Time limitation on filing request for hearings

Section 110 of the bill amends section 205 (b) of the act to clarify the intent of present law that the Secretary may impose a limitation on the time within which an individual may request a hearing after a decision has been made by the Secretary. The language of the present section provides that the Secretary must grant such a hearing "whenever requested" by such individual or by specified dependents or survivors. In a recent decision involving another issue, the Court of Appeals for the Tenth Circuit indicated that this provision as written might require that no case in which an individual has once been given an adverse decision can ever be considered closed until such time as the individual has requested and received a hearing, regardless of the lapse of time. Under this view, individuals could request hearings after the passage of many years during which the Department may have been paying benefits to an adverse claimant. Your committee believes that the Department should not have to keep cases open indefinitely, and that individuals who desire hearings should be required to request them within a reasonable period of time. Under the provisions of section 205 (b) as amended by the bill, the Secretary of Health, Education and Welfare would be specifically authorized to limit the period by regulation, but the prescribed period for requesting hearings could not be less than 6 months after notice of a decision is mailed to the individual. Any individual who has not previously had a hearing would have a period of not less than 6 months after date of enactment of this provision to request a hearing on a notice of decision mailed prior to that date.

No such amendment was included in the House bill.

Earnings test for beneficiaries in active military or naval service overseas Section 111 (a) of the bill amends section 203 (e) (4) (C) of the act which relates to the definition of wages for the purpose of the earnings test, to provide that services performed outside the United States in the active military or naval service of the United States would be deemed to be employment within the United States. This would place the remuneration for such service under the annual earnings test. Subsection (b) of the section amends section 203 (k) of the act which relates to the definition of "noncovered remunerative activity outside the United States," to eliminate services performed in the active military or naval service of the United States from such definition. This would remove such service from the applicability of the 7-day work test.

The amendments made by this section would be applicable with respect to taxable years ending after 1955. No such amendments were included in the House bill.

Under present law, a beneficiary who is a member of the Armed Forces (usually a child beneficiary under age 18) is subject to the $1,200-a-year earnings test while he is serving in the United States, but if he is outside the United States becomes subject to the test under which benefits are suspended if the beneficiary engages in noncovered remunerative activity on 7 or more days in a month.

Effect of remarriage in case of certain widows

Section 112 of the bill adds a new paragraph (3) to section 202 (e) of the act to provide that in any case in which a widow remarries and such marriage terminates because of the husband's death but she is

not his "widow" as defined in section 216 (c) of the act (and, therefore, she is not eligible for benefits as his widow), such remarriage will be deemed not to have occurred. The widow could again be eligible for widow's insurance benefits on the basis of her previous husband's earnings.

Benefits to remarried widows who become entitled to widow's insurance benefits under this amendment would not be payable for any month prior to the latest of (1) the month in which the most recent husband died, (2) the 12th month before the month in which the widow filed application for widow's benefits under the new provision. or (3) September 1956.

This amendment was not included in the House bill.

Extension of period for filing proof of support and applications for lump-sum death payment

Section 113 (a) of the bill adds a new subsection (o) to section 202 of the act (not included in the House bill) to provide that in cases where an individual failed to file the proof of support by the insured worker required for husband's, widower's, or parent's benefits, or to file application for a lump-sum death payment based on deaths after 1946, within the period set forth in the law (generally 2 years after the entitlement or death of the insured individual), and there was good cause for the failure to file in time, the proof or application would be deemed to have been filed in time if it is filed within 2 years following such period or within 2 years following August 1956, whichever is later. The Secretary would have authority to determine by regulation what constitutes "good cause" for purposes of this provision. This amendment would apply in the case of lump-sum death payments under title II of the act, and monthly benefits under such title for months after August 1956, based on applications filed after August 1956.

Computation of average monthly wage

Section 114 of the bill (the same as sec. 106 of the House bill) contains provisions for computing the average monthly wage over full-calendar years in cases involving periods of disability as is now done for cases not involving such periods.

Subsection (a) of the section amends section 215 (b) (1) of the Social Security Act to provide that, in the computation of the average monthly wage, all years any part of which were included in a period of disability shall be excluded from the computation. However, the months and earnings for the year in which the disability began will be included in the computation if a higher primary insurance amount would result.

Subsection (b) of the section amends section 215 (d) (5) of the Social Security Act, which relates to the computation of the average monthly wage where periods prior to 1951 are involved. The amended section would provide that all of the quarters in any year prior to 1951 any part of which was included in a period of disability would be excluded from the elapsed quarters unless, in the case of the year in which the period of disability began, the inclusion of such quarters and of the wages for such quarters would result in a higher primary insurance amount.

Subsection (c) of the section amends section 215 (e) of the Social Security Act to provide that any wages paid to an individual in any

year any part of which was included in a period of disability, and any self-employment income credited to such a year, shall be excluded in computing the average monthly wage unless the months of such year are included as elapsed months in the computation under section 215 (b) (1) which relates to the computation of the average monthly wage where periods after 1950 are involved.

Subsection (d) provides an effective date for the amendments made by the section. These amendments would apply only to individuals (1) who become entitled (without regard to the provisions in sec. 202 (j) (1) of the Social Security Act, relating to retroactive payment of benefits) to old-age insurance benefits after the enactment of the bill, or (2) who die without becoming entitled to such old-age insurance benefits and on the basis of whose earnings an application for benefits or a lump-sum death payment is filed after the date of enactment, or (3) who, after the date of enactment of the bill, file an application which is accepted as an application for a disability determination under the existing section 216 (i) of the Social Security Act.

Advisory Council on Social Security Financing

Section 115 (a) of the bill (the same as sec. 107 (a) of the House bill) establishes an Advisory Council on Social Security Financing for the purpose of reviewing the status of the Federal old-age and survivors insurance trust fund in relation to the long-term commitments of the old-age and survivors insurance program.

Subsection (b) of this section provides that the Council shall consist of the Commissioner of Social Security, as chairman, and 12 other persons appointed by the Secretary of Health, Education, and Welfare who shall, to the extent possible, represent employers and employees in equal numbers, and self-employed persons and the public. The Council would have to be appointed after February 1957 and before January 1958.

Section 115 (c) of the bill authorizes the Council to engage such technical assistance, including actuarial services, as it may require and, in addition, requires the Secretary of Health, Education, and Welfare to make available to the Council such assistance from the Department of Health, Education, and Welfare as the Council may require to carry out its functions. This section also provides for compensation for members of the Council while on business of the Council, at rates to be fixed by the Secretary, but not in excess of $50 a day, and for payment of necessary traveling expenses and per diem.

Section 115 (d) of the bill provides that the Council shall make a report of its findings and recommendations (including its recommendations for changes in tax rates under the old-age and survivors insurance program) to the Secretary of the Board of Trustees of the Federal old-age and survivors insurance trust fund. This report must be submitted not later than January 1, 1959, and is to be included in the annual report of the Board of Trustees to be submitted to the Congress not later than March 1, 1959. The Council would go out of existence after January 1, 1959.

A new Council, similarly constituted and with the same functions, would be appointed not earlier than 3 years and not later than 2 years before the first year for which each ensuing scheduled increase (after 1960) in social security tax rates is effective. Each such Council would report its findings and recommendations in the manner described

above not later than January 1 of the year preceding the year in which the scheduled change in tax rates occurs, and the report and recommendations would be included in the annual report of the Board of Trustees to be submitted to the Congress not later than the March 1 following such January 1. Each such Council would also go out of existence after such January 1.

Investment of trust fund

Section 116 of the bill amends section 201 (c) of the Social Security Act to provide that obligations issued for purchase by the Federal old-age and survivors insurance trust fund would yield a rate of interest equal to the average rate of interest borne by all marketable interest-bearing obligations of the United States not due or callable until after the expiration of 5 years from date of original issue. Under present law, the rate of interest for trust fund investments is equal to the average rate borne by all interest-bearing obligations of the United States without regard to maturities or marketability. The average rate would be rounded to the nearest multiple of one-eighth of 1 percent if it is not already a multiple of one-eighth of 1 percent, rather than to the next lower multiple of one-eighth of 1 percent as in present law.

The section also provides that obligations issued for purchase by the trust fund are to have maturities fixed with due regard for the needs of the trust fund, and replaces the present designation of such obligations as "special obligations exclusively to the trust fund" with the designation "public debt obligations for purchase by the trust fund."

Correction of records of self-employment income

Section 117 of the bill amends section 205 (c) (5) of the act (relating to the time limitation for correction of earnings records) to provide that under specified circumstances an individual's earnings record could be corrected, even after the time limitation has run with respect to a given year, to include self-employment income for that year in any case where wages for that year were deleted from the records as having been erroneously reported. The amount of self-employment income to be included could not be in excess of the amount of wages deleted. The correction could be made only to the extent of the individual's self-employment income (or his net earnings from selfemployment) not already included in his earnings record as selfemployment income which is included in a tax return or statement filed before the expiration of the time limitation following the taxable year in which the deletion of wages is made.

Section 118 of the bill amends section 202 of the Social Security Act by adding a new subsection (p), which provides that no benefits may be paid to certain aliens who are outside the United States.

Paragraph (1) of the new subsection (p) provides that the prohibition against payment shall apply to any individual who is not a citizen or national of the United States for any month after the third consecutive calendar month during all of which the Secretary finds, on the basis of information furnished to him by the Attorney General or which otherwise comes to his attention, that such individual is outside the United States and prior to the first month for all of which he has been in the United States. The prohibition would not apply to

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individuals who are citizens 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 which pays periodic benefits, or their actuarial equivalent, on account of old age, retirement, or death, if United States citizens who are not citizens of such foreign country and who qualify for such benefits are permitted to receive such periodic benefits or their actuarial equivalent while they are outside of such foreign country for periods of 3 months or longer.

Paragraph (2) of the new subsection (p) provides that a person who is, or on application would be, entitled to a monthly benefit under section 202 for June 1956 would not, because of this provision, be deprived of such benefit or of any other benefit based on the wages and self-employment income of the individual on whose wages and selfemployment income such monthly benefit for June 1956 is based.

Paragraph (3) provides that no lump-sum death payment may be made on the basis of the wages and self-employment income of an individual who died while outside the United States and whose benefits were not paid under paragraph (1) for the month preceding the month in which he died.

Paragraph (4) provides that the deductions under subsections (b) and (c) of section 203 of the Social Security Act on account of work or failure to have a child in the beneficiary's care would not be applied for any month with respect to the benefits of any individual if his benefits for such month are not payable by reason of paragraph (1).

Paragraph (5) provides that the Attorney General shall certify to the Secretary such information regarding aliens who depart from the United States to any foreign country (other than a country which is territorially contiguous to the 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 obtaining such other information as may be necessary for this purpose. What is a social insurance or pension system of general application for purposes of paragraph (1) of the new subsection (p) necessarily will depend upon a consideration of all aspects of the system, including, among others, such factors as its scope and the type of benefits payable. It may include consideration, as a single system, of several social insurance or pension plans in effect in a country, each of which, standing alone, might not be a system of general application.

No provision suspending benefits of aliens was included in the bill passed by the House.

Definition of Secretary

Section 119 of the bill provides that the term "Secretary," as used in the bill and in the provisions of the Social Security Act set forth in the bill, means the Secretary of Health, Education, and Welfare. This is the same as section 108 of the House bill.

AMENDMENTS PRESERVING RELATIONSHIP BETWEEN RAILROAD RETIREMENT AND OLD-AGE AND SURVIVORS INSURANCE

Section 120 of the bill amends the Railroad Retirement Act. These amendments are designed to maintain the relationship between the old-age and survivors insurance system and the railroad retirement system that was established by the amendments made in 1951 to the Railroad Retirement Act by Public Law 234, 82d Congress.