-
ing a coordinating council, an executive committee of such council, and
a medical review board, for each network area) as he finds necessary to
accomplish such purpose, and a national end stage renal disease med-
ical information system. The Secretary may by regulations provide
for such coordination of network planning and quality assurance ac-
tivities and such exchange of data and information among agencies
with responsibilities for health planning and quality assurance activi-
ties under Federal law as is consistent with the economical and efficient
Revised August 1978
Sec. 1881 (c)
506-E
administration of this section and with the responsibilities established
for network organizations under this section.
(B) At least one patient representative shall serve as a member of
each coordinating council and executive committee.
(C) The Secretary shall, in regulations, prescribe requirements with
respect to membership in network organizations by individuals (and
the relatives of such individuals) (i) who have an ownership or con-
trol interest in a facility or provider which furnishes services referred
to in section 1861 (s) (2) (F), or (ii) who have received remuneration
from any such facility or provider in excess of such amounts as consti-
tute reasonable compensation for services (including time and effort
relative to the provision of professional medical services) or goods
supplied to such facility or provider; and such requirements shall pro-
vide for the definition, disclosure, and, to the maximum extent con-
sistent with effective administration, prevention of potential or actual
financial or professional conflicts of interest with respect to decisions
concerning the appropriateness, nature, or site of patient care.
(2) The network organizations of each network shall be responsi-
ble, in addition to such other duties and functions as may be prescribed
by the Secretary, for-
(A) encouraging, consistent with sound medical practice, the
use of those treatment settings most compatible with the success-
ful rehabilitation of the patient;
(B) developing criteria and standards relating to the quality
and appropriateness of patient care; and network goals with
respect to the placement of patients in self-care settings and
undergoing or preparing for transplantation;
(C) evaluating the procedure by which facilities and pro-
viders in the network assess the appropriateness of patients for
proposed treatment modalities;
(D) identifying facilities and providers that are not cooper-
ating toward meeting network goals and assisting such facilities.
and providers in developing appropriate plans for correction; and
(E) submitting an annual report to the Secretary on July 1
of each year which shall include a full statement of the network's
goals, data on the network's performance in meeting its goals
(including data on the comparative performance of facilities and
providers with respect to the identification and placement of suit-
able candidates in self-care settings and transplantation), identi-
fication of those facilities that have consistently failed to cooper-
ate with network goals, and recommendations with respect to the
need for additional or alternative services or facilities in the
network in order to meet the network goals, including self-dialysis
training, transplantation, and organ procurement facilities.
Sec. 1881(c)
Revised August 1978
506-F
(3) Where the Secretary determines, on the basis of the data con-
tained in the network's annual report and such other relevant data as
may be available to him, that a facility or provider has consistently
failed to cooperate with network plans and goals, he may terminate
or withhold certification of such facility or provider (for purposes
of payment for services furnished to individuals with end stage renal
disease) until he determines that such provider or facility is making
reasonable and appropriate efforts to cooperate with the network's
plans and goals.
(4) The Secretary shall, in determining whether to certify addi-
tional facilities or expansion of existing facilities within a network,
take into account the network's goals and performance as reflected in
the network's annual report.
(5) The Secretary, after consultation with appropriate profes-
sional and planning organizations, shall provide such guidelines with
respect to the planning and delivery of renal disease services as are
necessary to assist network organizations in their development of their
respective networks' goals to promote the optimum use of self-dialysis
and transplantation by suitable candidates for such modalities.
(6) It is the intent of the Congress that the maximum practical
number of patients who are medically, socially, and psychologically
suitable candidates for home dialysis or transplantation should be so
treated. The Secretary shall consult with appropriate professional and
network organizations and consider available evidence relating to
developments in research, treatment methods, and technology for home
dialysis and transplantation. The Secretary shall periodically submit
to the Congress such legislative recommendations as the Secretary finds
warranted on the basis of such consultation and evidence to further
the national objective of maximizing the use of home dialysis and
transplantation consistent with good medical practice.
(d) Notwithstanding any provision to the contrary in section 226
any individual who donates a kidney for transplant surgery shall be
entitled to benefits under parts A and B of this title with respect to
such donation. Reimbursement for the reasonable expenses incurred
by such an individual with respect to a kidney donation shall be made
(without regard to the deductible, premium, and coinsurance provi-
sions of this title), in such manner as may be prescribed by the Secre-
tary in regulations, for all reasonable preparatory, operation, and
postoperation recovery expenses associated with such donation, in-
cluding but not limited to the expenses for which payment could be
made if he were an eligible individual for purposes of parts A and B
of this title without regard to this subsection. Payments for postopera-
tion recovery expenses shall be limited to the actual period of recovery.
Revised August 1978
Sec. 1881 (f)
506-G
(e) (1) Notwithstanding any other provision of this title, the Sec-
retary may, pursuant to agreements with approved providers of serv-
ices and renal dialysis facilities, reimburse such providers and facili-
ties (without regard to the deductible and coinsurance provisions of
this title) for the reasonable cost of the purchase, installation, mainte-
nance and reconditioning for subsequent use of artificial kidney and
automated dialysis peritoneal machines (including supportive equip-
ment) which are to be used exclusively by entitled individuals dialyz-
ing at home.
(2) An agreement under this subsection shall require that the pro-
vider or facility will—
(A) make the equipment available for use only by entitled in-
dividuals dialyzing at home;
(B) recondition the equipment, as needed, for reuse by such in-
dividuals throughout the useful life of the equipment, including
modification of the equipment consistent with advances in re-
search and technology;
(C) provide for full access for the Secretary to all records and
information relating to the purchase, maintenance, and use of the
equipment; and
(D) submit such reports, data, and information as the Secre-
tary may require with respect to the cost, management, and use
of the equipment.
(3) For purposes of this section, the term "supportive equipment"
includes blood pumps, heparin pumps, bubble detectors, other alarm
systems, and such other items as the Secretary may determine are
medically necessary.
(f) (1) The Secretary shall initiate and carry out, at selected loca-
tions in the United States, pilot projects under which financial assist-
ance in the purchase of new or used durable medical equipment for
renal dialysis is provided to individuals suffering from end stage renal
disease at the time home dialysis is begun, with provision for a trial
period to assure successful adaptation to home dialysis before the
actual purchase of such equipment.
(2) The Secretary shall conduct experiments to evaluate methods
for reducing the costs of the end stage renal disease program. Such
experiments shall include (without being limited to) reimbursement
for nurses and dialysis technicians to assist with home dialysis, and
reimbursement to family members assisting with home dialysis.
(3) The Secretary shall conduct experiments to evaluate methods of
dietary control for reducing the costs of the end stage renal disease
program, including (without being limited to) the use of protein-con-
trolled products to delay the necessity for, or reduce the frequency of,
dialysis in the treatment of end stage renal disease.
Sec. 1881(f)
Revised August 1978
506-H
(4) The Secretary shall conduct a comprehensive study of methods
for increasing public participation in kidney donation and other organ
donation programs.
(5) The Secretary shall conduct a full and complete study of the
reimbursement of physicians for services furnished to patients with
end stage renal disease under this title, giving particular attention to
the range of payments to physicians for such services, the average
amounts of such payments, and the number of hours devoted to fur-
nishing such services to patients at home, in renal disease facilities, in
hospitals, and elsewhere.
(6) The Secretary shall conduct a study of the number of patients
with end stage renal disease who are not eligible for benefits with
respect to such disease under this title (by reason of this section or
otherwise), and of the economic impact of such noneligibility of such
individuals. Such study shall include consideration of mechanisms
whereby governmental and other health plans might be instituted or
modified to permit the purchase of actuarially sound coverage for the
costs of end stage renal disease.
(7) The Secretary shall conduct a study of the medical appropriate-
ness and safety of cleaning and reusing dialysis filters by home dialysis
patients. In such cases in which the Secretary determines that such
home cleaning and reuse of filters is a medically sound procedure, the
Secretary shall conduct experiments to evaluate such home cleaning
and reuse as a method of reducing the cost of the end stage renal
disease program.
(8) The Secretary shall submit to the Congress no later than
October 1, 1979, a full report on the experiments conducted under
paragraphs (1), (2), (3), and (7), and the studies under paragraphs
(4), (5), (6), and (7). Such report shall include any recommendations
for legislative changes which the Secretary finds necessary or desirable
as a result of such experiments and studies.
(g) The Secretary shall submit to the Congress on April 1, 1979,
and April 1 of each year thereafter a report on the end stage renal
disease program, including but not limited to—
(1) the number of patients, nationally and by renal disease
network, on dialysis (self-dialysis or otherwise) at home and in
facilities;
(2) the number of new patients entering dialysis at home and
in facilities during the year;
(3) the number of facilities providing dialysis and the utiliza-
tion rates of those facilities;
(4) the number of kidney transplants, by source of donor organ;
(5) the number of patients awaiting organs for transplant;
(6) the number of transplant failures;
Revised August 1978
Sec. 1881 (g)
506-I
(7) the range of costs of kidney acquisitions, by type of
facility and by region;
(8) the number of facilities providing transplants and the
number of transplants performed per facilitity;
(9) patient mortality and morbidity rates;
(10) the average annual cost of hospitalization for ancillary
problems in dialysis and transplant patients, and drug costs for
transplant patients;
(11) medicare payment rates for dialysis, transplant proce-
dures, and physician services, along with any changes in such
rates during the year and the reasons for those changes;
(12) the results of cost-saving experiments;
(13) the results of basic kidney disease research conducted by
the Federal Government, private institutions, and foreign
governments.
(14) information on the activities of medical review boards.
and other networks organizations; and
(15) estimated program costs over the next five years.
Revised April 1978
TITLE XIX-GRANTS TO STATES FOR MEDICAL
ASSISTANCE PROGRAMS
Sec. 1901. Appropriation
Sec. 1902. State Plans for Medical Assistance_
Sec. 1903. Payment to States___
Sec. 1904. Operation of State Plans_
Sec. 1905. Definitions
1
Sec. 1906. [Repealed.]
Sec. 1907. Observance of Religious Beliefs.
Sec. 1908. State Programs for Licensing of Administrators of Nursing
Homes
Sec. 1909. Penalties
Sec. 1910. Certification and Approval of Skilled Nursing Facilities and of
Rural Health Clinics_.
Sec. 1911. Indian Health Service Facilities_
Sec. 1912. Assignment of Rights of Payment___.
Appropriation
Page 1
507
507
522
531
532
537
537
537
539
540B
540B
540C
Sec. 1901. For the purpose of enabling each State, as far as prac-
ticable under the conditions in such State, to furnish (1) medical
assistance on behalf of families with dependent children and of aged,
blind, or disabled individuals, whose income and resources are insuf-
ficient to meet the cost of necessary medical services, and (2) rehabili-
tation and other services to help such families and individuals attain
or retain capability for independence or self-care, there is hereby
authorized to be appropriated for each fiscal year a sum sufficient to
carry out the purposes of this title. The sums made available under
this section shall be used for making payments to States which have
submitted, and had approved by the Secretary of Health, Education,
and Welfare, State plans for medical assistance.
State Plans for Medical Assistance 2
Sec. 1902. (a) A State plan for medical assistance must-
(1) provide that it shall be in effect in all political subdivisions.
of the State, and, if administered by them, be mandatory upon
them;
(2) provide for financial participation by the State equal to
not less than 40 per centum of the non-Federal share of the ex-
penditures under the plan with respect to which payments under
section 1903 are authorized by this title; and, effective July 1,
1969, provide for financial participation by the State equal to all
of such non-Federal share or provide for distribution of funds
Ad
1 This table of contents does not appear in the law.
2 In addition to the requirements of this section, State medical assistance plans must
comply with the requirements of section 212(a) of P.L. 93-66 (see page 742 of this
document); section 503 of P.L. 94-566 (see page 792 of this document) and section 1618
of the Social Security Act.
(507)
Sec. 1902(a)
508
Revised April 1978
from Federal or State sources, for carrying out the State plan, on
an equalization or other basis which will assure that the lack of
adequate funds from local sources will not result in lowering the
amount, duration, scope, or quality of care and services available
under the plan;
(3) provide for granting an opportunity for a fair hearing
before the State agency to any individual whose claim for medical
assistance under the plan is denied or is not acted upon with
reasonable promptness;
(4) provide (A) such methods of administration (including
methods relating to the establishment and maintenance of per-
sonnel standards on a merit basis, except that the Secretary shall
exercise no authority with respect to the selection, tenure of office,
and compensation of any individual employed in accordance with
such methods, and including provision for utilization of profes-
sional medical personnel in the administration and, where admin-
istered locally, supervision of administration of the plan) as are
found by the Secretary to be necessary for the proper and efficient
operation of the plan, and (B) for the training and effective use
of paid subprofessional staff, with particular emphasis on the
full-time or part-time employment of recipients and other persons
of low income, as community service aides, in the administration
of the plan and for the use of nonpaid or partially paid volunteers
in a social service volunteer program in providing services to
applicants and recipients and in assisting any advisory committees
established by the State agency;
(5) either provide for the establishment or designation of a
single State agency to administer or to supervise the administra-
tion of the plan, or provide for the establishment or designation
of a single State agency to administer or to supervise the ad-
ministration of the plan, except that the determination of eligi-
bility for medical assistance under the plan shall be made by the
State or local agency administering the State plan approved
under title I or XVI (insofar as it relates to the aged) if the
State is eligible to participate in the State plan program estab-
lished under title XVI or by the agency or agencies administering
the supplemental security income program established under title
XVI or the State plan approved under part A of title IV if the
State is not eligible to participate in the State plan program estab-
lished under title XVI;
(6) provide that the State agency will make such reports, in
such form and containing such information, as the Secretary
may from time to time require, and comply with such provisions
as the Secretary may from time to time find necessary to assure
the correctness and verification of such reports;
Revised April 1978
Sec. 1902(a)
509
(7) provide safeguards which restrict the use or disclosure of
information concerning applicants and recipients to purposes di-
rectly connected with the administration of the plan;
(8) provide that all individuals wishing to make application
for medical assistance under the plan shall have opportunity to
do so, and that such assistance shall be furnished with reasonable
promptness to all eligible individuals;
(9) provide-
(A) that the State health agency, or other appropriate
State medical agency (whichever is utilized by the Secretary
for the purposes specified in the first sentence of section 1864
(a)), shall be responsible for establishing and maintaining
health standards for private or public institutions in which
recipients of medical assistance under the plan may receive
care or services, and
(B) for the establishment or designation of a State au-
thority or authorities which shall be responsible for estab-
lishing and maintaining standards, other than those relating
to health, for such institutions; 1
(10) provide—
(A) for making medical assistance available to all indi-
viduals receiving aid or assistance under any plan of the
State approved under title I, X, XIV, or XVI, or part A of
title IV, or with respect to whom supplemental security in-
come benefits are being paid under title XVI;
Mga
(B) that the medical assistance made available to any
individual described in clause (A)—
(i) shall not be less in amount, duration, or scope
than the medical assistance made available to any other
such individual, and
(ii) shall not be less in amount, duration, or scope
than the medical assistance made available to individuals
not described in clause (A); and
(C) if medical assistance is included for any group of
individuals who are not described in clause (A) and who
do not meet the income and resources requirements of the
appropriate State plan, or the supplemental security income
program under title XVI, as the case may be, as determined
in accordance with standards prescribed by the Secretary-
1 P.L. 92–603, sec. 249E, provides: "For purposes of section 1902(a)(10) of the Social
Security Act any individual who, for the month of August 1972, was eligible for or receiv-
ing aid or assistance under a State plan approved under title I, X, XIV, or XVI, or part
A of title IV of such Act and who for such month was entitled to monthly insurance bene-
fits under title II of such Act shall be deemed to be eligible for such aid or assistance for
any month thereafter prior to July 1975 if such individual would have been eligible for
such aid or assistance for such month had the increase in monthly insurance benefits under
title II of such Act resulting from enactment of Public Law 92-336 not been ap-
plicable to such individual."
Sec. 1902(a)
510
Revised April 1978
(i) for making medical assistance available to all
individuals who would, except for income and resources,
be eligible for aid or assistance under any such State plan
or to have paid with respect to them supplemental secu-
rity income benefits under title XVI, and who have
insufficient (as determined in accordance with compa-
rable standards) income and resources to meet the costs
of necessary medical and remedial care and services, and
(ii) that the medical assistance made available to all
individuals not described in clause (A) shall be equal
in amount, duration, and scope;
except that (I) the making available of the services described
in paragraph (4), (14), or (16) of section 1905 (a) to individuals
meeting the age requirements prescribed therein shall not, by
reason of this paragraph (10), require the making available of
any such services, or the making available of such services of the
same amount, duration, and scope, to individuals of any other
ages, (II) the making available of supplementary medical insur-
ance benefits under part B of title XVIII to individuals eligible
therefor (either pursuant to an agreement entered into under
section 1843 or by reason of the payment of premiums under such
title by the State agency on behalf of such individuals), or pro-
vision for meeting part or all of the cost of deductibles, cost
sharing, or similar charges under part B of title XVIII for
individuals eligible for benefits under such part, shall not, by
reason of this paragraph (10), require the making available of
any such benefits, or the making available of services of the same
amount, duration, and scope, to any other individuals, and (III)
the making available of medical assistance equal in amount, dura-
tion, and scope to the medical assistance made available to individ-
uals described in clause (A) to any classification of individuals
approved by the Secretary, with respect to whom there is being
paid, or who are eligible, or would be eligible if they were not
in a medical institution, to have paid with respect to them, a
State supplementary payment shall not, by reason of this para-
graph (10), require the making available of any such assistance,
or the making available of such assistance of the same amount,
duration, and scope, to any other individuals not described in
clause (A);
(11) (A) provide for entering into cooperative arrangements
with the State agencies responsible for administering or super-
vising the administration of health services and vocational re-
habilitation services in the State looking toward maximum uti-
lization of such services in the provision of medical assistance
under the plan, and (B) effective July 1, 1969, provide, to the
Revised April 1978
Sec. 1902(a)
511
extent prescribed by the Secretary, for entering into agreements,
with any agency, institution, or organization receiving payments
for part or all of the cost of plans or projects under title V, (i)
providing for utilizing such agency, institution, or organization in
furnishing care and services which are available under such plan
or project under title V and which are included in the State plan
approved under this section and (ii) making such provision as
may be appropriate for reimbursing such agency, institution, or
organization for the cost of any such care and services furnished
any individual for which payment would otherwise be made to
the State with respect to him under section 1903;
(12) provide that, in determining whether an individual is
blind, there shall be an examination by a physician skilled in the
diseases of the eye or by an optometrist, whichever the individual
may select;
(13) provide—
(A) (i) for the inclusion of some institutional and some
noninstitutional care and services, and
(ii) for the inclusion of home health services for any indi-
vidual who, under the State plan, is entitled to skilled nursing
facility services, and
(B) in the case of individuals receiving aid or assistance
under any plan of the State approved under title I, X, XIV,
or XVI, or part A of title IV, or with respect to whom sup-
plemental security income benefits are being paid under title
XVI, for the inclusion of at least the care and services listed
in clauses (1) through (5) of section 1905 (a), and
(C) in the case of individuals not included under subpara-
graph (B) for the inclusion of at least—
(i) the care and services listed in clauses (1) through
(5) of section 1905 (a) or
(ii) (I) the care and services listed in any 7 of the
clauses numbered (1) through (16) of such section and
(II) in the event the care and services provided under
the State plan include hospital or skilled nursing fa-
cility services, physicians' services to an individual in
a hospital or skilled nursing facility during any period
he is receiving hospital services from such hospital or
skilled nursing facility services from such home, and
(D) for payment of the reasonable cost of inpatient hos-
pital services provided under the plan, as determined in ac-
cordance with methods and standards, consistent with section.
1122, which shall be developed by the State and reviewed
and approved by the Secretary and (after notice of approval
by the Secretary) included in the plan, except that the reason-
#
•
(
Sec. 1902(a)
512
Revised April 1978
able cost of any such services as determined under such meth-
ods and standards shall not exceed the amount which would
be determined under section 1861 (v) as the reasonable cost.
of such services for purposes of title XVIII; and
(E) effective July 1, 1976, for payment of the skilled nurs-
ing facility and intermediate care facility services provided
under the plan on a reasonable cost related basis, as deter-
mined in accordance with methods and standards which shall
be developed by the State on the basis of cost-finding methods
approved and verified by the Secretary; and
(F) for payment for services described in section 1905 (a)
(2) (B) provided by a rural health clinic under the plan of
100 percent of costs which are reasonable and related to the
cost of furnishing such services or based on such other tests of
reasonableness, as the Secretary may prescribe in regulations
under section 1833 (a) (3), or, in the case of services to which
those regulations do not apply, on such tests of reasonable-
ness as the Secretary may prescribe in regulations under this
subparagraph;¹
(14) effective January 1, 1973, provide that-
(A) in case of individuals receiving aid or assistance under
any plan of the State approved under title I, X, XIV, or
XVI, or part A of title IV, or with respect to whom supple-
mental security income benefits are being paid under title
XVI, or who meet the income and resources requirements of
the appropriate State plan, or the supplemental security in-
come program under title XVI, as the case may be, and indi-
viduals with respect to whom there is being paid, or who are
eligible, or would be eligible if they were not in a medical
institution, to have paid with respect to them, a State supple-
mentary payment and are eligible for medical assistance
equal in amount, duration, and scope to the medical assistance
made available to individuals described in paragraph
(10)(A)—
(i) no enrollment fee, premium, or similar charge,
and no deduction, cost sharing, or similar charge with
respect to the care and services listed in clauses (1)
through (5) and (7) of section 1905 (a), will be imposed
under the plan, and
(ii) any deduction, cost sharing, or similar charge im-
posed under the plan with respect to other care and
services will be nominal in amount (as determined in
1 Subparagraph (F) was added by sec. 2(c) (1) of P.L. 95-210 effective as specified in
sec. 2(f) which is printed in this document on p. 803.
Revised April 1978
512-A
Sec. 1902(a)
accordance with standards approved by the Secretary
and included in the plan), and
(B) with respect to individuals (other than individuals
with respect to whom there is being paid, or who are eligible
or would be eligible if they were not in a medical institution,
to have paid with respect to them, a State supplementary
payment and are eligible for medical assistance equal in
amount, duration, and scope to the medical assistance made
available to individuals described in paragraph (10)(A))
who are not receiving aid or assistance under any such State
plan and with respect to whom supplemental security income
benefits are not being paid under title XVI and who do not
meet the income and resources requirements of the appropri-
513
Sec. 1902(a)
ate State plan, or the supplemental security income program
under title XVI, as the case may be,
(i) there may be imposed an enrollment fee, premium,
or similar charge which (as determined in accordance
with standards prescribed by the Secretary) is related
to the individual's income, and
(ii) any deductible, cost-sharing, or similar charge
imposed under the plan will be nominal;
(15) in the case of eligible individuals 65 years of age or older
who are covered by either or both of the insurance programs es-
tablished by title XVIII, provide where, under the plan, all of
any deductible, cost sharing, or similar charge imposed with re-
spect to such individual under the insurance program established
by such title is not met, the portion thereof which is met shall be
determined on a basis reasonably related (as determined in ac-
cordance with standards approved by the Secretary and included
in the plan) to such individual's income or his income and
resources;
(16) provide for inclusion, to the extent required by regula-
tions prescribed by the Secretary, of provisions (conforming to
such regulations) with respect to the furnishing of medical as-
sistance under the plan to individuals who are residents of the
State but are absent therefrom;
(17) include reasonable standards (which shall be comparable
for all groups and may, in accordance with standards prescribed
by the Secretary, differ with respect to income levels, but only in
the case of applicants or recipients of assistance under the plan
who are not receiving aid or assistance under any plan of the
State approved under title I, X, XIV, or XVI, or part A of
title IV, and with respect to whom supplemental security income
benefits are not being paid under title XVI, based on the varia-
tions between shelter costs in urban areas and in rural areas) for
determining eligibility for and the extent of medical assistance
under the plan which (A) are consistent with the objectives of
this title, (B) provide for taking into account only such income
and resources as are, as determined in accordance with standards
prescribed by the Secretary, available to the applicant or re-
cipient and (in the case of any applicant or recipient who would,
except for income and resources, be eligible for aid or assistance
in the form of money payments under any plan of the State
approved under title I, X, XIV, or XVI, or part A of title IV,
or to have paid with respect to him supplemental security income
benefits under title XVI) as would not be disregarded (or set
aside for future needs) in determining his eligibility for such
aid, assistance, or benefits, (C) provide for reasonable evaluation
Sec. 1902(a)
514
of any such income or resources, and (D) do not take into account
the financial responsibility of any individual for any applicant
or recipient of assistance under the plan unless such applicant or
recipient is such individual's spouse or such individual's child
who is under age 21 or (with respect to States eligible to partici-
pate in the State program established under title XVI), is blind
or permanently and totally disabled, or is blind or disabled as
defined in section 1614 (with respect to States which are not eligi-
ble to participate in such program); and provide for flexibility
in the application of such standards with respect to income by
taking into account, except to the extent prescribed by the Secre-
tary, the costs (whether in the form of insurance premiums or
otherwise) incurred for medical care or for any other type of
remedial care recognized under State law;
(18) provide that no lien may be imposed against the property
of any individual prior to his death on account of medical as-
sistance paid or to be paid on his behalf under the plan (except
pursuant to the judgment of a court on account of benefits incor-
rectly paid on behalf of such individual), and that there shall be
no adjustment or recovery (except, in the case of an individual
who was 65 years of age or older when he received such assistance,
from his estate, and then only after the death of his surviving
spouse, if any, and only at a time when he has no surviving child
who is under age 21 or (with respect to States eligible to partici-
pate in the State program established under title XVI), is blind or
permanently and totally disabled, or is blind or disabled as defined
in section 1614 (with respect to States which are not eligible to
participate in such program) of any medical assistance correctly
paid on behalf of such individual under the plan;
K
(19) provide such safeguards as may be necessary to assure
that eligibility for care and services under the plan will be deter-
mined, and such care and services will be provided, in a manner
consistent with simplicity of administration and the best interests
of the recipients;
(20) if the State plan includes medical assistance in behalf of
individuals 65 years of age or older who are patients in institutions.
for mental diseases-
(A) provide for having in effect such agreements or other
arrangements with State authorities concerned with mental
diseases, and, where appropriate, with such institutions, as
may be necessary for carrying out the State plan, including
arrangements for joint planning and for development of
alternate methods of care, arrangements providing assurance
of immediate readmittance to institutions where needed for
individuals under alternate plans of care, and arrangements
515
Sec. 1902(a)
providing for access to patients and facilities, for furnishing
information, and for making reports;
(B) provide for an individual plan for each such patient
to assure that the institutional care provided to him is in
his best interests, including, to that end, assurances that
there will be initial and periodic review of his medical and
other needs, that he will be given appropriate medical
treatment within the institutions, and that there will be a
periodical determination of his need for continued treatment
in the institution;
(C) provide for the development of alternate plans of care,
making maximum utilization of available resources, for re-
cipients 65 years of age or older who would otherwise need
care in such institutions, including appropriate medical treat-
ment and other aid or assistance; for services referred to in
section 3(a) (4)(A) (i) and (ii), section 603 (a)(1)(A) (i)
and (ii), or section 1603 (a) (4) (A) (i) and (ii) which are ap-
propriate for such recipients and for such patients; and for
methods of administration necessary to assure that the re-
sponsibilities of the State agency under the State plan with
respect to such recipients and such patients will be effectively
carried out; and
(D) provide methods of determining the reasonable cost
of institutional care for such patients;
(21) if the State plan includes medical assistance in behalf of
individuals 65 years of age or older who are patients in public
institutions for mental diseases, show that the State is making
satisfactory progress toward developing and implementing a com-
prehensive mental health program, including provision for utili-
zation of community mental health centers, nursing facilities, and
other alternatives to care in public institutions for mental diseases;
(22) include descriptions of (A) the kinds and numbers of pro-
fessional medical personnel and supporting staff that will be used
in the administration of the plan and of the responsibilities they
will have, (B) the standards, for private or public institutions in
which recipients of medical assistance under the plan may receive
care or services, that will be utilized by the State authority or
authorities responsible for establishing and maintaining such
standards, (C) the cooperative arrangements with State health
agencies and State vocational rehabilitation agencies entered into
with a view to maximum utilization of and coordination of the
provision of medical assistance with the services administered or
supervised by such agencies, and (D) other standards and
methods that the State will use to assure that medical or remedial
Sec. 1902 (a)
516
Revised April 1978
--
care and services provided to recipients of medical assistance are
of high quality;
(23) except in the case of Puerto Rico, the Virgin Islands, and
Guam, provide that any individual eligible for medical assistance
(including drugs) may obtain such assistance from any institu-
tion, agency, community pharmacy, or person, qualified to perform
the service or services required (including an organization which
provides such services, or arranges for their availability, on a pre-
payment basis), who undertakes to provide him such services;
and a State plan shall not be deemed to be out of compliance with
the requirements of this paragraph or paragraph (1) or (10)
solely by reason of the fact that the State (or any political subdi-
vision thereof) has entered into a contract with an organization
which has agreed to provide care and services in addition to those
offered under the State plan to individuals eligible for medical
assistance who reside in the geographic area served by such or-
ganization and who elect to obtain such care and services from
such organization, or by reason of the fact that the plan provides
for payment for rural health clinic services only if those services
are provided by a rural health clinic; 1
(24) effective July 1, 1969, provide for consultative services
by health agencies and other appropriate agencies of the State
to hospitals, nursing facilities, home health agencies, clinics, lab-
oratories, and such other institutions as the Secretary may specify
in order to assist them (A) to qualify for payments under this
Act, (B) to establish and maintain such fiscal records as may be
necessary for the proper and efficient administration of this Act,
and (C) to provide information needed to determine payments
due under this Act on account of care and services furnished to
individuals;
(25) provide (A) that the State or local agency administering
such plan will take all reasonable measures to ascertain the legal
liability of third parties to pay for care and services (available
under the plan) arising out of injury, disease, or disability, (B)
that where the State or local agency knows that a third party has
such a legal liability such agency will treat such legal liability as
a resource of the individual on whose behalf the care and services
are made available for purposes of paragraph (17) (B), and (C)
that in any case where such a legal liability is found to exist after
medical assistance has been made available on behalf of the in-
dividual, the State or local agency will seek reimbursement for
such assistance to the extent of such legal liability;
1 Paragraph (23) was amended by Public Law 94-48. It was further amended by sec.
2(c) (2) of P.L. 95-210 effective as specified in sec. 2(f) which is printed in this document
on p. 803.
Revised April 1978
517
Sec. 1902(a)
(26) effective July 1, 1969, provide (A) for a regular program
of medical review (including medical evaluation) of each pa-
tient's need for skilled nursing facility care or (in the case of in-
dividuals who are eligible therefor under the State plan) need
for care in a mental hospital, a written plan of care, and, where
applicable, a plan of rehabilitation prior to admission to a skilled
nursing facility; (B) for periodic inspections to be made in all
skilled nursing facilities and mental institutions (if the State
plan includes care in such institutions) within the State by one
or more medical review teams (composed of physicians and other
appropriate health and social service personnel, or, in the case of
skilled nursing facilities, composed of physicians or registered
nurses and other appropriate health and social service personnel)
of (i) the care being provided in such nursing facilities (and
mental institutions, if care therein is provided under the State
plan) to persons receiving assistance under the State plan, (ii)
with respect to each of the patients receiving such care, the ade-
quacy of the services available in particular nursing facilities (or
institutions) to meet the current health needs and promote the
maximum physical well-being of patients receiving care in such
facilities (or institutions), (iii) the necessity and desirability of
the continued placement of such patients in such nursing facili-
ties (or institutions), and (iv) the feasibility of meeting their
health care needs through alternative institutional or noninstitu-
tional services; and (C) for the making by such team or teams of
full and complete reports of the findings resulting from such
inspections together with any recommendations to the State agency
administering or supervising the administration of the State
plan; 1
(27) provide for agreements with every person or institution
providing services under the State plan under which such person
or institution agrees (A) to keep such records as are necessary
fully to disclose the extent of the services provided to individuals
receiving assistance under the State plan, and (B) to furnish the
State agency or the Secretary with such information, regarding
any payments claimed by such person or institution for providing
services under the State plan, as the State agency or the Secretary
may from time to time request; 2
(28) provide that any skilled nursing facility receiving pay-
ments under such plan must satisfy all of the requirements con-
tained in section 1861 (j), except that the exclusion contained
therein with respect to institutions which are primarily for the
1 Paragraph (26) was amended by sec. 20 (b) of P.L. 95-142.
2 Paragraph (27) was amended by sec. 9 of P.L. 95–142.
21-746 O - 78
-
39
Sec. 1902 (a)
518
Revised April 1978
care and treatment of mental diseases and tuberculosis shall not
apply for purposes of this title;
(29) include a State program which meets the requirements
set forth in section 1908, for the licensing of administrators of
nursing homes;
(30) provide such methods and procedures relating to the utili-
zation of, and the payment for, care and services available under
the plan (including but not limited to utilization review plans as
provided for in section 1903 (i) (4)) as may be necessary to safe-
guard against unnecessary utilization of such care and services
and to assure that payments (including payments for any drugs
provided under the plan) are not in excess of reasonable charges
consistent with efficiency, economy, and quality of care;
(31) provide (A) for a regular program of independent pro-
fessional review (including medical evaluation of each patient's
need for intermediate care) and a written plan of service prior
to admission or authorization of benefits in an intermediate care
facility as determined under regulations of the Secretary; (B)
for periodic on-site inspections to be made in all such intermedi-
ate care facilities (if the State plan includes care in such in-
stitutions) within the State by one or more independent profes-
sional review teams (composed of physicians or registered nurses
and other appropriate health and social service personnel) of (i)
the care being provided in such intermediate care facilities to per-
sons receiving assistance under the State plan, (ii) with respect to
each of the patients receiving such care, the adequacy of the serv-
ices available in particular intermediate care facilities to meet
the current health needs and promote the maximum physical well-
being of patients receiving care in such facilities, (iii) the neces-
sity and desirability of the continued placement of such patients
in such facilities, and (iv) the feasibility of meeting their health.
care needs through alternative institutional or non-institutional
services; and (C) for the making by such team or teams of full
and complete reports of the findings resulting from such inspec-
tions, together with any recommendations to the State agency
administering or supervising the administration of the State plan;
Ge
(32) provide that no payment under the plan for any care or
service provided to an individual shall be made to anyone other
than such individual or the person or institution providing such
care or service, under an assignment or power of attorney or
otherwise; except that—
(A) in the case of any care or service provided by a phy-
sician, dentist, or other individual practitioner, such payment
may be made (i) to the employer of such physician, dentist,
Revised April 1978
519
Sec. 1902(a)
or other practitioner if such physician, dentist, or practitioner
is required as a condition of his employment to turn over his
fee for such care or service to his employer, or (ii) (where
the care or service was provided in a hospital, clinic, or other
facility) to the facility in which the care or service was pro-
vided if there is a contractual arrangement between such
physician, dentist, or practitioner and such facility under
which such facility submits the bill for such care or service;
and
(B) nothing in this paragraph shall be construed (i) to
prevent the making of such a payment in accordance with
an assignment from the person or institution providing the
care or service involved if such assignment is made to a gov-
ernmental agency or entity or is established by or pursuant
to the order of a court of competent jurisdiction, or (ii) to
preclude an agent of such person or institution from receiving
any such payment if (but only if) such agent does so pursuant
to an agency agreement under which the compensation to
be paid to the agent for his services for or in connnection with
the billing or collection of payments due such person or insti-
tution under the plan is unrelated (directly or indirectly)
to the amount of such payments or the billings therefor, and
is not dependent upon the actual collection of any such
payment;
(33) provide-
1
(A) that the State health agency, or other appropriate.
State medical agency, shall be responsible for establishing a
plan, consistent with regulations prescribed by the Secre-
tary, for the review by appropriate professional health
personnel of the appropriateness and quality of care and
services furnished to recipients of medical assistance under
the plan in order to provide guidance with respect thereto
in the administration of the plan to the State agency estab-
lished or designated pursuant to paragraph (5) and, where
applicable, to the State agency described in the penultimate
sentence of this subsection; and
(B) that the State or local agency utilized by the Secretary
for the purpose specified in the first sentence of section
1864(a), or, if such agency is not the State agency which is
responsible for licensing health institutions, the State agency
responsible for such licensing, will perform for the State
agency administering or supervising the administration of
the plan approved under this title the function of determin-
1 Paragraph (32) was amended by sec. 2 (a) (3) of P.L. 95-142.
Sec. 1902 (a)
520
Revised April 1978
ing whether institutions and agencies meet the requirements
for participation in the program under such plan;
(34) provide that in the case of any individual who has been
determined to be eligible for medical assistance under the plan,
such assistance will be made available to him for care and services
included under the plan and furnished in or after the third month
before the month in which he made application (or application
was made on his behalf in the case of a deceased individual) for
such assistance if such individual was (or upon application would
have been) eligible for such assistance at the time such care and
services were furnished;
(35) provide that any intermediate care facility receiving pay-
ments under such plan complies with the requirements of sec-
tion 1124; 1
(36) provide that within 90 days following the completion of
each survey of any health care facility, laboratory, agency, clinic,
or organization, by the appropriate State agency described in
paragraph (9), such agency shall (in accordance with regulations
of the Secretary) make public in readily available form and place
the pertinent findings of each such survey relating to the com-
pliance of each such health care facility, laboratory, clinic, agency,
or organization with (A) the statutory conditions of participation
imposed under this title, and (B) the major additional conditions
which the Secretary finds necessary in the interest of health and
safety of individuals who are furnished care or services by any
such facility, laboratory, clinic, agency, or organization;
(37) provide for claims payment procedures which (A) ensure
that 90 per centum of claims for payment (for which no further
written information or substantiation is required in order to make
payment) made for services covered under the plan and furnished
by health care practitioners through individual or group practices
or through shared health facilities are paid within 30 days of the
date of receipt of such claims and that 99 per centum of such
claims are paid within 90 days of the date of receipt of such claims,
and (B) provide for procedures of prepayment and postpayment
claims review, including review of appropriate data with respect
to the recipient and provider of a service and the nature of the
service for which payment is claimed, to ensure the proper and
efficient payment of claims and management of the program.²
(38) require that an entity (other than an individual practi-
tioner or a group of practitioners) that furnishes, or arranges for
the furnishing of, items or services under the plan, shall supply
1 Paragraph (35) was amended by sec. 3(c) (1) (A) of P.L. 95-142.
2 Paragraph (37) was added by sec. 2(b) of P.L. 95–142.
Revised April 1978
521
Sec. 1902(a)
(within such period as may be specified in regulations by the
Secretary or by the single State agency which administers or
supervises the administration of the plan) upon request specifi-
cally addressed to such entity by the Secretary or such State
agency, respectively, (A) full and complete information as to the
ownership of a subcontractor (as defined by the Secretary in regu-
lations) with whom such entity has had, during the previous
twelve months, business transactions in an aggregate amount in ex-
cess of $25,000, and (B) full and complete information as to any
significant business transactions (as defined by the Secretary in
regulations), occurring during the five-year period ending on the
date of such request, between such entity and any wholly owned
supplier or between such entity and any subcontractor.¹
C
(39) provide that, subject to subsection (g), whenever the single
State agency which administers or supervises the administration
of the State plan is notified by the Secretary under section 1862
(e) (2) (A) that a physician or other individual practitioner has
been suspended from participation in the program under title
XVIII, the agency shall promptly suspend such physician or
practitioner from participation in the plan for not less than the
period specified in such notice, and no payment may be made under
the plan with respect to any item or service furnished by such
physician or practitioner during the period of the suspension
under this title; and 2
(40) require each health services facility or organization which
receives payments under the plan and of a type for which a uni-
form reporting system has been established under section 1121(a)
to make reports to the Secretary of information described in such
section in accordance with the uniform reporting system (estab-
lished under such section) for that type of facility or
organization.3
Notwithstanding paragraph (5), if on January 1, 1965, and on the
date on which a State submits its plan for approval under this title,
the State agency which administered or supervised the administration
of the plan of such State approved under title X (or title XVI, insofar
as it relates to the blind) was different from the State agency which
administered or supervised the administration of the State plan ap-
proved under title I (or title XVI, insofar as it relates to the aged),
the State agency which administered or supervised the administration
of such plan approved under title X (or title XVI, insofar as it re-
lates to the blind) may be designated to administer or supervise the
administration of the portion of the State plan for medical assistance
which relates to blind individuals and a different State agency may
be established or designated to administer or supervise the administra-
¹ Paragraph (38) was added by sec. 3(c) (1) (D) of P.L. 95–142.
2 Paragraph (39) was added by sec. 7(b) of P.L. 95–142.
3 Paragraph (40) was added by sec. 19 (b) (2) of P.L. 95–142.
Sec. 1902(a)
522
Revised April 1978
tion of the rest of the State plan for medical assistance; and in such
case the part of the plan which each such agency administers, or the
administration of which each such agency supervises, shall be regarded
as a separate plan for purposes of this title (except for purposes of
paragraph (10)). For purposes of paragraphs (9)(A), (29), (31),
and (33), and of section 1903 (i) (4), the term “skilled nursing facility"
and "nursing home" do not include a Christian Science sanatorium
operated, or listed and certified, by the First Church of Christ,
Scientist, Boston, Massachusetts.
For purposes of paragraph (10) any individual who, for the month
of August 1972, was eligible for or receiving aid or assistance under a
State plan approved under title I, X, XIV, or XVI, or part A of title
IV and who for such month was entitled to monthly insurance benefits.
under title II shall for purposes of this title only be deemed to be elig-
ible for financial aid or assistance for any month thereafter if such
individual would have been eligible for financial aid or assistance for
such month had the increase in monthly insurance benefits under title
II resulting from enactment of Public Law 92–336 not been applicable
to such individual.¹
1
The requirement of clause (A) of paragraph (37) with respect to
a State plan may be waived by the Secretary if he finds that the State
has exercised good faith in trying to meet such requirement.²
(b) The Secretary shall approve any plan which fulfills the condi-
tions specified in subsection (a) of this section, except that he shall
not approve any plan which imposes as a condition for eligibility for
medical assistance under the plan-
(1) an age requirement of more than 65 years; or
(2) effective July 1, 1967, any age requirement which excludes
any individual who has not attained the age of 21 and is or would,
except for the provisions of section 406 (a) (2), be a dependent
child under part A of subchapter IV of this chapter; or
(3) any residence requirement which excludes any individual
who resides in the State; or
(4) any citizenship requirement which excludes any citizen of
the United States.
(c) Notwithstanding subsection (b), the Secretary shall not ap-
prove any State plan for medical assistance if he determines that the
approval and operation of the plan will result in a reduction in aid or
assistance in the form of money payments (other than so much, if any,
of the aid or assistance in such form as was, immediately prior to the
effective date of the State plan under this title, attributable to medical
1 This sentence was added by Public Law 94-48.
2 This sentence was added by sec. 2(b) (1) (D) of P.L. 95–142.
Revised April 1978
Sec. 1902(f)
523
>
needs) provided for eligible individuals under a plan of such State
approved under title I, X, XIV, or XVI, or part A of title IV.
(d) [Repealed].
(e) Notwithstanding any other provision of this title, effective
January 1, 1974, each State plan approved under this title must pro-
vide that each family which was receiving aid pursuant to a plan of
the State approved under part A of title IV in at least 3 of the 6
months immediately preceding the month in which such family became
ineligible for such aid because of increased hours of, or increased in-
come from, employment, shall, while a member of such family is em-
ployed, remain eligible for assistance under the plan approved under
this title (as though the family was receiving aid under the plan ap-
proved under part A of title IV) for 4 calendar months beginning with
the month in which such family became ineligible for aid under the
plan approved under part A of title IV because of income and resources
or hours of work limitations contained in such plan.
(f) Notwithstanding any other provision of this title, except as
provided in subsection (e), no State not eligible to participate in the
State plan program established under title XVI shall be required to
provide medical assistance to any aged, blind, or disabled individual
(within the meaning of title XVI) for any month unless such State
would be (or would have been) required to provide medical assist-
ance to such individual for such month had its plan for medical assist-
ance approved under this title and in effect on January 1, 1972, been
in effect in such month, except that for this purpose any such individ-
ual shall be deemed eligible for medical assistance under such State
plan if (in addition to meeting such other requirements as are or may
be imposed under the State plan) the income of any such individual
as determined in accordance with section 1903 (f) (after deducting
any supplemental security income payment and State supplementary
payment made with respect to such individual and incurred expenses
for medical care as recognized under State law) is not in excess of the
standard for medical assistance established under the State plan as in
effect on January 1, 1972. In States which provide medical assistance
to individuals pursuant to clause (10) (C) of subsection (a) of this
section, an individual who is eligible for medical assistance by reason
of the requirements of this section concerning the deduction of incurred
medical expenses from income shall be considered an individual eligi-
ble for medical assistance under clause (10)(A) of that subsection if
that individual is, or is eligible to be (1) an individual with respect to
whom there is payable a State supplementary payment on the basis
of which similarly situated individuals are eligible to receive medical
assistance equal in amount, duration, and scope to that provided to
individuals eligible under clause (10) (A), or (2) an eligible individ-
⭑
S
C
Sec. 1902(f)
524
Revised April 1978
ual or eligible spouse, as defined in title XVI, with respect to whom
supplemental security income benefits are payable; otherwise that indi-
vidual shall be considered to be an individual eligible for medical
assistance under clause (10) (C) of that subsection. In States which do
not provide medical assistance to individuals pursuant to clause (10)
(C) of that subsection, an individual who is eligible for medical
assistance by reason of the requirements of this section concerning the
deduction of incurred medical expenses from income shall be con-
sidered an individual eligible for medical assistance under clause
(10)(A) of that subsection.
(g) The Secretary may waive suspension under subsection (a) (39)
of a physician's or practitioner's participation in a State plan
approved under this title and of the prohibition under such subsection
of payment for any item or service furnished by him during the period
of such suspension, if the single State agency which administers or
supervises the administration of the plan submits a request to the
Secretary for such waiver and if the Secretary approves such request.¹
Payment to States
Sec. 1903. (a) From the sums appropriated therefor, the Secretary
(except as otherwise provided in this section) shall pay to each State
which has a plan approved under this title, for each quarter, begin-
ning with the quarter commencing January 1, 1966
(1) an amount equal to the Federal medical assistance per-
centage (as defined in section 1905 (b), subject to subsections (g)
and (h) of this section) of the total amount expended during
such quarter as medical assistance under the State plan (including
expenditures for premiums under part B of title XVIII, for
individuals who are eligible for medical assistance under the
plan and (A) are receiving aid or assistance under any plan of
the State approved under title I, X, XIV, or XVI, or part A of
title IV, or with respect to whom supplemental security income
benefits are being paid under title XVI, or (B) with respect to
whom there is being paid a State supplementary payment and
are eligible for medical assistance equal in amount, duration, and
scope to the medical assistance made available to individuals de-
scribed in section 1902(a)(10)(A), and, except in the case of
individuals sixty-five years of age or older and disabled individ-
uals entitled to hospital insurance benefits under title XVIII or
who are not enrolled under part B of title XVIII, other insur-
ance premiums for medical or any other type of remedial care or
the cost thereof); plus
1 Subsection (g) was added by section 111 of Public Law 94-182 and repealed by Public
Law 94–552. A new subsection (g) was added by sec. 7(c) of Public Law 95–142.
tr
Revised April 1978
525
Sec. 1903 (a)
(2) an amount equal to 75 per centum of so much of the sums
expended during such quarter (as found necessary by the Secre-
tary for the proper and efficient administration of the State plan)
as are attributable to compensation or training of skilled pro-
fessional medical personnel, and staff directly supporting such
personnel of the State agency or any other public agency; plus
(3) an amount equal to—
(A) (i) 90 per centum of so much of the sums expended
during such quarter as are attributable to the design, develop-
ment, or installation of such mechanized claims processing
and information retrieval systems as the Secretary determines
are likely to provide more efficient, economical, and effective
administration of the plan and to be compatible with the
claims processing and information retrieval systems utilized
in the administration of title XVIII, including the State's
share of the cost of installing such a system to be used jointly
in the administration of such State's plan and the plan of
any other State approved under this title, and
(ii) 90 per centum of so much of the sums expended during
any such quarter in the fiscal year ending June 30, 1972, or
the fiscal year ending June 30, 1973, as are attributable to
the design, development, or installation of cost determination
systems for State-owned general hospitals (except that the
total amount paid to all States under this clause for either
such fiscal year shall not exceed $150,000), and
(B) 75 per centum of so much of the sums expended dur-
ing such quarter as are attributable to the operation of sys-
tems (whether such systems are operated directly by the
State or by another person under a contract with the State)
of the type described in subparagraph (A) (i) (whether or
not designed, developed, or installed with assistance under
such subparagraph) which are approved by the Secretary
and which include provision for prompt written notice to
each individual who is furnished services covered by the plan,
or to each individual in a sample group of individuals who
are furnished such services, of the specific services (other than
confidential services) so covered, the name of the person
or persons furnishing the services, the date or dates on which
the services were furnished, and the amount of the payment
or payments made under the plan on account of the services;
plus 1
(4) an amount equal to 100 per centum of the sums expended
with respect to costs incurred during such quarter (as found neces-
¹ Subparagraph (B) was amended by sec. 10 of P.L. 95–142.
Sec. 1903 (a)
526
Revised April 1978
sary by the Secretary for the proper and efficient administration
of the State plan) which are attributable to compensation or
training of personnel (of the State agency or any other public
agency) responsible for inspecting public or private institutions
(or portions thereof) providing long-term care to recipients of
medical assistance to determine whether such institutions comply
with health or safety standards applicable to such institutions
under this Act; plus ¹
1
(5) an amount equal to 90 per centum of the sums expended
during such quarter which are attributable to the offering, ar-
ranging, and furnishing (directly or on a contract basis) of
family planning services and supplies;
(6) subject to subsection (b)(3), an amount equal to 90 per
centum of the sums expended during each quarter beginning on
or after October 1, 1977, and ending before October 1, 1980, with
respect to costs incurred during such quarter (as found necessary
by the Secretary for the elimination of fraud in the provision and
administration of medical assistance provided under the State
plan) which are attributable to the establishment and operation
of (including the training of personnel employed by) a State
medicaid fraud control unit (described in subsection (q)); plus
2
(7) an amount equal to 50 per centum of the remainder of the
amounts expended during such quarter as found necessary by the
Secretary for the proper and efficient administration of the State
plan.2
(b) (1) Notwithstanding the preceding provisions of this section, the
amount determined under subsection (a) (1) for any State for any
quarter beginning after December 31, 1969, shall not take into ac-
count any amounts expended as medical assistance with respect to
individuals aged 65 or over and disabled individuals entitled to hos-
pital insurance benefits under title XVIII which would not have been
so expended if the individuals involved had been enrolled in the
insurance program established by part B of title XVIII, other than
amounts expended under provisions of the plan of such State required
by section 1902(a)(34).
(2) For limitation on Federal participation for capital expenditures
which are out of conformity with a comprehensive plan of a State or
areawide planning agency, see section 1122.
(3) The amount of funds which the Secretary is otherwise obli-
gated to pay a State during a quarter under subsection (a)(6) may
not exceed the higher of—
1 Paragraph (4) is effective only through September 30, 1980 as provided by sec. 249B
of P.L. 92–603, as amended by sec. 8 of P.L. 93–368 and sec. 309 (b) of P.L. 95–83.
2 Paragraph (6) was added (and the former paragraph (6) was redesignated as para-
graph (7)) by sec. 17 (a) of P.L. 95-142. See also sec. 17 (e) which is printed in this
document on p. 799.
Revised April 1978
Sec. 1903 (f)
527
(A) $125,000, or
(B) one-quarter of 1 per centum of the sums expended by the
Federal, State, and local governments during the previous quarter
in carrying out the State's plan under this title.¹
(c) [Repealed.]
(d) (1) Prior to the beginning of each quarter, the Secretary shall
estimate the amount to which a State will be entitled under subsections
(a) and (b) for such quarter, such estimates to be based on (A)
a report filed by the State containing its estimate of the total sum
to be expended in such quarter in accordance with the provisions of
such subsections, and stating the amount appropriated or made avail-
able by the State and its political subdivisions for such expenditures
in such quarter, and if such amount is less than the State's propor-
tionate share of the total sum of such estimated expenditures, the
source or sources from which the difference is expected to be derived,
and (B) such other investigation as the Secretary may find necessary.
(2) The Secretary shall then pay to the State, in such installments
as he may determine, the amounts so estimated, reduced or increased
to the extent of any overpayment or underpayment which the Secre-
tary determines was made under this section to such State for any
prior quarter and with respect to which adjustment has not already
been made under this subsection. Expenditures for which payments
were made to the State under subsection (a) shall be treated as an
overpayment to the extent that the State or local agency administering
such plan has been reimbursed for such expenditures by a third party
pursuant to the provisions of its plan in compliance with section
1902 (a) (25).
(3) The pro rata share to which the United States is equitably
entitled, as determined by the Secretary, of the net amount recovered
during any quarter by the State or any political subdivision thereof
with respect to medical assistance furnished under the State plan
shall be considered an overpayment to be adjusted under this
subsection.
(4) Upon the making of an estimate by the Secretary under this
subsection, any appropriations available for payments under this sec-
tion shall be deemed obligated.
(e) [Repealed.]
(f) (1) (A) Except as provided in paragraph (4), payment under
the preceding provisions of this section shall not be made with respect
to any amount expended as medical assistance in a calendar quarter,
in any State, for any member of a family the annual income of which
exceeds the applicable income limitation determined under this
paragraph.
1 Paragraph (3) was added by sec. 17(b) of P.L. 95-142.
Sec. 1903 (f)
528
Revised April 1978
(B) (i) Except as provided in clause (ii) of this subparagraph, the
applicable income limitation with respect to any family is the amount
determined, in accordance with standards prescribed by the Secre-
tary, to be equivalent to 1333 percent of the highest amount which
would ordinarily be paid to a family of the same size without any in-
come or resources, in the form of money payments, under the plan
of the State approved under part A of title IV of this Act.
(ii) If the Secretary finds that the operation of a uniform maxi-
mum limits payments to families of more than one size, he may adjust
the amount otherwise determined under clause (i) to take account of
families of different sizes.
(C) The total amount of any applicable income limitation deter-
mined under subparagraph (B) shall, if it is not a multiple of $100
or such other amount as the Secretary may prescribe, be rounded to
the next higher multiple of $100 or such other amount, as the case
may be.
(2) In computing a family's income for purposes of paragraph (1),
there shall be excluded any costs (whether in the form of insurance
premiums or otherwise) incurred by such family for medical care or
for any other type of remedial care recognized under State law.
(3) For purposes of paragraph (1)(B), in the case of a family
consisting of only one individual, the "highest amount which would
ordinarily be paid” to such family under the State's plan approved
under part A of title IV of this Act shall be the amount determined
by the State agency (on the basis of reasonable relationship to the
amounts payable under such plan to families consisting of two or
more persons) to be the amount of the aid which would ordinarily be
payable under such plan to a family (without any income or re-
sources) consisting of one person if such plan (without regard to
section 408) provided for aid to such a family.
(4) The limitations on payment imposed by the preceding provi-
sions of this subsection shall not apply with respect to any amount
expended by a State as medical assistance for any individual-
(A) who is receiving aid or assistance under any plan of the
State approved under title I, X, XIV or XVI, or part A of title
IV, or with respect to whom supplemental security income benefits
are being paid under title XVI, or
(B) who is not receiving such aid or assistance, and with
respect to whom such benefits are not being paid, but (i) is eligible
to receive such aid or assistance, or to have such benefits paid
with respect to him, or (ii) would be eligible to receive such aid
or assistance, or to have such benefits paid with respect to him if
he were not in a medical institution, or
T
Revised April 1978
529
Sec. 1903 (g)
(C) with respect to whom there is being paid, or who is eligible,
or would be eligible if he were not in a medical institution, to
have paid with respect to him, a State supplementary payment
and is eligible for medical assistance equal in amount, duration,
and scope to the medical assistance made available to individuals
described in section 1902 (a) (10) (A), but only if the income of
such individual (as determined under section 1612, but without
regard to subsection (b) thereof) does not exceed 300 percent
of the supplemental security income benefit rate established by
section 1611 (b) (1),
at the time of the provision of the medical assistance giving rise to
such expenditure.
(g) (1) Subject to paragraph (3), with respect to amounts paid for
the following services furnished under the State plan after June 30,
1973 (other than services furnished pursuant to a contract with a
health maintenance organization as defined in section 1876), the Fed-
eral medical assistance percentage shall be decreased as follows: After
an individual has received care as an inpatient in a hospital (including
an institution for tuberculosis), skilled nursing facility or inter-
mediate care facility on 60 days, or in a hospital for mental diseases on
90 days (whether or not such days are consecutive), during any fiscal
year, which for purposes of this section means the four calendar quar-
ters ending with June 30, the Federal medical assistance percentage
with respect to amounts paid for any such care furnished thereafter
to such individual in the same fiscal year shall be decreased by a per
centum thereof (determined under paragraph (5)) unless the State
agency responsible for the administration of the plan makes a showing
satisfactory to the Secretary that, with respect to each calendar quarter
for which the State submits a request for payment at the full Federal
medical assistance percentage for amounts paid for inpatient hospital
services (including tuberculosis hospitals), skilled nursing facility
services, or intermediate care facility services furnished beyond 60
days (or inpatient mental hospital services furnished beyond 90 days),
there is in operation in the State an effective program of control over
utilization of such services; such a showing must include evidence
that-
(A) in each case for which payment is made under the State
plan, a physician certifies at the time of admission, or, if later,
the time the individual applies for medical assistance under the
State plan (and recertifies, where such services are furnished over
a period of time, in such cases, at least every 60 days, and accom-
panied by such supporting material, appropriate to the case in-
volved, as may be provided in regulations of the Secretary), that
Sec. 1903(g)
530
Revised April 1978
such services are or were required to be given on an inpatient
basis because the individual needs or needed such services; and
(B) in each such case, such services were furnished under a
plan established and periodically reviewed and evaluated by a
physician;
(C) such State has in effect a continuous program of review of
utilization pursuant to section 1902(a)(30) whereby each admis-
sion is reviewed or screened in accordance with criteria established
by medical and other professional personnel who are not them-
selves directly responsible for the care of the patient involved,
and who do not have a significant financial interest in any such
institution and are not, except in the case of a hospital, employed
by the institution providing the care involved; and the informa-
tion developed from such review or screening, along with the data
obtained from prior reviews of the necessity for admission and
continued stay of patients by such professional personnel, shall
be used as the basis for establishing the size and composition of
the sample of admissions to be subject to review and evaluation
by such personnel, and any such sample may be of any size up to
100 per centum of all admissions and must be of sufficient size to
serve the purpose of (i) identifying the patterns of care being
provided and the changes occurring over time in such patterns
so that the need for modification may be ascertained, and (ii) sub-
jecting admissions to early or more extensive review where infor-
mation indicates that such consideration is warranted; and ¹
(D) such State has an effective program of medical review of
the care of patients in mental hospitals, skilled nursing facilities,
and intermediate care facilities pursuant to section 1902 (a) (26)
and (31) whereby the professional management of each case is re-
viewed and evaluated at least annually by independent profes-
sional review teams.
In determining the number of days on which an individual has re-
ceived services described in this subsection, there shall not be counted
any days with respect to which such individual is entitled to have
payments made (in whole or in part) on his behalf under section
1812.2
(2) The Secretary shall, as part of his validation procedures under
this subsection, conduct timely sample onsite surveys of private and
public institutions in which recipients of medical assistance may receive
care and services under a State plan approved under this title, and his
findings with respect to such surveys (as well as the showings of the
1 Subparagraph (C) was amended by section 110 of Public Law 94-182 effective April 1,
1976
2 Paragraph (1) was amended by sec. 20(a) (1) and (2) of P.L. 95-142. See also sec. 6
of P.L. 95-59 which is printed in this document on p. 796 and sec. 20 (c) of P.L. 95-142
which is printed in this document on p. 801.
Revised April 1978
531
Sec. 1903 (g)
State agency required under this subsection) shall be made available
for public inspection.¹
(3) (A) No reduction in the Federal medical assistance percentage
of a State otherwise required to be imposed under this subsection shall
take effect-
(i) if such reduction is due to the State's unsatisfactory or
invalid showing made with respect to a calendar quarter begin-
ning before January 1, 1977;
(ii) before January 1, 1978;
(iii) unless a notice of such reduction has been provided to the
State at least 30 days before the date such reduction takes effect; or
(iv) due to the State's unsatisfactory or invalid showing made
with respect to a calendar quarter beginning after September 30,
1977, unless notice of such reduction has been provided to the State
no later than the first day of the fourth calendar quarter following
the calendar quarter with respect to which such showing was
made.
(B) The Secretary shall waive application of any reduction in the
Federal medical assistance percentage of a State otherwise required
to be imposed under paragraph (1) because a showing by the State,
made under such paragraph with respect to a calendar quarter ending
after January 1, 1977, and before October 1, 1977, is determined to be
either unsatisfactory under such paragraph or invalid under para-
graph (2), if the Secretary determines that the State's showing made
under paragraph (1) with respect to the calendar quarter ending on
December 31, 1977, is satisfactory under such paragraph and is valid
under paragraph (2).²
(4) (A) The Secretary may not find the showing of a State, with
respect to a calendar quarter under paragraph (1), to be satisfactory
if the showing is submitted to the Secretary later than the 30th day
after the last day of the calendar quarter, unless the State demon-
strates to the satisfaction of the Secretary good cause for not meeting
such deadline.
(B) The Secretary shall find a showing of a State, with respect to
a calendar quarter under paragraph (1), to be satisfactory under such
paragraph with respect to the requirement that the State conduct
annual onsite inspections in mental hospitals, skilled nursing facili-
ties, and intermediate care facilities under paragraph (26) and (31)
of section 1902 (a), if the showing demonstrates that the State has
conducted such an onsite inspection during the 12-month period end-
ing on the last date of the calendar quarter—
aland
1 Paragraph (2) was amended by sec. 20 (a) (3) of P.L. 95-142.
Paragraph (3), was added by sec. 20(a) (4) of P.L. 95-142 effective as specified in sec.
20(c) which is printed in this document on p. 801.
Sec. 1903 (g)
532
Revised April 1978
(i) in each of not less than 98 per centum of the number of such
hospitals and facilities requiring such inspection, and
(ii) in every such hospital or facility which has 200 or more
beds,
and that, with respect to such hospitals and facilities not inspected
within such period, the State has exercised good faith and due deli-
gence in attempting to conduct such inspection, or if the State dem-
onstrates to the satisfaction of the Secretary that it would have made
such a showing but for failings of a technical nature only.¹
(5) In the case of a State's unsatisfactory or invalid showing made
with respect to a type of facility or institutional services in a calendar
quarter, the per centum amount of the reduction of the State's Federal
medical assistance percentage for that type of services under para-
graph (1) is equal to 33 per centum multiplied by a fraction, the
denominator of which is equal to the total number of patients receiv-
ing that type of services in that quarter under the State plan in facili-
ties or institutions for which a showing was required to be made under
this subsection, and the numerator of which is equal to the number of
such patients receiving such type of services in that quarter in those
facilities or institutions for which a satisfactory and valid showing
was not made for that calendar quarter.¹
(6) The Secretary shall submit to Congress, not later than sixty
days after the end of such calendar quarter, a report on-
(A) his determination as to whether or not each showing,
made under paragraph (1) by a State with respect to the calendar
quarter, has been found to be satisfactory under such paragraph;
(B) his review (through onsite surveys and otherwise) under
paragraph (2) of the validity of showings previously submitted
by a State; and
(C) any reduction in the Federal medical assistance percent-
age he has imposed on a State because of its submittal under para-
graph (1) of an unsatisfactory or invalid showing.¹
(h) (1) If the Secretary determines for any calendar quarter begin-
ning after June 30, 1973, with respect to any State that there does not
exist a reasonable cost differential between the statewide average cost
of skilled nursing facility services and the statewide average cost of
intermediate care facility services in such State, the Secretary may
reduce the amount which would otherwise be considered as expendi-
tures under the State plan by any amount which in his judgment is
a reasonable equivalent of the difference between the amount of the
expenditures by such State for intermediate care facility services and
1 Paragraphs (4), (5), and (6) were added by sec. 20(a) (4) of P.L. 95-142 effective as
specified in sec. 20 (c) which is printed in this document on p. 801.
Revised April 1978
532-A
Sec. 1903 (i)
the amount that would have been expended by such State for such
services if there had been a reasonable cost differential between the
cost of skilled nursing facility services and the cost of intermediate
care facility services.
(2) In determining whether any such cost differential in any State
is reasonable the Secretary shall take into consideration the range of
such cost differentials in all States.
(3) For the purposes of this subsection, the term "cost differential"
for any State for any quarter means, as determined by the Secretary
on the basis of the data for the most recent calendar quarter for which
satisfactory data are available, the excess of
(A) the average amount paid in such State (regardless of the
source of payment) per inpatient day for skilled nursing facility
services, over
(B) the average amount paid in such State (regardless of the
source of payment) per inpatient day for intermediate care facil-
ity services.
(4) For purposes of this subsection, the term "cost" shall mean
amounts reimbursable by the State under a State plan approved under
this title.
(i) Payment under the preceding provisions of this section shall
not be made—
-
(1) with respect to any amount paid for items or services
furnished under the plan after December 31, 1972, to the extent
that such amount exceeds the charge which would be determined
to be reasonable for such items or services under the fourth and
fifth sentences of section 1842(b) (3); or
(2) with respect to any amount paid for services furnished
under the plan after December 31, 1972, by a provider or other
person during any period of time, if payment may not be made
under title XVIII with respect to services furnished by such pro-
vider or person during such period of time solely by reason of a
determination by the Secretary under section 1862 (d) (1) or under
clause (D), (E), or (F) of section 1866 (b) (2), or by reason of
noncompliance with a request made by the Secretary under clause
(C) (ii) of such section 1866 (b) (2) or under section 1902 (a) (38);
or 1
21-746 - 78
(3) with respect to any amount expended for inpatient hospital
services furnished under the plan to the extent that such amount
exceeds the hospital's customary charges with respect to such
services or (if such services are furnished under the plan by a
public institution free of charge or at nominal charges to the
public) exceeds an amount determined on the basis of those items
1 Paragraph (2) was amended by sec. (3) (c) (2) of P.L. 95–142.
C
40
Sec. 1903 (i)
532-B
Revised April 1978
(specified in regulations prescribed by the Secretary) included in
the determination of such payment which the Secretary finds will
provide fair compensation to such institution for such services;
or
(4) with respect to any amount expended for care or services
furnished under the plan by a hospital or skilled nursing facility
unless such hospital or skilled nursing facility has in effect a utili-
zation review plan which meets the requirements imposed by sec-
tion 1861(k) for purposes of title XVIII; and if such hospital or
skilled nursing facility has in effect such a utilization review plan
for purposes of title XVIII, such plan shall serve as the plan
required by this subsection (with the same standards and proce-
dures and the same review committee or group) as a condition of
payment under this title; the Secretary is authorized to waive
the requirements of this paragraph if the State agency demon-
strates to his satisfaction that it has in operation utilization re-
view procedures which are superior in their effectiveness to the
procedures required under section 1861 (k).
(j) (1) Notwithstanding the preceding provisions of this section,
no payment shall be made to a State (except as provided under this
subsection) with respect to expenditures incurred by it for services pro-
vided by any institution during any period that an order for suspen-
sion of payment (as authorized by this subsection) is effective with
respect to such institution.
(2) The Secretary may issue a suspension of payment order with
respect to any institution if—
(A) such institution (i) does not (at the time such order is
issued) have in effect an agreement with the Secretary which is
entered into pursuant to section 1866; and (ii) did (prior to the
time such order is issued) have in effect such an agreement; and
(B) (i) The Secretary has been unable to collect (or make
satisfactory arrangement for the collection of) amounts due on
account of overpayments made to such institution under title
XVIII; or
(ii) the Secretary has been unable to obtain from such insti-
tution the data and information necessary to enable him to deter-
mine the amount (if any) of the overpayments made to such in-
stitution under title XVIII.
(3) Whenever the Secretary issues any order for suspension of
payment under this subsection with respect to any institution, he shall
submit a notice of such. order to the single State agency (referred
to in section 1902 (a) (5)) of each State which he has reason to believe
does or may utilize the services of such institution in providing medi-
cal assistance under a plan approved under this title.
Revised April 1978
532-C
Sec. 1903 (m)
(4) Any order for suspension of payment issued with respect to any
institution under this subsection shall become effective, in the case of
any State plan approved under this title, on the 60th day after the date
the State agency (referred to in section 1902 (a) (5)) administering or
supervising the administration of such plan receives notice of such
order submitted pursuant to paragraph (3). Any such order shall cease
to be effective at such time as the Secretary is satisfied that the insti-
tution is participating in substantial negotiations which seek to remedy
the conditions which gave rise to his order of suspension of payments,
or that the amounts (referred to in paragraph (2)) are no longer due
from such institution or that a satisfactory arrangement has been
made for the payment by such institution of any such amounts. Upon
the determination of the Secretary that any such order with respect
to any such institution shall cease to be effective, he shall forthwith
notify each State agency to which he has theretofore submitted notice.
under paragraph (3) with respect to such institution.
(5) Whenever any order which has been issued by the Secretary
under the preceding provisions of this subsection with respect to an
institution ceases to be effective, any payment to which any State would
(except for the preceding provisions of this subsection) have been
entitled under this section on account of services provided by such
institution shall be made to such State for the month in which such
order ceases to be effective.
(k) The Secretary is authorized to provide at the request of any
State (and without cost to such State) such technical and actuarial
assistance as may be necessary to assist such State to contract with any
health maintenance organization which meets the requirements of sec-
tion 1876 for the purpose of providing medical care and services to
individuals who are entitled to medical assistance under this title.
(1) [Repealed]¹
(m) (1) (A) The term "health maintenance organization" means a
legal entity which provides health services to individuals enrolled in
such organization and which-
(i) provides to its enrollees who are eligible for benefits under
this title the services and benefits described in paragraphs (1),
(2), (3), (4) (C), and (5) of section 1905, and, to the extent
required by section 1902 (a) (13) (A) (ii) to be provided under a
State plan for medical assistance, the services and benefits de-
scribed in paragraph (7) of section 1905 (a);
(ii) provides such services and benefits in the manner pre-
scribed in section 1301 (b) of the Public Health Service Act
(except that, solely for purposes of this paragraph, the term "basic
health services" and references thereto, when employed in such
section, shall be deemed to refer to the services and benefits de-
1 Subsection (1) added by section 111 of Public Law 94-182 and repealed by Public Law
94-552.
Sec. 1903 (m)
Revised April 1978
532-D
scribed in paragraphs (1), (2), (3), (4) (C), and (5) of section
1905 (a), and, to the extent required by section 1902(a)(13) (A)
(ii) to be provided under a State plan for medical assistance, the
services and benefits described in paragraph (7) of section 1905
(a)); and
(iii) is organized and operated in the manner prescribed by
section 1301 (c) of the Public Health Service Act (except that
solely for purposes of this paragraph, the term "basic health serv-
ices" and references thereto, when employed in such section shall
be deemed to refer to the services and benefits described in section.
1905(a) (1), (2), (3), (4) (C), and (5), and to the extent required
by section 1902(a) (13) (A) (ii) to be provided under a State plan
for medical assistance, the services and benefits described in para-
graph (7) of section 1905 (a)).
(B) The duties and functions of the Secretary, insofar as they
involve making determinations as to whether an organization is a
health maintenance organization within the meaning of subparagraph
(A), shall be administered through the Assistant Secretary for Health
and in the Office of the Assistant Secretary for Health, and the admin-
istration of such duties and functions shall be integrated with the
administration of section 1312 (a) and (b) of the Public Health Serv-
ice Act.
(2)(A) Except as provided in subparagraphs (B) and (C), no
payment shall be made under this title to a State with respect to
expenditures incurred by it for payment (determined under a prepaid
capitation basis or under any other risk basis) for services provided
by any entity which is responsible for the provision of inpatient hos-
pital services and any other service described in paragraph (2), (3),
(4), (5), or (7) of section 1905 (a) or for the provision of any three or
more of the services described in such paragraphs unless--
(i) the Secretary (or the State as authorized by paragraph
(3)) has determined that the entity is a health maintenance orga-
nization as defined in paragraph (1); and
(ii) less than one-half of the membership of the entity consists
of individuals who (I) are insured for benefits under part B of
title XVIII or for benefits under both parts A and B of such title,
or (II) are eligible to receive benefits under this title.¹
(B) Subparagraph (A) does not apply with respect to payments
under this title to a State with respect to expenditures incurred by it
for payment for services provided by an entity which—
(i) (I) received a grant of at least $100,000 in the fiscal year
ending June 30, 1976, under section 319 (d) (1) (A) or 330(d) (1)
¹ Subparagraph (A) was amended by sec. 105(a)(1) of P.L. 95-83.
Revised April 1978
532-E
Sec. 1903 (m)
of the Public Health Service Act, and (II) for the period begin-
ning July 1, 1976, and ending on the expiration of the period
for which payments are to be made under this title has been the
recipient of a grant under either such section; and
(II) provides to its enrollees, on a prepaid capitation risk
basis or on any other risk basis, all of the services and benefits
described in paragraphs (1), (2), (3), (4) (C), and (5) of section
1905 (a) and, to the extent required by section 1902 (a) (13) (A)
(ii) to be provided under a State plan for medical assistance, the
services and benefits described in paragraph (7) of such section;
or
(ii) is a nonprofit primary health care entity located in a rural
area (as defined by the Appalachian Regional Commission)—
(I) which received in the fiscal year ending June 30, 1976,
at least $100,000 (by grant, subgrant, or subcontract) under
the Appalachian Regional Development Act of 1965, and
(II) for the period beginning July 1, 1976, and ending on
the expiration of the period for which payments are to be
made under this title either has been the recipient of a grant,
subgrant, or subcontract under such Act or has provided serv-
ices under a contract (initially entered into during a year in
which the entity was the recipient of such a grant, subgrant,
or subcontract) with a State agency under this title on a pre-
paid capitation risk basis or on any other risk basis; or
(iii) which has contracted with the single State agency for the
provision of services (but not including inpatient hospital serv-
ices) to persons eligible under this title on a prepaid risk basis
prior to 1970.
(C) Subparagraph (A)(ii) shall not apply with respect to
payments under this title to a State with respect to expenditures
incurred by it for payment for services by an entity during the
three-year period beginning on the date of enactment of this
subsection or beginning on the date the entity enters into a con-
tract with the State under this title for the provision of health
services on a prepaid risk basis, whichever occurs later, but only
if the entity demonstrates to the satisfaction of the Secretary by
the submission of plans for each year of such three-year period
that it is making continuous efforts and progress toward achiev-
ing compliance with subparagraph (A)(ii).¹
(3) A State may, in the case of an entity which has submitted an
application to the Secretary for determination that it is a health main-
tenance organization within the meaning of paragraph (1) and for
1
1 Subparagraph (C) was amended by sec. 105(a) (2) of P.L. 95-83.
Sec. 1903 (m)
532-F
Revised April 1978
which no such determination has been made within 90 days of the
submission of the application, make a provisional determination for
the purposes of this title that such entity is such a health maintenance
organization. Such provisional determination shall remain in force
until such time as the Secretary makes a determination regarding the
entity's qualification under paragraph (1).¹
(n) The State agency may refuse to enter into any contract or
agreement with a hospital, nursing home, or other institution, organi-
zation, or agency for purposes of participation under the State plan,
cr otherwise to approve an institution, organization, or agency for
such purposes, if any person, who has a direct or indirect ownership
or control interest of 5 percent or more in such institution, organiza-
tion, or agency, or who is an officer, director, agent, or managing
employee (as defined in section 1126(b)) of such institution, organi-
zation, or agency, is a person described in section 1126 (a) (whether
or not such institution, organization, or agency has in effect an agree-
ment entered into with the Secretary pursuant to section 1866 or is
subject to a suspension of payment order issued under subsection (j)
of this section); and, notwithstanding any other provision of this
section, the State agency may terminate any such contract, agree-
ment, or approval if it determines that the institution, organization,
or agency did not fully and accurately make any disclosure required
of it by section 1126 (a) at the time such contract or agreement was
entered into or such approval was given.2
(0) Notwithstanding the preceding provisions of this section, no
payment shall be made to a State under the preceding provisions of
this section for expenditures for medical assistance provided for an
individual under its State plan approved under this title to the extent
that a private insurer (as defined by the Secretary by regulation)
would have been obligated to provide such assistance but for a provi-
sion of its insurance contract which has the effect of limiting or exclud-
ing such obligation because the individual is eligible for or is provided
medical assistance under the plan.³
(p) (1) When a political subdivision of a State makes, for the
State of which it is a political subdivision, or one State makes, for
another State, the enforcement and collection of rights of support or
payment assigned under section 1912, pursuant to a cooperative
arrangement under such section (either within or outside of such
State), there shall be paid to such political subdivision or such other
State from amounts which would otherwise represent the Federal
share of payments for medical assistance provided to the eligible
individuals on whose behalf such enforcement and collection was made,
an amount equal to 15 percent of any amount collected which is attrib-
utable to such rights of support or payment.
1 Subsection (m) was added by section 202 of P.L. 94-460.
2 Subsection (n) was added by sec. 8 (c) of P.L. 95-142.
3 Subsection (o) was added by sec. 11(a) of P.L. 95–142.
Revised April 1978
Sec. 1903 (q)
532-G
(2) Where more than one jurisdiction is involved in such enforce-
ment or collection, the amount of the incentive payment determined
under paragraph (1) shall be allocated among the jurisdictions in a
manner to be prescribed by the Secretary.¹
(q) For the purposes of this section, the term "State medicaid
fraud control unit" means a single identifiable entity of the State gov-
ernment which the Secretary certifies (and annually recertifies) as
meeting the following requirements:
(1) The entity (A) is a unit of the office of the State Attorney
General or of another department of State government which pos-
sesses statewide authority to prosecute individuals for criminal
violations, (B) is in a State the constitution of which does not
provide for the criminal prosecution of individuals by a statewide
authority and has formal procedures, approved by the Secretary,
that (i) assure its referral of suspected criminal violations relat-
ing to the program under this title to the appropriate authority
or authorities in the State for prosecution and (ii) assure its
assistance of, and coordination with, such authority or authorities
in such prosecutions, or (C) has a formal working relationship
with the office of the State Attorney General and has formal pro-
cedures (including procedures for its referral of suspected crim-
inal violations to such office) which are approved by the Secretary
and which provide effective coordination of activities between the
entity and such office with respect to the detection, investigation,
and prosecution of suspected criminal violations relating to the
program under this title.
(2) The entity is separate and distinct from the single State
agency that administers or supervises the administration of the
State plan under this title.
(3) The entity's function is conducting a statewide program for
the investigation and prosecution of violations of all applicable
State laws regarding any and all aspects of fraud in connection
with any aspect of the provision of medical assistance and the
activities of providers of such assistance under the State plan
under this title.
(4) The entity has procedures for reviewing complaints of the
abuse and neglect of patients of health care facilities which receive
payments under the State plan under this title, and, where appro-
priate, for acting upon such complaints under the criminal laws
of the State or for referring them to other State agencies for
action.
(5) The entity provides for the collection, or referral for collec-
tion to a single State agency, of overpayments that are made under
1 Subsection (p) was added by sec. 11(a) of P.L. 95-142.
Sec. 1903 (n)
532-H
Revised April 1978
the State plan to health care facilities and that are discovered by
the entity in carying out its activities.
(6) The entity employs such auditors, attorneys, investigators,
and other necessary personnel and is organized in such a manner
as is necessary to promote the effective and efficient conduct of the
entity's activities.
(7) The entity submits to the Secretary an application and
annual reports containing such information as the Secretary
determines, by regulation, to be necessary to determine whether
the entity meets the other requirements of this subsection.¹
1 Subsection (q) was added by sec. 17 (c) of P.L. 95-142 effective as specified in sec.
17(e) which is printed in this document on p. 799.
Revised April 1978
Sec. 1905(a)
532-I
Operation of State Plans
Sec. 1904. If the Secretary, after reasonable notice and opportunity
for hearing to the State agency administering or supervising the ad-
ministration of the State plan approved under this title, finds-
(1) that the plan has been so changed that it no longer complies
with the provisions of section 1902; or
(2) that in the administration of the plan there is a failure to
comply substantially with any such provision;
the Secretary shall notify such State agency that further payments
will not be made to the State (or, in his discretion, that payments will
be limited to categories under or parts of the State plan not affected
by such failure), until the Secretary is satisfied that there will no
longer be any such failure to comply. Until he is so satisfied he shall
make no further payments to such State (or shall limit payments to
categories under or parts of the State plan not affected by such
failure).
Definitions
Sec. 1905. For purposes of this title—
(a) The term "medical assistance" means payment of part or all
of the cost of the following care and services (if provided in or after
the third month before the month in which the recipient makes appli-
cation for assistance) for individuals, and, with respect to physicians'
or dentists' services, at the option of the State, to individuals (other
than individuals with respect to whom there is being paid, or who are
eligible, or would be eligible if they were not in a medical institution,
to have paid with respect to them a State supplementary payment and
are eligible for medical assistance equal in amount, duration, and
scope to the medical assistance made available to individuals described
in section 1902(a) (10) (A)) not receiving aid or assistance under any
plan of the State approved under title I, X, XIV, or XVI, or part Å
of title IV, and with respect to whom supplemental security income
benefits are not being paid under title XVI, who are
(i) under the age of 21,
(ii) relatives specified in section 406 (b) (1) with whom a child
is living if such child, except for section 406(a)(2), is (or would,
if needy, be) a dependent child under part A of title IV,
(iii) 65 years of age or older,
(iv) blind, with respect to States eligible to participate in the
State plan program established under title XVI,
(v) 18 years of age or older and permanently and totally
disabled, with respect to States eligible to participate in the State
plan program established under title XVI,
Sec. 1905(a)
532-J
Revised April 1978
(vi) persons essential (as described in the second sentence of
this subsection) to individuals receiving aid or assistance under
State plans approved under title I, X, XIV, or XVI, or
(vii) blind or disabled as defined in section 1614, with respect.
to States not eligible to participate in the State plan program
established under title XVI,
but whose income and resources are insufficient to meet all of such
cost-
(1) inpatient hospital services (other than services in an institu-
tion for tuberculosis or mental diseases);
(2)(A) outpatient hospital services, and (B) consistent with
State law permitting such services, rural health clinic services (as
defined in subsection (1)) and any other ambulatory services
which are offered by a rural health clinic (as defined in subsection
(1)) and which are otherwise included in the plan; 1
(3) other laboratory and X-ray services;
(4)(A) skilled nursing facility services (other than services
in an institution for tuberculosis or mental diseases) for individ-
uals 21 years of age or older (B) effective July 1, 1969, such
early and periodic screening and diagnosis of individuals who
are eligible under the plan and are under the age of 21 to ascertain
their physical or mental defects, and such health care, treatment,
and other measures to correct or ameliorate defects and chronic
1 Paragraph (2) was amended by sec. 2(a) of P.L. 95-210 effective as specified in sec.
2(f) which is printed in this document on p. 803.
533
Sec. 1905(a)
conditions discovered thereby, as may be provided in regulations
of the Secretary; and (C) family planning services and supplies
furnished (directly or under arrangements with others) to in-
dividuals of child-bearing age (including minors who can be
considered to be sexually active) who are eligible under the State
plan and who desire such services and supplies;
(5) physicians' services furnished by a physician (as defined in
section 1861 (r) (1)), whether furnished in the office, the patient's
home, a hospital, or a skilled nursing facility, or elsewhere;
(6) medical care, or any other type of remedial care recognized
under State law, furnished by licensed practitioners within the
scope of their practice as defined by State law;
(7) home health care services;
(8) private duty nursing services;
(9) clinic services;
(10) dental services;
(11) physical therapy and related services;
(12) prescribed drugs, dentures, and prosthetic devices; and
eyeglasses prescribed by a physician skilled in diseases of the
eye or by an optometrist, whichever the individual may select;
(13) other diagnostic, screening, preventive, and rehabilitative
services;
(14) inpatient hospital services, skilled nursing facility serv-
ices, and intermediate care facility services for individuals 65
years of age or over in an institution for tuberculosis or mental
diseases;
(15) intermediate care facility services (other than such serv-
ices in an institution for tuberculosis or mental diseases) for
individuals who are determined, in accordance with section 1902
(a) (31) (A), to be in need of such care;
(16) effective January 1, 1973, inpatient psychiatric hospital
services for individuals under age 21, as defined in subsection
(h); and
(17) any other medical care, and any other type of remedial
care recognized under State law, specified by the Secretary;
except as otherwise provided in paragraph (16), such term does not
include-
(A) any such payments with respect to care or services for
any individual who is an inmate of a public institution (except
as a patient in a medical institution); or
(B) any such payments with respect to care or services for
any individual who has not attained 65 years of age and who
is a patient in an institution for tuberculosis or mental diseases.
For purposes of clause (vi) of the preceding sentence, a person shall
be considered essential to another individual if such person is the
Sec. 1905(a)
534
Revised August 1978
spouse of and is living with such individual, the needs of such person
are taken into account in determining the amount of aid or assistance
furnished to such individual (under a State plan approved under
title I, X, XIV, or XVI), and such person is determined, under such
a State plan, to be essential to the well being of such individual.
(b) The term "Federal medical assistance percentage" for any
State shall be 100 per centum less the State percentage; and the
State percentage shall be that percentage which bears the same ratio
to 45 per centum as the square of the per capita income of such State
bears to the square of the per capita income of the continental United
States (including Alaska) and Hawaii; except that (1) the Federal
medical assistance percentage shall in no case be less than 50 per cen-
tum or more than 83 per centum, and (2) the Federal medical assist-
ance percentage for Puerto Rico, the Virgin Islands, and Guam shall
be 50 per centum. The Federal medical assistance percentage for any
State shall be determined and promulgated in accordance with the
provisions of subparagraph (B) of section 1110 (a) (8). Notwithstand-
ing the first sentence of this section, the Federal medical assistance
percentage shall be 100 per centum with respect to amounts expended
as medical assistance for services which are received through an Indian
Health Service facility whether operated by the Indian Health Serv-
ice or by an Indian tribe or tribal organization (as defined in section 4
of the Indian Health Care Improvement Act).¹
1
(c) For purposes of this title the term "intermediate care facility"
means an institution which (1) is licensed under State law to pro-
vide, on a regular basis, health-related care and services to individuals
who do not require the degree of care and treatment which a hospital
or skilled nursing facility is designed to provide, but who because of
their mental or physical condition require care and services (above the
level of room and board) which can be made available to them only
through institutional facilities, (2) meets such standards prescribed
by the Secretary as he finds appropriate for the proper provision of
such care, (3) meets such standards of safety and sanitation as are
established under regulation of the Secretary in addition to those
applicable to nursing homes under State law, and (4) meets the re-
quirements of section 1861 (j) (14) with respect to protection of
patients' personal funds. The term "intermediate care facility" also
includes any skilled nursing facility or hospital which meets the re-
quirements of the preceding sentence. The term "intermediate care
facility" also includes a Christian Science sanatorium operated, or
listed and certified, by the First Church of Christ, Scientist,
'The last sentence of subsection (b) was added by section 402(e) of P.L. 94-437.
Revised August 1978
Sec. 1905(c)
534-A
-
Boston, Massachusetts, but only with respect to institutional serv-
ices deemed appropriate by the State. The term "intermediate care fa-
cility" also includes any institution which is located in a State on an
Indian reservation and is certified by the Secretary as meeting the re-
quirements of clauses (2), (3), and (4) of this subsection and providing
Revised August 1978
Sec. 1905(f)
535
the care and services required under clauses (1). With respect to serv-
ices furnished to individuals under age 65, the term "intermediate care
facility" shall not include, except as provided in subsection (d), any
public institution or distinct part thereof for mental diseases or mental
defects.¹
(d) The term "intermediate care facility services" may include
services in a public institution (or distinct part thereof) for the men-
tally retarded or persons with related conditions if—
(1) The primary purpose of such institution (or distinct part
thereof) is to provide health or rehabilitative services for men-
tally retarded individuals and which meet such standards as may
be prescribed by the Secretary;
(2) the mentally retarded individual with respect to whom a
request for payment is made under a plan approved under this
title is receiving active treatment under such a program; and
(3) the State or political subdivision responsible for the opera-
tion of such institution has agreed that the non-Federal expendi-
tures in any calendar quarter prior to January 1, 1975, with
respect to services furnished to patients in such institution (or dis-
tinct part thereof) in the State will not, because of payments made
under this title, be reduced below the average amount expended
for such services in such institution in the four quarters immedi-
ately preceding the quarter in which the State in which such in-
stitution is located elected to make such services available under
its plan approved under this title.
K
(e) In the case of any State the State plan of which (as approved
under this title) —
(1) does not provide for the payment of services (other than
services covered under section 1902(a)(12)) provided by an op-
tometrist; but
(2) at a prior period did provide for the payment of services
referred to in paragraph (1);
the term "physicians' services" (as used in subsection (a)(5)) shall
include services of the type which an optometrist is legally authorized
to perform where the State plan specifically provides that the term
"physicians' services", as employed in such plan, includes services of
the type which an optometrist is legally authorized to perform,
and shall be reimbursed whether furnished by a physician or an
optometrist.
(f) For purposes of this title, the term "skilled nursing facility
services" means services which are or were required to be given an
individual who needs or needed on a daily basis skilled nursing care
(provided directly by or requiring the supervision of skilled nursing
personnel) or other skilled rehabilitation services which as a practical
1 Subsection (c) was amended by sections 8(a) and 8(b) of Public Law 95–292. The
word "clauses" in the next to last sentence is a technical error; it apparently should be
"clause".
Sec. 1905(f)
536
matter can only be provided in a skilled nursing facility on an
inpatient basis.
(g) If the State plan includes provision of chiropractors' services,
such services include only-
(1) services provided by a chiropractor (A) who is licensed
as such by the State and (B) who meets uniform minimum stand-
ards promulgated by the Secretary under section 1861 (r) (5);
and
Hay
(2) services which consist of treatment by means of manual
manipulation of the spine which the chiropractor is legally
authorized to perform by the State.
(h) (1) For purposes of paragraph (16) of subsection (a), the term
"inpatient psychiatric hospital services for individuals under age 21"
includes only-
(A) inpatient services which are provided in an institution
which is accredited as a psychiatric hospital by the Joint Commis-
sion on Accreditation of Hospitals;
(B) inpatient services which, in the case of any individual,
(i) involve active treatment which meets such standards as may
be prescribed in regulations by the Secretary, and (ii) a team,
consisting of physicians and other personnel qualified to make
determinations with respect to mental health conditions and the
treatment thereof, has determined are necessary on an inpatient
basis and can reasonably be expected to improve the condition, by
reason of which such services are necessary, to the extent that
eventually such services will no longer be necessary; and
(C) inpatient services which, in the case of any individual, are
provided prior to (A) the date such individual attains age 21, or
(B) in the case of an individual who was receiving such services in
the period immediately preceding the date on which he attained
age 21, (i) the date such individual no longer requires such serv-
ices, or (ii) if earlier, the date such individual attains age 22;
(2) Such term does not include services provided during any
calendar quarter under the State plan of any State if the total amount
of the funds expended, during such quarter, by the State (and the
political subdivisions thereof) from non-Federal funds for inpatient
services included under paragraph (1), and for active psychiatric
care and treatment provided on an outpatient basis for eligible men-
tally ill children, is less than the average quarterly amount of the funds
expended, during the 4-quarter period ending December 31, 1971, by
the State (and the political subdivisions thereof) from non-Federal
funds for such services.
(i) For purposes of this title, the term "skilled nursing facility"
also includes any institution which is located in a State on an Indian
reservation and is certified by the Secretary as being a qualified skilled
nursing facility by meeting the requirements of section 1861(j).
Revised April 1978
537
Sec. 1908(a)
(j) The term "State supplementary payment" means any cash pay-
ment made by a State on a regular basis to an individual who is
receiving supplemental security income benefits under title XVI or
who would but for his income be eligible to receive such benefits, as
assistance based on need in supplementation of such benefits (as deter-
mined by the Secretary), but only to the extent that such payments
are made with respect to an individual with respect to whom supple-
mental security income benefits are payable under title XVI, or would
but for his income be payable under that title.
(k) Increased supplemental security income benefits payable pur-
suant to section 211 of Public Law 93-66 shall not be considered
supplemental security income benefits payable under title XVI.
(1) The terms "rural health clinic services" and "rural health clinic"
have the meanings given such terms in section 1861 (aa), except that
(1) clause (ii) of section 1861 (aa) (2) shall not apply to such terms,
and (2) the physician arrangement required under section 1861 (aa)
(2) (B) shall only apply with respect to rural health clinic services
and, with respect to other ambulatory care services, the physician
arrangement required shall be only such as may be required under the
State plan for those services.¹
1
Sec. 1906. [Repealed.]
Observance of Religious Beliefs
Sec. 1907. Nothing in this title shall be construed to require any
State which has a plan approved under this title to compel any per-
son to undergo any medical screening, examination, diagnosis, or treat-
ment or to accept any other health care or services provided under
such plan for any purpose (other than for the purpose of discovering
and preventing the spread of infection or contagious disease or for
the purpose of protecting environmental health), if such person
objects (or, in case such person is a child, his parent or guardian
objects) thereto on religious grounds.
State Programs for Licensing of Administrators of Nursing
Homes
Sec. 1908. (a) For purposes of section 1902(a) (29), a “State pro-
gram for licensing of administrators of nursing homes" is a program
which provides that no nursing home within the State may operate
except under the supervision of an administrator licensed in the man-
ner provided in this section.
1 Subsection (1) was added by sec. 2 (b) of P.L. 95-210 effective as specified in sec. 2(f)
which is printed in this document on p. 803.
Sec. 1908(b)
538
Revised April 1978
(b) Licensing of nursing home administrators shall be carried out
by the agency of the State responsible for licensing under the healing
arts licensing act of the State, or, in the absence of such act or such
an agency, a board representative of the professions and institutions
concerned with care of chronically ill and infirm aged patients and
established to carry out the purposes of this section.
(c) It shall be the function and duty of such agency or board to—
(1) develop, impose, and enforce standards which must be met
by individuals in order to receive a license as a nursing home
administrator, which standards shall be designed to insure that
nursing home administrators will be individuals who are of good
character and are otherwise suitable, and who, by training or
experience in the field of institutional administration, are quali-
fied to serve as nursing home administrators;
S
(2) develop and apply appropriate techniques, including ex-
aminations and investigations, for determining whether an indi-
vidual meets such standards;
(3) issue licenses to individuals determined, after the appli-
cation of such techniques, to meet such standards, and revoke or
suspend licenses previously issued by the board in any case where
the individual holding any such license is determined substan-
tially to have failed to conform to the requirements of such stand-
ards;
(4) establish and carry out procedures designed to insure that
individuals licensed as nursing home administrators will, during
any period that they serve as such, comply with the requirements
of such standards;
(5) receive, investigate, and take appropriate action with re-
spect to, any charge or complaint filed with the board to the effect
that any individual licensed as a nursing home administrator has
failed to comply with the requirements of such standards; and
(6) conduct a continuing study and investigation of nursing
homes and administrators of nursing homes within the State with
a view to the improvement of the standards imposed for the
licensing of such administrators and of procedures and methods
for the enforcement of such standards with respect to administra-
tors of nursing homes who have been licensed as such.
(d) No State shall be considered to have failed to comply with the
provisions of section 1902 (a) (29) because the agency or board of such
State (established pursuant to subsection (b)) shall have granted any
waiver, with respect to any individual who, during all of the three
calendar years immediately preceding the calendar year in which the
requirements prescribed in section 1902 (a) (29) are first met by the
State, has served as a nursing home administrator, of any of the stand-
-
Revised April 1978
Sec. 1909(a)
539
ards developed, imposed, and enforced by such agency or board pursu-
ant to subsection (c).
(e) As used in this section, the term-
(1) "nursing home" means any institution or facility defined as
such for licensing purposes under State law, or, if State law does
not employ the term nursing home, the equivalent term or terms
as determined by the Secretary, but does not include a Christian
Science sanatorium operated, or listed and certified, by the First
Church of Christ, Scientist, Boston, Massachusetts; and
(2) "nursing home administrator" means any individual who
is charged with the general administration of a nursing home
whether or not such individual has an ownership interest in such
home and whether or not his functions and duties are shared with
one or more other individuals.
Penalties 1
Sec. 1909. (a) Whoever-
(1) knowingly and willfully makes or causes to be made any
false statement or representation of a material fact in any appli-
cation for any benefit or payment under a State plan approved
under this title,
(2) at any time knowingly and willfully makes or causes to
be made any false statement or representation of a material fact
for use in determining rights to such benefit or payment,
(3) having knowledge of the occurrence of any event affecting
(A) his initial or continued right to any such benefit or payment,
or (B) the initial or continued right to any such benefit or pay-
ment of any other individual in whose behalf he has applied for or
is receiving such benefit or payment, conceals or fails to disclose
such event with an intent fraudulently to secure such benefit or
payment either in a greater amount or quantity than is due or
when no such benefit or payment is authorized, or
(4) having made application to receive any such benefit or
payment for the use and benefit of another and having received it,
knowingly and willfully converts such benefit or payment or any
part thereof to a use other than for the use and benefit of such
other person,
shall (i) in the case of such a statement, representation, concealment,
failure, or conversion by any person in connection with the furnishing
(by that person) of items or services for which payment is or may be
made under this title, be guilty of a felony and upon conviction thereof
fined not more than $25,000 or imprisoned for not more than five years
1 Section 1909 was amended in its entirety by sec. 4(b) of Public Law 95–142.
21-746 O - 78 41
Sec. 1909(a)
540
Revised April 1978
or both, or (ii) in the case of such a statement, representation, conceal-
ment, failure, or conversion by any other person, be guilty of a mis-
demeanor and upon conviction thereof fined not more than $10,000
or imprisoned for not more than one year, or both. In addition, in any
case where an individual who is otherwise eligible for assistance under
a State plan approved under this title is convicted of an offense under
the preceding provisions of this subsection, the State may at its option
(notwithstanding any other provision of this title or of such plan)
limit, restrict, or suspend the eligibility of that individual for such
period (not exceeding one year) as it deems appropriate; but the
imposition of a limitation, restriction, or suspension with respect to
the eligibility of any individual under this sentence shall not affect the
eligibility of any other person for assistance under the plan, regardless
of the relationship between that individual and such other person.
(b) (1) Whoever solicits or receives any remuneration (including
any kickback, bribe, or rebate) directly or indirectly, overtly or
covertly, in cash or in kind—
(A) in return for referring an individual to a person for the
furnishing or arranging for the furnishing of any item or service
for which payment may be made in whole or in part under this
title, or
(B) in return for purchasing, leasing, ordering, or arranging
for or recommending purchasing, leasing, or ordering any good,
facility, service, or item for which payment may be made in
whole or in part under this title,
shall be guilty of a felony and upon conviction thereof, shall be fined
not more than $25,000 or imprisoned for not more than five years, or
both.
(2) Whoever offers or pays any remuneration (including any kick-
back, bribe, or rebate) directly or indirectly, overtly or covertly, in
cash or in kind to any person to induce such person—
(A) to refer an individual to a person for the furnishing or
arranging for the furnishing of any item or service for which
payment may be made in whole or in part under this title, or
(B) to purchase, lease, order, or arrange for or recommend
purchasing, leasing, or ordering any good, facility, service, or
item for which payment may be made in whole or in part under
this title,
shall be guilty of a felony and upon conviction thereof, shall be fined
not more than $25,000 or imprisoned for not more than five years, or
both.
(3) Paragraphs (1) and (2) shall not apply to—
Revised April 1978
540-A
Sec. 1909(d)
(A) a discount or other reduction in price obtained by a pro-
vider of services or other entity under this title if the reduction.
in price is properly disclosed and appropriately reflected in the
costs claimed or charges made by the provider or entity under this
title; and
(B) any amount paid by an employer to an employee (who
has a bona fide employment relationship with such employer) for
employment in the provision of covered items or services.
(c) Whoever knowingly and willfully makes or causes to be made,
or induces or seeks to induce the making of, any false statement or
representation of a material fact with respect to the conditions or oper-
ation of any institution or facility in order that such institution or
facility may qualify (either upon initial certification or upon recerti-
fication) as a hospital, skilled nursing facility, intermediate care facil-
ity, or home health agency (as those terms are employed in this title)
shall be guilty of a felony and upon conviction thereof shall be fined
not more than $25,000 or imprisoned for not more than five years, or
both.
(d) Whoever knowingly and willfully—
(1) charges, for any service provided to a patient under a
State plan approved under this title, money or other consideration
at a rate in excess of the rates established by the State, or
(2) charges, solicits, accepts, or receives, in addition to any
amount otherwise required to be paid under a Stato plan approved
under this title, any gift, money, donation, or other consideration
(other than a charitable, religious, or philanthropic contribution
from an organization or from a person unrelated to the patient)-
(A) as a precondition of admitting a patient to a hos-
pital, skilled nursing facility, or intermediate care facility,
or
(B) as a requirement for the patient's continued stay in
such a facility,
when the cost of the services provided therein to the patient is
paid for (in whole or in part) under the State plan,
shall be guilty of a felony and upon conviction thereof shall be fined
not more than $25,000 or imprisoned for not more than five years, or
both.
Sec. 1910(a)
540-B
Revised April 1978
Certification and Approval of Skilled Nursing Facilities and of
Rural Health Clinics 1
Sec. 1910. (a) (1) Whenever the Secretary certifies an institution in
a State to be qualified as a skilled nursing facility under title XVIII,
such institution shall be deemed to meet the standards for certification.
as a skilled nursing facility for purposes of section 1902 (a) (28).
(2) The Secretary shall notify the State agency administering the
medical assistance plan of his approval or disapproval of any institu-
tion which has applied for certification by him as a qualified skilled
nursing facility.
(b) (1) Whenever the Secretary certifies a facility in a State to be
qualified as a rural health clinic under title XVIII, such facility shall
be deemed to meet the standards for certification as a rural health
clinic for purposes of providing rural health clinic services under this
title.
(2) The Secretary shall notify the State agency administering the
medical assistance plan of his approval or disapproval of any facility
in that State which has applied for certification by him as a qualified
rural health clinic.
Indian Health Service Facilities 2
Sec. 1911. (a) A facility of the Indian Health Service (including
a hospital, intermediate care facility, or skilled nursing facility),
whether operated by such Service or by an Indian tribe or tribal orga-
nization (as those terms are defined in section 4 of the Indian Health
Care Improvement Act), shall be eligible for reimbursement for med-
ical assistance provided under a State plan if and for so long as it
meets all of the conditions and requirements which are applicable
generally to such facilities under this title.
(b) Notwithstanding subsection (a), a facility of the Indian Health
Service (including a hospital, intermediate care facility, or skilled
nursing facility) which does not meet all of the conditions and require-
ments of this title which are applicable generally to such facility, but
which submits to the Secretary within six months after the date of the
enactment of this section an acceptable plan for achieving compliance
with such conditions and requirements, shall be deemed to meet such
conditions and requirements (and to be eligible for reimbursement
under this title), without regard to the extent of its actual compliance
with such conditions and requirements, during the first twelve months
after the month in which such plan is submitted.
1 Section 1910 was amended by sec. 2(d) of Public Law 95-210 effective as specified in
sec. 2(f) which is printed in this document on p. 803.
2 Section 1911 was added by section 402(a) of Public Law 94-437 subject to the condi-
tions specified in sections 402 (b)-402(d) of that act which are printed in this document
on page 782.
Revised April 1978
Sec. 1912(b)
540-C
Assignment of Rights of Payment
Sec. 1912. (a) For the purpose of assisting in the collection of
medical support payments and other payments for medical care owed
to recipients of medical assistance under the State plan approved
under this title, a State plan for medical assistance may-
(1) provide that, as a condition of eligibility for medical
assistance under the State plan to an individual who has the legal
capacity to execute an assignment for himself, the individual is
required-
1
(A) to assign the State any rights, of the individual or
of any other person who is eligible for medical assistance
under this title and on whose behalf the individual has the
legal authority to execute an assignment of such rights, to
support (specified as support for the purpose of medical care
by a court or administrative order) and to payment for medi-
cal care from any third party; and
(B) to cooperate with the State (i) in establishing the
paternity of such person (referred to in subparagraph (A))
if the person is a child born out of wedlock, and (ii) in obtain-
ing support and payments (described in subparagraph (A))
for himself and for such person, unless (in either case) the
individual is found to have good cause for refusing to coop-
erate as determined by the State agency in accordance with
standards prescribed by the Secretary, which standards shall
take into consideration the best interests of the individuals
involved; and
G
(2) provide for entering into cooperative arrangements
(including financial arrangements), with any appropriate agency
of any State (including, with respect to the enforcement and
collection of rights of payment for medical care by or through a
parent, with a State's agency established or designated under sec-
tion 454(3)) and with appropriate courts and law enforcement
officials, to assist the agency or agencies administering the State
plan with respect to (A) the enforcement and collection of rights
to support or payment assigned under this section and (B) any
other matters of common concern.
(b) Such part of any amount collected by the State under an assign-
ment made under the provisions of this section shall be retained by the
State as is necessary to reimburse it for medical assistance payments
made on behalf of an individual with respect to whom such assignment
was executed (with appropriate reimbursement of the Federal Gov-
ernment to the extent of its participation in the financing of such
medical assistance), and the remainder of such amount collected shall
be paid to such individual.
1 Section 1912 was added by sec. 11(b) of P.L. 95-142.
TITLE XX-GKANTS TO STATES FOR SERVICES¹
Sec. 2001.
Sec. 2002.
Sec. 2003. Program reporting--.
Sec. 2004.
Sec. 2005.
Sec. 2006.
Sec. 2007. Definitions
Appropriation authorized_
Payments to States_.
Services program planning---.
Effective date of regulations published by the Secretary-
Evaluation; program assistance__.
Page 2
541
541
549
553
555
555
555
Appropriation Authorized
Sec. 2001. For the purpose of encouraging each State, as far as
practicable under the conditions in that State, to furnish services
directed at the goal of-
(1) achieving or maintaining economic self-support to pre-
vent, reduce, or eliminate dependency,
(2) achieving or maintaining self-sufficiency, including reduc-
tion or prevention of dependency,
(3) preventing or remedying neglect, abuse, or exploitation of
children and adults unable to protect their own interests, or pre-
serving, rehabilitating or reuniting families,
(4) preventing or reducing inappropriate institutional care by
providing for community-based care, home-based care, or other
forms of less intensive care, or
(5) securing referral or admission for institutional care when
other forms of care are not appropriate, or providing services
to individuals in institutions,
there is authorized to be appropriated for each fiscal year a sum
sufficient to carry out the purposes of this title. The sums made avail-
able under this section shall be used for making payments to States
under section 2002.
1 Title became effective October 1, 1975.
• This table of contents does not appear in the law.
Payments To States
Sec. 2002. (a) (1) From the sums appropriated therefore, the Secre-
tary shall, subject to the provisions of this section and section 2003,
pay to each State, for each quarter, an amount equal to 90 per centum
of the total expenditures during that quarter for the provision of fam-
ily planning services and 75 per centum of the total expenditures dur-
ing that quarter for the provision of other services directed at the
goal of-
A
(541)
Sec. 2002(a)
542
(A) achieving or maintaining economic self-support to pre-
vent, reduce, or eliminate dependency,
(B) achieving or maintaining self-sufficiency, including reduc-
tion or prevention of dependency,
(C) preventing or remedying neglect, abuse, or exploitation
of children and adults unable to protect their own interests, or
preserving, rehabilitating, or reuniting families,
(D) preventing or reducing inappropriate institutional care
by providing for community-based care, home-based care, or other
forms of less intensive care, or
(E) securing referral or admission for institutional care when
other forms of care are not appropriate, or providing services to
individuals in institutions,
including expenditures for administration (including planning and
evaluation) and personnel training and retraining directly related to
the provision of those services (including both short- and long-term
training at educational institutions through grants to such institutions
or by direct financial assistance to students enrolled in such institu-
tions). Services that are directed at these goals include, but are not
limited to, child care services, protective services for children and
adults, services for children and adults in foster care, services related
to the management and maintenance of the home, day care services for
adults, transportation services, training and related services, employ-
ment services, information, referral, and counseling services, the prep-
aration and delivery of meals, health support services and appropriate
combinations of services designed to meet the special needs of children,
the aged, the mentally retarded, the blind, the emotionally disturbed,
the physically handicapped, and alcoholics and drug addicts.¹
(2) (A) No payment with respect to any expenditures other than
expenditures for personnel training or retraining directly related to
the provision of services may be made under this section to any State
for any fiscal year in excess of an amount which bears the same ratio
to $2,500,000,000 as the population of that State bears to the popula-
tion of the fifty States and the District of Columbia. The Secretary
shall promulgate the limitation applicable to each State for each fiscal
year under this paragraph prior to the first day of the third month of
the preceding fiscal year, as determined on the basis of the most recent
satisfactory data available from the Department of Commerce.¹
(B) Each State with respect to which a limitation is promulgated
under subparagraph (A) for any fiscal year shall, at the earliest prac-
ticable date after the commencement of such fiscal year (and in accord-
ance with regulations prescribed by the Secretary), certify to the Sec-
retary whether the amount of its limitation is greater or less than the
1 See also section 3 of P.L. 94-401 which is printed in this document on page 779.
543
Sec. 2002(a)
amount needed by the State, for uses to which the limitation applies,
for such fiscal year and, if so, the amount by which the amount of such
limitation is greater or less than such need.
(C) If any State certifies, in accordance with subparagraph (B),
that the amount of its limitation for any fiscal year is greater than its
need for such year, then the amount of the limitation of such State
for such year shall be reduced by the excess of its limitation amount
over its need, and the amount of such reduction shall be available for
allotment as provided in subparagraph (D).
(D) Of the amounts made available, pursuant to subparagraph
(C), for allotment for any fiscal year, the Secretary (i) shall allot to
the jurisdiction of Puerto Rico $15,000,000, to the jurisdiction of Guam
$500,000, and to the jurisdiction of the Virgin Islands $500,000, which
shall be available to each such jurisdiction in addition to amounts avail-
able under section 1108 for purposes of matching the expenditures of
such jurisdictions for services pursuant to sections 3(a) (4) and (5),
403 (a) (3), 1003 (a) (3) and (4), 1403(a) (3) and (4), and 1603 (a) (4)
and (5): Provided, That if the amounts made available, pursuant to
subparagraph (C), are insufficient to meet the requirements of this
clause, then such amounts as are available shall be allotted to each of
the three jurisdictions in proportion to their respective populations.
(3) No payment may be made under this section to any State with
respect to any expenditure for the provision of any service to any indi-
vidual unless-
(A) the State's services program planning meets the require-
ments of section 2004, and
(B) the final comprehensive annual services plan in effect
when the service is provided to the individual includes the pro-
vision of that service to a category of individuals which includes
that individual in the descriptions required by section 2004 (2)
(B) and (C) of the services to be provided under the plan and the
categories of individuals to whom the services are to be provided.
The Secretary may not deny payment under this section to any State
with respect to any expenditure on the ground that it is not an expendi-
ture for the provision of a service or is not an expenditure for the pro-
vision of a service directed at a goal described in paragraph (1) of this
subsection.
(4) So much of the aggregate expenditures with respect to which
payment is made under this section to any State for any fiscal year as
equals 50 per centum of the payment made under this section to the
State for that fiscal year must be expended for the provision of services.
to individuals-
(A) who are receiving aid under the plan of the State ap-
proved under part A of title IV or who are eligible to receive such
aid, or
Sec. 2002(a)
544
(B) whose needs are taken into account in determining the
needs of an individual who is receiving aid under the plan of the
State approved under part A of title IV, or who are eligible to
have their needs taken into account in determining the needs of
an individual who is receiving or is eligible to receive such aid, or
(C) with respect to whom supplemental security income bene-
fits under title XVI or State supplementary payments, as defined
in section 2007 (1), are being paid, or who are eligible to have such
benefits or payments paid with respect to them, or
(D) whose income and resources are taken into account in de-
termining the amount of supplemental security income benefits
or State supplementary payments, as defined in section 2007(1),
being paid with respect to an individual, or whose income and
resources would be taken into account in determining the amount
of such benefits or payments to be paid with respect to an indi-
vidual who is eligible to have such benefits or payments paid with
respect to him, or
(E) who are eligible for medical assistance under the plan of
the State approved under title XIX.
In any case in which services are provided to individuals to whom
the provisions of paragraph (14) are applied, the proportion of the
expenditures for such services which are attributable to individuals
described in the preceding sentence may be determined on the basis
of generally accepted statistical sampling procedures.¹
(5) No payment may be made under this section to any State with
respect to any expenditure for the provision of any service to any
individual-
(A) who is receiving, or whose needs are taken into account in
determining the needs of an individual who is receiving, aid un-
der the plan of the State approved under part A of title IV, or
with respect to whom supplemental security income benefits under
title XVI or State supplementary payments, as defined in section
2007(1), are being paid, or
(B) who is a member of a family the monthly gross income of
which is less than the lower of-
(i) 80 per centum of the median income of a family of
four in the State, or
(ii) the median income of a family of four in the fifty
States and the District of Columbia,
adjusted, in accordance with regulations prescribed by the Secre-
tary, to take into account the size of the family,
if any fee or other charge (other than a voluntary contribution) im-
posed on the individual for the provision of that service is not con-
sistent with such requirements (including requirements prohibiting
1 Paragraph (4) was amended by section 1(b) of P.L. 94-401, effective October 1, 1975.
Revised April 1978
Sec. 2002(a)
545
the imposition of any such fee or charge) as the Secretary shall
prescribe.
(6) No payment may be made under this section to any State with
respect to any expenditure for the provision of any service, other than
an information or referral service, family planning services, or a
service directed at the goal of preventing or remedying neglect, abuse,
or exploitation of children and adults unable to protect their own in-
terests, to any individual who is not an individual described in para-
graph (5), and—
(A) who is a member of a family the monthly gross income of
which exceeds 115 per centum of the median income of a family
of four in the State, adjusted, in accordance with regulations
prescribed by the Secretary, to take into account the size of the
family, or
(B) who is a member of a family the monthly gross income
of which-
(i) exceeds the lower of—
(I) 80 per centum of the median income of a family
of four in the State, or
or
(II) the median income of a family of four in the
fifty States and the District of Columbia,
adjusted, in accordance with regulations prescribed by the
Secretary, to take into account the size of the family, and
(ii) does not exceed 115 per centum of the median income
of a family of four in the State, adjusted, in accordance with
regulations prescribed by the Secretary, to take into account
the size of the family,
unless a fee or other charge reasonably related to income is im-
posed on the individual for the provision of the service.
The Secretary shall promulgate the median income of a family of four
in each State and the fifty States and the District of Columbia appli-
cable to payments with respect to expenditures in each fiscal year prior
to the first day of the third month of the preceding fiscal year.¹
(7) No payment may be made under this section to any State with
respect to any expenditure-
(A) for the provision of medical or any other remedial care,
(except as provided in paragraph (11) (D)²), other than family
planning services, unless it is an integral but subordinate part of
a service described in paragraph (1) of this subsection and Fed-
eral financial participation with respect to the expenditure is not
available under the plan of the State approved under title XIX;
1 Paragraph (6) was amended by section 1(c) of P.L. 94-401, effective October 1, 1975.
2 The phrase "(except as provided by paragraph (11) (D))" was added by section 4 of
Public Law 94-120 as amended by section 6 of P.L. 94-401 and by section 1(c) of P.L.
95-171 effective only for the period October 1, 1975, to September 30, 1978.
Sec. 2002(a)
Revised April 1978
546
(B) for the purchase, construction, or major modification of
any land, building or other facility, or fixed equipment; or
(C) which is in the form of goods or services provided in kind
by a private entity; or
(D) which is made from donated private funds, unless such
funds-
(i) are transferred to the State and are under its adminis-
trative control, and
(ii) are donated to the State, without restrictions as to
use, other than restrictions as to the services with respect to
which the funds are to be used imposed by a donor who is not
a sponsor or operator of a program to provide those services,
or the geographic area in which the services with respect to
which the contribution is used are to be provided, and
(iii) do not revert to the donor's facility or use if the
donor is other than a nonprofit organization; or
(E) for the provision of room or board (except as provided
by paragraph (11) (C) and paragraph (11) (D)¹) other than
room or board provided for a period of not more than six consecu-
tive months as an integral but subordinate part of a service de-
scribed in paragraph (1) of this subsection.
With regard to ending the dependency of individuals who are alco-
holics or drug addicts, the entire rehabilitative process for such in-
dividuals, including but not limited to initial detoxification, short
term residential treatment, and subsequent outpatient counseling and
rehabilitative services, whether or not such a process involves more
than one provider of services, shall be the basis for determining
whether standards imposed by or under subparagraph (A) or (E) of
this paragraph have been met.²
(8) No payment may be made under this section with respect to
any expenditure if payment is made with respect to that expenditure
under section 403 or 422 of this Act.
(9) (A) No payment may be made under this section with respect
to any expenditure in connection with the provision of any child day
care service, unless—
(i) in the case of care provided in the child's home, the care
meets standards established by the State which are reasonably in
accord with recommended standards of national standard-setting
organizations concerned with the home care of children, or
(ii) in the case of care provided outside the child's home, the
care meets the Federal interagency day care requirements as ap-
1 The phrase "and paragraph 11 (D)" was added by section 4 of Public Law 94-120
as amended by section 6 of P.L. 94-401 and by section 1(c) of P.L. 95-171 effective only
for the period October 1, 1975 to September 30, 1978.
2 The last sentence of paragraph (7) was added by section 4 of Public Law 94-120
as amended by section 6 of P.L. 94-401 and by section 1 (c) of P.L. 95-171 effective only
for the period October 1, 1975 to September 30, 1978.
Revised April 1978
Sec. 2002(a)
547
proved by the Department of Health, Education, and Welfare
and the Office of Economic Opportunity on September 23, 1968;
except that (I) subdivision III of such requirements with respect
to educational services shall be recommended to the States and
not required, and staffing standards for school-age children in day
care centers may be revised by the Secretary, (II) the staffing
standards imposed with respect to such care in the case of children
under age 3 shall conform to regulations prescribed by the Secre-
tary, (III) the staffing standards imposed with respect to such
care in the case of children aged 10 to 14 shall require at least one
adult for each 20 children, and in the case of school-aged children
under age 10 shall require at least one adult for each 15 children,
(IV) the State agency may waive the staffing standards other-
wise applicable in the case of a day care center or group day
care home in which not more than 20 per centum of the chil-
dren in the facility (or, in the case of a day care center, not
more than 5 children in the center) are children whose care is
being paid for (wholly or in part) from funds made available
to the State under this title, if such agency finds that it is not
feasible to furnish day care for the children, whose care is so
paid for, in a day care facility which complies with such staffing
standards, and if the day care facility providing care for such
children complies with applicable State standards, and (V) in
determining whether applicable staffing standards are met in the
case of day care provided in a family day care home, the num-
ber of children being cared for in such home shall include a
child of the mother who is operating the home only if such
child is under age 6,
1
except as provided in subparagraph (B).¹
(B) The Secretary shall submit to the President of the Senate and
the Speaker of the House of Representatives, after December 31, 1976,
and prior to April 1, 1978, an evaluation of the appropriateness of the
requirements imposed by subparagraph (A), together with any recom-
mendations he may have for modification of those requirements. No
earlier than ninety days after the submission of that report, the Sec-
retary may, by regulation, make such modifications in the require-
ments imposed by subparagraph (A) as he determines are
appropriate.2
(C) The requirements imposed by this paragraph are in lieu of
any requirements that would otherwise be applicable under section
522 (d) of the Economic Opportunity Act of 1964 to child day care
services with respect to which payment is made under this section.
1 The requirements of section 2002 (a) (9) are modified during the period October 1, 1975-
September 30, 1978 by sec. 7(a) (3) of P.L. 93-647, as amended (see p. 759). Sec. 5 of P.L.
94-401, as amended by sec. 1(b) of P.L. 95-171, added to paragraph (9) (A) (ii) subclause
(IV) (effective September 7, 1976 to September 30, 1978) and subclause (V) (effective
October 1, 1975 to September 30, 1978).
2 Subparagraph (B) was amended by section 5 of P.L. 95–59.
Sec. 2002(a)
548
Revised April 1978
(10) No payment may be made under this section with respect to
any expenditure for the provision of any educational service which
the State makes generally available to its residents without cost and
without regard to their income.
(11) No payment may be made under this section with respect
to any expenditure for the provision of any service to any individual
living in any hospital, skilled nursing facility, or intermediate care
facility (including any such hospital or facility for mental diseases
or for the mentally retarded), any prison, or any foster family home
except-
(A) any expenditure for the provision of a service that (i)
is provided by other than the hospital, facility, prison, or foster
family home in which the individual is living, and (ii) is pro-
vided under the State's program for the provision of the services
described in paragraph (1), to individuals who are not living
in a hospital, skilled nursing facility, intermediate care facility,
prison, or foster family home,
(B) any expenditure which is for the cost, in addition to the
cost of basic foster care, of the provision, by a foster family home,
to an individual living in that home, of a service which meets
a special need of that individual, as determined under regula-
tions prescribed by the Secretary,
(C) any expenditure for the provision of emergency shelter
provided to a child, for not in excess of thirty days, as a pro-
tective service; and
(D) any expenditure for the initial detoxification of an alco-
holic or drug dependent individual, for a period not to exceed
7 days, if such detoxification is integral to the further provision of
services for which such individual would otherwise be eligible
under this title.¹
(12) No payment may be made under this section with respect to
any expenditure for the provision of cash payments as a service.
(13) No payment may be made under this section with respect
to any expenditure for the provision of any service to any individual
to the extent that the provider of the service or the individual receiv-
ing the service is eligible to receive payment under title XVIII with
respect to the provision of the service.
(14)(A) For purposes of paragraphs (5) and (6), an individual
shall, at the option of the State, be deemed to be an individual
described in paragraph (5) (B) if, because of the geographic area in
which any particular service is provided to him, the characteristics
of the community to which it is provided, the nature of the service,
the conditions (other than income) of eligibility to receive it, or other
1 Clause (D) of section 2002(a)(11) was added by section 4 of Public Law 94-120
as amended bysection 6 of P.L. 94-401 and by section 1(c) of P.L. 95-171 effective only
for the period October 1, 1975 to September 30, 1978.
Revised April 1978
549
Sec. 2002(b)
factors surrounding its provision, the State may reasonably conclude
without individual determinations of eligibility, that substantially all
of the persons who receive the service are members of families with
a monthly gross income which is not more than 90 per centum of the
median income of a family of four in the State, adjusted (in accord-
ance with the regulations prescribed by the Secretary) to take into
account the size of the family.
(B) The provisions of subparagraph (A) shall not be applicable
to child day care services furnished to any child other than a child of
a migratory agricultural worker.¹
(15) No payment may be made under this section with respect to
any expenditure for the provision of any health related service if
such service is provided by an entity which has failed to comply with
a request made by the Secretary or State agency under section 2003
(d) (1) (J), for so long as such entity remains in noncompliance with
such request.2
(16) Any State may refuse to enter into a contract or other arrange-
ment with a provider of services for purposes of participation under
the program established by this title, or otherwise to approve a pro-
vider for such purposes, if any person who has a direct or indirect
ownership or control interest of 5 percent or more in such provider,
or who is an officer, director, agent, or managing employee (as defined
in section 1126(b)) of such provider, is a person described in section
1126(a), and the State may terminate any such contract, arrangement,
or approval if it determines that the provider did not fully and accu-
rately make any disclosure required of it by section 1126 (a) at the
time the contract or arrangement was entered into or the approval
was given.³
(b) (1) Prior to the beginning of each quarter the Secretary shall
estimate the amount to which a State will be entitled under this sec-
tion for that quarter on the basis of a report filed by the State con-
taining its estimate of the amount to be expended during that quarter
with respect to which payment must be made under this section, to-
gether with an explanation of the bases for that estimate.
(2) The Secretary shall then pay to the State, in such installments
as he may determine, the amount so estimated, reduced or increased to
the extent of any overpayment or underpayment which the Secretary
determines was made under this section to the State for any prior quar-
ter and with respect to which adjustment has not already been made
under this subsection.
(3) Upon the making of any estimate by the Secretary under this
subsection, any appropriations available for payments under this sec-
tion shall be deemed obligated.
1 Paragraph (14) was added by section 1(a) of P.L. 94-401, effective October 1, 1975.
2 Paragraph (15) was added by section 3(d) (2) of P.L. 95-142.
3 Paragraph (16) was added by section 8(d) of P.L. 95–142.
Sec. 2003 (a)
Revised April 1978
550
Program Reporting
Sec. 2003. (a) Each State which participates in the program estab-
lished by this title shall make such reports concerning its use of Fed-
eral social services funds as the Secretary may by regulation provide.
(b) Each State which participates in the program established by
this title shall assure that the aggregate expenditures from appropri-
ated funds from the State and political subdivisions thereof for the
provision of services during each services program year (as established
under the requirements of section 2002 (a) (3)) with respect to which
payment is made under section 2002 is not less than the aggregate
expenditures from such appropriated funds for the provision of those
services during the fiscal year ending June 30, 1973, or the fiscal year
ending June 30, 1974, with respect to which payment was made under
the plan of the State approved under title I, VI, X, XIV, or XVI, or
part A of title IV, whichever is less, except that the requirements of
this subsection shall not apply to any State for any services program
year if the payment to the State under section 2002, for each fiscal year
any part of which is included in that services program year, with
respect to expenditures other than expenditures for personnel training
or retraining directly related to the provision of services, equals the
allotment of the State for that fiscal year under section 2002 (a) (2).
•
(c) (1) If the Secretary, after reasonable notice and an opportunity
for a hearing to the State, finds that there is a substantial failure to
comply with any of the requirements imposed by subsections (a) and
(b) of this section, he shall, except as provided in paragraph (2),
notify the State that further payments will not be made to the State
under section 2002 until he is satisfied that there will no longer be any
such failure to comply, and until he is so satisfied he shall make no
further payments to the State.
(2) The Secretary may suspend implementation of any termina-
tion of payments under paragraph (1) for such period as he determines
appropriate and instead reduce the amount otherwise payable to the
State under section 2002 for expenditures during that period by 3 per
centum for each of subsections (a) and (b) of this section with respect
to which there was a finding of substantial noncompliance and with
respect to which he is not yet satisfied that there will no longer be any
such failure to comply.
(d) (1) Each State which participates in the program established
by this title shall have a plan applicable to its program for the provi-
sion of the services described in section 2002 (a) (1) which—
Revised April 1978
Sec. 2003 (d)
551
(A) provides that an opportunity for a fair hearing before
the appropriate State agency will be granted to any individual
whose claim for any service described in section 2002 (a) (1) is
denied or is not acted upon with reasonable promptness;
(B) provides that the use or disclosure of information ob-
tained in connection with administration of the State's program
for the provision of the services described in section 2002 (a) (1)
concerning applicants for and recipients of those services will be
restricted to purposes directly connected with the administration
of that program, the plan of the State approved under part A of
title IV, the plan of the State developed under part B of that
title, the supplemental security income program established by
title XVI, or the plan of the State approved under title XIX;
(C) provides for the designation by the chief executive officer
of the State or as otherwise provided by the laws of the State, of
an appropriate agency which will administer or supervise the
administration of the State's program for the provision of the
services described in section 2002(a)(1);
(D) provides that the State will, in the administration of its
program for the provision of the services described in section
2002 (a) (1), use such methods relating to the establishment and
maintenance of personnel standards on a merit basis as are found
by the Secretary to be necessary for the proper and efficient op-
eration of the program, except that the Secretary shall exercise
no authority with respect to the selection, tenure of office, or com-
pensation of any individual employed in accordance with such
methods;
(E) provides that no durational residency or citizenship
requirement will be imposed as a condition to participation in
the program of the State for the provision of the services de-
scribed in section 2002(a) (1);
(F) provides, if the State program for the provision of the
services described in section 2002 (a)(1) includes services to in-
dividuals living in institutions or foster homes, for the estab-
lishment or designation of a State authority or authorities which
shall be responsible for establishing and maintaining standards
for such institutions or homes which are reasonably in accord
with recommended standards of national organizations concerned
with standards for such institutions or homes, including stand-
ards related to admissions policies, safety, sanitation, and pro-
tection of civil rights;
(G) provides, if the State program for the provision of the
services described in section 2002 (a) (1) includes child day care
services, for the establishment or designation of a State authority
21-746 O 78 42
<
-
Revised April 1978
551-A
Sec. 2003(d)
or authorities which shall be responsible for establishing and main-
taining standards for such services which are reasonably in accord
with recommended standards of national organizations concerned
with standards for such services, including standards related to
admission policies for facilities providing such services, safety,
sanitation, and protection of civil rights;
(H) provides that the State's program for the provision of
the services described in section 2002 (a) (1) will be in effect in all
political subdivisions of the State;
(I) provides for financial participation by the State in the
provision of the services described in section 2002 ('a) (1) ; and
(J) provides that any entity (other than an individual prac-
titioner or a group of practitioners) receiving payments for the
provision of health related services complies with the require-
ments of section 1124, and supplies (within such period as may
be specified in regulations by the Secretary or by the State
agency which administers or supervises the administration of the
plan) upon request specifically addressed to such entity by the
Secretary or such State agency, respectively, (i) full and com-
plete information as to the ownership of a subcontractor (as
defined by the Secretary in regulations) with whom such entity
has had, during the previous twelve months, business transactions
in an aggregate amount in excess of $25,000, and (ii) full and com-
plete information as to any significant business transactions (as
defined by the Secretary in regulations), occurring during the
five-year period ending on the date of such request, between such
entity and any wholly owned supplier or between such entity
and any subcontractor.¹
Notwithstanding clause (C), if on December 1, 1974, the State agency
which administered or supervised the administration of the portion of
the plan of the State for services to the aged, blind, or disabled ap-
proved under title VI of this Act which related to blind individuals
was different from the agency which administered or supervised the
administration of the rest of that plan, the State agency which admin-
istered or supervised the administration of the portion of the plan of
¹ Subparagraph (J) was added by section 3(d)(1) of P.L. 95-142.
Sec. 2003 (e)
552
Revised April 1978
the State for services to the aged, blind, or disabled related to blind
individuals may be designated to administer or supervise the adminis-
tration of the portion of the State's program for the provision of the
services described in section 2002 (a) (1) related to blind individuals
and a separate State agency may be designated to administer or su-
pervise the administration of the rest of the program; and in such
case the part of the program which each agency administers, or the
administration of which each agency supervises, shall be regarded as
a separate program for the provision of the services described in sec-
tion 2002(a)(1) for purposes of this title. The date selected by the
State pursuant to section 2004 (1) as the beginning of the services pro-
gram year for each of the separate programs shall be the same.
(2) The Secretary shall approve any plan which complies with
the provisions of paragraph (1).
(e) (1) No payment may be made under section 2002 to any State
which does not have a plan approved under subsection (g).¹
1
(2) In the case of any State plan which has been approved by the
Secretary under subsection (d), if the Secretary, after reasonable
notice and an opportunity for a hearing to the State, finds—
(A) that the plan no longer complies with the provisions of
subsection (d) (1), or
(B) that in the administration of the plan there is a substan-
tial failure to comply with any such provision,
the Secretary shall, except as provided in paragraph (3), notify the
State that further payments will not be made to the State under sec-
tion 2002 until he is satisfied that there will no longer be any such
failure to comply, and until he is so satisfied he shall make no further
payments to the State.
(3) The Secretary may suspend implementation of any termina-
tion of payments under paragraph (2) for such period as he deter-
mines appropriate and instead reduce the amount otherwise payable
to the State under section 2002 for expenditures during that period by
3 percent for each clause of subsection (d) (1) with respect to which
there is a finding of noncompliance and with respect to which he is not
yet satisfied that there will no longer be any such failure to comply.
(f) The provisions of section 333 of the Comprehensive Alcohol
Abuse and Alcoholism Prevention, Treatment, and Rehabilitation
Act of 1970 shall be applicable to services provided by any State pur-
suant to this title with respect to individuals suffering from drug
addiction or alcoholism.2
4
1 The reference to subsection (g) is a technical error in the law. The intended reference
is to subsection (d).
2 Subsection (f) was added to section 2003 effective only for the period October 1, 1975
to September 30, 1978 by section 4 of Public Law 94-120 as amended by section 6 of
Public Law 94-401 and by section 1(c) of P.L. 95–171.
553
Sec. 2004
Services Program Planning
Sec. 2004. A State's services program planning meets the require-
ments of this section if, for the purpose of assuring public participa-
tion in the development of the program for the provision of the serv-
ices described in section 2002 (a) (1) within the State—
(1) the beginning of the fiscal year of either the Federal Gov-
ernment or the State government is established as the beginning
of the State's services program year; and
(2) at least ninety days prior to the beginning of the State's
services program year, the chief executive officer of the State, or
such other official as the laws of the State provide, publishes and
makes generally available (as defined in regulations prescribed by
the Secretary after consideration of State laws governing notice
of actions by public officials) to the public a proposed compre-
hensive annual services program plan prepared by the agency
designated pursuant to the requirements of section 2003 (d) (1) (C)
and, unless the laws of the State provide otherwise, approved by
the chief executive officer, which sets forth the State's plan for the
provision of the services described in section 2002(a)(1) during
that year, including—
(A) the objectives to be achieved under the program,
(B) the services to be provided under the program, in-
cluding at least one service directed at at least one of the goals
in each of the five categories of goals set forth in section
2002(a)(1) (as determined by the State) and including at
least three types of services (selected by the State) for indi-
viduals who are recipients of supplemental security income
benefits under title XVI and who are in need of such services,
together with a definition of those services and a description
of their relationship to the objectives to be achieved under the
program and the goals described in section 2002 (a) (1),
(C) the categories of individuals to whom those services
are to be provided, including any categories based on the in-
come of individuals or their families,
(D) the geographic areas in which those services are to be
provided, and the nature and amount of the services to be
provided in each area,
(E) a description of the planning, evaluation, and report-
ing activities to be carried out under the program,
(F) the sources of the resources to be used to carry out the
program,
(G) a description of the organizational structure
through which the program will be administered, including
Sec. 2004
554
the extent to which public and private agencies and volun-
teers will be utilized in the provision of services,
(H) a description of how the provision of services under
the program will be coordinated with the plan of the State
approved under part A of title IV, the plan of the State.
developed under part B of that title, the supplemental secu-
rity income program established by title XVI, the plan of the
State approved under title XIX, and other programs for the
provision of related human services within the State, includ-
ing the steps taken to assure maximum feasible utilization of
services under these programs to meet the needs of the low
income population,
(I) the estimated expenditures under the program, in-
cluding estimated expenditures with respect to each of the
services to be provided, each of the categories of individuals
to whom those services are to be provided, and each of the
geographic areas in which those services are to be provided,
and a comparison between estimated non-Federal expendi-
tures under the program and non-Federal expenditures for
the provision of the services described in section 2002 (a) (1)
in the State during the preceding services program year, and
(J) a description of the steps taken, or to be taken, to
assure that the needs of all residents of, and all geographic
areas in, the State were taken into account in the development
of the plan; and
(3) public comment on the proposed plan is accepted for a
period of at least forty-five days; and
(4) at least forty-five days after publication of the proposed
plan and prior to the beginning of the State's services program
year, the chief executive officer of the State, or such other official
as the laws of the State provide, publishes a final comprehensive
annual services program plan prepared by the agency designed
pursuant to the requirements of section 2003 (d)(1)(C) and, un-
less the laws of the State provide otherwise, approved by the chief
executive officer, which sets forth the same information required
to be included in the proposed plan, together with an explanation
of the differences between the proposed and final plan and the
reasons therefor; and
(5) any amendment to a final comprehensive services program
plan is prepared by the agency designated pursuant to section
2003 (d) (1) (C), approved by the chief executive officer of the
State unless the laws of the State provide otherwise, and published
by the chief executive officer of the State, or such other official
as the laws of the State provide, as a proposed amendment on
555
Sec. 2007
which public comment is accepted for a period of at least thirty
days, and then prepared by the agency designated pursuant to sec-
tion 2003 (d) (1) (C), approved by the chief executive officer of
the State unless the laws of the State provide otherwise, and pub-
lished by the chief executive officer of the State, or such other
official as the laws of the State provide, as a final amendment, to-
gether with an explanation of the differences between the pro-
posed and final amendment and the reasons therefor.
Effective Date Of Regulations Published By The Secretary
Sec. 2005. No final regulation published by the Secretary under
this title shall be effective with respect to payments under section
2002 for expenditures during any quarter commencing before the be-
ginning of the first services program year established by the State
under the requirements of section 2002 (a) (3) which begins at least
sixty days after the publication of the final regulation.
Evaluation; Program Assistance
Sec. 2006. (a) The Secretary shall provide for the continuing
evaluation of State programs for the provision of the services de-
scribed in section 2002 (a) (1).
(b) The Secretary shall make available to the States assistance
with respect to the content of their services program, and their services
program planning, reporting, administration, and evaluation.
(c) Within six months after the close of each fiscal year, the Sec-
retary shall submit to the Congress a report on the operation of the
program established by this title during that year, including-
(1) the evaluations carried out under subsection (a) and the
results obtained therefrom, and
(2) the assistance provided under subsection (b) during that
year.
Definitions
Sec. 2007. For purposes of this title—
(1) the term "State supplementary payment" means any cash
payment made by a State on a regular basis to an individual who
is receiving supplemental security income benefits under title
XVI or who would but for his income be eligible to receive such
benefits, as assistance based on need in supplementation of such
benefits, as determined by the Secretary, and
(2) the term "State" means the fifty States and the District of
Columbia.
か
​Revised August 1978
SELECTED PROVISIONS OF THE INTERNAL
REVENUE CODE OF 1954
26 U.S.C. 1—
Subtitle A-Income Taxes
CHAPTER 1-NORMAL TAXES AND SURTAXES
SUBCHAPTER A-DETERMINATION OF TAX LIABILITY
*
*
Part IV-Credits Against Tax
Subpart A-Credits Allowable
*
*
EK
*
*
SEC. 40. EXPENSES OF WORK INCENTIVE PROGRAMS.
(a) GENERAL RULE.-There shall be allowed, as a credit against the
tax imposed by this chapter, the amount determined under subpart C
of this part.
(b) REGULATIONS.-The Secretary shall prescribe such regulations
as may be necessary to carry out the purposes of this section and
subpart C.
*
SEC. 43. EARNED INCOME.¹
(a) ALLOWANCE OF CREDIT.-In the case of an eligible individual,
there shall be allowed as a credit against the tax imposed by this
chapter for the taxable year an amount equal to 10 percent of so much
of the earned income for the taxable year as does not exceed $4,000.
1 Section 43 was added by section 204 of Public Law 94-12 and amended by section 2
of Public Law 94-164 and section 401(c) of Public Law 94-455. It is effective for taxable
years beginning after December 31, 1974, and before January 1, 1979. Section 2(d) of
Public Law 94-164 governs the treatment of refunds under this section in determining
benefits under assistance programs. This section is reprinted in this document on page 767.
See also section 103(b) of P.L. 95–30.
(557)
IRC Sec. 43(b)
558
(b) LIMITATION.-The amount of the credit allowable to a taxpayer
under subsection (a) for any taxable year shall be reduced (but not
below zero) by an amount equal to 10 percent of so much of the ad-
justed gross income (or, if greater, the earned income) of the taxpayer
for the taxable year as exceeds $4,000.
<
(c) DEFINITION.-For purposes of this section—
(1) ELIGIBLE INDIVIDUAL.-The term "eligible individual” means
an individual who, for the taxable year—
(A) maintains a household (within the meaning of section
44A (f) (1)) in the United States which is the principal place
of abode of that individual and-
(i) a child of that individual if such child meets the
requirements of section 151 (e) (1) (B) (relating to addi-
tional exemptions for dependents), or
(ii) a child of that individual who is disabled (within
the meaning of section 72 (m) (7)) and with respect to
whom that individual is entitled to claim a deduction un-
der section 151; and
(B) is not entitled to exclude any amount from gross in-
come under section 911 (relating to earned income from
sources without the United States) or section 931 (relating to
income from sources within the possessions of the United
States).
(2) EARNED INCOME.
(A) The term “earned income" means—
(i) wages, salaries, tips, and other employee compen-
sation, plus
(ii) the amount of the taxpayer's net earnings from
self-employment for the taxable year (within the mean-
ing of section 1402 (a)).
(B) For purposes of subparagraph (A)—
(i) except as provided in clause (ii), any amount shall
be taken into account only if such amount is includible
in the gross income of the taxpayer for the taxable year,
(ii) the earned income of an individual shall be com-
puted without regard to any community property laws,
(iii) no amount received as a pension or annuity shall
be taken into account, and
(iv) no amount to which section 871 (a) applies (re-
lating to income of nonresident alien individuals not
connected with United States business) shall be taken
into account.
(d) MARRIED INDIVIDUALS.-In the case of an individual who is
married (within the meaning of section 143), this section shall apply
only if a joint return is filed for the taxable year under section 6013.
559
IRC Sec. 44A(c)
(e) TAXABLE YEAR MUST BE FULL TAXABLE YEAR.-Except in the
case of a taxable year closed by reason of the death of the taxpayer, no
credit shall be allowable under this section in the case of a taxable year
covering a period of less than 12 months.
*
*
*
*
*
SEC. 44A. EXPENSES FOR HOUSEHOLD AND DEPEND-
ENT CARE SERVICES NECESSARY FOR GAIN-
FUL EMPLOYMENT.
(a) ALLOWANCE OF CREDIT.-In the case of an individual who
maintains a household which includes as a member one or more quali-
fying individuals (as defined in subsection (c)(1)), there shall be
allowed as a credit against the tax imposed by this chapter for the
taxable year an amount equal to 20 percent of the employment-related
expenses (as defined in subsection (c) (2)) paid by such individual
during the taxable year.
(b) APPLICATION WITH OTHER CREDITS.-The credit allowed by
subsection (a) shall not exceed the amount of the tax imposed by this
chapter for the taxable year reduced by the sum of the credits allow-
able under-
(1) section 33 (relating to foreign tax credit),
(2) section 37 (relating to credit for the elderly),
(relating to investment in certain depreciable
(3) section 38
property),
(4) section 40 (relating to expenses of work incentive pro-
grams),
(5) section 41 (relating to contributions to candidates for
public office),
(6) section 42 (relating to general tax credit), and
(7) section 44 (relating to purchase of new principal
residence).
(c) DEFINITIONS OF QUALIFYING INDIVIDUAL AND EMPLOYMENT-
RELATED EXPENSES.-For purposes of this section-
(1) QUALIFYING INDIVIDUAL.-The term "qualifying individ-
ual" means—
(A) a dependent of the taxpayer who is under the age
of 15 and with respect to whom the taxpayer is entitled to a
deduction under section 151 (e),
(B) a dependent of the taxpayer who is physically or
mentally incapable of caring for himself, or
(C) the spouse of the taxpayer, if he is physically or
mentally incapable of caring for himself.
IRC Sec. 44A (c)
560
(2) EMPLOYMENT-RELATED EXPENSES.-
(A) IN GENERAL.-The term "employment-related ex-
penses" means amounts paid for the following expenses, but
only if such expenses are incurred to enable the taxpayer to
be gainfully employed for any period for which there are 1
or more qualifying individuals with respect to the taxpayer:
(i) expenses for household services, and
(ii) expenses for the care of a qualifying individual.
(B) EXCEPTION.-Employment-related expenses described
in subparagraph (A) which are incurred for services outside
the taxpayer's household shall be taken into account only if
incurred for the care of a qualifying individual described in
paragraph (1)(A).
(d) DOLLAR LIMIT ON AMOUNT CREDITABLE.-The amount of the
employment-related expenses incurred during any taxable year which
may be taken into account under subsection (a) shall not exceed-
(1) $2,000 if there is 1 qualifying individual with respect to
the taxpayer for such taxable year, or
(2) $4,000 if there are 2 or more qualifying individuals with
respect to the taxpayer for such taxable year.
(e) EARNED INCOME LIMITATION.-
(1) IN GENERAL.-Except as otherwise provided in this sub-
section, the amount of the employment-related expenses incurred
during any taxable year which may be taken into account under
subsection (a) shall not exceed-
(A) in the case of an individual who is not married at the
close of such year, such individual's earned income for such
year, or
(B) in the case of an individual who is married at the
close of such year, the lesser of such individual's earned
income or the earned income of his spouse for such year.
(2) SPECIAL RULE FOR SPOUSE WHO IS A STUDENT OR INCAPABLE
OF CARING FOR HIMSELF.-In the case of a spouse who is a student
or a qualifying individual described in subsection (c) (1) (C), for
purposes of paragraph (1), such spouse shall be deemed for each
month during which such spouse is a full-time student at an ed-
ucational institution, or is such a qualifying individual, to be
gainfully employed and to have earned income of not less than—
(A) $166 if subsection (d) (1) applies for the taxable
year, or
-
(B) $333 if subsection (d)(2) applies for the taxable
year.
In the case of any husband and wife, this paragraph shall apply
with respect to only one spouse for any one month.
561
IRC Sec. 44A(f)
(f) SPECIAL RULES.-For purposes of this section—
(1) MAINTAINING HOUSEHOLD.-An individual shall be treated
as maintaining a household for any period only if over half the
cost of maintaining the household for such period is furnished
by such individual (or, if such individual is married during such
period, is furnished by such individual and his spouse).
(2) MARRIED COUPLES MUST FILE JOINT RETURN.—If the tax-
payer is married at the close of the taxable year, the credit shall
be allowed under subsection (a) only if the taxpayer and his
spouse file a joint return for the taxable year.
(3) MARITAL STATUS.-An individual legally separated from
his spouse under a decree of divorce or of separate maintenance
shall not be considered as married.
(4) CERTAIN MARRIED INDIVIDUALS LIVING APART.—If—
(A) an individual who is married and who files a sep-
arate return—
(i) maintains as his home a household which con-
stitutes for more than one-half of the taxable year the
principal place of abode of a qualifying individual, and
(ii) furnishes over half of the cost of maintaining
such household during the taxable year, and
(B) during the last 6 months of such taxable year such
individual's spouse is not a member of such household,
such individual shall not be considered as married.
(5) SPECIAL DEPENDENCY TEST IN CASE OF DIVORCED PARENTS,
ETC.—If—
(A) a child (as defined in section 151(e) (3)) who is under
the age of 15 or who is physically or mentally incapable of
caring for himself receives over half of his support during
the calendar year from his parents who are divorced or legally
separated under a decree of divorce or separate maintenance
or who are separated under a written separation agreement,
and
(B) such child is in the custody of one or both of his parents
for more than one-half of the calendar year,
in the case of any taxable year beginning in such calendar year
such child shall be treated as being a qualifying individual de-
scribed in subparagraph (A) or (B) of subsection (c) (1), as the
case may be, with respect to that parent who has custody for a
longer period during such calendar year than the other parent,
and shall not be treated as being a qualifying individual with
respect to such other parent.
IRC Sec. 44A(f)
562
(6) PAYMENTS TO RELATED INDIVIDUALS.-
(A) IN GENERAL.-Except as provided in subparagraph
(B), no credit shall be allowed under subsection (a) for any
amount paid by the taxpayer to an individual bearing a rela-
tionship to the taxpayer described in paragraphs (1) through
(8) of section 152 (a) (relating to definition of dependent)
or to a dependent described in paragraph (9) of such section.
(B) EXCEPTION.-Subparagraph (A) shall not apply to
any amount paid by the taxpayer to an individual with
respect to whom, for the taxable year of the taxpayer in which
the service is performed, neither the taxpayer nor his spouse
is entitled to a deduction under section 151 (e) (relating to
deduction for personal exemptions for dependents), but only
if the service with respect to which such amount is paid con-
stitutes employment within the meaning of section 3121 (b).
(7) STUDENT.-The term "student" means an individual who
during each of 5 calendar months during the taxable year is a full-
time student at an educational organization.
(8) EDUCATIONAL ORGANIZATION.-The term "educational orga-
nization" means an educational organization described in section
170 (b) (1) (A) (ii).
(g) REGULATIONS.-The Secretary shall prescribe such regulations
as may be necessary to carry out the purposes of this section.¹
*
*
*
*
X
Subpart C-Rules for Computing Credit for Expenses of Work Incentive
Programs
P
Sec. 50A. Amount of credit.
Sec. 50B. Definitions; special rules.
SEC. 50A. AMOUNT OF CREDIT.
(a) DETERMINATION OF AMOUNT.-
(1) GENERAL RULE.-The amount of the credit allowed by sec-
tion 40 for the taxable year shall be equal to 20 percent of the work
incentive program expenses (as defined in section 50B(a)).
(2) LIMITATION BASED ON AMOUNT OF TAX.-Notwithstanding
paragraph (1), the credit allowed by section 40 for the taxable
year shall not exceed—
(A) so much of the liability for tax for the taxable year
as does not exceed $50,000, plus
(B) 50 percent of so much of the liability for tax for the
taxable year as exceeds $50,000.
¹ Section 44A was added by section 504 of Public Law 94–455, effective for taxable years
beginning after December 31, 1975.
563
IRC Sec. 50A(a)
The preceding sentence shall not apply to so much of the credit
allowed by section 40 as is attributable to Federal welfare
recipient employment incentive expenses described in subsection
(a) (6) (B).¹
(3) LIABILITY FOR TAX. For purposes of paragraph (2), the
liability for tax for the taxable year shall be the tax imposed by
this chapter for such year, reduced by the sum of the credits
allowable under-
(A) section 33 (relating to foreign tax credit),
(B) section 37 (relating to retirement income),
(C) section 38 (relating to investment in certain depreci-
able property), and
(D) section 41 (relating to contributions to candidates for
public office).
For purposes of this paragraph, any tax imposed for the taxable
year by section 56 (relating to minimum tax for tax preferences),
section 72(m) (5) (B) (relating to 10 percent tax on premature
distributions to owner-employees), section 402 (e) (relating to tax
on lump sum distributions), section 408 (f) (relating to additional
tax on income from certain retirement accounts), section 531
(relating to accumulated earnings tax), section 541 (relating to
personal holding company tax), or section 1378 (relating to tax
on certain capital gains of subchapter S corporations), and any
additional tax imposed for the taxable year by section 1351 (d) (1)
(relating to recoveries of foreign expropriation losses), shall
not be considered tax imposed by this chapter for such year.²
(4) MARRIED INDIVIDUALS.—In the case of a husband or wife
who files a separate return, the amount specified under subpara-
graphs (A) and (B) of paragraph (2) shall be $25,000 in lieu
of $50,000. This paragraph shall not apply if the spouse of the
taxpayer has no work incentive program expenses for, and no
unused credit carryback or carryover to, the taxable year of such
spouse which ends within or with the taxpayer's taxable year.³
(5) CONTROLLED GROUPS.-In the case of a controlled group, the
$50,000 amount specified under paragraph (2) shall be reduced
for each component member of such group by apportioning
$50,000 among the component members of such group in such
manner as the Secretary shall by regulations prescribe. For pur-
poses of the preceding sentence, the term "controlled group" has
the meaning assigned to such term by section 1563 (a).³
3
1 Paragraph (2) was amended by section 4 (a) (1) of Public Law 94-401, effective with
respect to individuals hired after September 7, 1976. Paragraph (2) was also amended by
section 2107(a) of Public Law 94-455.
2 Section 50A(a)(3) was amended by Public Law 93-406 and by sections 1901 (a) (6)
and (b)(1) (D) of Public Law 94-455.
3 Paragraphs (4) and (5) were amended by section 2107(a) of Public Law 94-455.
IRC Sec. 50A(a)
564
(6) LIMITATION WITH RESPECT TO CERTAIN ELIGIBLE EMPLOYEES.-
(A) NONBUSINESS ELIGIBLE EMPLOYEES.-Notwithstanding
paragraph (1), the credit allowed by section 40 with respect
to Federal welfare recipient employment incentive expenses
paid or incurred by the taxpayer during the taxable year to
an eligible employee whose services are not performed in con-
nection with a trade or business of the taxpayer shall not
exceed $1,000.
(B) CHILD DAY CARE SERVICES ELIGIBLE EMPLOYEES.—Not-
withstanding paragraph (1), the credit allowed by section 40
with respect to Federal welfare recipient employment incen-
tive expenses paid or incurred by the taxpayer during the
taxable year to an eligible employee whose services are per-
formed in connection with a child day care services program,
conducted by the taxpayer, shall not exceed $1,000.¹
(b) CARRYBACK AND CARRYOVER OF UNUSED CREDIT.-
P
(1) ALLOWANCE OF CREDIT.—If the amount of the credit deter-
mined under subsection (a) (1) for any taxable year exceeds the
limitation provided by subsection (a) (2) for such taxable year
(hereinafter in this subsection referred to as "unused credit
year"), such excess shall be-
(A) a work incentive progam credit carryback to each of
the 3 taxable years preceding the unused credit year, and
(B) a work incentive program credit carryover to each of
the 7 taxable years following the unused credit year,
and shall be added to the amount allowable as a credit by section
40 for such years, except that such excess may be a carryback only
to a taxable year beginning after December 31, 1971. The entire
amount of the unused credit for an unused credit year shall be
carried to the earliest of the 10 taxable years to which (by reason
of subparagraphs (A) and (B)) such credit may be carried, and
then to each of the other 9 taxable years to the extent that, because
of the limitation contained in paragraph (2), such unused credit
may not be added for a prior taxable year to which such unused
credit may be carried.
(2) LIMITATION.-The amount of the unused credit which may
be added under paragraph (1) for any preceding or succeeding
taxable year shall not exceed the amount by which the limitation
provided by subsection (a) (2) for such taxable year exceeds the
sum of-
1 Section 50A(a)(6) was added by section 401(a)(1) of Public Law 94-12 and was
amended (effective with respect to individuals hired after September 7, 1976) by section
4(a) (2) of Public Law 94-401.
565
IRC Sec. 50A(c)
(A) the credit allowable under subsection (a) (1) for such
taxable year, and
(B) the amounts which, by reason of this subsection, are
added to the amount allowable for such taxable year and at-
tributable to taxable years preceding the unused credit year.
(c) EARLY TERMINATION OF EMPLOYMENT BY EMPLOYER, ETC.-
(1) General RULE.-Under regulations prescribed by the Sec-
retary—
(A) Work incentive program expenses.-If the employ-
ment of any employee with respect to whom work incentive
program expenses are taken into account under subsection (a)
is terminated by the taxpayer at any time during the first
90 days of such employment (whether or not consecutive) or
before the close of the 90th calendar day after the day in
which such employee completes 90 days of employment with
the taxpayer, the tax under this chapter for the taxable year
in which such employment is terminated shall be increased
by an amount (determined under such regulations) equal to
the credits allowed under section 40 for such taxable year
and all prior taxable years attributable to work incentive
program expenses paid or incurred with respect to such
employee.¹
(B) Carrybacks and carryovers adjusted.—In the case of
any termination of employment to which subparagraph (A)
applies, the carrybacks and carryovers under subsection (b)
shall be properly adjusted.
(2) SUBSECTION NOT TO APPLY IN CERTAIN CASES.-
(A) In general.—Paragraph (1) shall not apply to—
(i) a termination of employment of an employee who
voluntarily leaves the employment of the taxpayer,
(ii) a termination of employment of an individual
who, before the close of the period referred to in para-
graph (1)(A), becomes disabled to perform the services
of such employment, unless such disability is removed
before the close of such period and the taxpayer fails to
offer reemployment to such individual,
(iii) a termination of employment of an individual, if
it is determined under the applicable State unemployment
compensation law that the termination was due to the
misconduct of such individual,
1 Subparagraph (A) was amended by section 2107 (b) of P.L. 94-455.
21-746 O - 78 - 43
IRC Sec. 50A(c)
566
Revised April 1978
(iv) a termination of employment of an individual
with respect to whom Federal welfare recipient employ-
ment incentive expenses (as described in section 50B
(a) (2)) are taken into account under subsection (a), or
(v) a termination of employment of an individual due
to a substantial reduction in the trade or business opera-
tions of the taxpayer.¹
(B) Change in form of business, etc.-For purposes of
paragraph (1), the employment relationship between the tax-
payer and an employee shall not be treated as terminated—
(i) by a transaction to which section 381(a) applies,
if the employee continues to be employed by the acquir-
ing corporation, or
(ii) by reason of a mere change in the form of con-
ducting the trade or business of the taxpayer, if the
employee continues to be employed in such trade or busi-
ness and the taxpayer retains a substantial interest in
such trade or business.
(3) SPECIAL RULE.—Any increase in tax under paragraph (1)
shall not be treated as tax imposed by this chapter for purposes
of determining the amount of any credit allowable under subpart
A.
(d) FAILURE TO PAY COMPARABLE WAGES.-
(1) GENERAL RULE.-Under regulations prescribed by the Sec-
retary, if during the period described in subsection (c) (1) (A),
the taxpayer pays wages (as defined in section 50B (b)) to an
employee with respect to whom work incentive program expenses
are taken into account under subsection (a) which are less than
the wages paid to other employees who perform comparable serv-
ices, the tax under this chapter for the taxable year in which
such wages are so paid shall be increased by an amount (deter-
mined under such regulations) equal to the credits allowed under
section 40 for such taxable year and all prior taxable years
attributable to work incentive program expenses paid or incurred
with respect to such employee, and the carrybacks and carryovers
under subsection (b) shall be properly adjusted.
(2) SPECIAL RULE. Any increase in tax under paragraph (1)
shall not be treated as tax imposed by this chapter for purposes
of determining the amount of any credit allowable under sub-
part A.
1 Subparagraph (A) was amended by section 401 of Public Law 94-12 and by section
2107 (c) of P.L. 94-455 by adding clauses (IV) and (V) respectively.
Revised August 1978
IRC Sec. 50B(c)
567
SEC. 50B. DEFINITIONS; SPECIAL RULES.
(a) WORK INCENTIVE PROGRAM EXPENSES.—
(1) IN GENERAL.-For purposes of this subpart, the term "work
incentive program expenses" means the sum of—
(A) the amount of wages paid or incurred by the taxpayer
for services rendered during the first 12 months of employ-
ment (whether or not consecutive) of employees who are
certified by the Secretary of Labor as-
(i) having been placed in employment under a work
incentive program established under section 432 (b) (1)
of the Social Security Act, and
(ii) not having displaced any individual from em-
ployment, plus
(B) the amount of Federal welfare recipient employment
incentive expenses paid or incurred by the taxpayer for serv-
ices rendered during the first 12 months of employment
(whether or not consecutive).
(2) DEFINITIONS.-For purposes of this section, the term "Fed-
eral welfare recipient employment incentive expenses" means the
amount of wages paid or incurred by the taxpayer for services
rendered to the taxpayer by an eligible employee—
(A) before January 1, 1980, or
(B) in the case of an eligible employee whose services are
performed in connection with a child day care services pro-
gram of the taxpayer, before October 1, 1978.3
(3) EXCLUSION.-No item taken into account under paragraph
(1) (A) shall be taken into account under paragraph (1)(B). No
item taken into account under paragraph (1)(B) shall be taken
into account under paragraph 1(A).¹
(b) Wages.--For purposes of subsection (a), the term "wages"
means only cash remuneration (including amounts deducted and with-
held).
(c) LIMITATIONS.—
(1) TRADE OR BUSINESS EXPENSES.-No item shall be taken into
account under subsection (a) (1) (A) unless such item is incurred
in a trade or business of the taxpayer.2
30-975 O - 78
¹ Section 50 B(a) was amended by section 401 of Public Law 94-12 and section 2107 (d)
and (e) of Public Law 94–455. Paragrah (2) of this section was also amended by section
4 (b) and (c) of Public Law 94-401 effective with respect to individuals hired after Septem-
ber 7, 1976 whose services are performed in connection with a child day care services
program of the taxpayer.
2 Subsections (c) (1) and (c) (4) were amended by section 401 of Public Law 94-12.
3 Subsection (a)(2)(B) was amended by section 1(e) of Public Law 95-171.
•
5
IRC Sec. 50B (c)
568
(2) REIMBURSED EXPENSES.-No item shall be taken into account
under subsection (a) to the extent that the taxpayer is reimbursed
for such item.
(3) GEOGRAPHICAL LIMITATION.-No item shall be taken into
account under subsection (a) with respect to any expense paid or
incurred by the taxpayer with respect to employment outside the
United States.
(4) MAXIMUM PERIOD OF TRAINING OR INSTRUCTION.-No item
with respect to any employee shall be taken into account under
subsection (a) (1) (A) after the end of the 24-month period begin-
ning with the date of initial employment of such employee by the
taxpayer:2
(5) INELIGIBLE INDIVIDUALS.-No item shall be taken into ac-
count under subsection (a) with respect to an individual who-
(A) bears any of the relationships described in paragraphs
(1) through (8) of section 152(a) to the taxpayer, or, if the
taxpayer is a corporation, to an individual who owns, di-
rectly or indirectly, more than 50 percent in value of the
outstanding stock of the corporation (determined with the
application of section 267 (c)),
(B) if the taxpayer is an estate or trust, is a grantor, bene-
ficiary, or fiduciary of the estate or trust, or is an individual
who bears any of the relationships described in paragraphs
(1) through (8) of section 152(a) to a grantor, beneficiary,
or fiduciary of the estate or trust, or
(C) is a dependent (described in section 152 (a) (9)) of the
taxpayer, or, if the taxpayer is a corporation, of an individual
described in subparagraph (A), or, if the taxpayer is an estate
or trust, of a grantor, beneficiary, or fiduciary of the estate or
trust.
(d) SUBCHAPTER S CORPORATIONS.-In case of an electing small busi-
ness corporation (as defined in section 1371)-
(1) the work incentive program expenses for each taxable year
shall be apportioned pro rata among the persons who are share-
holders of such corporation on the last day of such taxable year,
and
(2) any person to whom any expenses have been apportioned
under paragraph (1) shall be treated (for purposes of this sub-
part) as the taxpayer with respect to such expenses.
(e) ESTATES AND TRUSTS.-In the case of an estate or trust-
(1) the work incentive program expenses for any taxable year
shall be apportioned between the estate or trust and the benefi-
569
IRC Sec. 50B(g)
ciaries on the basis of the income of the estate or trust allocable to
each,
(2) any beneficiary to whom any expenses have been appor
tioned under paragraph (1) shall be treated (for purposes of this
subpart) as the taxpayer with respect to such expenses, and
(3) the $50,000 amount specified under subparagraphs (A) and
(B) of section 50A(a)(2) applicable to such estate or trust shall
be reduced to an amount which bears the same ratio to $50,000 as
the amount of the expenses allocated to the trust under paragraph
(1) bears to the entire amount of such expenses.¹
(f) LIMITATIONS WITH RESPECT TO CERTAIN PERSONS.-In the case
of-
(1) an organization to which section 593 applies,
(2) a regulated investment company or a real estate investment
trust subject to taxation under subchapter M (section 851 and
following), and
(3) a cooperative organization described in section 1381 (a),
rules similar to the rules provided in section 46(e) shall apply
under regulations prescribed by the Secretary.2
(g) ELIGIBLE EMPLOYEE.-
(1) ELIGIBLE EMPLOYEE.-For purposes of subsection (a) (1)
(B), the term "eligible employee" means an individual-
(A) who has been certified by the Secretary of Labor or
by the appropriate agency of State or local government as
being eligible for financial assistance under part A of title
IV of the Social Security Act and as having continuously
received such financial assistance during the 90 day period
which immediately precedes the date on which such individ-
ual is hired by the taxpayer,
(B) who has been employed by the taxpayer for a period
in excess of 30 consecutive days on a substantially full-time
basis,
(C) who has not displaced any other individual from em-
ployment by the taxpayer, and
(D) who is not a migrant worker.
The term "eligible employee" includes an employee of the taxpayer
whose services are not performed in connection with a trade or busi-
ness of the taxpayer.
(2) MIGRANT WORKER.-For purposes of paragraph (1), the
term "migrant worker" means an individual who is employed for
services for which the customary period of employment by one
¹ Paragraph (3) was amended by section 2107(a)(4) of Public Law 94–455.
2 Subsection (f) (3) was amended by section 302 of Public Law 94-12.
IRC Sec. 50B(g)
570
Revised April 1978
employer is less than 30 days if the nature of such services re-
quires that such individual travel from place to place over a short
period of time.¹
(h) CROSS REFERENCE.-
For application of this subpart to certain acquiring corpora-
tions, see section 381 (c) (24).
*
*
*
*
SUBCHAPTER B-COMPUTATION OF TAXABLE INCOME
E3
*
*
Part VI-Itemized Deductions for Individuals and Corporations
*
*
*
*
Sec. 1401. Rate of tax..
Sec. 1402. Definitions
Sec. 1403. Miscellaneous provisions__ -
*
*
SEC. 188. AMORTIZATION OF CERTAIN EXPENDITURES
FOR CHILD CARE FACILITIES.2
(a) ALLOWANCE OF DEDUCTION.-At the election of the taxpayer,
made in accordance with regulations prescribed by the Secretary, any
expenditure chargeable to capital account made by an employer to
acquire, construct, reconstruct, or rehabilitate section 188 property (as
defined in subsection (b)) shall be allowable as a deduction ratably
over a period of 60 months, beginning with the month in which the
property is placed in service. The deduction provided by this section
with respect to such expenditure shall be in lieu of any depreciation
deduction otherwise allowable on account of such expenditure.
(b) SECTION 188 PROPERTY.--For purposes of this section, the term
"section 188 property" means tangible property which qualifies under
regulations prescribed by the Secretary or his delegate as a child care
center facility primarily for the children of employees of the taxpay-
ers; except that such term shall not include—
(1) any property which is not of a character subject to deprecia-
tion; or
(2) property located outside the United States.
(c) APPLICATION OF SECTION.-This section shall apply only with
respect to expenditures made after December 31, 1971, and before
January 1, 1982.
*
*
*
*
2 Section 188 was amended by section 402 of P.L. 95-30.
3 Section 214 was repealed by section 504 (b) of P.L. 94-455.
4 Page references do not appear in the law.
*
SEC. 214. [REPEALED] 3
CHAPTER 2-TAX ON SELF-EMPLOYMENT INCOME
*
Page 4
571
572
581
1 Subsection (g) was added by section 401 of Public Law 94-12 and paragraph (1)(A)
of subsection (g) was amended by section 2107 (f) of Public Law 94-455.
Revised April 1978
IRC Sec. 1401 (b)
571
SEC. 1401. RATE OF TAX.¹
(a) OLD-AGE, SURVIVORS, AND DISABILITY INSURANCE.-In addition
to other taxes, there shall be imposed for each taxable year, on the
self-employment income of every individual, a tax as follows:
(1) in the case of any taxable year beginning before January 1,
1978, the tax shall be equal to 7.0 percent of the amount of the
self-employment income for such taxable year;
(2) in the case of any taxable year beginning after Decem-
ber 31, 1977, and before January 1, 1979, the tax shall be equal to
7.10 percent of the amount of the self-employment income for
such taxable year;
(3) in the case of any taxable year beginning after Decem-
ber 31, 1978, and before January 1, 1981, the tax shall be equal to
7.05 percent of the amount of the self-employment income for
such taxable year;
(4) in the case of any taxable year beginning after Decem-
ber 31, 1980, and before January 1, 1982, the tax shall be equal to
8.00 percent of the amount of the self-employment income for
such taxable year;
(5) in the case of any taxable year beginning after Decem-
ber 31, 1981, and before January 1, 1985, the tax shall be equal to
8.05 percent of the amount of the self-employment income for
such taxable year;
(6) in the case of any taxable year beginning after Decem-
ber 31, 1984, and before January 1, 1990, the tax shall be equal to
8.55 percent of the amount of the self-employment income for
such taxable year; and
(7) in the case of any taxable year beginning after Decem-
ber 31, 1989, the tax shall be equal to 9.30 percent of the amount of
the self-employment income for such taxable year.²
(b) HOSPITAL INSURANCE.—In addition to the tax imposed by the
preceding subsection, there shall be imposed for each taxable year, on
the self-employment income of every individual, a tax as follows:
(1) in the case of any taxable year beginning after Decem-
ber 31, 1973, and before January 1, 1978, the tax shall be equal to
0.90 percent of the amount of the self-employment income for
such taxable year;
(2) in the case of any taxable year beginning after Decem-
ber 31, 1977, and before January 1, 1979, the tax shall be equal to
1.00 percent of the amount of the self-employment income for such
taxable year;
¹ Section 1401 was amended by section 1901 (a) (154) of P.L. 94-455.
2 Subsection (a) was amended by section 101(a)(3) of P.L. 95–216.
.
IRC Sec. 1401(a)
Revised April 1978
572
(3) in the case of any taxable year beginning after Decem-
ber 31, 1978, and before January 1, 1981, the tax shall be equal to
1.05 percent of the amount of the self-employment income for such
taxable year;
(4) in the case of any taxable year beginning after Decem-
ber 31, 1980, and before January 1, 1985, the tax shall be equal to
1.30 percent of the amount of the self-employment income for such
taxable year;
(5) in the case of any taxable year beginning after Decem-
ber 31, 1984, and before January 1, 1986, the tax shall be equal
to 1.35 percent of the amount of the self-employment income for
such taxable year; and
(6) in the case of any taxable year beginning after Decem-
ber 31, 1985, the tax shall be equal to 1.45 percent of the amount
of the self-employment income for such taxable year.¹
(c) RELIEF FROM TAXES IN CASES COVERED BY CERTAIN INTERNA-
TIONAL AGREEMENTS.-During any period in which there is in effect an
agreement entered into pursuant to section 233 of the Social Security
Act with any foreign country, the self-employment income of an
individual shall be exempt from the taxes imposed by this section to
the extent that such self-employment income is subject under such
agreement to taxes or contributions for similar purposes under the
social security system of such foreign country.2
SEC. 1402. DEFINITIONS.
(a) NET EARNINGS FROM SELF-EMPLOYMENT.-The term "net earn-
ings from self-employment" means the gross income derived by an
individual from any trade or business carried on by such individual,
less the deductions allowed by this subtitle which are attributable to
such trade or business, plus his distributive share (whether or not
distributed) of income or loss described in section 702(a) (9) from
any trade or business carried on by a partnership of which he is a
member; except that in computing such gross income and deductions
and such distributive share of partnership ordinary income or loss—
(1) there shall be excluded rentals from real estate and from
personal property leased with the real estate (including such
rentals paid in crop shares) together with the deductions attribut-
able thereto, unless such rentals are received in the course of a
trade or business as a real estate dealer; except that the preceding
provisions of this paragraph shall not apply to any income derived
by the owner or tenant of land if (A) such income is derived
under an arrangement, between the owner or tenant and another
in dividual, which provides that such other individual shall pro-
1 Subsection (b) was amended by section 101 (b) (3) of P.L. 95–216.
2 Subsection (c) was added by section 317 (b) (1) of P.L. 95-216.
Revised April 1978
573
IRC Sec. 1402(a)
duce agricultural or horticultural commodities (including live-
stock, bees, poultry, and fur-bearing animals and wildlife) on
such land, and that there shall be material participation by the
owner or tenant (as determined without regard to any activities
of an agent of such owner or tenant) in the production or the
management of the production of such agricultural or horticul-
tural commodities, and (B) there is material participation by the
owner or tenant (as determined without regard to any activities
of an agent of such owner or tenant) with respect to any such
agricultural or horticultural commodity;
(2) there shall be excluded dividends on any share of stock, and
interest on any bond, debenture, note, or certificate, or other evi-
dence of indebtedness, issued with interest coupons or in regis-
tered form by any corporation (including one issued by a govern-
ment or political subdivision thereof), unless such dividends and
interest (other than interest described in section 35) are received
in the course of a trade or business as a dealer in stocks or
securities;
(3) there shall be excluded any gain or loss—
(A) which is considered as gain or loss from the sale or
exchange of a capital asset,
(B) from the cutting of timber, or the disposal of timber,
coal, or iron ore, if section 631 applies to such gain or loss, or
(C) from the sale, exchange, involuntary conversion, or
other disposition of property if such property is neither-
(i) stock in trade or other property of a kind which
would properly be includible in inventory if on hand at
the close of the taxable year, nor
(ii) property held primarily for sale to customers in
the ordinary course of the trade or business;
(4) the deduction for net operating losses provided in section
172 shall not be allowed;
(5) if—
(A) any of the income derived from a trade or business
(other than a trade or business carried on by a partnership)
is community income under community property laws ap-
plicable to such income, all of the gross income and deduc-
tions attributable to such trade or business shall be treated as
the gross income and deductions of the husband unless the
wife exercises substantially all of the management and con-
trol of such trade or business, in which case all of such gross
income and deductions shall be treated as the gross income
and deductions of the wife; and
IRC Sec. 1402(a)
574
Revised April 1978
(B) any portion of a partner's distributive share of the
ordinary income or loss from a trade or business carried on
by a partnership is community income or loss under the com-
munity property laws applicable to such share, all of such
distributive share shall be included in computing the net
earnings from self-employment of such partner, and no part
of such share shall be taken into account in computing the
net earnings from self-employment of the spouse of such
partner;
(6) a resident of Puerto Rico shall compute his net earnings
from self-employment in the same manner as a citizen of the
United States but without regard to section 933;
(7) the deduction for personal exemptions provided in section
151 shall not be allowed;
PI
(8) an individual who is a duly ordained, commissioned, or
licensed minister of a church or a member of a religious order
shall compute his net earnings from self-employment derived
from the performance of service described in subsection (c) (4)
without regard to section 107 (relating to rental value of parson-
ages) and, section 119 (relating to meals and lodging furnished
for the convenience of the employer), section 911 (relating to
earned income from sources without the United States) and sec-
tion 931 (relating to income from sources within possessions of
the United States);
(9) the term "possession of the United States" as used in sec-
tions 931 (relating to income from sources within possessions of
the United States) and 932 (relating to citizens of possessions of
the United States) shall be deemed not to include the Virgin
Islands, Guam, or American Samoa;
(10) there shall be excluded amounts received by a partner
pursuant to a written plan of the partnership, which meets such
requirements as are prescribed by the Secretary, and which pro-
vides for payments on account of retirement, on a periodic basis,
to partners generally or to a class or classes of partners, such
payments to continue at least until such partner's death, if-
(A) such partner rendered no services with respect to any
trade or business carried on by such partnership (or its suc-
cessors) during the taxable year of such partnership (or its
successors), ending within or with his taxable year, in which
such amounts were received, and
(B) no obligation exists (as of the close of the partner-
ship's taxable year referred to in subparagraph (A)) from
the other partners to such partner except with respect to
retirement payments under such plan, and
Revised April 1978
574-A
IRC Sec. 1402(a)
(C) such partner's share, if any, of the capital of the
partnership has been paid to him in full before the close of
the partnership's taxable year referred to in subparagraph
(A);
(11) in the case of an individual who has been a resident of
the United States during the entire taxable year, the exclusion
from gross income provided by section 911 (a) (2) shall not apply;
and
(12) there shall be excluded the distributive share of any item
of income or loss of a limited partner, as such, other than guar-
anteed payments described in section 707 (c) to that partner for
services actually rendered to or on behalf of the partnership to
the extent that those payments are established to be in the nature
of remuneration for those services.¹
1
If the taxable year of a partner is different from that of the partner-
ship, the distributive share which he is required to include in com-
puting his net earnings from self-employment shall be based on the
ordinary income or loss of the partnership for any taxable year of
the partnership ending within or with his taxable year. In the case.
of
any trade or business which is carried on by an individual or by a
partnership and in which, if such trade or business were carried on
exclusively by employees, the major portion of the services would con-
stitute agricultural labor as defined in section 3121 (g)-
(i) in the case of an individual, if the gross income derived by
him from such trade or business is not more than $2,400, the net
earnings from self-employment derived by him from such trade
or business may, at his option, be deemed to be 66% percent of
such gross income; or
(ii) in the case of an individual, if the gross income derived by
him from such trade or business is more than $2,400 and the net.
earnings from self-employment derived by him from such trade
or business (computed under this subsection without regard to
this sentence) are less than $1,600, the net earnings from self-
employment derived by him from such trade or business may, at
his option, be deemed to be $1,600; and
(iii) in the case of a member of a partnership, if his distribu-
tive share of the gross income of the partnership derived from
such trade or business (after such gross income has been reduced
by the sum of all payments to which section 707 (c) applies) is not
more than $2,400, his distributive share of income described in
section 702 (a) (9) derived from such trade or business may, at his
Paragraph (12) was added by section 313 (b) of P.L. 95–216.
575
IRC Sec. 1402(a)
option, be deemed to be an amount equal to 663 percent of his
distributive share of such gross income (after such gross income
has been so reduced); or
(iv) in the case of a member of a partnership, if his distribu-
tive share of the gross income of the partnership derived from
such trade or business (after such gross income has been reduced
by the sum of all payments to which section 707 (c) applies) is
more than $2,400 and his distributive share (whether or not dis-
tributed) of income described in section 702 (a) (9) derived from
such trade or business (computed under this subsection without
regard to this sentence) is less than $1,600, his distributive share
of income described in section 702(a) (9) derived from such trade
or business may, at his option, be deemed to be $1,600.
For purposes of the preceding sentence, gross income means—
(v) in the case of any such trade or business in which the
income is computed under a cash receipts and disbursements
method, the gross receipts from such trade or business reduced
by the cost or other basis of property which was purchased and
sold in carrying on such trade or business, adjusted (after such
reduction) in accordance with the provisions of paragraphs (1)
through (7) and paragraph (9) of this subsection; and
(vi) in the case of any such trade or business in which the
income is computed under an accrual method, the gross income
from such trade or business, adjusted in accordance with the pro-
visions of paragraphs (1) through (7) and paragraph (9) of
this subsection;
and, for purposes of such sentence, if an individual (including a mem-
ber of a partnership) derives gross income from more than one such
trade or business, such gross income (including his distributive share
of the gross income of any partnership derived from any such trade
or business) shall be deemed to have been derived from one trade or
business.
The preceding sentence and clauses (i) through (iv) of the second
preceding sentence shall also apply in the case of any trade or busi-
ness (other than a trade or business specified in such second preceding
sentence) which is carried on by an individual who is self-employed
on a regular basis as defined in subsection (i), or by a partnership of
which an individual is a member on a regular basis as defined in sub-
section (i), but only if such individual's net earnings from self-
employment as determined without regard to this sentence in the
taxable year are less than $1,600 and less than 66% percent of the sum
(in such taxable year) of such individual's gross income derived from
all trades or businesses carried on by him and his distributive share
IRC Sec. 1402(a)
Revised April 1978
576
of the income or loss from all trades or businesses carried on by all
the partnerships of which he is a member; except that this sentence
shall not apply to more than 5 taxable years in the case of any indi-
vidual, and in no case in which an individual elects to determine the
amount of his net earnings from self-employment for a taxable year
under the provisions of the two preceding sentences with respect to a
trade or business to which the second preceding sentence applies and
with respect to a trade or business to which this sentence applies shall
such net earnings for such year exceed $1,600.
(b) SELF-EMPLOYMENT INCOME.-The term "self-employment in-
come" means the net earnings from self-employment derived by an
individual (other than a nonresident alien individual) during any
taxable year; except that such term shall not include-
(1) that part of the net earnings from self-employment which
is in excess of-
(i) an amount equal to the contribution and benefit
base (as determined under section 230 of the Social Security
Act)¹ which is effective for the calendar year in which such
taxable year begins, minus (ii) the amount of the wages
paid to such individual during such taxable year; or
(2) the net earnings from self-employment, if such net earn-
ings for the taxable year are less than $400.
For purposes of clause (1), the term "wages" (A) includes such remu-
neration paid to an employee for services included under an agree-
ment entered into pursuant to the provisions of section 218 of the
Social Security Act (relating to coverage of State employees), or
under an agreement entered into pursuant to the provisions of section
3121 (1) (relating to coverage of citizens of the United States who are
employees of foreign subsidiaries of domestic corporations), as would
be wages under section 3121 (a) if such services constituted employ-
ment under section 3121 (b), and (B) includes compensation which is
subject to the tax imposed by section 3201 or 3211. An individual who
is not a citizen of the United States but who is a resident of the
Commonwealth of Puerto Rico, the Virgin Islands, Guam, or Ameri-
can Samoa shall not, for purposes of this chapter be considered to be
a nonresident alien individual.²
(c) TRADE OR BUSINESS.-The term "trade or business" when used
with reference to self-employment income or net earnings from self-
employment, shall have the same meaning as when used in section 162
(relating to trade or business expenses), except that such term shall
not include
1 See Annendir B.
• Section 1402(b) was amended by Public Law 94-92,, and by section 1901(a)(155) (A)
of Public Law 94-455.
577
IRC Sec. 1402(d)
(1) the performance of the functions of a public office, other
than the functions of a public office of a State or a political sub-
division thereof with respect to fees received in any period in
which the functions are performed in a position compensated
solely on a fee basis and in which such functions are not covered
under an agreement entered into by such State and the Secretary
of Health, Education, and Welfare pursuant to section 218 of
the Social Security Act;
(2) the performance of service by an individual as an em-
ployee, other than-
(A) service described in section 3121 (b) (14) (B) per-
formed by an individual who has attained the age of 18,
(B) service described in section 3121 (b) (16),
(C) service described in section 3121 (b) (11), (12), or
(15) performed in the United States (as defined in section
3121(e) (2)) by a citizen of the United States.
(D) service described in paragraph (4) of this subsection,
(E) service performed by an individual as an employee
of a State or a political subdivision thereof in a position com-
pensated solely on a fee basis with respect to fees received
in any period in which such service is not covered under an
agreement entered into by such State and the Secretary of
Health, Education, and Welfare pursuant to section 218 of
the Social Security Act, and
$
·
1
(F) service described in section 3121(b) (20);
(3) the performance of service by an individual as an em-
ployee or employee representative as defined in section 3231;
(4) the performance of service by a duly ordained, commis-
sioned, or licensed minister of a church in the exercise of his
ministry or by a member of a religious order in the exercise of
duties required by such order; or
(5) the performance of service by an individual in the exercise
of his profession as a Christian Science practitioner; or
(6) The performance of service by an individual during the
period for which an exemption under section (h) is effective with
respect to him.
The provisions of paragraph (4) or (5) shall not apply to service
(other than service performed by a member of a religious order who
has taken a vow of poverty as a member of such order) performed by
an individual unless an exemption under subsection (e) is effective
with respect to him.
(d) EMPLOYEE AND WAGES.-The term "employee" and the term
"wages" shall have the same meaning as when used in chapter 21
1 Subparagraph (F) was added by section 1207 (e)(1)(B) of P.L. 94-455 effective as
specified in section 1207 (f) (4) of that act which is printed in this document on page 783.
IRC Sec. 1402(d)
Revised April 1978
578
(sec. 3101 and following, relating to Federal Insurance Contributions
Act).
(e) MINISTERS, MEMBERS OF RELIGIOUS ORDERS, AND CHRISTIAN
SCIENCE PRACTITIONERS-1
(1) EXEMPTION.-Any individual who is (A) a duly ordained,
commissioned, or licensed minister of a church or a member of a
religious order (other than a member of a religious order who has
taken a vow of poverty as a member of such order) or (B) a
Christian Science practitioner, upon filing an application (in such
form and manner, and with such official, as may be prescribed by
regulations made under this chapter) together with a statement
that either he is conscientiously opposed to, or because of religious
principles he is opposed to, the acceptance (with respect to services
performed by him as such minister, member, or practitioner) of
any public insurance which makes payments in the event of death,
disability, old age, or retirement or makes payments toward the
cost of, or provides services for, medical care (including the bene-
fits of any insurance system established by the Social Security
Act), shall receive an exemption from the tax imposed by this
chapter with respect to services performed by him as such min-
ister, member, or practitioner. Notwithstanding the preceding
sentence, an exemption may not be granted to an individual under
this subsection if he had filed an effective waiver certificate under
this section as it was in effect before its amendment in 1967.
(2) TIME FOR FILING APPLICATION.-Any individual who de-
sires to file an application pursuant to paragraph (1) must file
such application on or before whichever of the following dates
is later: (A) the due date of the return (including any extension
thereof) for the second taxable year for which he has net earn-
ings from self-employment (computed without regard to sub-
sections (c) (4) and (c)(5)) of $400 or more, any part of which
was derived from the performance of service described in sub-
section (c) (4) or (c)(5); or (B) the due date of the return
(including any extension thereof) for his second taxable year
ending after 1967.
(3) EFFECTIVE DATE OF EXEMPTION.-An exemption received by
an individual pursuant to this subsection shall be effective for
the first taxable year for which he has net earnings from self-
employment (computed without regard to subsections (c) (4) and
(c) (5)) of $400 or more, any part of which was derived from
the performance of service described in subsection (c) (4) or (c)
(5), and for all succeeding taxable years. An exemption received
pursuant to this subsection shall be irrevocable.
¹ See also section 316 of P.L. 95–216 which is printed in this document on p. 807–808.
579
IRC Sec. 1402(g)
(f) PARTNER'S TAXABLE YEAR ENDING AS THE RESULT OF DEATH.-
In computing a partner's net earnings from self-employment for his
taxable year which ends as a result of his death (but only if such
taxable year ends within, and not with, the taxable year of the part-
nership), there shall be included so much of the deceased partner's
distributive share of the partnership's ordinary income or loss for the
partnership taxable year as is not attributable to an interest in the
partnership during any period beginning on or after the first day
of the first calendar month following the month in which such partner
died. For purposes of this subsection-
(1) in determining the portion of the distributive share which
is attributable to any period specified in the preceding sentence,
the ordinary income or loss of the partnership shall be treated
as having been realized or sustained ratably over the partnership
taxable year; and
(2) the term "deceased partner's distributive share" includes
the share of his estate or of any other person succeeding, by reason
of his death, to rights with respect to his partnership interest.
(g) MEMBERS OF CERTAIN RELIGIOUS FAITHS.—¹
(1) EXEMPTION.-Any individual may file an application (in
such form and manner, and with such official, as may be prescribed
by regulations under this chapter) for an exemption from the tax
imposed by this chapter if he is a member of a recognized religious
sect or division thereof and is an adherent of established tenets or
teachings of such sect or division by reason of which he is con-
scientiously opposed to acceptance of the benefits of any private
or public insurance which makes payments in the event of death,
disability, old-age, or retirement or makes payments toward the
cost of, or provides services for, medical care (including the bene-
fits of any insurance system established by the Social Security
Act). Such exemption may be granted only if the application
contains or is accompanied by-
(A) such evidence of such individual's membership in, and
adherence to the tenets or teachings of the sect or division
thereof as the Secretary may require for purposes of deter-
mining such individual's compliance with the preceding sen-
tence, and
21-746 O 78
(B) his waiver of all benefits and other payments under
titles II and XVIII of the Social Security Act on the basis
of his wages and self-employment income as well as all such
benefits and other payments to him on the basis of the wages
and self-employment income of any other person,
<
1
1 Subsection (g) (formerly subsection (h)) was redesignated by section 1901(a) (155)
(B) of Public Law 94-455 which also repealed the former subsection (g).
44
-
IRC Sec. 1402(g)
580
and only if the Secretary of Health, Education, and Welfare finds
that-
(C) such sect or division thereof has the established tenets
or teachings referred to in the preceding sentence,
(D) it is the practice, and has been for a period of time
which he deems to be substantial, for members of such sect
or division thereof to make provision for their dependent
members which in his judgment is reasonable in view of their
general level of living, and
(E) such sect or division thereof has been in existence at
all times since December 31, 1950.
An exemption may not be granted to any individual if any benefit
or other payment referred to in subparagraph (B) became pay-
able (or, but for section 203 or 222 (b) of the Social Security Act,
would have become payable) at or before the time of the filing of
such waiver.
(2) TIME FOR FILING APPLICATIONS.-For purposes of this sub-
section, an application must be filed on or before the time pre-
scribed for filing the return (including any extension thereof) for
the first taxable year for which the individual has self-employment
income (determined without regard to this subsection or subsec-
tion (c)(6)), except that an application filed after such date
but on or before the last day of the third calendar month following
the calendar month in which the taxpayer is first notified in writ-
ing by the Secretary that a timely application for an exemption
from the tax imposed by this chapter has not been filed by him
shall be deemed to be filed timely.¹
(3) PERIOD FOR WHICH EXEMPTION EFFECTIVE.-An exemption
granted to any individual pursuant to this subsection shall apply
with respect to all taxable years beginning after December 31,
1950, except that such exemption shall not apply for any taxable
year-
(A) beginning (i) before the taxable year in which such
individual first met the requirements of the first sentence of
paragraph (1), or (ii) before the time as of which the Sec-
retary of Health, Education, and Welfare finds that the sect
or division thereof of which such individual is a member met
the requirements of subparagraphs (C) and (D), or
(B) ending (i) after the time such individual ceases to
meet the requirements of the first sentence of paragraph (1),
or (ii) after the time as of which the Secretary of Health,
Education, and Welfare finds that the sect or division thereof
1 Paragraph (2) was amended by section 1901 (a) (155) (C) of Public Law 94-455.
581
IRC Sec. 1403(b)
of which he is a member ceases to meet the requirements of
subparagraph (C) or (D).
(4) APPLICATION BY FIDUCIARIES OR SURVIVORS.-In any case
where an individual who has self-employment income dies before
the expiration of the time prescribed by paragraph (2) for filing
an application for exemption pursuant to this subsection, such an
application may be filed with respect to such individual
within
such time by a fiduciary acting for such individual's estate or by
such individual's survivor (within the meaning of section 205 (c)
(1) (C) of the Social Security Act).
Regular Basis
(h) An individual shall be deemed to be self-employed on a regu-
lar basis in a taxable year, or to be a member of a partnership on a
regular basis in such year, if he had net earnings from self-employ-
ment, as defined in the first sentence of subsection (a), of not less than
$400 in at least two of the three consecutive taxable years immediately
preceding such taxable year from trades or businesses carried on by
such individual or such partnership.¹
SEC. 1403. MISCELLANEOUS PROVISIONS.
(a) TITLE OF CHAPTER. This chapter may be cited as the "Self-
Employment Contributions Act of 1954".
(b) CROSS REFERENCES.—
(1) For provisions relating to returns, see section 6017.
(2) For provisions relating to collection of taxes in Virgin
Islands, Guam, American Samoa, and Puerto Rico, see sec-
tion 7651.
(3) For provisions relating to declaration of estimated tax
on self-employment income, see section 6015.
*
*
*
*
Subchapter A. Tax on employees.
Subchapter B. Tax on employers.
Subchapter C. General provisions.
SUBTITLE C-EMPLOYMENT TAXES
Chapter 21. Federal insurance contributions act.
Chapter 22. Railroad retirement tax act.
Chapter 23. Federal unemployment tax act.
Chapter 24. Collection of income tax at source on wages.
Chapter 25. General provisions relating to employment taxes.
*
CHAPTER 21-FEDERAL INSURANCE
CONTRIBUTIONS ACT
*
1 Subsection (h) (formerly subsection (1)) was redesignated by section 1901 (a) (155) (B)
of Public Law 94-455.
IRC Sec. 3101
Revised April 1978
582
*
*
SEC. 3101. RATE OF TAX.¹
*
SUBCHAPTER A-TAX ON EMPLOYEES
(a) OLD-AGE, SURVIVORS, AND DISABILITY INSURANCE. In addition
to other taxes, there is hereby imposed on the income of every indi-
vidual a tax equal to the following percentages of the wages (as defined
in section 3121(a)) received by him with respect to employment (as
defined in section 3121(b))-
(1) with respect to wages received during the calendar years
1974 through 1977, the rate shall be 4.95 percent;
(2) with respect to wages received during the calendar year
1978, the rate shall be 5.05 percent;
(3) with respect to wages received during the calendar years
1979 and 1980, the rate shall be 5.08 percent;
(4) with respect to wages received during the calendar year
1981, the rate shall be 5.35 percent;
(5) with respect to wages received during the calendar years
1982 through 1984, the rate shall be 5.40 percent;
(6) with respect to wages received during the calendar years
1985 through 1989, the rate shall be 5.70 percent; and
(7) with respect to wages received after December 31, 1989,
the rate shall be 6.20 percent.²
(b) HOSPITAL INSURANCE.-In addition to the tax imposed by the
preceding subsection, there is hereby imposed on the income of every
individual a tax equal to the following percentages of the wages (as
defined in section 3121(a)) received by him with respect to employ-
ment (as defined in section 3121(b))—
(1) with respect to wages received during the calendar years.
1974 through 1977, the rate shall be 0.90 percent;
(2) with respect to wages received during the calendar year
1978, the rate shall be 1.00 percent;
(3) with respect to wages received during the calendar years
1979 and 1980, the rate shall be 1.05 percent;
(4) with respect to wages received during the calendar years.
1981 through 1984, the rate shall be 1.30 percent;
(5) with respect to wages received during the calendar year
1985, the rate shall be 1.35 percent; and
(6) with respect to wages received after December 31, 1985,
the rate shall be 1.45 percent.³
(c) RELIEF FROM TAXES IN CASES COVERED BY CERTAIN INTERNA-
TIONAL AGREEMENTS.-During any period in which there is in effect an
agreement entered into pursuant to section 233 of the Social Security
¹ Section 3101 was amended by section 1903 (a) (1) of P.L. 94–455.
2 Subsection (a) was amended by section 101(a)(1) of P.L. 95-216.
3 Subsection (b) was amended by section 101 (b) (1) of P.L. 95-216.
-
Revised April 1978
IRC Sec. 3102(c)
583
Act with any foreign country, wages received by or paid to an individ-
ual shall be exempt from the taxes imposed by this section to the
extent that such wages are subject under such agreement to taxes or
contributions for similar purposes under the social security system
of such foreign country.¹
SEC. 3102. DEDUCTION OF TAX FROM WAGES.
(a) REQUIREMENT.-The tax imposed by section 3101 shall be col-
lected by the employer of the taxpayer, by deducting the amount of
the tax from the wages as and when paid. An employer who in any
calendar quarter pays to an employee cash remuneration to which
paragraph (7)(B) of section 3121(a) is applicable may deduct an
amount equivalent to such tax from any such payment of remunera-
tion, even though at the time of payment the total amount of such
remuneration paid to the employee by the employer in the calendar
quarter is less than $50; and an employer who in any calendar year
pays to an employee cash remuneration to which paragraph (7) (C) or
(10) of section 3121 (a) is applicable may deduct an amount equivalent
to such tax from any such payment of remuneration, even though at the
time of payment the total amount of such remuneration paid to the em-
ployee by the employer in the calendar year is less than $100; and an
employer who in any calendar year pays to an employee cash remunera-
tion to which paragraph (8) (B) of section 3121 (a) is applicable may
deduct an amount equivalent to such tax from any such payment of
remuneration, even though at the time of payment the total amount of
such remuneration paid to the employee by the employer in the calen-
dar year is less than $150 and the employee has not performed agricul-
tural labor for the employer on 20 days or more in the calendar year for
cash remuneration computed on a time basis; and an employer who is
furnished by an employee a written statement of tips (received in a
calendar month) pursuant to section 6053 (a) to which paragraph (12)
(B) of section 3121 (a) is applicable may deduct an amount equivalent
to such tax with respect to such tips from any wages of the employee
(exclusive of tips) under his control, even though at the time such
statement is furnished the total amount of the tips included in state-
ments furnished to the employer as having been received by the em-
ployee in such calendar month in the course of his employment by such
employer is less than $20.2
(b) INDEMNIFICATION OF EMPLOYER.-Every employer required so
to deduct the tax shall be liable for the payment of such tax, and shall
be indemnified against the claims and demands of any person for the
amount of any such payment made by such employer.
(c) SPECIAL RULE FOR TIPS.-
(1) In the case of tips which constitute wages, subsection (a)
shall be applicable only to such tips as are included in a written
1 S..bsection (c) was added by section 317 (b) (2) of P.L. 95–216.
2 Subsection (a) was amended by section 355 (a) of P.L. 95-216.
-
IRC Sec. 3102(c)
584
Revised April 1978
statement furnished to the employer pursuant to section 6053 (a),
and only to the extent that collection can be made by the employer,
at or after the time such statement is so furnished and before the
close of the 10th day following calendar month (or, if para-
graph (3) applies, the 30th day following the year) in which
the tips were deemed paid, by deducting the amount of the tax
from such wages of the employee (excluding tips, but including
funds turned over by the employee to the employer pursuant to
paragraph (2)) as are under control of the employer.
(2) If the tax imposed by section 3101, with respect to tips
which are included in written statements furnished in any month
to the employer pursuant to section 6053 (a), exceeds the wages
of the employee (excluding tips) from which the employer is re-
quired to collect the tax under paragraph (1), the employee may
furnish to the employer on or before the 10th day of the following
month (or, if paragraph (3) applies, on or before the 30th day of
the following year) an amount of money equal to the amount
of the excess.
(3) The Secretary may, under regulations prescribed by him,
authorize employers-
*
(A) to estimate the amount of tips that will be reported
by the employee pursuant to section 6053 (a) in any calendar
year,
(B) to determine the amount to be deducted upon each
payment of wages (exclusive of tips) during such year as
if the tips so estimated constituted the actual tips so reported,
and
(C) to deduct upon any payment of wages (other than
tips, but including funds turned over by the employee to the
employer pursuant to paragraph (2)) to such employee dur-
ing such year (and within 30 days thereafter) such amount
as may be necessary to adjust the amount actually deducted
upon such wages of the employee during the year to the
amount required to be deducted in respect of tips included in
written statements furnished to the employer during the
year.
(4) If the tax imposed by section 3101 with respect to tips
which constitute wages exceeds the portion of such tax which can
be collected by the employer from the wages of the employee pur-
suant to paragraph (1) or paragraph (3), such excess shall be
paid by the employee.¹
SUBCHAPTER B-TAX ON EMPLOYERS
*
*
*
1 Subsection (c) was amended by section 355 (b) of P.L. 95-216.
*
*k
Revised April 1978
IRC Sec. 3111(c)
585
SEC. 3111. RATE OF TAX.1
(a) OLD-AGE, SURVIVORS, AND DISABILITY INSURANCE. In addition
to other taxes, there is hereby imposed on every employer an excise
tax, with respect to having individuals in his employ, equal to the
following percentages of the wages (as defined in section 3121 (a) and
(t)) paid by him with respect to employment (as defined in section
3121(b))-
(1) with respect to wages paid during the calendar years
1974 through 1977, the rate shall be 4.95 percent;
(2) with respect to wages paid during the calendar year 1978,
the rate shall be 5.05 percent;
(3) with respect to wages paid during the calendar years
1979 and 1980, the rate shall be 5.08 percent;
(4) with respect to wages paid during the calendar year 1981,
the rate shall be 5.35 percent;
(5) with respect to wages paid during the calendar years 1982
through 1984, the rate shall by 5.40 percent;
(6) with respect to wages paid during the calendar years 1985
through 1989, the rate shall be 5.70 percent; and
(7) with respect to wages paid after December 31, 1989, the rate
shall be 6.20 percent.2
(b) HOSPITAL INSURANCE.-In addition to the tax imposed by the
preceding subsection, there is hereby imposed on every employer an
excise tax, with respect to having individuals in his employ, equal to
the following percentages of the wages (as defined in section 3121(a)
and (t)) paid by him with respect to employment (as defined in section
3121(b))—
(1) with respect to wages paid during the calendar years 1974
through 1977, the rate shall be 0.90 percent;
(2) with respect to wages paid during the calendar year 1978,
the rate shall be 1.00 percent;
(3) with respect to wages paid during the calendar years 1979
and 1980, the rate shall be 1.05 percent;
(4) with respect to wages paid during the calendar years 1981
through 1984, the rate shall be 1.30 percent;
(5) with respect to wages paid during the calendar year 1985,
the rate shall be 1.35 percent; and
(6) with respect to wages paid after December 31, 1985, the
rate shall be 1.5 percent.3
(c) RELIEF FROM TAXES IN CASES COVERED BY CERTAIN INTERNA-
TIONAL AGREEMENTS.-During any period in which there is in effect an
agreement entered into pursuant to section 233 of the Social Security
Act with any foreign country, wages received by or paid to an individ-
¹ Section 3111 was amended by section 1903(a) (1) of P.L. 94–455.
2 Subsection (a) was amended by sections 101(a)(2) and 315(b) of P.L. 95-216.
3 Subsection (b) was amended by sections 101(b)(2) and 315(b) of P.L. 95-216.
IRC Sec. 3111(c)
586
Revised April 1978
ual shall be exempt from the taxes imposed by this section to the
extent that such wages are subject under such agreement to taxes or
contributions for similar purposes under the social security system
of such foreign country.¹
SEC. 3112. INSTRUMENTALITIES OF THE UNITED STATES.
Notwithstanding any other provision of law (whether enacted
before or after the enactment of this section) which grants to any
instrumentality of the United States an exemption from taxation,
such instrumentality shall not be exempt from the tax imposed by
section 3111 unless such other provision of law grants a specific exemp-
tion, by reference to section 3111 (or the corresponding section of
prior law), from the tax imposed by such section.
SEC. 3113, [Repealed] 2
SUBCHAPTER C-GENERAL PROVISIONS
Sec. 3121. Definitions
Sec. 3122. Federal service
Sec. 3123. Reductions as constructive payments.
Sec. 3124. Estimate of revenue reduction.
Sec. 3125. Returns in the case of governmental employees in Guam,
American Samoa, and the District of Columbia_
Sec. 3126. Short title__
Page 3
586
615-A
616
616
616
617
SEC. 3121. DEFINITIONS.
(a) WAGES.-For purposes of this chapter, the term "wages" means
all remuneration for employment, including the cash value of all
remuneration paid in any medium other than cash; except that such
term shall not include-
1 Subsection (c) was added by section 317(b) (2) of P.L. 95–216.
2 Section 3113 was repealed by section 1903 (a) (2) of P.L. 94-455.
3 Page reference do not appear in the law.
4 See Appendix B.
4
(1) that part of the remuneration which, after remuneration
(other than remuneration referred to in the succeeding paragraphs
of this subsection) equal to the contribution and benefit base * ( (as
determined under section 230 of the Social Security Act) with
respect to employment has been paid to an individual by an em-
ployer during the calendar year with respect to which such con-
tribution and benefit base is effective, is paid to such individual
by such employer during such calendar year. If an employer
(hereinafter referred to as successor employer) during any
calendar year acquires substantially all the property used in a
trade or business of another employer (hereinafter referred to as
a predecessor), or used in a separate unit of a trade or business of
a predecessor, and immediately after the acquisition employs in
his trade or business an individual who immediately prior to the
acquisition was employed in the trade or business of such prede-
G
Revised April 1978
IRC Sec. 3121(a)
587
cessor, then, for the purpose of determining whether the successor
employer has paid remuneration (other than remuneration re-
ferred to in the succeeding paragraphs of this subsection) with
respect to employment equal to the contribution and benefit base 1
(as determined under section 230 of the Social Security Act) to
such individual during such calendar year, any remuneration
(other than renumeration referred to in the succeeding paragraphs
of this subsection) with respect to employment paid (or consid-
ered under this paragraph as having been paid) to such individual
by such predecessor during such calendar year and prior to such
acquisition shall be considered as having been paid by such suc-
cessor employer;
(2) the amount of any payment (including any amount paid by
an employer for insurance or annuities, or into a fund, to provide
for any such payment) made to, or on behalf of, an employee or
any of his dependents under a plan or system established by an
employer which makes provision for his employees generally (or
for his employees generally and their dependents) or for a class
or classes of his employees (or for a class or classes of his em-
ployees and their dependents), on account of—
(A) retirement, or
(B) sickness or accident disability, or
(C) medical or hospitalization expenses in connection with
sickness or accident disability, or
(D) death;
(3) any payment made to an employee (including any amount
paid by an employer for insurance or annuities, or into a fund, to
provide for any such payment) on account of retirement;
(4) any payment on account of sickness or accident disability,
or medical or hospitalization expenses in connection with sick-
ness or accident disability, made by an employer to, or on behalf
of, an employee after the expiration of 6 calendar months follow-
ing the last calendar month in which the employee worked for
such employer;
(5) any payment made to, or on behalf of, an employee or his
beneficiary-
(A) from or to a trust described in section 401 (a) which is
exempt from tax under section 501 (a) at the time of such
payment unless such payment is made to an employee of the
trust as remuneration for services rendered as such employee
and not as a beneficiary of the trust,
(B) under or to an annuity plan which, at the time of such
payment, is a plan described in section 403 (a), or
(C) under or to a bond purchase plan which, at the time
of such payment, is a qualified bond purchase plan described
in section 405 (a);
IRC Sec. 3121(a)
Revised April 1978
588
(6) the payment by an employer (without deduction from the
remuneration of the employee)-
(A) of the tax imposed upon an employee under section
3101 (or the corresponding section of prior law), or
(B) of any payment required from an employee under a
State unemployment compensation law;
(7) (A) remuneration paid in any medium other than cash to an
employee for service not in the course of the employer's trade or
business or for domestic service in a private home of the employer;
(B) cash remuneration paid by an employer in any calendar
quarter to an employee for domestic service in a private home of
the employer, if the cash remuneration paid in such quarter by
the employer to the employee for such service is less than $50. As
used in this subparagraph, the term "domestic service in a private
home of the employer," does not include service described in sub-
section (g) (5);
(C) cash remuneration paid by an employer in any calendar
year to an employee for service not in the course of the em-
ployer's trade or business, if the cash remuneration paid in such
year by the employer to the employee for such service is less
than $100. As used in this subparagraph, the term "service not in
the course of the employer's trade or business" does not include
domestic service in a private home of the employer and does not
include service described in subsection (g) (5);¹
1
(8) (A) remuneration paid in any medium other than cash for
agricultural labor;
(B) cash remuneration paid by an employer in any calendar
year to an employee for agricultural labor unless (i) the cash
remuneration paid in such year by the employer to the employee
for such labor is $150 or more, or (ii) the employee performs
agricultural labor for the employer on 20 days or more during
such year for cash remuneration computed on a time basis;
(9) any payment (other than vacation or sick pay) made to
an employee after the month in which he attains age 62, if such
employee did not work for the employer in the period for which
such payment is made; ?
2
(10) remuneration paid by an employer in any calendar year
to an employee for service described in subsection (d) (3) (C)
(relating to home workers), if the cash remuneration paid in such
year by the employer to the employee for such service is less
than $100; 3
(11) remuneration paid to or on behalf of an employee if (and
to the extent that) at the time of the payment of such remunera-
1 Subparagraph (C) was amended by sec. 356 (a) of P.L. 95-216.
2 Paragraph (9) was amended by section 104 (i) of Public Law 92-603 effective with
respect to payments after 1974.
3 Paragraph (10) was amended by section 356(a) of P.L. 95–216.
Revised April 1978
IRC Sec. 3121(b)
588-A
tion it is reasonable to believe that a corresponding deduction is
allowable under section 217;
(12) (A) tips paid in any medium other than cash;
(B) cash tips received by an employee in any calendar month
in the course of his employment by an employer unless the amount
of such cash tips is $20 or more;
(13) any payment or series of payments by an employer to an
employee or any of his dependents which is paid—
(A) upon or after the termination of an employee's em-
ployment relationship because of (i) death, (ii) retirement
for disability, or (iii) retirement after attaining an age spec-
ified in the plan referred to in subparagraph (B) or in a pen-
sion plan of the employer, and
(B) under a plan established by the employer which makes
provision for his employees generally or a class or classes of
his employees (or for such employees or class or classes of
employees and their dependents),
other than any such payment or series of payments which would
have been paid if the employee's employment relationship had
not been so terminated;
(14) any payment made by an employer to a survivor or the
estate of a former employee after the calendar year in which such
employee died;
(15) any payment made by an employer to an employee, if at
the time such payment is made such employee is entitled to disa-
bility insurance benefits under section 223 (a) of the Social Se-
curity Act and such entitlement commenced prior to the calendar
year in which such payment is made, and if such employee did not
perform any services for such employer during the period for
which such payment is made; or
(16) remuneration paid by an organization exempt from in-
come tax under section 501 (a) (other than an organization de-
scribed in section 401(a)) or under section 521 in any calendar
year to an employee for service rendered in the employ of such
organization, if the remuneration paid in such year by the orga-
nization to the employee for such service is less than $100.¹
(b) EMPLOYMENT.-For purposes of this chapter, the term "em-
ployment" means any service, of whatever nature, performed either
(A) by an employee for the person employing him, irrespective of the
citizenship or residence of either, (i) within the United States, or (ii)
on or in connection with an American vessel or American aircraft
under a contract of service which is entered into within the United
1 Paragraph (16) was added by section 356 (b) of P.L. 95–216.
589
IRC Sec. 3121(b)
States or during the performance of which and while the employee is
employed on the vessel or aircraft it touches at a port in the United
States, if the employee is employed on and in connection with such
vessel or aircraft when outside the United States, or (B) outside the
United States by a citizen of the United States as an employee for an
American employer (as defined in subsection (h)); except that such
term shall not include— ¹
(1) service performed by foreign agricultural workers (A)
under contracts entered into in accordance with title V of the
Agricultural Act of 1949, as amended (7 U.S.C. 1461-1468), or
(B) lawfully admitted to the United States from the Bahamas,
Jamaica, and the other British West Indies, or from any other
foreign country or possession thereof, on a temporary basis to
perform agricultural labor; 1
(2) domestic service performed in a local college club, or local
chapter of a college fraternity or sorority, by a student who is
enrolled and is regularly attending classes at a school, college, or
university;
(3)(A) service performed by an individual in the employ of
his spouse, and service performed by a child under the age of 21
in the employ of his father or mother;
(B) service not in the course of the employer's trade or busi-
ness, or domestic service in a private home of the employer, per-
formed by an individual in the employ of his son or daughter;
except that the provisions of this subparagraph shall not be
applicable to such domestic service if—
(i) the employer is a surviving spouse or a divorced indi-
vidual and has not remarried, or has a spouse living in the
home who has a mental or physical condition which results
in such spouse's being incapable of caring for a son, daughter,
stepson, or stepdaughter (referred to in clause (ii)) for at
least 4 continuous weeks in the calendar quarter in which the
service is rendered, and
(ii) a son, daughter, stepson, or stepdaughter of such em-
ployer is living in the home, and
(iii) the son, daughter, stepson, or stepdaughter (referred
to in clause (ii)) has not attained age 18 or has a mental
or physical condition which requires the personal care and
supervision of an adult for at least 4 continuous weeks in
the calendar quarter in which the service is rendered;
1 Subsection (b) and paragraph (1) of subsection (b) were amended by section 1903 (a)
(3) of P.L. 94–455.
IRC Sec. 3121(b)
590
(4) service performed by an individual on or in connection
with a vessel not an American vessel, or on or in connection with
an aircraft not an American aircraft, if (A) the individual is
employed on and in connection with such vessel or aircraft,
when outside the United States and (B) (i) such individual is not
a citizen of the United States or (ii) the employer is not an
American employer;
(5) service performed in the employ of any instrumentality
of the United States, if such instrumentality is exempt from the
tax imposed by section 3111 by virtue of any provision of law
which specifically refers to such section (or the corresponding
section of prior law) in granting such exemption;
(6) (A) service performed in the employ of the United States
or in the employ of any instrumentality of the United States, if
such service is covered by a retirement system established by a law
of the United States;
(B) service performed by an individual in the employ of an
instrumentality of the United States if such an instrumentality
was exempt from the tax imposed by section 1410 of the Internal
Revenue Code of 1939 on December 31, 1950, and if such service
is covered by a retirement system established by such instrumen-
tality; except that the provisions of this subparagraph shall not be
applicable to—
(i) service performed in the employ of a corporation which
is wholly owned by the United States;
(ii) service performed in the employ of a Federal land
bank, a Federal intermediate credit bank, a bank for coop-
eratives, a Federal land bank association, a production credit
association, a Federal Reserve Bank, a Federal Home Loan
Bank, or a Federal Credit Union;
(iii) service performed in the employ of a State, county,
or community committee under the Commodity Stabilization
Service;
(iv) service performed by a civilian employee, not com-
pensated from funds appropriated by the Congress, in the
Army and Air Force Exchange Service, Army and Air Force
Motion Picture Service, Navy Exchanges, Marine Corps Ex-
changes, or other activities, conducted by an instrumentality
of the United States subject to the jurisdiction of the Secre-
tary of Defense, at installations of the Department of De-
fense for the comfort, pleasure, contentment, and mental and
physical improvement of personnel of such Department; or
591
IRC Sec. 3121(b)
(v) service performed by a civilian employee, not compen-
sated from funds appropriated by the Congress, in the Coast
Guard Exchanges or other activities, conducted by an instru-
mentality of the United States subject to the jurisdiction of
the Secretary of Transportation, at installations of the Coast
Guard for the comfort, pleasure, contentment, and mental
and physical improvement of personnel of the Coast
Guard;
1
(C) service performed in the employ of the United States or
in the employ of any instrumentality of the United States, if such
service is performed-
(i) as the President or Vice President of the United States
or as a Member, Delegate, or Resident Commissioner of or
to the Congress;
(ii) in the legislative branch;
(iii) in a penal institution of the United States by an
inmate thereof;
(iv) by any individual as an employee included under sec-
tion 5351(2) of title 5, United States Code (relating to cer-
tain interns, student nurses, and other student employees of
hospitals of the Federal Government), other than as a medi-
cal or dental intern or a medical or dental resident in
training;
(v) by any individual as an employee serving on a tempo-
rary basis in case of fire, storm, earthquake, flood, or other
similar emergency; or
(vi) by any individual to whom subchapter III of chapter
83 of title 5, United States Code, does not apply because
such individual is subject to another retirement system (other
than the retirement system of the Tennessee Valley Author-
ity);
(7) service performed in the employ of a State, or any politi-
cal subdivision thereof, or any instrumentality of any one more
of the foregoing which is wholly owned thereby, except that this
paragraph shall not apply in the case of—
(A) service which, under subsection (j), constitutes cov-
ered transportation service,
(B) service in the employ of the Government of Guam
or the Government of American Samoa or any political sub-
division thereof, or of any instrumentality of any one or
1 Clause (v) was amended by section 1903 (a)(3)(C) of P.L. 94–455.
IRC Sec. 3121(b)
592
more of the foregoing which is wholly owned thereby, per-
formed by an officer or employee thereof (including a mem-
ber of the legislature of any such Government or political
subdivision), and, for purposes of this title with respect to
the taxes imposed by this chapter-
(i) any person whose service as such an officer or em-
ployee is not covered by a retirement system established
by a law of the United States shall not, with respect to
such service, be regarded as an employee of the United
States or any agency or instrumentality thereof, and
(ii) the remuneration for service described in clause
(i) (including fees paid to a public official) shall be
deemed to have been paid by the Government of Guam
or the Government of American Samoa or by a political
subdivision thereof or an instrumentality of any one or
more of the forgoing which is wholly owned thereby,
whichever is appropriate,
(C) service performed in the employ of the District of
Columbia or any instrumentality which is wholly owned
thereby, if such service is not covered by a retirement system
established by a law of the United States; except that the
provisions of this subparagraph shall not be applicable to
service performed—
(i) in a hospital or penal institution by a patient or
inmate thereof;
(ii) by any individual as an employee included under
section 5351(2) of title 5, United States Code (relating
to certain interns, student nurses, and other student em-
ployees of hospitals of the District of Columbia Govern-
ment), other than as a medical or dental intern or as a
medical or dental resident in training;
(iii) by an individual as an employee serving on a
temporary basis in case of fire, storm, snow, earthquake,
flood or other similar emergency; or
(iv) by a member of a board, committee, or council of
the District of Columbia, paid on a per diem, meeting, or
other fee basis, or
(D) service performed in the employ of the Government
of Guam (or any instrumentality which is wholly owned by
such Government) by an employee properly classified as a
temporary or intermittent employee, if such service is not
covered by a retirement system established by a law of Guam;
593
IRC Sec. 3121(b)
except that (i) the provisions of this subparagraph shall not
be applicable to services performed by an elected official or a
member of the legislature or in a hospital or penal institution
by a patient or inmate thereof, and (ii) for purposes of this
subparagraph, clauses (i) and (ii) of subparagraph (B)
shall apply;
(8) (A) service performed by a duly ordained, commissioned,
or licensed minister of a church in the exercise of his ministry or
by a member of a religious order in the exercise of duties required
by such order, except that this subparagraph shall not apply to
service performed by a member of such an order in the exercise
of such duties, if an election of coverage under section 3121 (r)
of the Internal Revenue Code of 1954 is in effect with respect to
such order, or with respect to the autonomous subdivision thereof
to which such member belongs;
(B) service performed in the employ of a religious, charitable,
educational, or other organization described in section 501 (c) (3)
which is exempt from income tax under section 501 (a), but this
subparagraph shall not apply to service performed during the
period for which a certificate, filed pursuant to subsection (k)
(or the corresponding subsection of prior law) or deemed to
have been so filed under paragraph (4) or (5) of such subsection,
is in effect if such service is performed by an employee-
(i) whose signature appears on the list filed (or deemed
to have been filed) by such organization under subsection
(k) (or the corresponding subsection of prior law),
(ii) who became an employee of such organization after
the calendar quarter in which the certificate (other than a
certificate referred to in clause (iii) was filed (or deemed
to have been filed), or
(iii) who, after the calendar quarter in which the certifi-
cate was filed (or deemed to have been filed) with respect to
a group described in section 3121 (k) (1) (E), became a mem-
ber of such group,
except that this subparagraph shall apply with respect to service
performed by an employee as a member of a group described in
section 3121 (k) (1) (E) with respect to which no certificate is (or
is deemed to be) in effect; ¹
1
(9) service performed by an individual as an employee or em-
ployee representative as defined in section 3231;
1 Subparagraph (B) was amended by section 1(b) of P.L. 94–563.
21-746 O
-
78
--
45
IRC Sec. 3121(b)
Revised April 1978,
594
(10) service performed in the employ of—
(A) a school, college, or university, or
(B) an organization described in section 509 (a) (3) if the
organization is organized, and at all times thereafter is oper-
ated, exclusively for the benefit of, to perform the functions
of, or to carry out the purposes of a school, college, or univer-
sity and is operated, supervised, or controlled by or in con-
nection with such school, college, or university, unless it is a
school, college, or university of a State or a political sub-
division thereof and the services performed in its employ by
a student referred to in section 218 (c) (5) of the Social
Security Act are covered under the agreement between the
Secretary of Health, Education, and Welfare and such State
entered into pursuant to section 218 of such Act:
if such service is performed by a student who is enrolled and
regularly attending classes at such school, college, or university;
1
(11) service performed in the employ of a foreign government
(including service as a consular or other officer or employee or a
nondiplomatic representative);
(12) service performed in the employ of an instrumentality
wholly owned by a foreign government—
(A) if the service is of a character similar to that per-
formed in foreign countries by employees of the United States
Government or of an instrumentality thereof; and
(B) if the Secretary of State, shall certify to the Secre-
tary of the Treasury that the foreign government, with re-
spect to whose instrumentality and employees thereof exemp-
tion is claimed, grants an equivalent exemption with respect
to similar service performed in the foreign country by em-
ployees of the United States Government and of instrumen-
talities thereof; 2
་
(13) service performed as a student nurse in the employ of a
hospital or a nurses' training school by an individual who is en-
rolled and is regularly attending classes in a nurses' training
school chartered or approved pursuant to State law;
(14) (A) service performed by an individual under the age of
18 in the delivery or distribution of newspapers or shopping
news, not including delivery or distribution to any point for sub-
sequent delivery or distribution;
1 Paragraph (10) was amended by section 356 (c) of P.L. 95-216.
2 Subparagraph (B) was amended by section 1906 (b) (13) (C) of P.L. 94-455.
Revised April 1978
IRC Sec. 3121(b)
595
(B) service performed by an individual in, and at the time of,
the sale of newspapers or magazines to ultimate consumers, under
an arrangement under which the newspapers or magazines are to
be sold by him at a fixed price, his compensation being based on
the retention of the excess of such price over the amount at which
the newspapers or magazines are charged to him, whether or not
he is guaranteed a minimum amount of compensation for such
service, or is entitled to be credited with the unsold newspapers
or magazines turned back;
(15) service performed in the employ of an international
organization;
(16) service performed by an individual under an arrangement
with the owner or tenant of land pursuant to which—
(A) such individual undertakes to produce agricultural
or horticultural commodities (including livestock, bees, poul-
try, and fur-bearing animals and wildlife) on such land,
(B) the agricultural or horticultural commodities pro-
duced by such individual, or the proceeds therefrom, are to
be divided between such individual and such owner or tenant,
and
(C) the amount of such individual's share depends on the
amount of the agricultural or horticultural commodities
produced;
(17) service in the employ of any organization which is per-
formed (A) in any year during any part of which such organi-
zation is registered, or there is in effect a final order of the Sub-
versive Activities Control Board requiring such organization to
register, under the Internal Security Act of 1950, as amended, as
a Communist-action organization, a Communist-front organiza-
tion, or a Communist-infiltrated organization, and (B) after June
30, 1956; 1
(18) service performed in Guam by a resident of the Republic
of the Philippines while in Guam on a temporary basis as a non-
immigrant alien admitted to Guam pursuant to section 101(a)
(15) (H)(ii) of the Immigration and Nationality Act (8 U.S.C.
1101(a) (15) (H) (ii));
(19) service which is performed by a nonresident alien indi-
vidual for the period he is temporarily present in the United
States as a nonimmigrant under subparagraph (F) or (J) of sec-
tion 101(a)(15) of the Immigration and Nationality Act, as
amended, and which is performed to carry out the purpose speci-
fied in subparagraph (F) or (J), as the case may be; or
¹ Paragraph (17) was amended by section 356(d) of P.L. 95–216.
IRC Sec. 3121(b)
596
(20) service performed by an individual on a boat engaged in
catching fish or other forms of aquatic animal life under an ar-
rangement with the owner or operator of such boat pursuant to
which-
#
(A) such individual does not receive any cash remunera-
tion (other than as provided in subparagraph (B)),
(B) such individual receives a share of the boat's (or
the boats' in the case of a fishing operation involving more
than one boat) catch of fish or other forms of aquatic animal
life or a share of the proceeds from the sale of such catch,
and
(C) the amount of such individual's share depends on
the amount of the boat's (or the boats' in the case of a fishing
operation involving more than one boat) catch of fish or other
forms of aquatic animal life,
but only if the operating crew of such boat (or each boat from
which the individual receives a share in the case of a fishing opera-
tion involving more than one boat) is normally made up of fewer
than 10 individuals.¹
(c) INCLUDED AND EXCLUDED SERVICE.-For purposes of this chap-
ter, if the services performed during one-half or more of any pay
period by an employee for the person employing him constitute em-
ployment, all the services of such employee for such period shall be
deemed to be employment; but if the services performed during more
than one-half of any such pay period by an employee for the person
employing him do not constitute employment, then none of the services
of such employee for such period shall be deemed to be employment.
As used in this subsection, the term "pay period” means a period (of
not more than 31 consecutive days) for which a payment of remunera-
tion is ordinarily made to the employee by the person employing him.
This subsection shall not be applicable with respect to services per-
formed in a pay period by an employee for the person employing him,
where any of such service is excepted by subsection (b) (9).
(d) EMPLOYEE. For purposes of this chapter, the term "employee"
means
(1) any officer of a corporation; or
(2) any individual who, under the usual common law rules ap-
plicable in determining the employer-employee relationship, has
the status of an employee; or
1 Paragraph (20) was added by section 1207(e)(A) of Public Law 94-455 effective
as specified in section 1207 (f) (4) of that act which is printed in this document on page
783.
597
IRC Sec. 3121(e)
(3) any individual (other than an individual who is an em-
ployee under paragraph (1) or (2)) who performs services for
remuneration for any person—
(A) as an agent-driver or commission-driver engaged in
distributing meat products, vegetable products, fruit prod-
ucts, bakery products, beverages (other than milk), or laun-
dry or dry-cleaning services, for his principal;
(B) as a full-time life insurance salesman;
(C) as a home worker performing work, according to
specifications furnished by the person for whom the services
are performed, on materials or goods furnished by such per-
son which are required to be returned to such person or a
person designated by him; or
(D) as a traveling or city salesman, other than as an
agent-driver or commission-driver, engaged upon a full-time
basis in the solicitation on behalf of, and the transmission to,
his principal (except for side-line sales activities on behalf of
some other person) of orders from wholesalers, retailers, con-
tractors, or operators of hotels, restaurants, or other similar
establishments for merchandise for resale or supplies for use
in their business operations;
if the contract of service contemplates that substantially all of
such services are to be performed personally by such individual;
except that an individual shall not be included in the term "em-
ployee" under the provisions of this paragraph if such individual
has a substantial investment in facilities used in connection with
the performance of such services (other than in facilities for
transportation), or if the services are in the nature of a single
transaction not part of a continuing relationship with the person
for whom the services are performed.
(e) STATE, UNITED STATES, AND CITIZEN.-For purposes of this
chapter-
(1) STATE. The term "State" includes the District of Colum-
bia, the Commonwealth of Puerto Rico, the Virgin Islands,
Guam, and American Samoa.
(2) UNITED STATES.-The term "United States" when used in
a geographical sense includes the Commonwealth of Puerto Rico,
the Virgin Islands, Guam, and American Samoa.
An individual who is a citizen of the Commonwealth of Puerto Rico
(but not otherwise a citizen of the United States) shall be considered,
for purposes of this section, as a citizen of the United States.
IRC Sec. 3121(f)
598
(f) AMERICAN VESSEL AND AIRCRAFT.-For purposes of this chap-
ter, the term "American vessel" means any vessel documented or
numbered under the laws of the United States; and includes any vessel
which is neither documented or numbered under the laws of the
United States nor documented under the laws of any foreign country,
if its crew is employed solely by one or more citizens or residents of
the United States or corporations organized under the laws of the
United States or of any State; and the term "American aircraft"
mean an aircraft registered under the laws of the United States.
(g) AGRICULTURAL LABOR.—For purposes of this chapter, the term
“agricultural labor” includes all service performed—
(1) on a farm, in the employ of any person, in connection with
cultivating the soil, or in connection with raising or harvesting
any agricultural or horticultural commodity, including the rais-
ing, shearing, feeding, caring for, training, and management of
livestock, bees, poultry, and fur-bearing animals and wildlife;
(2) in the employ of the owner or tenant or other operator of a
farm, in connection with the operation, management, conserva-
tion, improvement, or maintenance of such farm and its tools and
equipment, or in salvaging timber or clearing land of brush and
other debris left by a hurricane, if the major part of such service
is performed on a farm;
•
(3) in connection with the production or harvesting of any
commodity defined as an agricultural commodity in section 15 (g)
of the Agricultural Marketing Act, as amended (12 U.S.C. 1141j),
or in connection with the ginning of cotton, or in connection with
the operation or maintenance of ditches, canals, reservoirs, or
waterways, not owned or operated for profit, used exclusively for
supplying and storing water for farming purposes;
(4)(A) in the employ of the operator of a farm in handling,
planting, drying, packing, packaging, processing, freezing, grad-
ing, storing, or delivering to storage or to market or to a carrier
for transportation to market, in its unmanufactured state, any
agricultural or horticultural commodity; but only if such opera-
tor produced more than one-half of the commodity with respect
to which such service is performed;
(B) in the employ of a group of operators of farms (other
than a cooperative organization) in the performance of service
described in subparagraph (A), but only if such operators pro-
duced all of the commodity with respect to which such service
is performed. For purposes of this subparagraph, any unincor-
Revised April 1978
IRC Sec. 3121(i)
599
porated group of operators shall be deemed a cooperative organi-
zation if the number of operators comprising such group is more
than 20 at any time during the calendar year in which such
service is performed; ¹
1
(C) the provisions of subparagraphs (A) and (B) shall not
be deemed to be applicable with respect to service performed in
connection with commercial canning or commercial freezing or
in connection with any agricultural or horticultural commodity
after its delivery to a terminal market for distribution for
consumption; or
(5) on a farm operated for profit if such service is not in the
course of the employer's trade or business or is domestic service.
in a private home of the employer
As used in this subsection, the term "farm" includes stock, dairy,
poultry, fruit, fur-bearing animal, and truck farms, plantations,
ranches, nurseries, ranges, greenhouses or other similar structures used
primarily for the raising of agricultural or horticultural commodities,
and orchards.
(h) AMERICAN EMPLOYER.-For purposes of this chapter, the term
"American employer" means an employer which is—
(1) the United States or any instrumentality thereof,
(2) an individual who is a resident of the United States,
(3) a partnership, if two-thirds or more of the partners are
residents of the United States,
(4) a trust, if all of the trustees are residents of the United
States, or
(5) a corporation organized under the laws of the United
States or of any State.
(i) COMPUTATION OF WAGES IN CERTAIN CASES.-
"
(1) DOMESTIC SERVICE. For purposes of this chapter, in the
case of domestic service described in subsection (a)(7) (B), any
payment of cash remuneration for such service which is more.
or less than a whole-dollar amount shall, under such conditions
and to such extent as may be prescribed by regulations made under
this chapter, be computed to the nearest dollar. For the purpose
of the computation to the nearest dollar, the payment of a frac-
tional part of a dollar shall be disregarded unless it amounts to
one-half dollar or more, in which case it shall be increased to $1.
The amount of any payment of cash remuneration so computed
to the nearest dollar shall, in lieu of the amount actually paid, be
deemed to constitute the amount of cash remuneration for pur-
poses of subsection (a) (7) (B).
1 Subparagraph (B) was amended by section 356 (d) of P.L. 95-216.
IRC Sec. 3121(i)
600
(2) SERVICE IN THE UNIFORMED SERVICES.-For purposes of this
chapter, in the case of an individual performing service, as a
member of a uniformed service, to which the provisions of sub-
section (m)(1) are applicable, the term "wages" shall, subject to
the provisions of subsection (a) (1) of this section, include as
such individual's remuneration for such service only his basic
pay as described in section 102 (10) of the Servicemen's and Vet-
erans' Survivor Benefits Act.
(3) PEACE CORPS VOLUNTEER SERVICE. For purposes of this chap-
ter, in the case of an individual performing service, as a volun-
teer or volunteer leader with the meaning of the Peace Corps
Act, to which the provisions of section 3121 (p) are applicable,
the term "wages" shall, subject to the provisions of subsection
(a) (1) of this section, include as such individual's remuneration
for such service only amounts paid pursuant to section 5(c) or
6(1) of the Peace Corps Act.
(4) SERVICE PERFORMED BY CERTAIN MEMBERS OF RELIGIOUS OR-
DERS. For purposes of this chapter, in any case where an indi-
vidual is a member of a religious order (as defined in subsection
(r) (2)) performing service in the exercise of duties required
by such order, and an election of coverage under subsection (r)
is in effect with respect to such order or with respect to the auton-
omous subdivision thereof to which such member belongs, the
term "wages" shall, subject to the provisions of subsection (a)
(1), include as such individual's remuneration for such service
the fair market value of any board, lodging, clothing, and other
perquisites furnished to such member by such order or subdivision
thereof or by any other person or organization pursuant to an
agreement with such order or subdivision, except that the amount
included as such individual's remuneration under this paragraph
shall not be less than $100 a month.
(j) COVERED TRANSPORTATION SERVICE. For purposes of this
chapter-
(1) EXISTING TRANSPORTATION SYSTEMS GENERAL RULE.-EX-
cept as provided in paragraph (2), all service performed in the
employ of a State or political subdivision in connection with its
operation of a public transportation system shall constitute cov-
ered transportation service if any part of the transportation sys-
tem was acquired from private ownership after 1936 and prior to
1951.
(2) EXISTING TRANSPORTATION SYSTEMS-CASES IN WHICH NO
TRANSPORTATION EMPLOYEES, OR ONLY CERTAIN EMPLOYEES, ARE COV-
ERED.-Service performed in the employ of a State or political
601
IRC Sec. 3121(j)
subdivision in connection with the operation of its public trans-
portation system shall not constitute covered transportation serv-
ice if-
(A) any part of the transportation system was acquired
from private ownership after 1936 and prior to 1951, and
substantially all service in connection with the operation of
the transportation system was, on December 31, 1950, covered
under a general retirement system providing benefits which,
by reason of a provision of the State constitution dealing
specifically with retirement systems of the State or political
subdivisions thereof, cannot be diminished or impaired; or
(B) no part of the transportation system operated by the
State or political subdivision on December 31, 1950, was ac-
quired from private ownership after 1936 and prior to 1951;
except that if such State or political subdivision makes an acqui-
sition after 1950 from private ownership of any part of its trans-
portation system, then, in the case of any employee who-
(C) became an employee of such State or political subdi-
vision in connection with and at the time of its acquisition
after 1950 of such part, and
(D) prior to such acquisition rendered service in employ-
ment (including as employment service covered by an agree-
ment under section 218 of the Social Security Act) in con-
nection with the operation of such part of the transportation
system acquired by the State or political subdivision,
the service of such employee in connection with the operation of
the transportation system shall constitute covered transportation
service, commencing with the first day of the third calendar quar-
ter following the calendar quarter in which the acquisition of such
part took place, unless on such first day such service of such em-
ployee is covered by a general retirement system which does not,
with respect to such employee, contain special provisions appli-
cable only to employees described in subparagraph (C).
(3) TRANSPORTATION SYSTEMS ACQUIRED AFTER 1950.-All serv-
ice performed in the employ of a State or political subdivision
thereof in connection with its operation of a public transporta-
tion system shall constitute covered transportation service if the
transportation system was not operated by the State or political
subdivision prior to 1951 and, at the time of its first acquisition
(after 1950) from private ownership of any part of its transpor-
tation system, the State or political subdivision did not have a
general retirement system covering substantially all service per-
IRC Sec. 3121(j)
602
formed in connection with the operation of the transportation
system.
(4) DEFINITIONS.-For the purposes of this subsection-
(A) The term "general retirement system" means any
pension, annuity, retirement, or similar fund or system estab-
lished by a State or by a political subdivision thereof for
employees of the State, political subdivision, or both; but
such term shall not include such a fund or system which
covers only service performed in positions connected with
the operation of its public transportation system.
(B) A transportation system or a part thereof shall be
considered to have been acquired by a State or political sub-
division from private ownership if prior to the acquisition
service performed by employees in connection with the oper-
ation of the system or part thereof acquired constituted
employment under this chapter or subchapter A of chapter
9 of the Internal Revenue Code of 1939 or was covered by an
agreement made pursuant to section 218 of the Social Security
Act and some of such employees became employees of the
State or political subdivision in connection with and at the
time of such acquisition.
(C) The term "political subdivision" includes an instru-
mentality of—
(i) a State,
(ii) one or more political subdivisions of a State, or
(iii) a State and one or more of its political
subdivisions.
(k) EXEMPTION OF RELIGIOUS, CHARITABLE, AND CERTAIN OTHER
ORGANIZATIONS.-
(1) WAIVER OF EXEMPTION BY ORGANIZATION.-
(A) An organization described in section 501 (c) (3) which
is exempt from income tax under section 501 (a) may file a
certificate (in such form and manner, and with such official,
as may be prescribed by regulations made under this chapter)
certifying that it desires to have the insurance system estab-
lished by title II of the Social Security Act extended to
service performed by its employees. Such certificate may
be filed only if it is accompanied by a list containing the
signature, address, and social security account number (if
any) of each employee (if any) who concurs in the filing
of the certificate. Such list may be amended at any time prior
to the expiration of the twenty-fourth month following the
calendar quarter in which the certificate is filed by filing with
603
IRC Sec. 3121(k)
│
the prescribed official a supplemental list or lists containing
the signature, address, and social security account number (if
any) of each additional employee who concurs in the filing of
the certificate. The list and any supplemental list shall be
filed in such form and manner as may be prescribed by regu-
lations made under this chapter.
(B) The certificate shall be in effect (for purposes of sub-
section (b) (8) (B) and for purposes of section 210 (a) (8) (B)
of the Social Security Act) for the period beginning with
whichever of the following may be designated by the
organization:
-
(i) the first day of the calendar quarter in which the
certificate is filed,
(ii) the first day of the calendar quarter succeeding
such quarter, or
(iii) the first day of any calendar quarter preceding
the calendar quarter in which the certificate is filed, ex-
cept that such date may not be earlier than the first day
of the twentieth calendar quarter preceding the quarter
in which such certificate is filed.
(C) In the case of service performed by an employee whose
name appears on a supplemental list filed after the first month
following the calendar quarter in which the certificate is filed,
the certificate shall be in effect (for purposes of subsection
(b) (8) (B) and for purposes of section 210(a) (8) (B) of the
Social Security Act) only with respect to service performed
by such individual for the period beginning with the first
day of the calendar quarter in which such supplemental list
is filed.
(D) The period for which a certificate filed pursuant to
this subsection or the corresponding subsection of prior law
is effective may be terminated by the organization, effective
at the end of a calendar quarter, upon giving 2 years' advance
notice in writing, but only if, at the time of the receipt of
such notice, the certificate has been in effect for a period of
not less than 8 years. The notice of termination may be re-
voked by the organization by giving, prior to the close of
the calendar quarter specified in the notice of termination,
a written notice of such revocation. Notice of termination or
revocation thereof shall be filed in such form and manner,
and with such official, as may be prescribed by regulations
made under this chapter.
(E) If an organization described in subparagraph (A)
employs both individuals who are in positions covered by a
IRC Sec. 3121(k)
604
pension annuity, retirement, or similar fund or system es-
tablished by a State or by a political subdivision thereof and
individuals who are not in such positions, the organization
shall divide its employees into two separate groups. One group
shall consist of all employees who are in positions covered
by such a fund or system and (i) are members of such fund
or system, or (ii) are not members of such fund or system
but are eligible to become members thereof; and the other
group shall consist of all remaining employees. An orga-
nization which has so divided its employees into two groups
may file a certificate pursuant to subparagraph (A) with
respect to the employees in either group, or may file a separate
certificate pursuant to such subparagraph with respect to the
employees in each group.
(F) If a certificate filed pursuant to this paragraph is
effective for one or more calendar quarters prior to the
quarter in which the certificate is filed, then—
(i) for purposes of computing interest and for pur-
poses of section 6651 (relating to addition to tax for
failure to file tax return or pay tax), the due date for
the return and payment of the tax for such prior calendar
quarters resulting from the filing of such certificate shall
be the last day of the calendar month following the
calendar quarter in which the certificate is filed; and
(ii) the statutory period for the assessment of such
tax shall not expire before the expiration of 3 years from
such due date.¹
(H) [Repealed]
1
C
(2) TERMINATION OF WAIVER PERIOD BY SECRETARY.-If the Sec-
retary finds that any organization which filed a certificate pur-
suant to this subsection or the corresponding subsection of prior
law has failed to comply substantially with the requirements
applicable with respect to the taxes imposed by this chapter or
the corresponding provisions of prior law or is no longer able to
comply with the requirements applicable with respect to the
taxes imposed by this chapter, the Secretary shall give such
organization not less than 60 days' advance notice in writing
that the period covered by such certificate will terminate at
the end of the calendar quarter specified in such notice. Such
notice of termination may be revoked by the Secretary by giv-
ing, prior to the close of the calendar quarter specified in the
notice of termination, written notice of such revocation to the
1 Subparagraph (F) (formerly subparagraph (G)) was redesignated by section 1903
(a)(3)(E) of P.L. 94-455 which also repealed subparagraph (H) and the former sub-
paragraph (F).
Revised April 1978
605
IRC Sec. 3121(k)
organization. No notice of termination or of revocation thereof
shall be given under this paragraph to an organization without
the prior concurrence of the Secretary of Health, Education, and
Welfare.
(3) NO RENEWAL OF WAIVER.—In the event the period covered
by a certificate filed pursuant to this subsection or the correspond-
ing subsection of prior law is terminated by the organization, no
certificate may again be filed by such organization pursuant to
this subsection.
(4) CONSTRUCTIVE FILING OF CERTIFICATE WHERE NO REFUND OR
CREDIT OF TAXES HAS BEEN MADE.-
(A) In any case where—
(i) an organization described in section 501 (c) (3)
which is exempt from income tax under section 501 (a)
has not filed a valid waiver certificate under paragraph
(1) of this subsection (or under the corresponding pro-
vision of prior law) as of the date of the enactment of
this paragraph (or, if later, as of the earliest date on
which it satisfies clause (ii) of this subparagraph.), but ¹
1
(ii) the taxes imposed by sections 3101 and 3111 have
been paid with respect to the remuneration paid by such
organization to its employees, as though such a certif-
icate had been filed, during any period (subject to sub-
paragraph (B)(i)) of not less than three consecutive
calendar quarters,
such organization shall be deemed (except as provided in
subparagraph (B) of this paragraph) for purposes of sub-
section (b) (8) (B) and section 210(a) (8) (B) of the Social
Security Act, to have filed a valid waiver certificate under
paragraph (1) of this subsection (or under the correspond-
ing provision of prior law) on the first day of the period de-
scribed in clause (ii) of this subparagraph effective (subject
to subparagraph (C)) on the first day of the calendar quarter
in which such period began, and to have accompanied such
certificate with a list containing the signature, address, and
social security number (if any) of each employee with respect
to whom the taxes described in such subparagraph were paid
(and each such employee shall be deemed for such purposes to
have concurred in the filing of the certificate).
(B) Subparagraph (A) shall not apply with respect to any
organization if—
(i) the period referred to in clause (ii) of such sub-
paragraph (in the case of that organization) terminated
before the end of the earliest calendar quarter falling
1 Subparagraph (A) was amended by sections 312(b) (2) and 312(f) of P.L. 95–216.
(The period following the word "subparagraph" is a technical error in the law.)
IRC Sec. 3121(k)
606
Revised April 1978
wholly or partly within the time limitation (as defined in
section 205 (c) (1) (B) of the Social Security Act) im-
mediately preceding the date of the enactment of this
paragraph, or
(ii) a refund or credit of any part of the taxes which
were paid as described in clause (ii) of such subpara-
graph with respect to remuneration for services per-
formed on or after the first day of the earliest calendar
quarter falling wholly or partly within the time limita-
tion (as defined in section 205 (c) (1) (B) of the Social
Security Act) immediately preceding the first day of
the calendar quarter of enactment of this paragraph
(other than a refund or credit which would have been
allowed if a valid waiver certificate filed under para-
graph (1) had been in effect) has been obtained by the
organization or its employees prior to September 9,
1976, or 1
(iii) the organization, prior to the end of the period
referred to in clause (ii) of such subparagraph (and, in
the case of an organization organized on or before Octo-
ber 9, 1969, prior to October 19, 1976), had applied for a
ruling or determination letter acknowledging it to be ex-
empt from income tax under section 501(c)(3), and it
subsequently received such ruling or determination let-
ter and did not pay any taxes under sections 3101 and
3111 with respect to any employee with respect to any
quarter ending after the twelfth month following the
date of mailing of such ruling or determination letter and
did not pay any such taxes with respect to any quarter
beginning after the later of (I) December 31, 1975 or
(II) the date on which such ruling or determination
letter was issued.2
(C) In the case of any organization which is deemed under
this paragraph to have filed a valid waiver certificate under
paragraph (1), if—
(i) the period with respect to which the taxes imposed
by sections 3101 and 3111 were paid by such organization
(as described in subparagraph (A) (ii)) terminated prior
to October 1, 1976, or
(ii) the taxes imposed by sections 3101 and 3111 were
not paid during the period referred to in clause (i)
(whether such period has terminated or not) with respect.
to remuneration paid by such organization to individuals
1 Clause (ii) was amended by section 312(b) (4) of P.L. 95–216.
2 Clause (iii) was added by section 312(g) of P.L. 95-216.
Revised April 1978
607
IRC Sec. 3121(k)
who became its employees after the close of the calendar
quarter in which such period began,
taxes under sections 3101 and 3111—
(iii) in the case of an organization which meets the
requirements of this subparagraph by reason of clause
(i), with respect to remuneration paid by such organiza-
tion after the termination of the period referred to in
clause (i) and prior to July 1, 1977; or
(iv) in the case of an organization which meets the
requirements of this subparagraph by reason of clause
(ii), with respect to remuneration paid prior to July 1,
1977, to individuals who became its employees after the
close of the calendar quarter in which the period referred
to in clause (i) began,
which remain unpaid on the date of the enactment of this
subparagraph, or which were paid after October 19, 1976, but
prior to the date of the enactment of this subparagraph, shall
not be due or payable (or, if paid, shall be refunded); and
the certificate which such organization is deemed under this
paragraph to have filed shall not apply to any service with re-
spect to the remuneration for which the taxes imposed by sec-
tions 3101 and 3111 (which remain unpaid on the date of the
enactment of this subparagraph, or were paid after Octo-
ber 19, 1976, but prior to the date of the enactment of this
subparagraph) are not due and payable (or are refunded)
by reason of the preceding provisions of this subparagraph.
In applying this subparagraph for purposes of title II of the
Social Security Act, the period during which reports of
wages subject to the taxes imposed by section 3101 and 3111
were made by any organization may be conclusively treated
as the period (described in subparagraph (A)(ii)) during
which the taxes imposed by such sections were paid by such
organization.¹
(5) CONSTRUCTIVE FILING OF CERTIFICATE WHERE REFUND OR
CREDIT HAS BEEN MADE AND NEW CERTIFICATE IS NOT FILED.—In any
case where-
(A) an organization described in section 501(c)(3) which
is exempt from income tax under section 501 (a) would be
deemed under paragraph (4) of this subsection to have filed
a valid waiver certificate under paragraph (1) if it were not
excluded from such paragraph (4) (pursuant to subpara-
graph (B) (ii) thereof) because a refund or credit of all or a
part of the taxes described in paragraph (4)(A)(ii) was ob-
tained prior to September 9, 1976; and
¹ Subparagraph (C) was added by section 312(b)(1) of P.L. 95–216.
IRC Sec. 3121(k)
608
Revised April 1978
(B) such organization has not, prior to April 1, 1978,
filed a valid waiver certificate under paragraph (1) which is
effective for a period beginning on or before the first day
of the first calendar quarter with respect to which such re-
fund or credit was made (or, if later, with the first day of
the earliest calendar quarter for which such certificate may be
in effect under paragraph (1)(B) (iii)) and which is ac-
companied by the list described in paragraph (1)(A),
such organization shall be deemed, for purposes of subsection (b)
(8) (B) and section 210 (a) (8) (B) of the Social Security Act, to
have filed a valid waiver certificate under paragraph (1) of this
subsection on April 1, 1978, effective for the period beginning on
the first day of the first calendar quarter with respect to which the
refund or credit referred to in subparagraph (A) of this para-
graph was made (or, if later, with the first day of the earliest
calendar quarter falling wholly or partly within the time limita-
tion (as defined in section 205 (c) (1) (B) of the Social Security
Act) immediately preceding the date of the enactment of this
paragraph), and to have accompanied such certificate with a list
containing the signature, address, and social security number (if
any) of each employee described in subparagraph (a) of para-
graph (4) including any employee with respect to whom taxes
were refunded or credited as described in subparagraph (A) of
this paragraph (and each such employee shall be deemed for
such purposes to have concurred in the filing of the certificate).
A certificate which is deemed to have been filed by an organization
on April 1, 1978, shall supersede any certificate which may have
been actually filed by such organization prior to that day except
to the extent prescribed by the Secretary or his delegate.¹
(6) APPLICATION OF CERTAIN PROVISIONS TO CASES OF CONSTRUC-
TIVE FILING.—All of the provisions of this subsection (other than
subparagraphs (B), (F), and (H) of paragraph (1)), including
the provisions requiring payment of taxes under section 3101 and
3111 with respect to the services involved (except as provided in
paragraph (4) (C)), shall apply with respect to any certificate
which is deemed to have been filed by an organization on any day
under paragraph (4) or (5), in the same way they would apply
if the certificate had been actually filed on that day under para-
graph (1); except that-
(A) the provisions relating to the filing of supplemental
lists of concurring employees in the third sentence of para-
graph (1)(A), and in paragraph (1)(C), shall apply to the
extent prescribed by the Secretary or his delegate;
1 Paragraph (5) was amended by section 312 (a) (1) of P.L. 95-216.
Revised April 1978
608-A
IRC Sec. 3121(k)
|
(B) the provisions of paragraph (1)(E) shall not apply
unless the taxes described in paragraph (4) (A) (ii) were paid
by the organization as though a separate certificate had been
filed with respect to one or both of the groups to which such
provisions relate; and
(C) the action of the organization in obtaining the refund
or credit described in paragraph (5)(A) shall not be con-
sidered a termination of such organization's coverage period
for purposes of paragraph (3). Any organization which is
deemed to have filed a waiver certificate under paragraph
(4) or (5) shall be considered for purposes of section 3102 (b)
to have been required to deduct the taxes imposed by section
3101 with respect to the services involved.¹
(7) BOTH EMPLOYEE AND EMPLOYER TAXES PAYABLE BY ORGA-
NIZATION FOR RETROACTIVE PERIOD IN CASES OF CONSTRUCTIVE FIL-
ING.-Notwithstanding any other provision of this chapter, in any
case where an organization described in paragraph (5)(A) has
not filed a valid waiver certificate under paragraph (1) prior
to April 1, 1978, this paragraph and is accordingly deemed under
paragraph (5) to have filed such a certificate on April 1, 1978,
the taxes due under section 3101, with respect to services constitut-
ing employment by reason of such certificate or any period prior
to that date (along with the taxes due under section 3111 with
respect to such services and the amount of any interest paid in
connection with the refund or credit described in paragraph (5)
(a)) shall be paid by such organization from its own funds and
without any deduction from the wages of the individuals who
performed such services; and those individuals shall have no
liability for the payment of such taxes.²
(8) EXTENDED PERIOD FOR PAYMENT OF TAXES FOR RETROACTIVE
COVERAGE.----Notwithstanding any other provision of this title, in
any case where-
(A) an organization is deemed under paragraph (4) to
have filed a valid waiver certificate under paragraph (1),
but the applicable period described in paragraph (4) (A) (ii)
has terminated and part or all of the taxes imposed by sec-
tions 3101 and 3111 with respect to remuneration paid by
such organization to its employees after the close of such
period remains payable notwithstanding paragraph (4)(C),
or
(B) an organization described in paragraph (5)(A) files
a valid waiver certificate under paragraph (1) by March 31,
1978, as described in paragraph (5) (B), or (not having filed
1 Paragraph (6) was amended by section 312(b) (3) of P.L. 95–216.
2 Paragraph (7) was amended by section 312(a) (2) of P.L. 95-216.
21-746 O - 78 - 46
Revised April 1978
608-B
IRC Sec. 3121(k)
such a certificate by that date) is deemed under paragraph
(5) to have filed such a certificate on April 1, 1978, or
(C) an individual files a request under section 3 of Public
Law 94-563, or under section 312 (c) of the Social Security
Amendments of 1977, to have service treated as constituting
remuneration for employment (as defined in section 3121 (b)
and in section 210 (a) of the Social Security Act),
the taxes due under sections 3101 and 3111 with respect to services.
constituting employment by reason of such certificate for any
period prior to the first day of the calendar quarter in which the
date of such filing or constructive filing occurs, or with respect to
service constituting employment by reason of such request, may
be paid in installments over an appropriate period of time, as
determined under regulations prescribed by the Secretary, rather
than in a lump sum.¹
(1) AGREEMENTS ENTERED INTO BY DOMESTIC CORPORATIONS WITH
RESPECT TO FOREIGN SUBSIDIARIES.-
(1) AGREEMENT WITH RESPECT TO CERTAIN EMPLOYEES OF FOREIGN
SUBSIDIARIES.-The Secretary shall, at the request of any domestic
corporation, enter into an agreement (in such form and manner
as may be prescribed by the Secretary) with any such corpora-
tion which desires to have the insurance system established by
title II of the Social Security Act extended to service performed
outside the United States in the employ of any one or more
of its foreign subsidiaries (as defined in paragraph (8)) by
all employees who are citizens of the United States, except that
the agreement shall not be applicable to any service performed
by, or remuneration paid to, an employee if such service or re-
muneration would be excluded from the term "employment"
1 Paragraphs (4), (5), (6), (7), and (8) were added by section 1(c) of Public Law
94-563 effective for services performed after 1950, to the extent covered by waiver certifil-
cates filed or deemed to have been filed under section 3121(k) (4) or (5). Paragraph (8)
was amended by section 312(d) of P.L. 95–216.
609
IRC Sec. 3121(r)
or "wages”, as defined in this section, had the service been per-
formed in the United States. Such agreement may be amended
at any time so as to be made applicable in the same manner
and under the same conditions, with respect to any other for-
eign subsidiary of such domestic corporation. Such agreement
shall be applicable with respect to citizens of the United
States who, on or after the effective date of the agreement, are
employees of and perform services outside the United States for
any foreign subsidiary specified in the agreement. Such agree-
ment shall provide—
(A) that the domestic corporation shall pay to the Secre-
tary, at such time or times as the Secretary may by regu-
lations prescribe, amounts equivalent to the sum of the taxes
which would be imposed by sections 3101 and 3111 (includ-
ing amounts equivalent to the interest, additions to the
taxes, additional amounts, and penalties which would be
applicable) with respect to the remuneration which would
be wages if the services covered by the agreement consti-
tuted employment as defined in this section; and
(B) that the domestic corporation will comply with such
regulations relating to payments and reports as the Secretary
may prescribe to carry out the purposes of this subsection.
(2) EFFECTIVE PERIOD OF AGREEMENT.—An agreement entered
into pursuant to paragraph (1) shall be in effect for the period
beginning with the first day of the calendar quarter in which such
agreement is entered into or the first day of the succeeding calen-
dar quarter, as may be specified in the agreement; except that in
case such agreement is amended to include the services performed
for any other subsidiary and such amendment is executed after
the first month following the first calendar quarter for which the
agreement is in effect, the agreement shall be in effect with respect
to service performed for such other subsidiary only after the
calendar quarter in which such amendment is executed.¹
1
(3) TERMINATION OF PERIOD BY A DOMESTIC CORPORATION.-The
period for which an agreement entered into pursuant to para-
graph (1) of this subsection is effective may be terminated with
respect to any one or more of its foreign subsidiaries by the domes-
tic corporation, effective at the end of a calendar quarter, upon
giving two year's advance notice in writing, but only if, at the
time of the receipt of such notice, the agreement has been in effect
for a period of not less than eight years. The notice of termination
may be revoked by the domestic corporation by giving, prior to
the close of the calendar quarter specified in the notice of termina-
¹ Paragraph (2) was amended by section 1903 (a) (3) (F) of P.L. 94–455.
IRC Sec. 3121(1)
610
tion, a written notice of such revocation. Notice of termination or
revocation thereof shall be filed in such form and manner as may
be prescribed by regulations. Notwithstanding any other provi-
sion of this subsection, the period for which any such agreement
is effective with respect to any foreign corporation shall terminate
at the end of any calendar quarter in which the foreign corpora-
tion, at any time in such quarter, ceases to be a foreign subsidiary
as defined in paragraph (8).
(4) TERMINATION OF PERIOD BY SECRETARY.-If the Secretary
finds that any domestic corporation which entered into an agree-
ment pursuant to this subsection has failed to comply substan-
tially with the terms of such agreement, the Secretary shall give
such domestic corporation not less than sixty days' advance no-
tice in writing that the period covered by such agreement will
terminate at the end of the calendar quarter specified in such
notice. Such notice of termination may be revoked by the Secre-
tary by giving, prior to the close of the calendar quarter speci-
fied in the notice of termination, written notice of such revoca-
tion to the domestic corporation. No notice of termination or
of revocation thereof shall be given under this paragraph to
a domestic corporation without the prior concurrence of the
Secretary of Health, Education, and Welfare.
(5) NO RENEWAL OF AGREEMENT.—If any agreement entered
into pursuant to paragraph (1) of this subsection is terminated
in its entirety (A) by a notice of termination filed by the domestic
corporation pursuant to paragraph (3), or (B) by a notice of
termination given by the Secretary pursuant to paragraph (4),
the domestic corporation may not again enter into an agreement
pursuant to paragraph (1). If any such agreement is terminated
with respect to any foreign subsidiary, such agreement may not
thereafter be amended so as again to make it applicable with
respect to such subsidiary.
(6) DEPOSITS IN TRUST FUNDS.—For purposes of section 201 of
the Social Security Act, relating to appropriations to the Federal
Old-Age and Survivors Insurance Trust Fund and the Federal
Disability Insurance Trust Fund, such remuneration-
(A) paid for services covered by an agreement entered
into pursuant to paragraph (1) as would be wages if the
services constituted employment, and
(B) as is reported to the Secretary pursuant to the pro-
visions of such agreement or of the regulations issued under
this subsection,
shall be considered wages subject to the taxes imposed by this
chapter.
611
IRC Sec. 3121(m)
(7) OVERPAYMENTS AND UNDERPAYMENTS.-
(A) If more or less than the correct amount due under an
agreement entered into pursuant to this subsection is paid
with respect to any payment of remuneration, proper adjust-
ments with respect to the amounts due under such agreement
shall be made, without interest, in such manner and at such
times as may be required by regulations prescribed by the
Secretary.
(B) If an overpayment cannot be adjusted under sub-
paragraph (A), the amount thereof shall be paid by the Sec-
retary, through the Fiscal Service of the Treasury Depart-
ment, but only if a claim for such overpayment is filed with
the Secretary within two years from the time such overpay-
ment was made.
(8) DEFINITION OF FOREIGN SUBSIDIARY.-For purposes of this
subsection and section 210(a) of the Social Security Act, a for-
eign subsidiary of a domestic corporation is—
(A) a foreign corporation not less than 20 percent of the
voting stock of which is owned by such domestic corporation;
or
(B) a foreign corporation more than 50 percent of the
voting stock of which is owned by the foreign corporation
described in subparagraph (A).
(9) DOMESTIC CORPORATION AS SEPARATE ENTITY.-Each domes-
tic corporation which enters into an agreement pursuant to para-
graph (1) of this subsection shall, for purposes of this subsection
and section 6413(c)(2) (C), relating to special refunds in the
case of employees of certain foreign corporations, be considered
an employer in its capacity as a party to such agreement separate
and distinct from its identity as a person employing individuals
on its own account.
(10) REGULATIONS.-Regulations of the Secretary to carry out
the purposes of this subsection shall be designed to make the re-
quirements imposed on domestic corporations with respect to serv-
ices covered by an agreement entered into pursuant to this
subsection the same, so far as practicable, as those imposed upon
employers pursuant to this title with respect to the taxes imposed
by this chapter.
(m) SERVICE IN THE UNIFORMED SERVICES.-For purposes of this
chapter—
(1) INCLUSION OF SERVICE.—The term “employment" shall, not-
withstanding the provisions of subsection (b) of this section, in-
clude service performed by an individual as a member of a uni-
IRC Sec. 3121 (m)
612
formed service on active duty; but such term shall not include any
such service which is performed while on leave without pay.¹
(2) ACTIVE DUTY.-The term "active duty" means "active duty"
as described in section 102 of the Servicemen's and Veterans' Sur-
vivor Benefits Act, except that it shall also include "active duty
for training" as described in such section.
(3) INACTIVE DUTY TRAINING.—The term "inactive duty train-
ing" means "inactive duty training" as described in such section
102.
(n) MEMBER OF A UNIFORMED SERVICE. For purposes of this chap-
ter, the term "member of a uniformed service" means any person
appointed, enlisted, or inducted in a component of the Army, Navy,
Air Force, Marine Corps, or Coast Guard (including a reserve com-
ponent of a uniformed service as defined in section 102 (3) of the
Servicemen's and Veterans' Survivor Benefits Act), or in one of those
services without specification of component, or as a commissioned
officer of the Coast and Geodetic Survey or the Regular or Reserve
Corps of the Public Health Service, and any person serving in the
Army or Air Force under call or conscription. The term includes—
M
(1) a retired member of any of those services;
(2) a member of the Fleet Reserve or Fleet Marine Corps.
Reserve;
(3) a cadet at the United States Military Academy, a mid-
shipman at the United States Naval Academy, and a cadet at
the United States Coast Guard Academy or United States Air
Force Academy;
or
(4) a member of the Reserve Officers' Training Corps, the
Naval Reserve Officers' Training Corps, or the Air Force Reserve
Officers' Training Corps, when ordered to annual training duty
for fourteen days or more, and while performing authorized
travel to and from that duty; and
(5) any person while en route to or from, or at, a place for
final acceptance or for entry upon active duty in the military or
naval service-
(A) who has been provisionally accepted for such duty;
(B) who, under the Universal Military Training and
Service Act, has been selected for active military or naval
service;
and has been ordered or directed to proceed to such place.
The term does not include a temporary member of the Coast Guard
Reserve.
1 Paragraph (1) was amended by section 1903 (a)(3)(G) of Public Law 94-455.
613
IRC Sec. 3121'(r)
(0) CREW LEADER. For purposes of this chapter, the term "crew
leader” means an individual who furnishes individuals to perform
agricultural labor for another person, if such individual pays (either
on his own behalf or on behalf of such person) the individuals so fur-
nished by him for the agricultural labor performed by them and if
such individual has not entered into a written agreement with such
person whereby such individual has been designated as an employee
of such person; and such individuals furnished by the crew leader
to perform agricultural labor for another person shall be deemed to
be the employees of such crew leader. For purposes of this chapter
and chapter 2, a crew leader shall, with respect to service performed
in furnishing individuals to perform agricultural labor for another
person and service performed as a member of the crew, be deemed
not to be an employee of such other person.
(p) PEACE CORPS VOLUNTEER SERVICE.-For purposes of this chap-
ter, the term "employment" shall, notwithstanding the provisions of
subsection (b) of this section, include service performed by an indi-
vidual as a volunteer or volunteer leader within the meaning of the
Peace Corps Act.
(q) TIPS INCLUDED FOR EMPLOYEE TAXES.-For purposes of this
chapter other than for purposes of the taxes imposed by section 3111,
tips received by an employee in the course of his employment shall be
considered remuneration for employment. Such remuneration shall
be deemed to be paid at the time a written statement including such
tips is furnished to the employer pursuant to section 6053 (a) or (if
no statement including such tips is so furnished) at the time received.
(r) ELECTION OF COVERAGE BY RELIGIOUS ORDERS.—
(1) CERTIFICATE OF ELECTION BY ORDER.-A religious order
whose members are required to take a vow of poverty, or any
autonomous subdivision of such order, may file a certificate (in
such form and manner, and with such official, as may be prescribed
by regulations under this chapter) electing to have the insurance
system established by title II of the Social Security Act extended
to services performed by its members in the exercise of duties
required by such order or such subdivision thereof. Such certifi-
cate of election shall provide that-
(A) such election of coverage by such order or subdivision
shall be irrevocable;
C
(B) such election shall apply to all current and future
members of such order, or in the case of a subdivision thereof
to all current and future members of such order who belong
to such subdivision;
(C) all services performed by a member of such an order
or subdivision in the exercise of duties required by such order
IRC Sec. 3121 (r)
614
or subdivision shall be deemed to have been performed by
such member as an employee of such order or subdivision;
and
(D) the wages of each member, upon which such order or
subdivision shall pay the taxes imposed by sections 3101 and
3111, will be detc.mined as provided in subsection (i) (4).
(2) DEFINITION OF MEMBER.-For purposes of this subsection,
a member of a religious order means any individual who is sub-
ject to a vow of poverty as a member of such order and who per-
forms tasks usually required (and to the extent usually required)
of an active member of such order and who is not considered
retired because of old age or total disability.
(3) EFFECTIVE DATE FOR ELECTION.—(A) A certificate of elec-
tion of coverage shall be in effect, for purposes of subsection (b)
(8) (A) and for purposes of section 210 (a) (8) (A) of the Social
Security Act, for the period beginning with whichever of the
following may be designated by the order or subdivision thereof:
(i) the first day of the calendar quarter in which the cer-
tificate is filed,
(ii) the first day of the calendar quarter succeeding such
quarter, or
(iii) the first day of any calendar quarter preceding the
calendar quarter in which the certificate is filed, except that
such date may not be earlier than the first day of the twentieth
calendar quarter preceding the quarter in which such certifi-
cate is filed.
Whenever a date is designated under clause (iii), the election
shall apply to services performed before the quarter in which the
certificate is filed only if the member performing such services
was a member at the time such services were performed and is
living on the first day of the quarter in which such certificate is
filed.
(B) If a certificate of election filed pursuant to this subsection
is effective for one or more calendar quarters prior to the quarter
in which such certificate is filed, then-
(i) for purposes of computing interest and for purposes.
of section 6651 (relating to addition to tax for failure to file
tax return), the due date for the return and payment of the
tax for such prior calendar quarters resulting from the filing
of such certificate shall be the last day of the calendar month
following the calendar quarter in which the certificate is filed;
and
(ii) the statutory period for the assessment of such tax
shall not expire before the expiration of 3 years from such
due date.
Revised April 1978
IRC Sec. 3121(t)
615
(4) COORDINATION WITH COVERAGE OF LAY EMPLOYEES.-Notwith-
standing the preceding provisions of this subsection, no certificate
of election shall become effective with respect to an order or sub-
division thereof, unless-
(A) if at the time the certificate of election is filed a cer-
tificate of waiver of exemption under subsection (k) is in
effect with respect to such order or subdivision, such order
subdivision amends such certificate of waiver of exemption
(in such form and manner as may be prescribed by regula-
tions made under this chapter) to provide that it may not be
revoked, or
(B) if at the time the certificate of election is filed a cer-
tificate of waiver of exemption under such subsection is not in
effect with respect to such order or subdivision, such order or
subdivision files such certificate of waiver of exemption
under the provisions of such subsection except that such
certificate of waiver of exemption cannot become effective at
a later date than the certificate of election and such certificate
of waiver of exemption must specify that such certificate of
waiver of exemption may not be revoked. The certificate of
waiver of exemption required under this subparagraph shall
be filed notwithstanding the provisions of subsection (k) (3).
(s) CONCURRENT EMPLOYMENT BY TWO OR MORE EMPLOYERS.-For
purposes of sections 3102, 3111, and 3121 (a) (1), if two or more related
corporations concurrently employ the same individual and compen-
sate such individual through a common paymaster which is one of such
corporations, each such corporation shall be considered to have paid
as remuneration to such individual only the amounts actually dis-
bursed by it to such individual and shall not be considered to have
paid as remuneration to such individual amounts actually disbursed
to such individual by another of such corporations.¹
(t) SPECIAL RULE FOR DETERMINING WAGES SUBJECT TO EMPLOYER
TAX IN CASE OF CERTAIN EMPLOYERS WHOSE EMPLOYEES RECEIVE
INCOME FROM TIPS.-If the wages paid by an employer with respect to
the employment during any month of an individual who (for services
performed in connection with such employment) receives tips which
constitute wages, and to which section 3102 (a) applies, are less than
the total amount which would be payable (with respect to such
employment) at the minimum wage rate applicable to such individual
under section 6(a) (1) of the Fair Labor Standards Act of 1938
(determined without regard to section 3 (m) of such Act), the wages so
paid shall be deemed for purposes of section 3111 to be equal to such
total amount.2
1 Subsection (s) was added by sec. 314(a) of P.L. 95-216 effective with respect to
wages paid after December 31, 1978.
2 Subsection (t) was added by sec. 315(a) of P.L. 95–216.
Revised April 1978
IRC Sec. 3122
615-A
SEC. 3122. FEDERAL SERVICE.
In the case of the taxes imposed by this chapter with respect to
service performed in the employ of the United States or in the employ
of any instrumentality which is wholly owned by the United States,
including service, performed as a member of a uniformed service,
to which the provisions of section 3121 (m) (1) are applicable, and
including service, performed as a volunteer or volunteer leader with-
in the meaning of the Peace Corps Act, to which the provisions of
section 3121(p) are applicable, the determination whether an indi-
vidual has performed service which constitutes employment as de-
fined in section 3121 (b), the determination of the amount of remunera-
tion for such service which constitutes wages as defined in section
3121(a), and the return and payment of the taxes imposed by this
chapter, shall be made by the head of the Federal agency or instru-
mentality having the control of such service, or by such agents as
such head may designate. The person making such return may, for
convenience of administration, make payments of the tax imposed
under section 3111 with respect to such service without regard to the
contribution and benefit base limitation in section 3121 (a) (1), and he
shall not be required to obtain a refund of the tax paid under section
3111 on that part of the remuneration not included in wages by reason
of section 3121 (a) (1). Payments of the tax imposed under section 3111
IRC Sec. 3122
616
with respect to service, performed by an individual as a member of a
uniformed service, to which the provisions of section 3121 (m) (1) are
applicable, shall be made from appropriations available for the pay
of members of such uniformed service. The provisions of this section
shall be applicable in the case of service performed by a civilian em-
ployee, not compensated from funds appropriated by the Congress, in
the Army and Air Force Exchange Service, Army and Air Force
Motion Picture Service, Navy Exchanges, Marine Corps Exchanges,
or other activities, conducted by an instrumentality of the United
States subject to the jurisdiction of the Secretary of Defense, at instal-
lations of the Department of Defense for the comfort, pleasure, con-
tentment, and mental and physical improvement of personnel of such
Department; and for purposes of this section the Secretary of De-
fense shall be deemed to be the head of such instrumentality. The
provisions of this section shall be applicable also in the case of service
performed by a civilian employee, not compensated from funds ap-
propriated by the Congress, in the Coast Guard Exchanges or other
activities, conducted by an instrumentality of the United States sub-
ject to the jurisdiction of the Secretary of Transportation, at installa-
tions of the Coast Guard for the comfort, pleasure, contentment, and
mental and physical improvement of personnel of the Coast Guard;
and for purposes of this section the Secretary of Transportation shall
be deemed to be the head of such instrumentality.¹
SEC. 3123. DEDUCTIONS AS CONSTRUCTIVE PAYMENTS.
Whenever under this chapter or any act of Congress, or under the
law of any State, an employer is required or permitted to deduct any
amount from the remuneration of any employee and to pay the amount
deducted to the United States, a State, or any political subdivision
thereof, then for purposes of this chapter the amount so deducted
shall be considered to have been paid to the employee at the time of
such deduction.
SEC. 3124. ESTIMATE OF REVENUE REDUCTION.
The Secretary at intervals of not longer than 3 years shall estimate
the reduction in the amount of taxes collected under this chapter by
reason of the operation of section 3121 (b) (9) and shall include such
estimate in his annual report.
SEC. 3125. RETURNS IN THE CASE OF GOVERNMENTAL
EMPLOYEES IN GUAM, AMERICAN SAMOA,
AND THE DISTRICT OF COLUMBIA.
(a) GUAM.-The return and payment of the taxes imposed by this
chapter on the income of individuals who are officers or employees of
¹ Section 3122 was amended by section 1903(a) (4) of Public Law 94-455.
617
IRC Sec. 3126
the Government of Guam or any political subdivision thereof or of
any instrumentality of any one or more of the foregoing which is
wholly owned thereby, and those imposed on such Government or
political subdivision or instrumentality with respect to having such
individuals in its employ, may be made by the Governor of Guam or
by such agents as he may designate. The person making such return
may, for convenience of administration, make payments of the tax
imposed under section 3111 with respect to the service of such individ-
uals without regard to the contribution and benefit base limitation in
section 3121 (a) (1).
(b) AMERICAN SAMOA.-The return and payment of the taxes
imposed by this chapter on the income of individuals who are officers
or employees of the Government of American Samoa or any political
subdivision thereof or of any instrumentality of any one or more of
the foregoing which is wholly owned thereby, and those imposed on
such Government or political subdivision or instrumentality with
respect to having such individuals in its employ, may be made by the
Governor of American Samoa or by such agents as he may designate.
The person making such return may, for convenience of administra-
tion, make payments of the tax imposed under section 3111 with
respect to the service of such individuals without regard to the
contribution and benefit base limitation in section 3121 (a) (1).
(c) DISTRICT OF COLUMBIA.-In the case of the taxes imposed by
this chapter with respect to service performed in the employ of the
District of Columbia or in the employ of any instrumentality which
is wholly owned thereby, the return and payment of the taxes may be
made by the Mayor of the District of Columbia or such agents as he
may designate. The person making such return may, for convenience
of administration, make payments of the tax imposed by section 3111
with respect to such service without regard to the contribution and
benefit base limitation in section 3121 (a) (1).¹
SEC. 3126. SHORT TITLE.
This chapter may be cited as the "Federal Insurance Contributions
Act."
CHAPTER 22-RAILROAD RETIREMENT TAX ACT
Subchapter A. Tax on employees.
Subchapter B. Tax on employee representatives.
Subchapter C. Tax on employers.
Subchapter D. General provisions.
SUBCHAPTER A-TAX ON EMPLOYEES
Sec. 3201. Rate of tax.
Sec. 3202. Deduction of tax from compensation.
1 Section 3125 was amended by section 1903(a) (5) of P.L. 94-455.
IRC Sec. 3201
618
SEC. 3201.
RATE OF TAX.
In addition to other taxes, there is hereby imposed on the income of
every employee a tax equal to the rate of the tax imposed with respect.
to wages by section 3101 (a) plus the rate imposed by section 3101 (b)
of so much of the compensation paid in any calendar month to such
employee for services rendered by him as is not in excess of an amount
equal to one-twelfth of the current maximum annual taxable "wages"
as defined in section 3121 for any month.¹
SEC. 3202. DEDUCTION OF TAX FROM COMPENSATION.
(a) REQUIREMENT.-The tax imposed by section 3201 shall be col-
lected by the employer of the taxpayer by deducting the amount of the
tax from the compensation of the employee as and when paid. If an
employee is paid compensation after September 30, 1973 by more than
one employer for services rendered during any calendar month and
the aggregate of such compensation is in excess of an amount equal
to one-twelfth of the current maximum annual taxable "wages" as
defined in section 3121 for any month, the tax to be deducted by each
employer other than a subordinate unit of a national railway-labor-
organization employer from the compensation paid by him to the
employee with respect to such month shall be that proportion of the
tax with respect to such compensation paid by all such employers
which the compensation paid by him to the employee for services
rendered during such month bears to the total compensation paid by
all such employers to such employee for services rendered during
such month; and in the event that the compensation so paid by such
employers to the employee for services rendered during such month
is less than an amount equal to one-twelfth of the current maximum
annual taxable "wages" as defined in section 3121 for any month, each
subordinate unit of a national railway-labor-organization employer
shall deduct such proportion of any additional tax as the compensation
paid by such employer to such employee for services rendered during
such month bears to the total compensation paid by all such employers
to such employee for services rendered during such month. An em-
ployer who is furnished by an employee a written statement of tips
(received in a calendar month) pursuant to section 6053 (a) to which
paragraph (3) of section 3231 (e) is applicable may deduct an amount
equivalent to such tax with respect to such tips from any compensation
of the employee (exclusive of tips) under his control, even though at
the time such statement is furnished the total amount of the tips
included in statements furnished to the employer as having been
received by the employee in such calendar month in the course of his
employment by such employer is less than $20.²
1 Section 3201 was amended by P.L. 94–93 and by section 1903(a) (6) of P.L. 94-455.
2 Subsections (a) and (b) were amended by section 1903 (a) (7) of P.L. 94–455.
619
IRC Sec. 3202(c)
(b) INDEMNIFICATION OF EMPLOYER.-Every employer required
under subsection (a) to deduct the tax shall be liable for the pay-
ment of such tax and shall not be liable to any person for the amount of
any such payment.¹
(c) SPECIAL RULE FOR TIPS.-
(1) In the case of tips which constitute compensation, subsec-
tion (a) shall be applicable only to such tips as are included in a
written statement furnished to the employer pursuant to section.
6053 (a), and only to the extent that collection can be made by the
employer, at or after the time such statement is so furnished and
before the close of the 10th day following the calendar month (or,
if paragraph (3) applies, the 30th day following the quarter) in
which the tips were deemed paid, by deducting the amount of the
tax from such compensation of the employee (excluding tips, but
including funds turned over by the employee to the employer pur-
suant to paragraph (2)) as are under control of the employer.
(2) If the tax imposed by section 3201, with respect to tips
which are included in written statements furnished in any month
to the employer pursuant to section 6053 (a), exceeds the compen-
sation of the employee (excluding tips) from which the employer
is required to collect the tax under paragraph (1), the employee
may furnish to the employer on or before the 10th day of the fol-
lowing month (or, if paragraph (3) applies, on or before the 30th
day of the following quarter) an amount of money equal to the
amount of the excess.
(3) The Secretary may, under regulations prescribed by him,
authorize employers-
(A) to estimate the amount of tips that will be reported by
the employee pursuant to section 6053(a) in any quarter of
the calendar year,
(B) to determine the amount to be deducted upon each
payment of compensation (exclusive of tips) during such
quarter as if the tips so estimated constituted actual tips so
reported, and
(C) to deduct upon any payment of compensation (other
than tips, but including funds turned over by the employee
to the employer pursuant to paragraph (2)) to such employee
during such quarter (and within 30 days thereafter) such
amount as may be necessary to adjust the amount actually
deducted upon such compensation of the employee during the
quarter to the amount required to be deducted in respect of
tips included in written statements furnished to the employer
during the quarter.
(4) If the tax imposed by section 3201 with respect to tips which
constitute compensation exceeds the portion of such tax which can
1 Subsections (a) and (b) were amended by section 1903(a)(7) of P.L. 94–455.
IRC Sec. 3202(c)
620
be collected by the employer from the compensation of the em-
ployee pursuant to paragraph (1) or paragraph (3), such excess
shall be paid by the employee.
SUBCHAPTER B-TAX ON EMPLOYEE REPRESENTATIVES
Sec. 3211. Rate of tax.
Sec. 3212.
Determination of compensation.
SEC. 3211. RATE OF TAX.
(a) In addition to other taxes, there is hereby imposed on the
income of each employee representative a tax equal to 9.5 percent plus
the sum of the rates of tax imposed with respect to wages by sections
3101 (a), 3101 (b), 3111(a), and 3111(b) of so much of the compensa-
tion paid in any calendar month to such employee representative for
services rendered by him as is not in excess of an amount equal to
one-twelfth of the current maximum annual taxable "wages" as
defined in section 3121 for any month.¹
(b) In addition to other taxes, there is hereby imposed on the
income of each employee representative a tax at a rate equal to the
rate of excise tax imposed on every employer, provided for in section
3221(c), for each man-hour for which compensation is paid to him
for services rendered as an employee representative.
SEC. 3212. DETERMINATION OF COMPENSATION.
The compensation of an employee representative for the purpose of
ascertaining the tax thereon shall be determined in the same manner
and with the same effect as if the employee organization by which
such employee representative is employed were an employer as defined
in section 3231(a).
SUBCHAPTER C-TAX ON EMPLOYERS
Sec. 3221. Rate of tax.
SEC. 3221. RATE OF TAX.
(a) In addition to other taxes, there is hereby imposed on every em-
ployer an excise tax, with respect to having individuals in his employ,
equal to 9.5 percent of so much of the compensation paid in any calen-
dar month by such employer for services rendered to him as is, with
respect to any employee for any calendar month, not in excess of an
amount equal to one-twelfth of the current maximum annual taxable
"wages" as defined in section 3121 for any month, except that if an
employee is paid compensation by more than one employer for services
rendered during any calendar month, the tax imposed by this section.
shall apply to not more than an amount equal to one-twelfth of the
1 Section 3211(a) was amended by Public Law 94-93 and by section 1903 (a)(8) of
Public Law 94-45ð.
621
IRC Sec. 3221(c)
current maximum annual taxable "wages" as defined in section 3121
for any month of the aggregate compensation paid to such employee
by all such employers for services rendered during such month, and
each employer other than a subordinate unit of a national railway-
labor-organization employer shall be liable for that proportion of the
tax with respect to such compensation paid by all such employers
which the compensation paid by him to the employee for services ren-
dered during such months bears to the total compensation paid by all
such employers to such employee for services rendered during such
month; and in the event that the compensation so paid by such em-
ployers to the employee for services rendered during such month is
less than an amount equal to one-twelfth of the current maximum
annual taxable "wages" as defined in section 3121 for any month each
subordinate unit of a national railway-labor-organization employer
shall be liable for such proportion of any additional tax as the com-
pensation paid by such employer to such employee for services ren-
dered during such month bears to the total compensation paid by all
such employers to such employee for services rendered during such
month. Where compensation for services rendered in a month is paid
an employee by two or more employers, one of the employers who has
knowledge of such joint employment may, by proper notice to the
Secretary, and by agreement with such other employer or employers
as to settlement of their respective liabilities under this section and
section 3202, elect for the tax imposed by section 3201 and this section
to apply to all of the compensation paid by such employer for such
month as does not exceed the maximum amount of compensation in
respect to which taxes are imposed by such section 3201 and this sec-
tion; and in such a case the liability of such other employer or em-
ployers under this section and section 3202 shall be limited to the dif-
ference, if any, between the compensation paid in any calendar month
by the electing employer and the maximum amount of compensation
to which section 3201 and this section apply.¹
(b) The rate of tax imposed by subsection (a) shall be increased
by the rate of tax imposed with respect to wages by section 3111(a)
plus the rate imposed by section 3111(b).2
(c) In addition to other taxes, there is hereby imposed on every
employer an excise tax, with respect to having individuals in his
employ, for each man-hour for which compensation is paid by such
employer for services rendered to him during any calendar quarter, at
such rate as will make available sufficient funds to meet the obligation
to pay supplemental annuities at the level provided under section
3(j) of the Railroad Retirement Act of 1937 as in effect on Decem-
1 Subsection (a) was amended by Public Law 94-93 and by sections 1903 (a) (9) (A)
and 1906(b) (13) (G) of P.L. 94-455.
2 Subsection (b) was amended by section 1903(a) (9) (B) of P.L. 94–455.
21-746 O 78
-
-
47
IRC Sec. 3221(c)
622
ber 31, 1974 and administrative expenses in connection therewith. For
the purpose of this subsection, the Railroad Retirement Board is
directed to determine what rate is required for each calendar quarter.
The Railroad Retirement Board shall make the determinations pro-
vided for not later than fifteen days before each calendar quarter. As
soon as practicable after each determination of the rate, as provided
in this subsection, the Railroad Retirement Board shall publish a no-
tice in the Federal Register, and shall advise all employers, employee
representatives, and the Secretary, of the rate so determined. With
respect to daily, weekly, or monthly rates of compensation such
tax shall apply to the number of hours comprehended in the rate to-
gether with the number of overtime hours for which compensation in
addition to the daily, weekly, or monthly rate is paid. With respect to
compensation paid on a mileage or piecework basis such tax shall
apply to the number of hours constituting the hourly equivalent of the
compensation paid.
Each employer of employees whose supplemental annuities are
reduced pursuant to section 3 (j) (2) of the Railroad Retirement Act
of 1937 or section 2(h) (2) of the Railroad Retirement Act of 1974
shall be allowed as a credit against the tax imposed by this subsection
an amount equivalent in each month to the aggregate amount of
reductions in supplemental annuities accruing in such month to em-
ployees of such employer. If the credit so allowed to such an employer
for any month exceeds the tax liability of such employer accruing
under this subsection in such month, the excess may be carried forward
for credit against such taxes accruing in subsequent months but the
total credit allowed by this paragraph to an employer shall not exceed
the total of the taxes on such employer imposed by this subsection.
At the end of each calendar quarter the Railroad Retirement Board
shall certify to the Secretary with respect to each such employer the
amount of credit accruing to such employer under this paragraph dur-
ing such quarter and shall notify such employer as to the amount so
certified.¹
(d) Notwithstanding the provisions of subsection (c) of this sec-
tion, the tax imposed by such subsection (c) shall not apply to an
employer with respect to employees who are covered by a supple-
mental pension plan which is established pursuant to an agreement
reached through collective bargaining between the employer and em-
ployees. There is hereby imposed on every such employer and excise
tax equal to the amount of the supplemental annuity paid to each such
employee under section 2(b) of the Railroad Retirement Act of 1974,
plus a percentage thereof determined by the Railroad Retirement
1 Subsection (c) was amended by sections 1903 (a) (9) (C) and 1906(b)(13)(G) of
P.L. 94-455.
623
IRC Sec. 3231(a)
Board to be sufficient to cover the administrative costs attributable to
such payments under section 2(b) of such Act.
SUBCHAPTER D-GENERAL PROVISIONS
Sec. 3231.
Definitions.
Sec. 3232. Court jurisdiction.
Sec. 3233. Short title.
SEC. 3231. DEFINITIONS.¹ 1
(a) EMPLOYER. For purposes of this chapter, the term "employer"
means any carrier (as defined in subsection (g)), and any company
which is directly or indirectly owned or controlled by one or more such
carriers or under common control therewith, and which operates any
equipment or facility or performs any service (except trucking service
casual service, and the casual operation of equipment or facilities) in
connection with the transportation of passengers or property by rail-
road, or the receipt, delivery, elevation, transfer in transit, refrigera-
tion or icing, storage, or handling of property transported by railroad,
and any receiver, trustee, or other individual or body, judicial or
otherwise, when in the possession of the property or operating all or
any part of the business of any such employer; except that the term
"employer" shall not include any street, interurban, or suburban elec-
tric railway, unless such railway is operating as part of a general
steam-railroad system of transportation, but shall not exclude any
part of the general steam-railroad system of transportation now or
hereafter operated by any other motive power. The Interstate Com-
merce Commission is hereby authorized and directed upon request
of the Secretary, or upon complaint of any party interested, to deter-
mine after hearing whether any line operated by electric power
falls within the terms of this exception. The term "employer"
shall also include railroad associations, traffic associations, tariff
bureaus, demurrage bureaus, weighing and inspection bureaus, col-
lection agencies and other associations, bureaus, agencies, or organi-
zations controlled and maintained wholly or principally by two or
more employers as hereinbefore defined and engaged in the perform-
ance of services in connection with or incidental to railroad trans-
portation; and railway labor organizations, national in scope, which
have been or may be organized in accordance with the provisions of
the Railway Labor Act, as amended (45 U.S.C., chapter 8), and
their State and National legislative committees and their general
committees and their insurance departments and their local lodges
and divisions, established pursuant to the constitutions and bylaws
of such organizations. The term "employer" shall not include
any company by reason of its being engaged in the mining of coal,
1 Section 3231 was amended by section 1903 (a) (10) of P.L. 94-455.
IRC Sec. 3231(a)
624
the supplying of coal to an employer where delivery is not beyond the
mine tipple, and the operation of equipment or facilities therefor, or
in any of such activities.
(b) EMPLOYEE.-For purposes of this chapter, the term "employee"
means any individual in the service of one or more employers for com-
pensation; except that the term "employee" shall include an employee
of a local lodge or division defined as an employer in subsection (a)
only if he was in the service of or in the employment relation to a
carrier on or after August 29, 1935. An individual shall be deemed
to have been in the employment relation to a carrier on August 29,
1935, if-
(1) he was on that date on leave of absence from his employ-
ment, expressly granted to him by the carrier by whom he was
employed, or by a duly authorized representative of such carrier,
and the grant of such leave of absence was established to the satis-
faction of the Railroad Retirement Board before July 1947; or
(2) he was in the service of a carrier after August 29, 1935, and
before January 1946 in each of 6 calendar months, whether or not
consecutive; or
(3) before August 29, 1935, he did not retire and was not re-
tired or discharged from the service of the last carrier by whom
he was employed or its corporate or operating successor, but―
(A) solely by reason of his physical or mental disability
he ceased before August 29, 1935, to be in the service of such
carrier and thereafter remained continuously disabled until
he attained age 65 or until August 1945, or
(B) solely for such last stated reason a carrier by whom
he was employed before August 29, 1935, or a carrier who is
its successor did not on or after August 29, 1935, and before
August 1945 call him to return to service, or
(C) if he was so called he was solely for such reason un-
able to render service in 6 calendar months as provided in
paragraph (2); or
(4) he was on August 29, 1935, absent from the service of a
carrier by reason of a discharge which, within 1 year after the
effective date thereof, was protested, to an appropriate labor rep-
resentative or to the carrier, as wrongful, and which was fol-
lowed within 10 years of the effective date thereof by his rein-
statement in good faith to his former service with all his seniority
rights;
except that an individual shall not be deemed to have been on August
29, 1935, in the employment relation to a carrier if before that date
he was granted a pension or gratuity on the basis of which a pension
was awarded to him pursuant to section 6 of the Railroad Re-
625
IRC Sec. 3231(d)
tirement Act of 1937 (45 U.S.C. 228f), or if during the last pay-
roll period before August 29, 1935, in which he rendered a service to a
carrier he was not in the service of an employer, in accordance with
subsection (d), with respect to any service in such payroll period, or
if he could have been in the employment relation to an employer only
by reason of his having been, either before or after August 29, 1935,
in the service of a local lodge or division defined as an employer
in subsection (a). The term "employee" includes an officer of an em-
ployer. The term "employee" shall not include any individual while
such individual is engaged in the physical operations consisting of
the mining of coal, the preparation of coal, the handling (other than
movement by rail with standard railroad locomotives) of coal not
beyond the mine tipple, or the loading of coal at the tipple.
(c) EMPLOYEE REPRESENTATIVE.-For purposes of this chapter, the
term "employee representative" means any officer or official repre-
sentative of a railway labor organization other than a labor orga-
nization included in the term "employer" as defined in subsection (a),
who before or after June 29, 1937, was in the service of an employer
as defined in subsection (a) and who is duly authorized and designated
to represent employees in accordance with the Railway Labor Act
(45 U.S.C., chapter 8), as amended, and any individual who is regu-
larly assigned to or regularly employed by such officer or official
representative in connection with the duties of his office.
Ma
(d) SERVICE. For purposes of this chapter, an individual is in the
service of an employer whether his service is rendered within or with-
out the United States, if-
(1) he is subject to the continuing authority of the employer to
supervise and direct the manner of rendition of his service, or he is
rendering professional or technical services and is integrated into
the staff of the employer, or he is rendering, on the property used
in the employer's operations, other personal services the rendition
of which is integrated into the employer's operations, and
(2) he renders such service for compensation;
except that an individual shall be deemed to be in the service of an
employer, other than a local lodge or division or a general committee
of a railway-labor-organization employer, not conducting the princi-
pal part of its business in the United States, only when he is rendering
service to it in the United States; and an individual shall be deemed
to be in the service of such a local lodge or division only if—
(3) all, or substantially all, the individuals constituting its
membership are employees of an employer conducting the prin-
cipal part of its business in the United States; or
(4) the headquarters of such local lodge or division is located
in the United States;
IRC Sec. 3231(d)
626
and an individual shall be deemed to be in the service of such a general
committee only if—
(5) he is representing a local lodge or division described in
paragraph (3) or (4) immediately above; or
(6) all, or substantially all, the individuals represented by it
are employees of an employer conducting the principal part of its
business in the United States; or
(7) he acts in the capacity of a general chairman or an assistant
general chairman of a general committee which represents in-
dividuals rendering service in the United States to an employer,
but in such case if his office or headquarters is not located in the
United States and the individuals represented by such general
committee are employees of an employer not conducting the prin-
cipal part of its business in the United States, only such propor-
tion of the remuneration for such service shall be regarded as
compensation as the proportion which the mileage in the United
States under the jurisdiction of such general committee bears to
the total mileage under its jurisdiction, unless such mileage for-
mula is inapplicable, in which case such other formula as the Rail-
road Retirement Board may have prescribed pursuant to section
1(c) of the Railroad Retirement Act of 1937 (45 U.S.C. 228a)
shall be applicable, and if the application of such mileage for-
mula, or such other formula as the Board may prescribe, would
result in the compensation of the individual being less than 10
percent of his remuneration for such service, no part of such
remuneration shall be regarded as compensation;
-
Provided, however, That an individual not a citizen or resident of the
United States shall not be deemed to be in the service of an employer
when rendering service outside the United States to an employer who
is required under the laws applicable in the place where the service
is rendered to employ therein, in whole or in part, citizens or residents.
thereof; and the laws applicable on August 29, 1935, in the place
where the service is rendered shall be deemed to have been applicable
there at all times prior to that date.
(e) COMPENSATION. For purposes of this chapter—
(1) The term "compensation" means any form of money remu-
neration paid to an individual for services rendered as an em-
ployee to one or more employers. Such term does not include (i)
the amount of any payment (including any amount paid by an
employer for insurance or annuities, or into a fund, to provide for
any such payment) made to, or on behalf of, an employee or any
of his dependents under a plan or system established by an em-
627
IRC Sec. 3231(e)
ployer which makes provision for his employees generally (or for
his employees generally and their dependents) or for a class or
classes of his employees (or for a class or classes of his employees
and their dependents), on account of sickness or accident dis-
ability or medical or hospitalization expenses in connection with
sickness or accident disability, (ii) tips (except as is provided
under paragraph (3)), (iii) the voluntary payment by an em-
ployer, without deduction from the remuneration of the employ-
ee, of the tax imposed on such employee by section 3201, or (iv)
an amount paid specifically-either as an advance, as reimburse-
ment or allowance for traveling or other bona fide and nec-
essary expenses incurred or reasonably expected to be incurred
in the business of the employer provided any such payment is
identified by the employer either by a separate payment or by
specifically indicating the separate amounts where both wages
and expense reimbursement or allowance are combined in a single
payment. Compensation which is earned during the period for
which the Secretary shall require a return of taxes under this
chapter to be made and which is payable during the calendar
month following such period shall be deemed to have been paid
during such period only. For the purpose of determining the
amount of taxes under sections 3201 and 3221, compensation
earned in the service of a local lodge or division of a railway-
labor-organization employer shall be disregarded with respect
to any calendar month if the amount thereof is less than $25.
Compensation for service as a delegate to a national or inter-
national convention of a railway labor organization defined as an
"employer" in subsection (a) of this section shall be disregarded
for purposes of determining the amount of taxes due pursuant to
this chapter if the individual rendering such service has not pre-
viously rendered service, other than as such a delegate, which
may be included in his "years of service" for purposes of the Rail-
road Retirement Act.¹
(2) An employee shall be deemed to be paid compensation in the
period during which such compensation is earned only upon a writ-
ten request by such employee, made within six months following
the payment, and a showing that such compensation was earned
during a period other than the period in which it was paid. An em-
ployee shall be deemed to be paid "for time lost" the amount he is
paid by an employer with respect to an identifiable period of ab-
1 Paragraph (1) was amended by section 4 (b) of P.L. 94–547.
f
IRC Sec. 3231(e)
628
sence from the active service of the employer, including absence on
account of personal injury, and the amount he is paid by the em-
ployer for loss of earnings resulting from his displacement to a less
remunerative position or occupation. If a payment is made by an
employer with respect to a personal injury and includes pay for
time lost, the total payment shall be deemed to be paid for time
lost unless, at the time of payment, a part of such payment is
specifically apportioned to factors other than time lost, in which
event only such part of the payment as is not so apportioned shall
be deemed to be paid for time lost.
(3) Solely for purposes of the tax imposed by section 3201 and
other provisions of this chapter insofar as they relate to such tax,
the term "compensation" also includes cash tips received by an
employee in any calendar month in the course of his employment
by an employer unless the amount of such cash tips is less than
$20.1
(f) COMPANY.-For purposes of this chapter, the term "company"
includes corporations, associations, and joint-stock companies.
(g) CARRIER.-For purposes of this chapter, the term "carrier"
means an express company, sleeping-car company, or carrier by rail-
road, subject to part I of the Interstate Commerce Act (49 U.S.C.,
chapter 1).
(h) TIPS CONSTITUTING COMPENSATION, TIME DEEMED PAID.-For
purposes of this chapter, tips which constitute compensation for pur-
poses of the tax imposed under section 3201 shall be deemed to be paid
at the time a written statement including such tips is furnished to the
employer pursuant to section 6053 (a) or (if no statement including
such tips is so furnished) at the time received; and tips so deemed to
be paid in any month shall be deemed paid for services rendered in
such month.
W
SEC. 3232. COURT JURISDICTION.
The several district courts of the United States shall have juris-
diction to entertain an application by the Attorney General on behalf
of the Secretary to compel an employee or other person residing within
the jurisdiction of the court or an employer subject to service of proc-
ess within its jurisdiction to comply with any obligations imposed on
such employee, employer, or other person under the provisions of this
chapter. The jurisdiction herein specifically conferred upon such Fed-
eral courts shall not be held exclusive of any jurisdiction otherwise pos-
sessed by such courts to entertain civil actions, whether legal or equi-
¹ Section 3231 (e) was amended by Public Laws 94-92 and 94–93.
629
IRC Sec. 3302(a)
table in nature, in aid of the enforcement of rights or obligations aris-
ing under the provisions of this chapter.
SEC. 3233. SHORT TITLE.
This chapter may be cited as the "Railroad Retirement Tax Act."
CHAPTER 23—FEDERAL UNEMPLOYMENT TAX ACT
Sec. 3301. Rate of tax__.
Sec. 3302. Credits against tax---
Sec. 3303. Conditions of additional credit allowance_--
Sec. 3304. Approval of State laws.
Sec. 3305. Applicability of State law..
Sec. 3306. Definitions_
I
1
Sec. 3307. Deductions as constructive payments__
Sec. 3308. Instrumentalities of the United States_
Sec. 3309. State law coverage of certain services performed for nonprofit
organizations or governmental entities___
1
Page¹
629
629
634
639
644
647
658
659
Sec. 3310. Judicial review.
Sec. 3311. Short title..
SEC. 3301. RATE OF TAX.2
There is hereby imposed on every employer (as defined in section
3306 (a)) for each calendar year an excise tax, with respect to having
individuals in his employ, equal to—
(1) 3.4 percent, in the case of a calendar year beginning before
the first calendar year after 1976, as of January 1 of which there
is not a balance of repayable advances made to the extended un-
employed compensation account (established by section 905 (a) of
the Social Security Act); or
(2) 3.2 percent, in the case of such first calendar year and each
calendar year thereafter;
1
659
660
661
of the total wages (as defined in section 3306 (b)) paid by him during
the calendar year with respect to employment (as defined in section
3306 (c)).
SEC. 3302. CREDITS AGAINST TAX.³
(a) CONTRIBUTIONS TO STATE UNEMPLOYMENT FUNDS.
(1) The taxpayer may, to the extent provided in this subsec-
tion and subsection (c), credit against the tax imposed by section
3301 the amount of contributions paid by him into an unemploy-
1 Page references do not appear in the law.
2 Section 3301 was amended by section 1903 (a) (11) of Public Law 94-455 and by section
211(b) of Public Law 94-566 (effective with respect to remuneration paid after December
31, 1976).
3 Section 3302 was amended by section 1903(a)(12) of Public Law 94-455.
IRC Sec. 3302(a)
630
ment fund maintained during the taxable year under the unem-
ployment compensation law of a State which is certified as
provided in section 3304 for the 12-month period ending on Octo-
ber 31 of such year.
C
(2) The credit shall be permitted against the tax for the tax-
able year only for the amount of contributions paid with respect
to such taxable year.
(3) The credit against the tax for any taxable year shall be
permitted only for contributions paid on or before the last day
upon which the taxpayer is required under section 6071 to file a
return for such year; except that credit shall be permitted for
contributions paid after such last day, but such credit shall not
exceed 90 percent of the amount which would have been allowable
as credit on account of such contributions had they been paid on
or before such last day.
(4) Upon the payment of contributions into the unemployment
fund of a State which are required under the unemployment com-
pensation law of that State with respect to remuneration on the
basis of which, prior to such payment into the proper fund, the
taxpayer erroneously paid an amount as contributions under an-
other unemployment compensation law, the payment into the
proper fund shall, for purposes of credit against the tax, be
deemed to have been made at the time of the erroneous payment.
If, by reason of such other law, the taxpayer was entitled to cease
paying contributions with respect to services subject to such other
law, the payment into the proper fund shall, for purposes of credit
against the tax, be deemed to have been made on the date the
return for the taxable year was filed under section 6071.
(b) ADDITIONAL CREDIT.-In addition to the credit allowed under
subsection (a), a taxpayer may credit against the tax imposed by
section 3301 for any taxable year an amount, with respect to the un-
employment compensation law of each State certified as provided in
section 3303 for the 12-month period ending on October 31, of such
year, or with respect to any provisions thereof so certified, equal to the
amount, if any, by which the contributions required to be paid by him
with respect to the taxable year were less than the contributions such
taxpayer would have been required to pay if throughout the taxable
year he had been subject under such State law to the highest rate ap-
plied thereunder in such 12-month period to any person having indi-
viduals in his employ, or to a rate of 2.7 percent, whichever rate is
lower.
631
IRC Sec. 3302(c)
(c) LIMIT ON TOTAL CREDITS.-
(1) The total credits allowed to a taxpayer under this section
shall not exceed 90 percent of the tax against which such credits
aro allowable.
(2) If an advance or advances have been made to the un-
employment account of a State under title XII of the Social
Security Act, then the total credits (after applying subsections (a)
and (b) and paragraph (1) of this subsection) otherwise allow-
able under this section for the taxable year in the case of a tax-
payer subject to the unemployment compensation law of such
State shall be reduced-
(A)(i) in the case of a taxable year beginning with the
second consecutive January 1 as of the beginning of which
there is a balance of such advances, by 10 percent of the
tax imposed by section 3301 with respect to the wages paid
by such taxpayer during such taxable year which are attribut-
able to such State; and
(ii) in the case of any succeeding taxable year beginning
with a consecutive January 1 as of the beginning of which
there is a balance of such advances, by an additional 10 per-
cent, for each such succeeding taxable year, of the tax imposed
by section 3301 with respect to the wages paid by such tax-
payer during such taxable year which are attributable to
such State;
(B) in the case of a taxable year beginning with the third
or fourth consecutive January 1 as of the beginning of which
there is a balance of such advances, by the amount determined
by multiplying the wages paid by such taxpayer during such
taxable year which are attributable to such State by the per-
centage (if any) by which-
(i) 2.7 percent, exceeds
(ii) the average employer contribution rate for such
State for the calendar year preceding such taxable year;
and
(C) in the case of a taxable year beginning with the fifth
or any succeeding consecutive January 1 as of the beginning
of which there is a balance of such advances, by the amount
determined by multiplying the wages paid by such taxpayer
during such taxable year which are attributable to such State
by the percentage (if any) by which—
(i) the 5-year benefit cost rate applicable to such State
for such taxable year or (if higher) 2.7 percent, exceeds
IRC Sec. 3302(c)
Revised April 1977
632
(ii) the average employer contribution rate for such
State for the calendar year preceding such taxable year.
The provisions of the preceding sentence shall not be applicable with
respect to the taxable year beginning January 1, 1975, or any suc-
ceeding taxable year which begins before January 1, 1980; and, for
purposes of such sentence, January 1, 1980, shall be deemed to be the
first January 1 occurring after January 1, 1974, and consecutive tax-
able years in the period commencing January 1, 1980, shall be deter-
mined as if the taxable year which begins on January 1, 1980, were
the taxable year immediately succeeding the taxable year which began
on January 1, 1974.¹
(3) If the Secretary of Labor determines that a State, or State
agency, has not—
(A) entered into the agreement described in section 239 of the
Trade Act of 1974, with the Secretary of Labor before July 15,
1975, or
(B) fulfilled its commitments under an agreement with the
Secretary of Labor as described in section 239 of the Trade Act
of 1974,
then, in the case of a taxpayer subject to the unemployment compen-
sation law of such State, the total credits (after applying subsections
(a) and (b) and paragraphs (1) and (2) of this section) other-
wise allowable under this section for a year during which such State
or agency does not enter into or fulfill such an agreement shall be
reduced by 15 percent of the tax imposed with respect to wages paid
by such taxpayer during such year which are attributable to such
State.2
(d) DEFINITIONS AND SPECIAL RULES RELATING TO SUBSECTION
(c).—
(1) RATE OF TAX DEEMED TO BE 3 PERCENT.—In applying sub-
section (c), the tax imposed by section 3301 shall be computed at
the rate of 3 percent in lieu of the rate provided by such section.
(2) WAGES ATTRIBUTABLE TO A PARTICULAR STATE. For pur-
poses of subsection (c), wages shall be attributable to a particu-
lar State if they are subject to the unemployment compensation
law of the State, or (if not subject to the unemployment com-
pensation law of any State) if they are determined (under rules
or regulations prescribed by the Secretary) to be attributable to
such State.
(3) ADDITIONAL TAXES INAPPLICABLE WHERE ADVANCES ARE RE-
PAID BEFORE NOVEMBER 10 OF TAXABLE YEAR.—Paragraph (2) of
subsection (c) shall not apply with respect to any State
1 This sentence was added to paragraph (2) by Public Law 94-45 subject to the condi-
tions specified in section 110(b) of such Public Law (see p. 763). It was amended by sec-
tion 201 of P.L. 95-19, subject to the same conditions (see p. 795).
2 Paragraph (3) was amended by Public Law 94-45.
633
IRC Sec. 3302(d)
for the taxable year if (as of the beginning of November 10 of
such year) there is no balance of advances referred to in such
paragraph.
(4) AVERAGE EMPLOYER CONTRIBUTION RATE.-For purposes of
subparagraphs (B) and (C) of subsection (c)(2), the average
employer contribution rate for any State for any calendar year
is that percentage obtained by dividing—
(A) the total of the contributions paid into the State unem-
ployment fund with respect to such calendar year, by
(B) the total of the remuneration subject to contributions
under the State unemployment compensation law with re-
spect to such calendar year.
For purposes of subparagraph (C) of subsection (c) (2), if the
average employer contribution rate for any State for any cal-
endar year (determined without regard to this sentence) equals
or exceeds 2.7 percent, such rate shall be determined by increas-
ing the amount taken into account under subparagraph (A) of
the preceding sentence by the aggregate amount of employee pay-
ments (if any) into the unemployment fund of such State with
respect to such calendar year which are to be used solely in the
payment of unemployment compensation.
(5) 5-YEAR BENEFIT COST RATE.—For purposes of subparagraph
(C) of subsection (c) (2), the 5-year benefit cost rate applicable
to any State for any taxable year is that percentage obtained by
dividing-
(A) one-fifth of the total of the compensation paid under
the State unemployment compensation law during the 5-year
period ending at the close of the second calendar year pre-
ceding such taxable year, by
(B) the total of the remuneration subject to contributions.
under the State unemployment compensation law with re-
spect to the first calendar year preceding such taxable year.
(6) ROUNDING.-If any percentage referred to in either sub-
paragraph (B) or (C) of subsection (c) (2) is not a multiple of
.1 percent, it shall be rounded to the nearest multiple of .1 percent.
(7) DETERMINATION AND CERTIFICATION OF PERCENTAGES.—The
percentage referred to in subsection (c)(2) (B) or (C) for any
taxable year for any State having a balance referred to therein
shall be determined by the Secretary of Labor, and shall be certi-
fied by him to the Secretary of the Treasury before June 1 of
such year, on the basis of a report furnished by such State to the
Secretary of Labor before May 1 of such year. Any such State
report shall be made as of the close of March 31 of the taxable
year, and shall be made on such forms, and shall contain such
IRC Sec. 3302(d)
634
information, as the Secretary of Labor deems necessary to the
performance of his duties under this section.
(e) SUCCESSOR EMPLOYER.-Subject to the limits provided by sub-
section (c), if—
(1) an employer acquires during any calendar year substan-
tially all the property used in the trade or business of another
person, or used in a separate unit of a trade or business of such
other person, and immediately after the acquisition employs in
his trade or business one or more individuals who immediately
prior to the acquisition were employed in the trade or business
of such other person, and
(2) such other person is not an employer for the calendar year
in which the acquisition takes place,
then, for the calendar year in which the acquisition takes place, in
addition to the credits allowed under subsections (a) and (b), such
employer may credit against the tax imposed by section 3301 for such
year an amount equal to the credits which (without regard to sub-
section (c)) would have been allowable to such other person under
subsections (a) and (b) and this subsection for such year, if such other
person had been an employer, with respect to remuneration subject to
contributions under the unemployment compensation law of a State
paid by such other person to the individual or individuals described
in paragraph (1).
SEC. 3303. CONDITIONS OF ADDITIONAL CREDIT AL-
LOWANCE.
(a) STATE STANDARDS.—A taxpayer shall be allowed an additional
credit under section 3302 (b) with respect to any reduced rate of
contributions permitted by a State law, only if the Secretary of Labor
finds that under such law-
(1) no reduced rate of contributions to a pooled fund or to a
partially pooled account is permitted to a person (or group of
persons) having individuals in his (or their) employ except on
the basis of his (or their) experience with respect to unemploy-
ment or other factors bearing a direct relation to unemployment
risk during not less than the 3 consecutive years immediately pre-
ceding the computation date;
(2) no reduced rate of contributions to a guaranteed employ-
ment account is permitted to a person (or a group of persons)
having individuals in his (or their) employ unless—
(A) the guaranty of remuneration was fulfilled in the year
preceding the computation date; and
(B) the balance of such account amounts to not less than
22 percent of that part of the payroll or payrolls for the
Revised April 1978
635
IRC Sec. 3303(b)
3 years preceding the computation date by which contribu-
tions to such account were measured; and
(C) such contributions were payable to such account with
respect to 3 years preceding the computation date;
(3) no reduced rate of contributions to a reserve account is
permitted to a person (or group of persons) having individuals
in his (or their) employ unless-
(A) compensation has been payable from such account
throughout the year preceding the computation date, and
(B) the balance of such account amounts to not less than
five times the largest amount of compensation paid from
such account within any 1 of the 3 years preceding such date,
and
(C) the balance of such account amounts to not less than
212 percent of that part of the payroll or payrolls for the
3 years preceding such date by which contributions to such
account were measured, and
(D) such contributions were payable to such account with
respect to the 3 years preceding the computation date.
For any person (or group of persons) who has (or have) not been
subject to the State law for a period of time sufficient to compute.
the reduced rates permitted by paragraphs (1), (2), and (3) of this
subsection on a 3-year basis (i) the period of time required may be
reduced to the amount of time the person (or group of persons) has
(or have) had experience under or has (or have) been subject to the
State law, whichever is appropriate, but in no case less than 1 year
immediately preceding the computation date, or (ii) a reduced rate
(not less than 1 percent) may be permitted by the State law on a rea-
sonable basis other than as permitted by paragraph (1), (2), or (3).
(b) CERTIFICATION BY THE SECRETARY OF LABOR WITH RESPECT TO
ADDITIONAL CREDIT ALLOWANCE.-1
(1) On October 31 of each calendar year, the Secretary of
Labor shall certify to the Secretary of the Treasury the law of
each State (certified by the Secretary of Labor as provided in
section 3304 for the 12-month period ending on such October 31),
with respect to which he finds that reduced rates of contributions
were allowable with respect to such 12-month period only in
accordance with the provisions of subsection (a).
(2) If the Secretary of Labor finds that under the law of a
single State (certified by the Secretary of Labor as provided in
section 3304) more than one type of fund or account is maintained,
and reduced rates of contributions to more than one type of fund
1 Subsection (b) was amended by sections 1903 (a) (13) and 1906(b) (13) (C) of P.L.
94-455.
IRC Sec. 3303(b)
636
or account were allowable with respect to any 12-month period
ending on October 31, and one or more of such reduced rates were
allowable under conditions not fulfilling the requirements of sub-
section (a), the Secretary of Labor shall, on such October 31,
certify to the Secretary of the Treasury only those provisions of
the State law pursuant to which reduced rates of contributions.
were allowable with respect to such 12-month period, under condi-
tions fulfilling the requirements of subsection (a), and shall, in
connection therewith, designate the kind of fund or account, as
defined in subsection (c), established by the provisions so certi-
fied. If the Secretary of Labor finds that a part of any reduced
rate of contributions payable under such law or under such pro-
visions is required to be paid into one fund or account and a part
into another fund or account, the Secretary of Labor shall make
such certification pursuant to this paragraph as he finds will
assure the allowance of additional credits only with respect to
that part of the reduced rate of contributions which is allowed
under provisions which do fulfill the requirements of subsec-
tion (a).
+
(3) The Secretary of Labor shall, within 30 days after any
State law is submitted to him for such purpose, certify to the
State agency his findings with respect to reduced rates of con-
tributions to a type of fund or account, as defined in subsection
(c), which are allowable under such State law only in accordance
with the provisions of subsection (a). After making such findings,
the Secretary of Labor shall not withhold his certification to the
Secretary of such State law, or of the provisions thereof with
respect to which such findings were made, for any 12-month
period ending on October 31 pursuant to paragraph (1) or (2)
unless, after reasonable notice and opportunity for hearing to the
State agency, the Secretary of Labor finds the State law no longer
contains the provisions specified in subsection (a) or the State
has, with respect to such 12-month period, failed to comply sub-
stantially with any such provision.
(c) DEFINITIONS.-As used in this section-
(1) RESERVE ACCOUNT.-The term "reserve account" means a
separate account in an unemployment fund, maintained with re-
spect to a person (or group of persons) having individuals in
his (or their) employ, from which account, unless such account is
exhausted, is paid all and only compensation payable on the basis
of services performed for such person (or for one or more of the
persons comprising the group).
(2) POOLED FUND. The term "pooled fund" means an unem-
ployment fund or any part thereof (other than a reserve account
637
IRC Sec. 3303 (c)
or a guaranteed employment account) into which the total con-
tributions of persons contributing thereto are payable, in which
all contributions are mingled and undivided, and from which
compensation is payable to all individuals eligible for compensa-
tion from such fund.
(3) PARTIALLY POOLED ACCOUNT.-The term "partially pooled
account" means a part of an unemployment fund in which part of
the fund all contributions thereto are mingled and undivided, and
from which part of the fund compensation is payable only to
individuals to whom compensation would be payable from a re-
serve account or from a guaranteed employment account but for
the exhaustion or termination of such reserve account or of such
guaranteed employment account. Payments from a reserve ac-
count or guaranteed employment account into a partially pooled
account shall not be construed to be inconsistent with the provi-
sions of paragraph (1) or (4).
(4) GUARANTEED EMPLOYMENT ACCOUNT.—The term “guaran-
teed employment account" means a separate acccount, in an un-
employment fund, maintained with respect to a person (or group
of persons) having individuals in his (or their) employ who, in
accordance with the provisions of the State law or of a plan there-
under approved by the State agency,
(A) guarantees in advance at least 30 hours of work, for
which remuneration will be paid at not less than stated rates,
for each of 40 weeks (or if more, 1 weekly hour may be de-
ducted for each added week guaranteed) in a year, to all the
individuals who are in his (or their) employ in, and who
continue to be available for suitable work in, one or more
distinct establishments, except that any such individual's
guaranty may commence after a probationary period (in-
cluded within the 11 or less consecutive weeks immediately
following the first week in which the individual renders
services), and
(B) give security or assurance, satisfactory to the State
agency, for the fulfillment of such guaranties, from which
account, unless such account is exhausted or terminated, is
paid all and only compensation, payable on the basis of serv-
ices performed for such person (or for one or more of the
persons comprising the group), to any such individual whose
guaranteed remuneration has not been paid (either pursuant
to the guaranty or from the security or assurance provided
for the fulfillment of the guaranty), or whose guaranty is
not renewed and who is otherwise eligible for compensation
under the State law.
21-746 O - 78 - 48
IRC Sec. 3303(c)
638
(5) YEAR. The term "year" means any 12 consecutive calendar
months.
(6) BALANCE.-The term "balance", with respect to a reserve
account or a guaranteed employment account, means the amount
standing to the credit of the account as of the computation date;
except that, if subsequent to January 1, 1940, any moneys have
been paid into or credited to such account other than payments
thereto by persons having individuals in their employ, such term
shall mean the amount in such account as of the computation date
less the total of such other moneys paid into or credited to such
account subsequent to January 1, 1940.
(7) COMPUTATION DATE.-The term "computation date" means
the date, occurring at least once in each calendar year and within
27 weeks prior to the effective date of new rates of contributions,
as of which such rates are computed.
(8) REDUCED RATE.-The term "reduced rate" means a rate of
contributions lower than the standard rate applicable under the
State law, and the term "standard rate” means the rate on the
basis of which variations therefrom are computed.
(d) VOLUNTARY CONTRIBUTIONS.-A State law may, without being
deemed to violate the standards set forth in subsection (a), permit
voluntary contributions to be used in the computation of reduced rates
if such contributions are paid prior to the expiration of 120 days after
the beginning of the year for which such rates are effective.
(e) PAYMENTS BY CERTAIN NONPROFIT ORGANIZATIONS.-A State
may, without being deemed to violate the standards set forth in sub-
section (a), permit an organization (or a group of organizations) de-
scribed in section 501 (c) (3) which is exempt from income tax under
section 501(a) to elect (in lieu of paying contributions) to pay into
the State unemployment fund amounts equal to the amounts of com-
pensation attributable under the State law to service performed in the
employ of such organization (or group).
(f) TRANSITION.-To facilitate the orderly transition to coverage
of service to which section 3309(a)(1)(A) applies, a State law may
provide that an organization (or group of organizations) which elects
before April 1, 1972, to make payments (in lieu of contributions)
into the State unemployment fund as provided in section 3309 (a) (2),
and which had paid contributions into such fund under the State law
with respect to such service performed in its employ before Janu-
ary 1, 1969, is not required to make any such payments (in lieu of
contributions) on account of compensation paid after its election as
heretofore described which is attributable under the State law to
service performed in its employ, until the total of such compensation
equals the amount—
-
639
IRC Sec. 3304(a)
(1) by which the contributions paid by such organization (or
group) with respect to a period before the election provided by
section 3309 (a) (2), exceed
(2) the unemployment compensation for the same period which
was charged to the experience-rating account of such organiza-
tion (or group) or paid under the State law on the basis of wages
paid by it or service performed in its employ, whichever is
appropriate.¹
(g) TRANSITIONAL RULE FOR UNEMPLOYMENT COMPENSATION
AMENDMENTS or 1976.-To facilitate the orderly transition to cover-
age of service to which section 3309 (a) (1) (A) applies by reason of
the enactment of the Unemployment Compensation Amendments of
1976, a State law may provide that an organization (or group of
organizations) which elects, when such election first becomes avail-
able under the State law with respect to such service, to make pay-
ments (in lieu of contributions) into the State unemployment fund
as provided in section 3309 (a) (2), and which had paid contributions
into such fund under the State law with respect to such service per-
formed in its employ before the date of the enactment of this sub-
section, is not required to make any such payment (in lieu of con-
tributions) on account of compensation paid after its election as
heretofore described which is attributable under the State law to
such service performed in its employ, until the total of such compen-
sation equals the amount-
-
(1) by which the contributions paid by such organization (or
group) on the basis of wages for such service with respect to a
period before the election provided by section 3309 (a) (2), exceed
(2) the unemployment compensation for the same period
which was charged to the experience-rating account of such orga-
nization (or group) or paid under the State law on the basis of
such service performed in its employ or wages paid for such
service, whichever is appropriate.2
SEC. 3304. APPROVAL OF STATE LAWS.³
(a) REQUIREMENTS.-The Secretary of Labor shall approve any
State law submitted to him, within 30 days of such submission, which
he finds provides that-
(1) all compensation is to be paid through public employment
offices or such other agencies as the Secretary of Labor may
approve;
(2) no compensation shall be payable with respect to any day
of unemployment occurring within 2 years after the first day of
the first period with respect to which contributions are required;
1 Subsection (f) was amended by section 122 of P.L. 94–566.
2 Subsection (g) was added by section 122 of P.L. 94-566.
3 Section 3304 was amended by sections 1903 (a)(14) and 1906 (b) (13) (C) and (E) of
of P.L. 94-455.
IRC Sec. 3304(a)
Revised April 1977
640
(3) all money received in the unemployment fund shall (ex-
cept for refunds of sums erroneously paid into such fund and
except for refunds paid in accordance with the provisions of sec-
tion 3305(b)) immediately upon such receipt be paid over to the
Secretary of the Treasury to the credit of the Unemployment
Trust Fund established by section 904 of the Social Security Act
(42 U.S.C. 1104);
(4) all money withdrawn from the unemployment fund of the
State shall be used solely in the payment of unemployment com-
pensation, exclusive of expenses of administration, and for re-
funds of sums erroneously paid into such fund and refunds paid
in accordance with the provisions of section 3305 (b); except
that-
(A) an amount equal to the amount of employee payments
into the unemployment fund of a State may be used in the
payment of cash benefits to individuals with respect to their
disability, exclusive of expenses of administration; and
(B) the amounts specified by section 903 (c) (2) of the
Social Security Act may, subject to the conditions prescribed
in such section, be used for expenses incurred by the State
for administration of its unemployment compensation law
and public employment offices;
(5) compensation shall not be denied in such State to any
otherwise eligible individual for refusing to accept new work un-
der any of the following conditions:
(A) if the position offered is vacant due directly to a strike,
lockout, or other labor dispute;
(B) if the wages, hours, or other conditions of the work
offered are substantially less favorable to the individual than
those prevailing for similar work in the locality;
(C) if as a condition of being employed the individual
would be required to join a company union or to resign from
or refrain from joining any bona fide labor organization;
(6) (A) compensation is payable on the basis of service to which
section 3309 (a) (1) applies, in the same amount, on the same terms,
and subject to the same conditions as compensation payable on the
basis of other service subject to such law;
except that-
(i) with respect to services in an instructional, research,
or principal administrative capacity for an educational insti-
tution to which section 3309 (a) (1) applies, compensation
shall not be payable based on such services for any week com-
mencing during the period between two successive academic
years or terms (or, when an agreement provides instead for a
similar period between two regular but not successive terms,
Revised April 1978
641
IRC Sec. 3304(a)
during such period) to any individual if such individual per-
forms such services in the first of such academic years (or
terms) and if there is a contract or reasonable assurance that
such individual will perform services in any such capacity
for any educational institution in the second of such academic
years or terms,
(ii) with respect to services in any other capacity for an
educational institution (other than an institution of higher
education) to which section 3309 (a) (1) applies, compensa-
tion payable on the basis of such services may be denied to
any individual for any week which commences during a
period between two successive academic years or terms if such
individual performs such services in the first of such aca-
demic years or terms and there is a reasonable assurance that
such individual will perform such services in the second of
such academic years or terms,
(iii) with respect to any services described in clause (i) or
(ii), compensation payable on the basis of such services may
be denied to any individual for any week which commences
during an established and customary vacation period or holi-
day recess if such individual performs such services in the
period immediately before such vacation period or holiday
recess, and there is a reasonable assurance that such individual
will perform such services in the period immediately follow-
ing such vacation period or holiday recess,
(iv) with respect to any services described in clause (i) or
(ii), compensation payable on the basis of services in any such
capacity may be denied as specified in clauses (i), (ii), and
(iii) to any individual who performed such services in an
educational institution while in the employ of an educa-
tional service agency, and for this purpose the term "educa-
tional service agency" means a governmental agency or
governmental entity which is established and operated ex-
clusively for the purpose of providing such services to one
or more educational institutions, and ¹
G
(B) payments (in lieu of contributions) with respect to serv-
ice to which section 3309 (a) (1) applies may be made into the
State unemployment fund on the basis set forth in section 3309
(a) (2); 2
(7) an individual who has received compensation during his
benefit year is required to have had work since the beginning of
such year in order to qualify for compensation in his next benefit
year;
1 Subparagraph (A) was amended by sec. 115(c) of P.L. 94-566, sec. 302(c) of P.L.
95-19, and sec. 2 of P.L. 95–171.
* Subparagraph (B) was amended by section 506(b) of P.L. 94-566.
*
IRC Sec. 3304(a)
Revised April 1978
642
(8) compensation shall not be denied to an individual for any
week because he is in training with the approval of the State
agency (or because of the application, to any such week in train-
ing, of State law provisions relating to availability for work,
active search for work, or refusal to accept work);
(9) (A) compensation shall not be denied or reduced to an in-
dividual solely because he files a claim in another State (or a
contiguous country with which the United States has an agree-
ment with respect to unemployment compensation) or because
he resides in another State (or such a contiguous country) at the
time he files a claim for unemployment compensation;
(B) the State shall participate in any arrangements for the
payment of compensation on the basis of combining an individ-
ual's wages and employment covered under the State law with his
wages and employment covered under the unemployment compen-
sation law of other States which are approved by the Secretary of
Labor in consultation with the State unemployment compensation
agencies as reasonably calculated to assure the prompt and full
payment of compensation in such situations. Any such arrange-
ment shall include provisions for (i) applying the base period
of a single State law to a claim involving the combining of an
individual's wages and employment covered under two or more
State laws, and (ii) avoiding duplicate use of wages and employ-
ment by reason of such combining;
(10) compensation shall not be denied to any individual by
reason of cancellation of wage credits or total reduction of his
benefit rights for any cause other than discharge for misconduct
connected with his work, fraud in connection with a claim
for compensation, or receipt of disqualifying income;
(11) extended compensation shall be payable as provided by
the Federal-State Extended Unemployment Compensation Act
of 1970.
(12) no person shall be denied compensation under such State
law solely on the basis of pregnancy or termination of
pregnancy; 1
(13) compensation shall not be payable to any individual on
the basis of any services, substantially all of which consist of
participating in sports or athletic events or training or prepar-
ing to so participate, for any week which commences during the
period between two successive sport seasons (or similar periods)
if such individual performed such services in the first of such
seasons (or similar periods) and there is a reasonable assurance
1 Paragraph (12) was amended, effective for 1978 and subsequent-year certifications, by
section 312 of P.L. 94–566.
Revised April 1978
IRC Sec. 3304(a)
643
that such individual will perform such services in the later of
such seasons (or similar periods); 1
(14) (A) compensation shall not be payable on the basis of
services performed by an alien unless such alien is an individual
who was lawfully admitted for permanent residence at the time
such services were performed, was lawfully present for pur-
poses of performing such services, or was permanently residing
in the United States under color of law at the time such services
were performed (including an alien who was lawfully present
in the United States as a result of the application of the provi-
sions of section 203 (a) (7) or section 212 (d) (5) of the Immi-
gration and Nationality Act),2
(B) any data or information required of individuals applying
for compensation to determine whether compensation is not pay-
able to them because of their alien status shall be uniformly
required from all applicants for compensation, and
(C) in the case of an individual whose application for com-
pensation would otherwise be approved, no determination by the
State agency that compensation to such individual is not payable
because of his alien status shall be made except upon a preponder-
ance of the evidence;
1
(15) the amount of compensation payable to an individual for
any week which begins after March 31, 1980, and which begins
in a period with respect to which such individual is receiving a
governmental or other pension, retirement or retired pay, annuity,
or any other similar periodic payment which is based on the
previous work of such individual shall be reduced (but not below
zero) by an amount equal to the amount of such pension, retire-
ment or retired pay, annuity, or other payment, which is reason-
ably attributable to such week; 13
-
(16) (A) wage information contained in the records of the
agency administering the State law which is necessary (as deter-
mined by the Secretary of Health, Education, and Welfare in
regulations) for purposes of determining an individual's eligibil-
ity for aid or services, or the amount of such aid or services, under
a State plan for aid and services to needy families with children
approved under part A of title IV of the Social Security Act,
shall be made available to a State or political subdivision thereof
1 Paragraphs (13), (14), and (15) were added (and the former paragraph (13) was
redesignated as (16)) by section 314 of P.L. 94-566 effective for certifications starting
1978 (1979 in the case of States whose legislatures have no regular session in 1977).
2 Subparagraph (A) was amended by section 302 (a) of P.L. 95-19.
3 Paragraph (15) was amended by section 302(e) of P.L. 95–19.
Revised April 1978
IRC Sec. 3304 (c)
643-A
when such information is specifically requested by such State or
political subdivision for such purposes, and
(B) such safeguards are established as are necessary (as de-
termined by the Secretary of Health, Education, and Welfare
in regulations) to insure that such information is used only for
the purposes authorized under subparagraph (A);¹
(17) all the rights, privileges, or immunities conferred by such
law or by acts done pursuant thereto shall exist subject to the
power of the legislature to amend or repeal such law at any time.¹
(b) NOTIFICATION.-The Secretary of Labor shall, upon approving
such law, notify the governor of the State of his approval.
(c) CERTIFICATION.-On October 31 of each taxable year the Secre-
tary of Labor shall certify to the Secretary of the Treasury each State
whose law he has previously approved, except that he shall not certify
any State which, after reasonable notice and opportunity for hearing
to the State agency, the Secretary of Labor finds has amended its law
so that it no longer contains the provisions specified in subsection (a)
or has with respect to the 12-month period ending on such October 31
failed to comply substantially with any such provision in such sub-
section. No finding of a failure to comply substantially with any pro-
vision in paragraph (5) of subsection (a) shall be based on an applica-
tion or interpretation of State law (1) until all administrative review
provided for under the laws of the State has been exhausted, or (2)
with respect to which the time for judicial review provided by the laws
1 Paragraph (16) was added (and the former paragraph (16) was redesignated as (17))
by section 403(b) of P.L. 95–216.
IRC Sec. 3304(c)
Revised April 1978
644
of the State has not expired, or (3) with respect to which any judicial
review is pending. On October 31 of any taxable year after 1971, the
Secretary of Labor shall not certify any State which, after reasonable
notice and opportunity for hearing to the State agency, the Secretary
of Labor finds has failed to amend its law so that it contains each of the
provisions required by reason of the exactment of the Employment
Security Amendments of 1970 to be included therein, or has with
respect to the 12-month period ending on such October 31, failed to
comply substantially with any such provision. On October 31 of any
taxable year after 1977, the Secretary shall not certify any State which,
after reasonable notice and opportunity for a hearing to the State
agency, the Secretary of Labor finds has failed to amend its law so
that it contains each of the provisions required by reason of the enact-
ment of the Unemployment Compensation Amendments of 1976 to be
included therein, or has with respect to the 12-month period ending on
such October 31, failed to comply substantially with any such
provision.¹
(d) NOTICE OF NONCERTIFICATION.-If at any time the Secretary of
Labor has reason to believe that a State whose law he has previously
approved may not be certified under subsection (c), he shall promptly
so notify the governor of such State.
(e) CHANGE OF LAW DURING 12-MONTH PERIOD.-Whenever-
(1) any provision of this section, section 3302, or section 3303
refers to a 12-month period ending on October 31 of a year, and
(2) the law applicable to one portion of such period differs
from the law applicable to another portion of such period,
then such provision shall be applied by taking into account for
each such portion the law applicable to such portion.
(f) DEFINITION OF INSTITUTION OF HIGHER EDUCATION.-For pur-
poses of subsection (a) (6), the term "institution of higher education"
means an educational institution in any State which—
(1) admits as regular students only individuals having a
certificate of graduation from a high school, or the recognized
equivalent of such a certificate;
(2) is legally authorized within such State to provide a pro-
gram of education beyond high school;
(3) provides an educational program for it which awards a
bachelor's or higher degree, or provides a program which is
acceptable for full credit toward such a degree, or offers a pro-
gram of training to prepare students for gainful employment in a
recognized occupation; and
(4) is a public or other nonprofit institution.2
1 Subsection (c) was amended effective starting with certifications for 1978 by section
312 of P.L. 94-566. The first reference to "the Secretary" in the last sentence apparently
should refer to "the Secretary of Labor."
2 Subsection (f) was added by section 115(c) (5) of P.L. 94–566.
Revised April 1977
IRC Sec. 3305(a)
644-A
SEC. 3305. APPLICABILITY OF STATE LAW 1
(a) INTERSTATE AND FOREIGN COMMERCE.-No person required un-
der a State law to make payments to an unemployment fund shall be
relieved from compliance therewith on the ground that he is en-
gaged in interstate or foreign commerce, or that the State law does
not distinguish between employees engaged in interstate or foreign
commerce and those engaged in intrastate commerce.
(b) FEDERAL INSTRUMENTALITIES IN GENERAL.-The legislature of
any State may require any instrumentality of the United States
(other than an instrumentality to which section 3306 (c) (6) applies),
and the individuals in its employ, to make contributions to an unem-
ployment fund under a State unemployment compensation law ap-
proved by the Secretary of Labor under section 3304 and (except as
-
¹ Section 3305 was amended by sections 1903 (a)(15) and 1906(b) (13) (C) of P.L.
94-455.
645
IRC Sec. 3305(d)
provided in section 5240 of the Revised Statutes, as amended (12
U.S.C., sec. 484), and as modified by subsection (c)), to comply other-
wise with such law. The permission granted in this subsection shall
apply (A) only to the extent that no discrimination is made against
such instrumentality, so that if the rate of contribution is uniform
upon all other persons subject to such law on account of having in-
dividuals in their employ, and upon all employees of such persons,
respectively, the contributions required of such instrumentality or the
individuals in its employ shall not be at a greater rate than is required
of such other persons and such employees, and if the rates are deter-
mined separately for different persons or classes of persons having
individuals in their employ or for different classes of employees, the
determination shall be based solely upon unemployment experience
and other factors bearing a direct relation to unemployment risk; (B)
only if such State law makes provision for the refund of any contribu-
tions required under such law from an instrumentality of the United
States or its employees for any year in the event such State is not
certified by the Secretary of Labor under section 3304 with respect
to such year; and (C) only if such State law makes provision for the
payment of unemployment compensation to any employee of any such
instrumentality of the United States in the same amount, on the same
terms, and subject to the same conditions as unemployment compen-
sation is payable to employees of other employers under the State
unemployment compensation law.
(c) NATIONAL BANKS.-Nothing contained in section 5240 of the
Revised Statutes, as amended (12 U.S.C. 484), shall prevent any
State from requiring any national banking association to render re-
turns and reports relative to the association's employees, their remu-
neration and services, to the same extent that other persons are re-
quired to render like returns and reports under a State law requir-
ing contributions to an unemployment fund. The Comptroller of the
Currency shall, upon receipt of a copy of any such return or report of
a national banking association from, and upon request of, any duly
authorized official, body, or commission of a State, cause an examina-
tion of the correctness of such return or report to be made at the time
of the next succeeding examination of such association, and shall
thereupon transmit to such official, body, or commission a complete
statement of his findings respecting the accuracy of such returns or
reports.
(d) FEDERAL PROPERTY.-No person shall be relieved from compli-
ance with a State unemployment compensation law on the ground
that services were performed on land or premises owned, held, or
possessed by the United States, and any State shall have full jurisdic-
tion and power to enforce the provisions of such law to the same extent
IRC Sec. 3305(d)
646
and with the same effect as though such place were not owned, held, or
possessed by the United States.
(e) BONNEVILLE POWER ADMINISTRATOR.-[Repealed.]
(f) AMERICAN VESSELS.-The legislature of any State in which a
person maintains the operating office, from which the operations of
an American vessel operating on navigable waters within or within
and without the United States are ordinarily and regularly supervised,
managed, directed and controlled, may require such person and the
officers and members of the crew of such vessel to make contributions
to its unemployment fund under its State unemployment compensa-
tion law approved by the Secretary of Labor under section 3301 and
otherwise to comply with its unemployment compensation law with
respect to the service performed by an officer or member of the crew
on or in connection with such vessel to the same extent and with the
same effect as though such service was performed entirely within such
State. Such person and the officers and members of the crew of such
vessel shall not be required to make contributions, with respect to such
service, to the unemployment fund of any other State. The permis-
sion granted by this subsection is subject to the condition that such
service shall be treated, for purposes of wage credits given employees,
like other service subject to such State unemployment compensation
law performed for such person in such State, and also subject to the
same limitation, with respect to contributions required from such per-
son and from the officers and members of the crew of such vessel, as is
imposed by the second sentence (other than clause (B) thereof) of
subsection (b) with respect to contributions required from instru-
mentalities of the United States and from individuals in their employ.
(g) VESSELS OPERATED BY GENERAL AGENTS OF UNITED STATES.-
The permission granted by subsection (f) shall apply in the same
manner and under the same conditions (including the obligation to
comply with all requirements of State unemployment compensation
laws) to general agents of the Secretary of Commerce with respect to
service performed by officers and members of the crew on or in con-
nection with American vessels-
(1) owned by or bareboat chartered to the United States, and
(2) whose business is conducted by such general agents.
As to any such vessel, the State permitted to require contributions on
account of such service shall be the State to which the general agent
would make contributions if the vessel were operated for his own
account. Such general agents are designated, for this purpose, instru-
mentalities of the United States neither wholly nor partially owned
by it and shall not be exempt from the tax imposed by section 3301.
The permission granted by this subsection is subject to the same con-
647
IRC Sec. 3306(a)
ditions and limitations as are imposed in subsection (f), except that
clause (B) of the second sentence of subsection (b) shall apply.
(h) REQUIREMENT BY STATE OF CONTRIBUTIONS.-Any State may,
as to service performed, and on account of which contributions are
made pursuant to subsection (g)-
(1) require contributions from persons performing such serv-
ice under its unemployment compensation law or temporary dis-
ability insurance law administered in connection therewith, and
(2) require general agents of the Secretary of Commerce to
make contributions under such temporary disability insurance
law to make such deductions from wages or remuneration as
are required by such unemployment compensation or temporary
disability insurance law.
(i) General Agent as Legal ENTITY.-Each general agent of the
Secretary of Commerce making contributions pursuant to subsection
(g) or (h) shall, for purposes of such subsections, be considered a
legal entity in his capacity as an instrumentality of the United States,
separate and distinct from his identity as a person employing individ-
uals on his own account.
(j) DENIAL OF CREDITS IN CERTAIN CASES.-Any person required,
pursuant to the permission granted by this section, to make contribu-
tions to an unemployment fund under a State unemployment com-
pensation law approved by the Secretary of Labor under section 3304
shall not be entitled to the credits permitted, with respect to the un-
employment compensation law of a State, by subsections (a) and (b)
of section 3302 against the tax imposed by section 3301 for any tax-
able year if, on October 31 of such taxable year, the Secretary of Labor
certifies to the Secretary of the Treasury his finding, after reasonable
notice and opportunity for hearing to the State agency, that the unem-
ployment compensation law of such State is inconsistent with any one
or more of the conditions on the basis of which such permission is
granted or that, in the application of the State law with respect to the
12-month period ending on such October 31, there has been a substan-
tial failure to comply with any one or more of such conditions. For
purposes of section 3310, a finding of the Secretary of Labor under
this subsection shall be treated as a finding under section 3304 (c).
SEC. 3306. DEFINITIONS.¹
(a) EMPLOYER.-For purposes of this chapter—
(1) IN GENERAL.-The term "employer" means, with respect to
any calendar year, any person who
(A) during any calendar quarter in the calendar year or
the preceding calendar year paid wages of $1,500 or more, or
¹ Section 3306 was amended by section 1903 (a) (16) of P.L. 94–455.
IRC Sec. 3306(a)
648
(B) on each of some 20 days during the calendar year or
during the preceding calendar year, each day being in a dif-
ferent calendar week, employed at least one individual in
employment for some portion of the day.
For purposes of this paragraph, there shall not be taken into
account any wages paid to, or employment of, an employee per-
forming domestic services referred to in paragraph (3).
(2) AGRICULTURAL LABOR.-In the case of agricultural labor,
the term "employer" means, with respect to any calendar year, any
person who-
(A) during any calendar quarter in the calendar year or
the preceding calendar year paid wages of $20,000 or more
for agricultural labor, or
(B) on each of some 20 days during the calendar year or
during the preceding calendar year, each day being in a dif-
ferent calendar week, employed at least 10 individuals in
employment in agricultural labor for some portion of the
day.
(3) DOMESTIC SERVICE.-In the case of domestic service in a
private home, local college club, or local chapter of a college fra-
ternity or sorority, the term "employer" means, with respect to any
calendar year, any person who during any calendar quarter in the
calendar year or the preceding calendar year paid wages in cash
of $1,000 or more for such service.
(4) SPECIAL RULE.-A person treated as an employer under
paragraph (3) shall not be treated as an employer with respect
to wages paid for any service other than domestic service referred
to in paragraph (3) unless such person is treated as an employer
under paragraph (1) or (2) with respect to such other service.¹
(b) WAGES.-For purposes of this chapter, the term "wages" means
all remuneration for employment, including the cash value of all
remuneration paid in any medium other than cash; except that such
term shall not include-
(1) that part of the remuneration which, after remuneration
(other than remuneration referred to in the succeeding para-
graphs of this subsection) equal to $6,000 with respect to employ-
ment has been paid to an individual by an employer during any
calendar year, is paid to such individual by such employer during
such calendar year. If an employer (hereinafter referred to as
successor employer) during any calendar year acquires substan-
tially all the property used in a trade or business of another em-
ployer (hereinafter referred to as a predecessor), or used in a sepa-
1 Subsection (a) was amended, effective with respect to wages paid after 1977, by sec-
tion 114(a) of P.L. 94-566.
649
IRC Sec. 3306(b)
rate unit of a trade or business of a predecessor, and immedi-
ately after the acquisition employs in his trade or business an
individual who immediately prior to the acquisition was employed
in the trade or business of such predecessor, then, for the purpose
of determining whether the successor employer has paid remunera-
tion (other than remuneration referred to in the succeeding para-
graphs of this subsection) with respect to employment equal to
$6,000 to such individual during such calendar year, any re-
muneration (other than remuneration referred to in the succeed-
ing paragraphs of this subsection) with respect to employment
paid (or considered under this paragraph as having been paid)
to such individual by such predecessor during such calendar year
and prior to such acquisition shall be considered as having been
paid by such successor employer; ¹
1
-
(2) the amount of any payment (including any amount paid by
an employer for insurance or annuities, or into a fund, to provide
for any such payment) made to, or on behalf of, an employee or
any of his dependents under a plan or system established by an
employer which makes provision for his employees generally (or
for his employees generally and their dependents) or for a class
or classes of his employees (or for a class or classes of his em-
ployees and their dependents), on account of-
(A) retirement, or
or
(B) sickness or accident disability,
(C) medical or hospitalization expenses in connection with
sickness or accident disability, or
(D) death;
(3) any payment made to an employee (including any amount
paid by an employer for insurance or annuities or into a fund, to
provide for any such payment) on account of retirement;
(4) any payment on account of sickness or accident disability,
or medical or hospitalization expenses in connection with sickness
or accident disability, made by an employer to or on behalf of,
an employee after the expiration of 6 calendar months following
the last calendar month in which the employee worked for such
employer;
(5) any payment made to, or on behalf of, an employee or his
beneficiary—
(A) from or to a trust described in section 401(a) which
is exempt from tax under section 501 (a) at the time of such
payment unless such payment is made to an employee of the
1 Paragraph (1) was amended, effective for wages paid after 1977, by section 211 (a) of
Public Law 94-566.
21-746 O - 78 - 49
IRC Sec. 3306(b)
650
trust as remuneration for services rendered as such employee
and not as a beneficiary of the trust, or
(B) under or to an annuity plan which, at the time of such
payment, is a plan described in section 403 (a), or
(C) under or to a bond purchase plan which, at the time
of such payment, is a qualified bond purchase plan described
in section 405 (a);
(6) the payment by an employer (without deduction from the
remuneration of the employee) —
(A) of the tax imposed upon an employee under section
3101 (or the corresponding section of prior law), or
(B) of any payment required from an employee under a
State unemployment compensation law;
(7) remuneration paid in any medium other than cash to an em-
ployee for service not in the course of the employer's trade or
business;
(8) any payment (other than vacation or sick pay) made to an
employee after the month in which he attains the age of 65, if he
did not work for the employer in the period for which such pay-
ment is made;
(9) remuneration paid to or on behalf of an employee if (and
to the extent that) at the time of the payment of such remunera-
tion it is reasonable to believe that a corresponding deduction is
allowable under section 217;
(10) any payment or series of payments by an employer to an
employee or any of his dependents which is paid—
(A) upon or after the termination of an employee's em-
ployment relationship because of (i) death, (ii) retirement
for disability, or (iii) retirement after attaining an age speci-
fied in the plan referred to in subparagraph (B) or in a pen-
sion plan of the employer, and
(B) under a plan established by the employer which makes
provision for his employees generally or a class or classes of
his employees (or for such employees or class or classes of
employees and their dependents), other than any such pay-
ment or series of payments which would have been paid if
the employee's employment relationship had not been so
terminated; or
(11) remuneration for agricultural labor paid in any medium
other than cash.¹
(c) EMPLOYMENT.-For purposes of this chapter, the term “employ-
ment” means any service performed prior to 1955, which was employ-
1 Paragraph (11) was added by section 111 (a) of Public Law 94–566.
651
IRC Sec. 3306(c)
ment for purposes of subchapter C of chapter 9 of the Internal Reve-
nue Code of 1939 under the law applicable to the period in which such
service was performed, and (A) any service, of whatever nature, per-
formed after 1954 by an employee for the person employing him,
irrespective of the citizenship or residence of either, (i) within the
United States, or (ii) on or in connection with an American vessel
or American aircraft under a contract of service which is entered into
within the United States or during the performance of which and
while the employee is employed on the vessel or aircraft it touches at
a port in the United States, if the employee is employed on and in
connection with such vessel or aircraft when outside the United States,
and (B) any service, of whatever nature, performed after 1971 outside
the United States (except in a contiguous country with which the
United States has an agreement relating to unemployment compensa-
tion) by a citizen of the United States as an employee of an American
employer (as defined in subsection (j) (3)), except-¹
(1) agricultural labor (as defined in subsection (k)) unless-
(A) such labor is performed for a person who—
(i) during any calendar quarter in the calendar year or
the preceding calendar year paid remuneration in cash of
$20,000 or more to individuals employed in agricultural
labor (not taking into account labor performed before
January 1, 1980, by an alien referred to in subparagraph
(B)), or
(ii) on each of some 20 days during the calendar year
or the preceding calendar year, each day being in a dif-
ferent calendar week, employed in agricultural labor
(not taking into account labor performed before Janu-
ary 1, 1980, by an alien referred to in subparagraph (B))
for some portion of the day (whether or not at the same
moment of time) 10 or more individuals; and
(B) such labor is not agricultural labor performed before
January 1, 1980, by an individual who is an alien admitted to
the United States to perform agricultural labor pursuant
to sections 214(c) and 101(a) (15) (H) of the Immigration
and Nationality Act;
2
(2) domestic service in a private home, local college club, or
local chapter of a college fraternity or sorority unless performed
for a person who paid cash remuneration of $1,000 or more to
individuals employed in such domestic service in any calendar
quarter in the calendar year or the preceding calendar year;
3
The matter preceding paragraph (1) was amended by section 116(b) of Public Law
94-566.
Paragraph (1) was amended, effective for wages paid after 1977 for services after
1977, by section 111(b) of Public Law 94–566.
Paragraph (2) was amended, effective for wages paid after 1977 for services after
1977, by section 113 of Public Law 94–566.
IRC Sec. 3306(c)
652
(3) service not in the course of the employer's trade or business
performed in any calendar quarter by an employee, unless the
cash remuneration paid for such service is $50 or more and such
service is performed by an individual who is regularly employed
by such employer to perform such service. For purposes of this
paragraph, an individual shall be deemed to be regularly em-
ployed by an employer during a calendar quarter only if-
(A) on each of some 24 days during such quarter such in
dividual performs for such employer for some portion of the
day service not in the course of the employer's trade or busi-
ness, or
(B) such individual was regularly employed (as deter-
mined under subparagraph (A)) by such employer in the
performance of such service during the preceding calendar
quarter;
(4) service performed on or in connection with a vessel or air-
craft not an American vessel or American aircraft, if the em-
ployee is employed on and in connection with such vessel or air-
craft when outside the United States;
(5) service performed by an individual in the employ of his
son, daughter, or spouse, and service performed by a child under
the age of 21 in the employ of his father or mother;
(6) service performed in the employ of the United States Gov-
ernment or of an instrumentality of the United States which is-
(A) wholly or partially owned by the United States, or
(B) exempt from the tax imposed by section 3301 by
virtue of any provision of law which specifically refers to
such section (or the corresponding section of prior law) in
granting such exemption;
(7) service performed in the employ of a State, or any political
sub livision thereof, or any instrumentality of any one or more of
the foregoing which is wholly owned by one or more States or
political subdivisions; and any service performed in the employ
of any instrumentality of one or more States or political sub-
divisions to the extent that the instrumentality is, with respect to
such service, immune under the Constitution of the United States
from the tax imposed by section 3301;
(8) service performed in the employ of a religious, charitable,
educational, or other organization described in section 501 (c) (3)
which is exempt from income tax under section 501 (a);
(9) service performed by an individual as an employee or em-
ployee representative as defined in section 1 of the Railroad Un-
employment Insurance Act (45 U.S.C. 351);
653
IRC Sec. 3306(c)
(10)(A) service performed in any calendar quarter in the em-
ploy of any organization exempt from income tax under section
501 (a) (other than an organization described in section 401(a))
or under section 521, if the remuneration for such service is less
than $50, or
(B) service performed in the employ of a school, college, or
university, if such service is performed (i) by a student who is
enrolled and is regularly attending classes at such school, college,
or university, or (ii) by the spouse of such a student, if such
spouse is advised, at the time such spouse commences to perform
such service, that (I) the employment of such spouse to perform
such services is provided under a program to provide financial
assistance to such student by such school, college, or university,
and (II) such employment will not be covered by any program
of unemployment insurance, or
(C) service performed by an individual under the age of 22
who is enrolled at a nonprofit or public educational institution
which normally maintains a regular faculty and curriculum and
normally has a regularly organized body of students in attendance
at the place where its educational activities are carried on as a
student in a full-time program, taken for credit at such institu-
tion, which combines academic instruction with work experience,
if such service is an integral part of such program, and such insti-
tution has so certified to the employer, except that this subpara-
graph shall not apply to service performed in a program estab-
lished for or on behalf of an employer or group of employers, or
(D) service performed in the employ of a hospital, if such
service is performed by a patient of such hospital;
(11) service performed in the employ of a foreign government
(including service as a consular or other officer or employee or a
nondiplomatic representative);
(12) service performed in the employ of an instrumentality
wholly owned by a foreign government-
(A) if the service is of a character similar to that per-
formed in foreign countries by employees of the United
States Government or of an instrumentality thereof; and
(B) if the Secretary of State shall certify to the Secretary
of the Treasury that the foreign government, with respect
to whose instrumentality exemption is claimed, grants an
equivalent exemption with respect to similar service per-
formed in the foreign country by employees of the United
States Government and of instrumentalities thereof; ¹
1
1 Subparagraph (B) was amended by section 1906(b) (13) (C) of Public Law 94-455.
A
IRC Sec. 3306(c)
654
K
(13) service performed as a student nurse in the employ of a
hospital or a nurses' training school by an individual who is en-
rolled and is regularly attending classes in a nurses' training
school chartered or approved pursuant to State law; and service
performed as an intern in the employ of a hospital by an in-
dividual who has completed a 4 years' course in a medical school
chartered or approved pursuant to State law;
(14) service performed by an individual for a person as an in-
surance agent or as an insurance solicitor, if all such service per-
formed by such individual for such person is performed for re-
muneration solely by way of commission;
(15)(A) service performed by an individual under the age of
18 in the delivery or distribution of newspapers or shopping news,
not including delivery or distribution to any point for subsequent
delivery or distribution;
(B) service performed by an individual in, and at the time of,
the sale of newspapers or magazines to ultimate consumers, under
an arrangement under which the newspapers or magazines are to
be sold by him at a fixed price, his compensation being based on
the retention of the excess of such price over the amount at which
the newspapers or magazines are charged to him, whether or not
he is guaranteed a minimum amount of compensation for such
service, or is entitled to be credited with the unsold newspapers or
magazines turned back;
(16) service performed in the employ of an international
organization;
(17) service performed by an individual in (or as an officer or
member of the crew of a vessel while it is engaged in) the catch-
ing, taking, harvesting, cultivating, or farming of any kind of
fish, shellfish, crustacea, sponges, seaweeds, or other aquatic forms
of animal and vegetable life (including service performed by any
such individual as an ordinary incident to any such activity),
except-
(A) service performed in connection with the catching or
taking of salmon or halibut, for commercial purposes, and
(B) service performed on or in connection with a vessel of
more than 10 net tons (determined in the manner provided
for determining the register tonnage of merchant vessels
under the laws of the United States); or
(18) service which is performed by a nonresident alien indi-
vidual for the period he is temporarily present in the United
States as a nonimmigrant under subparagraph (F) or (J) of sec-
tion 101 (a) (15) of the Immigration and Nationality Act, as
655
IRC Sec. 3306(f)
amended (8 U.S.C. 1101 (a) (15) (F) or (J)), and which is per-
formed to carry out the purpose specified in subparagraph (F)
or (J), as the case may be.
(d) INCLUDED AND EXCLUDED SERVICE. For purposes of this chap-
ter, if the services performed during one-half or more of any pay
period by an employee for the person employing him constitute em-
ployment, all the services of such employee for such period shall be
deemed to be employment; but if the services performed during more
than one-half of any such pay period by an employee for the person
employing him do not constitute employment, then none of the serv-
ices of such employee for such period shall be deemed to be employ-
ment. As used in this subsection, the term "pay period” means a
period (of not more than 31 consecutive days) for which a payment
of remuneration is ordinarily made to the employee by the person
employing him. This subsection shall not be applicable with respect
to services performed in a pay period by an employee for the person
employing him, where any of such service is excepted by subsection
(c) (9).
(e) STATE AGENCY.-For purposes of this chapter, the term "State
agency" means any State officer, board, or other authority, designated
under a State law to administer the unemployment fund in such State.
(f) UNEMPLOYMENT FUND.-For purposes of this chapter, the term
"unemployment fund" means a special fund, established under a State
law and administered by a State agency, for the payment of compen-
sation. Any sums standing to the account of the State agency in the
Unemployment Trust Fund established by section 904 of the Social
Security Act, as amended (42 U.S.C. 1104), shall be deemed to be a
part of the unemployment fund of the State, and no sums paid out
of the Unemployment Trust Fund to such State agency shall cease to
be a part of the unemployment funds of the State until expended by
such State agency. An unemployment fund shall be deemed to be main-
tained during a taxable year only if throughout such year, or such
portion of the year as the unemployment fund was in existence, no
part of the moneys of such fund was expended for any purpose other
than the payment of compensation (exclusive of expenses of adminis-
tration) and for refunds of sums erroneously paid into such fund and
refunds paid in accordance with the provisions of section 3305(b);
except that
(1) an amount equal to the amount of employee payments into
the unemployment fund of a State may be used in the payment of
cash benefits to individuals with respect to their disability, exclu-
sive of expenses of administration; and
IRC Sec. 3306(f)
656
(2) the amounts specified by section 903 (c) (2) of the Social
Security Act may, subject to the conditions prescribed in such
section, be used for expenses incurred by the State for adminis-
tration of its unemployment compensation law and public em-
ployment offices.
(g) CONTRIBUTIONS.-For purposes of this chapter, the term "con-
tributions" means payments required by a State law to be made into
an unemployment fund by any person on account of having individ-
uals in his employ, to the extent that such payments are made by him
without being deducted or deductible from the remuneration of indi-
viduals in his employ.
(h) COMPENSATION.-For purposes of this chapter, the term "com-
pensation" means cash benefits payable to individuals with respect to
their unemployment.
(i) EMPLOYEE.-For purposes of this chapter, the term "employee"
has the meaning assigned to such term by section 3121 (d), except that
subparagraphs (B) and (C) of paragraph (3) shall not apply.
(j) STATE, UNITED STATES, AND AMERICAN EMPLOYER.-For pur-
poses of this chapter-
(1) STATE. The term "State" includes the District of Colum-
bia, the Commonwealth of Puerto Rico, and the Virgin Islands.
(2) UNITED STATES.-The term "United States" when used in
a geographical sense includes the States, the District of Columbia,
and the Commonwealth of Puerto Rico, and the Virgin Islands.
(3) AMERICAN EMPLOYER. The term "American employer"
means a person who is-
(A) an individual who is a resident of the United States,
(B) a partnership, if two-thirds or more of the partners
are residents of the United States,
(C) a trust, if all of the trustees are residents of the United
States, or
(D) a corporation organized under the laws of the United
States or of any State.
An individual who is a citizen of the Commonwealth of Puerto Rico
or the Virgin Islands (but not otherwise a citizen of the United
States) shall be considered, for the purposes of this section, as a citizen
of the United States.¹
(k) AGRICULTURAL LABOR.-For purposes of this chapter, the term
"agricultural labor" has the meaning assigned to such term by subsec-
tion (g) of section 3121, except that for purposes of this chapter sub-
paragraph (B) of paragraph (4) of such subsection (g) shall be
treated as reading:
1 Subsection (J) was amended by section 116 (b) (2) of Public Law 94-566.
657
IRC Sec. 3306(o)
"(B) in the employ of a group of operators of farms (or a coop-
erative organization of which such operators are members) in the
performance of service described in subparagraph (A), but only
if such operators produced more than one-half of the commodity
with respect to which such service is performed;".
(1) CERTAIN EMPLOYEES OF BONNEVILLE POWER ADMINISTRATION.-
[Repealed.]
(m) AMERICAN VESSEL AND AIRCRAFT.-For purposes of this
chapter, the term "American vessel" means any vessel documented or
numbered under the laws of the United States; and includes any
vessel which is neither documented or numbered under the laws of
the United States nor documented under the laws of any foreign
country, if its crew is employed solely by one or more citizens or resi-
dents of the United States or corporations organized under the laws
of the United States or of any State; and the term "American air-
craft" means an aircraft registered under the laws of the United
States.
(n) VESSEL OPERATED BY GENERAL AGENTS OF UNITED STATES.-
Notwithstanding the provisions of subsection (c) (6), service per-
formed by officers and members of the crew of a vessel which would
otherwise be included as employment under subsection (c) shall not
be excluded by reason of the fact that it is performed on or in con-
nection with an American vessel-
(1) owned by or bareboat chartered to the United States, and
(2) whose business is conducted by a general agent of the Secre-
tary of Commerce.
For purposes of this chapter, each such general agent shall be con-
sidered a legal entity in his capacity as such general agent, separate
and distinct from his identity as a person employing individuals on
his own account, and the officers and members of the crew of such an
American vessel whose business is conducted by a general agent of the
Secretary of Commerce shall be deemed to be performing services
for such general agent rather than the United States. Each such
general agent who in his capacity as such is an employer within the
meaning of subsection (a) shall be subject to all the requirements im-
posed upon an employer under this chapter with respect to service
which constitutes employment by reason of this subsection.
(0) SPECIAL RULE IN CASE OF CERTAIN AGRICULTURAL WORKERS.
(1) CREW LEADERS WHO ARE REGISTERED OR PROVIDE SPECIALIZED
AGRICULTURAL LABOR.-For purposes of this chapter, any indi-
vidual who is a member of a crew furnished by a crew leader to
perform agricultural labor for any other person shall be treated
as an employee of such crew leader-
IRC Sec. 3306(o)
Revised April 1978
658
(A) if—
(i) such crew leader holds a valid certificate of regis-
tration under the Farm Labor Contractor Registration
Act of 1963; or
(ii) substantially all the members of such crew oper-
ate or maintain tractors, mechanized harvesting or crop-
dusting equipment, or any other mechanized equipment,
which is provided by such crew leader; and
(B) if such individual is not an employee of such other
person within the meaning of subsection (i).
(2) OTHER CREW LEADERS.-For purposes of this chapter, in
the case of any individual who is furnished by a crew leader to
perform agricultural labor for any other person and who is not
treated as an employee of such crew leader under paragraph (1)—
(A) such other person and not the crew leader shall be
treated as the employer of such individual; and
(B) such other person shall be treated as having paid
cash remuneration to such individual in an amount equal to
the amount of cash remuneration paid to such individual by
the crew leader (either on his behalf or on behalf of such
other person) for the agricultural labor performed for such
other person.
(3) CREW LEADER.-For purposes of this subsection, the term.
"crew leader" means an individual who-
(A) furnishes individuals to perform agricultural labor
for any other person,
(B) pays (either on his behalf or on behalf of such other
person) the individuals so furnished by him for the agricul-
tural labor performed by them, and
(C) has not entered into a written agreement with such
other person under which such individual is designated as
an employee of such other person.¹
(p) CONCURRENT EMPLOYMENT BY TWO OR MORE EMPLOYERS. For
purposes of sections 3301, 3302, and 3306 (b) (1), if two or more related
corporations concurrently employ the same individual and compensate
such individual through a common paymaster which is one of such
corporations, each such corporation shall be considered to have paid as
remuneration to such individual only the amounts actually disbursed
by it to such individual and shall not be considered to have paid as
remuneration to such individual amounts actually disbursed to such
individual by another of such corporations. 2
1 Subsection (o) was added by section 112 of Public Law 94-566.
2 Subsection (p) was added by sec. 314 (b) of P.L. 95-216 effective with respect to wages
paid after December 31, 1978.
Revised April 1978
658-A
IRC Sec. 3307
SEC. 3307. DEDUCTIONS AS CONSTRUCTIVE PAYMENTS.
Whenever under this chapter or any act of Congress, or under the
law of any State, an employer is required or permitted to deduct any
amount from the remuneration of an employee and to pay the amount
deducted to the United States, a State, or any political subdivision
thereof, then for purposes of this chapter the amount so deducted
shall be considered to have been paid to the employee at the time of
such deduction.
Revised April 1977
IRC Sec. 3309 (b)
659
SEC. 3308. INSTRUMENTALITIES OF THE
UNITED STATES.
Notwithstanding any other provision of law (whether enacted before
or after the enactment of this section) which grants to any instru-
mentality of the United States an exemption from taxation, such in-
strumentality shall not be exempt from the tax imposed by section 3301
unless such other provision of law grants a specific exemption, by refer-
ence to section 3301 (or the corresponding section of prior law), from
the tax imposed by such section.
SEC. 3309. STATE LAW COVERAGE OF SERVICES PER-
FORMED FOR NONPROFIT ORGANIZATIONS
OR GOVERNMENTAL ENTITIES.
(a) STATE LAW REQUIREMENTS.
For purposes of section 3304 (a)
(6) —
(1) except as otherwise provided in subsections (b) and (c),
the services to which this paragraph applies are-
(A) service excluded from the term "employment" solely by
reason of paragraph (8) of section 3306 (c), and
(B) service excluded from the term "employment" solely
by reason of paragraph (7) of section 3306 (c); and ¹
(2) the State law shall provide that a governmental entity
or any other organization (or group of governmental entities or
other organizations) which, but for the requirements of this para-
graph, would be liable for contributions with respect to service
to which paragraph (1) applies may elect, for such minimum pe-
riod and at such time as may be provided by State law, to pay (in
lieu of such contributions) into the State unemployment fund
amounts equal to the amounts of compensation attributable under
the State law to such service. The State law may provide safe-
guards to ensure that governmental entities or other organizations
so electing will make the payments required under such elections."
(b) SECTION NOT TO APPLY TO CERTAIN SERVICE. This section
shall not apply to service performed—
(1) in the employ of (A) a church or convention or association
of churches, or (B) an organization which is operated primarily
for religious purposes and which is operated, supervised, con-
trolled, or principally supported by a church or convention or
association of churches;
(2) by a duly ordained, commissioned, or licensed minister of a
church in the exercise of his ministry or by a member of a religious
order in the exercise of duties required by such order;
1 Paragraph (1) was amended by section 115 (a) of Public Law 94-566 effective with
respect to services performed after 1977.
2 Paragraph (2) was amended by section 506(a) of P.L. 94-566 and section 302(b) of
P.L. 95-19.
IRC Sec. 3309(b)
660
(3) in the employ of a governmental entity referred to in para-
graph (7) of section 3306(c), if such service is performed by an
individual in the exercise of his duties-
(A) as an elected official;
(B) as a member of a legislative body, or a member of the
judiciary, of a State or political subdivision thereof;
(C) as a member of the State National Guard or Air
National Guard;
(D) as an employee serving on a temporary basis in case
of fire, storm, snow, earthquake, flood, or similar emergency;
or
(E) in a position which, under or pursuant to the State
law, is designated as (i) a major nontenured policymaking or
advisory position, or (ii) a policymaking or advisory posi-
tion the performance of the duties of which ordinarily does
not require more than 8 hours per week;
(4) in a facility conducted for the purpose of carrying out a
program of-
1
(A) rehabilitation for individuals whose earning capacity
is impaired by age or physical or mental deficiency or injury,
or
(B) providing remunerative work for individuals who be-
cause of their impaired physical or mental capacity cannot
be readily absorbed in the competitive labor market,
by an individual receiving such rehabilitation or remunerative
work;
(5) as part of an unemployment work-relief or work-training
program assisted or financed in whole or in part by any Federal
agency or an agency of a State or political subdivision thereof,
by an individual receiving such work relief or work training; and
(6) by an inmate of a custodial or penal institution.2
(c) NONPROFIT ORGANIZATIONS MUST EMPLOY 4 OR MORE.—This sec-
tion shall not apply to service performed during any calendar year in
the employ of any organization unless on each of some 20 days during
such calendar year or the preceding calendar year, each day being in a
different calendar week, the total number of individuals who were em-
ployed by such organization in employment (determined without
regard to section 3306 (c) (8) and by excluding service to which this
section does not apply by reason of subsection (b)) for some portion
of the day (whether or not at the same moment of time) was 4 or more.
(d) [Repealed] ³
3
SEC. 3310. JUDICIAL REVIEW.
(a) IN GENERAL.-Whenever under section 3303 (b) or section
3304 (c) the Secretary of Labor makes a finding pursuant to which he
1 Paragraph (3) was amended by section 115 (b) (1) of P.L. 94-566.
2Paragraph (6) was amended by section 115(b) (2) of P.L. 94-566.
Subsection (d) was repealed by section 115 (c) (2) of P.L. 94-566.
661
IRC Sec. 3311
is required to withhold a certification with respect to a State under
such section, such State may, within 60 days after the Governor of the
State has been notified of such action, file with the United States court
of appeals for the circuit in which such State is located or with the
United States Court of Appeals for the District of Columbia, a peti-
tion for review of such action. A copy of the petition shall be forthwith
transmitted by the clerk of the court to the Secretary of Labor. The
Secretary of Labor thereupon shall file in the court the record of the
proceedings on which he based his action as provided in section 2112 of
title 28 of the United States Code.
(b) FINDINGS OF FACT.-The findings of fact by the Secretary of
Labor, if supported by substantial evidence, shall be conclusive; but
the court, for good cause shown, may remand the case to the Secretary
of Labor to take further evidence, and the Secretary of Labor may
thereupon make new or modified findings of fact and may modify his
previous action, and shall certify to the court the record of the further
proceedings. Such new or modified findings of fact shall likewise be
conclusive if supported by substantial evidence.
(c) JURISDICTION OF COURT; REVIEW. The court shall have juris-
diction to affirm the action of the Secretary of Labor or to set it aside,
in whole or in part. The judgment of the court shall be subject to
review by the Supreme Court of the United States upon certiorari or
certification as provided in section 1254 of title 28 of the United States
Code.
(d) STAY OF SECRETARY OF LABOR'S ACTION.-
(1) The Secretary of Labor shall not withhold any certifica-
tion under section 3303 (b) or section 3304 (c) until the expiration
of 60 days after the Governor of the State has been notified of
the action referred to in subsection (a) or until the State has
filed a petition for review of such action, whichever is earlier.
(2) The commencement of judicial proceedings under this
section shall stay the Secretary of Labor's action for a period of
30 days, and the court may thereafter grant interim relief if war-
ranted, including a further stay of the Secretary of Labor's ac-
tion and including such other relief as may be necessary to
preserve status or rights."
1
(e) PREFERENCE.-Any judicial proceedings under this section shall
be entitled to, and, upon request of the Secretary of Labor or the State,
shall receive a preference and shall be heard and determined as expe-
ditiously as possible.¹
SEC. 3311. SHORT TITLE.
This chapter may be cited as the "Federal Unemployment Tax Act."
S
*
*
1 Subsections (d) and (e) were amended by section 1906(b)(13) of P.L. 94-455.
IRC Sec. 3501
662
CHAPTER 25-GENERAL PROVISIONS RELATING
TO EMPLOYMENT TAXES
SEC. 3501. COLLECTION AND PAYMENT OF TAXES.
The taxes imposed by this subtitle shall be collected by the Secretary
and shall be paid into the Treasury of the United States as internal-
revenue collections.
SEC. 3502. NONDEDUCTIBILITY OF TAXES IN COMPUT-
ING TAXABLE INCOME.
(a) The taxes imposed by section 3101 of chapter 21, and by sections
3201 and 3211 of chapter 22 shall not be allowed as a deduction to the
taxpayer in computing taxable income under subtitle A.
(b) The tax deducted and withheld under chapter 24 shall not be
allowed as a deduction either to the employer or to the recipient of
the income in computing taxable income under subtitle A.
SEC. 3503. ERRONEOUS PAYMENTS.
Any tax paid under chapter 21 or 22 by a taxpayer with respect to
any period with respect to which he is not liable to tax under such
chapter shall be credited against the tax, if any, imposed by such other
chapter upon the taxpayer, and the balance, if any, shall be refunded.
SEC. 3504. ACTS TO BE PERFORMED BY AGENTS.
In case a fiduciary, agent, or other person has the control, receipt,
custody, or disposal of, or pays the wages of an employee or group of
employees, employed by one or more employers, the Secretary, under
regulations prescribed by him, is authorized to designate such fiduci-
ary, agent, or other person to perform such acts as are required of em-
ployers under this title and as the Secretary may specify. Except as
may be otherwise prescribed by the Secretary, all provisions of law
(including penalties) applicable in respect of an employer shall be
applicable to a fiduciary, agent, or other person, so designated but,
except as so provided, the employer for whom such fiduciary, agent,
or other person acts shall remain subject to the provisions of law (in-
cluding penalties) applicable in respect of employers.
*
*
**
**
*
Subtitle F-Procedure and Administration
Chapter 61. Information and returns.
Chapter 62. Time and place for paying tax.
*
*
*
CHAPTER 61-INFORMATION AND RETURNS
663
IRC Sec. 6001
Chapter 63. Assessment.
Chapter 64. Collection.
Chapter 65. Abatements, credits, and refunds.
Chapter 66.
Limitations.
Chapter 67.
Chapter 68.
Chapter 69.
Chapter 70.
Chapter 71.
Chapter 72.
Chapter 73.
Chapter 74.
Chapter 75.
Chapter 76.
Chapter 77.
Chapter 78.
Chapter 79.
Chapter 80. General Rules.
Interest.
Additions to the tax, additional amounts, and assessable
penalties.
General provisions relating to stamps.
Jeopardy, bankruptcy and receiverships.
Transferees and fiduciaries.
Licensing and registration.
Bonds.
Closing agreements and compromises.
Crimes, other offenses, and forfeitures.
Judicial proceedings.
Miscellaneous provisions.
Discovery of liability and enforcement of title.
Definitions.
Sec. 6001. Notice or regulations requiring records, statements, and special
returns
Sec. 6011. General requirements of return, statement, or list.
Sec. 6017. Self-employment tax returns___
Sec. 6020. Returns prepared for or executed by Secretary_.
Sec. 6050A. Reporting requirements of certain fishing boat operators_
Sec. 6051. Receipts for employees---
Sec. 6053. Reporting of tips_-_.
Sec. 6061. Signing of returns and other documents_
Sec. 6064. Signature presumed authentic___
Sec. 6065. Verification of returns_.
Sec. 6071. Time for filing returns and other documents_
Sec. 6072. Time for filing income tax returns_.
Sec. 6081. Extension of time for filing returns_.
21-746 O - 78
Sec. 6091. Place for filing returns or other documents.
Sec. 6101. Period covered by returns or other documents_
Sec. 6103. Publicity of returns and disclosure of information as to persons
filing income tax returns_
Sec. 6109. Identifying numbers____.
¹ This table of contents does not appear in the law in this form.
-
50
Page 1
663
664
664
664
665
665
667
668
668
668
668
668
669
669
SEC. 6001. NOTICE OR REGULATIONS REQUIRING REC-
ORDS, STATEMENTS, AND SPECIAL RE-
TURNS.
670
Every person liable for any tax imposed by this title, or for the
collection thereof, shall keep such records, render such statements,
make such returns, and comply with such rules and regulations as the
Secretary may from time to time prescribe. Whenever in the judg-
ment of the Secretary it is necessary, he may require any person, by
notice served upon such person or by regulations, to make such returns,
render such statements, or keep such records, as the Secretary deems
670
674
IRC Sec. 6001
664
sufficient to show whether or not such person is liable for tax under
this title.
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SEC. 6011. GENERAL REQUIREMENT OF RETURN, STATE-
MENT, OR LIST.
(a) GENERAL RULE.-When required by regulations prescribed by
the Secretary any person made liable for any tax imposed by this
title, or for the collection thereof, shall make return or statement ac-
cording to the forms and regulations prescribed by the Secretary.
Every person required to make a return or statement shall include
therein the information required by such forms or regulations.
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(b) IDENTIFICATION OF TAXPAYER.-The Secretary is authorized to
require such information with respect to persons subject to the taxes
imposed by chapter 21 or chapter 24 as is necessary or helpful in se-
curing proper identification of such persons.
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*
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SEC. 6017. SELF-EMPLOYMENT TAX RETURNS.
Every individual (other than a nonresident alien individual) hav-
ing net earnings from self-employment of $400 or more for the taxable
year shall make a return with respect to the self-employment tax im-
posed by chapter 2. In the case of a husband and wife filing a joint
return under section 6013, the tax imposed by chapter 2 shall not be
computed on the aggregate income but shall be the sum of the taxes
computed under such chapter on the separate self-employment income
of each spouse.
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SEC. 6020. RETURNS PREPARED FOR OR EXECUTED BY
SECRETARY.
(a) PREPARATION OF RETURN BY SECRETARY.-If any person shall
fail to make a return required by this title or by regulations prescribed
thereunder, but shall consent to disclose all information necessary for
the preparation thereof, then, and in that case, the Secretary may pre-
pare such return, which being signed by such person, may be received
by the Secretary as the return of such person.
(b) EXECUTION OF RETURN BY SECRETARY.-
(1) AUTHORITY OF SECRETARY TO EXECUTE RETURN.-If any
person fails to make any return (other than a declaration of esti-
mated tax required under section 6015) required by any internal
revenue law or regulation made thereunder at the time prescribed
665
IRC Sec. 6051(a)
therefor, or makes, willfully or otherwise, a false or fraudulent
return, the secretary shall make such return from his own knowl-
edge and from such information as he can obtain through testi-
mony or otherwise.
(2) Status of RETURNS.-Any return so made and subscribed
by the Secretary shall be prima facie good and sufficient for all
legal purposes.
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SEC. 6050A. REPORTING REQUIREMENTS OF CERTAIN
FISHING BOAT OPERATORS.
(a) REPORTS.—The operator of a boat on which one or more indi-
viduals, during the calendar year, perform services described in section
3121(b) (20) shall submit to the Secretary (at such time, and in such
manner and form, as the Secretary shall by regulations prescribe)
information respecting-
(1) the identity of each individual performing such services;
(2) the percentage of each such individual's share of the
catches of fish or other forms of aquatic animal life, and the per-
centage of the operator's share of such catches;
(3) if such individual receives his share in kind, the type and
weight of such share, together with such other information as the
Secretary may prescribe by regulations reasonably necessary to
determine the value of such share; and
(4) if such individual receives a share of the proceeds of such
catches, the amount so received.
(b) WRITTEN STATEMENT.-Every person making a return under
subsection (a) shall furnish to each person whose name is set forth in
such return a written statement showing the information relating to
such person contained in such return. The written statement required
under the preceding sentence shall be furnished to the person on or
before January 31 of the year following the calendar year for which
the return under subsection (a) was made.¹
SUBPART C-INFORMATION REGARDING WAGES PAID EMPLOYEES
SEC. 6051. RECEIPTS FOR EMPLOYEES.
(a) REQUIREMENT.-Every person required to deduct and withhold
from an employee a tax under section 3101 or 3402, or who would have
been required to deduct and withhold a tax under section 3402 (deter-
mined without regard to subsection (n)) if the employee had claimed
no more than one withholding exemption, shall furnish to each such
¹ Section 6050A was added by section 1207(e)(3) of P.L. 94-455 effective for calendar
years after 1976.
IRC Sec. 6051(a)
Revised April 1978
666
employee in respect of the remuneration paid by such person to such
employee during the calendar year, on or before January 31 of the
succeeding year, or, if his employment is terminated before the close of
such calendar year, on the day on which the last payment of remunera-
tion is made, a written statement showing the following:
(1) the name of such person,
(2) the name of the employee (and his social security account
number if wages as defined in section 3121 (a) have been paid),
(3) the total amount of wages as defined in section 3401(a),
(4) the total amount deducted and withheld as tax under sec-
tion 3402,
(5) the total amount of wages as defined in section 3121(a),
and
(6) the total amount deducted and withheld as tax under sec-
tion 3101.
In the case of compensation paid for service as a member of a uni-
formed service, the statement shall show, in lieu of the amount re-
quired to be shown by paragraph (5), the total amount of wages as
defined in section 3121(a), computed in accordance with such section
and section 3121 (i) (2). In the case of compensation paid for service.
as a volunteer or volunteer leader within the meaning of the Peace.
Corps Act, the statement shall show, in lieu of the amount required to
be shown by paragraph (5), the total amount of wages as defined in
section 3121 (a), computed in accordance with such section and section
3121 (i) (3). In the case of tips received by an employee in the course
of his employment, the amounts required to be shown by paragraphs
(3) and (5) shall include only such tips as are included in statements
furnished to the employer pursuant to section 6053 (a). The amounts
required to be shown by paragraph (5) shall not include wages which
are exempted pursuant to sections 3101 (c) and 3111 (c) from the taxes
imposed by sections 3101 and 3111.¹
(b) SPECIAL RULE AS TO COMPENSATION OF MEMBERS OF ARMED
FORCES. In the case of compensation paid for service as a member
of the Armed Forces, the statement required by subsection (a) shall
be furnished if any tax was withheld during the calendar
year under
section 3402, or if any of the compensation paid during such year is
includible in gross income under chapter 1, or if during the calendar
year any amount was required to be withheld as tax under section.
3101. In lieu of the amount required to be shown by paragraph (3)
of subsection (a), such statement shall show as wages paid during
the calendar year the amount of such compensation paid during the
1 Subsection (a) was amended by section 317 (b) (3) of P.L. 95–216.
Revised April 1978
666-A
IRC Sec. 6051(b)
calendar year which is not excluded from gross income under chapter
1 (whether or not such compensation constituted wages as defined in
section 3401(a)).
(c) ADDITIONAL REQUIREMENTS.-The statements required to be
furnished pursuant to this section in respect of any remuneration shall
be furnished at such other times, shall contain such other information,
667
IRC Sec. 6053(b)
and shall be in such form as the Secretary may by regulations pre-
scribe. The statements required under this section shall also show the
proportion of the total amount withheld as tax under section 3101
which is for financing the cost of hospital insurance benefits under
part A of title XVIII of the Social Security Act.
(d) STATEMENTS TO CONSTITUTE INFORMATION RETURNS.—A dupli-
cate of any statement made pursuant to this section and in accord-
ance with regulations prescribed by the Secretary shall, when required
by such regulations, be filed with the Secretary.
(e) RAILROAD EMPLOYEES.-
(1) ADDITIONAL REQUIREMENT.-Every person required to
deduct and withhold tax under section 3201 from an employee
shall include on or with the statement required to be furnished
such employee under subsection (a) a notice concerning the pro-
visions of this title with respect to the allowance of a credit or
refund of the tax on wages imposed by section 3101 (b) and the tax
on compensation imposed by section 3201 or 3211 which is treated
as a tax on wages imposed by section 3101 (b).
(2) INFORMATION TO BE SUPPLIED TO EMPLOYEES.-Each person
required to deduct and withhold tax under section 3201 during
any year from an employee who has also received wages during
such year subject to the tax imposed by section 3101 (b) shall,
upon request of such employee, furnish to him a written statement
showing-
(A) the total amount of compensation with respect to
which the tax imposed by section 3201 was deducted,
(B) the total amount deducted as tax under section 3201,
and
(C) the portion of the total amount deducted as tax under
section 3201 which is for financing the cost of hospital insur-
ance under part A of title XVIII of the Social Security Act.
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SEC. 6053. REPORTING OF TIPS.¹
(a) REPORTS BY EMPLOYEES.-Every employee who, in the course of
his employment by an employer, receives in any calendar month tips
which are wages (as defined in section 3121(a) or section 3401(a)) or
which are compensation (as defined in section 3231 (e)) shall report
all such tips in one or more written statements furnished to his em-
ployer on or before the 10th day following such month. Such state-
ments shall be furnished by the employee under such regulations, at
such other times before such 10th day, and in such form and manner,
as may be prescribed by the Secretary.
(b) STATEMENTS FURNISHED BY EMPLOYERS.-If the tax imposed
by section 3101 or section 3201 (as the case may be) with respect to
1 See section 2111 of P.L. 94-455 which is printed in this document on page 783.
IRC Sec. 6053(b)
668
tips reported by an employee pursuant to subsection (a) exceeds the
tax which can be collected by the employer pursuant to section 3102 or
section 3202 (as the case may be), the employer shall furnish to the
employee a written statement showing the amount of such excess. The
statement required to be furnished pursuant to this subsection shall
be furnished at such time, shall contain such other information, and
shall be in such form as the Secretary may by regulations prescribe.
When required by such regulations, a duplicate of any such statement
shall be filed with the Secretary.
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SEC. 6061. SIGNING OF RETURNS AND OTHER DOCU-
MENTS.
Except as otherwise provided by sections 6062 and 6063, any re-
turn, statement, or other document required to be made under any
provision of the internal revenue laws or regulations shall be signed
in accordance with forms or regulations prescribed by the Secretary.
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SEC. 6064. SIGNATURE PRESUMED AUTHENTIC.
The fact that an individual's name is signed to a return, statement,
or other document shall be prima facie evidence for all purposes that
the return, statement, or other document was actually signed by him.
SEC. 6065. VERIFICATION OF RETURNS.
Except as otherwise provided by the Secretary, any return, declara-
tion, statement, or other document required to be made under any pro-
vision of the internal revenue laws or regulations shall contain or be
verified by a written declaration that it is made under the penalties of
perjury.
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SEC. 6071. TIME FOR FILING RETURNS AND OTHER
DOCUMENTS.
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(a) GENERAL RULE.-When not otherwise provided for by this
title, the Secretary shall by regulations prescribe the time for filing any
return, statement, or other document required by this title or by
regulations.
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SEC. 6072. TIME FOR FILING INCOME TAX RETURNS.
(a) GENERAL RULE. In the case of returns under section 6012, 6013,
6017, or 6031 (relating to income tax under subtitle A), returns made
on the basis of the calendar year shall be filed on or before the 15th
day of April following the close of the calendar year and returns made
669
IRC Sec. 6091(b)
on the basis of a fiscal year shall be filed on or before the 15th day
of the fourth month following the close of the fiscal year, except as
otherwise provided in the following subsections of this section.
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SEC. 6081. EXTENSION OF TIME FOR FILING RETURNS.
(a) GENERAL RULE.-The Secretary may grant a reasonable ex-
tension of time for filing any return, declaration, statement, or other
document required by this title or by regulations. Except in the case of
taxpayers who are abroad, no such extension shall be for more than
6 months.
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SEC. 6091. PLACE FOR FILING RETURNS OR OTHER
DOCUMENTS.
*
(b) TAX RETURNS.-In the case of returns of tax required under
authority of part II of this subchapter-
!
(1) PERSONS OTHER THAN CORPORATIONS.
(A) GENERAL RULE.-Except as provided in subparagraph
(B), a return (other than a corporation return) shall be
made to the Secretary-
P
(i) in the internal revenue district in which is located.
the legal residence or principal place of business of the
person making the return, or
(ii) at a service center serving the internal revenue
district referred to in clause (i),
as the Secretary may by regulations designate.
(B) EXCEPTION.-Returns of—
(i) persons who have no legal residence or principal
place of business in any internal revenue district,
(ii) citizens of the United States whose principal
place of abode for the period with respect to which the
return is filed is outside the United States,
(iii) persons who claim the benefits of section 911
(relating to earned income from sources without the
United States), section 931 (relating to income from
sources within possessions of the United States), or sec-
tion 933 (relating to income from sources within Puerto
Rico),
(iv) nonresident alien persons, and
(v) persons with respect to whom an assessment was
made under section 6851 (a) (relating to termination
assessments) with respect to the taxable year,
IRC Sec. 6091(b)
670
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shall be made at such place as the Secretary may by regula-
tions designate.
(2) CORPORATIONS.-
(A) GENERAL RULE.-Except as provided in subpara-
graph (B), a return of a corporation shall be made to the
Secretary-
(i) in the internal revenue district in which is located
the principal place of business or principal office or
agency of the corporation, or
(ii) at a service center serving the internal revenue
district referred to in clause (i),
as the Secretary may by regulations designate.
(B) EXCEPTION.-Returns of—
(i) corporations which have no principal place of
business or principal office or agency in any internal
revenue district,
(ii) corporations which claim the benefits of section
936 (relating to possession tax credit)¹,
(iii) foreign corporations, and
(iv) corporations with respect to which an assessment
was made under section 6851 (a) (relating to termina-
tion assessments) with respect to the taxable year,
shall be made at such place as the Secretary may by regula-
tions designate.
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SEC. 6101. PERIOD COVERED BY RETURNS OR OTHER
DOCUMENTS.
When net expenses provided for by this title, the Secretary may by
regulations prescribe the period for which, or the date as of which, any
return, statement, or other document required by this title or by regula-
tion shall be made.
SEC. 6103. CONFIDENTIALITY AND DISCLOSURE OF RE-
TURNS AND RETURN INFORMATION.
(a) GENERAL RULE.-Returns and return information shall be
confidential, and except as authorized by this title-
(1) no officer or employee of the United States,
(2) no officer or employee of any State or of any local child
support enforcement agency who has or had access to returns or
return information under this section, and
(3) no other person (or officer or employee thereof) who has
or had access to returns or return information under subsection
(e) (1) (D) (iii) or subsection (n),
1 Clause (11) was amended to read as shown here effective for taxable years beginning
after December 31, 1979 by section 1052 of P.L. 94–455.
671
IRC Sec. 6103(1)
shall disclose any return or return information obtained by him in any
manner in connection with his service as such an officer or an employee
or otherwise or under the provisions of this section. For purposes of
this subsection, the term "officer or employee" includes a former officer
or employee.
(1) DISCLOSURE OF RETURNS AND RETURN INFORMATION FOR PUR-
POSES OTHER THAN TAX ADMINISTRATION.
(1) DISCLOSURE OF CERTAIN RETURNS AND RETURN INFORMA-
TION TO SOCIAL SECURITY ADMINISTRATION AND RAILROAD RETIRE-
MENT BOARD.—The Secretary may, upon written request, disclose
returns and return information with respect to
(A) taxes imposed by chapters 2, 21, and 24, to the Social
Security Administration for purposes of its administration
of the Social Security Act;
(B) a plan to which part I of subchapter D of chapter 1
applies, to the Social Security Administration for purposes
of carrying out its responsibility under section 1131 of the
Social Security Act, limited, however to return information
described in section 6057 (d); and
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(C) taxes imposed by chapter 22, to the Railroad Retire-
ment Board for purposes of its administration of the Rail-
road Retirement Act.
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(5) DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE.
Upon written request by the Secretary of Health, Education,
and Welfare, the Secretary may disclose information returns
filed pursuant to part III of subchapter A of chapter 61 of
this subtitle for the purpose of carrying out, in accordance
with an agreement entered into pursuant to section 232 of the
Social Security Act, an effective return processing program.
(6) DISCLOSURE OF RETURN INFORMATION TO FEDERAL, STATE,
AND LOCAL CHILD SUPPORT ENFORCEMENT AGENCIES.-
(A) RETURN INFORMATION FROM INTERNAL REVENUE
SERVICE.-The Secretary may, upon written request, dis-
close to the appropriate Federal, State, or local child sup-
port enforcement agency-
(i) available return information from the master
files of the Internal Revenue Service relating to the
address, filing status, amounts and nature of income,
and the number of dependents reported on any re-
turn filed by, or with respect to, any individual with
respect to whom child support obligations are sought
IRC Sec. 6103(1)
672
to be established or enforced pursuant to the provi-
sions of part D of title IV of the Social Security Act
and with respect to any individual to whom such sup-
port obligations are owing, and
(ii) available return information reflected on any
return filed by, or with respect to, any individual
described in clause (i) relating to the amount of such
individual's gross income (as defined in section 61)
or consisting of the names and addresses of payors
of such income and the names of any dependents re-
ported on such return, but only if such return in-
formation is not reasonably available from any other
source.
(B) RESTRICTION ON DISCLOSURE.-The Secretary shall
disclose return information under subparagraph (A)
only for purposes of, and to the extent necessary in, es-
tablishing and collecting child support obligations from,
and locating, individuals owing such obligations.
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(p) Procedure and Recordkeeping.—
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(4) SAFEGUARDS.-Any Federal agency described in subsection
(h)(2), (i) (1), (2) or (5), (j) (1) or (2), (1)(1), (2), or (5),
or (o)(1), the General Accounting Office, or any agency, body, or
commission described in subsection (d) or (1)(3) or (6) shall,
as a condition for receiving returns or return information-
(A) establish and maintain, to the satisfaction of the Sec-
retary, a permanent system of standardized records with
respect to any request, the reason for such request, and the
date of such request made by or of it and any disclosure of
return or return information made by or to it;
(B) establish and maintain, to the satisfaction of the Sec-
retary, a secure area or place in which such returns or return
information shall be stored;
(C) restrict, to the satisfaction of the Secretary, access to
the returns or return information only to persons whose duties.
or responsibilities require access and to whom disclosure may
be made under the provisions of this title;
(D) provide such other safeguards which the Secretary
determines (and which he prescribes in regulations) to be
necessary or appropriate to protect the confidentiality of the
returns or return information;
(E) furnish a report to the Secretary, at such time and
containing such information as the Secretary may prescribe,
673
IRC Sec. 6103(p)
which describes the procedures established and utilized by
such agency, body, or commission or the General Accounting
Office for ensuring the confidentiality of returns and return
information required by this paragraph; and
(F) upon completion of use of such returns or return
information
*
(i) in the case of an agency, body, or commission
described in subsection (d) or (1) (6), return to the Secre-
tary such returns or return information (along with any
copies made therefrom) or make such returns or return
information undisclosable in any manner and furnish a
written report to the Secretary describing such manner;
and
(ii) in the case of an agency described in subsections
(h) (2), (i) (1), (2), or (5), (j) (1) or (2), (1) (1), (2),
or (5), or (o) (1), the commission described in subsection
(1) (3), or the General Accounting Office, either—
(I) return to the Secretary such returns or return
information (along with any copies made there-
from),
(II) otherwise make such returns or return infor-
mation undisclosable, or
(III) to the extent not so returned or made undis-
closable, ensure that the conditions of subparagraphs
(A), (B), (C), (D), and (E) of this paragraph con-
tinue to be met with respect to such returns or
return information.
except that the conditions of subparagraphs (A), (B), (C), (D),
and (E) shall cease to apply with respect to any return or return
information if, and to the extent that, such return or return infor-
mation is disclosed in the course of any judicial or administrative
proceeding and made a part of the public record thereof. If the
Secretary determines that any such agency, body, or commission
or the General Accounting Office has failed to, or does not, meet
the requirements of this paragraph, he may, after any proceedings
for review established under paragraph (7), take such actions as
are necessary to ensure such requirements are met, including refus-
ing to disclose returns or return information to such agency, body,
or commission or the General Accounting Office until he deter-
mines that such requirements have been or will be met.
*
IRC Sec. 6109(a)
674
SEC. 6109. IDENTIFYING NUMBERS.
(a) SUPPLYING of Identifying NUMBER.-When required by reg-
ulations prescribed by the Secretary:
(1) INCLUSION IN RETURNS.-Any person required under the
authority of this title to make a return, statement, or other docu-
ment shall include in such return, statement, or other document
such identifying number as may be prescribed for securing
proper identification of such person.
(2) FURNISHING NUMBER TO OTHER PERSONS.—Any person with
respect to whom a return, statement, or other document is re-
quired under the authority of this title to be made by another
person shall furnish to such other person such identifying num-
ber as may be prescribed for securing his proper identification.
(3) FURNISHING NUMBER OF ANOTHER PERSON.—Any person re-
quired under the authority of this title to make a return, state-
ment, or other document with respect to another person shall
request from such other person, and shall include in any such
return, statement, or other document, such identifying number
as may be prescribed for securing proper identification of such
other person.
(4) FURNISHING IDENTIFYING NUMBER OF INCOME TAX RETURN
PREPARER.-Any return or claim for refund prepared by an income
tax return preparer shall bear such identifying number for
securing proper identification of such preparer, his employer, or
both, as may be prescribed. For purposes of this paragraph, the
terms "return" and "claim for refund" have the respective mean-
ings given to such terms by section 6696 (e).
For purposes of this subsection, the identifying number of an indi-
vidual (or his estate) shall be such individual's social security account
number.
(b) LIMITATION.-
(1) Except as provided in paragraph (2), a return of any
person with respect to his liability for tax, or any statement or
other document in support thereof, shall not be considered for
purposes of paragraphs (2) and (3) of subsection (a) as a re-
turn, statement, or other document with respect to another person.
(2) For purposes of paragraphs (2) and (3) of subsection
(a), a return of an estate or trust with respect to its liability for
tax, and any statement or other document in support thereof, shall
be considered as a return, statement, or other document with
respect to each beneficiary of such estate or trust.
(c) REQUIREMENT OF INFORMATION.-For purposes of this section,
the Secretary is authorized to require such information as may be
necessary to assign an identifying number to any person.
675
IRC Sec. 6155(a)
(d) USE OF SOCIAL SECURITY ACCOUNT NUMBER.-The Social secu-
rity account number issued to an individual for purposes of section
205 (c) (2) (A) of the Social Security Act shall, except as shall other-
wise be specified under regulations of the Secretary, be used as the
identifying number for such individual for purposes of this title.
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CHAPTER 62-TIME AND PLACE FOR PAYING TAX
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SEC. 6151. TIME AND PLACE FOR PAYING TAX SHOWN
ON RETURNS.
(a) GENERAL RULE.-Except as otherwise provided in this section,
when a return of tax is required under this title or regulations, the
person required to make such return shall, without assessment or notice
and demand from the Secretary, pay such tax to the internal revenue
officer with whom the return is filed, and shall pay such tax at the
time and place fixed for filing the return (determined without regard
to any extension of time for filing the return).
SEC. 6152. INSTALLMENT PAYMENTS.
(a) PRIVILEGE TO ELECT TO MAKE INSTALLMENT PAYMENTS.—
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(3) EMPLOYEES SUBJECT TO UNEMPLOYMENT TAX.-[Repealed.]
(b) DATES PRESCRIBED FOR PAYMENTS OF INSTALLMENTS.—
(1) FOUR INSTALLMENTS.-In any case (other than payment of
estimated income tax) in which the tax may be paid in four in-
stallments, the first installment shall be paid on the date prescribed
for the payment of the tax, the second installment shall be paid
on or before 3 months, the third installment on or before 6 months,
and the fourth installment on or before 9 months, after such date.
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(2) TWO INSTALLMENTS.-In any case (other than payment of
estimated income tax) in which the tax may be paid in two install-
ments, the first installment shall be paid on the date prescribed
for the payment of the tax, and the second installment shall be
paid on or before 3 months after such date.
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SEC. 6155. PAYMENT ON NOTICE AND DEMAND.
(a) GENERAL RULE.-Upon receipt of notice and demand from the
Secretary, there shall be paid at the place and time stated in such
notice the amount of any tax (including any interest, additional
amounts, additions to tax, and assessable penalties) stated in such
notice and demands.
IRC Sec. 6161(a)
676
SEC. 6161. EXTENSION OF TIME FOR PAYING TAX.
(a) AMOUNT DETERMINED BY TAXPAYER ON RETURN.-
(1) GENERAL RULE.-The Secretary, except as otherwise pro-
vided in this title, may extend the time for payment of the
amount of the tax shown, or required to be shown, on any return
or declaration required under authority of this title (or any
installment thereof), for a reasonable period not to exceed 6
months (12 months in the case of estate tax) from the date
fixed for payment thereof. Such extension may exceed 6 months
in the case of a taxpayer who is abroad.
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CHAPTER 63-ASSESSMENTS
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SUBCHAPTER A-IN GENERAL
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SEC. 6201. ASSESSMENT AUTHORITY.
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(a)
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EMPLOYMENT TAXES.
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(4) Erroneous credit under section 39 or 43.-If on any return
or claim for refund of income taxes under subtitle A there is an
overstatement of the credit allowable by section 39 (relating to
certain uses of gasoline, special fuels, and lubricating oil) or sec-
tion 43 (relating to earned income), the amount so overstated
which is allowed against the tax shown on the return or which is
allowed as a credit or refund may be assessed by the Secretary
in the same manner as in the case of a mathematical error
appearing upon the return.¹
*
*
*
*
SEC. 6205 SPECIAL RULES APPLICABLE TO CERTAIN
¹ Section 6201 (a) (4) was amended by section 204 (b) (2) of Public Law 94-12.
(a) ADJUSTMENT OF TAX.-
(1) GENERAL RULE.-If less than the correct amount of tax
imposed by section 3101, 3111, 3201, 3221, or 3402 is paid with
respect to any payment of wages or compensation, proper adjust-
ments, with respect to both the tax and the amount to be deducted,
shall be made, without interest, in such manner and at such times
the Secretary may by regulation prescribe.
(2) UNITED STATES AS EMPLOYER. For purposes of this sub-
section, in the case of remuneration received from the United
677
IRC Sec. 6301
States or a wholly-owned instrumentality thereof during any cal-
endar year, each head of a Federal agency or instrumentality who
makes a return pursuant to section 3122 and each agent, desig-
nated by the head of a Federal agency or instrumentality, who
makes a return pursuant to such section shall be deemed a sepa-
rate employer.
(3) GUAM OR AMERICAN SAMOA AS EMPLOYER. For purposes of
this subsection, in the case of remuneration received during any
calendar year from the Government of Guam, the Government
of American Samoa, a political subdivision of either, or any in-
strumentality of any one or more of the foregoing which is wholly
owned thereby, the Governor of Guam, the Governor of Ameri-
can Samoa, and each agent designated by either who makes a
return pursuant to section 3125 shall be deemed a separate
employer.
(4) DISTRICT OF COLUMBIA AS EMPLOYER.—For purposes of this
subsection, in the case of remuneration received during any calen-
dar year from the District of Columbia or any instrumentality
which is wholly owned thereby, the Mayor of the District of
Columbia and each agent designated by him who makes a return
pursuant to section 3125 shall be deemed a separate employer.
(b) UNDERPAYMENTS.-If less than the correct amount of tax im-
posed by section 3101, 3111, 3201, 3221, or 3402 is paid or deducted
with respect to any payment of wages or compensation and the under-
payment cannot be adjusted under subsection (a) of this section, the
amount of the underpayment shall be assessed and collected in such
manner and at such times (subject to the statute of limitations prop-
erly applicable thereto) as the Secretary may by regulations prescribe.
*
*
21-746 O - 78
**
Sec. 6301. Collection authority.
Sec. 6302. Mode or time of collection_.
Sec. 6303. Notice and demand for tax-
Sec. 6305. Collection of certain liability.
Sec. 6313. Fractional parts of a cent.
Sec. 6314. Receipt for taxes----
Sec. 6331. Levy and distraint__
Sec. 6334. Property exempt from levy.
m
CHAPTER 64-COLLECTION
51
**
*
1 This table of contents does not appear in the law in this form.
**
SEC. 6301. COLLECTION AUTHORITY.
The Secretary shall collect the taxes imposed by the internal revenue
laws.
*
*
Page 1
677
678
678
678
679
679
679
680
IRC Sec. 6302(a)
678
SEC. 6302. MODE OR TIME OF COLLECTION.
(a) ESTABLISHMENT BY REGULATIONS.-If the mode or time for col-
lecting any tax is not provided for by this title, the Secretary may
establish the same by regulations.
(b) DISCRETIONARY METHOD.-Whether or not the method of col-
lecting any tax imposed by chapters 21, 31, 32, 33, section 4481 of
chapter 36, section 4501 (a) of chapter 37 is specifically provided for
by this title, any such tax may, under regulations prescribed by the
Secretary, be collected by means of returns, stamps, coupons, tickets,
books, or such other reasonable devices or methods as may be necessary
or helpful in securing a complete and proper collection of the tax.
(c) USE OF GOVERNMENT DEPOSITARIES.-The Secretary may
authorize Federal Reserve banks, and incorporated banks or trust
companies which are depositaries or financial agents of the United
States, to receive any tax imposed under the internal revenue laws,
in such manner, at such times, and under such conditions as he may
prescribe; and he shall prescribe the manner, times, and conditions
under the receipt of such tax by such banks and trust companies is
to be treated as payment of such tax to the Secretary.
SEC. 6303. NOTICE AND DEMAND FOR TAX.
1
(a) GENERAL RULE.-Where it is not otherwise provided by this title,
the Secretary shall, as soon as practicable, and within 60 days, after
the making of an assessment of a tax pursuant to section 6203, give
notice to each person liable for the unpaid tax, stating the amount
and demanding payment thereof. Such notice shall be left at the
dwelling or usual place of business of such person or shall be sent
by mail to such person's last known address.
(b) ASSESSMENT PRIOR TO LAST DATE FOR PAYMENT.-Except where
the Secretary believes collection would be jeopardized by delay, if
any tax is assessed prior to the last date prescribed for payment of
such tax, payment of such tax shall not be demanded under subsection
(a) until after such date.
SEC. 6305. COLLECTION OF CERTAIN LIABILITY.
(a) IN GENERAL.-Upon receiving a certification from the Secretary
of Health, Education, and Welfare, under section 452 (b) of the Social
Security Act with respect to any individual, the Secretary shall assess
and collect the amount certified by the Secretary of Health, Education,
and Welfare, in the same manner, with the same powers, and (except
as provided in this section) subject to the same limitations as if such
amount were a tax imposed by subtitle C the collection of which would
be jeopardized by delay, except that-
679
IRC Sec. 6331 (a)
(1) no interest or penalties shall be assessed or collected,
(2) for such purposes, paragraphs (4), (6), and (8) of sec-
tion 6334(a) (relating to property exempt from levy) shall not
apply,
(3) there shall be exempt from levy so much of the salary,
wages, or other income of an individual as is being withheld there-
from in garnishment pursuant to a judgment entered by a court
of competent jurisdiction for the support of his minor children,
and
(4) in the case of the first assessment against an individual for
delinquency under a court order against such individual for a
particular person or persons, the collection shall be stayed for a
period of 60 days immediately following notice and demand as
described in section 6303.
(b) REVIEW OF ASSESSMENTS AND COLLECTIONS.-No court of the
United States, whether established under article I or article III of the
Constitution, shall have jurisdiction of any action, whether legal or
equitable, brought to restrain or review the assessment and collection
of amounts by the Secretary or his delegate under subsection (a), nor
shall any such assessment and collection be subject to review by the
Secretary in any proceeding. This subsection does not preclude any
legal, equitable, or administrative action against the State by an indi-
vidual in any State court or before any State agency to determine his
liability for any amount assessed against him and collected, or to
recover any such amount collected from him, under this section.
*k
*
*
**
*
SEC. 6313. FRACTIONAL PARTS OF A CENT.
In the payment of any tax imposed by this title, a fractional part
of a cent shall be disregarded unless it amounts to one-half cent or
more, in which case it shall be increased to 1 cent.
SEC. 6314. RECEIPTS FOR TAXES.
(a) GENERAL RULE.-The Secretary shall, upon request, give
receipts for all sums collected by him, excepting only when the same
are in payment for stamps sold and delivered; but no receipt shall be
issued in lieu of a stamp representing a tax.
*
SEC. 6331. LEVY AND DISTRAINT.
(a) AUTHORITY OF SECRETARY OR DELEGATE.-If any person liable
to pay any tax neglects or refuses to pay the same within 10 days
after notice and demand, it shall be lawful for the Secretary to collect
such tax (and such further sum as shall be sufficient to cover the ex-
penses of the levy) by levy upon all property and rights to property
*
*
*
*k
IRC Sec. 6331(a)
680
(except such property as is exempt under section 6334), belonging to
such person or on which there is a lien provided in this chapter for
the payment of such tax. Levy may be made upon the accrued salary
or wages of any officer, employee, or elected official, of the United
States or the District of Columbia, or any agency or instrumentality of
the United States or the District of Columbia, by serving a notice of
levy on the employer (as defined in section 3401(d)) of such officer,
employee, or elected official. If the Secretary makes a finding that the
collection of such tax is in jeopardy, notice and demand for immediate
payment of such tax may be made by the Secretary and, upon failure
or refusal to pay such tax, collection thereof by levy shall be lawful
without regard to the 10-day period provided in this section.
(b) SEIZURE AND SALE OF PROPERTY.-The term "levy" as used in
this title includes the power of distraint and seizure by any means.
Except as otherwise provided in subsection (d) (3), a levy shall extend
only to property possessed and obligations existing at the time thereof.
In any case in which the Secretary may levy upon property or rights.
to property, he may seize and sell such property or rights to property
(whether real or personal, tangible or intangible).
*
*
*
*
*
SEC. 6334. PROPERTY EXEMPT FROM LEVY.
(a) ENUMERATION.-There shall be exempt from levy-
**
*
*k
*
(4) UNEMPLOYMENT BENEFITS.-Any amount payable to an
individual with respect to his unemployment (including any por-
tion thereof payable with respect to dependents) under an unem-
ployment compensation law of the United States, of any State, or
of the District of Columbia or of the Commonwealth of Puerto
Rico.
*
*
(6) CERTAIN ANNUITY AND PENSION PAYMENTS.-Annuity or
pension payments under the Railroad Retirement Act, benefits
under the Railroad Unemployment Insurance Act, special pension
payments received by a person whose name has been entered on
the Army, Navy, Air Force, and Coast Guard Medal of Honor
roll (38 U.S.C. 562), and annuities based on retired or retainer
pay under chapter 73 of title 10 of the United States Code.
(7) WORKMEN'S COMPENSATION.-Any amount payable to an
individual as workmen's compensation (including any portion
thereof payable with respect to dependents) under a workmen's
compensation law of the United States, any State, the District of
Columbia, or the Commonwealth of Puerto Rico.
681
IRC Sec. 6413(a)
(8) JUDGMENTS FOR SUPPORT OF MINOR CHILDREN.-If the tax-
payer is required by judgment of a court of competent jurisdic-
tion, entered prior to the date of levy, to contribute to the support
of his minor children, so much of his salary, wages, or other in-
come as is necessary to comply with such judgment.
CHAPTER 65-ABATEMENTS, CREDITS, AND REFUNDS
*
*
**
*
*
SUBCHAPTER A-PROCEDURE IN GENERAL
*
*
SEC. 6401. AMOUNTS TREATED AS OVERPAYMENTS.
(a) ASSESSMENT AND COLLECTION AFTER LIMITATION PERIOD.-The
term "overpayment" includes that part of the amount of the payment
of any internal revenue tax which is assessed or collected after the
expiration of the period of limitation properly applicable thereto.
(b) EXCESS CREDITS.-If the amount allowable as credits under sec-
tions 31 (relating to tax withheld on wages), 39 (relating to certain
uses of gasoline, special fuels, and lubricating oil), and 43 (relating
to earned income credit), exceeds the tax imposed by subtitle A (re-
duced by the credits allowable under subpart A of part IV of sub-
chapter A of chapter 1, other than the credits allowable under sec-
tions 31, 39, and 43), the amount of such excess shall be considered an
overpayment.
*
(c) RULE WHERE NO TAX LIABILITY.-An amount paid as tax shall
not be considered not to constitute an overpayment solely by reason of
the fact that there was no tax liability in respect of which such amount
was paid.
*
*
*
*
*
*
SUBCHAPTER B-RULES OF SPECIAL APPLICATION
*
*
*
*
*
*
SEC. 6413. SPECIAL RULES APPLICABLE TO CERTAIN
EMPLOYMENT TAXES.
(a) ADJUSTMENT OF TAX.—
(1) GENERAL RULE.-If more than the correct amount of tax
imposed by section 3101, 3111, 3201, 3221, or 3402 is paid with
respect to any payment of remuneration, proper adjustments,
with respect to both the tax and the amount to be deducted, shall
be made, without interest, in such manner and at such times as the
Secretary may by regulations prescribe.
1 Section 6401 was amended by section 204 (b) (1) of Public Law 94-12, and by section
701(f) of P.L. 94-455. For effective dates see section 209 (b) of Public Law 94-12 as
amended by section 401(c)(1)(A) of Public Law 94-455.
IRC Sec. 6413(a)
682
Revised April 1978
(2) UNITED STATES AS EMPLOYER. For purposes of this subsec-
tion, in the case of remuneration received from the United States
or a wholly-owned instrumentality thereof during any calendar
year, each head of a Federal agency or instrumentality who makes
a return pursuant to section 3122 and each agent, designated by
the head of a Federal agency or instrumentality, who makes a
return pursuant to such section shall be deemed a separate
employer.
(3) GUAM OR AMERICAN SAMOA AS EMPLOYER.-For purposes of
this subsection, in the case of remuneration received during any
calendar year from the Government of Guam, the Government of
American Samoa, a political subdivision of either, or any instru-
mentality of any one or more of the foregoing which is wholly
owned thereby, the Governor of Guam, the Governor of American
Samoa, and each agent designated by either who makes a return
pursuant to section 3125 shall be deemed a separate employer.
(4) DISTRICT OF COLUMBIA AS EMPLOYER.-For purposes of this
subsection, in the case of remuneration received during any cal-
endar year from the District of Columbia or any instrumentality
which is wholly owned thereby, the Mayor of the District of
Columbia and each agent designated by him who makes a return
pursuant to section 3125 shall be deemed a separate employer.
(b) OVERPAYMENTS OF CERTAIN EMPLOYMENT TAXES.-If more than
the correct amount of tax imposed by section 3101, 3111, 3201, 3221, or
3402 is paid or deducted with respect to any payment of remuneration
and the overpayment cannot be adjusted under subsection (a) of this
section, the amount of the overpayment shall be refunded in such man-
ner and at such times (subject to the statute of limitations properly
applicable thereto) as the Secretary may by regulations prescribe.
(c) SPECIAL REFUNDS.-
1 See Appendix B.
G
(1) IN GENERAL.-If by reason of an employee receiving wages
from more than one employer during a calendar year the wages
received by him during such year exceed the contribution and
benefit base (as determined under section 230 of the Social
Security Act)¹ which is effective with respect to such year, the
employee shall be entitled (subject to the provisions of section 31
(b)) to a credit or refund of any amount of tax, with respect to
such wages, imposed by section 3101 or section 3201, or by both
such sections, and deducted from the employee's wages (whether
or not paid to the Secretary), which exceeds the tax with respect
to the amount of such wages received in such year which is equal
to such contribution and benefit base. The term "wages" as used
in this paragraph shall, for purposes of this paragraph, include
"compensation" as defined in section 3231 (e).
Revised April 1978
683
IRC Sec. 6413(c)
(2) APPLICABILITY IN CASE OF FEDERAL AND STATE EMPLOYEES,
EMPLOYEES OF CERTAIN FOREIGN CORPORATIONS, AND GOVERNMENTAL
EMPLOYEES IN GUAM, AMERICAN SAMOA, AND THE DISTRICT OF
COLUMBIA.
(A) FEDERAL EMPLOYEES.-In the case of remuneration re-
ceived from the United States or a wholly-owned instrumen-
tality thereof during any calendar year, each head of a Fed-
eral agency or instrumentality who makes a return pursuant
to section 3122 and each agent, designated by the head of a
Federal agency or instrumentality, who makes a return pur-
suant to such section shall, for purposes of this subsection, be
deemed a separate employer, and the term "wages" includes
for purposes of this subsection the amount, not to exceed an
amount equal to the contribution and benefit base (as deter-
mined under section 230 of the Social Security Act)' for any
calendar year with respect to which such contribution and
benefit base is effective, determined by each such head or
agent as constituting wages paid to an employee.
(B) STATE EMPLOYEES.-For purposes of this subsection,
in the case of remuneration received during any calendar
year, the term "wages" includes such remuneration for serv-
ices covered by an agreement made pursuant to section 218 of
the Social Security Act as would be wages if such services con-
stituted employment; the term "employer" includes a State
or any political subdivision thereof, or any instrumentality
of any one or more of the foregoing; the term "tax" or "tax
imposed by section 3101" includes, in the case of services cov-
ered by an agreement made pursuant to section 218 of the
Social Security Act, an amount equivalent to the tax which
would be imposed by section 3101, if such services constituted
employment as defined in section 3121; and the provisions of
this subsection shall apply, whether or not any amount de-
ducted from the employee's remuneration as a result of an
agreement made pursuant to section 218 of the Social Security
Act has been paid to the Secretary.
(C) EMPLOYEES OF CERTAIN FOREIGN CORPORATIONS.—For
purposes of paragraph (1) of this subsection, the term
"wages" includes such remuneration for services covered by
an agreement made pursuant to section 3121 (1) as would be
wages if such services constituted employment; the term
“emplover" includes any domestic corporation which has
entered into an agreement pursuant to section 3121 (1); the
term "tax" or "tax imposed by section 3101," includes in the
case of services covered by an agreement entered into pursu-
1 See Appendix B.
;
IRC Sec. 6413(c)
684
ant to section 3121(1), an amount equivalent to the tax which
would be imposed by section 3101, if such services constituted
employment as defined in section 3121; and the provisions of
paragraph (1) of this subsection shall apply whether or not
any amount deducted from the employee's remuneration as
a result of the agreement entered into pursuant to section
3121(1) has been paid to the Secretary.
(D) GOVERNMENTAL EMPLOYEES IN GUAM.-In the case of
remuneration received from the Government of Guam or any
political subdivision thereof or from any instrumentality of
any one or more of the foregoing which is wholly owned
thereby, during any calendar year, the Governor of Guam
and each agent designated by him who makes a return pur-
suant to section 3125 (a) shall, for purposes of this subsection
be deemed a separate employer.
-
(E) GOVERNMENTAL EMPLOYEES IN AMERICAN SAMOA.—In
the case of remuneration received from the Government of
American Samoa or any political subdivision thereof or from
any instrumentality of any one or more of the foregoing
which is wholly owned thereby, during any calendar year, the
Governor of American Samoa and each agent designated by
him who makes a return pursuant to section 3125(b) shall,
for purposes of this subsection, be deemed a separate
employer.
(F) GOVERNMENT EMPLOYEES IN THE DISTRICT OF COLUM-
BIA. In the case of remuneration received from the District
of Columbia or any instrumentality wholly owned thereby,
during any calendar year, the Mayor of the District of Co-
lumbia and each agent designated by him who makes a re-
turn pursuant to section 3125 (c) shall, for purposes of this
subsection, be deemed a separate employer.
シ
​-
(3) APPLICABILITY WITH RESPECT TO COMPENSATION OF EM-
PLOYEES SUBJECT TO THE RAILROAD RETIREMENT TAX ACT.-In the
case of any individual who, during any calendar year, receives
wages from one or more employers and also receives compensa-
tion which is subject to the tax imposed by section 3201 or 3211,
such compensation shall, solely for purposes of applying para-
graph (1) with respect to the tax imposed by section 3101(b),
be treated as wages received from an employer with respect to
which the tax imposed by section 3101 (b) was deducted.
(d) REFUND OR CREDIT OF FEDERAL UNEMPLOYMENT TAX.—Any
credit allowable under section 3302, to the extent not previously
allowed, shall be considered an overpayment, but no interest shall be
allowed, or paid with respect to such overpayment.
685
IRC Sec. 6501(c)
*
*
CHAPTER 66-LIMITATIONS
*
Sec. 6501. Limitations on assessment and collection_.
Sec. 6502. Collection after assessment..
Sec. 6511. Limitations on credit or refund.
**
Sec. 6513. Time returns deemed filed and tax considered paid
Sec. 6521. Mitigation of effect of limitation in case of related taxes under
different chapters‒‒‒‒‒
*
SEC. 6501. LIMITATIONS ON ASSESSMENT AND COLLEC
TION.
Page 1
685
686
686
688
(a) GENERAL RULE.-Except as otherwise provided in this section,
the amount of any tax imposed by this title shall be assessed within
3 years after the return was filed (whether or not such return was filed
on or after the date prescribed) or, if the tax is payable by stamp,
at any time after such tax became due and before the expiration of
3 years after the date on which any part of such tax was paid, and
no proceeding in court without assessment for the collection of such
tax shall be begun after the expiration of such period.
(b) TIME RETURN DEEMED FILED.-
688
(1) EARLY RETURN. For purposes of this section, a return of
tax imposed by this title, except tax imposed by chapter 3, 21, or
24, filed before the last day prescribed by law or by regulations
promulgated pursuant to law for the filing thereof, shall be con-
sidered as filed on such last day.
*
(2) RETURN OF CERTAIN EMPLOYMENT TAXES AND TAX IMPOSED BY
CHAPTER 3.—For purposes of this section, if a return of tax im-
posed by chapter 3, 21, or 24 for any period ending with or
within a calendar year is filed before April 15 of the succeeding
calendar year, such return shall be considered filed on April 15 of
such calendar year.
(3) RETURN EXECUTED BY SECRETARY.-Notwithstanding the
provisions of paragraph (2) of section 6020 (b), the execution of
a return by the Secretary pursuant to the authority conferred by
such section shall not start the running of the period of limita-
tion on assessment and collection.
*
(c) EXCEPTIONS.-
(1) FALSE RETURN.-In the case of a false or fraudulent return
with the intent to evade tax, the tax may be assessed, or a proceed-
ing in court for collection of such tax may be begun without
assessment, at any time.
(2) WILLFUL ATTEMPT TO EVADE TAX.—In the case of a willful
attempt in any manner to defeat or evade tax imposed by this title
¹ This table of contents does not appear in the law in this form.
IRC Sec. 6501(c)
686
(other than tax imposed by subtitle A or B), the tax may be
assessed, or a proceeding in court for the collection of such tax
may be begun without assessment, at any time.
(3) NO RETURN.-In the case of failure to file a return, the tax
may be assessed, or a proceeding in court for the collection of such
tax may be begun without assessment, at any time.
(4) EXTENSION BY AGREEMENT.-Where, before the expiration
of the time prescribed in this section for the assessment of any tax
imposed by this title, except the estate tax provided in chapter 11,
both the Secretary and the taxpayer have consented in writing to
its assessment after such time, the tax may be assessed at any time
prior to the expiration of the period agreed upon. The period so
agreed upon may be extended by subsequent agreements in writ-
ing made before the expiration of the period previously agreed
upon.
**
*
ok
SEC. 6502. COLLECTION AFTER ASSESSMENT.
(a) LENGTH OF PERIOD.-Where the assessment of any tax imposed
by this title has been made within the period of limitation properly
applicable thereto, such tax may be collected by levy or by a proceed-
ing in court, but only if the levy is made or the proceeding begun—
(1) within 6 years after the assessment of the tax, or
(2) prior to the expiration of any period for collection agreed
upon in writing by the Secretary and the taxpayer before the
expiration of such 6-year period (or, if there is a release of levy
under section 6343 after such 6-year period, then before such
release).
*
**
The period so agreed upon may be extended by subsequent agreements
in writing made before the expiration of the period previously agreed
upon. The period provided by this subsection during which a tax may
be collected by levy shall not be extended or curtailed by reason of a
judgment against the taxpayer.
*
(b) DATE WHEN LEVY IS CONSIDERED MADE.-The date on which
a levy on property or rights to property is made shall be the date on
which the notice of seizure provided in section 6335 (a) is given.
*
*
SEC. 6511. LIMITATIONS ON CREDIT OR REFUND.
(a) PERIOD OF LIMITATION ON FILING CLAIM.--Claim for credit or
refund of an overpayment of any tax imposed by this title in respect
of which tax the taxpayer is required to file a return shall be filed by
the taxpayer within 3 years from the time the return was filed or
2 years from the time the tax was paid, whichever of such periods
expires the later, or if no return was filed by the taxpayer, within
2 years from the time the tax was paid. Claim for credit or refund
of any overpayment of any tax imposed by this title which is required
687
IRC Sec. 6511(d)
to be paid by means of a stamp shall be filed by the taxpayer within
3 years from the time the tax was paid.
(b) LIMITATIONS ON ALLOWANCE OF CREDITS ANd Refunds.—
(1) FILING OF CLAIM WITHIN PRESCRIBED PERIOD.—No credit or
refund shall be allowed or made after the expiration of the period
of limitation prescribed in subsection (a) for the filing of a claim
for credit or refund, unless a claim for credit or refund is filed
by the taxpayer within such period.
(2) LIMIT ON AMOUNT OF CREDIT OR REFUND.
(A) LIMIT WHERE CLAIM FILED WITHIN 3-YEAR PERIOD.—If
the claim was filed by the taxpayer during the 3-year period
prescribed in subsection (a), the amount of the credit or re-
fund shall not exceed the portion of the tax paid within the
period immediately preceding the filing of the claim, equal to
3 years plus the period of any extension of time for filing the
return. If the tax was required to be paid by means of a
stamp, the amount of the credit or refund shall not exceed
the portion of the tax paid within the 3 years immediately
preceding the filing of the claim.
(B) LIMIT WHERE CLAIM NOT FILED WITHIN 3-YEAR PE-
RIOD.-If the claim was not filed within such 3-year period,
the amount of the credit or refund shall not exceed the por-
tion of the tax paid during the 2 years immediately preceding
the filing of the claim.
(C) LIMIT IF NO CLAIM FILED.-If no claim was filed, the
credit or refund shall not exceed the amount which would be
allowable under subparagraph (A) or (B), as the case may
be, if claim was filed on the date the credit or refund is
allowed.
*
*
*
(d) SPECIAL RULES APPLICABLE TO INCOME TAXES.-
*
*
*
*
*
*
*
*
(5) SPECIAL PERIOD OF LIMITATION WITH RESPECT TO SELF-
EMPLOYMENT TAX IN CERTAIN CASES.-If the claim for credit or
refund relates to an overpayment of the tax imposed by chapter 2
(relating to the tax on self-employment income) attributable to
an agreement, or modification of an agreement, made pursuant to
section 218 of the Social Security Act (relating to coverage of
State and local employees), and if the allowance of a credit or
refund of such overpayment is otherwise prevented by the oper-
ation of any law or rule of law other than section 7122 (relating
to compromises), such credit or refund may be allowed or made
if claim therefor is filed on or before the last day of the second
year after the calendar year in which such agreement (or modi-
IRC Sec. 6511(d)
688
fication) is agreed to by the State and the Secretary of Health,
Education, and Welfare.
*
*
*
*
*
SEC. 6513. TIME RETURN DEEMED FILED AND TAX CON-
SIDERED PAID.
*
*
*
**
**
*
*
*
(c) RETURN AND PAYMENT OF SOCIAL SECURITY TAXES AND INCOME
TAX WITHHOLDING.-Notwithstanding subsection (a), for purposes of
section 6511 with respect to any tax imposed by chapter 3, 21, or 24—
(1) If a return for any period ending with or within a calendar
year is filed before April 15 of the succeeding calendar year, such
return shall be considered filed on April 15 of such succeeding
calendar year; and
(2) If a tax with respect to remuneration or other amount
paid during any period ending with or within a calendar year is
paid before April 15 of the succeeding calendar year, such tax
shall be considered paid on April 15 of such succeeding calendar
year.
*
*
*
*
*
*
(e) PAYMENTS OF FEDERAL UNEMPLOYMENT TAX.-Notwithstanding
subsection (a), for purposes of section 6511 any payment of tax im-
posed by chapter 23 which, pursuant to section 6157, is made for a
calendar quarter or other period within a calendar year shall, if made
before the last day prescribed for filing the return for the calendar
year (determined without regard to any extension of time for filing),
be considered made on such last day.
**
*
SEC. 6521. MITIGATION OF EFFECT OF LIMITATION IN
CASE OF RELATED TAXES UNDER DIFFER-
ENT CHAPTERS.
(a) SELF-EMPLOYMENT TAX AND TAX ON WAGES.-In the case of
the tax imposed by chapter 2 (relating to tax on self-employment
income) and the tax imposed by section 3101 (relating to tax on em-
ployees under the Federal Insurance Contributions Act)---
(1) If an amount is erroneously treated as self-employment
income, or if an amount is erroneously treated as wages, and
(2) If the correction of the error would require an assessment
of one such tax and the refund or credit of the other tax, and
(3) If at any time the correction of the error is authorized as
to one such tax but is prevented as to the other tax by any law or
rule of law (other than section 7122, relating to compromises),
then, if the correction authorized is made, the amount of the assess-
ment, or the amount of the credit or refund, as the case may be,
authorized as to the one tax shall be reduced by the amount of the
689
IRC Sec. 6601(b)
credit or refund, or the amount of the assessment, as the case may be,
which would be required with respect to such other tax for the correc-
tion of the error if such credit or refund, or such assessment, of such
other tax were not prevented by any law or rule of law (other than
section 7122 relating to compromises).
(b) DEFINITIONS. For purposes of subsection (a), the terms "self-
employment income" and "wages" shall have the same meaning as
when used in section 1402 (b).
*k
*
*
*
*
*
SEC. 6601. INTEREST ON UNDERPAYMENT, NONPAY-
MENT, OR EXTENSIONS OF TIME FOR PAY-
MENT, OF TAX.
(a) GENERAL RULE.-If any amount of tax imposed by this title
(whether required to be shown on a return, or to be paid by stamp or
by some other method) is not paid on or before the last date pre-
scribed for payment, interest on such amount at an annual rate estab-
lished under section 6621 shall be paid for the period from such last
date to the date paid.
CHAPTER 67-INTEREST
*
**
*
*
*
*
(b) LAST DATE PRESCRIBED FOR PAYMENT.-For purposes of this
section, the last date prescribed for payment of the tax shall be de-
termined under chapter 62 with the application of the following rules:
(1) EXTENSIONS OF TIME DISREGARDED.--The last date prescribed
for payment shall be determined without regard to any extension
of time for payment.
(2) INSTALLMENT PAYMENTS.--In the case of an election under
section 6152 (a) to pay the tax in installments—
(A) The date prescribed for payment of each installment
of the tax shown on the return shall be determined under
section 6152 (b), and
(B) The last date prescribed for payment of the first in-
stallment shall be deemed the last date prescribed for pay-
ment of any portion of the tax not shown on the return.
(3) JEOPARDY.-The last date prescribed for payment shall be
determined without regard to any notice and demand for pay-
ment issued, by reason of jeopardy (as provided in chapter 70),
prior to the last date otherwise prescribed for such payment.
*
*
(4) LAST DATE FOR PAYMENT NOT OTHERWISE PRESCRIBED.-In the
case of taxes payable by stamp and in all other cases in which
the last date for payment is not otherwise prescribed, the last date.
for payment shall be deemed to be the date the liability for tax
arises (and in no event shall be later than the date notice and
demand for the tax is made by the Secretary).
*
-
*
*
IRC Sec. 6601(e)
690
(e) APPLICABLE RULES.-Except as otherwise provided in this
title-
(1) INTEREST Treated as tax.—Interest prescribed under this
section on any tax shall be paid upon notice and demand, and
shall be assessed, collected, and paid in the same manner as taxes.
Any reference in this title (except subchapter B of chapter 63,
relating to deficiency procedures) to any tax imposed by this title
shall be deemed also to refer to interest imposed by this section
on such tax.
(2) NO INTEREST ON INTEREST.-No interest under this section
shall be imposed on the interest provided by this section.
(3) INTEREST ON PENALTIES, ADDITIONAL AMOUNTS, OR ADDITIONS
TO THE TAX. Interest shall be imposed under subsection (a) in
respect of any assessable penalty, additional amount, or addition
to the tax only if such assessable penalty, additional amount, or
addition to the tax is not paid within 10 days from the date of
notice and demand therefor, and in such case interest shall be
imposed only for the period from the date of the notice and de-
mand to the date of payment.
(4) PAYMENTS MADE WITHIN 10 DAYS AFTER NOTICE AND DE-
MAND. If notice and demand is made for payment of any
amount, and if such amount is paid within 10 days after the date
of such notice and demand, interest under this section on the
amount so paid shall not be imposed for the period after the date
of such notice and demand.
M
*
*
*
*
*
*
(g) LIMITATION ON ASSESSMENT AND COLLECTION.-Interest pre-
scribed under this section on any tax may be assessed and collected at
any time during the period within which the tax to which such interest
relates may be collected.
*
*
*
CHAPTER 68-ADDITIONS TO THE TAX, ADDITIONAL
AMOUNTS, AND ASSESSABLE PENALTIES
*
Sec. 6651. Failure to file tax return or to pay tax.
Sec. 6652. Failure to file certain information returns_.
*
1 The table of contents does not appear in the law in this form.
Sec. 6656. Failure to make deposit of taxes--
Sec. 6659. Applicable rules____
Sec. 6674. Fraudulent statement or failure to furnish statement to em-
ployee
Sec. 6676. Failure to supply identifying numbers_
Page 1
690
692
694
694
695
695
691
IRC Sec. 6651(b)
SEC. 6651. FAILURE TO FILE TAX RETURN OR TO PAY
TAX.
(a) ADDITION TO THE TAX.-In case of failure-
(1) to file any return required under authority of subchapter
A of chapter 61 (other than part III thereof), subchapter A of
chapter 51 (relating to distilled spirits, wines, and beer), or of
subchapter A of chapter 52 (relating to tobacco, cigars, cigarettes,
and cigarette papers and tubes), or of subchapter A of chapter
53 (relating to machine guns and certain other firearms), on the
date prescribed therefor (determined with regard to any exten-
sion of time for filing), unless it is shown that such failure is
due to reasonable cause and not due to willful neglect, there shall
be added to the amount required to be shown as tax on such
return 5 percent of the amount of such tax if the failure is for
not more than 1 month, with an additional 5 percent for each addi-
tional month or fraction thereof during which such failure con-
tinues, not exceeding 25 percent in the aggregate;
(2) to pay the amount shown as tax on any return specified in
paragraph (1) on or before the date prescribed for payment of
such tax (determined with regard to any extension of time for
payment). Unless it is shown that such failure is due to reason-
able cause and not due to willful neglect, there shall be added to
the amount shown as tax on such return 0.5 percent of the amount
of such tax if the failure is for not more than 1 month, with an
additional 0.5 percent for each additional month or fraction there-
of during which such failure continues, not exceeding 25 percent
in the aggregate; or
(3) to pay any amount in respect of any tax required to be
shown on a return specified in paragraph (1) which is not so
shown (including an assessment made pursuant to section
6213(b)) within 10 days of the date of the notice and demand
therefore, unless it is shown that such failure is due to reasonable
cause and not due to willful neglect, there shall be added to the
amount of tax stated in such notice and demand 0.5 percent of
the amount of such tax if the failure is for not more than 1 month,
with an additional 0.5 percent for each additional month or frac-
tion thereof during which such failure continues, not exceeding
25 percent in the aggregate.
(b) PENALTY IMPOSED ON NET AMOUNT DUE.-For purposes of-
(1) subsection (a) (1), the amount of tax required to be shown
on the return shall be reduced by the amount of any part of the
tax which is paid on or before the date prescribed for payment
of the tax and by the amount of any credit against the tax which
may be claimed on the return,
IRC Sec. 6651(b)
692
(2) subsection (a)(2), the amount of tax shown on the return
shall, for purposes of computing the addition for any month,
be
reduced by the amount of any part of the tax which is paid on or
before the beginning of such month and by the amount of any
credit against the tax which may be claimed on the return, and
(3) subsection (a) (3), the amount of tax stated in the notice
and demand shall, for the purpose of computing the addition for
any month, be reduced by the amount of any part of the tax which
is paid before the beginning of such month.
*
*
*
*
***
*
SEC. 6652. FAILURE TO FILE CERTAIN INFORMATION
RETURNS.
(a)
(b) OTHER RETURNS.-In the case of each failure to file a statement
of a payment to another person required under authority of section
6041 (relating to certain information at source), section 6042(a) (2)
(relating to payments of dividends aggregating less than $10), section
6044 (a) (2) (relating to payments of patronage dividends aggregat-
ing less than $10), section 6049 (a) (2) (relating to payments of in-
terest aggregating less than $10), section 6049 (a)(3) (relating to
other payments of interest by corporations), or section 6051 (d) (re-
lating to information returns with respect to income tax withheld),
in the case of each failure to make a return required by section 6050A
(a) (relating to reporting requirements of certain fishing boat op-
erators), and in the case of each failure to furnish a statement re-
quired by section 6053 (b) (relating to statements furnished by em-
ployers with respect to tips), or section 6050A (b) (relating to state-
ments furnished by certain fishing boat operators), on the date pre-
scribed therefor (determined with regard to any extension of time for
filing), unless it is shown that such failure is due to reasonable cause
and not to willful neglect, there shall be paid (upon notice and
demand by the Secretary and in the same manner as tax) by the
person failing to so file the statement, $1 for each such statement not
so filed, but the total amount imposed on the delinquent person for
all such failures during the calendar year shall not exceed $1,000.
(c) FAILURE TO REPORT TIPS.-In the case of failure by an em-
ployee to report to his employer on the date and in the manner pre-
scribed therefor any amount of tips required to be so reported by sec-
tion 6053 (a) which are wages (as defined in section 3121 (a), or which
are compensation (as defined in section 3231 (e)) unless it is shown
that such failure is due to reasonable cause and not due to willful
neglect, there shall be paid by the employee, in addition to the tax im-
posed by section 3101 or section 3201 (as the case may be) with respect
to the amount of tips which he so failed to report, an amount equal to
50 percent of such tax.
T
693
IRC Sec. 6652(d)
(d) RETURNS BY EXEMPT ORGANIZATIONS AND BY CERTAIN TRUSTS.—
(1) PENALTY ON ORGANIZATION OR TRUST.—In the case of a fail-
ure to file a return required under section 6033 (relating to returns
by exempt organizations), section 6034 (relating to returns by cer-
tain trusts), or section 6043 (b) (relating to exempt organiza-
tions), on the date and in the manner prescribed therefor (deter-
mined with regard to any extension of time for filing), unless it
is shown that such failure is due to reasonable cause there shall be
paid (on notice and demand by the Secretary and in the same
manner as tax) by the exempt organization or trust failing so
to file, $10 for each day during which such failure continues, but
the total amount imposed hereunder on any organization for
failure to file any return shall not exceed $5,000.
(2) MANAGERS.-The Secretary may make written demand
upon an organization failing to file under paragraph (1) speci-
fying therein a reasonable future date by which such filing shall
be made, and if such filing is not made on or before such date,
and unless it is shown that failure so to file is due to reasonable
cause, there shall be paid (on notice and demand by the Secre-
tary and in the same manner as tax) by the person failing so to
file, $10 for each day after the expiration of the time specified
in the written demand during which such failure continues, but
the total amount imposed hereunder on all persons for such
failure to file shall not exceed $5,000. If more than one person
is liable under this paragraph for a failure to file, all such per-
sons shall be jointly and severally liable with respect to such
failure. The term "person" as used herein means any officer, di-
rector, trustee, employee, member, or other individual who is un-
der a duty to perform the act in respect of which the violation
G
occurs.
(3) ANNUAL REPORTS.-In the case of a failure to file a report re-
quired under section 6056 (relating to annual reports by private
foundations) or to comply with the requirements of section
6104(d) (relating to public inspection of private foundations'
annual reports), on the date and in the manner prescribed there-
for (determined with regard to any extension of time for filing),
unless it is shown that such failure is due to reasonable cause,
there shall be paid (on notice and demand by the Secretary and
in the same manner as tax) by the person failing so to file or
meet the publicity requirement, $10 for each day during which
such failure continues, but the total amount imposed hereunder
on all such persons for such failure to file or comply with the
requirements of section 6104(d) with regard to any one annual
report shall not exceed $5,000. If more than one person is liable
under this paragraph for a failure to file or comply with the
21-746 O - 78 - 52
IRC Sec. 6652(d)
694
requirements of section 6104(d), all such persons shall be jointly
and severally liable with respect to such failure. The term "per-
son" as used herein means any officer, director, trustee, employee,
member, or other individual who is under a duty to perform the
act in respect of which the violation occurs.
*
*
**
*
*
*
*
SEC. 6656. FAILURE TO MAKE DEPOSIT OF TAXES.
(a) PENALTY.-In case of failure by any person required by this
title or by regulation of the Secretary under this title to deposit on
the date prescribed therefore any amount of tax imposed by this
title in such government depositary as is authorized under section
6302 (c) to receive such deposit, unless it is shown that such failure
is due to reasonable cause and not due to willful neglect, there shall be
imposed upon such person a penalty of 5 percent of the amount of the
underpayment. For purposes of this subsection, the term "under-
payment" means the excess of the amount of the tax required to be so
deposited over the amount, if any, thereof deposited on or before the
date prescribed therefor.
(b) PENALTY NOT IMPOSED AFTER DUE DATE FOR RETURN.—For
purposes of subsection (a), the failure shall be deemed not to continue
beyond the last date (determined without regard to any extension of
time) prescribed for payment of the tax required to be deposited or
beyond the date tax is paid, whichever is earlier.
*
*
*
*
**
SEC. 6659. APPLICABLE RULES.
(a) ADDITIONS TREATED AS TAX.-Except as otherwise provided in
this title-
(1) The additions to the tax, additional amounts, and penalties
provided by this chapter shall be paid upon notice and demand
and shall be assessed, collected, and paid in the same manner as
taxes:
:*.
(2) Any reference in this title to "tax" imposed by this title
shall be deemed also to refer to the additions to the tax, additional
amounts, and penalties provided by this chapter.
(b) PROCEDURE FOR ASSESSING CERTAIN ADDITIONS TO TAX.-For
purposes of subchapter B of chapter 63 (relating to deficiency pro-
cedures for income, estate, gift, and chapter 42 taxes), subsection (a)
shall not apply to any addition to tax under section 6651, 6654, or
6655; except that it shall apply-
(1) in the case of an addition described in section 6651, to that
portion of such addition which is attributable to a deficiency in
tax described in section 6211; or
695
IRC Sec. 6676(b)
(2) to an addition described in section 6654 or 6655, if no return
is filed for the taxable year.
*
*
*
*
*
*
SEC. 6674. FRAUDULENT STATEMENT OR FAILURE TO
FURNISH STATEMENT TO EMPLOYEE.
*
In addition to the criminal penalty provided by section 7204, any
person required under the provisions of section 6051 or 6053 (b) to
furnish a statement to an employee who willfully furnishes a false or
fraudulent statement, or who willfully fails to furnish a statement in
the manner, at the time, and showing the information required under
section 6051 or 6053(b), or regulations prescribed thereunder, shall
for each such failure be subject to a penalty under this subchapter of
$50, which shall be assessed and collected in the same manner as the
tax on employers imposed by section 3111.
*
*
SEC. 6676. FAILURE TO SUPPLY IDENTIFYING NUMBER.
(a) CIVIL PENALTY.-If any person who is required by regulations
prescribed under section 6109—
*
*
*
(1) to include his identifying number in any return, statement,
or other document,
(2) to furnish his identifying number to another person, or
(3) to include in any return, statement, or other document made
with respect to another person the identifying number of such
or other document,
fails to comply with such requirement at the time prescribed by such
regulations, such person shall pay a penalty of $5 for each such fail-
ure, unless it is shown that such failure is due to reasonable cause.
(b) DEFICIENCY PROCEDURES NOT TO APPLY.-Subchapter B of
chapter 63 (relating to deficiency procedures for income, estate, gift
and chapter 42 taxes) shall not apply in respect of the assessment or
collection of any penalty imposed by subsection (a).
CHAPTER 75-CRIMES, OTHER OFFENSES, AND
FORFEITURES
Sec. 7201. Attempt to evade or defeat tax-.
Sec. 7202. Willful failure to collect or pay over tax.
Sec. 7203. Willful failure to file return, supply information, or pay tax__
Sec. 7204. Fraudulent statement or failure to make statement to em-
ployees
Sec. 7206. Fraud and false statements_
Sec. 7207. Fraudulent returns, statements, or other documents_
1 This table of contents does not appear in the law in this form.
Page¹
696
696
696
696
696
697
N
IRC Sec. 7201
696
SEC. 7201. ATTEMPT TO EVADE OR DEFEAT TAX.
Any person who willfully attempts in any manner to evade or defeat
any tax imposed by this title or the payment thereof shall, in addition
to other penalties provided by law, be guilty of a felony and, upon
conviction thereof, shall be fined not more than $10,000, or imprisoned
not more than 5 years, or both, together with the costs of prosecution.
SEC. 7202. WILLFUL FAILURE TO COLLECT OR PAY OVER
TAX.
Any person required under this title to collect, account for, and
pay over any tax imposed by this title who willfully fails to collect
or truthfully account for and pay over such tax shall, in addition to
other penalties provided by law, be guilty of a felony and, upon con-
viction thereof, shall be fined not more than $10,000, or imprisoned
not more than 5 years, or both, together with the costs of prosecution.
SEC. 7203. WILLFUL FAILURE TO FILE RETURN, SUPPLY
INFORMATION, PAY TAX.
Any person required under this title to pay any estimated tax or tax,
or required by this title or by regulations made under authority
thereof to make a return (other than a return required under authority
of section 6015), keep any records, or supply any information, who
willfully fails to pay such estimated tax or tax, make such return,
keep such records, or supply such information, at the time or times
required by law or regulations, shall, in addition to other penalties
provided by law, be guilty of a misdemeanor and, upon conviction
thereof, shall be fined not more than $10,000, or imprisoned not more
than 1 year, or both, together with the costs of prosecution.
SEC. 7204. FRAUDULENT STATEMENT OR FAILURE TO
MAKE STATEMENT TO EMPLOYEES.
In lieu of any other penalty provided by law (except the penalty
provided by section 6674) any person required under the provisions of
section 6051 to furnish a statement who willfully furnishes a false or
fraudulent statement or who willfully fails to furnish a statement in
the manner, at the time, and showing the information required under
section 6051, or regulations prescribed thereunder, shall, for each such
offense, upon conviction thereof, be fined not more than $1,000, or
imprisoned not more than 1 year, or both.
**
*
*
*
*
SEC. 7206. FRAUD AND FALSE STATEMENTS.
Any person who-
*
(1) DECLARATION UNDER PENALTIES OF PERJURY.-Willfully
makes and subscribes any return, statement, or other document,
which contains or is verified by a written declaration that it is
697
IRC Sec. 7651
made under the penalties of perjury, and which he does not be-
lieve to be true and correct as to every material matter; or
(2) AID OR ASSISTANCE.-Willfully aids or assists in, or pro-
cures, counsels, or advises the preparation or presentation under,
or in connection with any matter arising under, the internal reve-
nue laws, of a return, affidavit, claim, or other document, which is
fraudulent or is false as to any material matter, whether or not
such falsity or fraud is with the knowledge or consent of the per-
son authorized or required to present such return, affidavit, claim,
or document;
*
*
shall be guilty of a felony and, upon conviction thereof, shall be fined
not more than $5,000, or imprisoned not more than 3 years; or both,
together with the costs of prosecution.
SEC. 7207. FRAUDULENT RETURNS, STATEMENTS, OR
OTHER DOCUMENTS.
Any person who willfully delivers or discloses to the Secretary or
his delegate any list, return, account, statement, or other document,
known by him to be fraudulent or to be false as to any material matter,
shall be fined not more than $1,000, or imprisoned not more than 1
year, or both. Any person required pursuant to sections 6047 (b) or
(c), 6056 or 6104 (d) to furnish any information to the Secretary or
any other person who willfully furnishes to the Secretary or such
other person any information known by him to be fraudulent or to
be false as to any material matter shall be fined not more than $1,000,
or imprisoned not more than 1 year, or both.
*
*
*
*
*
*
*
*
*
*
CHAPTER 78-DISCOVERY OF LIABILITY AND
ENFORCEMENT OF TITLE
*
*
*
*
*
SEC. 7651. ADMINISTRATION AND COLLECTION OF
TAXES IN POSSESSIONS.
Except as otherwise provided in this subchapter, and except as
otherwise provided in section 28(a) of the Revised Organic Act of
the Virgin Islands and section 30 of the Organic Act of Guam (relat-
ing to the covering of the proceeds of certain taxes into the treasuries
of the Virgin Islands and Guam, respectively)—
(1) APPLICABILITY OF ADMINISTRATIVE PROVISIONS.-All provi-
sions of the laws of the United States applicable to the assessment
and collection of any tax imposed by this title or of any other
liability arising under this title (including penalties) shall, in
"
IRC Sec. 7651
698
H
respect of such tax or liability, extend to and be applicable in any
possession of the United States in the same manner and to the
same extent as if such possession were a State, and as if the term
"United States" when used in a geographical sense included such
possession.
(2) TAX IMPOSED IN POSSESSION.-In the case of any tax which
is imposed by this title in any possession of the United States—
(A) INTERNAL REVENUE COLLECTIONS.-Such tax shall be
collected under the direction of the Secretary, and shall be paid
into the Treasury of the United States as internal revenue col-
lections; and
(B) APPLICABLE LAWS.-All provisions of the laws of the
United States applicable to the administration, collection, and
enforcement of such tax (including penalties) shall, in re-
spect of such tax, extend to and be applicable in such posses-
sion of the United States in the same manner and to the same
extent as if such possession were a State, and as if the term
"United States" when used in a geographical sense included
such possession.
(3) OTHER LAWS RELATING TO POSSESSIONS.-This section shall
apply notwithstanding any other provision of law relating to any
possession of the United States.
(4) CANAL ZONE.-For purposes of this section, the term "pos-
session of the United States" includes the Canal Zone.
(5) VIRGIN ISLANDS.
(A) For purposes of this section, the reference in section
28(a) of the Revised Organic Act of the Virgin Islands to
"any tax specified in section 3811 of the Internal Revenue
Code" shall be deemed to refer to any tax imposed by chapter
2 or by chapter 21.
(B) For purposes of this title, section 28 (a) of the Revised
Organic Act of the Virgin Islands shall be effective as if such
section had been enacted subsequent to the enactment of this
title.
*
**
**
*
*
SEC. 7655. CROSS REFERENCES.
(a) IMPOSITION OF TAX IN POSSESSIONS.-
For provisions imposing tax in possessions, see—
(1) Chapter 2, relating to self-employment tax;
(2) Chapter 21, relating to the tax under the Federal Insurance Con-
tributions Act;
(3) Chapter 37, relating to tax on sugar.
699
IRC Sec. 7805(a)
(b) OTHER PROVISIONS.-
For other provisions relating to possessions of the United States, see—
(1) Section 933, relating to income tax on residents of Puerto Rico ;
(2) Section 6418 (b), relating to exportation of sugar to Puerto Rico.
CHAPTER 79-DEFINITIONS
SEC. 7701. DEFINITIONS.
(a) When used in this title, where not otherwise distinctly expressed
or manifestly incompatible with the intent thereof-
(1) PERSON.-The term "person" shall be construed to mean
and include an individual, a trust, estate, partnership, associa-
tion, company or corporation.
*
*
*
*
(3) CORPORATION.-The term "corporation" includes associa-
tions, joint-stock companies, and insurance companies.
(4) DOMESTIC.-The term "domestic" when applied to a cor-
portion or partnership means created or organized in the United
States or under the law of the United States or of any State.
*
*
*
1
*
(7) STOCK.-The term "stock" includes shares in an association,
joint-stock company, or insurance company.
*
*
**
*
(9) UNITED STATES.-The term "United States" when used in a
geographical sense includes only the States and the District of
Columbia.
P
(10) STATE. The term "State" shall be construed to include
the District of Columbia, where such construction is necessary
to carry out the provisions of this title.
(11) SECRETARY OF THE TREASURY AND SECRETARY.-
*
(A) SECRETARY OF THE TREASURY.-The term "Secretary
of the Treasury" means the Secretary of the Treasury, per-
sonally, and shall not include any delegate of his.
(B) SECRETARY.-The term "Secretary" means the Secre-
tary of the Treasury or his delegate.
Ek
*
*
*
*
CHAPTER 80-GENERAL RULES
SEC. 7805. RULES AND REGULATIONS.
(a) AUTHORIZATION.-Except where such authority is expressly
given by this title to any person other than an officer or employee of
the Treasury Department, the Secretary shall prescribe all needful
rules and regulations for the enforcement of this title, including all
rules and regulations as may be necessary by reason of any alteration
of law in relation to internal revenue.
IRC Sec. 7805(a)
700
(c) PREPARATION AND DISTRIBUTION OF REGULATIONS, FORMS,
STAMPS, AND OTHER MATTERS.—The Secretary shall prepare and dis-
tribute all the instructions, regulations, directions, forms, blanks,
stamps, and other matters pertaining to the assessment and collection
of internal revenue.
**
*
**
ak
SEC. 7851. APPLICABILITY OF REVENUE LAWS.
(a) GENERAL RULES.-Except as otherwise provided in any section
of this title-
*k
**
(1) SUBTITLE A.-
(A) Chapters 1, 2, 4, and 6 of this title shall apply only
with respect to taxable years beginning after December 31,
1953, and ending after the date of enactment of this title, and
with respect to such taxable years, chapters 1 (except sec-
tions 143 and 144) and 2, and section 3801, of the Internal
Revenue Code of 1939 are hereby repealed.
*
**
*
(C) Any provision of subtitle A of this title the applica-
bility of which is stated in terms of a specific date (occurring
after December 31, 1953), or in terms of taxable years ending
after a specific date (occurring after December 31, 1953),
shall apply to taxable years ending after such specific date.
Each such provision shall, in the case of a taxable year sub-
ject to the Internal Revenue Code of 1939, be deemed to be
included in the Internal Revenue Code of 1939, but shall be
applicable only to taxable years ending after such specific
date. The provisions of the Internal Revenue Code of 1939
superseded by provisions of subtitle A of this title the appli-
cability of which is stated in terms of a specific date (occur-
ring after December 31, 1953) shall be deemed to be included
in subtitle A of this title, but shall be applicable only to the
period prior to the taking effect of the corresponding provi-
sion of subtitle A.
*k
*
*
*
(3) SUBTITLE C.-Subtitle C of this title shall apply only with
respect to remuneration paid after December 31, 1954, except that
chapter 22 of such subtitle shall apply only with respect to remu-
neration paid after December 31, 1954, which is for services per-
formed after such date. Chapter 9 of the Internal Revenue Code
of 1939 is hereby repealed with respect to remuneration paid after
*
*k
701
IRC Sec. 7852(b)
December 31, 1954, except that subchapter B of such chapter (and
subchapter E of such chapter to the extent it relates to subchapter
B) shall remain in force and effect with respect to remuneration
paid after December 31, 1954, for services performed on or before
such date.
*
*
(e) REFERENCE TO OTHER PROVISIONS. For the purpose of apply-
ing the Internal Revenue Code of 1939 or the Internal Revenue Code
of 1954 to any period, any reference in either such code to another
provision of the Internal Revenue Code of 1939 or the Internal Reve-
nue Code of 1954 which is not then applicable to such period shall be
deemed a reference to the corresponding provision of the other code
which is then applicable to such period.
SEC. 7852. OTHER APPLICABLE RULES.
*
*
*
*
*
*
*
*
(b) REFERENCE IN OTHER LAWS TO INTERNAL REVENUE CODE OF
1939. Any reference in any other law of the United States or in any
Executive order to any provision of the Internal Revenue Code of
1939 shall, where not otherwise distinctly expressed or manifestly
incompatible with the intent thereof, be deemed also to refer to the
corresponding provision of this title.
*
*
"
Revised April 1978
Excerpt From the Consumer Credit Protection Act, as Amended
(P.L. 90-321)
*
*
Sec.
301. Findings and purpose.
302. Definitions.
*
*
TITLE III—RESTRICTION ON GARNISHMENT
*
303. Restriction on garnishment.
304. Restriction on discharge from employment by reason of garnishment.
305. Exemption for State-regulated garnishments.
306. Enforcement by Secretary of Labor.
307. Effect on State laws.
ܕ
*
§ 301. Findings and purpose
(a) The Congress finds:
(1) The unrestricted garnishment of compensation due for per-
sonal services encourages the making of predatory extensions of
credit. Such extensions of credit divert money into excessive credit
payments and thereby hinder the production and flow of goods in
interstate commerce.
(2) The application of garnishment as a creditors' remedy fre-
quently results in loss of employment by the debtor, and the result-
ing disruption of employment, production, and consumption
constitutes a substantial burden on interstate commerce.
(3) The great disparities among the laws of the several States
relating to garnishment have, in effect, destroyed the uniformity
of the bankruptcy laws and frustrated the purposes thereof in
many areas of the country.
(b) On the basis of the findings stated in subsection (a) of this sec-
tion, the Congress determines that the provisions of this title are neces-
sary and proper for the purpose of carrying into execution the powers
of the Congress to regulate commerce and to establish uniform bank-
ruptcy laws.
§ 302. Definitions
For the purposes of this title:
(a) The term "earnings" means compensation paid or payable for
personal services, whether denominated as wages, salary, commission,
bonus, or otherwise, and includes periodic payments pursuant to a
pension or retirement program.
(703)
704
Revised April 1978
(b) The term "disposable earnings" means that part of the earnings
of any individual remaining after the deduction from those earnings
of any amounts required by law to be withheld.
(c) The term "garnishment" means any legal or equitable procedure
through which the earnings of any individual are required to be with-
held for payment of any debt.
§ 303. Restriction on garnishment
(a) Except as provided in subsection (b) and in section 305, the
maximum part of the aggregate disposable earnings of an individual
for any workweek which is subjected to garnishment may not exceed
(1) 25 per centum of his disposable earnings for that week, or
(2) the amount by which his disposable earnings for that week
exceed thirty times the Federal minimum hourly wage prescribed
by section 6(a)(1) of the Fair Labor Standards Act of 1938 in
effect at the time the earnings are payable,
whichever is less. In the case of earnings for any pay period other than
a week, the Secretary of Labor shall by regulation prescribe a multiple
of the Federal minimum hourly wage equivalent in effect to that set
forth in paragraph (2).
(b)(1) The restrictions of subsection (a) do not apply in the case
of-
(A) any order for the support of any person issued by a court
of competent jurisdiction or in accordance with an administrative
procedure, which is established by State law, which affords sub-
stantial due process, and which is subject to judicial review.
(B) any order of any court of bankruptcy under chapter XIII
of the Bankruptcy Act.
(C) any debt due for any State or Federal tax.
(2) The maximum part of the aggregate disposable earnings of
an individual for any workweek which is subject to garnishment to
enforce any order for the support of any person shall not exceed—
(A) where such individual is supporting his spouse or depend-
ent child (other than a spouse or child with respect to whose sup-
port such order is used), 50 per centum of such individual's
disposable earnings for that week; and
(B) where such individual is not supporting such a spouse or
dependent child described in clause (A), 60 per centum of such
individual's disposable earnings for that week;
except that, with respect to the disposable earnings of any individual
for any workweek, the 50 per centum specified in clause (A) shall be
deemed to be 55 per centum and the 60 per centum specified in clause
(B) shall be deemed to be 65 per centum, if and to the extent that such
earnings are subject to garnishment to enforce a support order with
respect to a period which is prior to the twelve-week period which ends
with the beginning of such workweek.
Revised April 1978
705
(c) No court of the United States or any State, and no State (or offi-
cer or agency thereof), may make, execute, or enforce any order or
process in violation of this section.¹
§ 304. Restriction on discharge from employment by reason of
garnishment
(a) No employer may discharge any employee by reason of the fact
that his earnings have been subjected to garnishment for any one
indebtedness.
(b) Whoever willfully violates subsection (a) of this section shall be
fined not more than $1,000, or imprisoned not more than one year, or
both.
§ 305. Exemption for State-regulated garnishments
The Secretary of Labor may by regulation exempt from the provi-
sions of section 303 (a) and (b) (2) garnishments issued under the laws
of any State if he determines that the laws of that State provide re-
strictions on garnishment which are substantially similar to those pro-
vided in section 303 (a) and (b) (2).¹
§ 306. Enforcement by Secretary of Labor
The Secretary of Labor, acting through the Wage and Hour Divi-
sion of the Department of Labor, shall enforce the provisions of this
title.
§ 307. Effect on State laws
This title does not annul, alter, or affect, or exempt any person from
complying with, the laws of any State
(1) prohibiting garnishments or providing for more limited
garnishments than are allowed under this title, or
(2) prohibiting the discharge of any employee by reason of the
fact that his earnings have been subjected to garnishment for
more than one indebtedness.
*
*
*
*
1 Sections 303 and 305 were amended by sec. 501 (e) of P.L. 95–30.
*
*
!
Revised April 1978
707
Excerpts From the Food Stamp Act of 1977, as Enacted by Sec-
tion 1301 of the Food and Agriculture Act of 1977 (Public Law
95-113)
Sec. 6. (a)
*
Sec. 11. (a)
**
*
*
*
*
**
*
* * *
(g) No individual who receives supplemental security income bene-
fits under title XVI of the Social Security Act, State supplementary
payments described in section 1616 of such Act, or payments of the
type referred to in section 212(a) of Public Law 93-66, as amended,
shall be considered to be a member of a household for any month, if,
for such month, such individual resides in a State which provides
State supplementary payments (1) of the type described in section
1616(a) of the Social Security Act and section 212 (a) of Public Law
93-66, and (2) the level of which has been found by the Secretary of
Health, Education, and Welfare to have been specifically increased
so as to include the bonus value of food stamps.
*
*
**
*
(j) The Secretary, in conjunction with the Secretary of Health,
Education, and Welfare, is authorized to prescribe regulations per-
mitting applicants for and recipients of social security benefits to
apply for food stamps at social security offices and be certified for
food stamp eligibility in such offices in order that the application and
certification for food stamp assistance may be accomplished as effi-
ciently and conveniently as possible.
*
[Note: The next page of this document is page 711]
21-746 O
·
78
53
Federal-State Extended Unemployment Compensation Act, As
Amended
Excerpt From Public Law 91-373, August 10, 1970
*
Title II-Federal-State Extended Unemployment
Compensation Program
Short Title
Sec. 201. This title may be cited as the "Federal-State Extended
Unemployment Compensation Act of 1970”.
Payment of Extended Compensation
State Law Requirements
Sec. 202. (a) (1) For purposes of section 3304(a) (11) of the Internal
Revenue Code of 1954, a State law shall provide that payment of ex-
tended compensation shall be made, for any week of unemployment
which begins in the individual's eligibility period, to individuals who
have exhausted all rights to regular compensation under the State
law and who have no rights to regular compensation with respect to
such week under such law or any other State unemployment compen-
sation law or to compensation under any other Federal law and are
not receiving compensation with respect to such week under the unem-
ployment compensation law of Canada. For purposes of the preced-
ing sentence, an individual shall have exhausted his rights to regular
compensation under a State law (A) when no payments of regular
compensation can be made under such law because such individual
has received all regular compensation available to him based on em-
ployment or wages during his base period, or (B) when his rights to
such compensation have terminated by reason of the expiration of
the benefit year with respect to which such rights existed.¹
(2) Except where inconsistent with the provisions of this title, the
terms and conditions of the State law which apply to claims for
regular compensation and to the payment thereof shall apply to claims
for extended compensation and to the payment thereof.
¹ Paragraph (1) was amended by section 116(d)(1) of P.L. 94–566.
(711)
Extend. Unemp. Comp. Act 712
Individuals' Compensation Accounts
(b) (1) The State law shall provide that the State will establish,
for each eligible individual who files an application therefor, an
extended compensation account with respect to such individual's
benefit year. The amount established in such account shall be not less
than whichever of the following is the least:
(A) 50 per centum of the total amount of regular compensation
(including dependents' allowances) payable to him during such
benefit year under such law.
(B) thirteen times his average weekly benefit amount, or
(C) thirty-nine times his average weekly benefit amount, re-
duced by the regular compensation paid (or deemed paid) to
him during such benefit year under such law;
except that the amount so determined shall (if the State law so pro-
vides) be reduced by the aggregate amount of additional compensation
paid (or deemed paid) to him under such law for prior weeks of unem-
ployment in such benefit year which did not begin in an extended
benefit period.
(2) For purposes of paragraph (1), an individual's weekly benefit
amount for a week is the amount of regular compensation (including
dependents' allowances) under the State law payable to such indi-
vidual for such week for total unemployment.
Extended Benefit Period
Beginning and Ending
Sec. 203. (a) For purposes of this title, in the case of any State,
an extended benefit period-
(1) shall begin with the third week after whichever of the
following weeks first occurs:
(A) a week for which there is a national "on" indicator, or
(B) a week for which there is a State "on" indicator; and
(2) shall end with the third week after the first week for which
there is both a national "off" indicator and a State "off" indicator.
Special Rules
(b) (1) In the case of any State-
(A) no extended benefit period shall last for a period of less
than thirteen consecutive weeks, and
Revised April 1977
713
Extend. Unemp. Comp. Act
(B) no extended benefit period may begin by reason of a State
"on" indicator before the fourteenth week after the close of a
prior extended benefit period with respect to such State.
(2) When a determination has been made that an extended benefit
period is beginning or ending with respect to a State (or all the
States), the Secretary shall cause notice of such determination to be
published in the Federal Register.
Eligibility Period
(c) For purposes of this title, an individual's eligibility period
under the State law shall consist of the weeks in his benefit year which
begin in an extended benefit period and, if his benefit year ends within
such extended benefit period, any weeks thereafter which begin in
such extended benefit period.
National "On" and "Off" Indicators
(d) For purposes of this section-
(1) There is a national "on" indicator for a week if, for the
period consisting of such week and the immediately preceding
twelve weeks, the rate of insured unemployment (seasonally
adjusted) for all States equaled or exceeded 4.5 per centum (de-
termined by reference to the average monthly covered employ-
ment for the first four of the most recent six calendar quarters
ending before the close of such period).
(2) There is a national "off" indicator for a week if, for the
period consisting of such week and the immediately preceding
twelve weeks, the rate of insured unemployment (seasonally
adjusted) for all States was less than 4.5 per centum (deter-
mined by reference to the average monthly covered employment
for the first four of the most recent six calendar quarters ending
before the close of such period).¹
State "On" and "Off" Indicators
(e) For purposes of this section-
(1) There is a State "on" indicator for a week if the rate of
insured unemployment under the State law for the period consist-
ing of such week and the immediately preceding twelve weeks—
1 Subsection (d) was amended by section 311(a) of P.L. 94-566 effective for weeks
beginning after December 31, 1976. Prior to this effective date, subsection (d) includes
the following sentence: Effective with respect to compensation for weeks of unemployment
beginning before December 31, 1976, and beginning after December 31, 1974 (or, if later,
the date established pursuant to State law), the State may by law provide that the deter-
mination of whether there has been a national "on" or "off" indicator beginning or ending
any extended benefit period shall be made under this subsection as if the phrase "4.5 per
centum," contained in paragraphs (1) and (2), read "4 per centum."
Revised April 1977
(A) equaled or exceeded 120 per centum of the average of
such rates for the corresponding thirteen-week period ending
in each of the preceding two calendar years, and
Extend. Unemp. Comp. Act 714
(B) equaled or exceeded 4 per centum.
(2) There is a State "off" indicator for a week if, for the period
consisting of such week and the immediately preceding twelve
weeks, either subparagraph (A) or subparagraph (B) of para-
graph (1) is not satisfied.
Effective with respect to compensation for weeks of unemployment
beginning after March 30, 1977 (or, if later, the date established
pursuant to State law) the State may by law provide that the deter-
mination of whether there has been a State "on" or "off" indicator
beginning or ending any extended benefit period shall be made under
this subsection as if (i) paragraph (1) did not contain subparagraph
(A) thereof, and (ii) the figure "4" contained in subparagraph (B)
thereof were "5"; except that, notwithstanding any such provision
of State law, any week for which there would otherwise be a State
"on" indicator shall continue to be such a week and shall not be deter-
mined to be a week for which there is a State "off" indicator. For
purposes of this subsection, the rate of insured unemployment for any
thirteen-week period shall be determined by reference to the average
monthly covered employment under the State law for the first four of
the most recent six calendar quarters ending before the close of such
period.¹
1
Rate of Insured Unemployment; Covered Employment
(f) (1) For purposes of subsections (d) and (e), the term "rate of
insured unemployment" means the percentage arrived at by dividing—
(A) the average weekly number of individuals filing claims
for weeks of unemployment with respect to the specified period,
1 Paragraph (2) was amended by Public Law 94-45. Effective for weeks beginning
after March 30, 1977 paragraph (2) was further amended by section 311(b) of Public
Law 94-566. Prior to that effective date, paragraph (2) contains the following sentence:
Effective with respect to compensation for weeks of unemployment beginning before
March 31, 1977, and beginning after December 31, 1973 (or, if later, the date established
pursuant to State law), the State may by law provide that the determination of whether
there has been a State "on" or "off" indicator beginning or ending any extended benefit
period shall be made under this subsection as if paragraph (1) did not contain subpara-
graph (A) thereof.
715
Extend. Unemp. Comp. Act
as determined on the basis of the reports made by all State
agencies (or, in the case of subsection (e), by the State agency)
to the Secretary, by
(B) the average monthly covered employment for the specified
period.
(2) Determinations under subsection (d) shall be made by the
Secretary in accordance with regulations prescribed by him.
(3) Determinations under subsection (e) shall be made by the State
agency in accordance with regulations prescribed by the Secretary.
Payments to States
Amount Payable
Sec. 204. (a)(1) There shall be paid to each State an amount equal
to one-half of the sum of—
(A) the sharable extended compensation, and
(B) the sharable regular compensation,
paid to individuals under the State law.
(2) No payment shall be made to any State under this subsection
in respect to compensation for which the State is entitled to reimburse-
ment under the provisions of any Federal law other than this Act.
1
(3) In the case of compensation which is sharable extended com-
pensation or sharable regular compensation by reason of the provision
contained in the last sentence of section 203 (d), the first paragraph
of this subsection shall be applied as if the words "one-half of" read
"100 per centum of" but only with respect to compensation that
would not have been payable if the State law's provisions as to
the State "on" and "off" indicators omitted the 120 percent factor as
provided for by Public Law 93-368 and by section 106 of this Act.¹
(4) The amount which, but for this paragraph, would be payable
under this subsection to any State in respect of any compensation paid
to an individual whose base period wages include wages for services to
which section 3306 (c)(7) of the Internal Revenue Code of 1954
applies shall be reduced by an amount which bears the same ratio to
the amount which, but for this paragraph, would be payable under
this subsection to such State in respect of such compensation as the
amount of the base period wages attributable to such services bears to
the total amount of the base period wages.2
1 The reference to "section 106 of this Act" is apparently intended as a reference to
section 106 of Public Law 93--572 which added paragraph (3) to this section.
'Paragraph (4) was added by section 212 of Public Law 94-566, effective for compensa-
tion for weeks of unemployment beginning after December 31, 1978.
Extend. Unemp. Comp. Act
716
Shareable Extended Compensation
(b) For purposes of subsection (a) (1) (A), extended compensation
paid to an individual for weeks of unemployment in such individual's
eligibility period is sharable extended compensation to the extent that
the aggregate extended compensation paid to such individual with
respect to any benefit year does not exceed the smallest of the amounts
referred to in subparagraphs (A), (B), and (C) of section 202 (b)(1).
Shareable Regular Compensation
(c) For purposes of subsection (a) (1) (B), regular compensation
paid to an individual for a week of unemployment is sharable regular
compensation-
(1) if such week is in such individual's eligibility period (deter-
mined under section 203 (c)), and
(2) to the extent that the sum of such compensation, plus the
regular compensation paid (or deemed paid) to him with respect
to prior weeks of unemployment in the benefit year, exceeds
twenty-six times (and does not exceed thirty-nine times) the
average weekly benefit amount (including allowances for depend-
ents) for weeks of total unemployment payable to such individual
under the State law in such benefit year.
Payment on Calendar Month Basis
(d) There shall be paid to each State either in advance or by way
of reimbursement, as may be determined by the Secretary, such sum
as the Secretary estimates the State will be entitled to receive under
this title for each calendar month, reduced or increased, as the case
may be, by any sum by which the Secretary finds that his estimates
for any prior calendar month were greater or less than the amounts
which should have been paid to the State. Such estimates may be
made upon the basis of such statistical, sampling, or other method as
may be agreed upon by the Secretary and the State agency.
Certification
(e) The Secretary shall from time to time certify to the Secretary
of the Treasury for payment to each State the sums payable to such
State under this section. The Secretary of the Treasury, prior to audit
or settlement by the General Accounting Office, shall make payment
to the State in accordance with such certification, by transfers from
the extended unemployment compensation account to the account of
such State in the Unemployment Trust Fund.
ŷ
717 Extend. Unemp. Comp. Act
+
Definitions
Sec. 205. For purposes of this title-
(1) The term "compensation" means cash benefits payable to
individuals with respect to their unemployment.
(2) The term "regular compensation" means compensation pay-
able to an individual under any State unemployment compensa-
tion law (including compensation payable pursuant to 5 U.S.C.
chapter 85), other than extended compensation and additional
compensation.
(3) The term "extended compensation" means compensation
(including additional compensation and compensation payable
pursuant to 5 U.S.C. chapter 85) payable for weeks of unemploy-
ment beginning in an extended benefit period to an individual
under those provisions of the State law which satisfy the require-
ments of this title with respect to the payment of extended com-
pensation.
(4) The term "additional compensation" means compensation
payable to exhaustees by reason of conditions of high unemploy-
ment or by reason of other special factors.
(5) The term "benefit year" means the benefit year as defined in
the applicable State law.
(6) The term "base period" means the base period as deter-
mined under applicable State law for the benefit year.
(7) The term "Secretary" means the Secretary of Labor of the
United States.
(8) The term "State" includes the District of Columbia,
the Commonwealth of Puerto Rico, and the Virgin Islands.¹
1
(9) The term "State agency" means the agency of the State
which administers its State law.
(10) The term "State law" means the unemployment compensa-
tion law of the State, approved by the Secretary under section
3304 of the Internal Revenue Code of 1954.
(11) The term "week" means a week as defined in the applicable
State law.
Approval of State Laws
Sec. 206. Section 3204 (a) of the Internal Revenue Code of 1954 is
amended by inserting after paragraph (10) (added by section 121 (a)
of this Act) the following new paragraph:
"(11) extended compensation shall be payable as provided by
the Federal-State Extended Unemployment Compensation Act
of 1970;".
1 Paragraph (8) was amended by section 116(d) (2) of Public Law 94-566.
Is
Trade Adjustment Assistance 718
Effective Dates
Sec. 207. (a) Except as provided in subsection (b)-
(1) in applying section 203, no extended benefit period may
begin with a week beginning before January 1, 1972; and
(2) section 204 shall apply only with respect to weeks of un-
employment beginning after December 31, 1971.
(b) (1) In the case of a State law approved under section 3304(a)
(11) of the Internal Revenue Code of 1954, such State law may also
provide that an extended benefit period may begin with a week estab-
lished pursuant to such law which begins earlier than January 1,
1972, but not earlier than 60 days after the date of the enactment of
this Act.
(2) For purposes of paragraph (1) with respect to weeks beginning
before January 1, 1972, the extended benefit period for the State shall
be determined under section 203 (a) solely by reference to the State
"on" indicator and the State "off" indicator.
(3) In the case of a State law containing a provision described in
paragraph (1), section 204 shall also apply with respect to weeks of
unemployment in extended benefit periods determined pursuant to
paragraph (1).
(c) Section 3304 (a)(11) of the Internal Revenue Code of 1954 (as
added by section 206) shall not be a requirement for the State law of
any State-
(1) in the case of any State the legislature of which does not
meet in a regular session which closes during the calendar year
1971, with respect to any week of unemployment which begins
prior to July 1, 1972; or
(2) in the case of any other State, with respect to any week of
unemployment which begins prior to January 1, 1972.
*
*
*
**
1
Excerpt From Public Law 93-618, The Trade Act of 1974 ¹
*
*
*
*
CHAPTER 2-ADJUSTMENT ASSISTANCE
FOR WORKERS
Subchapter A-Petitions and Determinations
SEC. 221. PETITIONS.
(a) A petition for a certification of eligibility to apply for adjust-
ment assistance under this chapter may be filed with the Secretary
of Labor (hereinafter in this chapter referred to as the "Secretary")
1 This chapter is effective April 3, 1975, and terminates September 30, 1982.
719 Trade Adjustment Assistance
by a group of workers or by their certified or recognized union or
other duly authorized representative. Upon receipt of the petition, the
Secretary shall promptly publish notice in the Federal Register that
he has received the petition and initiated an investigation.
(b) If the petitioner, or any other person found by the Secretary
to have a substantial interest in the proceedings, submits not later than
10 days after the date of the Secretary's publication under subsection
(a) a request for a hearing, the Secretary shall provide for a public
hearing and afford such interested persons an opportunity to be present,
to produce evidence, and to be heard.
SEC. 222. GROUP ELIGIBILITY REQUIREMENTS.
The Secretary shall certify a group of workers as eligible to apply
for adjustment assistance under this chapter if he determines-
(1) that a significant number or proportion of the workers in
such workers' firm or an appropriate subdivision of the firm have
become totally or partially separated, or are threatened to become
totally or partially separated,
(2) that sales or production, or both, of such firm or subdivi-
sion have decreased absolutely, and
(3) that increases of imports of articles like or directly com-
petitive with articles produced by such workers' firm or an ap-
propriate subdivision thereof contributed importantly to such
total or partial separation, or threat thereof, and to such decline
in sales or production.
For purposes of paragraph (3), the term "contributed importantly"
means a cause which is important but not necessarily more important
than any other cause.
SEC. 223. DETERMINATIONS BY SECRETARY OF LABOR.
(a) As soon as possible after the date on which a petition is filed
under section 221, but in any event not later than 60 days after that
date, the Secretary shall determine whether the petitioning group
meets the requirements of section 222 and shall issue a certification
of eligibility to apply for assistance under this chapter covering work-
ers in any group which meets such requirements. Each certification
shall specify the date on which the total or partial separation began
or threatened to begin.
(b) A certification under this section shall not apply to any worker
whose last total or partial separation from the firm or appropriate
subdivision of the firm before his application under section 231
occurred-
<
(1) more than one year before the date of the petition on
which such certification was granted, or
Trade Adjustment Assistance 720
(2) more than 6 months before the effective date of this chapter.
(c) Upon reaching his determination on a petition, the Secretary
shall promptly publish a summary of the determination in the Fed-
eral Register together with his reasons for making such determination.
(d) Whenever the Secretary determines, with respect to any certi-
fication of eligibility of the workers of a firm or subdivision of the
firm, that total or partial separations from such firm or subdivision
are no longer attributable to the conditions specified in section 222, he
shall terminate such certification and promptly have notice of such
termination published in the Federal Register together with his rea-
sons for making such determination. Such termination shall apply
only with respect to total or partial separations occurring after the
termination date specified by the Secretary.
SEC. 224. STUDY BY SECRETARY OF LABOR WHEN INTERNATIONAL
TRADE COMMISSION BEGINS INVESTIGATION; ACTION
WHERE THERE IS AFFIRMATIVE FINDING.
(a) Whenever the International Trade Commission (hereafter
referred to in this chapter as the "Commission") begins an investiga-
tion under section 201 with respect to an industry, the Commission
shall immediately notify the Secretary of such investigation, and the
Secretary shall immediately begin a study of—
(1) the number of workers in the domestic industry producing
the like or directly competitive article who have been or are likely
to be certified as eligible for adjustment assistance, and
(2) the extent to which the adjustment of such workers to the
import competition may be facilitated through the use of exist-
ing programs.
(b) The report of the Secretary of the study under subsection (a)
shall be made to the President not later than 15 days after the day on
which the Commission makes its report under section 201. Upon mak-
ing his report to the President, the Secretary shall also promptly make
it public (with the exception of information which the Secretary deter-
mines to be confidential) and shall have a summary of it published in
the Federal Register.
(c) Whenever the Commission makes an affirmative finding under
section 201 (b) that increased imports are a substantial cause of seri-
ous injury or threat thereof with respect to an industry, the Secretary
shall make available, to the extent feasible, full information to the
workers in such industry about programs which may facilitate the
adjustment to import competition of such workers, and he shall pro-
vide assistance in the preparation and processing of petitions and ap-
plications of such workers for program benefits.
721 Trade Adjustment Assistance
Subchapter B-Program Benefits
PART I-TRADE READJUSTMENT ALLOWANCES
SEC. 231. QUALIFYING REQUIREMENTS FOR WORKERS.
Payment of a trade readjustment allowance shall be made to an
adversely affected worker covered by a certification under sub-
chapter A who files an application for such allowance for any week of
unemployment which begins after the date specified in such certifica-
tion pursuant to section 223 (a), if the following conditions are met:
(1) Such worker's last total or partial separation before his
application under this chapter, occurred―
(A) on or after the date, as specified in the certification
under which he is covered, on which total or partial separa-
tion began or threatened to begin in the adversely affected
employment, and
(B) before the expiration of the 2-year period beginning
on the date on which the determination under section 223 was
made, and
(C) before the termination date (if any) determined pur-
suant to section 223(d); and
(2) Such worker had, in the 52 weeks immediately preceding
such total or partial separation, at least 26 weeks of employment
at wages of $30 or more a week in adversely affected employment
with a single firm or subdivision of a firm, or, if data with respect
to weeks of employment are not available, equivalent amounts
of employment computed under regulations prescribed by the
Secretary.
SEC. 232. WEEKLY AMOUNTS.
(a) Subject to the other provisions of this section, the trade read-
justment allowance payable to an adversely affected worker for a
week of unemployment shall be—
(1) 70 percent of his average weekly wage (but not in excess
of the average weekly manufacturing wage), reduced by
(2) 50 percent of the amount of the remuneration for services
performed during such week.
(b) Any adversely affected worker who is entitled to trade read-
justment allowances and who is undergoing training approved by
the Secretary, including on-the-job training, shall receive for each
week in which he is undergoing any such training, a trade readjust-
ment allowance in an amount (computed for such week) equal to the
amount computed under subsection (a) or (if greater) the amount
of any weekly allowance for such training to which he would be
Trade Adjustment Assistance 722
entitled under any other Federal law for the training of workers, if
he applied for such allowance. Such trade readjustment allowance
shall be paid in lieu of any training allowance to which the worker
would be entitled under such other Federal law.
(c) The amount of trade readjustment allowance payable to an
adversely affected worker under subsection (a) for any week shall
be reduced by any amount of unemployment insurance which he
receives, or which he would receive if he applied for such insurance,
with respect to such week; but, if the appropriate State or Federal
agency finally determines that the worker was not entitled to unem-
ployment insurance with respect to such week, the reduction shall not
apply with respect to such week.
(d) If unemployment insurance, or a training allowance under any
Federal law, is paid to an adversely affected worker for any week of
unemployment with respect to which he would be entitled (determined
without regard to subsection (c) or (e) or to any disqualification under
section 236 (c)) to a trade readjustment allowance if he applied for
such allowance, each such week shall be deducted from the total num-
ber of weeks of trade readjustment allowance otherwise payable to
him under section 233 (a) when he applies for a trade readjustment
allowance and is determined to be entitled to such allowance. If the
unemployment insurance or the training allowance paid to such
worker for any week of unemployment is less than the amount of the
trade readjustment allowance to which he would be entitled if he
applied for such allowance, he shall receive, when he applies for a
trade readjustment allowance and is determined to be entitled to such
allowance, a trade readjustment allowance for such week equal to such
difference.
(e) Whenever, with respect to any week of unemployment, the
total amount payable to an adversely affected worker as remuneration.
for services performed during such week, as unemployment insurance,
as a training allowance referred to in subsection (d), and as a trade
readjustment allowance exceeds 80 percent of his average weekly wage
(or, if lesser, 130 percent of the average weekly manufacturing wage),
then his trade readjustment allowance for such week shall be reduced
by the amount of such excess.
(f) The amount of any weekly payment to be made under this
section which is not a whole dollar amount shall be rounded upward
to the next higher whole dollar amount.
SEC. 233. TIME LIMITATIONS ON TRADE READJUSTMENT ALLOW-
ANCES.
(a) Payment of trade readjustment allowances shall not be made
to an adversely affected worker for more than 52 weeks, except that,
in accordance with regulations prescribed by the Secretary-
723 Trade Adjustment Assistance
(1) such payments may be made for not more than 26 addi-
tional weeks to an adversely affected worker to assist him to
complete training approved by the Secretary, or
(2) such payments shall be made for not more than 26 addi-
tional weeks to an adversely affected worker who had reached his
60th birthday on or before the date of total or partial separation.
In no case may an adversely affected worker be paid trade readjust-
ment allowances for more than 78 weeks.
(b) (1) Except for a payment made for an additional week under
subsection (a) (1) or (a) (2), a trade readjustment allowance may not
be paid for a week of unemployment beginning more than 2 years
after the beginning of the appropriate week.
(2) A trade readjustment allowance may not be paid for an addi-
tional week specified in subsection (a) (1) if the adversely affected
worker who would receive such allowance did not make a bona fide
application to a training program approved by the Secretary within
180 days after the end of the appropriate week or the date of his first
certification of eligibility to apply for adjustment assistance issued by
the Secretary, whichever is later.
(3) A trade readjustment allowance may not be paid for an addi-
tional week specified in subsection (a) if such additional week begins
more than 3 years after the beginning of the appropriate week.
(4) For purposes of this subsection, the appropriate week-
(A) for a totally separated worker is the week of his most
recent total separation, and
(B) for a partially separated worker is the first week for which
he receives a trade readjustment allowance following his most
recent partial separation.
SEC. 234. APPLICATION OF STATE LAWS.
Except where inconsistent with the provisions of this chapter and
subject to such regulations as the Secretary may prescribe, the avail-
ability and disqualification provisions of the State law-
(1) under which an adversely affected worker is entitled to
unemployment insurance (whether or not he has filed a claim
for such insurance), or
(2) if he is not so entitled to unemployment insurance, of the
State in which he was totally or partially separated,
shall apply to any such worker who files a claim for trade readjust-
ment allowances. The State law so determined with respect to a sepa-
ration of a worker shall remain applicable, for purposes of the
preceding sentence, with respect to such separation until such worker
becomes entitled to unemployment insurance under another State law
(whether or not he has filed a claim for such insurance).
Trade Adjustment Assistance 724
PART II—TRAINING AND RELATED SERVICES
SEC. 235. EMPLOYMENT SERVICES.
The Secretary shall make every reasonable effort to secure for
adversely affected workers covered by a certification under subchapter
A of this chapter counseling, testing, and placement services, and sup-
portive and other services, provided for under any other Federal law.
The Secretary shall, whenever appropriate, procure such services
through agreements with cooperating State agencies.
SEC. 236. TRAINING.
(a) If the Secretary determines that there is no suitable employ-
ment available for an adversely affected worker covered by a certifica-
tion under subchapter A of this chapter, but that suitable employment
(which may include technical and professional employment) would
be available if the worker received appropriate training, he may
approve such training. Insofar as possible, the Secretary shall provide
or assure the provision of such training on the job.
(b) The Secretary may, where appropriate, authorize suppemental
assistance necessary to defray transportation and subsistence expenses
for separate maintenance when training is provided in facilities which
are not within commuting distance of a worker's regular place of resi-
dence. The Secretary shall not authorize payments for subsistence
exceeding $15 per day; nor shall he authorize payments for trans-
portation expenses exceeding 12 cents per mile.
(c) Any adversely affected worker who, without good cause, refuses
to accept or continue, or fails to make satisfactory progress in, suitable
training to which he has been referred by the Secretary shall not there-
after be entitled to payments under this chapter until he enters or
resumes the training to which he has been so referred.
PART III-JOB SEARCH AND RELOCATION
ALLOWANCES
SEC. 237. JOB SEARCH ALLOWANCES.
(a) Any adversely affected worker covered by a certification under
subchapter A of this chapter who has been totally separated may file
an application with the Secretary for a job search allowance. Such
allowance, if granted, shall provide reimbursement to the worker of
80 percent of the cost of his necessary job search expenses as pre-
scribed by regulations of the Secretary; except that such reimburse-
ment may not exceed $500 for any worker.
(b) A job search allowance may be granted only—
(1) to assist an adversely affected worker in securing a job
within the United States: ;
725 Trade Adjustment Assistance
(2) where the Secretary determines that such worker cannot
reasonably be expected to secure suitable employment in the
commuting area in which he resides; and
(3) where the worker has filed an application for such allow-
ance with the Secretary no later than 1 year after the date of his
last total separation before his application under this chapter
or (in the case of a worker who has been referred to training by
the Secretary) within a reasonable period of time after the con-
clusion of such training period.
SEC. 238. RELOCATION ALLOWANCES.
(a) Any adversely affected worker covered by a certification under
subchapter A of this chapter who has been totally separated may file
an application with the Secretary for a relocation allowance, subject
to the terms and conditions of this section.
(b) A relocation allowance may be granted only to assist an ad-
versely affected worker in relocating within the United States and
only if the Secretary determines that such worker cannot reasonably
be expected to secure suitable employment in the commuting area in
which he resides and that such worker-
(1) has obtained suitable employment affording a reasonable
expectation of long-term duration in the area in which he wishes.
to relocate, or
(2) has obtained a bona fide offer of such employment.
(c) A relocation allowance shall not be granted to such worker
unless-
Ma
(1) for the week in which the application for such allowance
is filed, he is entitled to a trade readjustment allowance (deter-
mined without regard to section 232 (c) and (e)) or would be so
entitled (determined without regard to whether he filed applica-
tion therefor) but for the fact that he has obtained the employ-
ment referred to in subsection (b) (1), and
(2) such relocation occurs within a reasonable period after the
filing of such application or (in the case of a worker who has
been referred to training by the Secretary) within a reasonable
period after the conclusion of such training.
Under regulations prescribed by the Secretary, a relocation allowance
shall not be granted to more than one member of the family with
respect to the same relocation.
(d) For the purposes of this section, the term "relocation allowance"
means-
(1) 80 percent of the reasonable and necessary expenses, as
specified in regulations prescribed by the Secretary, incurred in
21-746 O 78 54
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Trade Adjustment Assistance 726
transporting a worker and his family, if any, and household
effects, and
(2) a lump sum equivalent to three times the worker's average
weekly wage, up to a maximum payment of $500.
Subchapter C-General Provisions
SEC. 239. AGREEMENTS WITH STATES.
(a) The Secretary is authorized on behalf of the United States.
to enter into an agreement with any State, or with any State agency
(referred to in this subchapter as "cooperating States" and "cooperat-
ing States agencies" respectively). Under such an agreement, the co-
operating State agency (1) as agent of the United States, will receive
applications for, and will provide, payments on the basis provided in
this chapter, (2) where appropriate, will afford adversely affected
workers who apply for payments under this chapter testing, counsel-
ing, referral to training, and placement services, and (3) will other-
wise cooperate with the Secretary and with other State and Federal
agencies in providing payments and services under this chapter.
(b) Each agreement under this subchapter shall provide the terms
and conditions upon which the agreement may be amended, suspended,
or terminated.
(c) Each agreement under this subchapter shall provide that un-
employment insurance otherwise payable to any adversely affected
worker will not be denied or reduced for any week by reason of any
right to payments under this chapter.
(d) A determination by a cooperating State agency with respect to
entitlement to program benefits under an agreement is subject to re-
view in the same manner and to the same extent as determinations
under the applicable State law and only in that manner and to that
extent.
(e) Section 3302(c) of the Internal Revenue Code of 1954 (relat-
ing to credits against Federal unemployment tax) is amended by
inserting after paragraph (3) the following new paragraph:
"(4) If the Secretary of Labor determines that a State, or
State agency, has not-
"(A) entered into the agreement described in section 239
of the Trade Act of 1974, with the Secretary of Labor before
July 1, 1975, or
"(B) fulfilled its commitments under an agreement with
the Secretary of Labor as described in section 239 of the
Trade Act of 1974,
then, in the case of a taxpayer subject to the unemployment
compensation law of such State, the total credits (after applying
727 Trade Adjustment Assistance
subsections (a) and (b) and paragraphs (1), (2), and (3) of
this section) otherwise allowable under this section for a year
during which such State or agency does not enter into or fulfill
such an agreement shall be reduced by 15 percent of the tax
imposed with respect to wages paid by such taxpayer during such
year which are attributable to such State.".
SEC. 240. ADMINISTRATION ABSENT STATE AGREEMENT.
(a) In any State where there is no agreement in force between a
State or its agency under section 239, the Secretary shall arrange
under regulations prescribed by him for performance of all necessary
functions under subchapter B of this chapter, including provision
for a fair hearing for any worker whose application for payments
is denied.
(b) A final determination under subsection (a) with respect to
entitlement to program benefits under subchapter B of this chapter
is subject to review by the courts in the same manner and to the same
extent as is provided by section 205 (g) of the Social Security Act (42
U.S.C. sec. 405 (g)).
SEC. 241. PAYMENTS TO STATES.
(a) The Secretary shall from time to time certify to the Secretary
of the Treasury for payment to each cooperating State the sums neces-
sary to enable such State as agent of the United States to make pay-
ments provided for by this chapter. The Secretary of the Treasury,
prior to audit or settlement by the General Accounting Office, shall
make payment to the State from the Adjustment Assistance Trust
Fund established in section 245 in accordance with such certification.
(b) All money paid a State under this section shall be used solely
for the purposes for which it is paid; and money so paid which is not
used for such purposes shall be returned, at the time specified in the
agreement under this subchapter, to the Secretary of the Treasury and
credited to Adjustment Assistance Trust Fund.
(c) Any agreement under this subchapter may require any officer
or employee of the State certifying payments or disbursing funds
under the agreement or otherwise participating in the performance
of the agreement, to give a surety bond to the United States in such
amount as the Secretary may deem necessary, and may provide for the
payment of the cost of such bond from funds for carrying out the
purposes of this chapter.
SEC. 242. LIABILITIES OF CERTIFYING AND DISBURSING OFFICERS.
(a) No person designated by the Secretary, or designated pursuant
to an agreement under this subchapter, as a certifying officer, shall, in
the absence of gross negligence or intent to defraud the United States,
be liable with respect to any payment certified by him under this
chapter.
Trade Adjustment Assistance 728
(b) No disbursing officer shall, in the absence of gross negligence or
intent to defraud the United States, be liable with respect to any pay-
ment by him under this chapter if it was based upon a voucher signed
by a certifying officer designated as provided in subsection (a).
SEC. 243. RECOVERY OF OVERPAYMENTS.
(a) If a cooperating State agency or the Secretary, or a court of
competent jurisdiction finds that any person-
(1) has made or has caused to be made by another, a false state-
ment or representation of a material fact knowing it to be false,
or has knowingly failed or caused another to fail to disclose a
material fact; and
(2) as a result of such action has received any payment under
this chapter to which he was not entitled,
such person shall be liable to repay such amount to the State agency
or the Secretary as the case may be, or either may recover such amount
by deductions from any sums payable to such person under this chap-
ter. Any such finding by a State agency or the Secretary may be
made only after an opportunity for a fair hearing.
(b) Any amount repaid to a State agency under this section shall
be deposited into the fund from which payment was made. Any
amount repaid to the Secretary under this section shall be returned
to the Secretary of the Treasury and credited to the Adjustment
Assistance Trust Fund.
SEC. 244. PENALTIES.
Whoever makes a false statement of a material fact knowing it to
be false, or knowingly fails to disclose a material fact, for the purpose
of obtaining or increasing for himself or for any other person any
payment authorized to be furnished under this chapter or pursuant
to an agreement under section 239 shall be fined not more than $1,000
or imprisoned for not more than one year, or both.
SEC. 245. CREATION OF TRUST FUND; AUTHORIZATION OF APPRO-
PRIATIONS OUT OF CUSTOMS RECEIPTS.
(a) There is hereby established on the books of the Treasury of
the United States a trust fund to be known as the "Adjustment Assist-
ance Trust Fund" (referred to in this section as the "Trust Fund").
The Trust Fund shall consist of such amounts as may be deposited in
it pursuant to the authorization contained in subsection (b). Amounts
in the Trust Fund may be used only to carry out the provisions of
this chapter (including administrative costs). The Secretary of the
Treasury shall be the trustee of the Trust Fund and shall report to
the Congress not later than March 1 of each year on the operation
and status of the Trust Fund during the preceding fiscal year.
(b) (1) There are hereby authorized to be appropriated to the Trust
Fund, out of amounts in the general fund of the Treasury attributable
729 Trade Adjustment Assistance
to the collections of customs duties not otherwise appropriated, for
each fiscal year ending after the date of the enactment of this Act, such
sums as may be necessary to carry out the provisions of this chapter
(including administrative costs).
(2) There are authorized to be appropriated to the Trust Fund, for
purposes of training (including administrative costs) under section
236 such sums as may be necessary.
SEC. 246. TRANSITIONAL PROVISIONS.
(a) Where a group of workers has been certified as eligible to apply
for adjustment assistance under section 302 (b) (2) or (c) of the Trade
Expansion Act of 1962, any worker who has not had an application for
trade readjustment allowances under section 322 of that Act denied
before the effective date of this chapter may apply under section 231 of
this Act as if the group certification under which he claims coverage
had been made under subchapter A of this chapter.
(b) In any case where a group of workers or their certified or recog-
nized union or other duly authorized representative has filed a petition
under section 301 (a) (2) of the Trade Expansion Act of 1962, more
than 4 months before the effective date of this chapter and
(1) the Commission has not rejected such petition before the
effective date of this chapter, and
(2) the President or his delegate has not issued a certification
under section 302 (c) of that Act to the petitioning group before
the effective date of this chapter,
such group or representative thereof may file a new petition under sec-
tion 221 of this Act, not later than 90 days after the effective date of this
chapter. For purposes of section 223 (b) (1), the date on which such
group or representative filed the petition under the Trade Expansion
Act of 1962 shall apply. Section 223 (b) (2) shall not apply to workers
covered by a certification issued pursuant to a petition meeting the
requirements of this subsection.
(c) A group of workers may file a petition under section 221 cover-
ing weeks of unemployment (as defined in the Trade Expansion Act of
1962) beginning before the effective date of this chapter, or covering
such weeks and also weeks of unemployment beginning on or after
the effective date of this chapter.
(d) Any worker receiving payments pursuant to this section shall
be entitled-
(1) for weeks of unemployment (as defined in the Trade Ex-
pansion Act of 1962) beginning before the effective date of this
chapter, to the rights and privileges provided in chapter 3 of title
III of such Act, and
(2) for weeks of unemployment beginning on or after the
effective date of this chapter, to the rights and privileges provided
-
Trade Adjustment Assistance 730
in this chapter, except that the total number of weeks of unem-
ployment, as defined in the Trade Expansion Act of 1962, for
which trade readjustment allowances were payable under that
Act shall be deducted from the total number of weeks of unem-
ployment for which an adversely affected worker is eligible for
trade readjustment allowances under this chapter.
(e) The Commission shall make available to the Secretary on re-
quest data it has acquired in investigations under section 301 of the
Trade Expansion Act of 1962 concluded within the 2-year period end-
ing on the effective date of this chapter which did not result in Presi-
dential action under section 302 (a) (3) or 302 (c) of that Act.
SEC. 247. DEFINITIONS.
For purposes of this chapter-
(1) The term "adversely affected employment" means employ-
ment in a firm or appropriate subdivision of a firm, if workers of
such firm or subdivision are eligible to apply for adjustment
assistance under this chapter.
(2) The term "adversely affected worker" means an individual
who, because of lack of work in adversely affected employment-
(A) has been totally or partially separated from such
employment, or
(B) has been totally separated from employment with the
firm in a subdivision of which such adversely affected em-
ployment exists.
(3) The term "average weekly manufacturing wage" means the
national gross average weekly earnings of production workers in
manufacturing industries for the latest calendar year (as officially
published annually by the Bureau of Labor Statistics of the
Department of Labor) most recently published before the period
for which the assistance under this chapter is furnished.
(4) The term “average weekly wage" means one-thirteenth of
the total wages paid to an individual in the high quarter. For pur-
poses of this computation, the high quarter shall be that quarter
in which the individual's total wages were highest among the first
4 of the last 5 completed calendar quarters immediately before the
quarter in which occurs the week with respect to which the com-
putation is made. Such week shall be the week in which total sepa-
ration occurred, or, in cases where partial separation is claimed,
an appropriate week, as defined in regulations prescribed by the
Secretary.
(5) The term "average weekly hours" means the average hours
worked by the individual (excluding overtime) in the employment
from which he has been or claims to have been separated in the
52 weeks (excluding weeks during which the individual was sick
731 Trade Adjustment Assistance
or on vacation) preceding the week specified in the last sentence
of paragraph (4).
(6) The term "partial separation" means, with respect to an
individual who has not been totally separated, that he has had—
(A) his hours of work reduced to 80 percent or less of his
average weekly hours in adversely affected employment, and
(B) his wages reduced to 80 percent or less of his average
weekly wage in such adversely affected employment.
(7) The term "remuneration" means wages and net earnings
derived from services performed as a self-employed individual.
(8) The term "State" includes the District of Columbia and the
Commonwealth of Puerto Rico; and the term "United States"
when used in the geographical sense includes such Commonwealth.
(9) The term "State agency" means the agency of the State
which administers the State law.
(10) The term "State law" means the unemployment insurance
law of the State approved by the Secretary of Labor under section.
3304 of the Internal Revenue Code of 1954.
(11) The term "total separation" means the layoff or severance
of an individual from employment with a firm in which, or in
a subdivision of which, adversely affected employment exists.
(12) The term "unemployment insurance" means the unem-
ployment insurance payable to an individual under any State
law or Federal unemployment insurance law, including chapter
85 of title 5, United States Code, and the Railroad Unemploy-
ment Insurance Act.
(13) The term "week" means a week as defined in the applicable
State law.
(14) The term "week of unemployment" means with respect
to an individual any week for which his remuneration for services
performed during such week is less than 80 percent of his average
weekly wage and in which, because of lack of work—
(A) if he has been totally separated, he worked less than
the full-time week (excluding overtime) in his current occu-
pation, or
(B) if he has been partially separated, he worked 80 per
cent or less of his average weekly hours.
SEC. 248. REGULATIONS.
The Secretary shall prescribe such regulations as may be necessary
to carry out the provisions of this chapter.
SEC. 249. SUBPENA POWER.
(a) The Secretary may require by subpena the attendance of wit-
nesses and the production of evidence necessary for him to make a
determination under the provisions of this chapter.
Trade Adjustment Assistance 732
で
​(b) If a person refuses to obey a subpena issued under subsection
(a), a United States district court within the jurisdiction of which
the relevant proceeding under this chapter is conducted may, upon
petition by the Secretary, issue an order requiring compliance with
such subpena.
SEC. 250. JUDICIAL REVIEW.
(a) A worker, group of workers, certified or recognized union, or
an authorized representative of such worker or group, aggrieved by a
final determination by the Secretary under the provisions of section
223 may, within 60 days after notice of such determination, file a
petition for review of such determination with the United States
court of appeals for the circuit in which such worker or group is
located or in the United States Court of Appeals for the District
of Columbia Circuit. The clerk of such court shall send a copy of
such petition to the Secretary. Upon receiving such petition, the Sec-
retary shall promptly certify and file in such court the record on
which he based such determination.
(b) The findings of fact by the Secretary, if supported by sub-
stantial evidence, shall be conclusive; but the court, for good cause
shown, may remand the case to the Secretary to take further evidence,
and the Secretary may thereupon make new or modified findings of
fact and may modify his previous action, and shall certify to the
court the record of the further proceedings. Such new or modified
findings of fact shall likewise be conclusive if supported by substan-
tial evidence.
(c) The court shall have jurisdiction to affirm the action of the
Secretary or to set it aside, in whole or in part. The judgment of the
court shall be subject to review by the Supreme Court of the United
States upon certiorari or certification as provided in section 1254 of
title 28, United States Code.
*
UCFE/UCX
EXCERPTS FROM
*
TITLE 5 U.S.C.-GOVERNMENT
ORGANIZATION AND EMPLOYEES
CHAPTER 85.-UNEMPLOYMENT COMPENSATION
LOY
SUBCHAPTER I—EMPLOYEES GENERALLY
Sec.
8501. Definitions__.
8502. Compensation under State agreement…
8503. Compensation absent State agreement. -
8504. Assignment of Federal service and wages_
8505. Payments to States --
8506. Dissemination of information_
8507. False statements and misrepresentations
8508. Regulations --
SUBCHAPTER II-EX-SERVICEMEN
8521. Definitions; application---
8522. Assignment of Federal service and wages.
8523. Dissemination of information...
8524. [Repealed.]
8525. Effect on other statutes__
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§ 8501. DEFINITIONS.
For the purpose of this subchapter—
(1) "Federal service" means service performed after 1952 in
the employ of the United States or an instrumentality of the
United States which is wholly or partially owned by the United
States, but does not include service (except service to which sub-
chapter II of this chapter applies) performed—
(A) by an elective official in the executive or legislative
branch;
(B) as a member of the armed forces;
(C) by Foreign Service personnel for whom special sepa-
ration allowances are provided under chapter 14 of title 22;
(D) outside the United States, the Commonwealth of
Puerto Rico, and the Virgin Islands by an individual who is
not a citizen of the United States;
P
(733)
UCFE/UCX
734
(E) by an individual excluded by regulations of the Civil
Service Commission from the operation of subchapter III
of chapter 83 of this title because he is paid on a contract or
fee basis;
(F) by an individual receiving nominal pay and allow-
ances of $12 or less a year;
(G) in a hospital, home, or other institution of the United
States by a patient or inmate thereof;
(H) by a student-employee as defined by section 5351 of
this title;
(I) by an individual serving on a temporary basis in case
of fire, storm, earthquake, flood, or other similar emergency;
(J) by an individual employed under a Federal relief
program to relieve him from unemployment;
(K) as a member of a State, county, or community com-
mittee under the Agricultural Stabilization and Conservation
Service or of any other board, council, committee, or other
similar body, unless the board, council, committee, or other
body is composed exclusively of individuals otherwise in the
full-time employ of the United States; or
(L) by an officer or a member of the crew on or in con-
nection with an American vessel-
(i) owned by or bareboat chartered to the United
States; and
(ii) whose business is conducted by a general agent
of the Secretary of Commerce;
if contributions on account of the service are required to be
made to an unemployment fund under a State unemployment
compensation law under section 3305 (g) of title 26;
(2) "Federal wages" means all pay and allowances, in cash
and in kind, for Federal service;
(3) "Federal employee" means an individual who has per-
formed Federal service;
(4) "compensation" means cash benefits payable to an indi-
vidual with respect to his unemployment including any portion
thereof payable with respect to dependents;
(5) "benefit year" means the benefit year as defined by the
applicable State unemployment compensation law, and if not so
defined the term means the period prescribed in the agreement
under this subchapter with a State or, in the absence of such an
agreement, the period prescribed by the Secretary of Labor;
(6) "State" means the several States, the District of Columbia,
the Commonwealth of Puerto Rico, and the Virgin Islands;¹
1 Paragraph (6) was amended by section 116(e) (1) of P.L. 94-566.
735
UCFE/UCX
(7) "United States", when used in a geographical sense, means
the States; and
(8) "base period" means the base period as defined by the
applicable State unemployment compensation law for the bene-
fit year.¹
§ 8502. COMPENSATION UNDER STATE AGREEMENT.
(a) The Secretary of Labor, on behalf of the United States, may
enter into an agreement with a State, or with an agency administering
the unemployment compensation law of a State, under which the State
agency shall—
(1) pay, as agent of the United States, compensation under
this subchapter to Federal employees; and
(2) otherwise cooperate with the Secretary and with other
State agencies in paying compensation under this subchapter.
(b) The agreement shall provide that compensation will be paid
by the State to a Federal employee in the same amount, on the same
terms, and subject to the same conditions as the compensation which
would be payable to him under the unemployment compensation law
of the State if his Federal service and Federal wages assigned under
section 8504 of this title to the State had been included as employment
and wages under that State law.
(c) (Repealed.)
(d) A determination by a State agency with respect to entitlement
to compensation under an agreement is subject to review in the same
manner and to the same extent as determinations under the State
unemployment compensation law, and only in that manner and to
that extent.
(e) Each agreement shall provide the terms and conditions on
which it may be amended or terminated.
§ 8503. COMPENSATION ABSENT STATE AGREEMENT.
(a) In the case of a Federal employee whose Federal service and
Federal wages are assigned under section 8504 of this title to a State
which does not have an agreement with the Secretary of Labor, the
Secretary, under regulations prescribed by him, shall, on the filing
by the Federal employee of a claim for compensation under this sub-
section, pay compensation to him in the same amount, on the same
terms, and subject to the same conditions as would be paid to him
under the unemployment compensation law of the State if his Federal
service and Federal wages had been included as employment and
wages under that State law. However, if the Federal employee, with-
out regard to his Federal service and Federal wages, has employ-
ment or wages sufficient to qualify for compensation during the
1 Paragraph (8) was added by section 214 (b) of P.L. 94-566.
UCFE/UCX
736
benefit year under that State law, then payments of compensation
under this subsection may be made only on the basis of his Federal
service and Federal wages.
(b) A Federal employee whose claim for compensation under sub-
section (a) of this section is denied is entitled to a fair hearing under
regulations prescribed by the Secretary. A final determination by the
Secretary with respect to entitlement to compensation under this sec-
tion is subject to review by the courts in the same manner and to the
same extent as is provided by section 405 (g) of tile 42.¹
1
Ga
§ 8504. ASSIGNMENT OF FEDERAL SERVICE AND WAGES.
Under regulations prescribed by the Secretary of Labor, the Fed-
eral service and Federal wages of a Federal employee shall be assigned
to the State in which he had his last official station in Federal service
before the filing of his first claim for compensation for the benefit
year. However—
(1) if, at the time of filing his first claim, he resides in another
State in which he performed, after the termination of his Federal
service, service covered under the unemployment compensation
law of the other State, his Federal service and Federal wages shall
be assigned to the other State;
(2) if his last official station in Federal service, before filing
his first claim, was outside the United States, his Federal service
and Federal wages shall be assigned to the State where he resides
at the time he files his first claim.2
§ 8505. PAYMENTS TO STATES.
(a) Each State is entitled to be paid by the United States with
respect to each individual whose base period wages included Federal
wages an amount which shall bear the same ratio to the total amount
of compensation paid to such individual as the amount of his Federal
wages in his base period bears, to the total amount of his base period
wages.3
(b) Each State shall be paid, either in advance or by way of reim-
bursement, as may be determined by the Secretary of Labor, the sum
that the Secretary estimates the State is entitled to receive under this
subchapter for each calendar month. The sum shall be reduced or in-
creased by the amount which the Secretary finds that his estimate
for an earlier calendar month was greater or less than the sum which
should have been paid to the State. An estimate may be made on the
basis of a statistical, sampling, or other method agreed on by the
Secretary and the State agency.
(c) The Secretary, from time to time, shall certify to the Secretary
of the Treasury the sum payable to each State under this section. The
1 Section 8503 was amended by section 116 (e) (2) of P.L. 94-566.
2 Section 8504 was amended by section 116(e) (3) of P.L. 94–566.
³ Subsection (a) was amended by section 214(a) of P.L. 94-566.
737
UCFE/UCX
Secretary of the Treasury before audit or settlement by the General
Accounting Office, shall pay the State in accordance with the certifica-
tion from the funds for carrying out the purposes of this subchapter.
(d) Money paid a State under this subchapter may be used solely
for the purposes for which it is paid. Money so paid which is not used
for these purposes shall be returned, at the time specified by the agree-
ment, to the Treasury of the United States and credited to current
applicable appropriations, funds, or accounts from which payments
to States under this subchapter may be made.
(e) An agreement may—
(1) require each State officer or employee who certifies pay-
ments or disburses funds under the agreement, or who otherwise
participates in its performance, to give a surety bond to the
United States in the amount the Secretary considers necessary;
and
(2) provide for payment of the cost of the bond from funds for
carrying out the purposes of this subchapter.
(f) In the absence of gross negligence or intent to defraud the
United States, an individual designated by the Secretary, or desig-
nated under an agreement, as a certifying official is not liable for the
payment of compensation certified by him under this subchapter.
(g) In the absence of gross negligence or intent to defraud the
United States, a disbursing official is not liable for a payment by him
under this subchapter if it was based on a voucher signed by a certi-
fying official designated as provided by subsection (f) of this section.
(h) For the purpose of payments made to a State under subchap-
ter III of chapter 7 of title 42, administration by a State agency
under an agreement is deemed a part of the administration of the
State unemployment compensation law.
§ 8506. DISSEMINATION OF INFORMATION.
(a) Each agency of the United States and each wholly or partially
owned instrumentality of the United States shall make available to
State agencies which have agreements under this subchapter, or to
the Secretary of Labor, as the case may be, such information con-
cerning the Federal service and Federal wages of a Federal employee
as the Secretary considers practicable and necessary for the deter-
mination of the entitlement of the Federal employee to compensation
under this subchapter. The information shall include the findings of
the employing agency concerning—
(1) whether or not the Federal employee has performed Fed-
eral service;
(2) the periods of Federal service;
(3) the amount of Federal wages; and
(4) the reasons for termination of Federal service.
UCFE/UCX
738
The employing agency shall make the findings in the form and man-
ner prescribed by regulations of the Secretary. The regulations shall
include provision for correction by the employing agency of errors
and omissions. This subsection does not apply with respect to Federal
service and Federal wages covered by subchapter II of this chapter.¹
(b) The agency administering the unemployment compensation
law of a State shall furnish the Secretary such information as he con-
siders necessary or appropriate in carrying out this subchapter. The
information is deemed the report required by the Secretary for the
purpose of section 503 (a) (6) of title 42.
§ 8507. FALSE STATEMENTS AND MISREPRESENTATIONS.
(a) If a State agency, the Secretary of Labor, or a court of com-
petent jurisdiction finds that an individual
(1) knowingly has made, or caused to be made by another, a
false statement or representation of a material fact, or know-
ingly has failed, or caused another to fail, to disclose a material
fact; and
(2) as a result of that action has received an amount as com-
pensation under this subchapter to which he was not entitled;
the individual shall repay the amount to the State agency or the
Secretary. Instead of requiring repayment under this subsection, the
State agency or the Secretary may recover the amount by deductions
from compensation payable to the individual under this subchapter
during the 2-year period after the date of the finding. A finding by
a State agency or the Secretary may be made only after an opportunity
for a fair hearing, subject to such further review as may be appro-
priate under sections 8502(d) and 8503 (c) of this title.
(b) An amount repaid under subsection (a) of this section shall
be-
(1) deposited in the fund from which payment was made, if
the repayment was to a State agency; or
(2) returned to the Treasury of the United States and credited
to the current applicable appropriation, fund, or account from
which payment was made, if the repayment was to the Secretary.
§ 8508. REGULATIONS.
The Secretary of Labor may prescribe rules and regulations neces-
sary to carry out this subchapter and subchapter II of this chapter.
The Secretary, insofar as practicable, shall consult with representa-
tives of the State unemployment compensation agencies before pre-
scribing rules or regulations which may affect the performance by
the State agencies of functions under agreements under this
subchapter.
1.Subsection (a) was amended by section 313 of P.L. 94-566.
739
UCFE/UCX
SUBCHAPTER II-EX-SERVICEMEN
§ 8521. DEFINITIONS; APPLICATION.
(a) For the purpose of this subchapter-
(1) "Federal service" means active service, including active
duty for training purposes, in the armed forces which either
began after January 31, 1955, or terminated after October 27,
1958, if-
K
(A) that service was continuous for 90 days or more, or
was terminated earlier because of an actual service-incurred
injury or disability; and
(B) with respect to that service, the individual-
(i) was discharged or released under conditions other
than dishonorable; and
(ii) was not given a bad conduct discharge, or, if an
officer, did not resign for the good of the service;
(2) "Federal wages" means all pay and allowances, in cash
and in kind, of Federal service, computed on the basis of the
pay and allowances for the pay grade of the individual at the
time of his latest discharge or release from Federal service as
specified in the schedule applicable at the time he files his first
claim for compensation for the benefit year. The Secretary of
Labor shall issue, from time to time, after consultation with the
Secretary of Defense, schedules specifying the pay and allow-
ances for each pay grade of servicemen covered by this sub-
chapter, which reflect representative amounts for appropriate
elements of the pay and allowances whether in cash or in kind;
and
(3) "State" means the several States, the District of Columbia,
the Commonwealth of Puerto Rico, and the Virgin Islands.¹
(b) The provisions of subchapter I of this chapter, subject to the
modifications made by this subchapter, apply to individuals who
have had Federal service as defined by subsection (a) of this section.
§ 8522. ASSIGNMENT OF FEDERAL SERVICE AND WAGES.
Notwithstanding section 8504 of this title, Federal service and Fed-
eral wages not previously assigned shall be assigned to the State
in which the claimant first files claim for unemployment compensa-
tion after his latest discharge or release from Federal service. This
assignment is deemed as assignment under section 8504 of this title
for the purpose of this subchapter.²
§ 8523. DISSEMINATION OF INFORMATION.
(a) When designated by the Secretary of Labor, an agency of the
United States shall make available to the appropriate State agency
1 Paragraph (3) was amended by section 116(e) (4) of P.L. 94-566.
2 Section 8522 was amended by section 116(e) (5) of P.L. 94-566.
UCFE/UCX
740
or to the Secretary, as the case may be, such information, including
findings in the form and manner prescribed by regulations of the
Secretary, as the Secretary considers practicable and necessary for
the determination of the entitlement of an individual to compensa-
tion under this subchapter.
(b) Subject to correction of errors and omissions as prescribed by
regulations of the Secretary, the following are final and conclusive.
for the purpose of sections 8502 (d) and 8503 (c) of this title :
(1) Findings by an agency of the United States made in ac-
cordance with subsection (a) of this section with respect to-
(A) whether or not an individual has met any condition
specified by section 8521 (a) (1) of this title;
(B) the periods of Federal service; and
(C) the pay grade of the individual at the time of his latest
discharge or release from Federal service.
(2) The schedules of pay and allowances prescribed by the
Secretary under section 8521 (a) (2) of this title.
§ 8524. [Repealed.]
§ 8525. EFFECT ON OTHER STATUTES.
(a) [Repealed].
(b) An individual is not entitled to compensation under this sub-
chapter for any period with respect to which he receives—
(1) a subsistence allowance under chapter 31 of title 38 or
under part VIII of Veterans Regulation Numbered 1(a); or
(2) an educational assistance allowance under chapter 35 of
title 38.
*
*
*
*
**
*
Revised April 1978
Excerpts From Public Law 93-66, As Amended
TITLE II-PROVISIONS RELATING TO THE
SOCIAL SECURITY ACT
Part B-Provisions Relating to Federal Program of
Supplemental Security Income
Supplemental Security Income Benefits For Essential Persons
Sec. 211. (a) (1) In determining (for purposes of Title XVI of the
Social Security Act, as in effect after December 1973) the eligibility
for and the amount of the supplemental security income benefit pay-
able to any qualified individual (as defined in subsection (b)), with
respect to any period for which such individual has in his home an
essential person (as defined in subsection (c))-
(A) the dollar amounts specified in subsection (a) (1) (A) and
(2) (A), and subsection (b)(1) and (2), of section 1611 of such
Act, shall each be increased by $876¹ for each such essential person,
and
-
(B) the income and resources of such individual shall (for
purposes of such title XVI) be deemed to include the income and
resources of such essential person;
except that the provisions of this subsection shall not, in the case of
any individual, be applicable for any period which begins in or after
the first month that such individual-
(C) does not but would (except for the provisions of sub-
paragraph (B)) meet-
(i) the criteria established with respect to income in sec-
tion 1611(a) of such Act, or
(ii) the criteria established with respect to resources by
such section 1611(a), (or, if applicable, by section 1611(g)
of such Act).
Kg
(2) The provisions of section 1611(g) of the Social Security Act
(as in effect after December 1973) shall, in the case of any qualified
21-746 O - 78 - 55
1 Under section 1617 of the Social Security Act, the amount $876 is increased to reflect
cost-of-living changes. The amounts (on a monthly basis) are shown in item 2 of appendix
E for 1975 and later years.
(741)
P.L. 93-66
742
individual (as defined in subsection (b)), be applied so as to include,
in the resources of such individual, the resources of any person (de-
scribed in subsection (b) (2)) whose needs were taken into account
in determining the need of such individual for the aid or assistance
referred to in subsection (b) (1).
(b) For purposes of this section, an individual shall be a "qualified
individual" only if-
(1) for the month of December 1973 such individual was a
recipient of aid or assistance under a State plan approved under
title I, X, XIV, or XVI of the Social Security Act, and
(2) in determining the need of such individual for such aid
or assistance for such month under such State plan, there were
taken into account the needs of a person (other than such indi-
vidual) who-
(A) was living in the home of such individual, and
(B) was not eligible (in his or her own right) for aid or
assistance under such State plan for such month.
(c) The term "essential person", when used in connection with any
qualified individual, means a person who-
(1) for the month of December 1973 was a person (described
in subsection (b) (2)) whose needs were taken into account in
determining the need of such individual for aid or assistance under
a State plan referred to in subsection (b) (1) as such State plan
was in effect for June 1973,
(2) lives in the home of such individual,
(3) is not eligible (in his or her own right) for supplemental
security income benefits under title XVI of the Social Security
Act (as in effect after December 1973), and
(4) is not the eligible spouse (as that term is used in such title
XVI) of such individual or any other individual.
If for any month after December 1973 any person fails to meet the
criteria specified in paragraph (2), (3), or (4) of the preceding sen-
tence, such person shall not, for such month or any month thereafter
be considered to be an essential person.
Mandatory Minimum State Supplementation of SSI Benefits
Program
Sec. 212. (a) (1) In order for any State (other than the Common-
wealth of Puerto Rico, Guam, or the Virgin Islands) to be eligible for
payments pursuant to title XIX, with respect to expenditures for any
quarter beginning after December 1973, such State must have in effect
an agreement with the Secretary of Health, Education, and Welfare
(hereinafter in this section referred to as the "Secretary") whereby
743
P.L. 93-66
the State will provide to individuals residing in the State supple-
mentary payments as required under paragraph (2).
(2) Any agreement entered into by a State pursuant to paragraph
(1) shall provide that each individual who—-
(A) is an aged, blind, or disabled individual (within the
meaning of section 1614(a) of the Social Security Act, as enacted
by section 301 of the Social Security Amendments of 1972), and
(B) for the month of December 1973 was a recipient of (and
was eligible to receive) aid or assistance (in the form of money
payments) under a State plan of such State (approved under
title I, X, XIV, or XVI, of the Social Security Act)
shall be entitled to receive, from the State, the supplementary pay-
ment described in paragraph (3) for each month, beginning with
January 1974, and ending with whichever of the following first occurs:
(C) the month in which such individual dies, or
(D) the first month in which such individual ceases to meet the
condition specified in subparagraph (A);
except that no individual shall be entitled to receive such supple-
mentary payment for any month, if, for such month, such individual
was ineligible to receive supplemental income benefits under title
XVI of the Social Security Act by reason of the provisions of section
1611(e) (1) (A), (2), or (3), 1611 (f), or 1615 (c) of such Act.
(3) (A) The supplementary payment referred to in paragraph (2)
which shall be paid for any month to any individual who is entitled
thereto under an agreement entered into pursuant to this subsection,
shall (except as provided in subparagraphs (D) and (E)) be an
amount equal to (i) the amount by which such individual's "December
1973 income" (as determined under subparagraph (B)) exceeds the
amount of such individual's "title XVI benefit plus other income" (as
determined under subparagraph (C)) for such month, or (ii) if
greater, such amount as the State may specify.
(B) For purposes of subparagraph (A), an individual's "December
1973 income” means an amount equal to the aggregate of—
(i) the amount of the aid or assistance (in the form of money
payments) which such individual would have received (including
any part of such amount which is attributable to meeting the needs
of any other person whose presence in such individual's home is
essential to such individual's well-being) for the month of Decem-
ber 1973 under a plan (approved under title I, X, XIV, or XVI,
of the Social Security Act) of the State entering into an agree-
ment under this subsection, if the terms and conditions of sụch
plan (relating to eligibility for and amount of such aid or assist-
ance payable thereunder) were, for the month of December 1973,
the same as those in effect, under such plan, for the month of
S
P.L. 93-66
744
June 1973, together with the bonus value of food stamps for
January 1972, as defined in section 401 (b) (3) of Public Law
92-603, if, for such month, such individual resides in a State
which provides State supplementary payments (I) of the type
described in section 1616(a) of the Social Security Act, and (II)
the level of which has been found by the Secretary pursuant to
section 8 of Public Law 93-233 to have been specifically increased
so as to include the bonus value of food stamps, and
(ii) the amount of the income of such individual (other than
the aid or assistance described in clause (i)) received by such
individual in December 1973, minus any such income which did
not result, but which if properly reported would have resulted
in a reduction in the amount of such aid or assistance.
(C) For purposes of subparagraph (A), the amount of an individ-
ual's "title XVI benefit plus other income" for any month means an
amount equal to the aggregate of-
(i) the amount (if any) of the supplemental security income
benefit to which such individual is entitled for such month under
title XVI of the Social Security Act, and
(ii) the amount of any income of such individual for such
month (other than income in the form of a benefit described in
clause (i)).
(D) If the amount determined under subparagraph (B)(i) in-
cludes, in the case of any individual, an amount which was payable to
such individual solely because of-
(i) a special need of such individual (including any special
allowance for housing, or the rental value of housing furnished
in kind to such individual in lieu of a rental allowance) which
existed in December 1973, or
(ii) any special circumstance (such as the recognition of the
needs of a person whose presence in such individual's home, in
December 1973, was essential to such individual's well-being),
and, if for any month after December 1973 there is a change with
respect to such special need or circumstance which, if such change
had existed in December 1973, the amount described in subparagraph
(B) (i) with respect to such individual would have been reduced on
account of such change, then, for such month and for each month
thereafter the amount of the supplementary payment payable under
the agreement entered into under this subsection to such individual
shall (unless the State, at its option, otherwise specifies) be reduced
by an amount equal to the amount by which the amount (described
in subparagraph (B)(i)) would have been so reduced.
(E) (i) In the case of an individual who, for December 1973 lived
as a member of a family unit other members of which received aid
745
P.L. 93-66
(in the form of money payments) under a State plan of a State
approved under part A of title IV of the Social Security Act, such
State at its option, may (subject to clause (ii)) reduce such individ-
ual's December 1973 income (as determined under subparagraph (B))
to such extent as may be necessary to cause the supplementary pay-
ment (referred to in paragraph (2)) payable to such individual for
January 1974 or any month thereafter to be reduced to a level designed
to assure that the total income of such individual (and of the members
of such family unit) for any month after December 1973 does not
exceed the total income of such individual (and of the members of
such family unit) for December 1973.
(ii) The amount of the reduction (under clause (i)) of any individ-
ual's December 1973 income shall not be in an amount which would
cause the supplementary payment (referred to in paragraph (2))
payable to such individual to be reduced below the amount of such
supplementary payment which would be payable to such individual
if he had, for the month of December 1973 not lived in a family,
members of which were receiving aid under part A of title IV of the
Social Security Act, and had had no income for such month other
than that received as aid or assistance under a State plan approved
under title I, X, XIV, or XVI of the Social Security Act.
(b) (1) Any State having an agreement with the Secretary under
subsection (a) may enter into an administration agreement with the
Secretary whereby the Secretary will, on behalf of such State, make
the supplementary payments required under the agreement entered
into under subsection (a).
(2) Any such administration agreement between the Secretary and
a State entered into under this subsection shall provide that the State
will (A) certify to the Secretary the names of each individual who,
for December 1973, was a recipient of aid or assistance (in the form of
money payments) under a plan of such State approved under title I,
X, XIV, or XVI of the Social Security Act, together with the amount
of such assistance payable to each such individual and the amount of
such individual's December 1973 income (as defined in subsection
(a)(3)(B)), and (B) provide the Secretary with such additional
data at such times as the Secretary may reasonably require in order
properly, economically, and efficiently to carry out such administration
agreement.
(3) Any State which has entered into an administration agreement
under this subsection shall, at such times and in such installments as
may be agreed upon between the Secretary and the State, pay to the
Secretary an amount equal to the expenditures made by the Secretary
as supplementary payments to individuals entitled thereto under the
agreement entered into with such State under subsection (a).
P.L. 93-66
746
(c) (1) Supplementary payments made pursuant to an agreement
entered into under subsection (a) shall be excluded under section
1612(b)(6) of the Social Security Act (as in effect after December
1973) in determining income of individuals for purposes of title XVI
of such Act (as so in effect).
(2) Supplementary payments made by the Secretary (pursuant to
an administration agreement entered into under subsection (b)) shall,
for purposes of section 401 of the Social Security Amendments of
1972, be considered to be payments made under an agreement entered
into under section 1616 of the Social Security Act (as enacted by sec-
tion 301 of the Social Security Amendments of 1972); except that
nothing in this paragraph shall be construed to waive, with respect to
the payments so made by the Secretary, the provisions of subsection
(b) of such section 401.
(d) For purposes of subsection (a) (1), a State shall be deemed to
have entered into an agreement under subsection (a) of this section if
such State has entered into an agreement with the Secretary under
section 1616 of the Social Security Act under which—
(1) individuals, other than individuals described in subsection
(a)(2) (A) and (B), are entitled to receive supplementary pay-
ments, and
(2) supplementary benefits are payable, to individuals
described in subsection (a) (2) (A) and (B) at a level and under
terms and conditions which meet the minimum requirements
specified in subsection (a).
(e) Except as the Secretary may by regulations otherwise provide,
the provisions of title XVI of the Social Security Act (as enacted by
section 301 of the Social Security Amendments of 1972), including the
provisions of part B of such title, relating to the terms and conditions
under which the benefits authorized by such title are payable shall,
where not inconsistent with the purposes of this section, be applicable
to the payments made under an agreement under subsection (b) of this
section; and the authority conferred upon the Secretary by such title
may, where appropriate, be exercised by him in the administration of
this section.
(f) The provisions of subsection (a) (1) shall not be applicable in
the case of any State-
(1) the Constitution of which contains provisions which make
it impossible for such State to enter into and commence carrying
out (on January 1, 1974) an agreement referred to in subsection
(a), and
(2) the Attorney General (or other appropriate State official)
of which has, prior to July 1, 1973, made a finding that the State
Constitution of such State contains limitations which prevent
747
P.L. 93-66
such State from making supplemental payments of the type
described in section 1616 of the Social Security Act.
*
*
Part D-Provisions Relating to Medicaid
Coverage of Essential Persons Under Medicaid
Sec. 230. In the case of any State plan (approved under title XIX
of the Social Security Act) which for December 1973 provided medical
assistance to persons described in section 1905 (a) (vi) of such Act,
there is hereby imposed the requirement (and such State plan shall
be deemed to require) that medical assistance under such plan be pro-
vided to each such person (who for December 1973 was eligible for
medical assistance under such plan) for each month (after December
1973) that—
(1) the individual (referred to in the last sentence of section
1905 (a) of such Act) with whom such person is living continues
to meet the criteria (as in effect for December 1973) for aid or
assistance under a State plan (referred to in such sentence), and
(2) such person continues to have the relationship with such
individual described in such sentence and meets the other criteria
(referred to in such sentence) with respect to a State plan (so
referred to) as such plan was in effect for December 1973.
Federal matching under title XIX of the Social Security Act shall be
available for the medical assistance furnished to individuals eligible
for such assistance under this section.
Persons in Medical Institutions
Sec. 231. For purposes of section 1902 (a) (10) of the Social Secu-
rity Act, any individual who, for all (or any part of) the month of
December 1973-
(1) was an inpatient in an institution qualified for reimburse-
ment under title XIX of the Social Security Act, and
(2) (A) received or would (except for his being an inpatient in
such institution) have been eligible to receive aid or assistance
under a State plan approved under title I, X, XIV, or XVI of
such Act, and
(B) on the basis of his status as described in subparagraph
(A), was included as an individual eligible for medical assistance
under a State plan approved under title XIX of such Act
(whether or not such individual actually received aid or assistance
under a State plan referred to in subparagraph (A)),
P.L. 93-66
748
shall be deemed to be receiving such aid or assistance for such month
and for such succeeding month in a continuous period of months if,
for each month in such period-
(3) such individual continues to be (for all of such month)
an inpatient in such an institution and would (except for his being
an inpatient in such institution) continue to meet the conditions
of eligibility to receive aid or assistance under such plan (as such
plan was in effect for December 1973), and
(4) such individual is determined (under the utilization review
and other professional audit procedures applicable to State plans
approved under title XIX of the Social Security Act) to be in
need of care in such an institution.
Federal matching under title XIX of the Social Security Act shall be
available for the medical assistance furnished to individuals eligible
for such assistance under this section.
Blind and Disabled Medically Indigent Persons
Sec. 232. For purposes of section 1902 (a) (10) of the Social Security
Act, any individual who, for the month of December 1973 was eligible
for medical assistance by reason of his having been determined to
meet the criteria for blindness or disability (established by a State.
plan approved under title I, X, XIV, or XVI of such Act), shall be
deemed for purposes of title XIX to be an individual who is blind
or disabled within the meaning of section 1614(a) of the Social Se-
curity Act for each month in a continuous period of months (begin-
ning with the month of January 1974), if, for each month in such
period, such individual continues to meet the criteria for blindness
or disability so established by such a State plan (as it was in effect
for December 1973), and the other conditions of eligibility contained
in the plan of the State approved under title XIX (as it was in effect
in December 1973). Federal matching under title XIX of the Social
Security Act shall be available for the medical assistance furnished
to individuals eligible for such assistance under this section.
Extension of Section 249E of Social Security
Amendments of 1972
Sec. 233. Section 249E of the Social Security Amendments of 1972
is amended by striking out "October 1974" and inserting in lieu thereof
"July 1975".
!
*
Revised April 1978
P.L. 93-233
749
Excerpts From Public Law 93-233, As Amended
Eligibility of Supplemental Security Income Recipients for Food
Stamps
Sec. 8. (a) ***
[NOTE: Subsections (a) and (b) of section 8 are no longer effective
as a result of the amendments made by P.L. 95-113, the Food and
Agriculture Act of 1977.]
(c) For purposes of section 6 (g) of the Food Stamp Act of 1977 and
subsections (b) (3) and (f) of this section, the level of State supple-
mentary payment under section 1616 (a) shall be found by the Secre-
tary to have been specifically increased so as to include the bonus value
of food stamps (1) only if, prior to October 1, 1973, the State has
entered into an agreement with the Secretary or taken other positive
steps which demonstrate its intention to provide supplementary pay-
ments under section 1616 (a) at a level which is at least equal to the
maximum level which can be determined under section 401(b)(1) of
the Social Security Amendments of 1972 and which is such that the
limitation on State fiscal liability under section 401 does result in a
reduction in the amount which would otherwise be payable to the
Secretary by the State, and (2) only with respect to such months as
the State may, at its option, elect.
(d) Upon the request of the State of California the Secretary shall
find, for purposes of the provisions specified in subsection (c) of this
section, that the level of such State's supplementary payments of the
type described in section 1616(a) of the Social Security Act has been
specifically increased for any month after June 1976 so as to include the
bonus value of food stamps if—
(1) the State law as in effect for such month specifically pro-
vides for increases in such payments on account of increases in the
level of benefits payable under title XVI of the Social Security
Act in a manner designed to assure that, whenever a cost-of-living
increase in the level of benefits payable under such title XVI be-
comes effective for any month after June 1976, the amount of the
State supplementary payment payable, for each month with
respect to which such cost-of-living increase is effective, to any
individual or to any individual with an eligible spouse, will be
increased by such amount as is necessary to assure that-
(A) the aggregate of (i) the amount payable for such
month to such individual, or to such individual with an
eligible spouse, under such title XVI, and (ii) the amount
payable for such month to such individual, or to such indi-
vidual with an eligible spouse, under the State's supplemen-
tary payments program,
T
P.L. 93-233
Revised April 1978
750
will exceed, by an amount which is not less than the monthly
amount of such cost-of-living increase (plus the monthly amount
of any previous cost-of-living increases in the level of benefits
payable under title XVI of the Social Security Act which became
effective for months after June 1976) —
(B) the aggregate of the amounts which would otherwise
have been payable, to such individual (or to such individual
with an eligible spouse), under such title XVI and under the
State's supplementary payments program for such month
under the law as in effect on June 1, 1976; and
(2) such month is (A) the month of July 1976, or (B) a
month thereafter which is in a period of consecutive months the
first of which is July 1976 and each of which is a month with
respect to which the conditions of paragraph (1) are met.
As used in this subsection, the term "cost-of-living increase in the level
of benefits payable under title XVI of the Social Security Act" means
an increase in benefits payable under such title XVI by reason of the
operation of section 1617 of such Act; except that the cost-of-living
increase in the level of benefits payable under such title XVI which
became effective for the month of July 1976 shall be deemed (for
purposes of determining the amount of the required excess referred to
in the matter following subparagraph (A) and preceding subpara-
graph (B) in paragraph (1)) to have provided an increase of $3.00
per month in the case of an individual without an eligible spouse and
$4.50 per month in the case of an individual with an eligible spouse.
(e) Section 401(b)(1) of the Social Security Amendments of 1972
is amended by striking out everything after the word "exceed" and
inserting in lieu thereof: "a payment level modification (as defined in
paragraph (2) of this subsection) with respect to such plans."
(f) The amendment made by subsection (e) shall not be effective
in any State which provides supplementary payments of the type de-
scribed in section 1616(a) of the Social Security Act the level of which
has been found by the Secretary to have been specifically increased so
as to include the bonus value of food stamps.¹
1
Continuation of Certain Demonstration Projects
Sec. 11. (a) If any State (other than the Commonwealth of Puerto
Rico, the Virgin Islands, or Guam) has any experimental, pilot, or
demonstration project (referred to in section 1115 of the Social
Security Act)—
1 Section 8 was amended by sec. 8 of P.L. 94-44, by sec. 2 of P.L. 94-365, by P.L. 94–379,
by sec. 3 of P.L. 95-59, and by sec. 1302 of P.L. 95-113. Also see sec. 6(g) of the Food Stamp
Act of 1977 which is printed in this document on p. 707.
Revised April 1978
P.L. 93-233
751
(1) which (prior to October 1, 1973) has been approved by the
Secretary of Health, Education, and Welfare (hereinafter in
this section referred to as the "Secretary"), for a period which
ends on or after December 31, 1973, as being a project with respect
to which the authority conferred upon him by subsection (a) or
(b) of such section 1115 will be exercised, and
(2) with respect to the costs of which Federal financial par-
ticipation would (except for the provisions of this section) be
denied or reduced on account of the enactment of section 301 of
the Social Security Amendments of 1972,
then, for any period (after December 31, 1973) with respect to which
such project is approved by the Secretary, Federal financial partici-
P.L. 93-233
752
pation in the costs of such project shall be continued in like manner
as if-
(3) such section 301 had not been enacted, and
(4) such State (for the month of January 1974 and any month
therafter) continued to have in effect the State plan (approved
under title XVI) which was in effect for the month of October
1973, or the State plans (approved under titles I, X, and XIV of
the Social Security Act) which were in effect for such month,
as the case may be.
(b) With respect to individuals-
(1) who are participants in any project to which the provi-
sions of subsection (a) are applicable, and
(2) with respect to whom supplemental security income bene-
fits are (or would, except for their participation in such project,
be) payable under title XVI of the Social Security Act, or who
meet the requirements for aid or assistance under a State plan
approved under title I, X, XIV, or XVI of the Social Security
Act of the State in which such project is conducted (as such State
plan was in effect for July 1973),
the Secretary may waive such requirements of title XVI of such Act
(as enacted by section 301 of the Social Security Amendments of 1972)
to such extent as he determines to be necessary to the successful opera-
tion of such project.
(c) In the case of any State which has entered into an agreement
with the Secretary under section 1616 of the Social Security Act (or
which is deemed, under section 212 (d) of Public Law 93-66, to have
entered into such an agreement), then, of the costs of any project of
such State with respect to which there is (solely by reason of the pro-
visions of subsection (a)) Federal financial participation, the non-
Federal share thereof shall-
(1) be paid, from time to time, to such State by the Secretary,
and
(2) shall for purposes of section 1616(d) of the Social Security
Act and section 401 of the Social Security Amendments of 1972,
be treated in like manner as if such non-Federal share were sup-
plementary payments made by the Secretary on behalf of such
State pursuant to such agreement.
Social Services Regulations Postponed
Sec. 12. (a) Subject to subsection (b), no regulation and no modifi-
cation of any regulation, promulgated by the Secretary of Health,
Education, and Welfare (hereinafter referred to as the "Secretary")
after January 1, 1973, shall be effective for any period which begins
prior to October 1, 1975, if (and insofar as) such regulation or modi-
753
P.L. 93-233
fication of a regulation pertains (directly or indirectly) to the provi-
sions of law contained in sections 3(a)(4)(A), 402(a)(19)(G),
403(a)(3)(A), 603(a)(1)(A), 1003(a)(3)(A), 1403(a)(3)(A), or
1603 (a) (4) (A), of the Social Security Act.
(b) (1) The provisions of subsection (a) shall not be applicable to
any regulation relating to "scope of programs", if such regulation is
identical (except as provided in the succeeding sentence) to the pro-
visions of section 221.0 of the regulations (relating to social services)
proposed by the Secretary and published in the Federal Register on
May 1, 1973. There shall be deleted from the first sentence of subsection
(b) of such section 221.0 the phrase "meets all the applicable require-
ments of this part and".
(2) The provisions of subsection (a) shall not be applicable to any
regulation relating to "limitations on total amount of Federal funds
payable to States for services", if such regulation is identical (except
as provided in the succeeding sentence) to the provisions of section
221.55 of the regulations so proposed and published on May 1, 1973.
There shall be deleted from subsection (d) (1) of such section 221.55
the phrase "(as defined under day care services for children)"; and,
in lieu of the sentence contained in subsection (d) (5) of such section
221.55, there shall be inserted the following: "Services provided to a
child who is under foster care in a foster family home (as defined in
section 408 of the Social Security Act) or in a childcare institution
(as defined in such section), or while awaiting placement in such a
home or institution, but only if such services are needed by such child
because he is under foster care.”.
(3) The provisions of subsection (a) shall not be applicable to
any regulation relating to "rates and amounts of Federal financial
participation for Puerto Rico, the Virgin Islands, and Guam”, if such
regulation is identical to the provisions of section 221.56 of the regu-
lations so proposed and published on May 1, 1973.
(4) The provisions of subsection (a) shall not be construed to pre-
clude the Secretary from making any modification in any regulation
(described in subsection (a)) if such modification is technically neces-
sary to take account of the enactment of section 301 or 302 of the
Social Security Amendments of 1972.
(c) Notwithstanding the provisions of section 553 (d) of title 5,
United States Code, any regulation described in subsection (b) may
become effective upon the date of its publication in the Federal
Register.
Sec. 13. (a) ***
*
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P.L. 93-233
754
Medicaid Eligibility for Individuals Receiving Mandatory
State Supplementary Payments
(c) In addition to other requirements imposed by law as conditions
for the approval of any State plan under title XIX of the Social
Security Act, there is hereby imposed (effective January 1, 1974) the
requirement (and each such State plan shall be deemed to require)
that medical assistance under such plan shall be provided to any
individual-
(1) for any month for which there (A) is payable with respect
to such individual a supplementary payment pursuant to an agree-
ment entered into between the State and the Secretary of Health,
Education, and Welfare under section 212 (a) of Public Law
93-66, and (B) would be payable with respect to such individual
such a supplementary payment, if the amount of the supple-
mentary payments payable pursuant to such agreement were estab-
lished without regard to paragraph (3)(A)(ii) of such section
212(a), and
(2) in like manner, and subject to the same terms and condi-
tions, as medical assistance is provided under such plan to individ-
uals with respect to whom benefits are payable for such month
under the supplementary security income program established
by title XVI of the Social Security Act.
Federal matching under title XIX of the Social Security Act shall be
available for the medical assistance furnished to individuals who are
eligible for such assistance under this subsection.
**
**
*
*
*
*
**
Payment for Services of Physicians Rendered in a Teaching
Hospital
Sec. 15. (a) (1) Notwithstanding any other provision of law, the
provisions of section 1861 (b) of the Social Security Act, shall, subject
to subsection (b) of this section, for the period with respect to which
this paragraph is applicable, be administered as if paragraph (7) of
such section read as follows:
"(7) a physician where the hospital has a teaching program
approved as specified in paragraph (6), if (A) the hospital elects
to receive any payment due under this title for reasonable costs of
such services, and (B) all physicians in such hospital agree not
to bill charges for professional services rendered in such hospital
to individuals covered under the insurance program established
by this title.".
(2) Notwithstanding any other provision of law, the provisions of
section 1832 (a) (2) (B) (i) of the Social Security Act, shall, subject
755
P.L. 93-233
to subsection (b) of this section, for the period with respect to which
this paragraph is applicable, be administered as if subclause II of
such section read as follows:
"(II) a physician to a patient in a hospital which has a teach-
ing program approved as specified in paragraph (6) of section
1861 (b) (including services in conjunction with the teaching pro-
grams of such hospital whether or not such patient is an in-
patient of such hospital), where the conditions specified in para-
graph (7) of such section are met, and".
(b) The provisions of subsection (a) shall not be deemed to render
improper any determination of payment under title XVIII of the
Social Security Act for any service provided prior to the enactment
of this Act.
(c) (1) The Secretary of Health, Education, and Welfare shall ar-
range for the conduct of a study or studies concerning (A) appropri-
ate and equitable methods of reimbursement for physicians' services
under titles XVIII and XIX of the Social Security Act in hospitals
which have a teaching program approved as specified in section 1861
(b)(6) of such Act, (B) the extent to which funds expended under
such titles are supporting the training of medical specialties which are
in excess supply, (C) how such funds could be expended in ways
which support more rational distribution of physicians manpower
both geographically and by specialty, (D) the extent to which such
funds support or encourage teaching programs which tend to dispro-
portionately attract foreign medical graduates, and (E) the existing
and appropriate role that part of such funds which are expended to
meet in whole or in part the cost of salaries of interns and residents in
teaching programs approved as specified in section 1861 (b) (6) of
such Act.
(2) The studies required by paragraph (1) shall be the subject of
an interim report thereon submitted not later than March 1, 1975,
and a final report not later than March 1, 1976. Such reports shall be
submitted to the Secretary, the Committee on Finance of the Senate,
and the Committee on Ways and Means of the House of Representa-
tives, simultaneously.
(3) The Secretary shall request the National Academy of Sciences
to conduct such studies under an arrangement under which the actual
expenses incurred by such Academy in conducting such studies will
be paid by the Secretary. If the National Academy of Sciences is will-
ing to do so, the Secretary shall enter into such an arrangement with
such Academy for the conduct of such studies.
(4) If the National Academy of Sciences is unwilling to conduct
the studies required under this section, under such an arrangement
with the Secretary, then the Secretary shall enter into a similar
P.L. 93-233
756
Revised August 1978
arrangements with other appropriate nonprofit private groups or asso-
ciations under which such groups or associations shall conduct such
studies and prepare and submit the reports thereon as provided in
paragraph (2).
(5) The Social Security Administration shall study the interim
report called for in paragraph (2) and shall submit its analysis of
such interim report to the Committee on Finance of the Senate and
the Committee on Ways and Means of the House of Representatives
not later than June 1, 1975. The Social Security Administration shall
study and submit its analysis of the final report to the Committee
on Finance of the Senate and the Committee on Ways and Means of
the House of Representatives by June 1, 1976.¹
(d) The provisions of subsection (a) shall apply with respect to
cost accounting periods beginning after June 30, 1973, and prior to
October 1, 1978.2
Basisof Medicare Payment for Services Provided by
Agencies and Providers
Sec. 16. In the administration of titles V, XVII, and XIX of the
Social Security Act, the amount payable under such title to any
provider of services on account of services provided by such hospital,
skilled nursing facility, or home health agency shall be determined
(for any period with respect to which the amendments made by sec-
tion 233 of Public Law 92-603 would, except for the provisions of
this section, be applicable) in like manner as if the date contained in
the first and second sentences of subsection (f) of such section 233
were December 31, 1973, rather than December 31, 1972.
Postponement on Effective Date of Certain Requirements
Imposed With Respect to Payment for Physical Therapy
Services
Sec. 17. (a) In the administration of title XVII of the Social
Security Act, the amount payable thereunder with respect to physical
therapy and other services referred to in section 1861(v)(5)(A) of
such Act (as added by section 151(c) of the Social Security Amend-
ments of 1972) shall be determined (for the period with respect to
which the amendment made by such section 151 (c) would, except for
the provisions of this section, be applicable) in like manner as if the
"December 31, 1972", which appears in such subsection (d)(3) of
such section 151, read "the month in which there are promulgated, by
the Secretary of Health, Education, and Welfare, final regulations
1 Subsection (c) was amended by sections 7(a) and (b) of P.L. 93–368.
2 Subsection (d) was amended by section 7(c) of P.L. 93-368, section 1 of P.L.
94-368, and section 7 of P.L. 95-292.
757
P.L. 93-368
implementing the provisions of section 1861 (v) (5) of the Social
Security Act".
Modification of Provisions Establishing Supplemental Security
Income Program
Sec. 19. (a) Section 303 (c) of the Social Security Amendments of
1972 is amended to read as follows:
"(c) Section 9 of the Act of April 19, 1950 (64 Stat. 47) is
amended to read as follows:
“SEC. 9. Beginning with the quarter commencing July 1, 1950, the
Secretary of the Treasury shall pay quarterly to each State (from
sums made available for making payments to the States under section
403 (a) of the Social Security Act) an amount, in addition to the
amount prescribed to be paid to such State under such section, equal
to 80 per centum of the total amount of contributions by the State
toward expenditures during the preceding quarter by the State, under
the State plan approved under the Social Security Act for aid to de-
pendent children to Navajo and Hopi Indians residing within the
boundaries of the State on reservations or on allotted or trust lands,
with respect to whom payments are made to the State by the United
States under section 403 (a) of the Social Security Act, not counting
so much of such expenditure to any individual for any month as
exceeds the limitations prescribed in such section.."
(b) Notwithstanding the provisions of section 301 of the Social
Security Amendments of 1972, the Secretary of Health, Education,
and Welfare shall make payments to the 50 States and the District of
Columbia after December 31, 1973, in accordance with the provisions
of the Social Security Act as in effect prior to January 1, 1974, for
(1) activities carried out through the close of December 31, 1973, under
State plans approved under title I, X, XIV, or XVI, of such Act, and
(2) administrative activities carried out after December 31, 1973,
which such Secretary determines are necessary to bring to a close
activities carried out under such State plans.
21-746 O - 78
*
<<
Excerpt From Public Law 93-368
Sec. 8. Section 249B of the Social Security Amendments of 1972
is amended by striking out "June 30, 1974" and inserting in lieu
thereof "June 30, 1977".
56
*
**
*
*
P.L. 93-480
758
***
Sec. 4(a)
(b) The Civil Service Commission and the Secretary of Health,
Education, and Welfare shall submit to the Committee on Post Office
and Civil Service and the Committee on Ways and Means of the House
of Representatives, and to the Committee on Post Office and Civil
Service and the Committee on Finance of the Senate, on or before
March 1, 1975, a report on the steps which have been taken, and the
steps which are planned, to enable the Secretary of Health, Educa-
tion, and Welfare to make the determination and certification referred
to in section 1862 (c) of the Social Security Act. If such report is not
submitted to such committees on or before March 1, 1975, the date
specified in such section (as amended by this section) shall be deemed
to be July 1, 1975, rather than January 1, 1976.
Excerpts From the Social Services Amendments of 1974
Public Law 93-647, as Amended
Excerpt From Public Law 93-480
Sec. 3(a) ***
*
*
*
*
*
*
*
*
(f) Any child day care service provided under any plan of a State
approved under part A, or developed under part B, of title IV of
the Social Security Act must meet the requirements applicable, under
subsection (a) (9) of section 2002 of the Social Security Act, as
amended by this Act, to child day care services with respect to which
payment is made under that section. The requirements imposed by
this subsection are in lieu of any requirements that would otherwise
be applicable under section 522(d) of the Economic Opportunity Act
of 1964 to child day care services provided under any plan of a State
approved under part A, or developed under part B, of title IV of
the Social Security Act.¹
(g) Section 12(a) of Public Law 93-233 is amended by striking
out "January 1, 1975" and inserting "October 1, 1975" in lieu thereof.
Notwithstanding the provisions of section 12(a) of Public Law 93–
233, the Secretary may make any modification in any regulation de-
scribed in that section if the modification is necessary to implement
the provisions of this part.
*
*
*
1 Provision modified for October 1, 1975-January 31, 1976. See section 7(a) (3).
Revised April 1978
P.L. 93-647
759
(j) Notwithstanding the provisions of paragraph (2) of section
2002 (a) of the Social Security Act, as amended by this Act, the limi-
tation imposed by such paragraph (2) for the fiscal year beginning
July 1, 1975, with respect to any State shall be the allotment of the
State for that fiscal year as determined under section 1130 of the
Social Security Act. In determining, for the purposes of that limita-
tion, the total amount of the payments made to any State with re-
spect to expenditures during fiscal year beginning July 1, 1975, there
shall be included the amount of any payments made to the State that
are chargeable against the allotment of the State for the fiscal yeaṛ
beginning July 1, 1975, under such section 1130.
Report by the Secretary
Sec. 4. Prior to July 1, 1977, the Secretary shall submit to the Con-
gress a report on the effectiveness of the program established by title
XX of the Social Security Act, as amended by this Act, during cal-
endar years 1975 and 1976, together with recommendations, if any, for
improvements in that program.
Sec. 7. (a) (1) ***
(2) Notwithstanding the provisions of section 2004 of the Social
Security Act, as amended by this Act, the first services program year
of each State shall begin on October 1, 1975, and end with the close of,
at the option of the State-
(A) the day in the twelve-month period beginning October 1,
1975, or
(B) the day in the twelve-month period beginning October 1,
1976,
which is the last day of the twelve-month period, established by the
State as its services program year under that section. Notwithstand-
ing the provisions of subsection (b) of section 2003 of the Social Se-
curity Act, as amended by this Act, the aggregate expenditures
required by that subsection with respect to the first services program
year of each State shall be the amount which bears the same ratio to
the amount that would otherwise be required under that subsection as
the number of months in the State's first services program year bears
to twelve.
(3) Notwithstanding paragraph (1) of this subsection or section
3(f), payments under title IV or section 2002 (a) (1) of the Social
Security Act with respect to expenditures made prior to October 1,
1978, in connection with the provision of child day care services in
day care centers and group day care homes, in the case of children
between the ages of six weeks and six years, may be made without
P.L. 93-647
760
Revised April 1978
regard to the requirements relating to staffing standards which are
imposed by or under section 2002 (a) (9) (A)(ii) of such Act, so long
as the staffing standards actually being applied in the provision of
the services involved (A) comply with applicable State law (as in
effect at the time the services are provided), (B) are no lower than
the corresponding staffing standards which were imposed or required
by applicable State law on September 15, 1975, and (C) are no lower,
in the case of any day care center or group day care home, than the
corresponding standards actually being applied in such center or home
on September 15, 1975.¹
Sec. 101(a)
***
(c) (1) Notwithstanding the provisions of section 402 (a) of the
Social Security Act, in addition to the amounts required to be dis-
regarded under clause (8) (A) of such section, there is imposed the
requirement (and the State plan shall be deemed to include the re-
quirement) that for the 15 months beginning July 1, 1975, in mak-
ing the determination under clause (7), the State agency shall with
respect to any month in such year and in addition to the amounts
required to be disregarded under clause (8) (A), disregard amounts
payable under section 457 (a) (1).
Excerpt From Public Law 94-12, the Tax Reduction Act of 1975
TITLE VII-MISCELLANEOUS PROVISIONS
SEC. 701. CERTAIN UNEMPLOYMENT COMPENSATION.
(a)
(b) MODIFICATION OF AGREEMENTS.-The Secretary of Labor shall,
at the earliest practicable date after the enactment of this Act, pro-
pose to each State with which he has in effect an agreement entered
into pursuant to section 102 of the Emergency Unemployment Com-
pensation Act of 1974 a modification of such agreement designed to
cause payments of emergency compensation thereunder to be made
in the manner prescribed by such Act, as amended by subsection (a)
of this section. Notwithstanding any provision of the Emergency
Unemployment Compensation Act of 1974, if any such State shall fail
1 Paragraph (3) was added by sec. 3 of P.L. 94-120 and was amended by sec. 2 of P.L. 94-
401. and by sec. 1(d) of P.L. 95-171.
761
P.L. 94-12
or refuse, within a reasonable time after the date of the enactment of
this Act, to enter into such a modification of such agreement, the Sec-
retary of Labor shall terminate such agreement.
SEC. 702. SPECIAL PAYMENT TO RECIPIENTS OF BENEFITS UNDER
CERTAIN RETIREMENT AND SURVIVOR BENEFIT PRO-
GRAMS.
(a) PAYMENT.-The Secretary of the Treasury shall, at the earliest
practicable date after the enactment of this Act, make a $50 payment.
to each individual, who for the month of March 1975, was entitled
(without regard to sections 202(j)(1) and 223(b) of title II of the
Social Security Act and without the application of section 5(a)(ii)
of the Railroad Retirement Act of 1974) to-
(1) a monthly insurance benefit payable under title II of the
Social Security Act,
(2) a monthly annuity or pension payment under the Railroad
Retirement Act of 1935, the Railroad Retirement Act of 1937, or
the Railroad Retirement Act of 1974, or
(3) a benefit under the supplemental security income benefits
program established by title XVI of the Social Security Act;
except that, (A) such $50 payment shall be made only to individuals
who were paid a benefit for March 1975 in a check issued no later
than August 31, 1975; (B) no such $50 payment shall be made to any
individual who is not a resident of the United States (as defined in
section 210 (i) of the Social Security Act); and (C) if an individual
is entitled under two or more of the programs referred to in clauses
(1), (2), and (3), such individual shall be entitled to receive only one
such $50 payment. For purposes of this subsection, the term "resident"
means an individual whose address of record for check payment pur-
poses is located within the United States.
(b) RECIPIENT IDENTIFICATION.-The Secretary of Health, Educa-
tion, and Welfare and the Railroad Retirement Board shall provide
the Secretary of the Treasury with such information and data as may
be needed to enable the Secretary of the Treasury to ascertain which
individuals are entitled to the payment authorized under subsection
(a).
(c) COORDINATION WITH OTHER FEDERAL PROGRAMS.-Any payment
made by the Secretary of the Treasury under this section to any indi-
vidual shall not be regarded as income (or, in the calendar year 1975,
as a resource) of such individual (or of the family of which he is a
member) for purposes of any Federal or State program which under-
takes to furnish aid or assistance to individuals or families, where
eligibility to receive such aid or assistance (or the amount of such aid
or assistance) under such program is based on the need therefor of the
P.L. 94-12
762
individual or family involved. The requirement imposed by the pre-
ceding sentence shall be treated as a condition for Federal financial
participation in any State (or local) welfare program for any calen-
dar quarter commencing after the date of enactment of this Act.
(d) APPROPRIATIONS AUTHORIZATION.-There are hereby authorized
to be appropriated, out of any funds in the Treasury not otherwise
appropriated, such sums as may be necessary to carry out the provi-
sions of this section.
(e) PAYMENT NOT TO BE CONSIDERED INCOME.-Payments made
under this section shall not be considered as gross income for purposes
of the Internal Revenue Code of 1954.
Excerpt From the Emergency Compensation and Special
Unemployment Assistance Extension Act of 1975
*
*
**
Public Law 94-45
*
**
Study and Report by Secretary of Labor
Sec. 104. The Secretary of Labor shall conduct a study and review
of the program established by the Emergency Unemployment Com-
pensation Act of 1974 and the program established under title II of
the Emergency Jobs and Unemployment Assistance Act of 1974 and
shall submit to the Congress not later than January 1, 1977, a report
on such study and review. Such study and review shall include-
(1) the employment, economic, and demographic characteristics
of individuals receiving benefits under either such program,
(2) the needs of the long-term unemployed for job counseling,
testing, referral and placement services, skill and apprenticeship
training, career-related education programs, and public service
employment opportunities, and
(3) an examination of all other benefits to which individuals
receiving benefits under either such program are eligible together
with an investigation of important factors affecting unemploy-
ment, a comparison of the aggregate value of such other benefits
plus benefits received under either such program with the amount
of compensation received by such individuals in their most recent
position of employment.
Modification of Agreements
Sec. 105. The Secretary of Labor shall, at the earliest practicable
date after the date of the enactment of this Act, propose to each State
with which he has in effect an agreement under section 102 of the
Emergency Unemployment Compensation Act of 1974 a modification.
763
P.L. 94-45
of such agreement designed to provide for the payment of the emer-
gency compensation benefits allowable under such Act by reason of the
amendments made by this part. Notwithstanding any provision of the
Emergency Unemployment Compensation Act of 1974, if any State
fails or refuses, within the three-week period beginning on the date
of the enactment of this Act, to enter into such a modification of such
agreement, the Secretary of Labor shall terminate such agreement.
*
*
Repayment of State Loans
Sec. 110. (a) Section 3302 (c)(3) of the Internal Revenue Code of
1954 is amended by adding at the end thereof the following new sen-
tence: "The provisions of the preceding sentence shall not be appli-
cable with respect to the taxable year beginning January 1, 1975, or
any succeeding taxable year which begins before January 1, 1978;
and, for purposes of such sentence, January 1, 1978, shall be deemed
to be the first January 1 occurring after January 1, 1974, and consecu-
tive taxable years in the period commencing January 1, 1978, shall be
determined as if the taxable year which begins on January 1, 1978,
were the taxable year immediately succeeding the taxable year which
began on January 1, 1974.”.
(b) (1) The amendment made by subsection (a) shall not be appli-
cable in the case of any State unless the Secretary of Labor finds that
such State has studied and taken appropriate action with respect to
the financing of its unemployment programs so as substantially to
accomplish the purpose of restoring the fiscal soundness of the State's
unemployment account in the Unemployment Trust Fund and permit-
ting the repayment within a reasonable time of any advances made
to such account under title XII of the Social Security Act. For pur-
poses of the preceding sentence, appropriate action with respect to the
financing of a State's unemployment programs means an increase in
the State's unemployment tax rate, an increase in the State's unem-
ployment tax base, a change in the experience rating formulas, or a
combination thereof.
(2) The Secretary of Labor shall promptly prescribe and publish
in the Federal Register regulations setting forth the criteria according
to which he will determine the requirements of the preceding
paragraph.
(3) Immediately after he makes a determination with respect to any
State under paragraph (1), the Secretary of Labor shall publish such
determination, together with his reasons therefor, in the Federal
Register.
P.L. 94-45
764
TITLE III-LOANS TO THE UNEMPLOYMENT FUND
OF THE VIRGIN ISLANDS
Sec. 301. (a) The Secretary of Labor (hereinafter in this section
referred to as the "Secretary") may make loans to the Virgin Islands
in such amounts as he determines to be necessary for the payment in
any month of compensation under the unemployment compensation
law of the Virgin Islands. A loan may be made under this subsection
for the payment of compensation in any month only if—
(1) the Governor of the Virgin Islands submits an application
therefor no earlier than the first day of the preceding month;
and
(2) such application contains an estimate of the amount of the
loan which will be required by the Virgin Islands for the pay-
ment of compensation in such month.
(b) For purposes of this section—
(1) an application for loan under subsection (a) shall be made
on such forms and shall contain such information and data (fiscal
and otherwise) concerning the operation and administration of
the unemployment compensation law of the Virgin Islands as the
Secretary deems necessary or relevant to the performance of his
duties under this section;
(2) the amount required by the Virgin Islands for the payment
of compensation in any month shall be determined with due allow-
ance for contingencies and taking into account all other amounts
that will be available in the unemployment fund of the Virgin
Islands for the payment of compensation in such month; and
(3) the term "compensation" means cash benefits payable to
individuals with respect to their unemployment, exclusive of ex-
penses of administration.
(c) Any loan made under subsection (a) shall be repayable (with-
out interest) not later than January 1, 1979. If after January 1, 1979,
any portion of any such loan remains unpaid, the Virgin Islands shall
pay interest thereon, until the loan is paid in full, at a rate equal to the
rate of interest in effect under section 6621 of the Internal Revenue
Code of 1954. If at some future date the Federal Unemployment Tax
Act shall be made applicable to the Virgin Islands, then, any amount of
principal or interest due on any such loan remaining unpaid on such
date shall be treated, for purposes of section 3302 (c) (3) of the Inter-
nal Revenue Code of 1954, as an advance made to the Virgin Islands
under title XII of the Social Security Act.¹
(d) No loan may be made under subsection (a) for any month
beginning after September 30, 1977. The aggregate of the loans which
may be made under subsection (a) shall not exceed $15,000,000.¹
¹ Subsections (c) and (d) were amended by Public Law 94–354.
765
P.L. 94-88
(e) There are authorized to be appropriated from the general fund
of the Treasury such sums as may be necessary to carry out this section.
**
*
*
Excerpts From Public Law 94-88
TITLE II—AMENDMENTS RELATING TO SOCIAL
SECURITY ACT
TEMPORARY WAIVERS OF CERTAIN REQUIREMENTS FOR CERTAIN STATES
Sec. 201. (a) If the Governor of any State, which has an approved
State plan under part A of title IV of the Social Security Act, submits
to the Secretary of Health, Education, and Welfare (hereinafter in
this section referred to as the "Secretary"), a request that any provi-
sion of section 402 (a) (26) of the Social Security Act or section 402
(a) (27) of such Act not be made applicable to such State prior to a
date specified in the request (which shall not be later than June 30,
1976) and-
(1) such request is accompanied by a certification, with respect
to such provision, of the Governor that the State cannot imple-
ment such provision because of the lack of authority to do so under
State law, and
(2) such request fully explains the reasons why such provi-
sion cannot be implemented, and sets forth any provision of State
law which impedes the implementation thereof,
the Secretary shall, if he is satisfied that such a waiver is justified,
grant the waiver so requested.
(b) During any period with respect to which a waiver, obtained
under subsection (a) with respect to section 402(a)(26)(A) of the
Social Security Act, is in effect with respect to any State, the provi-
sions of section 454 (4) and (5) of such Act shall be applied to such
State in like manner as if the phrase "with respect to whom an assign-
ment under section 402 (a) (26) of this title is effective" did not appear
therein, and the provisions of section 458 of such Act shall be applied
to such State in like manner as if the phrase "support rights assigned
under section 402 (a) (26)" read "child support obligations".
*
**
*
*
**
**
(d) The Secretary shall from time to time, submit to the Committee
on Finance of the Senate and the Committee on Ways and Means of
the House of Representatives, full and complete reports (the first of
which shall not be later than September 15, 1975) regarding any re-
quests which he has received for waivers under subsection (a) and
any waivers granted by him under such subsection, and such reports
shall include copies of all such requests for such waivers and any sup-
porting documents submitted with or in connection with any such
requests.
P.L. 94-88
766
SUPPORT ASSIGNMENTS BY RECIPIENTS DURING TRANSITIONAL PERIOD
Sec. 203. (a) In the case of any State the law of which on August 1,
1975, meets the requirements of section 402(a) (26) (A) of the Social
Security Act, the requirements of such section shall be effective, with
respect to individuals who are recipients on August 1, 1975, at such
time as may be determined by the State agency, but not later than the
time of the first redetermination of eligibility required after August 1,
1975, and in any event not later than February 1, 1976.
(b) In the case of any State described in subsection (a), the pro-
visions of section 454 (4) and (5) of the Social Security Act shall,
during the period beginning August 1, 1975, and ending December 31,
1975, be applied, with respect to all recipients of aid under the State
plan of such State (approved under part A of title IV of such Act)
who have not made an assignment pursuant to section 402 (a) (26) (A)
of such Act, in the case of such State in like manner as if the phrase
"with respect to whom an assignment under section 402(a)(26) of
this title is effective" did not appear therein, and the provisions of sec-
tion 458 of such Act shall, during such period, be applied in the case of
such State in like manner as if the phrase "support rights assigned
under section 402(a)(26)” read "child support obligations”.
*
*
*
Sec. 208. (a) ***
*
*
PAYMENTS TO STATES FOR CERTAIN EXPENSES INCURRED DURING JULY 1975
Sec. 206. Notwithstanding any other provision of law, amounts ex-
pended in good faith by any State (or by any of its political sub-
divisions) during July 1975 in employing and compensating staff per-
sonnel, leasing office space, purchasing equipment, or carrying out
other organizational or administrative activities, in preparation for or
implementation of the child support program under part D of title IV
of the Social Security Act, shall be considered for purposes of section
455 of such Act (as amended by this Act), to the extent that payment
for the activities involved would be made under such section (as so
amended) if section 101 of the Social Services Amendments of 1974
had become effective on July 1, 1975, to have been expended by the
State for the operation of the State plan or for the conduct of activities
specified in such section (as so amended).
PROTECTION OF CHILD'S BEST INTEREST
*
(d) (1) The Secretary of Health, Education, and Welfare shall sub-
mit to the Congress any proposed standards authorized to be pre-
Revised April 1978
P.L. 94-114
767
scribed by him under section 402(a) (26) (B) of the Social Security
Act (as added by the Social Services Amendments of 1974 and as
amended by subsection (a) of this section). Such standards shall take
effect at the end of the period which ends 60 days after such proposed
standards are so submitted to such committees unless, within such
period, either House of the Congress, adopts a resolution of disap-
proval.
(2) For purposes of this subsection, the term "resolution" means
only-
(A) a concurrent resolution of the two Houses of the Congress,
the matter after the resolving clause of which is as follows: "That
the Congress does not approve the standards (as authorized under
section 402 (a) (26) (B) of the Social Security Act) transmitted
to the Congress on
.", the blank space being filled
with the appropriate date; and
(B) a resolution of either House of the Congress, the matter
after the resolving clause of which is as follows: "That the
does not approve the standards (as authorized under
section 402(a) (26) (B) of the Social Security Act) transmitted
to the Congress on
" with the first blank space
being filled with the name of the resolving House, and the second
blank space being filled with the appropriate date.
>
(3) The provisions of subsection (b), (c), (d), (e), and (f) of sec-
tion 152 of the Trade Act of 1974 shall be applicable to resolutions
under this subsection, except that the "20 hours" referred to in sub-
sections (d) (2) and (e)(2) of such section shall be deemed to read
"4 hours".
*
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*
*
Excerpt From Public Law 94-114
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SEC. 6. All property conveyed to tribes pursuant to this Act and all
the receipts therefrom referred to in section 5 of this Act, shall be
exempt from Federal, State, and local taxation so long as such prop-
erty is held in trust by the United States. Any distribution of such
receipts to tribal members shall neither be considered as income or
resources of such members for purposes of any such taxation nor as
income, resources, or otherwise utilized as the basis for denying or
reducing the financial assistance or other benefits to which such mem-
ber or his household would otherwise be entitled to under the Social
Security Act or any other Federal or federally assisted program.
Revised April 1978
767-A
P.L. 94-164
Excerpt From Public Law 94-164, As Amended
Sec. 2. (a) **
(d) DISREGARD OF REFUND.-Any refund of Federal income taxes
made to any individual by reason of section 43 of the Internal Rev-
enue Code of 1954 (relating to earned income credit) shall not be
taken into account as income or receipts for purposes of determining
the eligibility, for the month in which such refund is made or any
month thereafter of such individual or any other individual for bene-
fits or assistance, or the amount or extent of benefits or assistance,
under any Federal program or under any State or local program
financed in whole or in part with Federal funds, but only if such
individual (or the family unit of which he is a member) is a recipient
P.L. 94-164
768
of benefits or assistance under such a program for the month before the
month in which such refund is made.¹
1
*
*
*
Excerpts From Public Law 94-182
PREVAILING CHARGE LEVEL FOR FISCAL YEAR 1976
Sec. 101. (a) Section 1842 (b) (3) of the Social Security Act is
amended by adding at the end thereof the following new sentence:
"Notwithstanding the provisions of the third and fourth sentences
preceding this sentence, the prevailing charge level in the case of a
physician service in a particular locality determined pursuant to such
third and fourth sentences for the fiscal year beginning July 1, 1975,
shall, if lower than the prevailing charge level for the fiscal year end-
ing June 30, 1975, in the case of a similar physician service in the same
locality by reason of the application of economic index data, be raised
to such prevailing charge level for the fiscal year ending June 30,
1975.".
(b) The amendment made by subsection (a) shall be applicable
with respect to claims filed under part B of title XVIII of the Social
Security Act with a carrier designated pursuant to section 1842 of
such Act and processed by such carrier after the appropriate changes
were made in the prevailing charge levels for the fiscal year beginning
July 1, 1975, on the basis of economic index data under the third and
fourth sentences of section 1842 (b) (3) of such Act; except that (1)
if less than the correct amount was paid (after the application of
subsection (a) of this section) on any claim processed prior to the
enactment of this section, the correct amount shall be paid by such
carrier at such time (not exceeding 6 months after the date of the
enactment of this section) as is administratively feasible, and (2) no
such payment shall be made on any claim where the difference between
the amount paid and the correct amount due is less than $1.
*
*
*
*
UPDATING OF THE LIFE SAFETY REQUIREMENTS APPLICABLE TO
NURSING HOMES
Sec. 106. (a) Section 1861 (j) (13) of the Social Security Act is
amended by striking out "(21st edition, 1967)" and inserting in lieu
thereof "(23d edition, 1973)".
1 Subsection (d) was amended by section 402 of Public Law 94-455.
769
P.L. 94-182
(b) Subject to subsection (c), the amendment made by subsection
(a) shall be effective on the first day of the sixth month which begins
after the date of enactment of this Act.¹
(c) Any institution (or part of an institution) which complied with
the requirements of section 1861 (j) (13) of the Social Security Act
on the day preceding the first day referred to in subsection (b) shall,
so long as such compliance is maintained (either by meeting the ap-
plicable provisions of the Life Safety Code (21st edition, 1967), with
or without waivers of specific provisions, or by meeting the applicable
provisions of a fire and safety code imposed by State law as provided
for in such section 1861 (j) (13)), be considered (for purposes of titles
XVIII and XIX of such Act) to be in compliance with the require-
ments of such section 1861 (j) (13), as it is amended by subsection (a)
of this section.
GRANTS FOR CERTAIN EXPERIMENTS AND DEMONSTRATION PROJECTS
Sec. 107. Nothing contained in section 222 (a) of Public Law 92-603
shall be construed to preclude or prohibit the Secretary of Health,
Education, and Welfare from including in any grant otherwise
authorized to be made under such section moneys which are to be used
for payments, to a participant in a demonstration or experiment with
respect to which the grant is made, for or on account of costs incurred.
or services performed by such participant for a period prior to the
date that the project of such participant is placed in operation, if—
(1) the applicant for such grant is a State or an agency thereof,
(2) such participant is an individual practice association which
has been in existence for at least 3 years prior to the date of enact-
ment of this section and which has in effect a contract with such
State (or an agency thereof), entered into prior to the date on
which the grant is approved by the Secretary, under which such
association will, for a period which begins before and ends after
the date such grant is so approved, provide health care services
for individuals entitled to care and services under the State plan
of such State which is approved under title XIX of the Social
Security Act,
(3) the purpose of the inclusion of the project of such associa-
tion is to test the utility of a particular rate-setting methodology,
designed to be employed in prepaid health plans, in an individual
practice association operation, and
(4) the applicant for such grant affirms that the use of moneys
from such grant to make such payments to such individual prac-
¹ Date of enactment was Dec. 31, 1975.
P.L. 94-182
770
tice association is necessary or useful in assuring that such asso-
ciation will be able to continue in operation and carry out the
project described in clause (3).
PROFESSIONAL STANDARDS REVIEW ORGANIZATION STARTUP DEADLINE
Sec. 108. (a) Subsections (c) (1) and (f)(1) of section 1152 of the
Social Security Act are each amended by striking out "January 1,
1976" and inserting in lieu thereof "January 1, 1978".
(b) The amendments made by subsection (a) shall not apply in any
area designated in accordance with section 1152 (a)(1) of the Social
Security Act where-
(1) the membership association or organization representing
the largest number of doctors of medicine in such area, or in the
State in which such area is located if different, has adopted by
resolution or other official procedure a formal policy position of
opposition to or noncooperation with the established program of
professional standards review; or
(2) the organization proposed to be designated by the Secre-
tary under section 1152 of such Act has been negatively voted
upon in accordance with the provisions of subsection (f) (2)
thereof.
STUDY REGARDING COVERAGE UNDER PART B OF MEDICARE FOR CERTAIN
SERVICES PROVIDED BY OPTOMETRISTS
Sec. 109. The Secretary of Health, Education, and Welfare shall
conduct a study of, and submit to the Congress not later than 4 months
after the date of enactment of this section a report containing his find-
ings and recommendations with respect to, the appropriateness of
reimbursement under the insurance program established by part B of
title XVIII of the Social Security Act for services performed by
doctors of optometry but not presently recognized for purposes of
reimbursement with respect to the provision of prosthetic lenses for
patients with aphakia.¹
*
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*
*
*
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TITLE II-PROVISIONS RELATING TO FOOD STAMPS
PROVIDED TO AFDC FAMILIES
FOOD STAMP DISTRIBUTION TO AFDC FAMILIES
Sec. 201. Notwithstanding any other provision of law, the final date
for compliance with regulations in implementation of section 10 (e) (7)
1 Date of enactment was Dec. 31, 1975.
Revised April 1978
P.L. 94-202
771
of the Food Stamp Act of 1964, as amended, may be extended until
October 1, 1976.¹
Sec. 3. The persons appointed under section 1631 (d) (2) of the
Social Security Act (as in effect prior to the enactment of this Act)
to serve as hearing examiners in hearings under section 1631(c) of
such Act may conduct hearings under titles II, XVI and XVIII of
the Social Security Act if the Secretary of Health, Education, and
Welfare finds it will promote the achievement of the objectives of such
titles, notwithstanding the fact that their appointments were made
without meeting the requirements for hearing examiners appointed
under section 3105 of title 5, United States Code; but their appoint-
ments shall terminate not later than at the close of the period ending
December 31, 1978, and during that period they shall be deemed to be
hearing examiners appointed under such section 3105 and subject as
such to subchapter II of chapter 5 of title 5, United States Code, to the
second sentence of such section 3105, and to all of the other provisions
of such title 5 which apply to hearing examiners appointed under
such section 3105.2
Sec. 6. (a) Notwithstanding the provisions of subsection (d) (5) (A)
of section 218 of the Social Security Act and the references thereto in
subsections (d) (1) and (d) (3) of such section 218, the agreement with
the State of West Virginia heretofore entered into pursuant to such
section 218 may, at any time prior to 1977, be modified pursuant to
subsection (c) (4) of such section 218 so as to apply to services per-
formed in policemen's or firemen's positions covered by a retirement
system on the date of the enactment of this Act by individuals as
employees of any class III or class IV municipal corporation (as
defined in or under the laws of the State) if the State of West Virginia
66
1 The provision of the Food Stamp Act referred to by this section reads as follows:
(e) The State agency of each State desiring to participate in the food stamp program
shall submit for approval a plan of operation specifying the manner in which such program
will be conducted within the State, the political subdivisions within the State in which the
State desires to conduct the program, and the effective dates of participation by each such
political subdivision. In addition, such plan of operation shall provide, among such other
provisions as may by regulations be required, the following: (1) *** (7) notwithstanding
any other provision of law, the institution of procedures under which any household par-
ticipating in the program shall be entitled, if it so elects, to have the charges, if any. for
its coupon allotment deducted from any grant or payment such household may be entitled
to receive under title IV of the Social Security Act and have its coupon allotment distrib-
uted to it with such grant or payment; and (8) * * ***
2 Section 1631 (d) (2) of the Social Security Act as in effect prior to repeal by this Act
read:
21-746 O
Excerpts From Public Law 94-202
"(2) To the extent the Secretary finds it will promote the achievement of the objectives
of this title, qualified persons may be appointed to serve as hearing examiners in hearings
under subsection (c) without meeting the specific standards prescribed for hearing ex-
aminers by or under subchapter II of chapter 5 of title 5. United States Code.
See also sec. 371 of P.L. 95-216 which is printed in this document on p. 815-816.
"
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P.L. 94-202
772
has at any time prior to the date of the enactment of this Act paid to
the Secretary of the Treasury, with respect to any of the services per-
formed in such positions by individuals as employees of such municipal
corporation, the sums prescribed pursuant to subsection (e) (1) of such
section 218. For purposes of this subsection, a retirement system which
covers positions of policemen or firemen, or both, and other positions,
shall, if the State of West Virginia so desires, be deemed to be a sepa-
rate retirement system with respect to the positions of such policemen
or firemen, or both, as the case may be.
(b) Notwithstanding the provisions of subsection (f) of section 218
of the Social Security Act, any modification in the agreement with the
State of West Virginia under subsection (a) of this section, to the
extent it involves services performed by individuals as employees of
any class III or class IV municipal corporation, may be made effective
with respect to-
(1) all services performed by such individual, in any police-
men's or firemen's position to which the modification relates, on
or after the date of the enactment of this Act; and
(2) all services performed by such individual in such a position
before such date of enactment with respect to which the State
of West Virginia has paid to the Secretary of the Treasury the
sums prescribed pursuant to subsection (e) (1) of such section 218
at the time or times established pursuant to such subsection
(e) (1), if and to the extent that—
(A) no refund of the sums so paid has been obtained, or
(B) a refund of part or all of the sums so paid has been
obtained but the State of West Virginia repays to the Secre-
tary of the Treasury the amount of such refund within ninety
days after the date that the modification is agreed to by the
State and the Secretary of Health, Education, and Welfare.
Sec. 7. Notwithstanding any other provision of law, no regulation
and no modification of any regulation, promulgated by the Secretary
of Health, Education, and Welfare, after the date of enactment of
this Act, shall become effective prior to the end of the eighteen-month
period which begins with the first day of the first calendar month
which begins after the date on which such regulation or modification
of a regulation is published in the Federal Register, if and insofar as
such regulation or modification of a regulation pertains, directly or
indirectly, to the frequency or due dates for payments and reports
required under section 218(e) of the Social Security Act.
Sec. 8. (a) This section may be cited as the "Combined Old-Age,
Survivors, and Disability Insurance-Income Tax Reporting Amend-
ments of 1975”.
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773
P.L. 94-202
(e) Any persons the Board of Trustees finds necessary to employ to
assist it in performing its functions under section 201 (g) (4) of the
Social Security Act may be appointed without regard to the civil
service or classification laws, shall be compensated, while so employed
at rates fixed by the Board of Trustees, but not exceeding $100 per day,
and, while away from their homes or regular places of business, they
may be allowed traveling expenses, including per diem in lieu of sub-
sistence, as authorized by law for persons in the Government service
employed intermittently.
(f) The Secretary shall not make any estimates pursuant to section
201 (g) (1) (A)(ii) of the Social Security Act before the Board of
Trustees prescribes the method of determining costs as provided in
section 201 (g) (4) of such Act. The determinations pursuant to sec-
tion 201(g) (1) (B) of the Social Security Act with respect to the
carrying out of the functions of the Department of Health, Education,
and Welfare specified in section 232 of such Act, which relate to the
administration of provisions of the Internal Revenue Code of 1954
(other than those referred to in clause (i) of the first sentence of sec-
tion 201(g) (1) (A) of the Social Security Act), during fiscal years
ending before the Board of Trustees prescribes the method of making
such determinations, shall be made after the Board of Trustees has
prescribed such method. The Secretary of Health, Education, and
Welfare shall certify to the Managing Trustee the amounts that should
be transferred from the general fund in the Treasury to the Trust
Funds (as referred to in section 201 (g) (1) (A) of the Social Security
Act) to insure that the general fund in the Treasury bears its proper
share of the costs of carrying out such functions in such fiscal years.
The Managing Trustee is authorized and directed to transfer any
such amounts in accordance with any certification so made.
*
*
*
(k) Notwithstanding the provisions of section 218(i) of the Social
Security Act, nothing contained in the amendments made by the pre-
ceding provisions of this section shall be construed to authorize or
require the Secretary, in promulgating regulations or amendments
thereto under such section 218 (i), substantially to modify the pro-
cedures, as in effect on December 1, 1975, for the reporting by States to
the Secretary of the wages of individuals covered by social security
pursuant to Federal-State agreements entered into pursuant to sec-
tion 218 of the Social Security Act.
P.L. 94-274
774
Excerpts From Public Law 94-274, as Amended
Section 1. This Act may be cited as the "Fiscal Year Transition
Act".
TITLE I
Sec. 101. (a) For the purposes of sections 222(d) (1), 421, 506(d),
516, 705, 901 (e) (2) and (f), 902, 905(b)(2), 1108, 1115, and 2002
(a) (2) of the Social Security Act, the term "fiscal year" includes the
period of July 1, 1976, through September 30, 1976, and the exercise
of authority pursuant to these provisions for that period shall be sub-
ject to the conditions stated in the following paragraphs:
(1) notwithstanding the provisions of section 222(d)(1) (42
U.S.C. 422 (d) (1)), the amount authorized to be transferred from
the trust funds pursuant to that section in the period beginning
July 1, 1976, and ending September 30, 1976, may not exceed 1.5
per centum of the total of the benefits certified for payment in the
first quarter of the fiscal year beginning July 1, 1975, and the
amount authorized to be transferred from the Trust Funds in
the fiscal year beginning October 1, 1976, may not exceed 1.5
per centum of the total of the benefits certified for payment in
the preceding twelve months;
(2) the fixed dollar allotment to each State under section 421
(42 U.S.C. 621) shall be $17,500;
(3) the reduction required by section 506(d) (42 U.S.C. 706
(d)) shall be the amount by which the sum expended from non-
Federal sources for that period is less than one-fourth the sum
expended from such sources for the fiscal year ending June 30,
1968;
(4) the amount allotted to each State under section 516 (42
U.S.C. 716) shall be the excess of one-fourth the amount of the
allotment for the State under sections 503 and 504 of the Social
Security Act (42 U.S.C. 703 and 704), for the fiscal year ending
June 30, 1973, plus the amount of any grants to the State under
sections 508, 509, and 510 of that Act (42 U.S.C. 708, 709, and
710), over the amount of the allotment of the State under sec-
tions 503 and 504 of that Act for the period;
(5) the limitation imposed by section 705 (b) (42 U.S.C. 906
(b)) on the amount that may be available for carrying out sec-
tion 705 (f) shall be $500,000 for that period;
(6) the percentage referenced in the second sentence of section
901(e)(2) (42 U.S.C. 1101 (e) (2)) shall be reduced to 10 per
centum for the purpose of advances to be made in that period;
(7) notwithstanding the provisions of section 901(f)(3)(A)
(42 U.S.C. 1101(f) (3)(A)), for the fiscal year beginning Octo-
775
P.L. 94-274
ber 1, 1976, the excess in the employment administration account
shall be retained until the amount in such account is equal to 160
per centum of the amount of the total appropriation by the Con-
gress out of the account for the period July 1, 1976, through Sep-
tember 30, 1976, and $37,500,000 or three thirty-seconds of the
amount in the employment security administration account,
whichever is the lesser, is authorized to be made available for that
period under the conditions provided therein;
(8) the determinative calendar year for the purpose of a
transfer to the unemployment account pursuant to section 902(a)
(42 U.S.C. 1102(a)), at the beginning of the fiscal year beginning
October 1, 1976, shall be calendar year 1975;
(9) the determinative calendar year for the purposes of a trans-
fer to the extended unemployment compensation account pur-
suant to section 905(b)(2) (B) (42 U.S.C. 1105(b)(2)(B)), at
the beginning of the fiscal year beginning October 1, 1976, shall
be calendar year 1975;
(10) the limitations imposed by section 1108 (42 U.S.C. 1308)
on amounts certified by the Secretary shall be one-fourth of the
limitations imposed by that section with respect to the fiscal year
ending June 30, 1976;
(11) the dollar limitation imposed by section 1115 (42 U.S.C.
1315) on the amount available for payments to the States for
the cost of projects under that section shall be $1,000,000 of the
aggregate amount appropriated for payments to the States for
the period; and
(12) notwithstanding the provisions of subparagraph (A) of
section 2002 (a) (2) (42 U.S.C. 1397a (a) (2)), the limitation
imposed by that subparagraph on payments with respect to
expenditures by a State for the period shall be one-fourth of the
limitation imposed on such payments with respect to expenditures
by the State for the fiscal year beginning July 1, 1975; and not-
withstanding the provisions of subparagraph (D) of section 2002
(a) (2), the maximum allotments under that subparagraph for the
period shall be $3,750,000 for Puerto Rico, $125,000 for Guam,
and $125,000 for the Virgin Islands, but nothing in this Act shall
apply to the second sentence of section 2002 (a) (2) (A).
(b) Notwithstanding the provisions of sections 503 and 504 of the
Social Security Act (42 U.S.C. 703 and 704), the fixed dollar allot-
ment to each State under each of these sections for the period of July
1, 1976, through September 30, 1976, shall be $17,500.
(c) Notwithstanding the provisions of section 1101 (a) (8) (B) of
the Social Security Act (42 U.S.C. 1301 (a) (8) (B)), the Federal
P.L. 94-274
776
percentages promulgated under that subparagraph in 1974 shall be
conclusive for each of the nine quarters in the period beginning on
July 1, 1975, and ending on September 30, 1977.
(d) Notwithstanding the provisions of section 2006 (c) of the Social
Security Act (42 U.S.C. 1397e (c)), the report on the operation of the
program established by title XX of that Act during the fiscal year
ending June 30, 1976, shall include the operation of that program
and
during the period of July 1, 1976, through September 30, 1976,
shall be submitted to the Congress prior to April 1, 1977.
Sec. 102. For the purposes of section 401 of the Social Security
Amendments of 1972 (42 U.S.C. 1382e note), the term "fiscal year"
includes the period of July 1, 1976, through September 30, 1976, and
the limitations imposed by section 401(a) on the amount payable to
the Secretary by a State shall be one-fourth of the non-Federal share
of expenditures as aid or assistance for quarters in calendar year 1972,
as determined under that section.
TITLE II
Sec. 201. The period of July 1, 1976, through September 30, 1976,
shall be treated as a fiscal year for the purpose of the following provi-
sions of law:
*
*
(11) section 305 (b) of the Social Security Amendments of 1972
(Public Law 92-603, 42 U.S.C. 401 note);
(12) sections 201 (a), (b), and (g) (1), 302(a), 403 (g), 424, 431,
502, 901 (b), (c), and (f), 903 (a)(1) and (b) (1), 1203, 1817(a), and
1841 (h) and (i) of the Social Security Act (42 U.S.C. 401 (a), (b),
and (g)(1), 502(a), 603 (g), 624, 631, 702, 1101 (b), (c), and (f),
1103 (a)(1) and (b)(1), 1323, 1395i (a), and 1395t (h) and (i));
*
*
*
*
(36) sections 103 (e) and 111(d) of the Social Security Amend-
ments of 1965 (42 U.S.C. 426a (c) and 1395i-1); and
*
*
*
Sec. 204. The period of July 1, 1976, through September 30, 1976,
shall be treated as part of the fiscal year beginning July 1, 1975, for
the purposes of the following provisions of law:
*
*:
(7) the following provisions of the Social Security Act:
section 201 (c) (42 U.S.C. 401 (c));
sections 403 (c) and (f) (42 U.S.C. 603 (c) and (f));
section 423 (c) (42 U.S.C. 623 (c));
Revised April 1978
P.L. 94-331
777
section 1118 (42 U.S.C. 1318);
section 1817(b) (42 U.S.C. 1395i (b))
section 1841 (b) (42 U.S.C. 1395t(b));
*
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*
*
Excerpts From Public Law 94-331, As Amended
*
1
*
*
*
SEC. 2. EXCLUSION FROM INCOME UNDER THE SUPPLE-
MENTAL SECURITY INCOME PROGRAM.
(a) IN GENERAL.-Section 1612(b) of the Social Security Act is
amended-
*
*
(1) by striking out the word "and" which appears at the end
of paragraph (9),
(2) by striking out the period at the end of paragraph (10)
and by inserting in lieu thereof "; and",
(3) by inserting the following new paragraph:
"(11) assistance received under the Disaster Relief Act of 1974
or other assistance provided pursuant to a Federal statute on ac-
count of a catastrophe which is declared to be a major disaster by
the President.".
(b) EFFECTIVE DATE.-The amendments made by this Act shall be
applicable only in the case of catastrophes which occur on or after
June 1, 1976.2
*
*
*
SEC. 4. AMENDMENT TO SUPPLEMENTAL SECURITY IN-
COME PROGRAM.
(a) IN GENERAL.-Section 1612(a)(2)(A) of the Social Security
Act is amended-
1 Paragraph (7) was amended by section 3(c) of Public Law 94-368.
2 Subsection (b) was amended by sec. 6 of P.L. 95–171.
(1) by striking out the word "and" which appears at the end
of clause (i) thereof and by inserting a comma in lieu of such
word, and
(2) by inserting immediately before the semicolon at the end
thereof the following: ", and (iii) support and maintenance shall
not be included and the provisions of clause (i) shall not be ap-
plicable in the case of any individual (and his eligible spouse,
if any) for the period which begins with the month in which such
individual (or such individual and his eligible spouse) began to
receive support and maintenance while living in a residential fa-
cility (including a private household) maintained by another
person and ends with the close of the month in which such indi-
vidual (or such individual and his eligible spouse) ceases to re-
ceive support and maintenance while living in such a residential
P.L. 94-331
Revised April 1978
778
facility (or, if earlier, with the close of the fifth month following
the month in which such period began), if, not more than 30 days
prior to the date on which such individual (or such individual
and his eligible spouse) began to receive support and maintenance
while living in such a residential facility, (I) such individual (or
such individual and his eligible spouse) were residing in a house-
hold maintained by such individual (or by such individual and
others) as his or their own home, (II) there occurred within the
area in which such household is located (and while such individ-
ual, or such individual and his spouse, were residing in the house-
hold referred to in subclause (I)) a catastrophe on account of
which the President declared a major disaster to exist therein for
purposes of the Disaster Relief Act of 1974, and (III) such in-
dividual declares that he (or he and his eligible spouse) ceased to
continue living in the household referred to in subclause (II)
because of such catastrophe".
(b) EFFECTIVE DATE.-The amendments made by this Act shall be
applicable only in the case of catastrophes which occur on or after
June 1, 1976.¹
*
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*
*
*
Excerpt From Public Law 94-368
*
*
*
*
Sec. 4. The amendments made by sections 2 and 3 of this Act shall
be effective with respect to periods beginning after June 30, 1976;
except that, for the twelve-month period beginning July 1, 1976, the
amendments made by section 3 shall be applicable with respect to
claims filed under part B of title XVIII of the Social Security Act
(after June 30, 1976, and before July 1, 1977) with a carrier desig-
nated pursuant to section 1842 of such Act and processed by such car-
rier after the appropriate changes were made pursuant to such section
3 in the prevailing charge levels for such twelve-month period under
the third and fourth sentences of section 1842 (b) (3) of the Social
Security Act.
*
*
Excerpt from Public Law 94-375
*
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**
Section 1. This Act may be cited as the "Housing Authorization
Act of 1976".
Sec. 2. (a) * *
*
*
*
*
*
:k
(h) Notwithstanding any other provision of law, the value of any
assistance paid with respect to a dwelling unit under the United States
Housing Act of 1937, the National Housing Act, section 101 of the
1 Subsecton (b) was amended by sec. 7 of P.L. 95-171.
Revised April 1978
779
P.L. 94-401
Housing and Urban Development Act of 1965, or title V of the
Housing Act of 1949 may not be considered as income or a resource
for the purpose of determining the eligibility of, or the amount of
the benefits payable to, any person living in such unit for assistance
under title XVI of the Social Security Act. This subsection shall
become effective on October 1, 1976.
*
**
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*
*
*
Excerpts From Public Law 94-401, As Amended
*
*
*
*
*
**
Sec. 3. (a) For purposes of title XX of the Social Security Act,
the amount of the limitation (imposed by section 2002 (a) (2) of such
Act) which is applicable to any State for the fiscal period beginning
July 1, 1976, and ending September 30, 1976, or which is applicable
to any State for the fiscal year ending September 30, 1977, and the
fiscal year ending September 30, 1978, shall be deemed to be equal to
whichever of the following is the lesser:
(1) an amount equal to—
(A) 106.4 per centum of the amount of the limitation so
imposed (as determined without regard to this section) in
the case of such fiscal period, or
(B) 108 per centum of the amount of the limitation so
imposed (as determined without regard to this section) in the
case of such fiscal year ending September 30, 1977, and such
fiscal year ending September 30, 1978, or
(2) an amount equal to (A) 100 per centum of such limitation
for such fiscal period or either such fiscal year (as determined
without regard to this section), plus (B) an amount equal to the
sum of (i) 75 per centum (in the case of such fiscal period) or 100
per centum (in the case of such fiscal year) of the total amount of
expenditures (I) which are made during such fiscal period or
year in connection with the provision of any child day care serv-
ice, and (II) with respect to which payment is authorized to be
made to the State under such title for such fiscal period or year,
and (ii) the aggregate of the amounts of the grants, made by the
State during such fiscal period or year, to which the provisions of
subsection (c)(1) are applicable.¹
(b) The additional Federal funds which become payable to any
State for the fiscal period or either fiscal year specified in subsection
(a) by reason of the provisions of such subsection shall, to the maxi-
mum extent that the State determines to be feasible, be employed in
such a way as to increase the employment of welfare recipients and
other low-income persons in jobs related to the provision of child day
care services.2
¹ Subsection (a) was amended by sec. 1(a) (1), (2) and (3) of P.L. 95-171.
2 Subsection (b) was amended by sec. 1(a) (4) of P.L. 95-171.
P.L. 94-401
780
Revised April 1978
(c) (1) Subject to paragraph (2), sums granted by a State to a
qualified provider of child day care services (as defined in paragraph
(3)(A)) during the fiscal period or either fiscal year specified in sub-
section (a), to assist such provider in meeting its Federal welfare
recipient employment incentive expenses (as defined in paragraph (3)
(B)) with respect to individuals employed in jobs related to the pro-
vision of child day care services in one or more child day care facilities
of such provider, shall be deemed, for purposes of title XX of the
Social Security Act, to constitute expenditures made by the State, in
accordance with the requirements and conditions imposed by such Act,
for the provision of services directed at one or more of the goals set
forth in clauses (A) through (E) of the first sentence of section 2002
(a) (1) of such Act. With respect to sums to which the preceding sen-
tence is applicable (after application of the provisions of paragraph
(2)), the figure "75", as contained in the first sentence of section 2002
(a) (1) of such Act, shall be deemed to read "100". -
•
(2) The provisions of paragraph (1) shall not be applicable—
(A) to the amount, if any, by which the aggregate of the sums
(as described in such paragraph) granted by any State during
the fiscal period or either fiscal year specified in subsection (a)
exceeds the amount by which such State's limitation (as referred
to in subsection (a)) is increased pursuant to such subsection for
such fiscal period or year, or
(B) with respect to any grant made to a particular qualified
provider of child day care services to the extent that (as deter-
mined by the Secretary) such grant is or will be used—
(i) to pay wages to any employee at an annual rate in
excess of $5,000, in the case of a public or nonprofit private
provider, or
(ii) to pay wages to any employee at an annual rate in
excess of $4,000, or to pay more than 80 per centum of the
wages of any employee, in the case of any other provider.
(3) For purposes of this subsection—
(A) the term "qualified provider of child day care services",
when used in reference to a recipient of a grant by a State, includes
a provider of such services only if, of the total number of children
receiving such services from such provider in the facility with
respect to which the grant is made, at least 20 per centum thereof
have some or all of the costs for the child day care services so
furnished to them by such provider paid for under the State's
services program conducted pursuant to title XX of the Social
Security Act; and
(B) the term "Federal welfare recipient employment expenses"
means expenses of a qualified provider of child day care services
Revised April 1978
P.L. 94-437
781
which constitute Federal welfare recipient employment incentive
expenses as defined in section 50B (a) (2) of the Internal Revenue
Code of 1954, or which would constitute Federal welfare recipient
employment incentive expenses as so defined if the provider were
a taxpayer entitled to a credit (with respect to the wages in-
volved) under section 40 of such Code.¹
(d) (1) In the administration of title XX of the Social Security
Act, the figure "75", as contained in the first sentence of section 2002
(a) (1) of such Act, shall, subject to paragraph (2), be deemed to read
"100" for purposes of applying such sentence to expenditures made
by a State for the provision of child day care services during the fiscal
year ending September 30, 1977, or the fiscal year ending September
30, 1978.
(2) The total amount of Federal payments which may be paid to
any State for either such fiscal year under title XX of the Social
Security Act at the rate specified in paragraph (1) shall not exceed
an amount equal to the excess (if any) of—
(A) the amount by which such State's limitation (as referred
to in subsection (a)) is increased pursuant to such subsection for
such year, over
(B) the aggregate of the amounts of the grants, made by the
State during such year, to which the provisions of subsection
(c) (1) are applicable.2
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Excerpts From Public Law 94-437
**
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*
Section 1. This Act may be cited as the "Indian Health Care Im-
provement Act".
*
TITLE IV-ACCESS TO HEALTH SERVICES
ELIGIBILITY OF INDIAN HEALTH SERVICE FACILITIES
UNDER MEDICARE PROGRAM
*
*
1 Subsection (c) was amended by sec. 1(a)-(4) of P.L. 95-171.
2 Subsection (d) was amended by sec. 1(a) (5) and (6) of P.L. 95–171.
3 Subsection (a) added section 1880 to the Social Security Act.
*
3
Sec. 401. (a) * * *³
(c) Any payments received for services provided to beneficiaries.
hereunder shall not be considered in determining appropriations for
health care and services to Indians.
(d) Nothing herein authorizes the Secretary to provide services to
an Indian beneficiary with coverage under title XVIII of the Social
Security Act, as amended, in preference to an Indian beneficiary
without such coverage.
P.L. 94-437
782
Sec. 402. (a) * * *1
(b) The Secretary is authorized to enter into agreements with the
appropriate State agency for the purpose of reimbursing such agency
for health care and services provided in Service facilities to Indians
who are eligible for medical assistance under title XIX of the Social
Security Act, as amended.
(c) Notwithstanding any other provision of law, payments to which
any facility of the Indian Health Service (including a hospital, inter-
mediate care facility, or skilled nursing facility) is entitled under a
State plan approved under title XIX of the Social Security Act by
reason of section 1911 of such Act shall be placed in a special fund to
be held by the Secretary and used by him (to such extent or in such
amounts as are provided in appropriation Acts) exclusively for the
purpose of making any improvements in the facilities of such Service
which may be necessary to achieve compliance with the applicable
conditions and requirements of such title. The preceding sentence shall
cease to apply when the Secretary determines and certifies that sub-
stantially all of the health facilities of such Service in the United
States are in compliance with such conditions and requirements.
*
(d) Any payments received for services provided recipients here-
under shall not be considered in determining appropriations for the
provision of health care and services to Indians.
SERVICES PROVIDED TO MEDICAID ELIGIBLE INDIANS
*:
**
*
*
**
Sec. 403. The Secretary shall include in his annual report required
by section 701 an accounting on the amount and use of funds made
available to the service pursuant to this title as a result of reimburse-
ments through titles XVIII and XIX of the Social Security Act, as
amended.
*
*
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*
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**
*
REPORT
*
*
Excerpts From Public Law 94-455
*
*
Sec. 101. Short Title.
This Act may be cited as the "Tax Reform Act of 1976”.
*
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Sec. 1207. ***
*
(f) Effective Dates.-
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1 Subsection (a) added section 1911 to the Social Security Act.
**
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:k
*
Revised April 1978
P.L. 94-563
783
*
(4) SUBSECTION (e)¹.
(A) The amendments made by paragraphs (1) (A) and (2) (A)
of subsection (e) shall apply to services performed after Decem-
ber 31, 1971. The amendments made by paragraphs (1) (B),
(1)(C), and (2) (B) of such subsection shall apply to taxable
years ending after December 31, 1971. The amendments made by
paragraph (3) of such subsection shall apply to calendar years
beginning after the date of the enactment of this Act.
(B) Notwithstanding subparagraph (A), if the owner or
operator of any boat treated a share of the boat's catch of fish
or other aquatic animal life (or a share of the proceeds there-
from) received by an individual after December 31, 1971, and
before the date of the enactment of this Act for services per-
formed by such individual after December 31, 1971, on such boat.
as being subject to the tax under chapter 21 of the Internal Reve-
nue Code of 1954, then the amendments made by paragraphs
(1) (A) and (B) and (2) of subsection (e) shall not apply with
respect to such services performed by such individual (and the
share of the catch, or proceeds therefrom, received by him for such
services).
*
*
*
*
*
*
SEC. 2111. EMPLOYER'S DUTIES IN CONNECTION WITH
THE RECORDING AND REPORTING OF TIPS.
*
(a) SUSPENSION OF RULINGS.-Until January 1, 1979, the law with
respect to the duty of an employer under section 6041 (a) of the Inter-
nal Revenue Code of 1954 to report charge account tips of employees
to the Internal Revenue Service (other than charge account tips in-
cluded in statements furnished to the employer under section 6053 (a)
of such Code) shall be administered-
*
(1) without regard to Revenue Rulings 75-400 and 76-231, and
(2) in accordance with the manner in which such law was
administered before the issuance of such rulings.
(b) EFFECTIVE DATE.-This section shall take effect on January 1,
1976.
*
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*
Ek
**
Excerpt From Public Law 94-563, As Amended
*
*
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*
**
Sec. 2. Notwithstanding any other provision of law, no refund or
credit of any tax paid under section 3101 or 3111 of the Internal
Revenue Code of 1954 by an organization described in section 501 (c)
1 Subsection (e) of section 1207 amended sections 3121(b), 1402(c) (2), 3401(a), 6050A,
and 6652(b) of the Internal Revenue Code and sections 210(a) and 211(c).(2) of the
Social Security Act.
P.L. 94-563
784
Revised April 1978
(3) of such Code which is exempt from income tax under section
501 (a) of such Code shall be made on or after September 9, 1976, by
reason of such organization's failure to file a waiver certificate under
section 3121(k) (1) of such Code (or the corresponding provision of
prior law), if such organization is deemed to have filed such a certifi-
cate under section 3121(k) (4) of such Code (as added by the first
section of this Act).
Sec. 3. In any case where-
(1) an individual performed service, as an employee of an
organization which is deemed under section 3121 (k) (5) of the
Internal Revenue Code of 1954 to have filed a waiver certificate
under section 3121 (k) (1) of such Code, at any time prior to the
period for which such certificate is effective;
(2) the taxes imposed by sections 3101 and 3111 of such Code
were paid with respect to remuneration paid for such service, but
such service (or any part thereof) does not constitute employment
(as defined in section 210 (a) of the Social Security Act and sec-
tion 3121 (b) of such Code) because the applicable taxes so paid
were refunded or credited (otherwise than through a refund or
credit which would have been allowed if a valid waiver certificate
filed under section 3121(k) (1) of such Code had been in effect)
prior to September 9, 1976; and
(3) any portion of such service (with respect to which taxes.
were paid and refunded or credited as described in paragraph
(2)) would constitute employment (as so defined) if the orga-
nization had actually filed under section 3121 (k) (1) of such Code
a valid waiver certificate effective as provided in section 3121(k)
(5) (B) thereof (with such individual's signature appearing on
the accompanying list),
the remuneration paid for the portion of such service described in
paragraph (3) shall, upon the request of such individual (filed on or
before April 15, 1980, in such manner and form, and with such official,
as may be prescribed by regulations made under title II of the Social
Security Act) accompanied by full repayment of the taxes which
were paid under section 3101 of such Code with respect to such remun-
eration and so refunded or credited (or by satisfactory evidence that
appropriate arrangements have been made for the repayment of
such taxes in installments as provided in section 3121(k) (8) of such
Code), be deemed to constitute remuneration for employment as so
defined. In any case where remuneration paid by an organization to an
individual is deemed under the preceding sentence to constitute re-
muneration for employment, such organization shall be liable (not-
withstanding any other provision of such Code) for repayment of
785
P.L. 94-566
any taxes which it paid under section 3111 of such Code with respect
to such remuneration and which were refunded or credited to it.¹
*
Section 1. Short title.
This Act may be cited as the "Unemployment Compensation
Amendments of 1976".
*
*
Excerpts From Public Law 94-566
*
**
*
*
SEC. 116. EXTENSION OF FEDERAL UNEMPLOYMENT
COMPENSATION LAW TO THE VIRGIN
ISLANDS.
*
*
*
*
*
**
(f) EFFECTIVE DATES.-
(1) SUBSECTIONS (a), (c), AND (d).-The amendments made by
subsections (a), (c), and (d) shall take effect on the later of
October 1, 1976, or the day after the day on which the Secretary
of Labor approves under section 3304 (a) of the Internal Reve-
nue Code of 1954 an unemployment compensation law submitted
to him by the Virgin Islands for approval.2
(2) SUBSECTION (b).-The amendments made by subsection
(b) shall apply with respect to remuneration paid after Decem-
ber 31 of the year in which the Secretary of Labor approves for
the first time an unemployment compensation law submitted to
him by the Virgin Islands for approval, for services performed
after such December 31.³
(3) SUBSECTION (e).-The amendments made by subsection (e)
shall apply with respect to benefit years beginning on or after
the later of October 1, 1976, or the first day of the first week for
which compensation becomes payable under an unemployment
compensation law of the Virgin Islands which is approved by the
Secretary of Labor under section 3304 (a) of the Internal Revenue
Code of 1954.4
(g) TRANSFER OF FUNDS.-The Secretary of Labor shall not approve
an unemployment compensation law of the Virgin Islands under sec-
tion 3304 (a) of the Internal Revenue Code of 1954 until the Governor
of the Virgin Islands has approved the transfer to the Federal Unem-
ployment Trust Fund established by section 904 of the Social Security
1 Sec. 3 was amended by sec. 312(e) of P.L. 95-216.
2 Subsections (a), (c), and (d) amended section 1101 (a) (1) of the Social Security Act,
section 5(b) of the Act of June 6, 1933, sections 202(a)(1) and 205(8) of the Federal-
State Extended Unemployment Compensation Act of 1970, and section 102(b)(1)(C) of
the Emergency Unemployment Compensation Act of 1974.
3 Subsection (b) amended sections 3306 (c) and 3306(j) of the Internal Revenue Code
of 1954.
4 Subsection (e) amended sections 8501 (6), 8521(3), and 8522 of title 5 of the United
States Code.
P.L. 94-566
786
Act of an amount equal to the dollar balance credited to the unem-
ployment subfund of the Virgin Islands established under section 310
of title 24 of the Virgin Islands Code.
PART II-TRANSITIONAL PROVISIONS
SEC. 121. FEDERAL REIMBURSEMENT FOR BENEFITS
PAID TO NEWLY COVERED WORKERS DUR-
ING TRANSITION PERIOD.
(a) GENERAL RULE.-If any State, the unemployment compensa-
tion law of which is approved by the Secretary under section 3304 (a)
of the Internal Revenue Code of 1954, provides for the payment of
compensation for any week of unemployment beginning on or after
January 1, 1978, on the basis of previously uncovered services, the
Secretary shall pay to the unemployment fund of such State an
amount equal to the Federal reimbursement for any compensation
paid for a week of unemployment beginning on or after January 1,
1978, to any individual whose base period wages include wages for
previously uncovered services.
(b) PREVIOUSLY UNCOVERED SERVICES. For purposes of this sec-
tion, the term "previously uncovered services" means, with respect
to any State, services-
K
(1) which were not covered by the State unemployment com-
pensation law, at any time, during the 1-year period ending
December 31, 1975; and
(2) which-
(A) are agricultural labor (as defined in section 3306(k)
of the Internal Revenue Code of 1954) or domestic services
referred to in section 3306(c) (2) of such Code (as in effect
on the day before the date of the enactment of this Act)
and are treated as employment (as defined in section 3306
(c) of such Code) by reason of the amendments made by
this Act, or
(B) are services to which section 3309(a)(1) of such
Code applies by reason of the amendments made by this
Act.
(c) FEDERAL REIMBURSEMENT.—
(1) IN GENERAL.-For purposes of this section, the Federal
reimbursement for compensation paid to any individual for any
week of unemployment shall be an amount which bears the
same ratio to the amount of such compensation as the amount
of the individual's base period wages which are attributable to
previously uncovered services which are reimbursable bears to the
total amount of the individual's base period wages.
787
P.L. 94-566
(2) REIMBURSABLE SERVICES. For purposes of determining the
amount of the Federal reimbursement for compensation paid
to any individual for any week of unemployment, previously
uncovered services shall be treated as being reimbursable—
(A) if such services were performed-
(i) before July 1, 1978, in the case of a week of
unemployment beginning before July 1, 1978; or
(ii) before January 1, 1978, in the case of a week of
unemployment beginning after July 1, 1978; and
(B) to the extent that assistance under title II of the
Emergency Jobs and Unemployment Assistance Act of 1974
was not paid to such individual on the basis of such services.
(3) DENIAL OF PAYMENT.-No payment may be made under
subsection (a) to any State in respect of any compensation for
which the State is entitled to any reimbursement under the pro-
visions of any Federal law other than this Act or the Federal-
State Extended Unemployment Compensation Act of 1970.
(d) EXPERIENCE RATING OF CERTAIN EMPLOYERS.-The unemploy-
ment compensation law of any State may, without being deemed to
violate the standards set forth in section 3303(a) of the Internal
Revenue Code of 1954, provide that the experience-rating account
of any employer shall not be charged for the compensation paid to any
individual whose base period wages includes wages for previously
uncovered services which are reimbursable under subsection (c) (2)
to the extent that such individual would not have been eligible to
receive such compensation had the State law not provided for the pay-
ment of compensation on the basis of such previously uncovered
services.
(e) CERTAIN NONPROFIT EMPLOYERS.-The unemployment compen-
sation law of any State may provide that any organization which elects
to make payments (in lieu of contributions) into the State unemploy-
ment compensation fund as provided in section 3309(a)(2) of the
Internal Revenue Code of 1954 shall not be liable to make such pay-
ments with respect to the compensation paid to any individual whose
base period wages includes wages for previously uncovered services.
which are reimbursable under subsection (c) (2) to the extent that
such individual would not have been eligible to receive such compen-
sation had the State not provided for the payment of compensation on
the basis of such previously uncovered services.
(f) PAYMENTS MADE MONTHLY.-Payments under subsection (a)
shall be made monthly, prior to audit or settlement by the General
Accounting Office, on the basis of estimates by the Secretary of the
amount payable to such State for such month, reduced or increased, as
the case may be, by any amount by which the Secretary finds that his
21-746 O - 78 - 58
P.L. 94-566
788
estimates for any prior month were greater or less than the amounts
which should have been paid to such State. Such estimates may be
made on the basis of such statistical, sampling, or other methods as
may be agreed upon by the Secretary and the State.
(g) DEFINITIONS. For purposes of this section-
(1) STATE. The term "State" includes the District of Colum-
bia, the Commonwealth of Puerto Rico, and the Virgin Islands.
(2) SECRETARY.-The term "Secretary" means the Secretary of
Labor.
(3) BENEFIT YEAR.-The term "benefit year" means the benefit
year as defined in the applicable State unemployment compen-
sation law.
(4) BASE PERIOD.-The term "base period" means the base period
as defined by the applicable State unemployment compensation
law for the benefit year.
(5) UNEMPLOYMENT FUND.-The term "unemployment fund"
has the meaning given to such term by section 3306 (f) of the
Internal Revenue Code of 1954.
(h) AUTHORIZATION OF APPROPRIATIONS.-There are authorized to
be appropriated from the general fund of the Treasury such sums as
may be necessary to carry out the purposes of this section.
*
*
*
*
*
*
*
TITLE IV-NATIONAL COMMISSION ON
UNEMPLOYMENT COMPENSATION
SEC. 411. NATIONAL COMMISSION ON UNEMPLOYMENT COMPENSA-
TION.
(a) ESTABLISHMENT OF COMMISSION.-There is established a
National Commission on Unemployment Compensation (hereinafter
in this section referred to as the "Commission") which shall consist of
thirteen members who shall be appointed as follows:
(1) Three members appointed by the President pro tempore of
the Senate.
(2) Three members appointed by the Speaker of the House of
Representatives.
(3) Seven members appointed by the President.
In making appointments under the preceding sentence, the President
pro tempore of the Senate, the Speaker of the House of Represent-
atives, and the President shall consult with each other to insure that
there will be a balanced representation of interested parties on the
Commission. The Commission shall consist of at least one represent-
789
P.L. 94-566
ative of labor, industry, the Federal Government, State government,
local government, and small business. The President shall designate
one of the members to serve as Chairman of the Commission. Seven
members shall constitute a quorum. Any vacancies in the Commission
shall not affect its powers, but shall be filled in the same manner in
which the original appointment was made.
(b) DUTIES OF THE COMMISSION.-The Commission shall study and
evaluate the present unemployment compensation programs in order
to assess the long-range needs of the programs, to develop alterna-
tives, and to recommend changes in the programs. Such study and
evaluation shall include, without being limited to—
(1) examination of the adequacy, and economic and adminis-
trative impacts, of the changes made by this Act in coverage, ben-
efit provisions, and financing;
(2) identification of appropriate purposes, objectives, and
future directions for unemployment compensation programs;
including railroad unemployment insurance;
(3) examination of issues and alternatives concerning the rela-
tionship of unemployment compensation to the economy, with
special attention to long-range funding requirements and desir-
able methods of program financing;
(4) examination of eligibility requirements, disqualification
provisions, and factors to consider in determining appropriate
benefit amounts and duration;
(5) examination of (A) the problems of claimant fraud and
abuse in the unemployment compensation programs (B) the ade-
quacy of present statutory requirements and administrative pro-
cedures designed to protect the programs against such fraud and
abuse and (C) problems of claimants in obtaining prompt proc-
essing and payment of their claims for benefits and any appro-
priate measures to relieve such problems;
(6) examination of the relationship between unemployment
compensation programs and manpower training and employ-
ment programs;
(7) examination of the appropriate role of unemployment com-
pensation in income maintenance and its relationship to other
social insurance and income maintenance programs;
(8) conduct of such surveys, hearings, research, and other
activities as it deems necessary to enable it to formulate appro-
priate recommendations, and to obtain relevant information,
attitudes, opinions, and recommendations from individuals and
P.L. 94-566
790
organizations representing employers, employees, and the general
public;
(9) review of the present method of collecting and analyzing
present and prospective national and local employment and
unemployment information and statistics;
(10) identification of any weaknesses in such method and any
problem which results from the operation of such method;
(11) formulation of any necessary or appropriate new tech-
niques for the collection and analysis of such information and
statistics; and
(12) examination of the feasibility and advisability of develop-
ing or not developing Federal minimum benefit standards for
State unemployment insurance program.
(c) POWERS OF THE COMMISSION.-
(1) HEARINGS.-The Commission, or, on the authorization of
the Commission, any subcommittee or members thereof, may, for
the purpose of carrying out the provisions of this section, hold
such hearing, take such testimony, receive such evidence, take such
oaths and sit and act at such times and places as the Commission
may deem appropriate and may administer oaths or affirmations
to witnesses appearing before the Commission or any subcom-
mittee or members thereof.
(2) STAFF.-Subject to such rules and regulations as may be
adopted by the Commission, the Chairman shall have the power
to
(A) appoint and fix the compensation of an executive
director, and such additional personnel as he deems advisable,
without regard to the provisions of title 5, United States
Code, governing appointments in the competitive service, and
without regard to the provisions of chapter 51 and subchapter
III of chapter 53 of such title relating to classification and
General Schedule pay rates, except that the executive director
may not receive pay in excess of the maximum annual rate
of basic pay in effect for grade GS-18 of the General
Schedule under section 5332 of such title and any additional
personnel may not receive pay in excess of the maximum
annual rate of basic pay in effect for grade GS-15 of such
General Schedule, and
(B) obtain temporary and intermittent services of experts
and consultants in accordance with the provisions of section
3109 of title 5, United States Code.
(3) CONTRACTS.-The Commission is authorized to negotiate
and enter into contracts with organizations, institutions, and
Revised April 1977
791
P.L. 94-566
individuals to carry out such studies, surveys, or research and
prepare such reports as the Commission determines are necessary
in order to carry out its duties.
(d) COOPERATION OF OTHER FEDERAL AGENCIES.-
(1) INFORMATION.-Each department, agency, and instrumen-
tality of the Federal Government is authorized and directed to
furnish to the Commission, upon request made by the Chairman,
and to the extent permitted by law, such data, reports, and other
information as the Commission deems necessary to carry out its
functions under this section.
(2) SERVICES.-The head of each department or agency of the
Federal Government is authorized to provide to the Commission
such services as the Commission requests on such basis, reim-
bursable and otherwise, as may be agreed between the depart-
ment or agency and the Chairman of the Commission. All such
requests shall be made by the Chairman of the Commission.
(3) DEPARTMENT OF LABOR.-The Department of Labor shall
provide support for the Commission and shall perform such
other functions with respect to the Commission as may be required
by the provisions of the Federal Advisory Committee Act.
(e) PAY AND TRAVEL EXPENSES.-
(1) MEMBERS SERVE WITHOUT PAY.—Except as provided in para-
graph (2), members of the Commission shall serve without pay.
(2) TRAVEL EXPENSES.-While away from their homes or regu-
lar places of business in the performance of services for the
Commission, members of the Commission shall be allowed travel
expenses, including per diem in lieu of subsistence, in the same
manner as persons employed intermittently in the Government
service are allowed expenses under section 5703(b) of title 5 of
the United States Code.
(f) INTERIM REPORT.-The Commission shall transmit to the Con-
gress not later than September 30, 1978, an interim report.¹
(g) FINAL REPORT.-The Commission shall transmit to the Presi-
dent and the Congress not later than July 1, 1979, a final report
containing a detailed statement of the findings and conclusions of the
Commission, together with such recommendations as it deems
advisable.¹
-
(h) TERMINATION.-On the ninetieth day after the date of sub-
mission of its final report to the President, the Commission shall cease
to exist.
(i) AUTHORIZATION OF APPROPRIATIONS.-There are hereby author-
ized to be appropriated such sums as may be necessary to carry out
the provisions of this section.
¹ Subsections (f) and (g) were amended by section 303 of P.L. 95–19.
P.L. 94-566
792
TITLE V-MISCELLANEOUS PROVISIONS
SEC. 501. REFERRAL OF BLIND AND DISABLED INDIVIDUALS UNDER
AGE 16, WHO ARE RECEIVING BENEFITS UNDER THE
SUPPLEMENTAL SECURITY INCOME PROGRAM, FOR AP-
PROPRIATE REHABILITATION SERVICES.
* * *
(a)
(b) PUBLICATION OF CRITERIA.-The Secretary shall, within 120
days after the enactment of this subsection, publish criteria to be
employed to determine disability (as defined in section 1614(a)(3) of
the Social Security Act) in the case of persons who have not attained
the age of 18.
*
*
*
*
*
SEC. 503. PRESERVATION OF MEDICAID ELIGIBILITY FOR INDIVID-
UALS WHO CEASE TO BE ELIGIBLE FOR SUPPLEMENTAL
SECURITY INCOME BENEFITS ON ACCOUNT OF COST-OF-
LIVING INCREASES IN SOCIAL SECURITY BENEFITS.
*
*
In addition to other requirements imposed by law as a condition
for the approval of any State plan under title XIX of the Social
Security Act, there is hereby imposed the requirement (and each such
State plan shall be deemed to require) that medical assistance under
such plan shall be provided to any individual, for any month after
June 1977 for which such individual is entitled to a monthly insur-
ance benefit under title II of such Act but is not eligible for benefits
under title XVI of such Act, in like manner and subject to the same
terms and conditions as are applicable under such State plan in the
case of individuals who are eligible for and receiving benefits under
such title XVI for such month, if for such month such individual
would be (or could become) eligible for benefits under such title XVI
except for amounts of income received by such individual and his
spouse (if any) which are attributable to increases in the level of
monthly insurance benefits payable under title II of such Act which
have occurred pursuant to section 215 (i) of such Act, in the case of
such individual, since the last month after April 1977 for which such
individual was both eligible for (and received) benefits under such
title XVI and was entitled to a monthly insurance benefit under such
title II, and, in the case of such individual's spouse (if any), since
the last such month for which such spouse was both eligible for (and
received) benefits under such title XVI and was entitled to a monthly
insurance benefit under such title II. Solely for purposes of this sec-
tion, payments of the type described in section 1616 (a) of the Social
Security Act or of the type described in section 212 (a) of Public Law
93-66 shall be deemed to be benefits under title XVI of the Social
Security Act.
*k
*
*
*
*
*
**
793
P.L. 94-566
SEC. 508. STATE EMPLOYMENT OFFICES TO SUPPLY DATA IN AID
OF ADMINISTRATION OF AFDC AND CHILD SUPPORT
PROGRAMS.
(a) IN GENERAL.-Section 3 (a) of the Act entitled "An Act to
provide for the establishment of a national employment system and
for cooperation with the States in the promotion of such system, and
for other purposes", approved June 6, 1933 (29 U.S.C. 49b (a)), is
amended by adding at the end thereof the following new sentence:
"It shall be the further duty of the bureau to assure that such employ-
ment offices in each State, upon request of a public agency administer-
ing or supervising the administration of a State plan approved under
part A of title IV of the Social Security Act or of a public agency
charged with any duty or responsibility under any program or activity
authorized or required under part D of title IV of such Act, shall
(and, notwithstanding any other provision of law, is hereby author-
ized to) furnish to such agency making the request, from any data
contained in the files of any such employment office, information with
respect to any individual specified in the request as to (A) whether
such individual is receiving, has received, or has made application for,
unemployment compensation, and the amount of any such compen-
sation being received by such individual, (B) the current (or most
recent) home address of such individual, and (C) whether such
individual has refused an offer of employment and, if so, a description
of the employment so offered and terms, conditions, and rate of pay
therefor.".
(b) PROVISION FOR REIMBURSEMENT OF EXPENSES.-For purposes
of section 403 of the Social Security Act, expenses incurred to reim-
burse State employment offices for furnishing information requested
of such offices pursuant to the third sentence of section 3 (a) of the Act
entitled "An Act to provide for the establishment of a national employ-
ment system and for cooperation with the States in the promotion
of such system, and for other purposes", approved June 6, 1933 (29
U.S.C. 49b (a), by a State or local agency administering a State
plan approved under part A of title IV of the Social Security Act
shall be considered to constitute expenses incurred in the administra-
tion of such State plan; and for purposes of section 455 of the Social
Security Act, expenses incurred to reimburse State employment offices
for furnishing information so requested by a State or local agency
charged with the duty of carrying out a State plan for child support
approved under part D of title IV of the Social Security Act shall be
considered to constitute expenses incurred in the administration of
such State plan.
P.L. 94-585
Revised April 1977
794
L
SECTION 1. SHORT TITLE.
.
*
Excerpts From Public Law 94-585
*
*
Sec. 1. (a) ***
(b) Administrative costs incurred by a State plan for aid and serv-
ices to needy families with children, approved under Part A of title
IV of the Social Security Act, in conducting procedures (described
in section 410 of such Act, as added by subsection (a) of this section)
in connection with the food stamp program shall be paid from funds
appropriated to carry out the Food Stamp Act of 1964, as amended.
Sec. 2. (a) * * *
*
*
*
Excerpts From Public Law 95-19
This Act may be cited as the "Emergency Unemployment Compen-
sation Extension Act of 1977".
TITLE I-AMENDMENTS TO THE EMER-
UNEMPLOYMENT
GENCY
COMPENSA-
TION PROGRAM
*
*
SEC. 106. MODIFICATION OF AGREEMENTS.
The Secretary of Labor shall, at the earliest practicable date after
the date of the enactment of this Act, propose to each State with
which he has in effect an agreement under section 102 of the Emer-
gency Unemployment Compensation Act of 1974 a modification of
such agreement designed to provide for the payment of emergency
compensation under such Act in accordance with the amendments
made by this title. Notwithstanding any other provision of law, if any
State fails or refuses, within the 3-week period beginning on the date
the Secretary of Labor proposes such a modification to such State, to
enter into such a modification of such agreement, the Secretary of
Labor shall terminate such agreement effective with the end of the
last week which ends on or before the last day of such 3-week period.
*
*
*
*
*
*
*
Revised April 1978
P.L. 95-30
795
TITLE II—REPAYMENT OF STATE LOANS
SEC. 201. REPAYMENT OF STATE LOANS.
(a) GENERAL RULE.-The last sentence of section 3302 (c) (2) of the
Internal Revenue Code of 1954 (relating to reduction in credits against
unemployment tax) is amended by striking out "January 1, 1978" each
place it appears and inserting in lieu thereof "January 1, 1980".
*
(b) STATE REQUIREMENTS.-The amendment made by subsection (a)
shall not apply in the case of any State unless the Secretary of Labor
finds that such State meets the requirements of section 110(b) of the
Emergency Compensation and Special Unemployment Assistance Ex-
tension Act of 1975.
*
*
*
*
*
*
Excerpts From Public Law 95-30
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.-This Act may be cited as the "Tax Reduction
and Simplification Act of 1977”.
*
*
**
*
TITLE IV-MISCELLANEOUS
PROVISIONS
SEC. 401. AUTHORIZATION OF ADDITIONAL APPROPRIATIONS FOR THE
WORK INCENTIVE PROGRAM.
(a) MATCHING FUNDS DISREGARDED.-The Secretary of Health,
Education, and Welfare and the Secretary of Labor are authorized to
carry out the work incentive program under title IV of the Social
Security Act from the sums appropriated pursuant to this Act with-
out regard to the requirements for non-Federal matching funds con-
tained in sections 402 (a) (19) (C), 402 (a) (19) (G), 403 (a) (3) (A),
403 (d), and 435 of the Social Security Act.
(b) AUTHORIZATION.-There are authorized to be appropriated to
carry out the work incentive program under title IV of the Social
Security Act, as modified by this Act (in addition to any sums other-
wise appropriated pursuant to title IV of such Act), $435,000,000 for
fiscal year 1978 and $435,000,000 for fiscal year 1979.
*
*
*
*
796
SEC 504. ANNUAL REPORT OF THE PRESIDENT.
*
*
*
(c) SUPPLEMENTAL REPORT.—The Secretary of Health, Education,
and Welfare shall submit to the Congress not later than June 30, 1977,
a special supplemental report, with respect to activities undertaken
pursuant to part D of title IV of the Social Security Act during the
fiscal year ending June 30, 1976, and during the transitional period
beginning July 1, 1976, and ending September 30, 1976. Such report
shall, with respect to such transitional period, contain all the data and
information specified in clauses (A) through (H) of section 452(a)
(10) of such Act (as amended by subsection (a) of this section), and
with respect to the fiscal year ending June 30, 1976, contain all such
data and information which was not included in the report made by
such Secretary to the Congress on June 30, 1976, pursuant to section
452(a) (10) of such Act, as in effect on such date.
SEC. 505. CERTAIN AFDC PAYMENTS.
*
*
*
For purposes of determining the amount payable to the State of
Georgia under section 403 (a) of the Social Security Act on account
of expenditures made by such State as aid to families with dependent
children under its State plan approved under part A of title IV of
such Act during calendar quarters, beginning after June 30, 1975, and
prior to January 1, 1977, there shall be included as an offset against
such expenditures amounts which-
(1) were collected as child support by the State pursuant to
a plan approved under part D of such title IV, and
(2) were retained by the State pursuant to, and in accordance
with the provisions of, section 457(a)(2) or section 457(b) (1)
of such Act.
*
*
*
*
*
Excerpts From Public Law 95-59
*
*
DEFERRAL OF IMPLEMENTATION OF CERTAIN DECREASES
IN MEDICAID MATCHING FUNDS
*
*
SEC. 6. Notwithstanding the provisions of subsection (g) of sec-
tion 1903 of the Social Security Act, the amount payable to any State
for the calendar quarters during the period commencing April 1,
1977, and ending September 30, 1977, on account of expenditures made
under a State plan approved under title XIX of such Act, shall not
be decreased by reason of the application of the provisions of such
subsection with respect to any period for which such State plan was
in operation prior to April 1, 1977.
Revised August 1978
P.L. 95-142
797
*
*
SEC. 4(a) * * *
*
*
Excerpts From Public Law 95-142, as amended
SHORT TITLE
SECTION 1. This Act may be cited as the "Medicare-Medicaid Anti-
Fraud and Abuse Amendments”.
*
*
SEC. 7. (a) * * *
*
*
(c) Section 204 (a) of Public Law 94-505 (42 U.S.C. 3524) (relat-
ing to annual reports of the Health, Education, and Welfare Inspector
General) is amended by adding at the end thereof the following sen-
tences: "Such report also shall include a detailed description of the
cases referred by the Department of Health, Education, and Welfare
to the Department of Justice during the period covered by the report,
an evaluation of the performance of the Department of Justice in the
investigation and prosecution of criminal violations relating to fraud
in the programs of health insurance and medical assistance provided
under titles XVIII and XIX of the Social Security Act, and any
recommendations with respect to improving the performance of such
activities by the Department of Justice. Promptly, after the Inspector
General submits such a report to Congress, the Attorney General shall
report to Congress concerning the details of the disposition of the
cases referred to the Department of Justice and described in the In-
spector General's report.".
-
*
*k
*
*
*
*
SUSPENSION OF PRACTITIONERS CONVICTED OF MEDICARE- OR MEDICAID-
RELATED CRIMES
*
*
*
*
*
*
(d) Section 332 (c) of the Public Health Service Act (relating to
considerations in the designation of health manpower shortage areas)
is amended by inserting after paragraph (2) the following new
paragraph:
*
*
*
"(3) The extent to which individuals who are (A) residents
of the area, members of the population group, or patients in the
medical facility or other public facility under consideration for
designation, and (B) entitled to have payment made for medical
services under title XVIII or XIX of the Social Security Act,
cannot obtain such services because of suspension of physicians
from the programs under such title.".
(e) (1) The amendment made by subsection (d) shall apply with
respect to determinations and designations made on and after the date
of the enactment of this Act.
*
*
*
**
P.L. 95-142
798
STUDY AND REVIEW OF MEDICARE CLAIMS PROCESSING
SEC. 12. The Comptroller General of the United States shall con-
duct a comprehensive study and review of the administrative structure
established for the processing of claims under title XVIII of the Social
Security Act, for the purpose of determining whether and to what
extent more efficient claims administration under such title could be
achieved-
-
(1) by reducing the number of participating intermediaries
and carriers;
(2) by making a single organization responsible for the proc-
essing of claims, under both part A and part B of such title, in a
particular geographic area;
(3) by providing for the performance of claims processing
functions on the basis of a prospective fixed price;
(4) by providing incentive payments for the most efficient
organizations; or
(5) by other modifications in such structure and related
procedures.
The Comptroller General shall submit to the Congress no later than
July 1, 1979, a complete report setting forth the results of such study
and review, together with his findings and his recommendations with
respect thereto.
*
SEC. 14(a)
(b) The Secretary of Health, Education, and Welfare shall develop
the standards, criteria, and procedures described in subsection (f) of
section 1816 of the Social Security Act (as added by subsection (a) (5))
not later than October 1, 1978.
(c) The amendment made by paragraphs (2) and (3) of subsection
(a) to the extent that they require application of standards, criteria,
and procedures developed under section 1816 (f) of the Social Security
Act shall apply to the entering into, renewal, or termination of agree-
ments on and after October 1, 1978.
SEC. 17(a)
(d) Except as provided in subsection (c), the amendment made by
subsection (a) (2) shall apply to agreements entered into or renewed on
or after the date of enactment of this Act.
**
**
**
*
(d) Section 402 (a)(1) of the Social Security Amendments of 1967
(Public Law 90-248), as amended by section 222 of the Social Security
Amendments of 1972 (Public Law 92-603), is amended-
(1) by striking out "and" at the end of subparagraph (H);
799
(2) by striking out the period at the end of subparagraph (I)
and inserting in lieu thereof "; and”; and
(3) by adding after subparagraph (I) the following new
subparagraph:
"(J) to develop or demonstrate improved methods for the in-
vestigation and prosecution of fraud in the provision of care or
services under the health programs established by the Social Se-
curity Act.".
(e) (1) The amendment made by subsection (a) shall apply with
respect to calendar quarters beginning after September 30, 1977.
(2) The Secretary of Health, Education, and Welfare shall estab-
lish such regulations, not later than ninety days after the date of en-
actment of this Act, as are necessary to carry out the amendments made
by this section.
REPORT ON HOME HEALTH AND OTHER IN-HOME SERVICES
SEC. 18. (a) Not later than one year after the date of enactment of
this Act, the Secretary of Health, Education, and Welfare shall sub-
mit to the appropriate committees of the Congress a report analyzing,
evaluating, and making recommendations with respect to, all aspects
(including the availability, administration, provision, reimbursement
procedures, and cost) of the delivery of home health and other in-home
services authorized to be provided under titles XVIII, XIX, and XX
of the Social Security Act.
(b) Such report shall include an evaluation of the coordination of
such services provided under the different titles, and shall also include
recommendations for changes in regulations and legislation with re-
spect tó
(1) the scope and definition of such services provided under
such titles;
(2) the requirements for an individual to be eligible to receive
such services under such titles;
(3) the standards for certification of providers of such services
under such titles and (as appropriate) the uniformity of such
standards for the programs under the different titles;
(4) procedures for control of utilization and assurance of
quality of such services under such titles, including (as appro-
priate) the licensing and accreditation of agencies providing such
services, a certificate of need program with respect to the offer-
ing of such services, and the development and use of norms and
standards for review of the utilization and quality of such
services;
(5) methods of reimbursement for such services, including (A)
methods of comparing costs incurred by different providers of
800
such services in order to determine the reasonableness of such costs
and (B) methods which provide for more uniform reimbursement
procedures under titles XVIII and XIX of the Social Security
Act; and
(6) the prevention of fraud and abuse in the delivery of such
services under such titles,
the reasons for such recommendations, an analysis of the impact of
implementing such recommendations on the cost of such services and
the demand for such services, and the methods of financing any rec-
ommended increased provision of such services under such titles.
(c) In developing the report the Secretary shall consult with pro-
fessional organizations, experts, and individual health professionals
in the field of home health and other in-home services and with pro-
viders, private insurers, and consumers of such services.
*
SEC. 19. (a)
*
* * *
*k
**
*
*
*k
*
(c) (1) The Secretary of Health, Education, and Welfare shall es-
tablish the systems described in section 1121 (a) of the Social Security
Act (added by subsection (a) of this section) only after consultation
with interested parties and-
(A) for hospitals, skilled nursing facilities, and intermediate
care facilities, not later than the end of the one-year period, and
(B) for other types of health services facilities and organiza-
tions, not later than the end of the two-year period,
beginning on the date of enactment of this Act.
(2) (A) The amendments made by subsection (b) shall apply with
respect to operations of a hospital, skilled nursing facility, or inter-
mediate care facility, on and after the first day of its first fiscal year
which begins after the end of the six-month period beginning on the
date a uniform reporting system is established (under section 1121 (a)
of the Social Security Act) for that type of health services facility.
(B) The amendments made by subsection (b) shall apply, with re-
spect to the operation of a health services facility or organization
which is neither a hospital, a skilled nursing facility, nor an intermedi-
ate care facility, on and after the first day of its first fiscal year which
begins after such date as the Secretary of Health, Education, and
Welfare determines to be appropriate for the implementation of the
reporting requirement for that type of facility or organization.
(C) Except as provided in subparagraphs (A) and (B), the amend-
ments made by subsection (b) (2) shall apply, with respect to State
plans approved under title XIX of the Social Security Act, on and af-
ter October 1, 1977.
G
1
Revised August 1978
P.L. 95-142
801
SEC. 20. (a) ***
*
*
*
*
(c) (1) Except as provided in paragraph (2), the amendments.
made by this section shall be effective on October 1, 1977, and the
Secretary of Health, Education, and Welfare shall promptly adjust
payments made to States under section 1903 of the Social Security
Act to reflect the changes made by such amendments.
(2) The amount of any reduction in the Federal medical assistance
percentage of a State, otherwise required to be imposed under section
1903 (g)(1) of the Social Security Act because of an unsatisfactory
or invalid showing made by the State with respect to a calendar quar-
ter beginning on or after January 1, 1977, shall be determined under
such section as amended by this section. Subparagraph (B) of para-
graph (4) of section 1903 (g) of such Act, as added by this section,
shall apply to any showing made by a State under such section with
respect to a calendar quarter beginning on or after January 1, 1977.¹
*
PROTECTION OF PATIENT FUNDS
SEC. 21. (a) Section 1861 (j) of the Social Security Act is amended
by striking out "and" at the end of paragraph (13) and inserting im-
mediately after such paragraph (13) the following new paragraph:
"(14) establishes and maintains a system that (A) assures a
full and complete accounting of its patients' personal funds, and
(B) includes the use of such separate account for such funds as
will preclude any commingling of such funds with facility funds
or with the funds of any person other than another such patient;
and”.
*
(b) The Secretary of Health, Education, and Welfare shall, by
regulation, define those costs which may be charged to the personal
funds of patients in skilled nursing facilities who are individuals
receiving benefits under the provisions of title XVIII, or under a State
plan approved under the provisions of title XIX, of the Social Secu-
rity Act, and those costs which are to be included in the reasonable cost
or reasonable charge for extended care services as determined under
the provisions of title XVIII, or for skilled nursing and intermediate
care facility services as determined under the provisions of title XIX,
of such Act.
*
*
(c) (1) The amendments made by subsection (a) shall be effective
on the first day of the first calendar quarter which begins more than
six months after the date of enactment of this Act.
(2) The Secretary of Health, Education, and Welfare shall issue
the regulations required under subsection (b) within ninety days after
the date of enactment of this Act.
*
*
*
1 Paragraph (2) was amended by section 8(e) of P.L. 95–292.
*
*
P.L. 95-171
802
Excerpt From Public Law 95-171
*
SEC. 3. (a) ***
(b) Notwithstanding any other provision of law, Federal financial
participation in aid to families with dependent children under a State
plan approved under section 402 of the Social Security Act, for
quarters (with respect to which expenditure reports were timely filed
by the State) during the period beginning with the calendar quarter
in which Public Law 90-248 was enacted and ending with the first
calendar quarter of 1977, shall not be denied, on or after October 1,
1977, by reason of the provision of goods, services, or items in the
form of a check which is drawn jointly to the order of the recipient.
and the person furnishing such goods, services, or items and which
shows the purpose for which the check is drawn, or by reason of the
failure of the State to meet the requirement of the last two sentences
of section 403 (a) of such Act or the failure of the State (or any
political subdivision thereof) to carry out the functions and duties
prescribed in clauses (A), (B), (C), and (E) of section 406 (b) (2)
of such Act, regardless of the form in which the aid involved was
paid, if (and to the extent that) the amount of such aid was correct
and the payment of the aid in that form did not result in assistance
in cases or in amounts not authorized by or under part A of title IV
of such Act.
*
SECTION 1. (a)
*
*
***
Excerpts From Public Law 95-210
*
(c) The Secretary of Health, Education, and Welfare (hereinafter
in this Act referred to as the "Secretary") shall conduct a study of the
feasibility and desirability of imposing a copayment for each visit to
a rural health clinic for rural health clinic services under part B of
title XVIII of the Social Security Act, instead of the deductible and
coinsurance amounts otherwise required under section 1833 of such Act
with respect to the provision of such services. The Secretary shall re-
port to the appropriate committees of Congress, not later than one
year after the date of enactment of this Act, on such study and on any
recommendations he may have for changes in the provisions of part B
of title XVIII of the Social Security Act to reflect the findings of such
study.
*
*
**
(e) Any private, nonprofit health care clinic that-
803
(1) on July 1, 1977, was operating and located in an area which
on that date (A) was not an urbanized area (as defined by the
Bureau of the Census) and (B) had a supply of physicians insuffi-
cient to meet the needs of the area (as determined by the Secre-
tary), and
(2) meets the definition of a rural health clinic under section
1861 (aa) (2) or section 1905 (1) of the Social Security Act, except
for clause (i) of section 1861 (aa) (2),
shall be considered, for the purposes of title XVIII or XIX, respec-
tively, of the Social Security Act, as satisfying the definition of a rural
health clinic under such section.
*
**
SEC. 2. (a)
* *
*
**
*
(f) (1) The amendments made by this section shall (except as other-
wise provided in paragraph (2)) apply to medical assistance pro-
vided, under a State plan approved under title XIX of the Social
Security Act, on and after the first day of the first calendar quarter
that begins more than six months after the date of enactment of this
Act.
*
21-746 O - 78
*
M
(2) In the case of a State plan for medical assistance under title
XIX of the Social Security Act which the Secretary determines
requires State legislation in order for the plan to meet the additional
requirements imposed by the amendments made by this section, the
State plan shall not be regarded as failing to comply with the require-
ments of such title solely on the basis of its failure to meet these addi-
tional requirements before the first day of the first calendar quarter
beginning after the close of the first regular session of the State legis-
lature that begins after the date of enactment of this Act.
59
*
*
DEMONSTRATION PROJECTS FOR PHYSICIAN-DIRECTED CLINICS IN URBAN
MEDICALLY UNDERSERVED AREAS
SEC. 3. (a) The Secretary shall provide, through demonstration
projects, reimbursement on a cost basis for services provided by physi-
cian-directed clinics in urban medically underserved areas for which
payment may be made under title XVIII of the Social Security Act
and, notwithstanding any other provision of such title, for services
provided by a physician assistant or nurse practitioner employed by
such clinics which would otherwise be covered under such title if pro-
vided by a physician.
(b) The demonstration projects developed under subsection (a) shall
be of sufficient scope and carried out on a broad enough scale to allow
the Secretary to evaluate fully—
804
(1) the relative advantages and disadvantages of reimburse-
ment on the basis of costs and fee-for-service for physician-
directed clinics employing a physician assistant or
practitioner;
nurse
(2) the appropriate method of determining the compensation
for physician services on a cost basis for the purposes of reimburse-
ment of services provided in such clinics;
(3) the appropriate definition for such clinics;
(4) the appropriate criteria to use for the purposes of desig-
nating urban medically underserved areas; and
(5) such other possible changes in the provisions of title XVIII
of the Social Security Act as might be appropriate for the efficient
and cost-effective reimbursement of services provided in such
clinics.
(c) Grants, payments under contracts, and other expenditures made
for demonstration projects under this section shall be made in appro-
priate part from the Federal Hospital Insurance Trust Fund (estab-
lished by section 1817 of the Social Security Act) and the Federal
Supplementary Medical Insurance Trust Fund (established by sec-
tion 1841 of the Social Security Act). Grants and payments under
contracts may be made either in advance or by way of reimbursement,
as may be determined by the Secretary, and shall be made in such
installments and on such conditions as the Secretary finds necessary to
carry out the purpose of this section. With respect to any such grant,
payment, or other expenditure, the amount to be paid from each trust
fund shall be determined by the Secretary giving due regard to the
purposes of the demonstration projects.
(d) The Secretary shall submit to the Congress, no later than Janu-
ary 1, 1981, a complete, detailed report on the demonstration projects
conducted under subsection (b). Such report shall include any recom-
mendations for legislative changes which the Secretary finds necessary
or desirable as a result of carrying out such demonstration projects.
(e) As used in this section, the terms "physician assistant" and
"nurse practitioner" have the meanings given such terms in section
1861 (aa) (3) of the Social Security Act.
REPORT BY THE SECRETARY OF HEALTH, EDUCATION, AND WELFARE ON
MENTAL HEALTH AND OTHER CENTERS
SEC. 4. (a) The Secretary shall submit to the Congress, no later than
six months after the date of enactment of this Act, a report on the
advantages and disadvantages of extending coverage under title
XVIII of the Social Security Act to urban or rural comprehensive
mental health centers and to centers for treatment of alcoholism and
drug abuse.
805
(b) The report submitted under subsection (a) shall include evalua-
tions of-
(1) the need for coverage under such title of services provided
by such centers;
(2) the extent of present utilization of such centers by individ-
uals eligible for benefits under such title;
(3) alternatives to services provided by such centers presently
available to individuals eligible for benefits under such title;
(4) the appropriate definition for such centers;
(5) the types of treatment provided by such centers;
(6) present Federal and State funding for such centers;
(7) the extent of coverage by private insurance plans for serv-
ices provided by such centers;
(8) present and projected costs of services provided by such
centers;
(9) available methods for assuring proper utilization of such
centers;
(10) the effect of allowing coverage for services provided by
such centers on other providers and practitioners; and
(11) the need for any demonstration projects for further eval-
uation of the need for coverage for services provided by such
centers.
*
*
*
SEC. 301. (a)
*
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***
*
*
Excerpts From Public Law 95-216
SECTION 1. This Act, with the following table of contents, may be
cited as the "Social Security Amendments of 1977”.
*
*
*
*
*
*
*
STUDY OF UNIVERSAL COVERAGE
*k
*
(c) (1)
(2) No notification with respect to an increased exempt amount for
individuals described in section 203 (f) (8) (D) of the Social Security
Act (as added by paragraph (1) of this subsection) shall be required
under the last sentence of section 203 (f) (8) (B) of such Act in 1977,
1978, 1979, 1980, or 1981; and section 203 (f) (8) (C) of such Act shall
not prevent the new exempt amount determined and published under
section 203 (f) (8) (A) in 1977 from becoming effective to the extent
that such new exempt amount applies to individuals other than those
described in section 203 (f) (8) (D) of such Act (as so added).
*
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*
*
*
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*
SEC. 311. (a) The Secretary of Health, Education, and Welfare is
directed to undertake, as soon as possible after the date of the enact-
806
ment of this Act, a thorough study with respect to the extent of the cov-
erage under the old-age, survivors, and disability insurance programs
and under the programs established by title XVIII of the Social
Security Act. The study shall examine the feasibility and desirability
of covering, under such social security programs, Federal employees,
State and local governmental employees, and employees of non-profit
organizations who are not now covered. The study shall include alter-
native methods of accomplishing such coverage together with any
appropriate alternatives to extending coverage to such employees.
(b) With respect to each major alternative method or proposal
included in the study described in subsection (a), such study shall also
include an analysis of the changes which would be required in the pro-
grams established by the Social Security Act and in any other systems
or programs (such as retirement, survivorship, disability, and health
programs) affecting the individuals who would be covered under
such social security programs under such alternative method or pro-
posal. Such analysis shall include the structural changes required in
such programs, the financial impact of such changes, and the effect of
such changes on the benefit rights and contribution liabilities of the
affected individuals.
(c) In conducting the study required by subsection (a), the Secre-
tary of Health, Education, and Welfare shall consult, as appropriate
with the Secretary of the Treasury, the Director of the Office of Man-
agement and Budget, and the Chairman of Civil Service Com-
mission, and those officials shall provide him with such information
and assistance as he may require. The Secretary shall also solicit the
views of other appropriate officials and organizations.
(d) The Secretary of Health, Education, and Welfare shall submit
to the President and the Congress, not later than 2 years after the date
of the enactment of this Act, a report of the findings of the study
required by subsection (a) together with his recommendations for any
appropriate legislative changes.
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*
SEC. 312. (a) * *
*
*
(c) In any case where-
(1) an individual performed service, as an employee of an
organization which is deemed under section 3121(k) (4) of the
Internal Revenue Code of 1954 to have filed a waiver certificate
under section 3121(k) (1) of such Code, on or after the first day
of the applicable period described in subparagraph (A)(ii) of
such section 3121(k) (4) and before July 1, 1977; and
(2) the service so performed does not constitute employment
(as defined in section 210 (a) of the Social Security Act and sec-
S
*
*
-
*
807
tion 3121 (b) of such Code) because the waiver certificate which
the organization is deemed to have filed is made inapplicable to
such service by section 3121 (k) (4) (C) of such Code, but would
constitute employment (as so defined) in the absence of such sec-
tion 3121 (k) (4) (C),
the remuneration paid for such service shall, upon the request of such
individual (filed on or before April 15, 1980, in such manner and form,
and with such official, as may be prescribed by regulations made under
title II of the Social Security Act) accompanied by full payment of
all of the taxes which would have been paid under section 3101 of such
Code with respect to such remuneration but for such section 3121(k)
(4) (C) (or by satisfactory evidence that appropriate arrangements
have been made for the payment of such taxes in installments as pro-
vided in section 3121(k) (8) of such Code), be deemed to constitute
remuneration for employment as so defined. In any case where remu-
neration paid by an organization to an individual is deemed under the
preceding sentence to constitute remuneration for employment, such
organization shall be liable (notwithstanding any other provision of
such Code) for payment of the taxes which it would have been re-
quired to pay under section 3111 of such Code with respect to such re-
muneration in the absence of such section 3121 (k) (4) (C).
*
*
*
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*
REVOCATION OF EXEMPTION FROM COVERAGE BY CLERGYMEN
SEC. 316. (a) Notwithstanding section 1402 (e)(3) of the Internal
Revenue Code of 1954, any exemption which has been received under
section 1402(e) (1) of such Code by a duly ordained, commissioned, or
licensed minister of a church or a Christian Science practitioner, and
which is effective for the taxable year in which this Act is enacted, may
be revoked by filing an application therefor (in such form and manner,
and with such official, as may be prescribed in regulations made under
chapter 2 of such Code), if such application is filed-
(1) before the applicant becomes entitled to benefits under sec-
tion 202(a) or 223 of the Social Security Act (without regard to
section 202 (j) (1) or 223 (b) of such Act), and
(2) no later than the due date of the Federal income tax return
(including any extension thereof) for the applicant's first taxable
year beginning after the date of the enactment of this Act.
Any such revocation shall be effective (for purposes of chapter 2 of
the Internal Revenue Code of 1954 and title II of the Social Security
Act), as specified in the application, either with respect to the appli-
cant's first taxable year ending on or after the date of the enactment
of this Act or with respect to the applicant's first taxable year begin-
ning after such date, and for all succeeding taxable years; and the
1
808
applicant for any such revocation may not thereafter again file appli-
cation for an exemption under such section 1402(e) (1). If the appli-
cation is filed on or after the due date of the applicant's first taxable
year ending on or after the date of the enactment of this Act and is
effective with respect to that taxable year, it shall include or be accom-
panied by payment in full of an amount equal to the total of the taxes
that would have been imposed by section 1401 of the Internal Revenue
Code of 1954 with respect to all of the applicant's income derived in
that taxable year which would have constituted net earnings from self-
employment for purposes of chapter 2 of such Code (notwithstanding
section 1402 (c) (4) or (c) (5) of such Code) except for the exemption
under section 1402 (e) (1) of such Code.
(b) Subsection (a) shall apply with respect to service performed
(to the extent specified in such subsection) in taxable years ending on
or after the date of the enactment of this Act, and with respect to
monthly insurance benefits payable under title II of the Social Secu-
rity Act on the basis of the wages and self-employment income of any
individual for months in or after the calendar year in which such indi-
vidual's application for revocation (as described in such subsection)
is filed (and lump-sum death payments payable under such title on
the basis of such wages and self-employment income in the case of
deaths occurring in or after such calendar year).
*
*
**
SEC. 317. (a)
(b) (1) * *
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*
*
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K
*
(4) Notwithstanding any other provision of law, taxes paid by any
individual to any foreign country with respect to any period of
employment or self-employment which is covered under the social secu-
rity system of such foreign country in accordance with the terms of
an agreement entered into pursuant to section 233 of the Social Security
Act shall not, under the income tax laws of the United States, be
deductible by, or creditable against the income tax of, any such
individual.
MODIFICATION OF AGREEMENT WITH ILLINOIS TO PROVIDE COVERAGE FOR
CERTAIN POLICEMEN AND FIREMEN
SEC. 318. (a) Notwithstanding the provisions of subsection (d) (5)
(A) of section 218 of the Social Security Act and the references thereto
in subsections (d) (1) and (d) (3) of such section 218, the agreement
with the State of Illinois heretofore entered into pursuant to such
section 218 may, at any time prior to January 1, 1979, be modified
pursuant to subsection (c) (4) of such section 218 so as to apply to
809
services performed in policemen's or firemen's positions covered by
the Illinois Municipal Retirement Fund on the date of the enactment
of this Act if the State of Illinois has at any time prior to the date of
the enactment of this Act paid to the Secretary of the Treasury, with
respect to any of the services performed in such positions, the sums
prescribed pursuant to subsection (e) (1) of such section 218. For
purposes of this section, a retirement system which covers positions
of policemen or firemen shall, if the State of Illinois so desires, be
deemed to be a separate retirement system with respect to the positions
of such policemen or firemen, as the case may be.
(b) Notwithstanding the provisions of subsection (f) of section
218 of the Social Security Act, any modification in the agreement with
the State of Illinois under subsection (a) of this section, to the extent
that it involves services performed by a policeman or fireman in posi-
tions covered under the Illinois Municipal Retirement Fund, shall be
made effective with respect to-
(1) all services performed by policemen or firemen, in positions
to which the modification relates, on or after the date of the en-
actment of this Act; and
(2) all services performed by such individuals in such positions
before such date of enactment with respect to which the State of
Illinois has paid to the Secretary of the Treasury the sums pre-
scribed pursuant to subsection (e) (1) of such section 218 at the
time or times established pursuant to such subsection (e) (1), if
and to the extent that—
(A) no refund of the sums so paid has been obtained, or
(B) a refund of part or all of the sums so paid has been
obtained but the State of Illinois repays to the Secretary of
the Treasury the amount of such refund within 90 days after
the date that the modification is agreed to by the State and
the Secretary of Health, Education, and Welfare.
SEC. 334. (a) *
*
*
**
(f) The amendments made by this section shall apply with respect to
monthly insurance benefits payable under title II of the Social Secu-
rity Act for months beginning with the month in which this Act is
enacted, on the basis of applications filed in or after the month in
which this Act is enacted.
(g) (1) The amendments made by the preceding provisions of this
section shall not apply with respect to any monthly insurance benefit
payable, under subsection (b), (c), (e), (f), or (g) (as the case may
be) of section 202 of the Social Security Act, to an individual—
810
(A) to whom there is payable for any month within the
60-month period beginning with the month in which this Act is
enacted (or who is eligible in any such month for) a monthly peri-
odic benefit (within the meaning of such provisions) based upon
such individual's earnings while in the service of the Federal
Government or any State (or political subdivision thereof, as
defined in section 218(b) (2) of the Social Security Act); and
(B) who at time of application for or initial entitlement to
such monthly insurance benefit under such subsection (b), (c),
(e), (f), or (g) meets the requirements of that subsection as it
was in effect and being administered in January 1977.
(2) For purposes of paragraph (1)(A), an individual is eligible
for a monthly periodic benefit for any month if such benefit would be
payable to such individual for that month if such individual were not
employed during that month and had made proper application for
such benefit.
(3) If any provision of this subsection, or the application thereof
to any person or circumstance, is held invalid, the remainder of this
section shall not be affected thereby, but the application of this sub-
section to any other persons or circumstances shall also be considered
invalid.
**
SEC. 336. (a)
*
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*
*
*
*
*
*
(c) (1) The amendments made by this section shall apply only with
respect to monthly benefits payable under title II of the Social Secu-
rity Act for months after December 1978, and, in the case of individ-
uals who are not entitled to benefits of the type involved for December
1978, only on the basis of applications filed on or after January 1,
1979.
(2) In the case of an individual who was entitled for the month of
December 1978 to monthly insurance benefits under subsection (e) or
(f) of section 202 of the Social Security Act to which the provisions of
subsection (e) (4) or (f)(5) applied, the Secretary shall, if such
benefits would be increased by the amendments made by this section,
redetermine the amount of such benefits for months after Decem-
ber 1978 as if such amendments had been in effect for the first month
for which the provisions of section 202(e) (4) or 202(f)(5) became
applicable.
(d) Where-
(1) two or more persons are entitled to monthly benefits under
section 202 of the Social Security Act for December 1978 on the
basis of the wages and self-employment income of a deceased
811
individual, and one or more of such persons is so entitled under
subsection (e) or (f) of such section 202, and
(2) one or more of such persons is entitled on the basis of such
wages and self-employment income to monthly benefits under
subsection (e) or (f) of such section 202 (as amended by this
section) for January 1979, and
(3) the total of benefits to which all persons are entitled under
section 202 of such Act on the basis of such wages and self-employ-
ment income for January 1979 is reduced by reason of section
203(a) of such Act as amended by this Act (or would, but
for the first sentence of section 203(a) (4), be so reduced),
then the amount of the benefit to which each such person referred to in
paragraph (1) is entitled for months after December 1978 shall in no
case be less after the application of this section and such section
203 (a) than the amount it would have been without the application
of this section.
DURATION-OF-MARRIAGE REQUIREMENT
SEC. 337. (a) Section 216(d) of the Social Security Act is amended
by striking out "20 years" in paragraphs (1) and (2) and inserting
in lieu thereof in each instance "10 years”.
(b) Section 202(b)(1)(G) of such Act is amended by striking out
“20 years" and inserting in lieu thereof "10 years”.
(c) The amendments made by this section shall apply with respect
to monthly benefits payable under title II of the Social Security Act
for months after December 1978, and, in the case of individuals who
are not entitled to benefits of the type involved for December 1978,
only on the basis of applications filed on or after January 1, 1979.
PART D-STUDY WITH RESPECT TO GENDER-BASED DISTINCTIONS
STUDY OF PROPOSALS TO ELIMINATE DEPENDENCY AND SEX DISCRIMINATION
UNDER THE SOCIAL SECURITY PROGRAM
SEC. 341. (a) The Secretary of Health, Education, and Welfare,
in consultation with the Task Force on Sex Discrimination in the
Department of Justice, shall make a detailed study, within the Depart-
ment of Health, Education, and Welfare and the Social Security
Administration, of proposals to eliminate dependency as a factor in
the determination of entitlement to spouse's benefits under the pro-
gram established under title II of the Social Security Act, and of
proposals to bring about equal treatment for men and women in any
and all respects under such program, taking into account the practi-
cal effects (particularly the effect upon women's entitlement to such
benefits) of factors such as-
812
(1) changes in the nature and extent of women's participation
in the labor force,
(2) the increasing divorce rate, and
(3) the economic value of women's work in the home.
The study shall include appropriate cost analyses.
(b) The Secretary shall submit to the Congress within six months
after the date of the enactment of this Act a full and complete report
on the study carried out under subsection (a).
*
*
*
*
*
*
PART F-NATIONAL COMMISSION ON SOCIAL SECURITY
ESTABLISHMENT OF COMMISSION
SEC. 361. (a) (1) There is hereby established a commission to be
known as the National Commission on Social Security (hereinafter
referred to as the "Commission").
(2) (A) The Commission shall consist of—
(i) five members to be appointed by the President, by and with
the advice and consent of the Senate, one of whom shall, at the
time of appointment, be designated as Chairman of the
Commission;
(ii) two members to be appointed by the Speaker of the House
of Representatives; and
(iii) two members to be appointed by the President pro tem-
pore of the Senate.
(B) At no time shall more than three of the members appointed by
the President, one of the members appointed by the Speaker of the
House of Representatives, or one of the members appointed by the
President pro tempore of the Senate be members of the same political
party.
(C) The membership of the Commission shall consist of individuals
who are of recognized standing and distinction and who possess the
demonstrated capacity to discharge the duties imposed on the Com-
mission, and shall include representatives of the private insurance
industry and of recipients and potential recipients of benefits under
the programs involved as well as individuals whose capacity is based
on a special knowledge or expertise in those programs. No individual
who is otherwise an officer or full-time employee of the United States
shall serve as a member of the Commission.
(D) The Chairman of the Commission shall designate a member of
the Commission to act as Vice Chairman of the Commission.
(E) A majority of the members of the Commission shall constitute
a quorum, but a lesser number may conduct hearings.
(F) Members of the Commission shall be appointed for a term of
two years.
813
(G) A vacancy in the Commission shall not affect its powers, but
shall be filled in the same manner as that herein provided for the
appointment of the member first appointed to the vacant position.
(3) Members of the Commission shall receive $138 per diem while
engaged in the actual performance of the duties vested in the Com-
mission, plus reimbursement for travel, subsistence, and other neces-
sary expenses incurred in the performance of such duties.
(4) The Commission shall meet at the call of the Chairman, or at the
call of a majority of the members of the Commission; but meetings of
the Commission shall be held not less frequently than once in each
calendar month which begins after a majority of the authorized mem-
bership of the Commission has first been appointed.
(b) (1) It shall be the duty and function of the Commission to con-
duct a continuing study, investigation, and review of-
(A) the Federal old-age, survivors, and disability insurance
program established by title II of the Social Security Act; and
(B) the health insurance programs established by title XVIII
of such Act.
(2) Such study, investigation, and review of such programs shall
include (but not be limited to)-
(A) the fiscal status of the trust funds established for the
financing of such programs and the adequacy of such trust
funds to meet the immediate and long-range financing needs of
such programs;
(B) the scope of coverage, the adequacy of benefits including
the measurement of an adequate retirement income, and the con-
ditions of qualification for benefits provided by such programs
including the application of the retirement income test to
unearned as well as earned income;
(C) the impact of such programs on, and their relation to,
public assistance programs, nongovernmental retirement and
annuity programs, medical service delivery systems, and national
employment practices;
(D) any inequities (whether attributable to provisions of law
relating to the establishment and operation of such programs, to
rules and regulations promulgated in connection with the admin-
istration of such programs, or to administrative practices and
procedures employed in the carrying out of such programs)
which affect substantial numbers of individuals who are insured
or otherwise eligible for benefits under such programs, including
inequities and inequalities arising out of marital status, sex, or
similar classifications or categories;
(E) possible alternatives to the current Federal programs or
particular aspects thereof, including but not limited to (i) a
814
phasing out of the payroll tax with the financing of such programs
being accomplished in some other manner (including general
revenue funding and the retirement bond), (ii) the establishment
of a system providing for mandatory participation in any or all
of the Federal programs, (iii) the integration of such current
Federal programs with private retirement programs, and (iv)
the establishment of a system permitting covered individuals a
choice of public or private programs or both;
(F) the need to develop a special Consumer Price Index for
the elderly, including the financial impact that such an index
would have on the costs of the programs established under the
Social Security Act; and
(G) methods for effectively implementing the recommendations
of the Commission.
(3) In order to provide an effective opportunity for the general
public to participate fully in the study, investigation, and review under
this section, the Commission, in conducting such study, investigation,
and review, shall hold public hearings in as many different geographi-
cal areas of the country as possible. The residents of each area where
such a hearing is to be held shall be given reasonable advance notice
of the hearing and an adequate opportunity to appear and express
their views on the matters under consideration.
(c) (1) No later than four months after the date on which a majority
of the authorized membership of the Commission is initially appointed,
the Commission shall submit to the President and the Congress a
special report describing the Commission's plans for conducting the
study, investigation, and review under subsection (b), with particular
reference to the scope of such study, investigation, and review and
the methods proposed to be used in conducting it.
(2) At or before the close of each of the first two years after the
date on which a majority of the authorized membership of the Com-
mission is initially appointed, the Commission shall submit to the
President and the Congress an annual report on the study, investiga-
tion, and review under subsection (b), together with its recommenda-
tions with respect to the programs involved. The second such report
shall constitute the final report of the Commission on such study, in-
vestigation, and review, and shall include its final recommendations;
and upon the submission of such final report the Commission shall
cease to exist.
-
(d) (1) The Commission shall appoint an Executive Director of the
Commission who shall be compensated at a rate fixed by the Commis-
sion, but which shall not exceed the rate established for level V of
the Executive Schedule by title 5, United States Code.
815
(2) In addition to the Executive Director, the Commission shall
have the power to appoint and fix the compensation of such personnel
as it deems advisable, in accordance with the provisions of title 5,
United States Code, governing appointments to the competitive serv-
ice, and the provisions of chapter 51 and subchapter III of chapter 53
of such title, relating to classification and General Schedule pay rates.
(e) In carrying out its duties under this section, the Commission,
or any duly authorized committee thereof, is authorized to hold such
hearings, sit and act at such times and places, and take such testimony,
with respect to matters with respect to which it has a responsibility
under this section, as the Commission or such committee may deem
advisable. The Chairman of the Commission or any member author-
ized by him may administer oaths or affirmations to witnesses appear-
ing before the Commission or before any committee thereof.
(f) The Commission may secure directly from any department or
agency of the United States such data and information as may be
necessary to enable it to carry out its duties under this section. Upon
request of the Chairman of the Commission, any such department or
agency shall furnish any such data or information to the Commission.
(g) The General Services Administration shall provide to the Com-
mission, on a reimbursable basis such administrative support services
as the Commission may request.
(h) There are hereby authorized to be appropriated such sums as
may be necessary to carry out this section.
(i) It shall be the duty of the Health Insurance Benefits Advisory
Council (established by section 1867 of the Social Security Act) to
provide timely notice to the Commission of any meeting, and the
Chairman of the Commission (or his delegate) shall be entitled to
attend any such meeting.
PART G-MISCELLANEOUS PROVISIONS
APPOINTMENT OF HEARING EXAMINERS
SEC. 371. The persons who were appointed to serve as hearing exam-
iners under section 1631(d) (2) of the Social Security Act (as in effect
prior to January 2, 1976), and who by section 3 of Public Law 94-202
were deemed to be appointed under section 3105 of title 5, United
States Code (with such appointments terminating no later than at
the close of the period ending December 31, 1978), shall be deemed
appointed to career-absolute positions as hearing examiners under
and in accordance with section 3105 of title 5, United States Code,
with the same authority and tenure (without regard to the expiration
of such period) as hearing examiners appointed directly under such
section 3105, and shall receive compensation at the same rate as
21-746 O - 78 - 60
816
hearing examiners appointed by the Secretary of Health, Education,
and Welfare directly under such section 3105. All of the provisions of
title 5, United States Code, and the regulations promulgated pursuant
thereto, which are applicable to hearing examiners appointed under
such section 3105, shall apply to the persons described in the preceding
sentence.
REPORT OF ADVISORY COUNCIL ON SOCIAL SECURITY
SEC. 372. Notwithstanding the provisions of section 706(d) of the
Social Security Act, the report of the Advisory Council on Social
Security which is due not later than January 1, 1979, may be filed at
any date prior to October 1, 1979.
*
*
*
REIMBURSEMENT FOR ERRONEOUS STATE SUPPLEMENTARY PAYMENT
SEC. 405. (a) Notwithstanding any other provision of law, the Secre-
tary of Health, Education, and Welfare is authorized and directed
to pay to each State an amount equal to the amount expended by such
State for erroneous supplementary payments to aged, blind, or disabled
individuals whenever, and to the extent to which, the Secretary
through an audit by the Department of Health, Education, and Wel-
fare which has been reviewed and concurred in by the Inspector
General of such department determines that-
(1) such amount was paid by such State as a supplementary
payment during the calendar year 1974 pursuant to an agreement
between the State and the Secretary required by section 212 of the
Act entitled "An Act to extend the Renegotiation Act of 1951 for
one year, and for other purposes", approved July 9, 1973, or such
amount was paid by such State as an optional State supplementa-
tion, as defined in section 1616 of the Social Security Act, during
the calendar year 1974.
(2) the erroneous payments were the result of good faith reli-
ance by such State upon erroneous or incomplete information
supplied by the Department of Health, Education, and Welfare,
through the State data exchange, or good faith reliance upon
incorrect supplemental security income benefit payments made by
such department, and
(3) recovery of the erroneous payments by such State would
be impossible or unreasonable.
(b) There are authorized to be appropriated such sums as are neces-
sary to carry out the provisions of this section.
*
1
Revised August 1978
817
P.L. 95-291
Public Law 95-291
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, That (a) there is
authorized to be appropriated for the fiscal year which ends on
September 30, 1979, not to exceed $543,000,000, to remain available.
until expended, to enable the Secretary of the Treasury to pay to any
State the amount determined by the Secretary of Health, Education,
and Welfare (hereinafter in this Act referred to as the "Secretary”),
in accordance with the succeeding provisions of this Act, to be payable
to the State in settlement of the unpaid claim of the State against the
United States for reimbursement of expenditures made by the State
prior to October 1, 1975, with respect to services (and related adminis-
trative costs) which the State asserts were provided (or incurred)
under an approved State plan pursuant to title I, IV-A, VI, X, XIV,
or XVI of the Social Security Act.
(b) For purposes of this Act, the term "unpaid claim" of any State
means (subject to the succeeding sentence) the total amount of Federal
reimbursement for expenditures of the type specified in subsection (a)
which has not been paid to such State prior to the date of enactment
of this Act. In determining such total amount in the case of any State,
any portion thereof attributable to expenditures made in any fiscal
year with respect to which the provisions of section 1130 of the Social
Security Act (as then in effect) were applicable shall be reduced (but
not below zero) by the excess (if any) of (1) the aggregate of the
portion of such total amount attributable to expenditures made in such
year and the total amount of the Federal reimbursement paid prior to
the date of enactment of this Act to such State with respect to expend-
itures made in such year, over (2) the State's allotment determined
under such section 1130 for such year.
SEC. 2. (a) In the case of that portion of the unpaid claim of a State
that the Secretary determines was asserted against the United States,
in the form and manner prescribed by the Secretary with respect to
the filing of claims under titles I, IV-A, VI, X, XIV, and XVI of the
Social Securty Act, prior to April 1, 1977, the Secretary shall certify
to the Secretary of the Treasury for payments to the State the sum
of-
(1) an amount equal to 38 percent of so much of such portion
as does not exceed $50,000,000;
(2) an amount equal to 35 percent of so much of such portion
as exceeds $50,000,000 but does not exceed $150,000,000; and
(3) an amount equal to 21 percent of so much of such portion
as exceeds $150,000,000;
except that the percentage specified in paragraph (1) shall be 58
percent and the percentage specified in paragraph (2) shall be 50
P.L. 95-291
Revised August 1978
818
percent in the case of a State if the portion of the unpaid claim of such
State referred to in the preceding provisions of this subsection equals
or exceeds 85 percent of the sum of (A) such portion and (B) the
total amount of Federal reimbursement for expenditures of the type
specified in the first section of this Act which has been paid to such
State prior to the date of enactment of this Act but with respect to
which formal steps have been initiated by the Secretary to recover
such reimbursement.
(b) (1) In the case of the portion of the unpaid claims of a State
that the Secretary determines meets the requirements of subsection
(a), except that the claim was asserted, in the form and manner pre-
scribed by the Secretary, on or after April 1, 1977, but prior to the
ninety-first day following the date upon which this Act is enacted, the
Secretary shall certify to the Secretary of the Treasury for payment
to the State, subject to paragraph (2), an amount equal to 15 percent
of so much of such portion as he finds to be for the provision of serv-
ices that he finds the State provided and for which he has not pro-
vided reimbursement, but the expenditures for which were reimburs-
able under title I, IV-A, VI, X, XIV, or XVI of the Social Security
Act prior to April 1, 1977, or, if not services the expenditures for
which were reimbursable, are services of a similar kind and are not
otherwise reimbursable under this Act.
(2) The Secretary may not certify for payment to any State under
the authority of this subsection an aggregate amount that exceeds 5
percent of that State's allotment for the fiscal year 1973 of social serv-
ice funds under titles I, IV-A, X, XIV, and XVI of the Social Securi-
ty Act, as determined in accordance with section 1130 (b) of such Act,
less the amount certified for payment to the State under subsection (a)
of this section.
(3) The Secretary shall have no authority, by regulations or other-
wise, to extend the time period specified in paragraph (1) or to waive
the time limit for assertion of a claim.
SEC. 3. (a) Except with respect to amounts paid by the Secretary to
a State prior to April 1, 1977, no State is entitled to reimbursement of
expenditures described by the first section of this Act, except as pro-
vided by this Act.
(b) Neither the Secretary nor any other official of the Federal
Government may seek to recover any amount paid to a State prior
to April 1, 1977, or pursuant to this Act, as reimbursement of expen-
ditures made by the State of the type described by the first section of
this Act.
SEC. 4. (a) The Secretary is authorized to enter into agreements
with any State in accordance with the provisions of this Act, and
agreements entered into prior to the enactment of this Act, to the
extent not inconsistent with the terms hereof, shall have the same force
Revised August 1978
P.L. 95-291
819
and effect as agreements entered into subsequent to enactment of
this Act.
(b) In the absence of an agreement, a State dissatisfied with a
determination by the Secretary under this Act may, by application to
the Secretary within 60 days after the date of notice to the State of
that determination, obtain the Secretary's review of that determina-
tion. If the application requests a hearing, the Secretary shall conduct
a hearing after reasonable notice to the State, and shall, on the basis
of evidence adduced at the hearing, affirm, modify, or reverse his
determination. If the Secretary does not preside at the reception of the
evidence at the hearing, the decision of the presiding official or body
shall be the decision of the Secretary.
(c) No court of the United States has jurisdiction to entertain any
action seeking the review of any determination or finding of the Secre-
tary under this Act, or otherwise seeking to compel a determination
by the Secretary to certify for payment any claim described by the
first section of this Act; except that the appropriate district court
shall have jurisdiction over any action seeking enforcement of an
agreement of the kind referred to in subsection (a).
SEC. 5. (a) Amounts appropriated under the first section of this
Act shall be first applied in settlement of the portions of unpaid claims
described in section 2(a). If, after that payment, the amounts remain-
ing are insufficient to pay the amounts established by section 2(b)
with respect to the portions of unpaid claims asserted under section
2(b), the Secretary shall certify for payment with respect to each such
portion an amount that bears the same relationship to that portion as
the total of such remaining available amounts bears to the total of all
portions of unpaid claims asserted under section 2(b).
(b) A reduction effected by subsection (a) of this section in the
amount payable to a State under section 2 (b) does not give rise to an
entitlement of the State to the difference between the amount payable
under section 2(b) (without regard to subsection (a) of this section)
and the amount payable under section 2(b) after application of sub-
section (a) of this section.
(c) In the event that the amount appropriated pursuant to the first
section of this Act exceeds the payable portions of unpaid claims
under subsections (a) and (b) of section 2, the amount paid to any
State receiving a payment computed with respect to paragraph (3)
of section 2(a) shall be increased (to the extent of such excess) by an
amount equal to the difference between the amount it received under
section 2(a) and the amount it would have so received if the per-
centage in such paragraph had been 25 percent.
SEC. 6. The Secretary of the Treasury shall pay to each State, out
of amounts appropriated pursuant to the first section of this Act, all
P.L. 95-292
820
Revised August 1978
amounts certified by the Secretary as payable to that State under the
terms of this Act.
Excerpts From Public Law 95-292
SEC. 6. The amendments made by the preceding sections of this Act
shall become effective with respect to services, supplies, and equipment
furnished after the third calendar month which begins after the date
of the enactment of this Act, except that those amendments providing
for the implementation of an incentive reimbursement system for
dialysis services furnished in facilities and providers shall become
effective with respect to a facility's or provider's first accounting period
which begins after the last day of the twelfth month following the
month of the enactment of this Act, and those amendments providing
for reimbursement rates for home dialysis shall become effective on
April 1, 1979.
SEC. 8. (a)
*
* *
(c) The Secretary of Health, Education, and Welfare shall, by
regulation, define those costs which may be charged to the personal
funds of patients in intermediate care facilities who are individuals.
receiving medical assistance under a State plan approved under the
provisions of title XIX of the Social Security Act, and those costs
which are to be included in the reasonable cost or reasonable charge
for intermediate care facility services as determined under the pro-
visions of such title.
(d) (1) The amendments made by subsections (a) and (b) shall
become effective on July 1, 1978.
(2) The Secretary of Health, Education, and Welfare shall issue
the regulations required under subsection (c) within 90 days after
the date of enactment of this Act but not later than July 1, 1978.
APPENDIX A
AMENDING LEGISLATION
Laws enacted since the 92nd Congress which amend or directly affect
the Social Security Act or the other related Acts included in this docu-
ment are listed below. For a listing of prior laws amending the Social
Security Act see House Document 93-117, Compilation of the Social
Security Laws, p. 675-677.
Private Law
Private Law 93–107, approved December 31, 1974 (88 Stat. 2386).
Public Laws
Public Law 93-53, approved July 1, 1973, (87 Stat. 134).
Public Law 93-58, approved July 6, 1973 (87 Stat. 141).
Public Law 93-66, approved July 9, 1973 (87 Stat. 152).
Public Law 93-69, approved July 10, 1973 (87 Stat. 162).
Public Law 93-233, approved December 31, 1973 (87 Stat. 947).
Public Law 93-256, approved March 28, 1974 (88 Stat. 52).
Public Law 93-329, approved June 30, 1974 (88 Stat. 288).
Public Law 93-335, approved July 8, 1974 (88 Stat. 291).
Public Law 93–368, approved August 7, 1974 (88 Stat. 420).
Public Law 93-406, approved September 2, 1974 (88 Stat. 829). The
Employee Retirement Income Security Act of 1974.
Public Law 93-445, passed over veto October 16, 1974 (88 Stat.
1305).
Public Law 93-480, approved October 26, 1974 (88 Stat. 1454).
Public Law 93-484, approved October 26, 1974 (88 Stat. 1459).
Public Law 93–490, approved October 26, 1974 (88 Stat. 1459).
Public Law 93-572, approved December 31, 1974 (88 Stat. 1869).
The Emergency Unemployment Compensation Act of 1974.
Public Law 93-618, approved January 3, 1975 (88 Stat. 1978). The
Trade Act of 1974.
Public Law 93-647, approved January 4, 1975 (88 Stat. 2337). The
Social Services Amendments of 1974.
Public Law 94-12, approved March 29, 1975 (89 Stat. 26). The
Tax Reduction Act of 1975.
Public Law 94-44, approved June 28, 1975 (89 Stat. 235).
Public Law 94 45, approved June 30, 1975 (89 Stat. 236). The
Emergency Compensation and Special Unemployment Assistance Ex-
tension Act of 1975.
Public Law 94-46, approved June 30, 1975 (89 Stat. 245).
Public Law 94-48, approved July 1, 1975 (89 Stat. 247).
Public Law 94-88, approved August 9, 1975 (89 Stat. 433).
(i)
ii
Revised April 1978
Public Law 94-92, approved August 9, 1975 (89 Stat. 461).
Public Law 94–93, approved August 9, 1975 (89 Stat. 466).
Public Law 94-120, approved October 21, 1975 (89 Stat. 609).
Public Law 94–164, approved December 23, 1975 (89 Stat. 970).
The Revenue Adjustment Act of 1975.
Public Law 94–182, approved December 31, 1975 (89 Stat. 1051).
Public Law 94-114 (S. 1327), approved October 17, 1975 (89 Stat.
577).
Public Law 94-202, approved January 2, 1976 (89 Stat. 1135).
Public Law 94-273 (S. 2445), approved April 21, 1976 (90 Stat.
375). The Fiscal Year Adjustment Act.
Public Law 94-274 (S. 2444). approved April 21, 1976 (90 Stat
383). The Fiscal Year Transition Act.
Public Law 94–331 (H.R. 10051), approved June 30, 1976 (90 Stat
781).
Public Law 94-354 (H.R. 13069), approved July 12, 1976 (90 Stat
888).
Public Law 94-365 (H.R. 14484), approved July 14, 1976 (90 Stat.
990).
Public Law 94–368 (H.R. 13501), approved July 16, 1976 (90 Stat.
997).
Public Law 94-375 (S. 3295), approved August 3, 1976 (90 Stat.
1067). The Housing Authorization Act of 1976.
Public Law 94-379 (H.R. 14514), approved August 10, 1976 (90
Stat. 1111).
Public Law 94-401 (H.R. 12455), approved September 7, 1976 (90
Stat. 1215).
Public Law 94-437 (S. 522), approved September 30, 1976 (90 Stat.
1400). The Indian Health Care Improvement Act.
Public Law 94-455 (H.R. 10612), approved October 4, 1976 (90
Stat. 1520). The Tax Reform Act of 1976.
Public Law 94-460 (H.R. 9019), approved October 8, 1976 (90 Stat.
1945). The Health Maintenance Organization Amendments of 1976.
Public Law 94-547 (H.R. 14041), approved October 18, 1976 (90
Stat. 2523).
Public Law 94-552 (H.R. 12961), approved October 18, 1976 (90
Stat. 2540).
Public Law 94-563 (H.R. 15571), approved October 19, 1976 (90
Stat. 2655).
Public Law 94-566 (H.R. 10210), approved October 20, 1976 (90
Stat. 2667). The Unemployment Compensation Amendments of 1976.
Public Law 94-569 (H.R. 7228), approved October 20, 1976 (90
Stat. 2699).
Public Law 94-585 (H.R. 13500), approved October 21, 1976 (90
Stat. 2899).
Revised August 1978
iii
Public Law 95–19 (H.R. 4800), approved April 12, 1977 (91 Stat.
39). The Emergency Unemployment Compensation Extension Act
of 1977.
Public Law 95-30 (H.R. 3477), approved May 23, 1977 (91 Stat.
126). The Tax Reduction and Simplification Act of 1977.
Public Law 95-59 (H.R. 1404), approved June 30, 1977 (91 Stat.
255).
Public Law 95-83 (H.R. 4975), approved August 1, 1977 (91 Stat.
383).
Public Law 95–113 (S. 275), approved September 29, 1977 (91 Stat.
913). The Food and Agriculture Act of 1977.
Public Law 95–142 (H.R. 3), approved October 25, 1977 (91 Stat.
1175). The Medicare-Medicaid Anti-Fraud and Abuse Amendments.
Public Law 95-171 (H.R. 3387), approved November 12, 1977 (91
Stat. 1353).
Public Law 95-210 (H.R. 8422), approved December 13, 1977 (91
Stat. 1485).
Public Law 95-216 (H.R. 9316), approved December 20, 1977 (91
Stat. 1509). The Social Security Amendments of 1977.
Public Law 95-291 (H.R. 11370), approved June 12, 1978 (92 Stat.
304).
Public Law 95-292 (H.R. 8423), approved June 13, 1978 (92 Stat.
307).
о
;
Revised April 1978
APPENDIX B
SOCIAL SECURITY TAXES
MAXIMUM AMOUNT OF ANNUAL EARNINGS SUBJECT TO SOCIAL
SECURITY TAX
Years
1937-50
1951-54
1955-58
1959-65
1966-67
1968-71
1972
1.973
1974
1975
1976
1977
1978
1979
1980
1981
1982
Years
1937-49
1950-53
1954-56.
1957-58__.
1959
1960-61__
1962_
1963-65
1966-
1967-
1968__
1969
1970_
1971-72___
1973_
11
11
1 Amount is adjusted automatically for increases in earnings level under section 230 of
the Social Security Act.
PAYROLL TAX RATES FOR EMPLOYERS AND EMPLOYEES (EACH)
[In percent]
I│
│11
111
It
…
11
1974–77__.
1978_.
1979-80__.
1981.
1982-84
1985
1986-89_.
1990-2010_
2011 and later..
11
││
I│
111
II
!!!
1│
11
1111
II
1
I
│I
1
I
1
1
1
1
I
1
1
I
I
I
1
I
I
I
I
I
I
I
I
1
1
I
·
!
1
1
1
1
1
}
1
F
1
1
1
1
1
I
│││
II
|
I
I
I
1
1
Old-age and
survivors
insurance
1.0
1. 5
2.0
2. 0
2. 25
2. 75
2.875
3. 375
3.5
3. 55
3. 325
3. 725
3. 65
4. 05
4. 3
4. 375
4. 275
4. 330
4. 525
4. 575
4.
750
4. 750
5. 100
5. 100
1
1
I
Disability
insurance
0.25
.25
· 25
•
25
. 25
· 35
.35
. 475
.475
.55
.55
.55
.575
.775
.750
.825
.825
. 950
.950
1. 100
1. 100
Subtotal,
cash Hospital
insurance
benefits
1.0
1.5
2.0
2.25
2.5
3.0
3. 125
3. 625
3. 85
3.9
3.8
4. 2
4. 2
4. 6
4. 85
4. 95
5. 05
5. 08
5. 35
5. 40
5.70
5.70
6. 20
6. 20
I
[
I
1
11
1
I
T
1
I
1
1
I
1 1
1
111
I
1
1
1
.6
.6
.6
1
. 6
1.0
0. 35
· 5
1
•
1
1
9
1.00
I
1. 05
1. 30
1. 30
1. 35
1. 45
1. 45
1. 45
Maximum
taxable
earnings
1
$3,000
3, 600
4, 200
0
4,800
6, 600
7,800
9, 000
10, 800
13, 200
14, 100
15, 300
16, 500
17, 700
22,900
25, 900
29, 700
(¹)
Total
1. 0
1. 5
2.0
2. 25
2.5
3. 0
3. 125
3. 625
4. 2
4. 4
4. 4
4. 8
4. 8
5. 2
5. 3
5. 85
6. 05
6. 13
6. 65
6. 70
7. 05
7. 15
7.65
7. 65
(v)
vi
Revised April 1978
Years
1951-53__
1954-56.
1957-58__
1959.
G
1960-61__
1962__.
1963-65---
1966.
1967__
1968__
1
I
1
1
II
1969
1970_.
1971-72.
1973_
1974-77__
!
1
1978.
1979-80_ _
1981_
1982-84.
1985_
II
1
11
I
!!!
11
I│
……
││}
1
1
1
1
L
I│
I
││
I
I
I
J
1
I
1
TAX RATES FOR SELF-EMPLOYED PERSONS
I
……
1
1
I
1
1
…
Į
I
1
FI
I
1
I
1
I
|
1
1
11
1986-89.
1990-2010_.
2011 and later___.
│││
}│#
1
I
1
1
1
III
▬▬▬▬▬▬▬ 1
|
I
1
1
│││
|
1
I
I
1
I
I
1
I
1
1
I
1
1
|
}
I
I
.I
I
1
I
1
1
1
T
Old-age and
survivors
insurance
2. 25
3.0
3.0
3. 375
4. 125
4. 325
5. 025
5. 275
5. 375
5. 0875
5. 5875
5. 475
6. 075
6. 205
6. 185
6. 0100
6. 0100
6. 7625
6. 8125
7. 1250
7. 1250
7. 6500
7. 6500
[In percent]
1
|
1
Disability
insurance
0.375
.375
375
•
.375
.375
.525
525
•
. 7125
.7125
825
825
.795
.815
1
1. 0900
1. 0400
1. 2375
1. 2375
1. 4250
1. 4250
1. 6500
1. 6500
Subtotal,
cash
benefits
2.25
3. 0
3.375
3.75
4. 5
4. 7
5. 4
5. 8
5.9
5. 8
6. 3
6. 3
6.9
7.0
7.0
7. 1
7. 05
8.00
8. 05
8.55
8.55
9.30
9.30
I
}
11
I
││
1
Hospital
insurance
↓
1
I
………│
▬▬▬▬▬▬▬│
……
11
11
I
1
0.35
.5
. 6
.6
.6
.6
1. 0
9
1.00
1. 05
1. 30
1. 30
1. 35
1. 45
1. 45
1. 45
Total
2. 25
3.0
3. 375
3. 75
4. 5
4. 7
5. 4
6. 15
6. 4
6. 4
6.9
6. 9
7.5
8.0
7.9
8. 1
8. 1
9.3
9. 35
9.90
10.00
10.75
10.75
APPENDIX C
FEDERAL PERCENTAGE AND FEDERAL MEDICAL ASSISTANCE PERCENTAGE, EFFECTIVE JUL. 1, 1975–SEPT. 30, 1977
(FISCAL YEARS 1975, 1976, 1977 AND TRANSITIONAL QUARTER JUL. 1, 1976–SEPT. 30, 1976)
State
Alabama..
Alaska.
Arizona..
Arkansas.
California_
Colorado.
Connecticut.
Delaware
District of Columbia...
Florida..
Georgia...
Guam
Hawaii.
Idaho.
Illinois
Indiana.
lowa_.
Kansas.
Kentucky
Louisiana..
Maine.
Maryland
Massachusetts.
Michigan..
Minnesota.
Mississippi......
Missouri.
Federal matching percentage
State financial
assistance
State medical
assistance
expenditures
expenditures (Federal medical
assistance
percentage)
(Federal
percentage)
65.00
50.00
56.09
65.00
50.00
50.00
50.00
50.00
50.00
52.60
62.34
50.00
50.00
64.64
50.00
52.75
52.37
50.00
65.00
65.00
65.00
50.00
50.00
50.00
52.05
65.00
54. 42
Source: 39 F.R. 33020, Sept. 13, 1974.
State
73.79
50.00
60.48
74.60 New Hampshire.
50.00
New Jersey.
New Mexico….
Montana……….
Nebraska..
Nevada….
54.69
50.00 New York…….
50.00 North Carolina…….
50.00 North Dakota.
57.34 Ohio….
66.10
Oklahoma.
50.00 Oregon.
50.00 Pennsylvania.
68. 18❘ Puerto Rico.
50.00❘ Rhode Island….
57.47 | South Carolina.
57. 13 South Dakota….
54.02❘ Tennessee.
71.37 Texas.
70.45 | Utah…….
60.74❘ Vermont.
50.00 Virgin Islands.
51.62 Virginia..
50.00 Washington_
55.26 West Virginia..
78.00 Wisconsin..
60.66 Wyoming..
(vii)
Federal matching percentage
State financial
assistance
State medical
assistance
expenditures
expenditures (Federal medical
(Federal
percentage)
assistance
percentage)
56.75
50.00
50.00
58.73
50.00
65.00
50.00
64.23
50.00
50.51
61.58
52.54
50. 13
50.00
52.22
65.00
59.78
65.00
56.29
65.00
64.46
50.00
52.24
50.00
65.00
53.92
50.00
61. 10
53.46
50.00
62.58
50.00
71.84
50.00
67.81
50.71
55.46
65.42
57.29
55.11
50.00
57.00
71.93
63.80
68.88
60.66
68.98
68.02
50.00
57.01
51.64
70. 16
58.53
53.44
APPENDIX D
FEDERAL PERCENTAGE AND FEDERAL MEDICAL ASSISTANCE PERCENTAGE, EFFECTIVE OCT. 1, 1977–SEPT. 30, 1979
(FISCAL YEARS 1978 AND 1979)
State
Alabama..
Alaska.
Arizona.
Arkansas
California
Colorado.
Connecticut..
Delaware.
District of Columbia…….
Florida.
Georgia....
Guam.
Hawaii.
Idaho
Illinois
Indiana..
lowa.
Kansas
Kentucky
Louisiana.
Maine.
Maryland
Massachusetts.
Michigan
Minnesota
Mississippi...
Missouri..
Federal matching percentage
State financial
State medical
assistance
assistance expenditures
expenditures (Federal medical
assistance
percentage)
(Federal
percentage)
65.00
50.00
56.46
65.00
50.00
50.00
50.00
50.00
50.00
51.72
62.02
50.00
50.00
50.53
50.00
53.18
50.00
50.00
65.00
65.00
65.00
50.00
50.00
50.00
50.29
65.00
56.29
Source: 41 F.R. 44880, Oct. 13, 1976.
State
72.58❘ Montana…….
50.00 Nebraska
Nevada..
60.81
72.06 New Hampshire.
50.00
New Jersey…………
53.71 | New Mexico…………….
50.00❘ New York….
50.00 | North Carolina.
50.00 North Dakota..
56.55❘ Ohio.
65.82 Oklahoma...
50.00 Oregon_
50.00 Pennsylvania.
63.58 Puerto Rico.
50.00❘ Rhode Island….
57.86 | South Carolina.
51.96 South Dakota….
52.35❘ Tennessee.
69.71❘ Texas.
70.45❘ Utah
60. 74❘ Vermont…….
50.00❘ Virgin Islands
51. 62 | Virginia…………
50.00 Washington.
55.26 West Virginia.
78.00 Wisconsin.
60.66 Wyoming….
(viii)
Federal matching percentage
State financial
assistance
State medical
assistance
expenditures
expenditures (Federal medical
(Federal
percentage)
assistance
percentage)
56.78
50.00
50.00
58.73
50.00
65.00
50.00
64.23
50.00
50,51
61.58
52.54
50.13
50.00
52.22
65.00
59.78
65.00
56.29
65.00
64.46
50.00
52.24
50.00
65.00
53.92
50.00
61.10
53.46
50.00
62.85
50.00
71.84
50.00
67.81
50.71
55.46
65.42
57.29
55. 11
50.00
57.00
71.93
63.80
68. 38
60.66
68.98
68.02
50.00
57.01
51.64
70. 16
58.53
53.44
APPENDIX E-VARIABLE AMOUNTS APPLICABLE TO
SELECTED PROVISIONS
[Note: See Appendix B for Tax Rates and Bases]
1. Retirement test exempt amounts:
Year
1977.
1978
1979.
1980_
1981.
1982
1983
││
Year
1975___
1976_
1977_
1978__
1979 _ _.
J
I
1
II
1
I
1
I
For persons under age 65
Monthly amount
$250
270
290
(2)
8.0
6. 4
5.9
6. 5
(³)
(2)
Percentage
increase 1 Individual
Annual amount
Special benefits 2
$69.60
74. 10
78.50
83.70
(*)
Couple
$3,000
3, 240
3, 480
(2)
(2)
$104. 40
111. 20
117.80
125. 60
(3)
(2)
(2)
8 8
1 Effective 1982, the age at which the retirement test ceases to apply will be reduced from 72 to 70.
• Amount is increased automatically to reflect increases in average wages.
2. Increased benefit levels under automatic provisions:
Special
minimum
For persons age 65–72 1
Monthly amount
$9.00
9.00
9.00
$250.00
333.33
375.00
6 11. 50
(³)
416. 67
458. 33
Monthly amount of-
500. 00
(2)
factor 3 Individual
Annual amount
Supplemental security
income
$157.70
167. 80
177.80
189. 40
(5)
$3,000
4, 000
4, 500
5, 000
5, 500
Couple
$236. 60
251.80
266. 70
284. 10
(5)
6, 000
(2)
Essential
person
$78.90
84.00
89.00
94, 80
(5)
1 This percentage is applied to increase social security benefits effective June of each year and supple-
mental security income benefits effective July of each year. (For persons becoming eligible for benefits after
1978, these percentages are applied to increase the benefit determined by the basic formula for years after
the 2d year before they reach age 62, die, or become disabled.)
• Under secs. 227 and 228.
• Under sec. 215(a)(1)(C) (i) (II).
• Under sec. 1611.
'Automatically increased as Consumer Price Index rises.
• Effective for months after December 1978, automatically increased thereafter as Consumer Price Index
rises.
(ix)
3. Formulas for determining benefit amounts under 1977 act:
For Determining Primary Insur- For Determining Maximum Fam-
ance Amount (PIA):
ily Benefit
90 percent of Average Indexed
Monthly Earnings
(AIMĚ) up to "A"; plus
32 percent of AIME above "A”
but not above "B"; plus
15 percent of AIME above "B.”
Year of worker's 1st eligibility or death ¹
1979_
1980__
Year
1978__
1979_
Year
1951.
1952__
1953___.
1954.
1955__
1956__
1957--
1958.
1959.
1960
1961__.
1962.
1963.
1964__
1965--
111
T
111
1 The year in which the insured individual first becomes eligible for an old-age insurance benefit (generally
age 62), or for a disability insurance benefit, or (if he did not become eligible for either) the year of his death
Automatically increased as wage levels rise.
1
4. Quarter of coverage amount:
[NOTE: Prior to 1978, an individual generally gained one quarter
of coverage under social security for every calendar quarter in which
he earned $50 or more in covered wages.]
1
1 Automatically increased as wage levels rise.
5. Average annual wages for indexing purposes:
Average wages
I
1111
………11
1111
1
I
1
1
1
I
I
E
I
1111
11
1
I
11
[I
}
1
1
I│
▬▬▬▬▬▬▬▬▬
11
………
1│
1
11
1
1
I
1
11
……│
11
1
11
………1
FI
FI
!!
I
41 |
11
·
1
11
I
1
t
I
……
|
1
I
1
I
I
1
X
I
I
I
1
150 percent of PIA up to "C";
plus
272 percent of PIA above ""@""
but not above "D"; plus
134 percent of PIA above "D"
but not above "E"; plus
175 percent of PIA above "E."
A
$180
(2)
I
$1,085
(2)
$250
(1)
Year
$2,769 1966__
2,945 1967__
3,089 1968.
3, 226 1969.
3, 350 1970.-.
3, 540 1971.
3,747 1972.
3, 852 1973.
Annual earnings under social security required for—
1 quarter of 2 quarters of 3 quarters of 4 quarters of
coverage
coverage
coverage
coverage
1
I
ORD
3,980 1974__
4, 148 1975..
4, 572 1978_
4,712 1979_
4,787 1980_
4, 283 1976--
4, 461 1977.
1
1
1
I│
I
B
1
11
↓││
▬▬▬▬▬▬▬ I
│
1
11
|
│
││
$500
(1)
111
11
││{
I
11
▬▬▬▬▬▬▬│
1111
11
││41
!!
││
|
11
$230
(2)
1│1
1
11
11
11
▬▬▬▬▬▬▬▬▬1
1
│
……│
с
1
………
I
1
11
▬▬▬▬▬▬▬▬▬│
………│
………│
I
11
11
││1
I
11
│
1
14
$750
(1)
1
││
1
▬▬▬▬▬▬▬▬↓
I
…
I
I
$332
(2).
1
I
I
1
1
…
I
1
1
1
1
1
D
1
1
1
1
I
E
$433
(2)
1
$1,000
(1)
Average wages
$4, 997
5, 311
5, 683
5,977
6, 288
6, 670
7, 250
7,580
8, 031
8, 631
9, 226
9, 779
NOTE.-Amounts to be used for indexing have not yet been promulgated. The amounts
shown in the table above were provided by the Social Security Administration to the 1978
Advisory Council and can be used as approximations.
xi
6. Year of coverage amount:
[NOTE: For purposes of section 215 (a) (1) (C) (i) (II), a "year of
coverage” for years prior to 1978 equals 25% of the maximum amount
of earnings subject to tax as shown in Appendix B.]
Year:
1978
1979
1 Increases automatically as wage levels rise.
Amount
$4,425
(¹).
APPENDIX F-SECTION 215 UNDER FORMER LAW
Note: The 1977 Social Security Amendments greatly modified the
manner of computing social security benefits. In a number of cases,
however, the former law continues to be applied. The basic benefit com-
putation section as previously in effect is reprinted in this appendix.
Computation of Primary Insurance Amount
Sec. 215. For the purposes of this title-
(a) The primary insurance amount of an insured individual shall
be determined as follows:
(1) Subject to the conditions specified in subsections (b), (c),
and (d) of this section and except as provided in paragraphs (2)
and (3) of this subsection, such primary insurance amount shall
be whichever of the following amounts is the largest:
(A) the amount in column IV of the following table (or,
if larger, the amount in column IV of the latest table deemed
to be such table under subsection (i) (2) (D)) on the line on
which in column III of such table appears his average
monthly wage (as determined under subsection (b));
(B) the amount in column IV of such table on the line on
which in column II appears his primary insurance amount
(as determined under subsection (c)); or
(C) the amount in column IV of such table on the line on
which in column I appears his primary insurance benefit (as
determined under subsection (d)).
(2) In the case of an individual who was entitled to a disabil-
ity insurance benefit for the month before the month in which
he died, became entitled to old-age insurance benefits, or at-
tained age 65, such primary insurance amount shall be—
(A) the amount in column IV of such table which is equal
to the primary insurance amount upon which such disability
insurance benefit is based; except that if such individual was
entitled to a disability insurance benefit under section 223
for the month before the effective month of a new table
(whether enacted by another law or deemed to be such table
under subsection (i) (2) (D)) and in the following month
became entitled to an old-age insurance benefit, or he died in
such following month, then his primary insurance amount for
such following month shall be the amount in column IV of the
(xiii)
xiv
new table on the line on which in column II of such table ap-
pears his primary insurance amount for the month before
the effective month of the table (as determined under subsec-
tion (c)) instead of the amount in column IV equal to the
primary insurance amount on which his disability insurance
benefit is based. For purposes of this paragraph, the term
"primary insurance amount" with respect to any individual
means only a primary insurance amount determined under
paragraph (1) (and such individual's benefits shall be
deemed to be based upon the primary insurance amount as
so determined); or
(B) an amount equal to the primary insurance amount
upon which such disability insurance benefit is based if such
primary insurance amount was determined under paragraph
(3).
(3) Such primary insurance amount shall be an amount equal to
$9.00 multiplied by the individual's years of coverage in excess of
10 in any case in which such amount is higher than the individ-
ual's primary insurance amount as determined under paragraph
(1) or (2).
For purposes of paragraph (3), an individual's "years of coverage" is
the number (not exceeding 30) equal to the sum of (i) the number
(not exceeding 14 and disregarding any fraction) determined by di-
viding the total of the wages credited to him (including wages deemed
to be paid prior to 1951 to such individual under section 217, compen-
sation under the Railroad Retirement Act of 1937 prior to 1951 which
is creditable to such individual pursuant to this title, and wages
deemed to be paid prior to 1951 to such individual under section 231)
for years after 1936 and before 1951 by $900, plus (ii) the number
equal to the number of years after 1950 each of which is a computation
base year (within the meaning of subsection (b) (2) (C)) and in each
of which he is credited with wages (including wages deemed to be
paid to such individual under section 217, compensation under the
Railroad Retirement Act of 1937 which is creditable to such individual
pursuant to this title, and wages deemed to be paid prior to 1951 to
such individual under section 229) and self-employment income of
not less than 25 percent of the maximum amount which, pursuant to
subsection (e), may be counted for such year.
Revised April 1978
Sec. 215(a)
XV
TABLE FOR DETERMINING PRIMARY INSURANCE AMOUNT AND MAXIMUM FAMILY BENEFITS BEGINNING
JUNE 1978
(Primary insurance benefit
under 1939 Act, as modified)
If an individual's primary in-
surance benefit (as deter-
mined under subsec. (d))
is-
At least-
$16.21
16.85
17.61
18.41
19.25
20.01
20.65
21.29
21.89
22.29
22.69
23.09
23.45
23.77
24.21
24.61
25.01
25.49
25.93
26.41
26.95
27.47
28.01
28.69
29.26
29.69
30.37
30.93
31.37
32.01
32.61
33.21
33.89
34.51
35.01
35.81
36.41
I
37.09
37.61
38.21
39. 13
39.69
40.34
41. 13
41.77
42.45
43.21
43.77
44. 45
44.89
But not more
than-
$16.20
16.84
17.60
18.40
19.24
20.00
20.64
21.28
21.88
22.28
22.68
23.08
23.44
23.76
24.20
24.60
25.00
25.48
25.92
26.40
26.94
27.46
28.00
28.68
29.25
29.68
30.36
30.92
31.36
32.00
32.60
33.20
33.88
34.50
35.00
35.80
36.40
37.08
37.60
38.20
39. 12
39.68
40.33
41.12
41. 76
42.44
43.20
43.76
44.44
44.88
45.60
21-746 O - 78 - 61
။
(Primary insur-
ance amount
effective for
June 1977)
Cr his primary
insurance
amcunt (as
determined
under subsec.
(c)) is-
$114.30
116. 10
118.80
121.00
123.00
125.80
128. 10
130.10
132.70
135.00
137.20
139.40
142.00
144.30
147.10
149.20
151.70
154.50
157.00
159.40
161.90
164. 20
166. 70
169.30
171.80
174.10
176.50
179.10
181.70
183.90
186.50
189.00
191.40
194.00
196.30
198.90
201.30
203.90
206.40
208,80
211.50
214.00
216.00
218.70
221.20
223.90
226.30
229.10
231.20
233.50
236.40
238.70
240.80
243.70
246.10
248. 70
251.00
253.50
256.20
258.30
261.10
263.50
265.80
(Average monthly wage)
Cr his average monthly wage (as
determined under subsec. (b))
is-
S
At least-
$77
79
81
82
84
86
88
90
91
93
95
97
98
100
102
103
105
107
108
110
114
119
123
128
133
137
142
147
151
156
161
|||
165
170
175
179
184
189
194
198
203
208
212
217
222
226
231
236
240
245
250
254
259
264
268
273
278
282
287
292
296
301
306
But not more
than-
P
$76
78
80
81
83
85
87
89
90
92
94
96
97
99
101
102
104
106
107
109
113
118
122
127
132
136
141
146
150
155
160
164
169
174
178
183
188
193
197
202
207
211
216
221
225
230
235
239
244
249
253
258
263
267
272
277
281
286
291
295
300
305
309
IV
(Primary
insurance
amount)
The amount
referred to in
the preceding
paragraphs of
this subsection
shall be
$121.80
123.70
126.60
128.90
131.20
134.00
136.50
138.60
141.40
143.80
146.20
148.50
151.30
153.70
156.70
158.90
161.60
164.60
167.30
169.80
172.50
174.90
177.60
180.40
183.00
185.50
188.00
190.80
193.60
195.90
198.70
201.30
203.90
206.70
209.10
211.90
214.40
217.20
219.90
222.40
225.30
228.00
230. 10
233.00
235.60
238.50
341. 10
244.00
246.30
248.70
251.80
254.30
256.50
259.60
262.10
264.90
267.40
270.00
272.90
275. 10
278. 10
280.70
283.10
V
(Maximum
family
benefits)
And the maxi-
mum amount
of benefits
payable (as
provided in
sec. 203(a))
on the basis
of his wages
and self-
employment
income shall be-
$182.70
185.60
189.90
193.50
196.80
201.00
204.80
207.90
212.10
215.70
219.30
222.80
227.00
230.60
235. 10
238.50
242.40
246.90
251.00
254.80
258.80
262.40
266.50
270.60
274.60
278.30
282.10
286.20
290.40
293.90
298.10
302.00
305.90
310. 10
313.70
318.00
321.70
326.00
329.90
333.60
338.00
342.00
345.20
349.50
353.40
357.80
361.70
366.10
371. 10
378.80
384.90
392.50
400.00
406.00
413. 70
421.20
427. 20
434.90
442.60
448. 50
456.10
463.80
469.80
Sec. 215(a)
Revised April 1978
xvi
TABLE FOR DETERMINING PRIMARY INSURANCE AMOUNT AND MAXIMUM FAMILY BENEFITS BEGINNING
JUNE 1978-Continued
I
(Primary insurance benefit
under 1939 Act, as modified)
If an individual's primary in-
surance benefit (as déter-
mined under subsec. (d))
is-
At least-
But not more
than-
||
(Primary insur-
ance amount
effective for
June 1977)
Or his primary
insurance
amount (as
determined
under subsec.
(c)) is-
268.50
270.70
273.20
275.80
278.10
281.00
283.00
285.60
288.30
290.50
293.30
295.60
297.90
300.60
303.10
305.70
307.90
310.30
313.00
315.40
318.20
320.20
322.50
324.80
327.40
329.60
331.60
334.40
336.50
338.70
341.30
343.50
345.80
347.90
350.70
352.60
354.90
357.40
359.70
361.90
364.50
366.60
368.80
371. 10
373.70
375.80
378.10
380.80
382.80
385.10
387.60
389.90
392.10
393.90
396.10
398.20
400.40
402.30
404.40
406. 20
408.40
410. 20
412. 60
414.60
(Average monthly wage)
Or his average monthly wage (as
determined under subsec. (b))
is-
At least-
310
315
320
324
329
334
338
343
348
352
357
362
366
371
376
380.
385
390
394
399
404
408
413
418
422
427
432
437
441
446
451
455
460
465
469
474
479
483
488
493
497
502
507
511
516
521
525
530
535
539
544
III
549
554
557
561
564
568
571
575
578
582
585
589
592
But not more
than-
314
319
323
328
333
337
342
347
351
356
361
365
370
375
379
384
389
393
398
403
407
412
417
421
426
431
436
440
445
450
454
459
464
468
473
478
482
487
492
496
501
506
510
515
520
524
529
534
538
543
548
553
556
560
563
567
570
574
577
581
584
588
591
595
IV
(Primary
insurance
amount)
The amount
referred to in
the preceding
paragraphs of
this subsection
shall be
286.00
288.30
291.00
293.80
296.20
299.30
301.40
304.20
307.10
309.40
312.40
314.90
317.30
320.20
322.90
325.60
328.00
330.50
333.40
336.00
338.90
341. 10
343.50
346.00
348.70
351.10
353. 20
356. 20
358,40
360.80
363.50
365.90
368.30
370.60
373.50
375.60
378.00
380.70
383, 10
385.50
388. 20
390.50
392.90
395.30
398.00
400.30
402. 70
405.60
407.70
410. 20
412.80
415.30
417.60
419.60
421.90
424. 10
426.50
428.50
430.70
432.70
435.00
436.90
439.50
441.60
V
(Maximum
family
benefits)
And the maxi-
mum amount
of benefits
payable (as
provided in
sec. 203(a))
on the basis
of his wages
and self-
employment
income shall be-
477.40
485. 10
491.10
498.70
506. 20
512.50
519.90
527.50
533.60
541. 20
548.80
554.90
562.50
569.90
576.30
583.90
591.30
597.40
605.10
612.70
618.60
626.30
633.80
639.90
647.50
655.10
662.70
665.70
669. 70
673.40
676.30
680.10
683.80
687.10
690.80
694.60
697.70
701.60
705.40
708.40
712.10
715.80
719.00
722.80
726.70
729.50
733,40
737.10
740. 20
744.10
747.80
751.60
753.90
756.90
759.30
762.30
764.50
767.50
769.90
772.80
775.20
778. 20
780.50
783.50
Revised April 1978
Sec. 215(a)
xvii
TABLE FOR DETERMINING PRIMARY INSURANCE AMOUNT AND MAXIMUM FAMILY BENEFITS BEGINNING
JUNE 1978—Continued
1
(Primary insurance benefit
under 1939 Act, as modified)
If an individual's primary in-
surance benefit (as deter-
mined under subsec. (d))
is-
At least-
But not more
than-
||
(Primary insur-
ance amount
effective for
June 1977)
Or his primary
insurance
amount (as
determined
under subsec.
(c)) is-
416.70
418. 70
420.70
422.80
424.90
426.90
428.90
431.00
433.00
435. 10
437.10
439.20
441.40
443. 20
445. 40
447.40
448.60
449.90
451.50
453.10
454.80
456.40
458.00
459.80
461.20
462.80
464.50
466.10
467.70
469.40
471.00
472.60
474.20
475.90
477.40
478.90
480.40
481.80
483.20
484.50
485.80
487.20
488.60
489.80
491.10
492.50
494.00
495.30
496.70
498.00
499.40
500.70
502.00
503.30
504.70
506.00
507.50
508.80
510.20
511.50
512.80
514.10
515.50
516.80
(Average monthly wage)
Or his average monthly wage (as
determined under subsec. (b))
is-
At least-
596
599
603
606
610
613
617
621
624
628
631
635
638
642
645
649
653
657
661
666
671
676
681
686
691
696
701
706
711
716
721
726
731
736
741
746
751
756
761
766
771
776
781
786
791
796
801
806
811
816
821
826
831
836
841
846
851
856
861
III
866
871
876
881
886
But not more
than-
598
602
605
609
612
616
620
623
627
630
634
637
641
644
648
652
656
660
665
670
675
680
685
690
695
700
705
710
715
720
725
730
735
740
745
750
755
760
765
770
775
780
785
790
795
800
805
810
815
820
825
830
835
840
845
850
855
860
865
870
875
880
885
890
IV
(Primary
insurance
amount)
The amount
referred to in
the preceding
paragraphs of
this subsection
shall be
443.80
446.00
448. 10
450.30
452.60
454.70
456.80
459. 10
461.20
463.40
465.60
467.80
470.10
472.10
474.40
476.50
477.80
478.20
480.90
482.60
484.40
486. 10
487.80
489.70
491.20
492.90
494.70
496.40
498. 20
500.00
501.70
503.40
505. 10
506.90
508.50
510. 10
511.70
513.20
514.70
516.00
517.40
518.90
520.40
521.70
523. 10
524.60
526:20
527.50
529.00
530.40
531.90
533.30
534.70
536.10
537.60
538.90
540.50
541.90
543.40
544.80
546.30
547.60
549. 10
550.40
V
(Maximum
family
benefits)
And the maxi-
mum amount
of benefits
payable (as
provided in
sec. 203(a))
on the basis
of his wages
and self-
employment
income shall be-
785.60
788.90
791. 10
794.00
796.50
799.50
802.50
804.80
807.90
810. 70
814.70
818.50
822.40
826.10
830. 10
833.70
836. 10
838.40
841.50
844.50
847.40
850.50
853.50
856.40
859.60
862.60
865.60
868.60
871.50
874.60
877.60
880.70
883.80
886.70
889.90
892.70
895.40
897.80
900.40
903.00
905.40
907.90
910.40
912.90
915.40
918.00
920.50
923.00
925.60
928.00
930.60
933. 10
935.70
938. 10
940.80
943.00
945.70
948. 10
950.70
953.20
955.70
958.20
960.80
963.20
Sec. 215(a)
Revised April 1978
xviii
TABLE FOR DETERMINING PRIMARY INSURANCE AMOUNT AND MAXIMUM FAMILY BENEFITS BEGINNING
JUNE 1978—Continued
1
(Primary insurance benefit
under 1939 Act, as modified)
If an individual's primary in-
surance benefit (as deter-
mined under subsec. (d))
is-
At least-
But not more
than-
11
(Primary insur-
ance amount
effective for
June 1977)
Or his primary
insurance
amount (as
determined
under subsec.
(c)) is-
P
518. 20
519.60
521.00
522.30
523.70
525.10
526.30
527.60
529.00
530.40
531.70
533.00
534.50
535.90
537.30
538.40
539.80
541. 20
542.60
543.80
545. 20
546.60
547.80
548.90
550.20
551.50
552.60
553.80
555,10
556. 20
557.50
558.80
559.80
561.10
562.40
563.60
564.80
566.00
567.30
568.40
569.70
571.00
572.00
573.30
574.60
575.70
577.00
578.20
579.40
580.60
581.90
583. 10
584.20
585.50
586.70
587.90
589. 20
590.30
591.40
592.60
593.70
594.80
595,80
597.10
(Average monthly wage)
Or his average monthly wage (as
determined under subsec. (b))
is-
At least-
891
896
901
906
911
916
921
926
931
936
941
946
951
956
961
966
971
976
981
986
991
996
1,001
1,006
1,011
1,016
1, 021
1,026
1,031
1,036
1, 041
1,046
1,051
1,056
1,061
1, 066
1,071
1, 076
1,081
1,086
1, 091
1,096
1, 101
1, 106
1, 111
1, 116
1, 121
1,126
1, 131
1, 136
1, 141
1, 146
1, 151
1, 156
1, 161
|||
1, 166
1, 171
1, 176
1, 181
1, 186
1, 191
1, 196
1, 201
1, 206
But not more
than-
895
900
905
910
915
920
925
930
935
940
945
950
955
960
965
970
975
980
985
990
995
1,000
1,005
1,010
1, 015
1,020
1,025
1,030
1.035
1,040
1,045
1,050
1,055
1,060
1,065
1, 070
1,075
1,080
1, 085
1,090
1,095
1, 100
1, 105
1, 110
1, 115
1, 120
1, 125
1, 130
1, 135
1, 140
1, 145
1, 150
1, 155
1, 160
1, 165
1. 170
1, 175
1, 180
1. 185
1, 190
1, 195
1, 200
1, 205
1,210
IV
(Primary
insurance
amount)
The amount
referred to in
the preceding
paragraphs of
this subsection
shall be
551.90
553.40
554.90
556.30
557.80
559.30
560.60
561.90
563.40
564.90
566.30
567.70
569.30
570.80
572.30
573.40
574.90
576,40
577.90
579. 20
580.70
582.20
583.50
584.60
586.00
587.40
588.60
589.80
591.20
592.40
593.80
595. 20
596.20
597.60
599.00
600.30
601.60
602.80
604. 20
605.40
606.80
608.20
609.20
610.60
612.00
613. 20
614.60
615.80
617.10
618.40
619.80
621. 10
622.20
623.60
624.90
626.20
627.50
628. 70
629.90
631.20
632.30
633.50
634.70
636.00
V
(Maximum
family
benefits)
And the maxi-
mum amount
of benefits
payable (as
provided in
sec, 203(a))
on the basis
of his wages
and self-
employment
income shall be-
S
966.00
968.30
970.90
973.50
976.00
978.30
981.00
983.40
985,90
988.50
991.00
993.50
996. 10
998.60
1,001.00
1,003. 60
1, 006. 20
1,008. 50
1, 011. 10
1, 013. 60
1,016. 20
1,018. 60
1,020. 70
1, 023. 20
1,025. 30
1,027.80
1, 029.90
1,032. 20
1,034.50
1, 036. 70
1,039. 10
1,041. 30
1,043. 40
1,045.90
1,048.00
1,050.50
1, 052.60
1,054. 80
1,057. 10
1, 058. 40
1, 061.70
1,064.00
1, 066. 10
1,068.50
1,070.70
1,073. 10
1,075. 30
1, 077.60
1,079. 70
1, 082. 20
1, 084. 40
1, 086. 70
1,088. 80
1,091. 10
1, 093. 40
1, 095.80
1,098, 00
1, 100. 20
1, 102. 20
1, 104. 30
1, 106.50
1, 108.60
1, 110.60
1, 112. 90
Revised April 1978
xix
Sec. 215(a)
TABLE FOR DETERMINING PRIMARY INSURANCE AMOUNT AND MAXIMUM FAMILY BENEFITS BEGINNING
JUNE 1978-Continued
1
(Primary insurance benefit
under 1939 Act, as modified)
If an individual's primary in-
surance benefit (as deter-
mined under subsec. (d))
is-
At least-
But not more
than-
||
(Primary insur-
ance amount
effective for
June 1977)
Or his primary
insurance
amount (as
determined
under subsec.
(c)) is—
598. 20
599.30
600.40
601.60
602.70
603.80
605.00
606. 10
607.20
608.30
609.50
610.60
611.70
612.80
613.80
614.90
616.00
617.00
618. 10
619.10
620.20
621.30
622.30
623.40
624.40
625.50
626.60
627.60
628.70
629.70
630.80
631.80
632.90
633.90
634.90
635.90
636.90
637.90
638.90
639.90
640.90
641.90
642.90
643.90
644.90
645.90
646.90
647.90
648.90
649.90
650.90
651.90
652.90
(Average monthly wage)
Or his average monthly wage (as
determined under subsec. (b))
is-
At least-
1,211
1, 216
1, 221
1,226
1, 231
1,236
1,241
1,246
1,251
1,256
1,261
1,266
1, 271
1,276
1, 281
1,286
1,291
1,296
1, 301
1,306
1,311
1,316
1, 321
1, 326
1,331
1,336
1, 341
1, 346
1, 351
1,356
1,361
1, 366
1,371
1,376
1,381
1, 386
1,391
1,396
1, 401
1,406
1,411
1,416
1, 421
1,426
1,431
1,436
1, 441
1,446
1, 451
1,456
1, 461
1,466
1,471
1,476
1,481
|||
1, 486
1, 491
1, 496
1, 501
1,506
1,511
1,516
1,521
1,526
But not more
than-
1, 215
1,220
1, 225
1,230
1, 235
1, 240
1, 245
1,250
1,255
1,260
1,265
1, 270
1,275
1, 280
1, 285
1,290
1,295
1,300
1, 305
1, 310
1, 315
1,320
1,325
1, 330
1,335
1,340
1,345
1,350
1,355
1, 360
1,365
1,370
1,375
1,380
1, 385
1,390
1, 395
1,400
1, 405
1, 410
1, 415
1,420
1,425
1,430
1,435
1,440
1, 445
1,450
1, 455
1,460
1.465
1, 470
1, 475
1, 480
1,485
1, 490
1, 495
1,500
1, 505
1,510
1, 515
1,520
1,525
1, 530
IV
(Primary
insurance
amount)
The amount
referred to in
the preceding
paragraphs of
this subsection
shall be
637. 10
638.30
639.50
640.80
641.90
643.10
644.40
645.50
646.70
647.90
649.20
650.30
651.50
652.70
653.70
654.90
656.10
657.20
658.30
659.40
660.60
661.70
662.80
664.00
665.00
666.20
667.40
668.40
669.60
670.70
671.90
672.90
674.10
675.20
676.20
677.30
678.30
679.40
680.50
681.50
682.60
683.70
684.70
685.80
686.90
687.90
689.00
690.10
691. 10
692.20
693.30
694.30
695.40
696.40
697.40
698.40
699.40
700.40
701.40
702.40
703.40
704.40
705.40
706.40
V
(Maximum
family
benefits)
And the maxi-
mum amount
of benefits
payable (as
provided in
sec. 203(a))
on the basis
of his wages
and self-
employment
income shall be-
1, 114.90
1. 117.00
1, 119.00
1, 121. 20
1, 123. 20
1, 125. 40
1, 127.50
1, 129.60
1, 131.60
1, 133. 80
1, 135.90
1, 138.00
1, 140.00
1, 142. 20
1, 144. 10
1, 146. 10
1, 148.00
1,150.00
1, 152.00
1, 154.00
1, 155.90
1, 157. 90
1, 159.80
1, 161. 90
1, 163.80
1, 165. 80
1, 167. 70
1, 169. 70
1, 171. 70
1, 173. 70
1, 175. 60
1, 177. 70
1, 179. 60
1, 181. 60
1, 183. 40
1, 185. 30
1, 187. 10
1, 189.00
1, 190.80
1, 192. 70
1, 194. 60
1, 196. 50
1, 198.30
1,200. 20
1, 202.00
1,203.90
1,205. 70
1, 207.70
1, 209.50
1, 211. 40
1, 213. 20
1, 215. 10
1, 216.90
1, 218.70
1,220.50
1,222.20
1,224.00
1,225.70
1,227.50
1, 229. 20
1, 231.00
1, 232. 70
1,234.50
1,236.20
Sec. 215(a)
Revised April 1978
XX
TABLE FOR DETERMINING PRIMARY INSURANCE AMOUNT AND MAXIMUM FAMILY BENEFITS BEGINNING
JUNE 1978-Continued
(Primary insurance benefit
under 1939 Act, as modified)
If an individual's primary in-
surance benefit (as déter-
mined under subsec. (d))
is-
At least-
But not more
than-
||
(Primary insur-
ance amount
effective for
June 1977)
Or his primary
insurance
amount (as
determined
under subsec.
(c)) is-
K
(Average monthly wage)
Or his average monthly wage (as
determined under subsec. (b))
is—
At least-
1, 531
1,536
1, 541
1,546
1,551
1, 556
1,561
1,566
1,571
1,576
1,581
1, 586
1,591
1,596
1, 601
1,606
1, 611
1,616
1, 621
1, 626
1, 631
1,636
1, 641
1,646
1,651
1, 656
1, 661
1,666
1, 671
1,676
1,681
1,686
1,691
1,696
1, 701
1,706
1, 711
1, 716
1, 721
1, 726
1, 731
1,736
1, 741
1, 746
1, 751
1,756
1, 761
1,766
1, 771
1, 776
1, 781
1, 786
1, 791
1,796
111
1, 801
1,806
1, 811
1, 816
1, 821
1,826
1,831
1,836
1, 841
1, 846
But not more
than-
1,535
1, 540
1,545
1, 550
1, 555
1, 560
1, 565
1,570
1,575
1, 580
1,585
1,590
1, 595
1,600
1,605
1,610
1,615
1, 620
1,625
1,630
1, 635
1,640
1,645
1,650
1,655
1,660
1, 665
1,670
1,675
1,680
1,685
1.690
1. 695
1,700
1, 705
1, 710
1, 715
1, 720
1,725
1, 730
1,735
1,740
1, 745
1,750
1,755
1, 760
1,765
1, 770
1,775
1,780
1,785
1, 790
1,795
1,800
1,805
1, 810
1, 815
1,820
1, 825
1, 830
1,835
1,840
1, 845
1, 850
IV
(Primary
insurance
amount)
The amount
referred to in
the preceding
paragraphs of
this subsection
shall be
707.40
708.40
709. 40
710.40
711.40
712.40
713.40
714.40
715.40
716.40
717.40
718.40
719.40
720.40
721.40
722.40
723.40
724.40
725.40
726.40
727.40
728.40
729.40
730.40
731.40
732.40
733.40
734.40
735.40
736.40
737.40
738. 40
739.40
740.40
741.40
742. 40
743. 40
744. 40
745.40
746.40
747.40
748.40
749.40
750.40
751.40
752.40
753.40
754. 40
755.40
756.40
757.40
758.40
759.40
760.40
761.40
762.40
763.40
764.40
765.40
766.40
767.40
768.40
769.40
770.40
V
(Maximum
family
benefits)
And the maxi-
mum amount
of benefits
payable (as
provided in
sec. 203(a))
on the basis
of his wages
and self-
employment
income shall be
1, 238.00
1, 239. 70
1, 241. 50
1, 243. 20
1,245.00
1,246. 70
1,248.50
1,250.20
1,252.00
1, 253. 70
1, 255. 50
1, 257.20
1, 259.00
1, 260. 70
1,262.50
1,264. 20
1, 266. 00
1, 267.70
1,269.50
1,271. 20
1,273.00
1, 274. 70
1,276. 50
1, 278. 20
1, 280.00
1, 281. 70
1,283.50
1, 285. 20
1, 287.00
1,288. 70
1,290.50
1, 292. 20
1,294.00
1, 295. 70
1,297.50
1, 299. 20
1, 301.00
1, 302. 70
1, 304. 50
1, 306. 20
1, 308.00
1, 309. 70
1, 311. 50
1, 313. 20
1, 315.00
1, 316. 70
1,318.50
1, 320. 20
1, 322.00
1, 323.70
1, 325. 50
1,327, 20
1, 329.00
1, 330.70
1, 332.50
1, 334. 20
1, 336.00
1, 337.70
1, 339. 50
1, 341. 20
1,343.00
1, 344. 70
1, 346. 50
1, 348. 20
Revised April 1978
Sec. 215(a)
xxi
TABLE FOR DETERMINING PRIMARY INSURANCE AMOUNT AND MAXIMUM FAMILY BENEFITS BEGINNING
JUNE 1978-Continued
(Primary insurance benefit
under 1939 Act, as modified)
I
If an individual's primary in-
surance benefit (as deter-
mined under subsec. (d))
is-
At least-
M
But not more
than-
11
(Primary insur-
ance amount
effective for
June 1977)
Or his primary
insurance
amount (as
determined
under subsec.
(c)) is—
(Average monthly wage)
|||
Or his average monthly wage (as
determined under subsec. (b))
695
is-
At least-
1,851
1,856
1,861
1,866
1,871
1,876
1,881
1,886
1, 891
1, 896
But not more
than-
1,855
1,860
1,865
1,870
1,875
1,880
1,885
1, 890
1,895
1,900
1, 905
1, 910
IV
(Primary
insurance
amount)
The amount
referred to in
the preceding
paragraphs of
this subsection
shall be
771.40
772.40
773.40
774.40
775.40
776.40
777.40
778.40
779.40
780.40
781.40
782.40
V
(Maximum
family
benefits)
And the maxi-
mum amount
of benefits
payable (as
provided in
sec. 203(a))
on the basis
of his wages
and self-
employment
income shall be-
1,350.00
1, 351. 70
1, 353.50
1, 355. 20
1, 357.00
1,358.70
1,360.50
1, 362. 20
1, 364. 00
1, 365. 70
1, 367.50
1, 369. 20
Average Monthly Wage
(b)(1) For the purposes of column III of the table appearing in
subsection (a) of this section, an individual's "average monthly wage"
shall be the quotient obtained by dividing—
(A) the total of his wages paid in and self-employment income
credited to his "benefit computation years" (determined under
paragraph (2)), by
(B) the number of months in such years.
(2) (A) The number of an individual's "benefit computation years"
shall be equal to the number of elapsed years (determined under para-
xxii
graph (3) of this subsection), reduced by five, except that the number
of an individual's benefit computation years shall in no case be less
than two.
(B) An individual's "benefit computation years" shall be those com-
putation base years, equal in number to the number determined under
subparagraph (A), for which the total of his wages and self-employ-
ment income is the largest.
(C) For purposes of subparagraph (B), “computation base years"
include only calendar years in the period after 1950 and prior to the
earlier of the following years-
(i) the year in which occurred (whether by reason of section
202 (j) (1) or otherwise) the first month for which the individual
was entitled to old-age insurance benefits, or
(ii) the year succeeding the year in which he died.
Any calendar year all of which is included in a period of disability
shall not be included as a computation base year.
(3) For purposes of paragraph (2), the number of an individual's
elapsed years is the number of calendar years after 1950 (or, if later,
the year in which he attained age 21) and before the year in which
he died, or if it occurred earlier but after 1960, the year in which he
attained age 62.1 For purposes of the preceding sentence, any cal-
endar year any part of which was included in a period of disability
shall not be included in such number of calendar years.
(4) The provisions of this subsection shall be applicable only in the
case of an individual-
(A) who becomes entitled to benefits under section 202(a) or
section 223 in or after the month in which a new table that appears
in (or is deemed by subsection (i) (2) (D) to appear in) subsec-
tion (a) becomes effective; or
(B) who dies in or after the month in which such table be-
comes effective without being entitled to benefits under section
202(a) or section 223; or
(C) whose primary insurance amount is required to be recom-
puted under subsection (f) (2).
(5) [Repealed.]
Primary Insurance Amount Under Prior Provisions
(c) (1) For the purpose of column II of the latest table that appears
in (or is deemed to appear in) subsection (a) of this section, an in-
¹ P.L. 92–603, section 104 (b), deleted "before
(A) in the case of a woman, the year in which she died or, if it occurred earlier
but after 1960, the year in which she attained age 62,
M
(B) in the case of a man who has died, the year in which he died or, if it occurred
earlier but after 1960, the year in which he attained age 65, or
(C) in the case of a man who has not died, the year occurring after 1960 in which
he attained (or would attain) age 65.
For" and inserted "before the year in which he died, or if it occurred earlier but after
1960. the year in which he attained age 62. For".
See footnote to sec. 214 (a) (1) for effective date.
xxiii
dividual's primary insurance amount shall be computed on the basis
of the law in effect prior to the month in which the latest such table
became effective.
(2) The provisions of this subsection shall be applicable only in the
case of an individual who became entitled to benefits under section
202 (a) or section 223, or who died, before such effective month.
Primary Insurance Benefit Under 1939 Act¹
(d) (1) For purposes of column I of the table appearing in subsec-
tion (a) of this section, an individual's primary insurance benefit shall
be computed as follows:
(A) The individual's average monthly wage shall be determined
as provided in subsection (b) (but without regard to paragraph
(4) thereof) of this section, except that for purposes of paragraph
(2) (C) and (3) of such subsection, 1936 shall be used instead of
1950.
(B) For purposes of subparagraphs (B) and (C) of subsection
(b) (2), an individual whose total wages prior to 1951 (as defined
in subparagraph (C) of this subsection) -
(i) do not exceed $27,000 shall be deemed to have been paid
such wages in equal parts in nine calendar years after 1936
and prior to 1951;
(ii) exceed $27,000 and are less than $42,000 shall be deemed
to have been paid (I) $3,000 in each of such number of calen-
dar years after 1936 and prior to 1951 as is equal to the integer
derived by dividing such total wages by $3,000, and (II) the
excess of such total wages over the product of $3,000 times
such integer, in an additional calendar year in such period; or
(iii) are at least $42,000 shall be deemed to have been paid
$3,000 in each of the fourteen calendar years after 1936 and
prior to 1951.
(C) For the purposes of subparagraph (B), "total wages prior
to 1951" with respect to an individual means the sum of (i) re-
muneration credited to such individual prior to 1951 on the records
of the Secretary, (ii) wages deemed paid prior to 1951 to such
individual under section 217, (iii) compensation under the Rail-
road Retirement Act of 1937 prior to 1951 creditable to him pur-
suant to this title, and (iv) wages deemed paid prior to 1951 to
such individual under section 231.
(D) The individual's primary insurance benefits shall be 45.6
per centum of the first $50 of his average monthly wage as com-
¹ Subsection (d), as it appears here, is applicable only to individuals who become eligible
for old-age or disability insurance benefits or die prior to 1978. Otherwise, the provisions
of subsection (d) as it appears on pages 131-133 apply.
xxiv
puted under this subsection, plus 11.4 per centum of the next $200
of such average monthly wage.
(2) The provisions of this subsection shall be applicable only in the
case of an individual-
(A) with respect to whom at least one of the quarters elapsing
prior to 1951 is a quarter of coverage;
(B) except as provided in paragraph (3), who attained age
22 after 1950 and with respect to whom less than six of the quar-
ters elapsing after 1950 are quarters of coverage, or who attained
such age before 1951; and
(C) (i) who becomes entitled to benefits under section 202(a)
or 223 after the date of the enactment of the Social Security
Amendments of 1967, or
(ii) who dies after such date without being entitled to benefits
under section 202 (a) or 223, or
(iii) whose primary insurance amount is required to be recom-
puted under section 215 (f) (2) or (6), or section 231.
(3) The provisions of this subsection as in effect prior to the enact-
ment of the Social Security Amendments of 1967 shall be applicable
in the case of an individual-
(A) who attained age 21 after 1936 and prior to 1951, or
(B) who had a period of disability which began prior to 1951,
but only if the primary insurance amount resulting therefrom is
higher than the primary insurance amount resulting from the ap-
plication of this section (as amended by the Social Security
Amendments of 1967) and section 220.
Certain Wages and Self-Employment Income Not To Be Counted
(e) For the purposes of subsections (b) and (d)—
(1) in computing an individual's average monthly wage there
shall not be counted the excess over $3,600 in the case of any
calendar year after 1950 and before 1955, the excess over $4,200
in the case of any calendar year after 1954 and before 1959, the
excess over $4,800 in the case of any calendar year after 1958
and before 1966, the excess over $6,600 in the case of any calendar
year after 1965 and before 1968, the excess over $7,800 in the case
of any calendar year after 1967 and before 1972, the excess over
$9,000 in the case of any calendar year after 1971 and before 1973,
the excess over $10,800 in the case of any calendar year after 1972
and before 1974, the excess over $13,200 in the case of any calendar
year after 1973 and before 1975, and the excess over an amount
equal to the contribution and benefit base (as determined under
section 230)¹ in the case of any calendar year after 1974 with re
1 See Appendix E.
XXV
spect to which such contribution and benefit base is effective of
(A) the wages paid to him in such year, plus (B) the self-employ-
ment income credited to such year (as determined under section
212); and
(2) if an individual's average monthly wage computed under
subsection (b) or for the purposes of subsection (d) is not a multi-
ple of $1, it shall be reduced to the next lower multiple of $1.
Recomputation of Benefits
(f) (1) After an individual's primary insurance amount has been
determined under this section, there shall be no recomputation of such
individual's primary insurance amount except as provided in this sub-
section or, in the case of a World War II veteran who died prior to
July 27, 1954, as provided in section 217 (b).
(2) If an individual has wages or self-employment income for a year
after 1965 for any part of which he is entitled to old-age insurance
benefits, the Secretary shall, at such time or times and within such
period as he may by regulations prescribe, recompute such individual's
primary insurance amount with respect to each such year. Such recom-
putation shall be made as provided in subsections (a) (1) (A) and
(C) and (a)(3) as though the year with respect to which such re-
computation is made is the last year of the period specified in subsec-
tion (b)(2)(C). A recomputation under this paragraph with respect
to any year shall be effective—
(A) in the case of an individual who did not die in such year,
for monthly benefits beginning with benefits for January of the
following year; or
(B) in the case of an individual who died in such year, for
monthly benefits beginning with benefits for the month in which
he died.
(3) In the case of any individual who became entitled to old-age
insurance benefits in 1952 or in a taxable year which began in 1952
(and without the application of section 202 (j) (1)), or who died in
1952 or in a taxable year which began in 1952 but did not become
entitled to such benefits prior to 1952, and who had self-employment
income for a taxable year which ended within or with 1952 or which
began in 1952, then upon application filed by such individual after the
close of such taxable year and prior to January 1961 or (if he died
without filing such application and such death occurred prior to Janu-
ary 1961) by a person entitled to monthly benefits on the basis of such
individual's wages and self-employment income, the Secretary shall
recompute such individual's primary insurance amount. Such recom-
putation shall be made in the manner provided in the preceding sub-
sections of this section (other than subsection (b) (4) (A)) for com-
xxvi
putation of such amount, except that (A) the self-employment income
closing date shall be the day following the quarter with or within
which such taxable year ended, and (B) the self-employment income
for any subsequent taxable year shall not be taken into account. Such
recomputation shall be effective (A) in the case of an application filed
by such individual, for and after the first month in which he became
entitled to old-age insurance benefits, and (B) in the case of an appli-
cation filed by any other person, for and after the month in which such
person who filed such application for recomputation became entitled
to such monthly benefits. No recomputation under this paragraph pur-
suant to an application filed after such individual's death shall affect
the amount of the lump-sum death payment under subsection (i) of
section 202, and no such recomputation shall render erroneous any
such payment certified by the Secretary prior to the effective date of
the recomputation.
(4) Any recomputation under this subsection shall be effective only
if such recomputation results in a higher primary insurance amount.
(5) In the case of a man who became entitled to old-age insurance
benefits and died before the month in which he attained age 65, the
Secretary shall recompute his primary insurance amount as provided
in subsection (a) as though he became entitled to old-age insurance
benefits in the month in which he died; except that (i) his computa-
tion base years referred to in subsection (b) (2) shall include the year
in which he died, and (ii) his elapsed years referred to in subsection
(b) (3) shall not include the year in which he died or any year there-
after. Such recomputation of such primary insurance amount shall be
effective for and after the month in which he died.
(6) Upon the death after 1967 of an individual entitled to benefits
under section 202 (a) or section 223, if any person is entitled to
monthly benefits or a lump-sum death payment, on the wages and self-
employment income of such individual, the Secretary shall recompute
the decedent's primary insurance amount, but only if the decedent
during his lifetime was paid compensation which was treated under
section 205 (o) as remuneration for employment.
Rounding of Benefits
(g) The amount of any primary insurance amount and the amount
of any monthly benefit computed under section 202 or 223 which (after
reduction under section 203 (a) and deductions under section 203 (b))
is not a multiple of $0.10 shall be raised to the next higher multiple
of $0.10.
Remuneration of Certain Public Health Service Officers¹
(h) (1) Notwithstanding the provisions of subchapter III of chap-
ter 83 of title 5, United States Code, remuneration paid for services to
which the provisions of section 210(1) (1) of this Act are applicable
1 Subsection title is not included in the statute.
xxvii
and which is performed by an individual as a commissioned officer of
the Reserve Corps of the Public Health Service prior to July 1, 1960,
shall not be included in computing entitlement to or the amount of any
monthly benefit under this title, on the basis of his wages and self-
employment income, for any month after June 1960 and prior to the
first month with respect to which the Civil Service Commission certi-
fies to the Secretary that, by reason of a waiver filed as provided in
paragraph (2), no further annuity will be paid to him, his wife, and
his children, or, if he has died, to his widow and children, under sub-
chapter III of chapter 83 of title 5, United States Code, on the basis
of such service.
(2) In the case of a monthly benefit for a month prior to that in
which the individual, on whose wages and self-employment income
such benefit is based, dies, the waiver must be filed by such individual;
and such waiver shall be irrevocable and shall constitute a waiver on
behalf of himself, his wife, and his children. If such individual did not
file such a waiver before he died, then in the case of a benefit for the
month in which he died or any month thereafter, such waiver must be
filed by his widow, if any, and by or on behalf of all his children, if
any; and such waivers shall be irrevocable. Such a waiver by a child
shall be filed by his legal guardian or guardians, or, in the absence
thereof, by the person (or persons) who has the child in his care.
Cost-of-Living Increases in Benefits
(i) (1) For purposes of this subsection-
(A) the term "base quarter" means (i) the calendar quarter
ending on March 31 in each year after 1974, or (ii) any other cal-
endar quarter in which occurs the effective month of a general
benefit increase under this title;
(B) the term "cost-of-living computation quarter” means a base
quarter, as defined in subparagraph (A)(i), in which the Con-
sumer Price Index prepared by the Department of Labor exceeds,
by not less than 3 per centum, such Index in the later of (i) the
last prior cost-of-living computation quarter which was estab-
lished under this subparagraph, or (ii) the most recent calendar
quarter in which occurred the effective month of a general benefit
increase under this title; except that there shall be no cost-of-
living computation quarter in any calendar year if in the year
prior to such year a law has been enacted providing a general
benefit increase under this title or if in such prior year such a
general benefit increase becomes effective; and
(C) the Consumer Price Index for a base quarter, a cost-of-
living computation quarter, or any other calendar quarter shall
be the arithmetical mean of such index for the 3 months in such
quarter.
xxviii
(2) (A) (i) The Secretary shall determine each year beginning with
1975 (subject to the limitation in paragraph (1) (B)) whether the base
quarter (as defined in paragraph (1)(A) (i)) in such year is a cost-of-
living computation quarter.
(ii) If the Secretary determines that the base quarter in any year
is a cost-of-living computation quarter, he shall, effective with the
month of June of such year as provided in subparagraph (B), increase
the benefit amount of each individual who for such month is entitled
to benefits under section 227 or 228, and the primary insurance amount
of each other individual under this title (but not including a primary
insurance amount determined under subsection (a) (3) of this section),
by an amount derived by multiplying each such amount (including
each such individual's primary insurance amount or benefit amount
under section 227 or 228 as previously increased under this subpara-
graph) by the same percentage (rounded to the nearest one-tenth of 1
percent) as the percentage by which the Consumer Price Index for
such cost-of-living computation quarter exceeds such index for the
most recent prior calendar quarter which was a base quarter under
paragraph (1)(A) (ii) or, if later, the most recent cost-of-living com-
putation quarter under paragraph (1) (B). Any such increased amount
which is not a multiple of $0.10 shall be increased to the next higher
multiple of $0.10.
(B) The increase provided by subparagraph (A) with respect to a
particular cost-of-living computation quarter shall apply in the case
of monthly benefits under this title for months after May of the calen-
dar
year in which occurred such cost-of-living computation quarter,
and in the case of lump-sum death payments with respect to deaths
occurring after May of such calendar year.
(C) (i) Whenever the level of the Consumer Price Index as pub-
lished for any month exceeds by 2.5 percent or more the level of such
index for the most recent base quarter (as defined in paragraph (1)
(A) (ii)) or, if later, the most recent cost-of-living computation quar-
ter, the Secretary shall (within 5 days after such publication) report
the amount of such excess to the House Committee on Ways and
Means and the Senate Committee on Finance.
(ii) Whenever the Secretary determines that a base quarter in a
calendar year is also a cost-of-living computation quarter, he shall
notify the House Committee on Ways and Means and the Senate Com-
mittee on Finance of such determination within 30 days after the close
of such quarter, indicating the amount of the benefit increase to be pro-
vided, his estimate of the extent to which the cost of such increase
would be met by an increase in the contribution and benefit base under
section 230 and the estimated amount of the increase in such base, the
xxix
actuarial estimates of the effect of such increase, and the actuarial as-
sumptions and methodology used in preparing such estimates.
(D).If the Secretary determines that a base quarter in a calendar
year is also a cost-of-living computation quarter, he shall publish in
the Federal Register within 45 days after the close of such quarter, a
determination that a benefit increase is resultantly required and the
percentage thereof. He shall also publish in the Federal Register at
that time (along with the increased benefit amounts which shall be
deemed to be the amounts appearing in sections 227 and 228) a revision
of the table of benefits contained in subsection (a) of this section (as
it may have been most recently revised by another law or pursuant
to this paragraph); and such revised table shall be deemed to be the
table appearing in such subsection (a). Such revision shall be deter-
mined as follows:
(i) The headings of the table shall be the same as the headings
in the table immediately prior to its revision, except that the
parenthetical phrase at the beginning of column II shall reflect
the year in which the primary insurance amounts set forth in
column IV of the table immediately prior to its revision were
effective.
(ii) The amounts on each line of column I and column III,
except as otherwise provided by clause (v) of this subparagraph,
shall be the same as the amounts appearing in each such column
in the table immediately prior to its revision.
(iii) The amount on each line of column II shall be changed
to the amount shown on the corresponding line of column IV
of the table immediately prior to its revision.
(iv) The amounts on each line of column IV and column V
shall be increased from the amounts shown in the table immedi-
ately prior to its revision by increasing each such amount by the
percentage specified in subparagraph (A) (ii) of this paragraph.
The amount on each line of column V shall be increased, if neces-
sary, so that such amount is at least equal to one and one-half
times the amount shown on the corresponding line in column IV.
Any such increased amount which is not a multiple of $0.10 shall
be increased to the next higher multiple of $0.10.
(v) If the contribution and benefit base (determined under
section 230) for the calendar year in which the table of benefits is
revised is lower than such base for the following calendar year,
columns III, IV, and V of such table shall be extended. The
amounts on each additional line of column III shall be the amounts
on the preceding line increased by $5 until in the last such line of
column III the second figure is equal to, or exceeds by less than $5,
one-twelfth of the new contribution and benefit base for the calen-
XXX
G
dar year following the calendar year in which such table of bene-
fits is revised. The amount on each additional line of column IV
shall be the amount on the preceding line increased by $1.00, until
the amount on the last line of such column is equal to the last line
of such column as determined under clause (iv) plus 20 percent of
the excess of the second figure in the last line of column III as ex-
tended under the preceding sentence over such second figure for
the calendar year in which the table of benefits is revised. The
amount in each additional line of column V shall be equal to 1.75
times the amount on the same line of column IV. Any such in-
creased amount which is not a multiple of $0.10 shall be increased
to the next higher multiple of $0.10.¹
(3) As used in this subsection, the term "general benefit increase
under this title” means an increase (other than an increase under this
subsection) in all primary insurance amounts on which monthly insur-
ance benefits under this title are based.
1 Clause (v) was amended by sec. 103(d) of P.L. 95–216.
о

UNIVERSITY OF MICHIGAN
3 9015 06519 7058
THE UNIVERSITY OF MICHIGAN
DATE DUE
AUG 0 3 1962
เวล
Bureau
of Govt.
KF
3644
1978
Li
U.S. Laws, Statutes
etc.
The social secur-
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1634-28 Murf
000 00 CyOb 12
CYOL
tall
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JAN 03 1981
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OR
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