SOCIAL SECURITY Office of the Commissioner Oct 26 1995 The Honorable Robert J. Dole United States Senate 141 Senate Hart Office Building Washington, DC 20510-1601 Dear Senator Dole: The Administration has significant concerns about several Supplemental Security Income (SSI) issues, including: (a) the impact of both the House and Senate bills on children with disabilities; (b) House and Senate restrictions on benefits to immigrants; (c) the Senate bill's proposal to raise the age of eligibility for the elderly for SSI; and (d) the administrative implications of implementing the provisions in these bills. Following are more detailed discussions of our concerns in these four areas. In addition, we have enclosed a discussion of a number of more technical concerns. Childhood Disability Both the House and Senate proposals go too far in making changes to the SSI childhood disability program. The Administration strongly opposes the House provisions that would eliminate most prospective cash benefits in favor of block granted services. This provision essentially punishes innocent children --more than 900,000 children over the next five years who would have been eligible under current law would not be entitled to cash benefits; as many as 600,000 fewer children with disabilities would receive cash benefits in FY 2000. While authorized services may be available to some ofthese children, the amount of the block grant allotment for each State would only be about 75 percent of the lost cash benefits --an amount that then must be spread among both the children receiving only these services and those still receiving cash benefits. More important, we believe that direct cash benefits are superior to block-grant services in several regards. Cash benefits provide greater flexibility to meet the varied and changing needs of children with disabilities; cash benefits support and preserve the capacity of families to care for children with disabilities in their homes, including substituting for lost wages of a parent who is unable to work full-time because he or she must care for a child with a disability; and cash benefits provide a means for the parents of children with disabilities to determine the needs of their children, rather than placing that judgement with a State government agency. SOCIAL SECURITY ADMINISTRATION WASHINGTON DC 20254 We believe that the stated intent of the House proposal --to provide necessary services and treatment --would likely not be met for two reasons. First, it is impossible to foresee every possible service that a disabled child might require. Yet the block grant could only be used for a specified set of services. Second, States would be allowed to (a) select, from a centrally developed list of "authorized services," those services which they would offer and (b) determine which "qualified children" could receive them. There would be no guarantee that a child with a disability would be able to receive services he or she needs --or any services at all. It would be impossible to ensure that children with disabilities, perhaps our most vulnerable population, would be treated fairly and equally nationwide in a program where block grants are administered differently by each State. In addition, we oppose the House provision which would codify one narrow section of SSA regulations into law as the new definition of disability. This provision would make it impossible to adapt SSA's rules to improved medical practices and changing circumstances. The Administration much prefers the Senate provision that establishes in law a new general definition of childhood disability. While the Administration prefers the Senate's definition of childhood disability, we strongly believe Congress should reduce hardship to children with disabilities now on SSI by exempting them from these new, stricter eligibility rules and applying them only to new applicants. If applied to current recipients, according to our most recent estimates, the new definition would cause approximately 160,000 children to lose their eligibility. We believe it would cause serious problems for the families who may have come to rely on this assistance to help those children who, while not so severely disabled as to qualify under the new rules, nevertheless have impairments disabling enough to have made them considered in need of Federal assistance. While we do not oppose the efforts to require continuing disability reviews, we are concerned that these additional workloads will over-stress SSA's limited resources. We favor the Senate version of this provision, which makes clear that the current medical improvement standard applies to these reviews; we would prefer to have the provision requiring that a parent or guardian present evidenceof "medically necessary" treatment dropped, since this concept is not well defined and would be difficult to enforce. Benefits to Immigrants The benefits to immigrants provisions have far reaching effects. We will focus our comments only on the impact on Social Security programs. Both the House md Senate bills go too far in cutting SSI benefits for legal immigrants, and shifting costs to states with high numbers of immigrants. Deeming has been shown as an effective way of holding sponsors responsible and we support strengthening that responsibility as reflected by the extended deeming provision in the Administration's welfare reform bill last year. The Administration strongly opposes the Senate provision that would discriminate against U.S. citizens by denying benefits to legal immigrants even after they become naturalized citizens. The Senate bill also limits those who can receive certain Federal benefits, including Social Security benefits. This provision would violate bilateral totalization agreements with 17 foreign countries and increase costs for American companies and workers. The legislation would be much more acceptable to the Administration if the following features were present. Immigrants who become disabled after entering the country and the aged over 75 should be eligible for SSI Refugees, asylees, Cuban and Haitian entrants, and others who came to the U.S. to avoid persecution should be given adequate time to naturalize before being subject to benefit restrictions. In addition, any sponsor-to-immigrant deeming formula should take into account the needs of the sponsor's family. The attachment to this letter discusses these issues and other concerns in more detail. Increased Age Requirements Section 251 of the Senate bill would increase the age requirement for "aged benefits" to correspond with the Social Security program's "retirement age." Beginning in 2003, the age will increase 2 months per year until it reaches age 66 in 2008. A similar transition between ages 66 and 67 will occur between 2021 and 2026. There is no comparable section in the House bill. The Administration opposes this provision because it could put at risk those poor, elderly individuals who lack skills or experience to enable them to be self-supporting at an advanced age. It is important to understand that the SSI program and the Social Security program are not automatically comparable. Social Security has a provision for optional early retirement at age 62 and the majority of Social Security recipients take advantage of this option. The early retirement age is not scheduled to change. SSI, however, has no provision for an early retirement age. Administrative Implications Given the magnitude of the changes to the SSI program envisioned in these bills, we are concerned that the administrative implications of implementing these changes will be significant. Congress needs to be aware of the potential effect of adding these unbudgeted new requirements on SSA's existing workload, including the deferral of other work. This concern is further addressed in our enclosure. In closing, we would be pleased to work with you on developing statutory language for any of the changes we suggest. Sincerely, Shirley S. Chater Commissioner of Social Security Enclosure ENCLOSURE Noncitizen Eligibility for SSI Benefits Both section 403 ofthe House bill and section 202 ofthe Senate bill generally would prohibit non-citizens from being eligible for SSI with certain exceptions. Under section 403 of the House bill, non-citizens in the following categories could be eligible: refugees during the 5-year period after their admittance to the United States; lawfully admitted permanent residents over age 75 who have resided in the United States for at least 5 years; active duty Armed Forces personnel, honorably discharged veterans, and their spouses and dependent children; and, lawful permanent residents who cannot take the naturalization examination because of physical or developmental disability or mental impairments. Non-citizens on the SSI rolls at the time of enactment who would not be in one of these excepted categories would be removed from the rolls 1 year after the date of enactment. Under section 202 of the Senate bill, these non-citizens could be eligible: refugees, asylees, and individuals who have their deportations withheld (eligibility for such individuals would be limited to 5-year period after their arrival in the United States); non-citizens who have worked and have sufficient quarters of coverage to be fully insured for Social Security benefits; and, non-citizens who have been battered or subjected to extreme cruelty. Non-citizens on the SSI rolls at the time of enactment who would not be in one of these excepted categories would be removed from the rolls January 1, 1997. Both bills end eligibility for non-citizens already on the SSI rolls beyond January 1997 and would result in significant numbers of current recipients--aged, blind, and disabled individuals--losing SSI eligibility. This feature is troubling; benefit restrictions should be applied only to persons who first apply for benefits after the effective date of the legislation. The Administration supports the House provision which exempts legal immigrants who because of physical or developmental disability or mental impairment are unable to fulfill the Immigration and Naturalization Act's naturalization requirements. The Administration would prefer that the bill be amended to provide that persons who become disabled after entering the country should be exempt from the bill's benefit restrictions. Disability cannot be foreseen and, therefore, should trigger an exemption to allow such benefits. Regarding refugees, asylees, Cuban and Haitian entrants, and others subject to persecution, the Administration would prefer the House bill if several modifications were made. Asylees, Cuban and Haitian entrants, and individuals who have had their deportations withheld should be added to the list in section 403 of exempted non-citizens who could be eligible for 5 years after their entry. And, the length of exemption should be made longer than 5 years so that sufficient time can be provided for affected individuals to complete the naturalization process. In addition, we have a number of technical concerns with these sections and would be willing to work with the Conference Committee in addressing our concerns. In the Senate bill, we would support an amendment with respect to treatment of refugees, asylees, Cuban and Haitian entrants, and non-citizens whose deportations are withheld who adjust to lawful permanent residence status after entry. We believe that the status under which the non-citizen was admitted in the United States should continue to be the status used to determine eligibility for benefits during the 5-year period. Otherwise there would be a disincentive for any affected non-citizen to seek adjustment in his or her status. Deeming of Sponsors' Income and Resources Both bills also contain provisions with regard to the deeming of sponsors' income and resources in determining SSI eligibility and benefit amount. Section 421 ofthe House bill would provide that in the case of new legally enforceable affidavits of support, deeming would apply until the non-citizen became a U.S. citizen. Under section 502 ofthe Senate bill, the deeming period would be for 5 years or, as specified in the new legally enforceable affidavits, until the alien earns 40 quarters of coverage in the United States regardless ofwhether he or she becomes a U.S. citizen, whichever is longer. Deeming has been shown as an effective way of holding sponsors responsible and we support strengthening that responsibility as reflected by the extended deeming provision in the Administration's welfare reform bill last year. However, we have strong reservations about both bills because they would repeal the current-law exemption from deeming for sponsored non-citizens who become blind or disabled after entry and change the current-law deeming formula so that the needs of the sponsors' families are not taken into account. Furthermore, we are strongly opposed to continuing deeming of the sponsor's income and assets beyond citizenship. This section may be subject to a constitutional challenge as applied to naturalized aliens, who may be ineligible solely because of their former status as aliens, for benefits to which other citizens are entitled. However, we defer to the Department of Justice on this question. The Senate bill's provisions regarding the exception to ineligibility for SSI for non-citizens who are fully insured for Social Security benefits and its relationship to the provision requiring the deeming of sponsors' assets until the non-citizen has worked for 40 qualifying quarters in the United States present policy, technical, and administrative problems. A qualifying quarter is defined as one in which the individual has at least the minimum for a Social Security quarter of coverage, has not received needs-based public assistance, and has income tax liability for the year in which the quarter was earned. Under this requirement, a non-citizen could become fully insured for Social Security benefits but not earn enough in some years to have had any tax liability. The number of quarters of coverage needed to be fully insured is based on how many years elapse after the year the individual becomes aged 21 and before the year in which he or she becomes disabled or reaches age 62. The maximum number of quarters is 40. Under a number of circumstances, an individual could become qualified for Social Security benefits but be indefinitely subject to the deeming of sponsor's income. A mother with two children could work full time for ten years at $6.25 an hour (1994 dollars), be eligible for Social Security benefits but still be subject to deeming of sponsor's income because she would have received needs based public assistance, the Earned Income Tax Credit. Alternatively, a young individual who became disabled shortly after his or her 21st birthday could become fully insured with as few as 6 quarters. Thus, if such an individual were a non-citizen, he or she could become eligible for SSI benefits. However, if he or she entered the United States on the basis of a legally enforceable affidavit of support, the sponsor's assets would be deemed to him or her for 40 qualifying quarters even though he or she was fully insured. Inasmuch as the individual might not meet the tax liability requirement in the years in which the quarters of coverage were earned, or be able to satisfy the requirement for 10 years of tax liability due to his or her disability, in some cases, deeming ofthe sponsor's assets would never end. While we do not support deeming past citizenship, the Senate deeming provision would be improved with an amendment to provide that deeming would also end when the immigrant is "fully insured, for Social Security benefits." In addition to the problems described above, the Senate deeming provision exception related to earnings with income tax liability would require agencies to request that the Internal Revenue Service retrieve at least ten years of tax records for each individual affected. Because tax files are stored for each individual tax year, this would create considerable administrative burdens for the IRS that would not exist for the alternative we recommend above. We defer to the Department of Treasury on the IRS administrative concerns. In addition, we are concerned with the effective dates in the Senate bill as they relate to deeming and benefit eligibility. Virtually all sponsored aliens on the rolls at the time of enactment would lose eligibility under the Senate bill as of January 1, 1997. However, the new deeming rules would have to be applied to them for the period between enactment and January 1997. This would be a significant administrative workload requiring the identification of all sponsored non-citizens currently exempted from sponsor-to-alien deeming--for example, parolees and disabled immigrants--for whom we have no information about their sponsors' incomes and resources. Affidavits of Support We support making affidavits of support legally enforceable contracts, and we believe that the affidavit should be binding for the same period as deeming, assuming deeming does not continue past citizenship. However, we do not believe that SSA should promulgate reimbursement rules, as required in section 503(d)(3) ofthe Senate bill, for other government agencies that administer means-tested benefits. We prefer the approach in the House bill which requires the Attorney General to promulgate reimbursement rules for all government agencies. Both the House and the Senate bills would permanently bar SSI eligibility for most lawful permanent residents, which would make deeming largely irrelevant for the SSI program. If these blanket exclusions are enacted despite Administration objections, it is likely that there would be very few cases in which SSA would be seeking reimbursement, thereby reducing substantially the need for SSA to administer reimbursement rules. It is likely that other programs will be more affected by this requirement than SSA. Prohibition on Payment of Federal Benefits to Certain Persons Section 507 of the Senate bill provides that certain Federal benefits, including Social Security benefits, would be payable only to persons lawfully present within the United States, whom the provision defines as U.S. citizens, permanent resident aliens, and certain categories of aliens and U.S. nationals. Thus, this section would appear to prohibit the payment of Social Security benefits to aliens who are outside the United States or who have been temporarily admitted to the United States. These payment restrictions would violate the terms ofthe bilateral Social Security totalization agreements with 17 foreign countries, including Canada and virtually all of Western Europe. Furthermore, the U.S. has treaties with at least 9 countries which require the U.S. to pay Social Security benefits to foreign treaty nationals inside the United States on the same basis as U.S. citizens. Seven of these treaties require the U. S. to accord this national treatment to foreign treaty nationals whether they are inside or outside the U.S. In addition, under current law, Social Security benefits are payable to aliens outside the U.S. who are citizens of one of the 65 countries whose social insurance system affords reciprocal treatment to U.S. citizens. Legislation abrogating existing agreements and treaties or otherwise adversely affecting the Social Security benefits of foreign nationals could lead to retaliatory restrictions on the payment of social insurance benefits by other countries to U.S. citizens. Furthermore, it would be unfair to deny Social Security benefits to aliens whose eligibility for benefits is based on earnings from authorized work which were covered under Social Security and subject to Social Security taxes. Finally, if the legislation results in the termination of bilateral Social Security agreements, many U.S. workers and employers will lose the right to foreign Social Security tax exemptions accorded to them pursuant to the agreements. Thus, we strongly oppose section 507 and urge that it be dropped by the Conference Committee. Battered Individual Exemption Section 701 of the Senate bill would exempt individuals who have been battered or subjected to extreme cruelty from certain provisions of SSI law. Although we understand that the exemption is intended to apply to the prohibition on eligibility for most non-citizens and as an exception to sponsor-to-alien deeming, the bill language also exempts such battered individuals from any of the provisions in section 1614(a) of the Social Security Act, which includes the restriction on benefits to residents of the United States, the age 65 requirement for SSI aged benefits, the statutory definition of disability and blindness, and the so-called medical improvement standard for continuing disability determinations. Thus, the language exempts battered individuals from any of these general eligibility provisions and seems to go far beyond the scope of the other SSI amendments of the bill. We would support the exemption if it were modified to apply only to non-citizens who are otherwise eligible but who would not meet one of the other non-citizen exceptions. Repeal of Pass-Along Requirement for State Supplementary Programs Section 605 of the House bill and section 214 of the Senate bill would repeal the current requirement for States to maintain their State supplementary payments at certain levels from year to year. This so-called "pass-along" requirement was added to the law in 1976 in reaction to some States' reducing their supplementary payments when SSI cost­of-living increases occurred. The intent of the original pass-along provisions was to assure that individuals would get an annual increase in their SSI/State supplementary payment amount without requiring States to increase their payments. The Administration has serious reservations about the provision repealing the "pass-along" requirement. Such a provision would leave the States free to reduce significantly or even eliminate their supplementary payment programs. Up to 2.9 million aged, blind, and disabled individuals could be affected. Of these, nearly 400,000 individuals nationwide receive State supplementary payments, but not Federal SSI benefits. Loss of State supplementary payments in such cases could also mean loss of Medicaid. Drug Addicts and Alcoholics Both the House and Senate bills would eliminate all SSI benefits to individuals whose drug addiction/alcoholism (DA/A) is a contributing factor material to their disability as required in both section 601 of the House bill and section 201 of the Senate bill. Provisions in section 201 of the Senate bill require that SSI disability recipients remaining on the rolls and identified as having a DA/A condition be referred to substance abuse treatment and receive their benefits through a representative payee. We have major concerns about the administrative costs associated with these last two proposals. We are willing to work with the conferees to explore alternative provisions that would have more modest administrative costs. Also, the provision concerning treatment for current recipients is unclear in its application. We prefer that the provision be effective at the date of the individual's first continuing disability review occurring after the date of enactment, parallel to the representative payee provision. Applicability of Medicaid Rules Regarding Counting of Certain Assets and Trusts Section 602(c)(4) of the House bill would require that the SSI program treat trusts and disposal of assets in the same way as they are treated in the Medicaid program There is no comparable provision in the Senate bill. We support the basic thrust of the provision. However, we do not believe that the intent of the provision will be achieved simply by making reference to a section in Medicaid law. If the treatment of trusts is applied in the same manner as under Medicaid law, it would result in the exclusion of many types of trusts which are currently exceptions in the Medicaid program under the rationale that they relate to situations where long-term health care is an issue. The same rationale would not be appropriate with regard to the SSI program which is designed to meet ordinary day-to-day basic needs. In addition, following strict Medicaid rules could limit the number of States in which the provision would apply since States are not required to apply the provision to non-institutionalized individuals. Further, the provision in the bill is restricted to children under age 18, and only in cases in which the child had control over the trust. It would be appropriate in the SSI program to apply the same treatment to all individuals regardless of age or whether they are institutionalized, as long as they are able to benefit from the trust. Medicaid law provides that each State will make determinations as to whether the disposal of assets provision applies in each case based on the individual situations. If it is intended that the provision in section 602(c)(4) for using Medicaid rules in the SSI program be strictly adhered to, it would mean that States would be making eligibility determinations based on separate State criteria rather than uniform SSI national criteria. We would be willing to provide the conference committee with draft language to perfect the provision so that it will fully achieve its intended goal. With respect to the disposal of resource provision, we would prefer that the provision be dropped since experience has shown that individuals do not divest themselves of resources in order to obtain SSL. If dropping the provision is not possible, we would prefer language specifically tailored to the SSI program. We are prepared to provide the committee perfecting language for such an approach. Reduction of Cash Benefits Payable to Certain Institutionalized Children According to its title, Section 602(f) of the House bill would provide that the $30 payment standard for persons in certain medical treatment facilities would apply to recipients under age 18 regardless of whether Medicaid or another source pays for their treatment. (Currently, the $30 payment applies to individuals in Medicaid facilities; institutionalized individuals whose care is being paid for by a source other than Medicaid--for example, Medicare--may be eligible for the full SSI benefit of up to $458 a month.) There is no comparable provision in the Senate bill. In principle, we support the provision but there are technical problems that need to be resolved. The title of the provision indicates that it would apply only to children, but the language of the provision would apply to both children and adults. We suggest that the language of the provision be revised to indicate clearly that the $30 payment limit will now apply to children regardless of the source of payment for their care. (The payment limit will continue to apply only to those adults whose care is covered by Medicaid.) Additionally, because of changes in Medicaid coverage categories over time, the list of facilities in section 161l(e)(l)(B) of current law is no longer applicable. In order to prevent inequitable situations, we strongly suggest as part of the amendment that the specified list of institutions in section 161l(e)(l)(B) be replaced with the term "medical facility" so that the provision would have a broader scope. This additional portion of the provision will apply to both children and adults. We would be willing to provide the conference committee with draft language to perfect this provision. Exchanging Information with Law Enforcement Both bills require SSA to provide law enforcement personnel, upon their request, the addresses of SSI recipients involved in, or who have information concerning, parole or probation violations, other criminal activities, or criminal investigations. This provision presents problems for a number of agencies, including the Departments of Health and Human Services and Housing and Urban Development, and we defer to these agencies and the Department of Justice on the merits of this provision. Should the provision be adopted, we support technical amendments to modify this provision to specify that the request for such information include certain identifying information which SSA would need: (1) in order to comply with the request; (2) be made by an authorized official of the agency; (3) contain sufficient identifying information to insure that the amount of information that we disclose is as limited as possible; and (4) be based on an order from a court of competent jurisdiction. Dedicated Savings Account Section 213(b) of the Senate bill would provide that any lump-sum SSI benefit for a disabled child at the request of the child's representative payee be paid into a special dedicated savings account. Monies in this account could be used only for certain specified purposes. There is no comparable provision in the House bill. We do not oppose the provision. However, we have a number of technical concerns that we would like to raise with staff for its consideration. Studies The Administration does not oppose the requirement in section 223 of the Senate bill that the Commissioner arrange for an independent study of the disability process. However, we prefer a modification to avoid overlap with the study to be conducted by the National Commission on the Future of Disability. The study of disability to be arranged by the Commissioner should be restricted to studying research and development by SSA of the methodology for making disability determinations under the current definition of disability as described in the disability redesign project. This should include the identification of a medically determinable impairment(s); the current Listing of Impairments or the proposed Index of Disability Impairments; any functional measure of ability to work; and the development of baseline work activities. It should not include a study of the current definition of disability. We do not oppose in section 231 of the Senate bill the creation of the National Commission on the Future of Disability, but we recommend that a separate general appropriation of $2 million be set up to fund the commission since it will cover disability issues related to all Federal programs, not just those administered by SSA. Accounting by Representative Payees The House bill makes no change to the representative payee accounting provision. Section 213(a) ofthe Senate bill would require SSA to advise representative payees of their responsibilities and would require payees to document expenditures and keep contemporaneous records of expenditures. This section also would delete the current requirement for annual reports by representative payees and would require SSA to implement statistically valid procedures for reviewing a sample of the contemporaneous records which payees would be required to keep. We oppose the Senate bill. The Senate provision regarding advising payees of their responsibilities and requiring record keeping is unnecessary because these requirements are met by SSA's current policies and procedures. With regard to payee accounting, although the bill attempts to substitute a review of a sample of payees' records, annual accounting by all payees is currently mandated by the Jordan court decision as a means of ensuring due process protections under the Fifth Amendment of the Constitution and would still apply. Thus, the requirement for a sample review would increase the administrative burden on SSA by requiring a different type of review of a sample of unspecified size in addition to the universal annual accounting, which currently costs more than $60 million annually to administer. Administrative Costs While this legislation is estimated by CBO to save from $18 billion to $21 billion in SSI program costs over five years, SSA's FY 1996 appropriations request does not include the funding to cover the new administrative work related to implementation of the legislation which generates these savings. CBO has estimated the administrative work related to SSA's implementation of the Senate Finance Committee version ofthe bill would cost about $300 million in FY 1996. Without additional administrative funding, SSA would make every effort to economize without diminishing service to the public. However, given the magnitude of these proposals, we believe that trade-offs would inevitably have to be made. To offset the costs of unbudgeted welfare reform work, we would have to defer other work, including disability claims processing, resulting in higher levels of pending claims, longer processing times, and deterioration of service to the public. We could envision seeking relief from already existing legislative mandates in order to address this new workload. We would note that we believe it would be counterproductive to defer or eliminate any discretionary payment safeguard activities such as overpayment collections, SSI redeterminations, and continuing disability reviews, all of which are intended to protect the public's investment.