Introduction

Social Security is a self-financed program that provides monthly cash benefits to retired and disabled workers and their family members, and to the family members of deceased workers. The program is authorized under Title II of the Social Security Act and administered by the Social Security Administration (SSA). As of June 2011, there were 54.8 million Social Security beneficiaries. Of those, 38.1 million were retired workers and family members, 10.4 million were disability beneficiaries, and 6.3 million were survivors of deceased workers.[i]

Social Security is financed by payroll taxes paid by covered workers and their employers. In 2011, an estimated 156.9 million workers are covered by Social Security.[ii] Employees and employers each pay 6.2% of covered earnings up to an annual limit ($106,800 in 2011); self-employed individuals pay 12.4% of net self-employment income up to an annual limit ($106,800 in 2011).[iii] Self-employed persons may deduct one-half of their Social Security payroll taxes for federal income tax purposes.[iv] Social Security is also credited with tax revenues from the federal income taxes paid by some beneficiaries on a portion of their benefits.

Social Security income and outgo are accounted for in two separate trust funds authorized under Title II of the Social Security Act: the Federal Old-Age and Survivors Insurance (OASI) trust fund and the Federal Disability Insurance (DI) trust fund.[v] As the Managing Trustee of the Social Security trust funds, the Secretary of the Treasury is required by law to invest Social Security revenues in interest-bearing federal government securities (special issues) held by the trust funds.[vi] The revenues exchanged for the federal government securities are deposited into the general fund of the U.S. Treasury and are indistinguishable from revenues in the general fund that come from other sources. Funds needed to pay Social Security benefits and administrative expenses come from the redemption or sale of federal government securities held by the trust funds.[vii]

In 2010, the Social Security trust funds had total income of $781 billion, total expenditures of $713 billion and accumulated holdings of $2.6 trillion.[viii] Because the assets held by the trust funds are federal government securities, the trust fund balance ($2.6 trillion at the end of 2010) represents the amount of money owed to the Social Security trust funds by the general fund of the U.S. Treasury.

Origins and Brief History of Social Security

Title II of the original Social Security Act of 1935[ix] established a national plan designed to provide economic security for the nation’s workers. The system of Old-Age Insurance it created provided benefits to individuals who were aged 65 or older and who had “earned” retirement benefits through work in jobs covered by the system. Benefits were to be financed by a payroll tax paid by employees and employers on wages up to a base amount ($3,000 per year at the time). Monthly benefits were to be based on cumulative wages in covered jobs. The law related the amount of the benefit to the amount of a worker’s wages covered by the program, but the formula was weighted to give a greater return, on payroll taxes paid, to low-wage earners. Before the Old-Age Insurance program was in full operation, the Social Security Amendments of 1939[x] shifted the emphasis of Social Security from protection of the individual worker to protection of the family by extending monthly cash benefits to the dependents and survivors of workers. The program now provided Old-Age and Survivors Insurance (OASI).

During the decades that followed, changes to the Social Security program were mainly ones of expansion. Coverage of workers became nearly universal (the largest groups remaining outside the system today are state and local government employees who have not chosen to join the system and federal employees who were hired before 1984). In 1956, Congress established the Disability Insurance (DI) program.[xi] Over the years, there were increases in the payroll tax rate, which increased from 2.0% of pay (1.0% each for employees and employers) in the 1937-1949 period to its current level of 12.4%.[xii] In addition, there were increases in the amount of wages subject to the payroll tax (the taxable wage base), which increased from $3,000 in the 1937-1950 period to its current level of $106,800.[xiii] The types of individuals eligible for benefits were expanded over the years,[xiv] and benefit levels were increased periodically. In 1972, legislation provided that benefits would increase automatically each year by the same percentage as the cost-of-living (effective in 1975).[xv]

Beginning in the late 1970s, legislative action regarding Social Security became more concentrated on solving persistent financing problems. Legislation enacted in 1977 raised taxes and curtailed future benefit growth in an effort to shore up the system’s finances.[xvi] Still, in 1982, the OASI trust fund needed to borrow assets from the DI trust fund and the Medicare Hospital Insurance trust fund (borrowed amounts were fully repaid by 1986). Finally, in 1983, Congress passed additional major legislation that was projected to restore solvency to the Social Security system on average over the 75-year projection period. Current projections by the Social Security Board of Trustees show that the Social Security system has a long-range funding shortfall. These projections, and other factors, have focused attention on potential Social Security program changes in the future.

Social Security Benefits

Social Security provides monthly cash benefits to retired and disabled workers and to the family members of retired, disabled or deceased workers. To be eligible for a Social Security retired-worker benefit, a person generally needs a minimum of 40 earnings credits, or 10 years of Social Security-covered employment (among other requirements).[xvii] A worker’s initial monthly benefit (known as the primary insurance amount or PIA) is based on his or her career-average earnings (using the highest 35 years of earnings) and a progressive benefit formula designed to provide a higher replacement rate for lower-wage workers compared to higher-wage workers.[xviii] A person may claim Social Security retired-worker benefits as early as age 62, however, benefits claimed before the full retirement age (FRA) are reduced to take into account the longer expected period of benefit receipt. The FRA ranges from age 65 to age 67, depending on the person’s year of birth. If a person claims benefits after he or she attains the full retirement age, benefits are increased (up to age 70) to take into account the shorter expected period of benefit receipt. In addition to benefit adjustments based on early or delayed retirement, other adjustments may apply such as those based on simultaneous entitlement to more than one type of Social Security benefit.

For Social Security disability benefits, “disability” is defined as the inability to engage in substantial gainful activity by reason of a medically determinable physical or mental impairment expected to result in death or last at least 12 months. Generally, the worker must be unable to do any kind of work that exists in the national economy, taking into account age, education and work experience. As noted above, a worker generally needs a minimum of 40 quarters of coverage for a Social Security retired-worker benefit. A worker may qualify for Social Security disabled-worker benefits with fewer quarters of coverage, depending on the age at which the worker became disabled. However, a minimum of 6 quarters of coverage is needed. Similarly, while the worker’s 35 highest years of earnings are used to compute a retired-worker benefit, fewer years of earnings may be used to compute a disabled-worker benefit. A disabled worker’s benefit is not reduced for receipt before the full retirement age.

Benefits for the Worker’s Family Members

Social Security is sometimes viewed narrowly as a program that provides benefits to retired and disabled workers. However, about 21% of current Social Security beneficiaries are dependents and survivors of retired, disabled and deceased workers.[xix]

Social Security benefits are payable to the spouse, divorced spouse or child of a retired or disabled worker. Benefits are also payable to the widow(er), divorced widow(er), child or parent of a deceased worker. In addition, in the case of a deceased worker, benefits are payable to the mother or father of a deceased worker’s child when the child is under age 16 or disabled and entitled to a Social Security child’s benefit based on the worker’s record. Benefits payable to family members are equal to a specified percentage of the worker’s PIA, subject to a maximum family benefit amount. For example, the spouse of a retired worker may receive up to 50% of the retired worker’s PIA, and the widow(er) of a deceased worker may receive up to 100% of the deceased worker’s PIA. Benefits paid to family members may be subject to adjustments based on the person’s age at entitlement, receipt of his or her own Social Security retired-worker benefit and other factors.

Chapter Overview

This chapter of the Green Book includes a series of Congressional Research Service (CRS) Reports organized under the following general headings:

• History of Social Security;
• Social Security Financing and the Trust Funds;
• Social Security Benefits and Eligibility;
• Social Security Disability Insurance; and
• Program Administration and Administrative Funding.

Readers should consult the reports listed under each of these headings for information and data related to these topics. A Tables and Figures section provides a list of the tables and figures included in the CRS reports, and includes additional tables and figures related to Social Security, followed by a Legislative History and Links to Additional Resources.

Congressional Research Service (CRS) Reports

The House Ways and Means Committee is making available selected reports by the Congressional Research Service (CRS) for inclusion in its 2011 Green Book website. CRS works exclusively for the United States Congress, providing policy and legal analysis to Committees and Members of both the House and Senate, regardless of party affiliation. Certain CRS reports with cover dates earlier than 2011 are included here because their contents remain current.

History of Social Security

RL30920: Major Decisions in the House and Senate on Social Security: 1935-2010

Social Security Financing and the Trust Funds

RL33028: Social Security: The Trust Fund

Social Security Benefits and Eligibility

R41479: Social Security: Revisiting Benefits for Spouses and Survivors

R41518: Social Security: The Minimum Benefit Provision

94-803: Social Security: Cost-of-Living Adjustments

98-35: Social Security: The Windfall Elimination Provision (WEP)

RL32453: Social Security: The Government Pension Offset (GPO)

R41242: Social Security Retirement Earnings Test: How Earnings Affect Benefits

RL32552: Social Security: Calculation and History of Taxing Benefits

Social Security Disability Insurance

RL32279: Primer on Disability Benefits: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI)

R41289: Disability Benefits Available Under the Social Security Disability Insurance (SSDI) and Veterans Disability Compensation (VDC) Programs

RS20479: Social Security: Substantial Gainful Activity for the Blind

RS22220: Social Security Disability Insurance (SSDI): The Five-Month Waiting Period for Benefits

Program Administration and Administrative Funding

R41716: Social Security Administration (SSA): Budget Issues

Tables and Figures in CRS Reports

The following tables and figures related to Social Security can be found in the CRS reports section of this Green Book chapter.

RL30920: Major Decisions in the House and Senate on Social Security: 1935-2010

Table 1. Social Security Laws, 1935-2010

RL33028: Social Security: The Trust Fund

Table 1. Annual Revenues, Costs, and Cash Flow Surpluses or Deficits for the Social Security Trust Fund, 1957-1983

Table 2. Annual Revenues, Costs, and Cash Flow Surpluses or Deficits for the Social Security Trust Fund, 1984-2010

Table 3. Projected Annual Revenues, Costs, and Cash Flow Deficits for the Social Security Trust Fund, 2011-2035

Table 4. Accumulated Holdings of the Social Security Trust Fund, 1957-2010

Table 5. Projected Accumulated Holdings of the Social Security Trust Fund, 2011-2035

R41479: Social Security: Revisiting Benefits for Spouses and Survivors

Figure 1. Basis of Entitlement for Women Aged 62 or Older, 1960-2008, Selected Years

Figure 2. Labor Force Participation Rate of Women with Children, 1975 to 2008

Figure 3. Relative Importance of Social Security to Total Retirement Income for Persons Aged 65 or Older in 2006

Figure 4. Poverty Status of Social Security Beneficiaries Aged 65 or Older in 2006 by Gender and Marital Status

Table 1. Percentage Reaching 10th Marriage Anniversary, by Marriage Cohort and Sex, for First and Second Marriages

Table 2. Average Benefit Levels Among Retired Workers With Dual Entitlement, December 2009

Table 3. Women's Earnings as a Percent of Men's Earnings, 1979 and 2009

Table 4. Benefits for Three Couples with Different Earnings Splits Between Husband and Wife

Table B-1. Computation of a Worker's Primary Insurance Amount (PIA) in 2010 Based on an Illustrative AIME of $5,000

Table C-1. Social Security Spousal and Widow(er)'s Benefits

R41518: Social Security: The Minimum Benefit Provision

Table 1. Special Minimum PIA Initial Monthly Benefit Amounts, by Number of Years of Coverage, Effective in 2011

Table 2. The Special Minimum PIA: Number of Current Beneficiaries, Average Monthly Special Minimum PIA Amounts and Average Monthly Benefit Payments, December 2009

Table A-1. Computation of a Worker's Primary Insurance Amount (PIA) in 2011 Based on an Illustrative AIME of $5,000

Table B-1. Social Security Auxiliary Benefits

Table C-1. Years of Coverage Counted for the Special Minimum PIA

Table C-2. Years of Coverage Counted for the Special Minimum PIA

94-803: Social Security: Cost-of-Living Adjustments

Table 1. Computation of a Potential Social Security COLA, January 2011

Table 2. History of Social Security Benefit Increases

98-35: Social Security: The Windfall Elimination Provision (WEP)

Table 1. Social Security Benefit Formula in 2011

Table 2. Monthly PIA for a Worker With Average Indexed Monthly Earnings of $1,500 and Retiring in 2011

Table 3. WEP Reduction Falls with Years of Substantial Coverage

Table 4. Number of Beneficiaries in Current Payment Status with Benefits Affected by Windfall Elimination Provision (WEP), by State and Type of Benefit, December 2010

RL32453: Social Security: The Government Pension Offset (GPO)

Table 1. Dual Entitlement Formula

Table 2. GPO Formula

Table 3. Dual Entitlement Rule Compared with Government Pension Offset

Table 4. Mary's Spousal Benefit, Before and After GPO Enactment

Table 5. Number of Social Security Beneficiaries Affected by GPO, by State, Type of Benefit, and Offset Status, December 2010

R41242: Social Security Retirement Earnings Test: How Earnings Affect Benefits

Table 1. Number of Worker Beneficiaries with Earnings in 2006

Table 2. Application of the Retirement Earnings Test to a Single Worker Beneficiary with Earnings Above the Annual Exempt Amount, 2011

Table 3. Application of the Retirement Earnings Test to a Family Consisting of a Worker Beneficiary with Earnings Above the Annual Exempt Amount and Auxiliary Beneficiaries (a Spouse and a Child), 2011

Table 4. Application of the Retirement Earnings Test to a Couple Consisting of a Worker Beneficiary and an Auxiliary (Spousal) Beneficiary, Both of Whom Have Earnings Above the Annual Exempt Amount and Are Below FRA Throughout the Calendar Year, 2011

Table 5. Applicability of the Retirement Earnings Test to Worker Beneficiaries and Auxiliary Beneficiaries

Table A-1. Computation of a Worker's Primary Insurance Amount in 2011 Based on an Illustrative AIME of $5,000

Table B-1. Social Security Auxiliary Benefits

Table C-1. Annual Exempt Amounts Under the Social Security Retirement Earnings Test, Calendar Years 2000-2011

RL32552: Social Security: Calculation and History of Taxing Benefits

Figure 1. Taxable Social Security Benefits as Non-Social Security (and Provisional) Income Increases for a Single Retiree with $14,105 in Annual Social Security Benefits, Tax Year 2010

Figure 2. Taxable Income for an Average Single Retiree

Figure 3. Taxable Income for a Single Retiree with $20,000 or $30,000 in Non-Social Security Income as Annual Social Security Benefits Increase, Tax Year 2010

Table 1. Calculation of Taxable Social Security and Tier I Railroad Retirement Benefits

Table 2. Example of Calculation of Social Security Benefits for Average Social Security Recipient and Different Assumptions about Other Income

Table 3. State Income Taxation of Social Security Benefits, Tax Year 2008

Table 4. Number and Percentage of Beneficiaries with Taxable Social Security Benefits by Income Class Under 2005

Table 5. Social Security Benefits and Taxes on Social Security Benefits by Income Class Under 2005 Law

RL32279: Primer on Disability Benefits: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI)

Table 1. Reasons for SSDI Worker Benefit Termination, 2009

R41289: Disability Benefits Available Under the Social Security Disability Insurance (SSDI) and Veterans Disability Compensation (VDC) Programs

Figure 1. Social Security Administration's Five-Step Sequential Evaluation Process for Determining Disability

Figure 2. SSDI Appeals Process

Figure 3. Flow Chart of the Various Steps in the VA Appeal Process

Table 1. Comparison of SSDI and VDC Recipients, End of FY2010

Table 2. Comparison of Key SSDI and VDC Program Components

Table 3. General VDC and SSDI Eligibility Determinations for Four Hypothetical Veterans

R41716: Social Security Administration (SSA): Budget Issues

Figure 1. Projected Spending on SSA Programs

Figure 2. SSA Total LAE Budget Authority

Figure 3. New Claims for Social Security and SSI Benefits

Figure 4. SSA Hearings Pending at the End of Each Fiscal Year

Figure 5. SSA Program Integrity Activities

Figure 6. SSA Administrative Budget Requests and Appropriations

Additional Tables and Figures Related to Social Security

The following additional tables and figures appear in this section of the Green Book chapter on Social Security.

Social Security as a Percentage of Income Among Beneficiaries Age 65 and Older

Table 1-1. Social Security as a Percentage of Income Among Beneficiaries Age 65 and Older in 2009

Figure 1-1. Social Security as a Share of Total Income Among Beneficiaries Age 65 and Older in 2009 By Income Quartile

Social Security Trust Funds

Table 1-2. Long-Range Actuarial Status of the Combined OASDI Trust Fund as Shown Under Intermediate Assumptions in Trustees’ Reports from 1983 to 2011

Table 1-3. Projected Trust Fund Exhaustion and Operations as Shown Under Intermediate Assumptions in Trustees’ Reports from 1983 to 2011

Social Security Retirement Age

Table 1-4. Increases in Full Retirement Age and Delayed Retirement Credits with Resulting Benefit, as a Percent of Primary Insurance Amount, Payable at Selected Ages, for Persons Born in 1924 or Later

Taxation of Social Security Benefits

Table 1-5. Worksheet for Determining the Taxable Portion of Social Security Benefits

Social Security Disability Insurance: Disability Determination Process

Figure 1-2. The Five-Step Disability Determination Process

Social Security Disability Insurance: Number of Beneficiaries

Table 1-6. Number of Disability Insurance (DI) Beneficiaries in Current-Payment Status, Selected Years 1960-2009

Social Security Disability Insurance: New Benefit Awards

Table 1-7. Disabled Workers’ Applications, Awards, Awards as a Percent of Applications, and Awards Per 1,000 Insured Workers, Selected Calendar Years 1965-2010

Table 1-8. Percent Distribution by Age and Sex of Title II Disabled Worker Beneficiaries Awarded Benefits in Selected Calendar Years 1970-2009

Table 1-9. Percent Distribution by Disabling Impairment of Title II Disabled Worker Beneficiaries Awarded Benefits in Selected Calendar Years 1970-2009

Social Security Disability Insurance: Substantial Gainful Activity Amounts

Table 1-10. Monthly Substantial Gainful Activity (SGA) Amounts, 1968-2011

▪ U.S. Social Security Administration

   www.socialsecurity.gov

▪ Social Security Advisory Board

   www.ssab.gov

▪ Congressional Budget Office

   www.cbo.gov (enter search phrase “Social Security”)

▪ U.S. Government Accountability Office

   www.gao.gov (enter search phrase “Social Security”)

▪ Retirement Research Consortium

   https://www.socialsecurity.gov/policy/rrc/index.html

tables and figures

Introduction

Medicare is a nationwide health insurance program for the aged and certain disabled persons. Medicare consists of four distinct parts: Part A (Hospital Insurance, or HI); Part B (Supplementary Medical Insurance, or SMI); Part C (Medicare Advantage, or MA); and Part D (the prescription drug benefit added by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, MMA). The program is administered by the Centers for Medicare and Medicaid Services (CMS). Total program outlays are estimated to reach $569 billion in fiscal year 2011. Net federal outlays, after deduction of beneficiary premiums and other offsetting receipts, are expected to be $491 billion in 2011.

Medicare is administered by CMS within the U.S. Department of Health and Human Services (DHHS). (Prior to June 14, 2001, this agency was known as the Health Care Financing Administration (HCFA).) Day-to-day program operations, including processing benefits and paying claims, are conducted by private Medicare contractors.

Coverage

Almost all persons age 65 and over are automatically entitled to Medicare Part A. Part A also provides coverage, after a 24-month waiting period, for persons under age 65 who are receiving Social Security cash benefits on the basis of disability. Most persons who need a kidney transplant or renal dialysis also may be covered, regardless of age. In 2010, Part A covered 47 million aged and disabled persons (including those with chronic kidney disease). Medicare Part B is voluntary. All persons age 65 and over and all persons enrolled in Part A may enroll in Part B by paying a monthly premium; those with higher incomes pay higher premiums. In 2010, 44 million aged and disabled persons were enrolled in Medicare Part B.

Approximately 75% of beneficiaries receive covered services through Part A and Part B. Together these programs are known as “Original Medicare.” (“Original Medicare” is sometimes referred to as “traditional fee-for-service Medicare” since a separate payment is made for each unit of service.) Medicare beneficiaries who are eligible for Part A and enrolled in Part B have the option of obtaining covered services through private health plans under Part C rather than through Original Medicare. (In this case, monthly per capita payments are made to the health plan.) Approximately 25% of Medicare beneficiaries have elected this option. All beneficiaries can elect to obtain coverage for prescription drugs through private health plans under Medicare Part D. About 34 million Medicare beneficiaries were enrolled in a Medicare Part D plan (28 million) or received drug benefits from an Medicare subsidized employer retiree plan (6 million) in 2010.

Benefits

Part A provides coverage for inpatient hospital services, up to 100 days of post-hospital skilled nursing facility (SNF) care, some home health services, and hospice care. CMS reimburses acute inpatient hospitals, home health agencies, hospice, inpatient psychiatric facilities, inpatient rehabilitation facilities, long-term care hospitals, and skilled nursing facilities under separate prospective payment systems. A prospective payment system (PPS) is a method of reimbursement in which Medicare payment is made based on a predetermined, fixed amount. Patients must pay a deductible ($1,132 in 2011) each time their hospital admission begins a benefit period. (A benefit period begins when a patient enters a hospital and ends when he or she has not been in a hospital or SNF for 60 days.) The limited numbers of beneficiaries requiring care beyond 60 days are subject to additional charges. Patients requiring SNF care are subject to a daily coinsurance charge for days 21-100 ($141.50 in 2011). There are no cost-sharing charges for home health care and limited charges for hospice care.

Part B provides coverage for physicians' services, laboratory services, durable medical equipment (DME), hospital outpatient department (OPD) services, and other medical services. The program generally pays 80 percent of Medicare's fee schedule or other approved amount after the beneficiary has met the annual deductible ($162 in 2011). The beneficiary is liable for the remaining 20 percent.

Under Part C, beneficiaries have the option of obtaining covered services through private health plans. Under an agreement with CMS, a plan agrees to provide all services covered under Medicare Parts A and B (except for hospice care) in return for a capitated monthly payment. 

Part D provides coverage for outpatient prescription drugs through private prescription drug plans (PDPs) or Medicare Advantage prescription drug (MA-PD) plans. Similar to Part C, Medicare makes monthly payments to Part D plans for each Part D enrollee. All plans are required to meet certain minimum benefit requirements, however there are significant differences among plans in terms of benefit design, drugs included on plan formularies (i.e., list of covered drugs), cost-sharing applicable for particular drugs, and monthly premiums.

Financing

Medicare Part A is financed primarily through the HI payroll tax levied on current workers and their employers. Employers and employees each pay a tax of 1.45 percent on all earnings. The self-employed pay a single tax of 2.9 percent on earnings. Revenues are credited to the HI trust fund.

Part B is financed through a combination of monthly premiums levied on program beneficiaries and Federal general revenues. Beneficiary premiums have generally represented about 25 percent of Part B costs; Federal general revenues (i.e., tax dollars) account for the remaining 75 percent. Beginning in 2007, higher income individuals pay higher premiums. Revenues are credited to the SMI trust fund.

Part C has no separate financing mechanism. Payments to MA plans are made in appropriate parts from the HI and SMI trust funds. Part D is financed by a combination of beneficiary premiums and general revenues. Revenues are credited to a separate account in the SMI trust fund.

Chapter Overview

This chapter of the Green Book includes links to recent Congressional Research Service (CRS) Reports on Medicare. A Tables and Figures section lists select tables and figures found in these reports. This chapter of the Green Book also includes a Legislative History of Medicare beginning in 1997. (Previous editions of the Green Book review legislation enacted prior to that date.) The Legislative History highlights major provisions and includes provisions which had a significant budget impact, changed program benefits, modified beneficiary cost sharing, or involved major program reforms. This chapter concludes with a list of Links to Additional Resources, including links to Medicare administrative and expenditure data and information on specific programs and payment systems published by the Centers for Medicare and Medicaid Services (CMS), the Medicare Payment Advisory Commission (MedPAC), and the Congressional Budget Office (CBO).

Congressional Research Service Reports

Medicare Budgeting and Payments

R40425, Medicare Primer

R41436, Medicare Financing

RS20946, Medicare: History of Insolvency Projections

RL30526, Medicare Payment Policies

R40907, Medicare Physician Payment Updates and the Sustainable Growth Rate (SGR) System

Medicare Oversight and Regulation

RL34217, Medicare Program Integrity: Activities to Protect Medicare from Payment Errors, Fraud, and Abuse

Legislative History

R41196, Medicare Provisions in the Patient Protection and Affordable Care Act (PPACA): Summary and Timeline

RL34592, P.L. 110-275: The Medicare Improvements for Patients and Providers Act of 2008

RL34360, P.L. 110-173: Provisions in the Medicare, Medicaid, and SCHIP Extension Act of 2007

RL31966, Overview of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003

RL30707, Medicare Provisions in the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA, P.L. 106-554)

RL30347, Medicare: Changes to Balanced Budget Act of 1997 (BBA 97, P.L. 105-33) Provisions

97-802, Medicare Provisions in the Balanced Budget Act of 1997 (BBA 97, P.L. 105-33)

Tables and Figures in CRS Reports

Following is a list of tables and figures related to Medicare that can be found in the CRS reports section of this Green Book chapter.

R40425, Medicare Primer

Figure 1. Projected Medicare Spending, by Category, FY2011

R41436, Medicare Financing

Figure 1. Sources of Medicare Revenue: 2010

Figure 2. Medicare Expenditures

Figure 3. Short-Term HI Expenditures and Income

Figure 4. HI Trust Fund Assets at Beginning of Year as a Percentage of Annual

Expenditures

Figure 5. Long-Range HI Income and Cost as a Percentage of Taxable Payroll

Figure 6. Medicare Cost and Non-interest Income by Source as a Percentage of GDP

Table 1. Medicare Data for Calendar Year 2010

Table 2. Unfunded HI Obligations

Table 3. Unfunded Part B and Part D Obligations

Table 4. SMI General Revenues as a Percentage of Personal and Corporate Federal

Income Tax

Table A-1. Medicare Enrollment, 1970 - 2085

Table B-1. Medicare Income and Expenditures, Calendar Years 1970-2020

Table C-1. Average Medicare Benefit Costs Per Beneficiary, Calendar Years 1970-2020

Table D-1. Operation of the Hospital Insurance Trust Fund, Calendar Years 1970-2020

Table E-1. Operation of the Part B Account of the SMI Trust Fund, Calendar Years 1970-2020

Table F-1. Operation of the Part D Account in the SMI Trust Fund, Calendar Years 2004-2020

Table G-1. Projected HI and SMI Expenditures as a Percentage of GDP

RS20946, Medicare: History of Insolvency Projections

Figure 1. Projected Number of Years Until HI Insolvency

Table 1. Year of Projected Insolvency of the Hospital Insurance Trust Fund in Past

Trustees Reports

Table A-1. Operation of the Hospital Insurance Trust Fund, Calendar Years 1970-2020

Table B-1. Tax Rates and Maximum Tax Bases

RL30526, Medicare Payment Policies

Table 1. Inpatient Prospective Payment System (IPPS) for Short-term, General Hospitals

Table 2. Hospitals Receiving Special Consideration Under Medicare’s IPPS

Table 3. IPPS-Exempt Hospitals and Distinct Part Units

Table 4. Skilled Nursing Facility (SNF) Care

Table 5. Hospice Care

Table 6. Physicians

Table 7. Nonphysician Practitioners

Table 8. Clinical Diagnostic Laboratory Services

Table 9. Preventive Services

Table 10. Telehealth

Table 11. Durable Medical Equipment (DME)

Table 12. Prosthetics and Orthotics

Table 13. Surgical Dressings

Table 14. Parenteral and Enteral Nutrition (PEN)

Table 15. Miscellaneous Items and Services

Table 16. Ambulatory Surgical Centers (ASCs)

Table 17. Hospital Outpatient Services

Table 18. Rural Health Clinics and Federally Qualified Health Center (FQHCs) Services

Table 19. Comprehensive Outpatient Rehabilitation Facility (CORF)

Table 20. Part B Drugs and Biologicals Covered Incident to a Physician’s Visit

Table 21. Blood

Table 22. Partial Hospitalization Services Connected to Treatment of Mental Illness

Table 23. Ambulance Services

Table 24. Home Health

Table 25. End-Stage Renal Disease Dialysis Services

Table 26. Managed Care Organizations

Table 27. Outpatient Prescription Drug Coverage

R40907, Medicare Physician Payment Updates and the Sustainable Growth Rate (SGR) System

Figure 1. Difference Between Cumulative Allowed and Actual Expenditures for

Physician Services Under the SGR System

Figure 2. Relative Increase in Part B Expenditures vs. per Capita GDP

Figure 3. Formula Updates, Actual Updates, and the Medicare Economic Index

Table 1. Summary of Updates and Legislative Activity

RL34217, Medicare Program Integrity: Activities to Protect Medicare from Payment Errors, Fraud, and Abuse

Figure 1. HCFAC Recoveries and Transfers to the Medicare HI Trust Fund, and HCFAC

Expenditures FY1998-FY2010

Table 1. A/B MAC Consolidation and Expected Effective Dates

Table 2. HCFAC and MIP Mandatory Appropriations Selected Years, FY1999-FY2012

Table 3. HCFAC and MIP Discretionary Appropriations, FY2009-FY2012

Table 4. National Medicare FFS Error Rates and Total Improper Payments for Selected Fiscal Years, 1996–2010

Table 5. Medicare Part D Payment Error Rate Measures

Table 6. Summary of Health Care Fraud and Abuse Actions, FY1999-FY2010

Table 7. Selected Recent Congressional Hearings

Table 8. Additional HCFAC Mandatory Appropriations Authorized by PPACA, FY2011-FY2020

Table 9. Maximum HCFAC Program Integrity Discretionary Appropriations Authorized by the Budget Control Act of 2011 (BCA, P.L. 112-25)

R41196, Medicare Provisions in the Patient Protection and Affordable Care Act (PPACA): Summary and Timeline

Figure 1. Estimates of Medicare Spending FY2010-FY2019

Table B-1. Timeline for Update Reductions Including Productivity Adjustments, by Provider

Table C-1. Start Date, Effective Date, or Deadline—Prior to 2010

Table C-2. Start Date, Effective Date, or Deadline—CY2010

Table C-3. Start Date, Effective Date, or Deadline—CY2011

Table C-4. Start Date, Effective Date, or Deadline—CY2012

Table C-5. Start Date, Effective Date, or Deadline—CY2013

Table C-6. Start Date, Effective Date, or Deadline—CY2014

Table C-7. Start Date, Effective Date, or Deadline—CY2015

Table C-8. Start Date, Effective Date, or Deadline—CY2016

Table C-9. Start Date, Effective Date, or Deadline—CY2017

Table C-10. Start Date, Effective Date, or Deadline—CY2018

Table C-11. Start Date, Effective Date, or Deadline—CY2019

Table C-12. Start Date, Effective Date, or Deadline—CY2020

Table C-13. Unspecified Start Date, Effective Date, or Deadline

97-802, Medicare Provisions in the Balanced Budget Act of 1997 (BBA 97, P.L. 105-33)

Figure 1. Estimate of Medicare Savings in Conference Agreement on BBA 1997

Table 1. Medicare Outlays

Table 2. Estimated Medicare Outlays Under Current Law (Prior to Enactment of BBA), FY1997-FY2007

Table 3. Estimated Medicare Part B Monthly Premium

Table 4. Transition to Annual Coordinated Election of Medicare+Choice Plans

Table 5. Beneficiary Cost-Sharing and Provider Reimbursement Under Medicare+Choice Plans for Basic Benefit Package

Table 6. Major Factors for Determining Medicare Payments to Medicare+Choice Plans

Table 7. CBO Estimate of Medicare Savings in the Balanced Budget Act of 1997, FY1998-FY2002

Table 8. Impact of BBA 97 on Medicare, FY1997-FY2002

Legislative History

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This section summarizes major Medicare legislation enacted into law, beginning in 1997. Previous editions of the Green Book review legislation enacted prior to that date. The summary highlights major provisions; it is not a comprehensive list of all Medicare amendments. Included are provisions which had a significant budget impact, changed program benefits, modified beneficiary cost sharing, or involved major program reforms. Provisions involving policy changes are mentioned the first time they are incorporated in legislation, but not necessarily every time a modification is made. The descriptions include either the initial effective date of the provision or, in the case of budget savings provisions, the fiscal years for which cuts were specified.

Balanced Budget Act (BBA) of 1997 (P.L.105-33)

Balanced Budget Refinement Act (BBRA) of 1999 (P. L. 106-113)

Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act (BIPA) of 2000 (P.L. 106-554)

Medicare Prescription Drug Improvement and Modernization Act (MMA) of 2003 (P.L. 108-173)  

Deficit Reduction Act (DRA) of 2005 (P.L. 109-171)

Tax Relief and HealthCare Act (TRHCA) of 2006 (P.L. 109-432)  

Medicare, Medicaid, and SCHIP Extension Act (MMSEA) of 2007 (P.L. 110-173)

Medicare Improvements for Patients and Providers Act (MIPPA) of 2008 (P.L. 110-275)

American Recovery and Reinvestment Act (ARRA) of 2009 (P.L. 111-5)

Patient Protection and Affordable Care Act (PPACA) of 2010 (P.L. 111-148) as amended by the Health Care and Education Affordability Reconciliation Act (HCERA) of 2010 (P.L. 111-152)

Medicare and Medicaid Extenders Act of 2010 (P.L. 111-309)

BALANCED BUDGET ACT (BBA) OF 1997 (P.L. 105-33)

Hospitals

Froze payments to PPS hospitals[ii] and PPS-exempt hospitals and units for fiscal year 1998 and limited updates for fiscal years 1999-2002. Established a PPS for inpatient rehabilitation hospitals, effective beginning in fiscal year 2001. Rebased capital payment rates and provided for additional reductions over the fiscal year 1997-2002 period. Reduced the indirect medical education payment from 7.7 percent to 5.5 percent by fiscal year 2001 and reformed direct graduate medical education payments (generally effective on enactment or October 1, 1997).

Skilled Nursing Facilities

Provided for a phase in of a PPS that will pay a Federal per-diem rate for covered SNF services (generally effective July 1, 1998).

Home Health

Provided for the establishment of a PPS for home health services. Provided for a reduction in per-visit cost limits prior to the implementation of the PPS, clarified the definitions of part-time and intermittent care, and provided for a study of the definition of homebound. Provided for the transfer of some home health costs from Part A to Part B (prospective payment effective October 1, 1999, reduction in cost limits effective on enactment, definition clarification effective October 1, 1997, and transfer of costs effective January 1, 1998).

Hospice

Reduced the hospice payment update for each of fiscal years 1998-2002, and clarified the definition of hospice care (generally effective on enactment).

Physicians

Provided for use of a single conversion factor; replaced the volume performance standard with the sustainable growth rate; provided for phased-in implementation of resource-based practice expenses; and permitted use of private contracts under specified conditions (generally effective January 1, 1998).

Hospital Outpatient Departments

Extended reductions in payments for outpatient hospital services paid on the basis of costs through December 1999 and established a PPS for hospital outpatient departments (OPDs) for covered services beginning in 1999 (generally effective on enactment).

Laboratory Services

Froze payments for laboratory services for fiscal years 1998-2002.

Ambulance Services

Provided for establishment of a fee schedule in 2000 for payment for ambulance services (generally effective on enactment).

Preventive Services

Authorized coverage for annual mammograms for all women over 40. Added coverage for screening pelvic exams, prostate cancer screening tests, colorectal cancer screening tests, diabetes self-management training services, and bone mass measurements for certain high-risk persons (generally effective in 1998, except prostate cancer screening effective 2000).

Beneficiary Premiums

Permanently set the Part B premium at 25 percent of program costs and expanded the premium assistance beginning in 1998 available under the Specified Low-Income Medicare Beneficiary (SLMB) Program (effective on enactment).

Supplementary Coverage

Provided for guaranteed issuance of specified Medigap policies without a preexisting condition exclusion for certain continuously enrolled aged individuals (effective July 1, 1998).

Competitive Bidding

Provided for competitive bidding demonstrations for furnishing Part B services (not including physicians services) (effective on enactment).

Commissions

Established a 17-member National Advisory Commission on the Future of Medicare (with appointments to be made by December 1, 1997). Established the Medicare Payment Advisory Commission replacing the Prospective Payment Assessment Commission and the Physician Payment Review Commission (with appointments to be made by September 30, 1997).

Medicare+Choice

Established a new part C of Medicare called Medicare+Choice (M+C). Built on the existing Medicare Risk Contract Program which enabled beneficiaries to enroll, where available, in health maintenance organizations (HMOs) that contracted with the Medicare Program. Expanded, beginning in 1999, the private plan options that could contract with Medicare to other types of managed care organizations (for example, preferred provider organizations and provider-sponsored organizations), private fee-for-service plans, and, on a limited demonstration basis, high deductible plans (called medical savings account plans) offered in conjunction with medical savings accounts (effective on enactment)

BALANCED BUDGET REFINEMENT ACT (BBRA) OF 1999 (INCORPORATED IN CONSOLIDATED APPROPRIATIONS ACT OF 1999, P.L.106-113)

IPPS Hospitals

Froze the indirect medical education adjustment at 6.5 percent through fiscal year 2000, reduced the adjustment to 6.25 percent in fiscal year 2001 and to 5.5 percent in fiscal year 2002 and subsequent years. Froze the reduction in the DSH adjustment to 3 percent in fiscal year 2001; changed the reduction to 4 percent in fiscal year 2002. Changed the methodology for Medicare's direct graduate medical education payments to teaching hospitals to incorporate a national average amount calculated using fiscal year 1997 hospital-specific per-resident amounts. Increased the number of years that would count as an initial period for child neurology residency training programs. Provided for the reclassification of certain counties and areas for the purposes of Medicare reimbursement.

PPS-Exempt Hospitals

Adjusted the labor-related portion of the 75-percent cap to reflect the wage differences in the hospital’s area relative to the national average. Increased the amount of continuous bonus payments to eligible long-term care and psychiatric providers from 1 percent to 1.5 percent for cost reporting periods beginning on or after October 1, 2000 and before September 30, 2001 and to 2 percent for cost reporting periods beginning on or after October 1, 2001 and before September 30, 2002. Required the Secretary to report on a discharge-based PPS for long-term care hospitals which would be implemented in a budget neutral fashion for cost reporting periods beginning on or after October 1, 2002. Required the Secretary to report on a per-diem-based PPS for psychiatric hospitals which would be implemented in a budget neutral fashion for cost reporting periods beginning on or after October 1, 2002. Required the Secretary to base the PPS for inpatient rehabilitation hospitals on discharges and incorporate functional related groups as the basis for payment adjustments.

Rural Hospitals

Permitted reclassification of certain urban hospitals as rural hospitals. Updated existing criteria used to designate outlying rural counties as part of metropolitan statistical areas for the purposes of Medicare’s hospital IPPS. Changed certain requirements pertaining to Medicare's Critical Access Hospital Program. Extended the Medicare dependent hospital classification through fiscal year 2006. Permitted certain sole community hospitals to receive Medicare payments based on their hospital specific fiscal year 1996 costs. Increased the target amount for sole community hospitals by the full market basket amount for discharges occurring in fiscal year 2001.

Skilled Nursing Facilities (SNFs)

Increased per-diem payments by 20 percent for 15 resource utilization groups (RUGs) under the PPS from April 1, 2000, until such time as the Secretary of HHS implements refinements to the RUGs. SNFs were permitted to elect to be paid under the full Federal PPS rate for SNFs (rather than go through the transitions period). Provided a temporary 4 percent increase in the Federal per-diem rate for SNF services for FY 2001 and FY 2002. The increase could not be considered in the base amount used to compute subsequent updates to the Federal per-diem rate. Expanded the list of services excluded from SNF PPS to include certain chemotherapy items and administration services, certain radioisotope services, certain prosthetic devices, and ambulance services furnished in conjunction with renal dialysis treatments, beginning in FY 2001. Any increase in total payments resulting from these exclusions are required to be budget neutral. Allowed SNFs with a 60 percent immunocompromised patient population to be paid temporarily a 50/50 blend of their facility-specific and Federal rates beginning with the first cost reporting period beginning after enactment of BBRA and ending on September 30, 2001.

Home Health

Delayed the 15-percent reduction in home health payments until 12 months after implementation of the PPS and, within 6 months of implementation, required the Secretary to assess the need for any reductions. Increased per-beneficiary limits by 2 percent for agencies whose per-beneficiary limit was below the national median; excluded durable medical equipment (DME) from consolidated billing, and provided agencies an additional $10 per beneficiary to offset costs for collecting outcome and assessment information set (OASIS) data.

Hospice

Increased payment rates otherwise in effect under the hospice PPS for fiscal year 2001 by 0.5 percent and for fiscal year 2002 by 0.75 percent, provided that these increases are not to be included in the base on which subsequent increases will be computed.

Hospital Outpatient Departments

Made seven major changes to Medicare payments under the HOPD OPPS: (1) required the Secretary of the U.S. Department of Health and Human Services (DHHS) to provide payments (within specified limits, and on a budget neutral basis) over and above PPS payments for certain high cost (“outlier”) patients; (2) as a transition to the PPS, for 2-3 years, on a budget neutral basis, required the Secretary of DHHS to provide “passthrough payments” to hospital OPDs above and beyond PPS payments for costs of certain ``current innovative'' and ``new, high cost'' devices, drugs, and biologicals; (3) limited the cost range of items or services that are included in any one PPS category and required the Secretary to review the PPS groups and amounts annually and to update them as necessary; (4) as a transition to the PPS, through 2003, limited the reduction in Medicare payments due to the PPS; (5) provided special payments until 2004 for small, rural hospitals to ensure that they receive no less under the outpatient PPS than they would have received under the prior system and provided the same protection permanently for cancer hospitals; (6) limited beneficiary copayments for outpatient care to no more than the amount of the beneficiary deductible for inpatient care; and (7) required that the pre-PPS payment base used as the budget neutrality benchmark for the PPS include beneficiary coinsurance amounts as paid under the pre-PPS system (i.e., 20 percent of hospital charges).

Physicians

Made technical changes to limit oscillations in the annual update to the conversion factor beginning in 2001 and provided that the sustainable growth rate is calculated on a calendar year basis. Required the Secretary, in determining practice expense relative values, to establish by regulation a process under which the Secretary would accept for use and would use, to the maximum extent practicable and consistent with sound data practices, data collected by outside organizations and entities.

Therapy Services

Suspended for 2 years (2001 and 2002) application of the caps on physical therapy and occupational therapy services.

Immunosuppressive Drugs

Extended the 36-month limit on coverage of immunosuppressive drugs for persons exhausting their coverage in 2000-2004. Set the increase for persons exhausting benefits in 2000 at 8 months, and limited total expenditures to $150 million over the 5 years.

Medicare+Choice

Contained several provisions designed to facilitate the implementation of M+C. Changed the phase in of the new risk adjustment payment methodology based on health status to a blend of 10 percent new health status method/90 percent old demographic method in 2000 and 2001, and not more than 20 percent health status in 2002. Provided for payment of a new entry bonus of 5 percent of the monthly M+C payment rate in the first 12 months and 3 percent in the subsequent 12 months to organizations that offer a plan in a payment area without an M+C plan since 1997, or in an area where all organizations announced withdrawal as of January 1, 2000. Reduced the exclusion period from 5 years to 2 years for organizations seeking to reenter the M+C Program after withdrawing. Allowed organizations to vary premiums, benefits, and cost sharing across individuals enrolled in the plan so long as these are uniform within segments comprising one or more M+C payment areas. Provided for submission of adjusted community rates by July 1 instead of May 1. Provided that the aggregate amount of user fees collected would be based on the number of M+C beneficiaries in plans compared to the total number of beneficiaries. Delayed implementation of the Medicare+Choice Competitive Bidding Demonstration Project.

MEDICARE, MEDICAID, AND SCHIP BENEFITS IMPROVEMENT

AND PROTECTION ACT (BIPA) OF 2000 (INCORPORATED IN THE CONSOLIDATED APPROPRIATIONS ACT OF 2001
PUBLIC LAW 106-554)

IPPS Hospitals

Provided the full market basket update to all hospitals for FY2001. Established that  all hospitals are eligible to receive Disproportionate Share Hospital (DSH) payments when their DSH percentage (threshold amount) exceeds 15 percent. Decreased the scheduled reduction in IPPS hospitals= DSH payments. Established that the cost of new medical technologies should be recognized with a budget neutral payment adjustment in IPPS by October 1, 2001.  Established that starting for FY2001 Medicare Geographic Classification Review Board (MGCRB) decisions, the reclassification of an IPPS hospital for use of a different area=s wage index is effective for 3 fiscal years. Modified teaching hospitals= indirect medical education (IME) percentage adjustment. Established that a teaching hospital=s approved per resident amount for cost reporting periods beginning during FY2002 is not less than 85 percent of the locality adjusted national average per resident amount. Changed a hospital=s payment of the direct costs of approved  nursing and allied health payments to incorporate Medicare managed care enrollees.

IPPS Exempt Hospitals

Established that total payments for inpatient rehabilitation facility (IRF) services in FY2002 would equal the amounts of payments that would have been made if the IRF prospective payment system (PPS) had not been enacted. Permitted an IRF to make a one-time election during the transition period to be paid based on a fully phased-in IRF-PPS rate.  Increased the incentive payments for psychiatric hospitals and distinct part units to 3 percent for cost reporting periods beginning on or after October 1, 2000. Increased the national cap for long-term care hospitals by 2 percent and the target amount by 25 percent for cost reporting periods beginning during FY2001. Required the Secretary to examine the feasibility and impact of basing payment on the existing (or refined) acute hospital diagnosis resource groups (DRGs) and using the most recently available hospital discharge data when developing the PPS for long-term care hospitals.

Rural Providers

Modified the critical access hospital (CAH) program: (1) eliminated liability of Medicare beneficiaries for coinsurance, deductible, copayment, or other cost sharing amount with respect to clinical diagnostic laboratory services furnished as an outpatient CAH service; (2) permitted CAHs to elect outpatient payments based on reasonable costs plus an amount based on 115 percent of Medicare=s fee schedule for professional services; (3) exempted swing beds in CAHs from the SNF prospective payment system; (4) provided for payment to CAHs for the compensation and related costs for on-call emergency room physicians who are not present on the premises, are not otherwise furnishing services, and are not on-call at any other provider or facility; and (5) specified that ambulance services provided by a CAH (or provided by an entity that is owned or operated by a CAH) are paid on a reasonable cost basis if the CAH or entity is the only provider or supplier of ambulance services that is located within a 35-mile drive of the CAH.

Modified the Medicare dependent hospital (MDH) classification so that an otherwise qualifying small rural hospital may be classified as an MDH if at least 60 percent of its days or discharges during a cost reporting period were attributable to Medicare Part A beneficiaries in at least two of the three most recent audited cost reporting periods. Permitted sole community hospitals to elect payment based on hospital specific, updated FY1996 costs if this target amount resulted in higher Medicare payments. Increased payments to providers of ground ambulance services for trips originating in rural areas that are greater than 17 miles and up to 50 miles. Provided permanent authority to physician assistants who owned rural health clinics which lost their designation as such to bill Medicare directly. Revised Medicare reimbursement for telehealth services. Exempted rural health clinics operated by hospitals with less than 50 beds from the per-visit payment method.

Skilled Nursing Facilities

Provided higher payments to SNFs by increasing the update to the full market basket for FY 2001 and the market basket minus 0.5 percentage point for FY 2002 and FY 2003. The nursing component of the federal rate was temporarily increased by 16.66 percent beginning April 1, 2000 through October 1, 2002. BIPA also corrected a payment anomaly created by BBRA by temporarily increasing all the rehabilitation RUGs by 6.7 percent (rather than the 20 percent for 3 specific rehabilitation RUGs). BIPA also limited application of the consolidated billing requirement to Part A-covered stays and to therapy services furnished during Part A and Part B-covered stays. Permitted the Secretary to establish a procedure for geographic reclassification for SNFs under PPS. The provision required the Secretary to collect the data necessary to establish a wage index for SNFs prior to establishing a geographic reclassification process. Required reports on different systems for categorizing patients in SNFs in a manner that accounts for the relative resource utilization of different patient types (by the Secretary); on the adequacy of Medicare payments to SNFs (by the GAO); and on nurse staffing ratios and the impact of the 16.66 percent increase in the nursing component payment rate (by the GAO).

Home Health

Delayed the effective date of the 15 percent reduction on payment limits for home health services an additional year after the implementation of PPS. Also provided the Secretary the authority to adjust for case mix changes that are not the result of real case mix changes. Provided home health agencies with the full market basket update for FY 2001. Provided a temporary 10 percent increase in payment for home health services furnished in a rural area from April 1, 2001 until March 31, 2003. Provided a two-month periodic interim payment after PPS began and subject to repayment with the settlement of the last cost report filed before PPS. Clarified that home health agencies are not prevented from using telehealth services if the services do not substitute for in-person home health services ordered under a plan of care and are not considered a home health visit for eligibility or payment purposes. Prohibited the Secretary from using solely time or distance in determining branch office status and permitted the Secretary to include forms of technology in determining what constitutes supervision for purposes of determining branch office status. Clarified the definition of homebound to permit beneficiaries who require home health services to attend adult day care for therapeutic, psychosocial, or medical treatment and remain eligible for the home health benefit. Also clarifies that any absence for the purpose of attending a religious services is considered infrequent or of short duration.

Hospices

Increased the hospice update by 5.0 percentage points in FY 2001 and required the Secretary to use 1.0043 as the Wichita, Kansas hospice wage index for FY 2000. Clarified that certification of an individual=s terminal illness must be based on the physician=s or the medical director=s clinical judgment regarding the normal course of the individual=s illness. Also required the Secretary to study and report on the appropriateness of the certification process regarding terminal illness and any recommendations for legislation by two years after enactment.

Hospital Outpatient Departments

Limited the amount of a beneficiary=s copayment for a procedure in a hospital outpatient department (OPD) to the hospital inpatient deductible applicable in that year, effective April 1, 2001. Reduced the effective copayment rate for outpatient services to a maximum rate of 57 percent and then gradually reduced the effective coinsurance rate in 5 percentage point intervals from 2002 through 2006 until the maximum rate is 40 percent in 2006, starting in April 2001. Increased the 2001 update to the full rate of increase in the market basket index. Increased the 2001 outpatient PPS payment rates. Authorized the Secretary to adjust the conversion factor in later years to eliminate the effect of coding or classification changes. Modified the procedures and standards by which certain medical devices are categorized and determined eligible for pass-through payments under the PPS. Permitted all qualifying hospitals to be eligible for transitional payments under OPPS. Established that  existing provider-based status designations continue for 2 years beginning October 1, 2000. Established that children=s hospitals would not receive lower Medicare payments under the outpatient PPS system than they would have received under the prior payment system.

Ambulatory Surgical Centers

Delayed implementation of proposed regulatory changes to the ambulatory payment classification system, which are based on 1994 cost data, until January 1, 2002. Established that the these changes would be phased in over 4 years. Required that the revised payment system, based on 1999 (or later) cost data, be implemented January 1, 2003. Established that the phase-in of the revised system and 1994 data ends when the system with 1999 or later data is implemented.

Laboratory Services

Permitted certain independent laboratories to continue to bill Medicare directly for the technical component of pathology services provided to hospital inpatients and hospital outpatients under a grandfather arrangement for a 2-year period (2001-2002).

Preventive Services

Made the following changes to coverage of preventive services: 1) modified existing law to provide Medicare coverage for biennial screening Pap smears and pelvic exams; 2) added Medicare coverage for annual glaucoma screenings for persons determined to be at high risk for glaucoma, individuals with a family history of glaucoma, and individuals with diabetes; 3) authorized coverage for screening colonoscopies for all individuals, not just those at high risk; 4) specified that screening mammographies are paid under the physician fee schedule; and 5) authorized coverage for medical nutrition therapy services for beneficiaries who have diabetes or renal disease.

Immunosuppressive Drugs

Eliminated the time limitations of the coverage of immunosuppressive drugs for beneficiaries who have received a transplant paid for by Medicare.

Ambulance Services

Provided for the full inflation update in 2001. Increased payments (from July 1, 2001 - December 31, 2003) for ground ambulance trips originating in rural areas that are greater than 17 miles and up to 50 miles.

Therapy Services

Extended the moratorium on physical therapy and occupational therapy caps for an additional year through 2002.

Dialysis Services

Increased the composite rate payment for renal dialysis by 2.4 percent for 2001. The Secretary was required to collect data and develop an end-stage renal disease (ESRD) market basket whereby the Secretary could estimate, before the beginning of each year, the percentage increase in costs for the mix of labor and non-labor goods and services included in the composite rate. The Secretary was required to report to Congress on the index together with recommendations on the appropriateness of an annual or periodic update.

Durable Medical Equipment and Prosthetics and Orthotics

Provided full CPI-U update for DME and PO for 2001, but maintained for 2002 the 0 percent update for DME and 1 percent update for PO. Provided coverage for certain prosthetics and custom-fabricated orthotics. Provided coverage for replacement of certain artificial limbs and replacement parts for such limbs.

Persons with Amyotrophic Lateral Sclerosis

Waived the 24-month waiting period for Medicare coverage (otherwise applicable for disabled persons) for persons with amyotrophic lateral sclerosis (ALS).

Medicare Coverage Process

Clarified when and under what circumstances Medicare coverage policy could be challenged. An aggrieved party could file a complaint concerning a national coverage decision which would be reviewed by the Department Appeals Board (DAB) of HHS. An aggrieved party could also file a complaint concerning a local coverage determination.  In this case, the determination would first be reviewed by an administrative law judge. If unsatisfied, complainants could subsequently seek review of such local policy by the DAB. In both cases, a DAB decision would constitute final HHS action and be subject to judicial review. An affected party would be permitted to submit a request to the Secretary to issue a national coverage or non-coverage determination.

Medicare+Choice

Established multiple floor rates, based on population and location. Applied a 3 percent minimum update in 2001 and returned to the current law minimum update of 2 percent thereafter. Increased the M+C payment rates for enrollees with ESRD to reflect the demonstration rate of social health maintenance organizations' ESRD capitation demonstrations. Extended the current risk adjustment methodology until 2003 and beginning in 2004, begin to phase in a new risk adjustment methodology based on data from inpatient hospitals and ambulatory settings. Permitted M+C plans to offer reduced Medicare Part B premiums to their enrollees as part of providing any required additional benefits or reduced cost-sharing. Extended the application of the new entry bonus for M+C plans to include areas for which notification had been provided, as of October 3, 2000, that no plans were available January 1, 2001. Required payment adjustments to M+C plans if a legislative change resulted in significant increased costs. Precluded the Secretary from implementing, other than at the beginning of a calendar year, regulations that impose new, significant regulatory requirements on M+C organizations. Required the Secretary to make decisions, within 10 days, approving or modifying marketing material used by M+C organizations, provided that the organization used model language specified by the Secretary. Allowed an M+C organization offering a plan in an area with more than one local coverage policy to use the local coverage policy for the part of the area that was most beneficial to M+C enrollees (as identified by the Secretary) for all M+C enrollees enrolled in the plan. Expanded the M+C quality assurance programs for M+C plans to include a separate focus on racial and ethnic minorities. Allowed the Secretary to waive or modify requirements that hinder the design of, offering of, or enrollment in certain M+C plans, such as M+C plans under contract between M+C organizations and employers, labor organizations, or trustees of a fund established by employers and/or labor organizations. Extended the period for Medigap enrollment for certain M+C enrollees affected by termination of coverage. Allowed individuals who enroll in an M+C plan after the 10th day of the month to receive coverage beginning on the first day of the next calendar month. Permitted ESRD beneficiaries to enroll in another M+C plan if they lost coverage when their plan terminated its contract or reduced its service area. Required an M+C plan to cover post-hospitalization skilled nursing care through an enrollee’s “home skilled nursing facility” in certain situations. Mandated review of Adjusted Community Rate (ACR) submissions by the HCFA Chief Actuary.

MEDICARE PRESCRIPTION DRUG IMPROVEMENT AND MODERNIZATION ACT (MMA) OF 2003 (P.L. 108-173)

Outpatient Prescription Drug Benefit (Part D)

Established a new optional Medicare prescription drug benefit program (Medicare Part D) effective January 1, 2006. Created within the Federal Supplementary Medical Insurance Trust Fund the Medicare Prescription Drug Account for payments for low-income subsidy payments, subsidy payments, payments to qualified retiree prescription drug plans, and administrative expenses. Required States to make payments to the Account for dual eligibles as provided for under Medicaid.

Directed the Secretary to ensure that each part D eligible individual has available a choice of enrollment in at least two qualifying plans in the area in which the individual resides, at least one of which is a prescription drug plan. Provided that in such case in which such plans are not available the part D eligible individual should be given the opportunity to enroll in a fallback prescription drug plan.

Divided qualified prescription drug coverage into either a standard coverage benefit package or an alternative prescription drug coverage with at least actuarially equivalent benefits. Outlined the standard coverage package, which included, for 2006, a $250 deductible, 25% cost-sharing for drug costs between $250 and the initial coverage limit of $2,250, then no coverage; except that the beneficiary shall have access to negotiated prices, until incurring out-of-pocket costs for covered drugs in a year equal $3,600, with the beneficiary thereafter to pay 5% of the cost of a prescription, or a copayment of $2 for a generic drug and $5 for any other drug, whichever is greater. Included as negotiated prices all discounts, direct or indirect subsidies, rebates, and direct or indirect remunerations. Increases these amounts in future years by the annual percentage increase in average per capita aggregate expenditures for covered drugs for the year ending the previous July. Includes among the out-of-pocket costs counting toward the annual $3,600 limit any costs paid by the part D eligible individual (or by another person such as a family member) under the Medicaid program or under a State pharmaceutical assistance program for which the individual (or other person) is not reimbursed. Provided for premium and cost-sharing subsidies for low-income subsidy-eligible individuals.

Established organizational requirements for prescription drug plan (PDP) sponsors, such as licenses, and required that they enter into a contract with the Secretary to be eligible to receive payments. Provided: (1) for the establishment of risk corridors for each PDP that determines the amount of risk that the PDP shall be exposed to for drug spending, and the resultant adjustment in payment attributable to this risk; and (2) that a PDP sponsor and Medicare Advantage (MA, formerly Medicare+Choice) organization that offers a plan that provides supplemental prescription drug benefits shall be at full financial risk for the provision of such supplemental benefits.

Required PDP sponsors to submit to the Secretary bid and other described information with respect to each drug plan it offers for review by the Secretary for the purpose of conducting negotiations concerning the terms and conditions of the proposed bid submitted and other terms in order for the Secretary to approve or disapprove the plan. In order to promote competition under new Medicare Part D and in carrying out such part, the Secretary may not interfere with the negotiations between drug manufacturers and pharmacies and PDP sponsors and may not require a particular formulary or institute a price structure for the reimbursement of covered part D drugs. Authorized the Secretary to make grants to physicians for the purpose of assisting them to implement electronic prescription drug programs that comply with appropriate standards.

Provided that until the permanent prescription drug benefit program became effective, the Secretary was to establish a program to endorse prescription drug discount card programs in order to provide access to prescription drug discounts through prescription drug card sponsors for discount card eligible individuals. Prohibited, effective January 1, 2006, the selling, issuance, or renewal of Medigap Rx policies for part D enrollees, but permitted the renewal of a Medigap Rx policy that was issued before January 1, 2006. Guaranteed issuance of a substitute Medigap policy for persons, enrolling in part D during the initial part D enrollment period, who at the time of such enrollment were enrolled in and terminated enrollment in a Medigap policy H, I, or J or a pre-standard policy that included drug coverage.

Medicare Advantage

Replaced the Medicare+Choice program with the Medicare Advantage (MA) program. Revised the payment system, requiring all plans to be paid at a rate at least as high as the rate for traditional Medicare fee-for-service plans. Increased minimum percentage increase to national growth rate. Directed the Secretary to establish regional plans to encourage private plans to serve Medicare beneficiaries in 10 to 50 regions, including in rural areas, within the 50 States and the District of Columbia beginning not later than January 1, 2005. Included risk corridors for plans during the first two years of the program in 2006 and 2007; a stabilization fund to encourage plan entry and limit plan withdrawals; a blended benchmark that would allow plan bids to influence the benchmark amount; and network adequacy stabilization payments to assist plans in forming adequate networks, particularly in rural areas. Allowed specialized MA plans for individuals with special needs.

Provided that beginning in 2006, each MA organization is to submit to the Secretary for each MA plan for the service area in which it intends to be offered in the following year the monthly aggregate bid amount for the provision of all items and services under the plan for the type of plan and year involved. Required this monthly bid amount to be compared against respective benchmark amounts for MA local and MA regional plans, with plans that submit bids below the benchmark to be paid their bids, plus 75% of the difference between the benchmark (and the bid to be returned to beneficiaries in the form of additional benefits or reduced premiums). Provided that for plans that bid above the benchmark the government will pay the benchmark amount, and the beneficiary will pay the difference between the benchmark and the bid amount as a premium.

Established that the MA program is a Federal program operated under Federal rules. Provided that State laws do not apply except state licensing laws or State laws relating to plan solvency. Made the Medicare Medical Savings Account (MSA) demonstration program a permanent program option and eliminated the capacity limit and the deadline for enrollment. Allowed a reasonable cost reimbursement contract to operate indefinitely unless two other plans of the same type enter the cost contract's service area. Directed the Secretary to establish a program for the application of comparative cost adjustment in CCA areas, to begin January 1, 2010, and last six years, and to test whether direct competition between private plans and the original Medicare fee-for-service program would enhance competition in Medicare.

Inpatient Hospital Services

Generally, Medicare payments to hospitals were increased. Acute-care hospitals paid under the inpatient prospective payment system (IPPS) that submit data on specified quality indicators were to receive a full update from 2005 through 2007; those hospitals that did not submit such data were to receive an update minus 0.4 percentage points for the year in question. Teaching hospitals received an increase in their indirect medical education payments from 2004 through 2006. A one-time, geographic reclassification process to increase hospitals’ wage index values for three years was established. Low volume hospitals with fewer than 800 discharges that are 25 road miles away from a similar hospital could qualify for up to a 25% increase in its Medicare payments. Redistributed unused resident positions in both direct and indirect graduate medical education. Certain teaching hospitals with high per resident payments would not receive a payment increase from FY2004 through FY2013. For 18 months from the date of enactment, physicians were not to refer Medicare patients to specialty hospitals in which they had an investment interest. This provision did not apply to hospitals that were in operation or under development before November 18, 2003.

Provided that hospitals in Puerto Rico would receive Medicare payments based on a 50-50 split between Federal and local amounts before April 1, 2004. From April 1, 2004 through September 30, 2004, payment would be based on a 62.5 percent Federal amount and a 37.5 percent local amount, and starting October 1, 2004, payment would be based on a 75 percent Federal amount and a 25 percent local amount.

Rural Hospitals

Rural hospitals (and hospitals in small urban areas) received an permanent 1.6% increase to Medicare’s base rate or per discharge payment; the limit on rural and small urban hospitals that qualify for disproportionate share hospital (DSH) payments increased from 5.25% to 12%; hospitals in low wage areas (those with wage index values below 1) received additional payments through a decrease from 71% to 62% in the labor-related portion of the base payment rate; certain small rural hospitals with less than 50 beds (those in newly established scarcity areas) received cost reimbursement for outpatient clinical laboratory tests; rural hospitals with less than 100 beds were protected from payment declines associated with the hospital outpatient prospective payment system (OPPS) for an additional two years; these OPPS hold harmless provisions were extended to sole community hospitals for services from 2004 through 2006. Amended the Balanced Budget Act of 1997 to extend the telemedicine demonstration project by 4 years and to increase total funding for the project. Directed the Secretary to establish a demonstration program to test the feasibility and advisability of the establishment of rural community hospitals to furnish covered inpatient hospital services to Medicare beneficiaries.

Critical Access Hospital (CAH)

Changed reimbursement to inpatient, outpatient, and covered skilled nursing facility services provided by a critical access hospital (CAH) to 101 percent of reasonable costs of services furnished to Medicare beneficiaries. Allowed a CAH to operate up to 25 beds while deleting the requirement that only 15 of the 25 beds be used for acute care at any time. Permitted a CAH to establish a distinct part psychiatric or rehabilitation unit that met the applicable requirements that would otherwise apply to the distinct part if the distinct part were established by a “subsection (d) hospital.” Limited the total number of beds that may be established for a distinct part unit to no more than ten. Allowed certain mileage standards to be waived in the case of a facility that was designated as a CAH before January 1, 2006 and was certified by the State as being a necessary provider of health care services.

Home Health

Increased home health agency payments by the full market basket percentage for the last quarter of 2003 and for the first quarter of 2004. Provided that the update for the remainder of 2004 and for 2005 and 2006 is to be the home health market basket percentage increase minus 0.8 percentage points. Provided that with respect to episodes and visits on or after April 1, 2004, and before April 1, 2005, in the case of home health services furnished in a rural area, the Secretary is required to increase the payment amount otherwise made for such services by five percent. Prevented such temporary additional payment increases from being used in calculating future home health payment amounts.

Ambulatory Surgical Centers

Provided that in FY 2004, starting April 1, 2004, the ambulatory surgery center (ASC) update would be the Consumer Price Index for all urban consumers (U.S. city average) as estimated as of March 31, 2003, minus 3.0 percentage points. Provided that in beginning in fiscal year 2005 to the end of calendar year 2009, the ASC update would be zero percent. Provided that subject to recommendations by GAO, the Secretary is to implement a revised payment system for payment of surgical services furnished in ASCs. Required the new system to be implemented so that it is first effective on or after January 1, 2006, and not later than January 1, 2008.

Physician Services

Made changes with respect to payment for physicians' services to: (1) provide that the update to the conversion factor for 2004 and 2005 would be not be less than 1.5 percent; (2) modify the formula for calculating the sustainable growth rate to provide that the gross domestic product factor would be based on the annual average change over the preceding 10 years (a 10-year rolling average); (3) provide that in calendar years 2004 and 2005, for physician's services provided in Alaska, the Secretary is required to increase geographic practice cost indices to a level of 1.67 for each of the work, practice expense, and malpractice cost indices that would otherwise be less than 1.67; and (4) allow podiatrists, dentists, and optometrists to enter into private contracts with Medicare beneficiaries.

Required the Secretary, beginning in 2004, to make adjustments in practice expense relative value units for certain drug administration services when establishing the physician fee schedule; (2) required the Secretary to use the survey data submitted to the Secretary as of January 1, 2003, by a certain physician specialty organization; and (3) required the Secretary, beginning in 2005, to use supplemental survey data to adjust practice expense relative value units for certain drug administration services in the physician fee schedule. Exempted the adjustments in practice expense relative value units for certain drug administration services from the budget neutrality requirements in 2004. Required a transitional adjustment or additional payment for services furnished from January 1, 2004, through December 31, 2005, to be made for drug administration services. Amended BIPA to provide that direct payment for the technical component of pathology services provided to Medicare beneficiaries who are inpatients or outpatients of acute care hospitals will be made for services furnished during 2005 and 2006.

Rural physicians in newly established scarcity areas receive a 5% increase in Medicare payments in 2005, 2006, and 2007; physicians in certain low-cost areas with geographic adjustment factors below 1 receive payment increases so as to increase this factor to 1, starting in 2004 through 2006.

Part B Drugs

Established the use of an average sales price methodology for payment for drugs and biologicals (except for pneumococcal, influenza, and hepatitis B vaccines and those associated with certain renal dialysis services) that are furnished on or after January 1, 2005. Created an exception to this methodology in the case of a physician who elects to participate in the newly established competition acquisition program.

Directed the Secretary to establish and implement a competitive acquisition program to acquire and pay for competitively biddable drugs and biologicals through the establishment of competitive acquisition areas for the award of contracts. Gives each physician the opportunity annually to elect to obtain drugs and biologicals under the program, rather than the program above using average sales methodology. Directed the Secretary to begin to phase-in the program beginning in 2006.

Durable Medical Equipment

Replaced the prior demonstration projects for competitive acquisition of items and services with a permanent program requiring the Secretary to establish and implement programs under which competitive acquisition areas are established throughout the United States for the furnishing of competitively priced items and services (including durable medical equipment and medical supplies) for which payment is made under Medicare Part B. Required payment under Medicare Part B for competitively priced items and services to be based on bids and requires Medicare payment to be equal to 80 percent of the payment amount determined, with beneficiaries paying the remaining 20 percent (after meeting the Part B deductible). Also, directed the Secretary to conduct a demonstration project on the application of competitive acquisition to clinical diagnostic laboratory tests.

Provided that for durable medical equipment, prosthetic devices, prosthetics and orthotics, the update would be 0 points in 2004 through 2008, and that after 2008 for those items not included in competitive bidding the update would be the consumer price index. Reduced the payment amounts for certain items in 2005 including, oxygen and oxygen equipment, standard wheelchairs, nebulizers, diabetic lancets and testing strips, hospital beds and air mattresses. Limited payments for custom molded shoes with inserts or extra-depth shoes with inserts for an individual with severe diabetic foot disease by the amount that would be paid if they were considered to be a prosthetic or orthotic device. Allowed the Secretary to establish lower payment limits than these amounts if shoes and inserts of an appropriate quality are readily available at lower amounts.

Directed the Secretary to establish and implement quality standards for suppliers of items and services of durable medical equipment, prosthetics and orthotics, and certain other items and services. Required the Secretary to establish standards for clinical conditions for payment for items of durable medical equipment.

Ambulance Services

Revised payments for ambulance services during phase in of payment rates under the fee schedule. For each level of ground service furnished in a year, the portion of the payment amount that is based on the fee schedule is to be the greater of the amount determined under such national fee schedule or a blended rate of the national fee schedule and the regional fee schedule for the region involved, whichever resulted in a larger payment. Increased by two percent the payments for ground ambulance services originating in a rural area or a rural census tract for services furnished on or after July 1, 2004, and before January 1, 2007. Provided that the fee schedule for ambulances in other areas would increase by one percent.

Preventive Services

The Act contains a number of provisions that expand coverage beginning January 1, 2005, including the following: (1) an initial preventive physical examination; (2) cardiovascular screening blood tests; and (3) diabetes screening tests.

Dialysis Services

Increased the composite rate for renal dialysis by 1.6 percent for 2005. Required the Secretary to establish a basic case-mix adjusted prospective payment system for dialysis services to begin for services furnished on January 1, 2005. Required the system to adjust for a limited number of patient characteristics. Provided that payments for separately billed drugs and biologicals (other than erythropoietin) would be 95 percent of the Average Wholesale Price (AWP) for 2004, the acquisition costs in 2005, and, beginning in 2006, for such drugs and biologicals (including erythropoietin), such acquisition cost or the average sales price payment methodology for the drug or biological as the Secretary may specify. Required drugs and biologicals (including erythropoietin) which were separately billed on the day before the enactment of this Act to continue to be separately billed on and after such date.

Therapy Services

 Provided for an additional two-year moratorium on therapy caps for 2004 and 2005.

Laboratory Tests

Provided that there would be no updates to the clinical diagnostic laboratory test fee schedule for 2004 through 2008.

Medicare Funding Warning

Required the Medicare Board of Trustees annual report to include information on: (1) projections of growth of general revenue Medicare spending as a percentage of the total Medicare outlays for the fiscal year and each of the succeeding six fiscal years. Provided that an affirmative determination of excess general revenue funding (defined as general revenue funding exceeding 45 percent of Medicare outlays) for two consecutive annual reports would be treated as a funding warning for Medicare. Amended federal money and finance law to provide in the event that a Medicare funding warning is made, the President is required to submit to Congress, within the 15-day period beginning on the date of the budget submission to Congress for the succeeding year, proposed legislation to respond to such warning. Provided that if during the year in which the warning is made, legislation is enacted which eliminates excess general revenue Medicare funding for the 7-fiscal-year period, then the President is not required to make a legislative proposal. Set out the procedures for House and Senate consideration of the President's legislative proposal.

Part B Premiums

Increased the monthly Part B premiums for higher-income enrollees beginning in 2007. Beneficiaries whose modified adjusted gross income exceed $80,000 and couples filing joint returns whose modified adjusted gross income exceeds $160,000 will be subject to higher premium amounts. The increase is to be calculated on a sliding scale basis and phased-in over a five-year period. The highest category on the sliding scale is for beneficiaries whose modified adjusted gross income is more than $200,000 ($400,000 for a couple filing jointly.

Part B Deductibles

The Medicare Part B deductible remained $100 through 2004, increased to $110 for 2005, and in subsequent years the deductible is to be increased by the same percentage as the Part B premium increase.

Medicare as Secondary Payer

Allowed the Secretary to make a conditional Medicare payment if a primary plan has not made or cannot reasonably be expected to make prompt payment. Required the payment to be contingent on reimbursement by the primary plan to the appropriate Medicare trust fund. Required a primary plan as well as an entity that receives payment from a primary plan to reimburse the Medicare Trust Funds for any payment made by the Secretary if the primary plan was obligated to make payment. Made other changes with regard to Medicare as a secondary payer to address the Secretary's authority to recover payment from any and all responsible entities and to bring action, including the collection of double damages, to recover payment under the Medicare secondary payer provisions.

Program Integrity

Required the Secretary to conduct a demonstration project to demonstrate the use of recovery audit contractors (RACs) under the Medicare Integrity Program in identifying underpayments and overpayments and recouping overpayments under the Medicare program for services for which payment is made under Medicare part A or part B. Required a report to Congress on the demonstration program.

Directed the Secretary to establish a pilot program to identify efficient, effective, and economical procedures for long term care facilities or providers to conduct background checks on prospective direct patient access employees.

Coverage Determinations Process

Required the Secretary to make available to the public the factors considered in making national coverage determinations of whether an item or service is reasonable and necessary. Allows for public comment in national coverage determinations. Directed the Secretary to develop a plan to evaluate new local coverage determinations to determine which should be adopted nationally and to what extent greater consistency can be achieved among local coverage determinations.

Regulatory Reform

Required the Secretary, in consultation with the Director of the Office of Management and Budget, to establish and publish a regular timeline for the publication of final regulations based on the previous publication of a proposed regulation or an interim final regulation. Prohibited the timeframe established from being longer than three years except under exceptional circumstances. Provided that if the Secretary publishes a final regulation that includes a provision that is not a logical outgrowth of a previously published notice of proposed rulemaking or interim final rule, such provision would be treated as a proposed regulation and would not take effect until there is the further opportunity for public comment and a publication of the provision again as a final regulation.

Contracting Reform

Allowed the Secretary to contract competitively with any eligible entity to serve as a Medicare contractor. Eliminated the distinction between Medicare Part A contractors (fiscal intermediaries) and Medicare Part B contractors (carriers), and merged separate authorities for fiscal intermediaries and carriers into a single authority for the new contractor. Authorized these new contractors, called Medicare Administrative Contractors, to assume all the functions of the current fiscal intermediaries and carriers including: determining payments; making payments; providing education and outreach to beneficiaries; communicating with providers and suppliers; and additional functions as necessary.

Directed the Secretary to provide through the toll free telephone number 1-800-MEDICARE for a means by which individuals seeking information about, or assistance with, such programs who phone such toll-free numbers are transferred (without charge) to appropriate entities for the provision of such information or assistance.

Appeals and Recovery

Directed the Commissioner of Social Security and the Secretary to develop a transition plan under which the functions of administrative law judges responsible for hearing cases under the Medicare program are transferred from the responsibility of the Commissioner and Social Security Administration to the Secretary and HHS. Authorized additional appropriations to increase the number of administrative law judges, improve education and training opportunities for administrative law judges, and increase the staff of the Departmental Appeals Board.

Revised the Medicare appeals process to: (1) require providers and suppliers to present all evidence for an appeal at the reconsideration level that is conducted by a qualified independent contractor (QIC) unless good cause precluded the introduction of the evidence; (2) provide for the use of beneficiaries' medical records in QIC reconsiderations; (3) require that notice of decisions or determinations, redeterminations, reconsiderations, and appeals be written in a manner calculated to be understood by a beneficiary and include reasons for the decision or determination or redetermination and the process for further appeal; (4) specify the eligibility requirements for QICs and their reviewer employees that relate to medical and legal expertise, independence, and prohibitions linked to decisions being rendered; and (5) reduce the required number of QICs from 12 to four.

Quality Improvement Demonstrations and Programs

Required the Secretary to provide for the phased-in development, testing, evaluation, and implementation of chronic care improvement programs. Required the programs to be designed to improve clinical quality and beneficiary satisfaction and achieve spending targets with respect to expenditures under Medicare for targeted beneficiaries with one or more threshold conditions.

Required the Secretary to develop a plan to improve quality of care and to reduce the cost of care for chronically ill Medicare beneficiaries within six months after enactment. The plan is to use existing data and identify data gaps, develop research initiatives, and propose intervention demonstration programs to provide better health care for chronically ill Medicare beneficiaries. Required the Secretary to implement the plan no later than two years after enactment.

Directed the Secretary to establish a pay-for-performance demonstration program with physicians to meet the needs of eligible beneficiaries through the adoption and use of health information technology and evidence-based outcomes measures.

Required each MA organization to have an ongoing quality improvement program for improving the quality of care provided to enrollees in each MA plan offered by such organization (other than an MA private fee-for-service plan or an MSA plan) effective for contract years beginning January 1, 2006. Required each MA organization, as part of the quality improvement program, to have a chronic care improvement program.

DEFICIT REDUCTION ACT (DRA) OF 2005 (P.L. 109-171)

Hospitals

Required that hospitals that receive payments under the inpatient prospective payment system (IPPS) that do not submit certain quality measures to the Secretary in FY2007 and each subsequent year would have the applicable market basket percentage reduced by two percentage points. Directed the Secretary to develop a plan to implement a value based purchasing program for Medicare payments for these hospitals beginning with FY2009. Required a hospital to report an individual's secondary diagnosis at admission with the information submitted at the time of discharge in order for payment to be made.

Directed the Secretary to develop a strategic and implementing plan regarding physician investment in specialty hospitals that address issues related to proportionality of investment return, bona fide investments, annual disclosure of investment information, and the provision of Medicaid and charity care by specialty hospitals. Required the Secretary to continue the suspension on enrollment of the new specialty hospitals until a certain time.

Directed the Secretary to establish a qualified gainsharing demonstration program for projects to: (1) test and evaluate relationships between hospitals and physicians to improve the quality and efficiency of care provided to Medicare beneficiaries; and (2) develop improved operational and financial hospital performance with sharing of remuneration as specified in the project.

Inpatient Rehabilitation Hospitals

Specified criterion used to determine whether a hospital or hospital unit is an inpatient rehabilitation facility for Medicare purposes. Established the compliance threshold at: (1) 60% during the 12-month period beginning on July 1, 2006; (2) 65% during the 12-month period beginning on July 1, 2007; and (3) 75% on July 1, 2008 and subsequently.

Rural Hospitals

Extended the Medicare dependent hospital (MDH) status for qualifying rural hospitals through discharges occurring before October 1, 2011. Required an increase in Medicare payments for covered OPD services in calendar 2006-2008 to non-sole community small rural hospitals with no more than 100 beds, if their OPD payments under the OPPS were less than under the prior reimbursement system.

Skilled Nursing Facilities

Reduced payments to skilled nursing facilities for allowable bad debts attributable to Medicare coinsurance by 30 percent for those individuals who are not dually eligible for Medicare and Medicaid. Directed the Secretary to establish a demonstration program for the purposes of understanding costs and outcomes across different post-acute care sites.

Home Health

Revised requirements for home health payments, eliminating the update for home health payments in 2006. Extended through calendar 2006 the prior 5% additional payment for home health episodes or visits furnished in a rural area. Required a home health agency to submit certain quality data to the Secretary annually, or incur a 2% reduction in the fiscal year market basket update. Required MedPAC to report to Congress on a detailed structure of value based payment adjustments for home health services under the Medicare program.

Ambulatory Surgical Centers

Required that ambulatory care surgery centers (ASC) be paid the Medicare OPD fee schedule amount whenever the ASC facility payment (without application of any geographic price differences) is greater than the Medicare OPD fee schedule amount for the same service.

Physicians

Provided that the update to the single conversion factor for physicians' services for 2006 is 0%. Required the Medicare Payment Advisory Commission (MedPAC) to report to Congress on mechanisms that could be used to replace the sustainable growth rate system.

Dialysis Services

Directed the Secretary to increase the amount of the composite rate component of the basic case-mix adjusted PPS for dialysis services furnished on or after January 1, 2006, by 1.6% above the amount of such component for such services furnished on December 31, 2005.

Therapy Services

Directed the Secretary to implement an exceptions process with respect to physical therapy, speech language pathology, and occupational therapy caps for expenses incurred in 2006. Directed the Secretary to implement clinically appropriate code edits with respect to Medicare Part B payments for physical therapy services, occupational therapy services, and speech-language pathology services in order to identify and eliminate improper payments.

Durable Medical Equipment

Required equipment suppliers to transfer the title of durable medical equipment (DME) in the capped rental category to the beneficiary after a thirteen month rental period. Required suppliers of oxygen equipment (including portable oxygen equipment) to transfer the title to the beneficiary after a 36-month rental period. Required payments for oxygen to continue after title transfer in the recognized amount for the period of medical need.

Imaging Services

Provided that the reduced expenditures attributable to the multiple procedure payment reduction for imaging (under the final rule published November 21, 2005) is not to be taken into account for purposes of the budget neutrality calculation for 2006 and 2007. Declared that, for specified imaging services furnished on or after January 1, 2007, if the technical component (including the technical component of a global fee) exceeds the Medicare outpatient department (OPD) fee schedule amount established under the prospective payment system (PPS) for such service, the Secretary is to substitute the Medicare OPD fee schedule amount, adjusted by the relevant geographic adjustment factor.

Part B Premiums

Revised requirements for the reduction in Medicare Part B premium subsidy based on income. Increased the monthly adjustment amounts, and accelerated their phase-in for higher income enrollees, with the provision fully effective in 2009.

Part B Covered Services

Authorized Medicare coverage of ultrasound screening for abdominal aortic aneurysms for an individual meeting certain criteria. Included ultrasound screening for abdominal aortic aneurysms in the package of services provided in the initial preventive service exam offered to new Medicare enrollees.

Part B Deductibles

Made the Part B deductible inapplicable to ultrasound screening for abdominal aortic aneurysm. Made the Part B deductible inapplicable to colorectal cancer screening tests.

Part B Enrollment

Permitted delayed enrollment under Medicare Part B without a delayed enrollment penalty to individuals who: (1) serve as volunteers outside the United States through a program sponsored by a tax-exempt organization that covers at least 12 months; and (2) demonstrate health insurance coverage while serving in the program. Created a special six-month special Part B enrollment period for such individuals, beginning on the first day of the month the individual was no longer in the program.

Medicare Advantage

Provided for the phase-out of risk adjustment budget neutrality over 2007 through 2010 in determining the amount of payments to Medicare Advantage Organizations. Directed the Secretary to establish a process and criteria to award site development grants to qualified Programs of All-inclusive Care for Elderly (PACE) providers that have been approved to serve a rural area.

Program Integrity

Increased Medicare Integrity Program funding amounts by $100 million for FY2006

TAX RELIEF AND HEALTHCARE ACT (TRHCA) OF 2006, (P.L. 109-432) 

Hospitals

Extended through September 30, 2007, the reclassification of subsection (d) hospitals (those that receive payment under the IPPS) wage index would which would have expired on March 31, 2007. Directed the Secretary to include in the proposed rule for FY2009 one or more proposals to revise such wage index adjustment. Extended through June 30, 2007, Medicare reasonable costs payments for certain clinical diagnostic laboratory tests furnished to hospital patients in certain rural areas.

Outpatient Hospitals

Required a 2% reduction in any annual increase (update) to the outpatient department (OPD) services fee schedule for the failure of a subsection (d) hospital to report on quality measures data about hospital outpatient services, or of an ambulatory surgical center to report on such data about its services. Directed the Secretary to develop measures of the quality of care furnished by hospitals in outpatient settings, reflecting consensus among affected parties, including measures set forth by national consensus building entities. Required the Secretary to establish procedures for making quality reporting data available to the public.

Physicians

Provided for an increase in the Medicare physician fee schedule conversion factor for 2007; (2) directed the Secretary to implement a system for the reporting by eligible professionals of data on specified quality measures; (3) provided for transitional bonus incentive payments to eligible professionals for quality reporting in 2007; (4) directed the Secretary to establish a Physician Assistance and Quality Initiative Fund available for physician payment and quality improvement initiatives; and (5) directed the Secretary to provide for the transfer from the Federal Supplementary Medical Insurance Trust Fund of a specified amount to the Centers for Medicare and Medicaid Services Program Management Account for FY2007-FY2009 to implement these measures. Extended through 2007 the mandatory 1.0 floor for the work geographic index adjustment for Medicare payment of physicians' services. Extended through 2007 specified requirements for the treatment of certain physician pathology services under Medicare.

Therapy Services

Extended through 2007 the exceptions process for Medicare therapy caps.

Dialysis Services

Revised the mandatory increase in the amount of the composite rate component of the basic case-mix adjusted system for dialysis services furnished on or after January 1, 2006. Limited the current rate component increase to services furnished before April 1, 2007. Required the current rate component for services furnished after April 1, 2007, to be increased by 1.6% above the amount of the rate component for services furnished on March 31, 2007.

Part B Drugs

Revised the payment process under the competitive acquisition process (CAP) for drugs and biologicals to: (1) require payment for drugs and biologicals to the applicable contractor only upon receipt of a claim for one supplied by the contractor for administration to a beneficiary; and (2) direct the Secretary to establish a post-payment review process to assure that payment is made for a drug or biological only if it has been administered to a beneficiary.

Vaccines

Provided, in the case of a vaccine administered during 2007 that is a covered Part D drug, that the administration of such vaccine shall be paid under Medicare Part B. Required the administration of vaccines to be included in the coverage of Part D drugs beginning in 2008.

Care Coordination

Directed the Secretary to establish a medical home demonstration project to redesign the health care delivery system to provide targeted, accessible, continuous and coordinated, family-centered care to high-need populations. Required such project to provide that: (1) care management fees are paid to persons performing services as personal physicians; and (2) incentive payments are paid to physicians participating in practices that provide services as a medical home.

Program Integrity

Required the Secretary to enter into contracts with recovery audit contractors to identify underpayments and overpayments and recoup overpayments for all services for which payment is made under Medicare Part A or Medicare Part B. Required the Secretary to provide for activities in all states under such a contract by January 1, 2010. Made appropriations to the Health Care Fraud and Abuse Control Account for FY2007-FY2010 and ensuing fiscal years.

MEDICARE, MEDICAID, AND SCHIP EXTENSION ACT (MMSEA) OF 2007 (P.L. 110-173)

Inpatient Hospitals

Extended the expiration date for certain wage index geographic reclassifications and special exceptions through FY2008 (as originally established by Section 508 of the MMA). Directed the Secretary, in the case of certain acute care hospitals, to apply a higher wage index in specified circumstances.

Long Term Care Hospitals

Directed the Secretary to study and report to Congress on the establishment of: (1) a national long-term care hospital (LTCH) facility primarily engaged in providing inpatient services to Medicare beneficiaries whose medically complex conditions require a long hospital stay; and (2) patient criteria for purposes of determining medical necessity, appropriateness of admission, and continued stay at, and discharge from, LTCHs. Prohibited the Secretary from applying, for a three-year period, the 25% patient threshold payment adjustment to freestanding and grandfathered LTCHs. Provided that payment to an applicable LTCH or satellite facility located in a rural area, or co-located with an urban single or MSA dominant hospital, shall not be subject to any payment adjustment if no more than 75% of the hospital's Medicare discharges are admitted from a co-located hospital. (An "MSA-dominant hospital" is one that has discharged more than 25% of the total hospital Medicare discharges in the metropolitan statistical area (MSA) in which the hospital is located.) Provided that payment to an applicable LTCH or satellite facility co-located with another hospital shall not be subject to a specified payment adjustment if no more than 50% of the hospital's Medicare discharges (with certain exceptions) are admitted from a co-located hospital. Prohibited the Secretary from making the one-time prospective adjustment to LTCH prospective payment rates. Directed the Secretary to impose a moratorium for purposes of the Medicare program: (1) on the establishment and classification of a LTCH (with certain exceptions) or satellite facility, other than an existing one; and (2) on an increase of LTCH beds in existing LTCHs or satellite facilities (except for bed increases in an existing LTCH or satellite facility during the moratorium). Provided for prospective payment updates for LTCHs.

Inpatient Rehabilitation Facilities

Froze the payment for inpatient rehabilitation facility (IRF) services in FY2008-FY2009.

Required the Secretary to require a compliance rate no greater than 60% in the classification criterion used under the IRF regulation to determine whether a hospital or hospital unit is an inpatient rehabilitation facility under Medicare. Required the Secretary, for cost reporting periods beginning on or after July 1, 2007, to include patients with comorbidities in the applicable inpatient population. Directed the Secretary to analyze and report to Congress on: (1) Medicare beneficiaries' access to medically necessary rehabilitation services; (2) alternatives or refinements to the 75% rule policy for determining criteria for inpatient rehabilitation hospital and unit designation under the Medicare program; and (3) certain conditions for which individuals are commonly admitted to certain inpatient rehabilitation hospitals.

Physicians

Increased the physician payment updated; revised the Physician Assistance and Quality Initiative Fund, adding limitations on expenditures; and extended through 2009 the physician quality reporting system. Provided for transitional bonus incentive payments for quality reporting in 2008, and waived the payment limitation for 2008 and 2009. Extended through June 30, 2008: (1) the Medicare incentive payment program for physician scarcity areas; and (2) the floor on work geographic adjustment under the Medicare physician fee schedule. Extended the specified treatment of certain physician pathology services under Medicare for the first six months of 2008.

Part B Drugs

Provided for application of alternative volume weighting in computation of average sales price with respect to payment of Medicare Part B multiple source and single source drugs furnished after April 1, 2008. Provided for a special rule for payment, beginning April 1, 2008, of single source drugs or biologicals treated as a multiple source drug.

Laboratory Services

Extended through June 30, 2008, Medicare reasonable costs payments for certain clinical diagnostic laboratory tests furnished to hospital patients in certain rural areas.

Medicare Advantage

Extended until January 1, 2010, the authority of specialized Medicare advantage plans for special needs individuals to restrict enrollment. Delayed until January 1, 2009, any application of the limitation on extension or renewal of Medicare reasonable cost contract plans. Decreased the amount of funding available to the Medicare Advantage Regional Plan Stabilization Fund during 2013.

Medicare as Secondary Payer

Required any entity serving as an insurer or third party administrator for a group health plan, as well as the administrator or fiduciary of any self-insured, self-administered group health plan, to: (1) secure from the plan sponsor and plan participants information necessary to identify situations where the group health plan is or has been a primary plan to the Medicare program; and (2) submit such information to the Secretary. Required an applicable plan to determine: (1) whether a claimant is entitled to Medicare benefits on any basis; and (2) submit specified information about any entitled claimant to the Secretary. Established civil money penalties for enforcement.

Medicare Commission

Made the Medicare Payment Advisory Commission (MedPAC) a congressional agency.

MEDICARE IMPROVEMENTS FOR PATIENTS AND PROVIDERS ACT (MIPPA) OF 2008 (P.L. 110-275)

Hospitals

Extended the authorization for FLEX (Medicare rural hospital flexibility program) grants through FY2010. Included among FLEX grant purposes providing support for critical access hospitals for quality improvement, quality reporting, performance improvements, and benchmarking. Authorized the Secretary to award grants to eligible critical access hospitals to assist them to transition to skilled nursing facilities (SNFs) and assisted living facilities. Permitted substitution of a specified rebased target amount for the amount ordinarily calculated in Medicare payments to sole community hospitals for inpatient hospital services. Extended through FY2009 the reclassification of certain hospitals. Extended and expanded the Medicare hold harmless provision under the prospective payment system for hospital outpatient department (OPD) services for certain hospitals.

Repealed the unique deeming authority under which an institution accredited as a hospital by the Joint Commission on Accreditation of Hospitals shall be deemed to be a hospital eligible for Medicare payments.

Physicians

Increased the update for physicians' payments for the second half of 2008 and for 2009. Extended through calendar 2009 the 1.0 floor on the Medicare work geographic adjustment under the Medicare physician fee schedule. Modified the funding for the physician assistance and quality initiative (PAQI) Fund (originally created by TRHCA), effectively eliminating monies from the fund in 2013 and 2014. As modified by the Supplemental Appropriations Act, 2008 (P.L. 110-252), $4.96 billion was removed from the fund in 2013-2015 and returned to the Medicare Part A and Part B Trust Funds, to be made available for other purposes.

Directed the Secretary to increase by 5% the fee schedule otherwise applicable for specified psychotherapy services during the period from July 1, 2008, through December 31, 2009. Set forth a special 100% fee schedule payment rule for teaching anesthesiologists. Directed the Secretary to make specified adjustments to payments to teaching certified registered nurse anesthetists.

Extended the physician quality reporting system, which had been scheduled to run through 2009, through 2010 and beyond. Established a physician feedback program, with the intent to improve efficiency and to control costs, and required the Secretary to develop a plan to transition to a value-based purchasing program for payment under the Medicare program for covered professional services.

Telehealth Services

Added a hospital-based or critical access hospital-based renal dialysis center, a SNF, and a community mental health center as originating sites for purposes of payment for telehealth services.

Preventive Services

Added “additional preventive services,” including body mass index and end-of-life planning to the list of Medicare-covered preventive services. Waived the deductible for the initial preventive physical exam (also known as “Welcome to Medicare”) and extended the eligibility period for this service from the first six months to the first year of Part B enrollment.

Mental Health Services

Increased the percentage that Medicare generally pays for mental health services from 50% to 80% over the 2010-2014 period; when the provision is fully phased-in in 2014 and outpatient psychiatric services will be paid on the same basis as other Part B services.

Imaging Services

Established an accreditation requirement for advanced diagnostic imaging services. Directed the Secretary to conduct a demonstration project to assess the appropriate use of imaging services.

Clinical Laboratory Services

Repealed the Medicare competitive bidding demonstration project for clinical laboratory services. Specified that the clinical laboratory fee schedule update otherwise slated to occur each year would be reduced each year from 2009 through 2013 by 0.5 percentage points. Provided that clinical diagnostic laboratory services furnished by a critical access hospital are to be treated as being furnished as part of outpatient critical access services without regard to whether the outpatient is physically present in the critical access hospital, or in a skilled SNF or a clinic (including a rural health clinic) operated by such a hospital, at the time the specimen is collected.

Extended through 2009 specified treatment of certain physician pathology services under Medicare.

Therapy Services

Extended the exceptions process for Medicare physical therapy caps through December 31, 2009.

Durable Medical Equipment

Terminated all contracts under the first round of the Durable Medical Equipment, prosthetics, orthotics, and other medical supplies (DMEPOS) competitive acquisition program, set to start July 1, 2008. Required the Secretary to re-bid the first round in 2009 and delayed the second round of bidding until 2011. To pay for the cost of the program delay, the Act required a 9.5% reduction in the fee schedule payments for all round 1 DMEPOS items and services both inside and outside of competitive acquisition areas. Prescribed requirements for application of accreditation in implementing quality standards. Set forth a special rule for the competitive acquisition program for diabetic testing strips.

Ambulance Services

Extended increased Medicare payments for ground ambulance services. Set forth a special payment rule for air ambulance services under the ambulance fee schedule.

Dialysis Services

Revised requirements for payments for renal dialysis services. Reduced the composite rate factor in the updates for renal dialysis services furnished during calendar year 2009, and those furnished on or after January 1, 2010. Directed the Secretary, for dialysis services furnished on or after January 1, 2011, to implement a (bundled) payment system under which a single payment is made to a service provider or a renal dialysis facility for renal dialysis services in lieu of any other payment. Institutes a system of quality incentives for service providers and renal dialysis facilities in the end-stage renal disease (ESRD) program. Directed the Comptroller General to report to Congress on implementation of the ESRD bundling payment system and quality initiative.

Medicare Advantage

Phased out Medicare indirect medical education (IME) payments to private health plans. Revised requirements for certain non-employer Medicare Advantage (MA) private fee-for-service plans (PFFS), as well as MA plans for special needs individuals, including, respectively, among other changes, requirements to assure access to network coverage and care management requirements for all special needs plans. Requires MA PFFS plans and Medicare Savings Account (MSA) plans to have a quality improvement program.

Extended through January 1, 2010, reasonable cost reimbursement contracts the Secretary may enter with organizations whose capacity to bear the risk of potential losses under a risk-sharing contract is in doubt. Placed a limitation on out-of-pocket costs (cost-sharing) for dual eligibles and qualified Medicare beneficiaries enrolled in a specialized MA plan for special needs individuals. Prescribed prohibitions on certain sales and marketing activities under MA plans and prescription drug plans. Reduced the initial funding to the MA Regional Plan Stabilization Fund to one dollar. (When the fund was first established in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (P.L. 108-173, MMA), it had an initial funding level of $10 billion.)

Outpatient Prescription Drug Benefit (Part D)

Includes barbiturates and benzodiazepines as covered part D drugs beginning in 2013.

Requires prompt payment of clean claims by prescription drug plans (PDPs) and MA-prescription drug plans (MA-PDs). Requires interest payments on late claims. Directed the Secretary to identify categories and classes of drugs for which: (1) restricted access would have major or life threatening clinical consequences for individuals who have a disease or disorder treated by them; and (2) there is significant clinical need for such individuals to have access to multiple drugs within a category or class because of unique chemical actions and pharmacological effects of such drugs, such as drugs used in the treatment of cancer. Requires PDP sponsors to include all covered Part D drugs in a formulary in the categories and classes identified by the Secretary, unless the Secretary establishes exceptions according to a specified process. Revised the definition of "medically accepted indication for drugs."

Low-Income Beneficiaries

Increased, effective January 1, 2010, the assets tests applicable under the Medicare Savings program (MSP) to those applicable under the low-income subsidy program (LIS) under the Medicare Part D prescription drug program ($6,290 for an individual, $9,440 for a couple in 2008, updated annually). Eliminated Medicare Part D late enrollment penalties payable by subsidy-eligible individuals. Excluded life insurance policies from being counted as an asset for purposes of determining LIS eligibility.

Demonstrations

Authorized the Secretary to expand the duration and the scope of the Medicare Medical Home Demonstration Project if such expansion is expected to: (1) improve the quality of patient care without increasing spending under the Medicare program; and (2) reduce spending under the Medicare program without reducing the quality of patient care.

Directed the Secretary to establish a demonstration project for development and testing of new community health integration models in certain rural counties for the delivery of acute care, extended care, and other essential health services to Medicare beneficiaries.

Medicare Improvement Fund

Established a Medicare Improvement Fund, available to the Secretary, to make improvements under the original Medicare fee-for-service program under Parts A and B for Medicare beneficiaries. MPPA, together with a provision in the Supplemental Appropriations Act, 2008 (P.L. 110-252), made $2.22 billion from the Parts A and B Trust Funds available for services furnished during FY2014 and an additional $19.9 billion available for fiscal years 2014 through 2017.

Supplementary Insurance

Requires a Medigap policy issuer to make available to an eligible individual at least Medicare supplemental policies classified as "C" or "F."

AMERICAN RECOVERY AND REINVESTMENT ACT (ARRA) OF 2009 (P.L. 111-5)

Health Information Technology: Medicare Incentives

Established specified incentive payments for eligible physicians who adopt and use certified electronic health record (EHR) technology meaningfully, beginning in 2011. Prohibited incentive payments after 2016. Reduced Medicare payments for any eligible professional who is not a meaningful EHR user beginning in 2015, except in certain circumstances where compliance with meaningful EHR requirements would result in a significant hardship. Applied such payment incentives for certain Medicare Advantage (MA) organizations for adoption and meaningful use of such technology.

Established incentive payments for certain eligible hospitals that adopt and meaningfully use certified EHR technology beginning in FY2011. Reduced the market basket update for any eligible hospital that has not adopted a certified system beginning in 2015, except in certain circumstances where compliance with meaningful EHR requirements would result in a significant hardship.

Made appropriations for FY2009-FY2016 for implementation of these provisions. Prohibited taking payment incentives made by this Act into account for computation of monthly Medicare premiums for individuals.

Hospice

Prohibited the Secretary from phasing out or eliminating the budget neutrality adjustment factor in the Medicare hospice wage index before October 1, 2009. Required the Secretary to recompute and apply the final index for FY2009 as if there had been no reduction in the budget neutrality adjustment factor.

Physicians

Made the Medicare Improvement Fund available for increases in the conversion factor in the formula used to determine the payment for physicians' services.

Comparative Effectiveness Research

Established a Federal Coordinating Council for Comparative Effectiveness Research to: (1) assist federal offices and agencies in coordinating the conduct or support of comparative effectiveness and related health services research; and (2) advise the President and Congress on strategies regarding the infrastructure needs of comparative effectiveness research within the federal government, and related matters.

PATIENT PROTECTION AND AFFORDABLE CARE ACT (PPACA) OF 2010 (P.L. 111-148) AS AMENDED BY THE HEALTH CARE AND EDUCATION AFFORDABILITY RECONCILIATION ACT (HCERA) OF 2010 (P.L. 111-152)

Fee-for-Service Provider Payments

Revised certain market basket updates and incorporates a full productivity adjustment into any updates that do not already incorporate such adjustments, including inpatient hospitals, home health providers, nursing homes, hospice providers, inpatient psychiatric facilities, long-term care hospitals, inpatient rehabilitation facilities, and certain Part B providers.

Hospitals

Extended “Section 508” hospital reclassifications until September 30, 2010, with a special rule for FY2010. ("Section 508" refers to Section 508 of the Medicare Modernization Act of 2003, which allows the temporary reclassification of a hospital with a low Medicare area wage index, for reimbursement purposes, to a nearby location with a higher Medicare area wage index, so that the "Section 508 hospital" will receive the higher Medicare reimbursement rate.)

Directed the Secretary to report to Congress a plan to reform the hospital wage index system. Requires application of the budget neutrality requirement associated with the effect of the imputed rural floor on the area wage index under the Balanced Budget Act of 1997 through a uniform national, instead of state-by-state, adjustment to the area hospital wage index floor.

Specified reductions to Medicare disproportionate share (DSH) payments for FY2014 and ensuing fiscal years, especially to acute care hospitals hospitals, to reflect lower uncompensated care costs relative to increases in the number of insured.

Extended for two years: (1) certain payment rules for long-term care hospital services; and (2) a certain moratorium on the establishment of certain hospitals and facilities.

Required the Secretary to determine if the outpatient costs incurred by inpatient prospective payment system-exempt cancer hospitals, including those for drugs and biologicals, with respect to Medicare ambulatory payment classification groups, exceed those costs incurred by other hospitals reimbursed under the outpatient prospective payment system (OPPS). Requires the Secretary, if this is so, to provide for an appropriate OPPS adjustment to reflect such higher costs for services furnished on or after January 1, 2011. Extended through 2010 hold harmless provisions under the prospective payment system for hospital outpatient department services.

Removed the 100-bed limitation for sole community hospitals so all such hospitals receive an 85% increase in the payment difference in 2010. Extended from July 1, 2010, until July 1, 2011, the reasonable cost reimbursement for clinical diagnostic laboratory service for qualifying rural hospitals with under 50 beds.

Extended the Rural Community Hospital Demonstration Program for five additional years. Expanded the maximum number of participating hospitals to 30, and to 20 the number of demonstration states with low population densities. Extended the Medicare-dependent Hospital Program through FY2012. Modified the Medicare inpatient hospital payment adjustment for low-volume hospitals for FY2011-FY2012. Revised requirements for the Demonstration Project on Community Health Integration Models in Certain Rural Counties to allow additional counties as well as physicians to participate. Allowed a critical access hospital to continue to be eligible to receive 101% of reasonable costs for providing: (1) outpatient care regardless of the eligible billing method such hospital uses; and (2) qualifying ambulance services. Extended through FY2012 FLEX grants under the Medicare Rural Hospital Flexibility Program. Allowed the use of grant funding to assist small rural hospitals to participate in delivery system reforms.

Established floors: (1) on the area wage index for hospitals in frontier states; (2) on the area wage adjustment factor for hospital outpatient department services in frontier states; and (3) for the practice expense index for services furnished in frontier states. Directed the Secretary to provide for a specified payment for FY2011 and FY2012 to qualifying acute care hospitals located in counties ranked in the lowest quartile of adjusted Medicare Part A and B spending (adjusted by age, sex, and race).

Graduate Medical Education

Reallocated unused residency positions to qualifying hospitals for primary care residents for purposes of payments to hospitals for graduate medical education costs. Revised provisions related to graduate medical education costs to count the time residents spend in nonprovider settings toward the full-time equivalency if the hospital incurs the costs of the stipends and fringe benefits of such residents during such time. Included toward the determination of full-time equivalency for graduate medical education costs time spent by an intern or resident in an approved medical residency training program in certain nonprovider settings. Directed the Secretary, when a hospital with an approved medical residency program closes, to increase the resident limit for other hospitals based on proximity criteria.

Home Health

Required the Secretary, starting in 2014, to rebase home health payments by an appropriate percentage, among other things, to reflect the number, mix, and level of intensity of home health services in an episode, and the average cost of providing care.

Hospice

Required the Secretary, by January 1, 2011, to begin collecting additional data and information needed to revise payments for hospice care. Directed the Secretary, not earlier than October 1, 2013, to implement, by regulation, budget neutral revisions to the methodology for determining hospice payments for routine home care and other services, which may include per diem payments reflecting changes in resource intensity in providing such care and services during the course of an entire episode of hospice care. Requires the Secretary to impose new requirements on hospice providers participating in Medicare, including requirements for: (1) a hospice physician or nurse practitioner to have a face-to-face encounter with the individual regarding eligibility and recertification; and (2) a medical review of any stays exceeding 180 days, where the number of such cases exceeds a specified percentage of them for all hospice programs.

Directed the Secretary to establish a Medicare Hospice Concurrent Care demonstration program under which Medicare beneficiaries are furnished, during the same period, hospice care and any other Medicare items or services from Medicare funds otherwise paid to such hospice programs.

Physicians

Extended through calendar 2010 the floor on geographic indexing adjustments to the work portion of the physician fee schedule. Revised requirements for calculation of the practice expense portion of the geographic adjustment factor applied in a fee schedule area for services furnished in 2010 or 2011. Extended the physician fee schedule mental health add-on payment provision through December 31, 2010. Directed the Secretary periodically to identify physician services as being potentially misvalued and make appropriate adjustments to the relative values of such services under the Medicare physician fee schedule. Required Medicare incentive payments for: (1) primary care practitioners providing primary care services on or after January 1, 2011, and before January 1, 2016; and (2) general surgeons performing major surgical procedures on or after January 1, 2011, and before January 1, 2016, in a health professional shortage area.

Preventive Services

Provided coverage of personalized prevention plan services, including a health risk assessment, for individuals. Prohibited cost-sharing for such services. Eliminated cost-sharing for certain preventive services recommended by the United States Preventive Services Task Force. Authorized the Secretary to modify Medicare coverage of any preventive service consistent with the recommendations of such Task Force.

Therapy Services

Extended the process allowing exceptions to limitations on medically necessary therapy caps through December 31, 2010.

Ambulance Services

Extended the bonus and increased payments for ground ambulance services until January 1, 2011. Extended the payment of certain urban air ambulance services until January 1, 2011.

Imaging Services

Increased the presumed utilization rate for calculating the payment for advanced imaging equipment other than low-tech imaging such as ultrasound, x-rays and EKGs. Increased the technical component payment "discount" for sequential imaging services on contiguous body parts during the same visit.

Laboratory Services

Directed the Secretary to conduct a demonstration project under Medicare Part B of separate payments for complex diagnostic laboratory tests provided to individuals.

Durable Medical Equipment

Restricted the lump-sum payment option for new or replacement chairs to the complex, rehabilitative power-driven wheelchairs only. Eliminated the lump-sum payment option for all other power-driven wheelchairs. Made the rental payment for power-driven wheelchairs 15% of the purchase price for each of the first three months (instead of 10%), and 6% of the purchase price for each of the remaining 10 months of the rental period (instead of 7.5%).

Required the Secretary to: (1) expand the number of areas to be included in round two of the competitive bidding program from 79 to 100 of the largest metropolitan statistical areas; and (2) use competitively bid prices in all areas by 2016. Exempted certain pharmacies from accreditation requirements until the Secretary develops pharmacy-specific standards.

Medicare Advantage

Phases-in Medicare Advantage (MA) benchmarks that are closer-to or below the level of per capita fee-for-service spending in each county. Adjusted benchmarks based on the quality of each plan, as measured on a 5-star rating system established by the Secretary, with higher benchmark adjustments in certain areas. Adjusted rebates based on plan quality as well, with new rebate levels at between 50% and 70% of the difference between the bid and the benchmark. Required the Secretary to continue to apply a coding intensity adjustment to account for the differences in coding patterns between MA and original Medicare. Repeals the Comparative Cost Adjustment program. Applied a minimum Medical Loss Ration requirement starting in 2014. Restricted cost sharing for certain items and procedures (chemotherapy treatment, renal dialysis, skilled nursing care, and services identified by the Secretary) to no more than that required under original Medicare. Clarifies the Secretary’s authority to deny plan bids. Shifted the annual coordinated election period for MA and Part D plan enrollment to earlier each fall (October 15 through December 7). Prohibited beneficiaries from switching MA plans after the start of the benefit year, but allowed beneficiaries to return to original Medicare during the first 45-days of the calendar year (January 1 – February 15). Eliminated the MA regional plan stabilization fund.

Extended special needs plans (SNPs) authority through December 31, 2013. Extended through January 1, 2013, the length of time reasonable cost plans may continue to operate regardless of any other MA plans serving the area. Repealed the Comparative Cost Adjustment Program created by the Medicare Modernization Act of 2003.

Allowed beneficiaries to disenroll from an MA plan and only return to the traditional Medicare fee-for-service program from January 1 to March 15 of each year. Revised requirements for annual beneficiary election periods.

Medicare Part D Prescription Drug Plans and MA-PD Plans

Directed the Secretary to establish a manufacturer coverage gap discount program. Required prescription drug manufacturers to participate in the Medicare coverage gap discount program for its drugs to be covered under Medicare Part D. Gradually reduces beneficiary cost sharing during the coverage gap. In 2020, Part D enrollees will be responsible for 25% of the cost of both brand name and generic drugs during the coverage gap. Directed the Secretary to provide a one-time $250 rebate in 2010 to all Medicare part D enrollees who enter the Medicare part D coverage gap (also known as the Medicare donut hole). Allowed the costs incurred by AIDS drug assistance programs and by the Indian Health Service (IHS) in providing prescription drugs to count toward the annual out-of-pocket threshold. Authorized the Secretary to identify classes of clinical concern through rulemaking, including anticonvulsants, antidepressants, antineoplastics, antipsychotics, antiretrovirals, and immunosuppressants for the treatment of transplant rejection. Required prescription drug plan sponsors to include all drugs in these classes in their formularies.

Excluded the MA rebate amounts and quality bonus payments from calculation of the regional low-income subsidy benchmark premium for MA monthly prescription drug beneficiaries. Directed the Secretary to permit a prescription drug plan or an MA-PD plan to waive the monthly beneficiary premium for a subsidy eligible individual if the amount of such premium is de minimis. Eliminated cost sharing for certain dual eligible individuals receiving care under a home and community-based waiver program who would otherwise require institutional care.

Medicare Part B and Part D Premiums

Required Part D enrollees who exceed certain income thresholds to pay higher premiums. Maintains the 2010 income thresholds used to establish Part B and Part D premiums for the period of 2011 through 2019. Revised the authority of the IRS to disclose income information to the Social Security Administration for purposes of adjusting the Part B subsidy.

Independent Payment Advisory Board

Established a 15-member Independent Payment Advisory Board. Beginning in 2014, if the growth in Medicare per capita spending exceeds a certain rate, the Board is required to develop and submit detailed proposals to reduce the rate of growth in Medicare spending to the President for Congress to consider. The Board is prohibited from submitting proposals that would ration care, increase revenues or change benefits, eligibility or beneficiary cost-sharing. Established a consumer advisory council to advise the Board on the impact of payment policies under this title on consumers.

Physician Ownership and Other Transparency

Prohibited physician-owned hospitals that do not have a provider agreement by December 31, 2010, to participate in Medicare. Allowed their participation in Medicare under a rural provider and hospital exception to the ownership or investment prohibition if they meet certain requirements addressing conflict of interest, bona fide investments, patient safety issues, and expansion limitations.

Required drug, device, biological and medical supply manufacturers to report to the Secretary transfers of value made to a physician, physician medical practice, a physician group practice, and/or teaching hospital, as well as information on any physician ownership or investment interest in the manufacturer. With respect to the Medicare in-office ancillary exception to the prohibition against physician self-referrals, required a referring physician to inform the patient in writing that the patient may obtain a specified imaging service from a person other than the referring physician, a physician who is a member of the same group practice as the referring physician, or an individual directly supervised by the physician or by another physician in the group practice. Required the referring physician also to provide the patient with a written list of suppliers who furnish such services in the area in which the patient resides.

Nursing Home Transparency

Required SNFs under Medicare and nursing facilities (NFs) under Medicaid to make available, upon request by the Secretary, the HHS Inspector General, the states, or a state long-term care ombudsman, information on ownership of the SNF or NF, including a description of the facility's governing body and organizational structure, as well as information regarding additional disclosable parties. Required SNFs and NFs to operate a compliance and ethics program effective in preventing and detecting criminal, civil, and administrative violations. Required the Secretary to publish on the Nursing Home Compare Medicare website: (1) standardized staffing data; (2) links to state websites regarding state survey and certification programs; (3) the model standardized complaint form; (4) a summary of substantiated complaints; and (5) the number of adjudicated instances of criminal violations by a facility or its employees. Required the Secretary to establish a nationwide program for national and state background checks on prospective direct patient access employees of long-term care facilities and providers.

Program Integrity

Required the Secretary to: (1) establish procedures for screening providers and suppliers participating in Medicare, Medicaid, and CHIP; and (2) determine the level of screening according to the risk of fraud, waste, and abuse with respect to each category of provider or supplier. Required providers and suppliers applying for enrollment or revalidation of enrollment in Medicare, Medicaid, or CHIP to disclose current or previous affiliations with any provider or supplier that: (1) has uncollected debt; (2) has had its payments suspended; (3) has been excluded from participating in a federal health care program; or (4) has had billing privileges revoked. Authorized the Secretary to deny enrollment in a program if these affiliations pose an undue risk to it. Required providers and suppliers to establish a compliance program containing specified core elements. Authorized the Secretary to exclude providers and suppliers participation in any federal health care program for providing false information on any application to enroll or participate. Appropriated additional amounts to the Health Care Fraud and Abuse Control account for FY2011-FY2020. Made additional appropriations to the Medicare Integrity Program for FY2010 and each subsequent year, indexed for inflation.

Required DME or home health services to be ordered by an enrolled Medicare eligible professional or physician. Required a physician, nurse practitioner, clinical nurse specialist, certified nurse-midwife, or physician assistant to have a face-to-face encounter with an individual before issuing a certification for home health services or DME. Authorized the Secretary to exclude from participation in any federal health care program any individual or entity ordering, referring for furnishing, or certifying the need for an item or service that fails to provide adequate documentation to verify payment. Required the Secretary to: (1) withhold payment for a 90-day period after submission of a claim; and (2) conduct enhanced oversight in cases where the Secretary identifies a significant risk of fraud among newly enrolling durable medical equipment (DME) suppliers in a particular category or geographical area.

Applied specified enhanced sanctions and civil monetary penalties to MA or Part D plans that: (1) enroll individuals in an MA or Part D plan without their consent; (2) transfer an individual from one plan to another for the purpose of earning a commission; (3) fail to comply with marketing requirements and CMS guidance; or (4) employ or contract with an individual or entity that commits a violation. Required the Secretary to expand the RAC program to Medicare parts C (Medicare Advantage) and D (Prescription Drug Program).

Medicare Improvement Fund

Eliminated funding in the Medicare Improvement Fund in FY2014.

Medicare Payroll Taxes

Increased after December 31, 2012, the hospital insurance tax rate by .9% for individual taxpayers earning over $200,000 ($250,000 for married couples filing joint tax returns). ) Includes net investment income in the Medicare taxable base and imposes a 3.8% tax on such income, beginning in 2013. Excluded from such tax the net investment income of taxpayers with adjusted gross incomes of less than $200,000 ($250,000 for joint returns). Defined "net investment income" to include interest, dividends, annuities, royalties, rents, passive income, and net gain from the disposition of nonbusiness property.

Medicare Eligibility

Deemed eligible for Medicare coverage certain individuals exposed to environmental health hazards.

Patient-Centered Outcomes Research

Established the Patient-Centered Outcomes Research Institute to identify priorities for, and establish, update, and carry out, a national comparative outcomes research project agenda. Prohibited the Secretary from using evidence and findings from Institute research to make a determination regarding Medicare coverage unless such use is through an iterative and transparent process which includes public comment and considers the effect on subpopulations.

Linking Payment to Quality Outcomes

Directed the Secretary to establish a hospital value-based purchasing program under which value-based incentive payments are made in a fiscal year to hospitals that meet specified performance standards for a certain performance period. Directed the Secretary to establish value-based purchasing demonstration programs for: (1) inpatient critical access hospital services; and (2) hospitals excluded from the program because of insufficient numbers of measures and cases. Subjects hospitals to a penalty adjustment to hospital payments for high rates of hospital acquired conditions. Directed the Secretary to develop a plan to implement value-based purchasing programs for Medicare payments for SNFs, home health agencies, and ambulatory surgical centers. Directed the Secretary to conduct separate pilot programs, for specified kinds of hospitals and hospice programs, to test the implementation of a value-based purchasing program for payments to the provider.

Required long-term care hospitals, inpatient rehabilitation hospitals, and hospices, starting in rate year 2014, to submit data on specified quality measures. Required reduction of the annual update of entities which do not comply. Directs the Secretary, starting FY2014, to establish quality reporting programs for inpatient cancer hospitals exempt from the prospective payment system. Established a quality measure reporting program for psychiatric hospitals beginning in FY2014.

Extended through 2013 the authority for incentive payments under the physician quality reporting system. Prescribed an incentive (penalty) for providers who do not report quality measures satisfactorily, beginning in 2015. Required the Secretary to integrate reporting on quality measures with reporting requirements for the meaningful use of electronic health records. Required specified new types of reports and data analysis under the physician feedback program. Directed the Secretary to establish a value-based payment modifier, under the physician fee schedule, based upon the quality of care furnished compared to cost. Authorized an additional incentive payment under the physician quality reporting system in 2011 through 2014 to eligible professionals who report quality measures to CMS via a qualified Maintenance of Certification program.

Required the Secretary to: (1) develop a Physician Compare website with information on physicians enrolled in the Medicare program and other eligible professionals who participate in the Physician Quality Reporting Initiative; and (2) implement a plan to make information on physician performance public through Physician Compare, particularly quality and patient experience measures.

Development of New Patient Care Models

Created within CMS a Center for Medicare and Medicaid Innovation to test innovative payment and service delivery models to reduce program expenditures while preserving or enhancing the quality of care furnished to individuals.

Directed the Secretary to establish a shared savings program that: (1) promotes accountability for a patient population; (2) coordinates items and services under Medicare Parts A and B; and (3) encourages investment in infrastructure and redesigned care processes for high quality and efficient service delivery.

Directed the Secretary to establish a pilot program for integrated care (involving payment bundling) during an episode of care provided to an applicable beneficiary around a hospitalization in order to improve the coordination, quality, and efficiency of health care services.

Directed the Secretary to conduct a demonstration program to test a payment incentive and service delivery model that utilizes physician and nurse practitioner directed home-based primary care teams designed to reduce expenditures and improve health outcomes in the provision of items and services to applicable beneficiaries.

Required the Secretary to establish a hospital readmissions reduction program involving certain payment adjustments, effective for discharges on or after October 1, 2012, for certain potentially preventable Medicare inpatient hospital readmissions. Directed the Secretary to make available a program for hospitals with a high severity adjusted readmission rate to improve their readmission rates through the use of patient safety organizations.

Directed the Secretary to establish a Community-Based Care Transitions Program which provides funding to eligible entities that furnish improved care transitions services to high-risk Medicare beneficiaries.

Extended certain gainsharing demonstration projects through FY2011.

MEDICARE AND MEDICAID EXTENDERS ACT OF 2010 (P.L. 111-309)

Hospitals

Extended section 508 hospital reclassifications through FY2011. ("Section 508" refers to Section 508 of the Medicare Modernization Act of 2003 [MMA], which allows the temporary reclassification of a hospital with a low Medicare area wage index, for reimbursement purposes, to a nearby location with a higher Medicare area wage index, so that the "Section 508 hospital" will receive the higher Medicare reimbursement rate.)

Extended through 2011 hold harmless provisions under the prospective payment system for hospital outpatient department services. Extended from July 1, 2010, until July 1, 2012, the reasonable cost reimbursement for clinical diagnostic laboratory service for qualifying rural hospitals with under 50 beds.

Graduate Medical Education

Revised specified requirements for reallocating unused residency positions to qualifying hospitals for primary care residents for purposes of payments to hospitals for graduate medical education (GME) costs. Applied such requirements to hospitals which are members of the same affiliated group. Made the reference level for each such hospital the reference resident level with respect to the cost reporting period that results in the smallest difference between such level and the otherwise applicable resident limit.

Physician Services

Set the 2011 update to the single conversion factor in the formula for the physicians' fee schedule at zero (thus freezing the physician payment update for 2011). Required the conversion factor for 2012 and subsequent years to be computed as if the zero update for 2011 had never applied. Extended through calendar 2011 the 1.0 floor on geographic indexing adjustments to the work portion of the physician fee schedule. Extended the physician fee schedule mental health add-on payment provision through December 31, 2011.

Therapy Services

Extended through December 31, 2011, the process allowing exceptions to limitations on medically necessary therapy caps.

Laboratory Services

Extended until January 1, 2012, an exception to a payment rule that permits laboratories to receive direct Medicare reimbursement when providing the technical component of certain physician pathology services that had been outsourced by certain (rural) hospitals.

Ambulance

Extended the bonus and increased payments for ground ambulance services until January 1, 2012. Extended the payment of certain urban air ambulance services until January 1, 2012. Extended increased payments for super rural ambulance services until January 1, 2012.

Medicare Improvement Fund

Decreased the amounts available for expenditure from the Medicare Improvement Fund for FY2015.

Links to Additional Resources

Government Sources

Centers for Medicare & Medicaid Services (CMS)

General Medicare Data

National Health Expenditure Data https://www.cms.gov/NationalHealthExpendData/

Data includes historical and projected spending measures on annual health spending in the U.S. by type of service delivered (hospital care, physician services, nursing home care, etc.) and source of funding for those services (private health insurance, Medicare, Medicaid, out-of-pocket spending, etc.).

CMS Statistics https://www.cms.gov/ResearchGenInfo/02_CMSStatistics.asp

Summary information about health expenditures and the Medicare and Medicaid programs.

CMS Data Compendium https://www.cms.gov/DataCompendium/

Contains historic, current, and projected data on Medicare enrollment and Medicaid recipients, expenditures, and utilization. Data pertaining to budget, administrative and operating costs, individual income, financing, and health care providers and suppliers are also included.

Medicare and Medicaid Statistical Supplement https://www.cms.gov/MedicareMedicaidStatSupp/01_Overview.asp#TopOfPage

The Medicare and Medicaid Statistical Supplement contains approximately 300 pages of statistical information about Medicare, Medicaid, and other Centers for Medicare & Medicaid Services (CMS) programs. The Supplement includes charts and tables showing health expenditures for the entire U.S. population, characteristics of the covered populations, use of services, and expenditures under these programs.

Medicare Trustees Reports https://www.cms.gov/ReportsTrustFunds/

Detailed, lengthy document, containing a substantial amount of data on the past and estimated future financial operations of the Hospital Insurance and Supplementary Medical Insurance Trust Funds.

Medicare Enrollment https://www.cms.gov/MedicareEnrpts/

This site contains various Medicare enrollment tables. It includes national and state enrollment trends, state enrollment by aged, disabled and all, as well as county level enrollment.

Medicare Current Beneficiary Survey (MCBS) https://www.cms.gov/MCBS/

MCBS is a continuous, multipurpose survey of a nationally representative sample of aged, disabled, and institutionalized Medicare beneficiaries. MCBS, which is sponsored by the Centers for Medicare & Medicaid Services (CMS), is the only comprehensive source of information on the health status, health care use and expenditures, health insurance coverage, and socioeconomic and demographic characteristics of the entire spectrum of Medicare beneficiaries. Data collection is administered by Westat, Inc.

Data on Specific Programs and Payment Systems

Fee-for-Service Statistics Utilization statistics for Medicare Parts A and B

https://www.cms.gov/MedicareFeeforSvcPartsAB/

Tables for Medicare utilization for Part A and Medicare utilization for Part B are included. Information included for hospitals, home health agencies, hospice, skilled nursing facilities, physician and other Part B services.

Prospective Payment Systems https://www.cms.gov/ProspMedicareFeeSvcPmtGen/

A Prospective Payment System (PPS) is a method of reimbursement in which Medicare payment is made based on a predetermined, fixed amount. CMS uses separate PPSs for reimbursement to acute inpatient hospitals, home health agencies, hospice, hospital outpatient, inpatient psychiatric facilities, inpatient rehabilitation facilities, long-term care hospitals, and skilled nursing facilities. Links to information about each specific PPS.

Fee Schedules https://www.cms.gov/FeeScheduleGenInfo/

Listing of fee maximums used to reimburse a physician and/or other providers on a fee-for-service basis. CMS develops fee schedules for physicians, ambulance services, clinical laboratory services, and durable medical equipment, prosthetics, orthotics, and supplies. Links to information about each specific fee schedule.

Physician Fee Schedule https://www.cms.gov/PhysicianFeeSched/01_Overview.asp

Contains information on payments under the physician fee schedule and related information concerning the development of the payment amounts.

Medicare Advantage and Medicare Part D Contract and Enrollment Data https://www.cms.gov/MCRAdvPartDEnrolData/

The Medicare Advantage (MA) / Part D Contract and Enrollment Data section is a centralized repository for publicly available data on contracts and plans, enrollment numbers, service area data, and contact information for MA, Prescription Drug Plan (PDP), cost, PACE, and demonstration organizations. Data is broken down by state, county and contract. Also provides annual Medicare Health Plan Employer Data and Information Set (HEDIS) performance measures.

Medicare Advantage Rates and Statistics https://www.cms.gov/MedicareAdvtgSpecRateStats/01_Overview.asp

Contains information on MA payment methodology, rate calculation data,

benchmarks, risk adjustment, and fee-for-service expenditure data by county.

Medicare Prescription Drug Benefit https://www.cms.gov/PrescriptionDrugCovGenIn/

Includes links to data on drug plan availability, premium information, Part D enrollment, and coverage gap spending

Congressional Budget Office (CBO)

March 2011 Medicare Baseline

https://www.cbo.gov/budget/factsheets/2011b/medicare.pdf

Collection of Health Care Publications including cost-estimates (scores) on recent legislation

https://www.cbo.gov/publications/collections/health.cfm

2011 Long-Term Budget Outlook including forecasts of Medicare spending and its relationship to total federal spending and GDP https://www.cbo.gov/doc.cfm?index=12212

 Medicare Payment Advisory Commission (MedPAC)

2011 Medicare Databook

https://www.medpac.gov/documents/Jun11DataBookEntireReport.pdf

MedPAC June 2011 Report to Congress

https://www.medpac.gov/documents/Jun11_EntireReport.pdf

MedPAC March 2011 Report to Congress

https://www.medpac.gov/documents/Mar11_EntireReport.pdf

Non-Government Sources

Kaiser Family Foundation State Health Facts: Medicare Data

https://www.statehealthfacts.org/comparecat.jsp?cat=6&rgn=6&rgn=1

National and state level data on enrollment, demographics, spending, and utilization.

Kaiser Family Foundation Health and Prescription Drug Plan Tracker

https://healthplantracker.kff.org/

National, state, regional and county level data on Medicare Advantage and Prescription Drug Plan enrollment, availability, payments, premiums, and benefits.

Introduction

The Supplemental Security Income (SSI) program is a means tested, federally-administered income assistance program authorized by Title XVI of the Social Security Act. Established in 1972 (Public Law 92-603) with benefits first paid in 1974, SSI provides monthly cash payments in accordance with uniform, nationwide eligibility requirements to needy aged, blind, and disabled persons. At the end of June 2011, there were 8,056,968 SSI recipients receiving over 4.3 billion dollars in monthly benefit payments.

The SSI program replaced the federal-state programs of Old Age Assistance and Aid to the Blind established by the original Social Security Act of 1935 as well as the program of Aid to the Permanently and Totally Disabled established by the Social Security Amendments of 1950. Under the former programs, federal matching funds were offered to the states to enable them to give cash relief, “as far as practicable” in each state, to eligible persons whom the states deemed needy. The states set benefit levels and administered these programs. The federal-state adult assistance programs continue to operate in Guam, Puerto Rico, and the Virgin Islands. Under the Covenant to Establish a Commonwealth of the Northern Mariana Islands, enacted as Public Law 94-241 on March 24, 1976, the Northern Mariana Islands is the only jurisdiction outside the 50 states and the District of Columbia in which residents are eligible for the SSI Program.

The Congress intended the new SSI program to be more than just a federal version of the former state adult assistance programs which it replaced. In describing the new program, the report of the Committee on Finance stated: “The Committee bill would make a major departure from the traditional concept of public assistance as it now applies to the aged, the blind, and the disabled. Building on the present Social Security program, it would create a new federal program administered by the Social Security Administration (SSA), designed to provide a positive assurance that the nation's aged, blind, and disabled people would no longer have to subsist on below poverty level incomes” (Senate Report No. 92-1230, p. 384; U.S. Senate, Committee on Finance, Sept. 26, 1972).

The SSI program was envisioned as a basic national income maintenance system for the aged, blind, and disabled which would differ from the state programs it replaced in a number of ways. It would be administered by SSA in a manner as comparable as possible to the way in which benefits were administered under the Social Security Program. While it was understood that modifications would be necessary to make SSA's systems work for the new program, SSI was seen as an add-on rather than a new system. SSA had a longstanding reputation for dealing with the public on a fair and humane basis, but with scrupulous regard for the requirements of law. Thus, it was expected that both recipients and taxpayers would be pleased with the outcome.

Under the former adult assistance programs the amount of assistance could vary from person to person according to an evaluation of the individual's needs. The SSI program, by contrast, represented a “flat grant” approach in which there would be a uniform federal income support level.

In contrast to the former state programs with their provisions for liens against property and relative support requirements, the SSI program was intended to have minimal barriers to eligibility other than a lack of income and resources. Even here, the new SSI program incorporated more generous provisions for disregarding income, particularly earned income, than was provided under the Old Age Assistance Program.

It should be noted that even though SSA administers the SSI program, SSI is not the same as Social Security. The SSI program is funded by general revenues of the U.S. Treasury - personal income taxes, corporate taxes, and other taxes. Social Security benefits are funded by the Social Security taxes paid by workers, employers, and self-employed persons. The programs also differ in other ways such as the conditions of eligibility and the method of determining payments. In addition, states have the option of supplementing the basic federal SSI payment. In some cases, state supplementary payments are administered by the state instead of SSA.

Chapter Overview

This chapter of the Green Book include a series of Congressional Research Service (CRS) Reports organized under the following general headings:

• Supplemental Security Income: Program Basics;
• Supplemental Security Income: Additional Program Provisions; and
• Social Security Administration: Program Administration and Administrative Funding.

Readers should consult the reports listed under each of these headings for information and data related to these topics. A Tables and Figures section provides a list of the tables and figures included in the CRS reports, and includes additional tables and figures related to SSI, followed by a Legislative History and Links to Additional Resources.

Congressional Research Service (CRS) Reports

The House Ways and Means Committee is making available selected reports by the Congressional Research Service (CRS) for inclusion in its 2011 Green Book website. CRS works exclusively for the United States Congress, providing policy and legal analysis to Committees and Members of both the House and Senate, regardless of party affiliation. Certain CRS reports with cover dates earlier than 2011 are included here because their content remains current.

Supplemental Security Income: Program Basics

94-486: Supplemental Security Income (SSI)

RL32279: Primer on Disability Benefits: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI)

Supplemental Security Income: Additional Program Provisions

RS20294: Supplemental Security Income (SSI): Beneficiary Income/Resource Limits and Accounts Exempt from Benefit Determinations

RS22512: Supplemental Security Income (SSI): Accounts Not Counted As Resources

RL33855: Child Welfare: Social Security and Supplemental Security Income (SSI) Benefits for Children in Foster Care

Social Security Administration: Program Administration and Administrative Funding

R41716: Social Security Administration (SSA): Budget Issues

94-803: Social Security: Cost-of-Living Adjustment

R40207: Social Security Administration: Workload and Related Issues

Tables and Figures in CRS Reports

The following tables and figures related to SSI can be found in the CRS reports section of this Green Book chapter.

RL32279: Primer on Disability Benefits: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI)

Table 1. Reasons for SSDI Worker Benefit Termination, 2009

RL33855: Child Welfare: Social Security and Supplemental Security Income (SSI) Benefits for Children in Foster Care

Table 1. All Children Receiving Social Security and SSI Benefits, March 2010

Table 2. Types of Representative Payees for Children in the SSI Program, December 2009

Table 3. Social Security (SSI and Title II) Benefits as Funding Stream for Child Welfare Spending, FY2006

R41716: Social Security Administration (SSA): Budget Issues

Figure 1. Projected Spending on SSA Programs

Figure 2. SSA Total LAE Budget Authority

Figure 3. New Claims for Social Security and SSI Benefits

Figure 4. SSA Hearings Pending at the End of Each Fiscal Year

Figure 5. SSA Program Integrity Activities

Figure 6. SSA Administrative Budget Requests and Appropriations

94-803: Social Security: Cost-of-Living Adjustment

Table 1. Computation of a Potential Social Security COLA, January 2011

Table 2. History of Social Security Benefit Increases

R40207: Social Security Administration: Workload and Related Issues

Figure 1. Social Security (OASDI) Claims Received, FY2000-FY2009

Figure 2. SSI Claims Received, FY2000-FY2009

Figure 3. SSA Full-Time Equivalent Staff, FY1998-FY2009

Figure 4. Average SSA Productivity

Figure 5. State Disability Determination Service (DDS) Staff, FY2005-FY2010

Figure 6. SSA Administrative Law Judges (ALJs), FY1996-FY2008

Figure 7. SSA Field Offices, FY2000-FY2009

Figure 8. Initial Disability Claims Pending, FY2007-FY2009

Figure 9. Average Processing Time for Initial Disability Claims, FY2000-FY2009

Figure 10. Hearings Pending, FY2000-FY2009

Figure 11. Average Processing Time for Hearings, FY2000-FY2009

Figure 12. Continuing Disability Reviews Processed, FY2004-FY2008

Figure 13. SSI Non-Disability Redeterminations Processed, FY1999-FY2009

Figure 14. SSI and OASDI Overpayments, FY2004-FY2008

Figure 15. SSI and OASDI Underpayment, FY2004-FY2008

Additional Tables Related to Supplemental Security Income

The following additional tables and figures appear in this section of the Green Book chapter on SSI.

Table 3-1. Maximum Income for Eligibility for Federal SSI Benefits, 2011

Table 3-2. Percentage and Total Number of Persons Receiving Federally-Administered Payments by Living Arrangement and Eligibility Category, December 2009

Table 3-3. Comparison of Federal Benefits to Poverty Guidelines for Eligible Individuals Receiving SSI, Selected Years 1975-2010

Table 3-4. Comparison of Federal Benefits to Poverty Guidelines for Eligible Couples Receiving SSI, Selected Years 1975-2010

Table 3-5. Number of Persons Receiving Federally-Administered Payments, Total Amount, and Average Monthly Amount by Source of Payments and Eligibility Category, December 2009
Table 3-6. Number of Recipients of Federally-Administered SSI Payments and Total Payments by State and Eligibility Category, December 2009

Table 3-7. SSI Recipients Under Age 65 by Diagnostic Group, December 2009

Table 3-8. Representative Payee Status of SSI Recipients by Age Group, December 2009

Table 3-9. SSI Recipients Receiving Federally-Administered Payments and Other Income by Type of Income and Age Group, December 2009

Table 3-10. Selected Characteristics of SSI Aged Beneficiaries Receiving Federally-Administered Payments, 2009

Table 3-11. Recipients of Federally-Administered Payments as a Percent of Total Recipients by Age Group, Selected Years 1975-2009

Table 3-12. Total Federally-Administered SSI Payments by State, 2009

Table 3-13. Total Federally-Administered SSI Payments, Selected Years 1974-2009

Legislative History

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104th CONGRESS

Public Law 104-121, the Contract with America Advancement Act of 1996

Public Law 104-121, the Contract with America Advancement Act of 1996, among other changes, prohibits disability insurance (DI) and Supplemental Security Income (SSI) eligibility to individuals whose drug addiction or alcoholism (DAA) is a contributing factor material to the finding of disability. This provision applies to individuals who file for benefits on or after the date of enactment and to individuals whose claims are finally adjudicated on or after the date of enactment. This provision also applies to current beneficiaries on January 1, 1997. It stipulates that SSA must: (1) notify current DAA beneficiaries of the new provisions within 90 days of enactment; and (2) complete new medical determinations by January 1, 1997 for affected current beneficiaries who request such a determination within 120 days after the date of enactment.

Public Law 104-121 applies representative payee requirements to DI or SSI beneficiaries who have a DAA condition, as determined by the Commissioner, and who are incapable of managing benefits. The Social Security Administration (SSA) would refer these individuals to the appropriate State agency for treatment. The representative payee and referral for treatment provisions would apply to applications filed after the third month following the month of enactment. In addition, the new law retains the $50 fee that representatives can collect for beneficiaries who have a DAA condition. The legislation also authorized an appropriation of $50 million for each of fiscal years 1997 and 1998 to carry out activities relating to the treatment of drug and alcohol abuse under the Public Health Service Act.

Public Law 104-121 also authorized additional funds to SSA for fiscal years 1996-2002 for the purpose of conducting continuing disability reviews (CDRs) and Supplemental Security Income CDRs and SSI redeterminations. This new funding level was achieved by increasing the amount of funds available for appropriations under the discretionary spending cap. The Commissioner of Social Security was required to ensure that the funds made available pursuant to this provision are used, to the greatest extent practicable, to maximize the combined savings to the Old Age, Survivors, and Disability Insurance (OASDI), SSI, Medicare, and Medicaid Programs. Moreover, the Commissioner is required to report annually, for fiscal years 1996-2002, to Congress on the amount of money spent on CDRs, the number of reviews conducted by category, the disposition of such reviews by program, and the estimated savings over the short, medium, and long term for the OASDI, SSI, Medicare, and Medicaid Programs from CDRs which result in cessations, and the estimated present value of such savings.

Public Law 104-193, the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996

Public Law 104-193, the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996, signed on August 22, 1996, made several major changes in SSI law. These include:

Limited Eligibility of Noncitizens for SSI Benefits – PRWORA prohibits SSI eligibility for all noncitizens except: refugees, asylees, and noncitizens whose deportation has been withheld (limited to their first 5 years of residence); certain active duty Armed Forces personnel, honorably discharged veterans, and their spouses and dependent children; and lawful permanent residents who have worked for 10 years or more. For purposes of the exception based on work, children are credited with all quarters worked by their parents, and married individuals, including widows, are credited with work performed by spouses during their marriage. However, after December 31, 1996, quarters of work during which an individual received Federal public assistance are not countable toward this exception.

Deeming of Sponsors' Incomes and Resources – For purposes of eligibility for sponsored noncitizens admitted under new, legally enforceable affidavits of support, PRWORA deems all of the sponsors' and sponsors' spouses' incomes and resources to the noncitizen until citizenship. However, deeming is not required for lawful permanent residents who have worked for 10 or more years not counting quarters of work after 1996 during which the individual received Federal public assistance, or for children and spouses of workers credited with work performed by them.

Requirements for Affidavits of Support for Sponsorship – Affidavits of support are made legally enforceable against the sponsor until the noncitizen becomes a U.S. citizen. The agency that provides assistance to a noncitizen must request reimbursement from the sponsor for assistance provided.

SSI Eligibility Based on Childhood Disability – The comparable severity standard is eliminated and replaced by the standard that a child is considered disabled if he or she has a medically-determinable impairment which results in "marked and severe" functional limitations and 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. The Social Security Administration was directed to eliminate references to maladaptive behavior in the domain of personal/behavioral function in the listing of impairments for children and to discontinue the use of individualized functional assessments in evaluating a child's disability. SSA also was required to redetermine, using the new criteria and by no later than August 22, 1997, the eligibility of recipients who may be affected by the new criteria. Benefits for those recipients who do not meet the new criteria would end on or after the later of July 1, 1997, or the date of the redetermination.

CDRs must be conducted once every 3 years for child recipients with nonpermanent impairments, and not later than 12 months after birth for low birth-weight babies. Representative payees must present evidence to SSA that the recipient is receiving treatment that is medically necessary and available, unless SSA determines that such treatment would be inappropriate or unnecessary. An eligibility redetermination, using the adult initial eligibility criteria, is required within 1 year after child recipients turn 18.

Funding – PRWORA authorized the appropriation of an additional $150 million in fiscal year 1997 and $100 million in fiscal year 1998 for the costs of performing CDRs and redeterminations.

Prisoner Reporting – The law provided for incentive payments to State and local penal institutions that furnish identifying information to SSA which results in suspension of SSI benefits to prisoners.

Modifying the Effective Date of Applications – An individual's application for SSI benefits would be effective on the first day of the month following the date on which the application is filed, or on which the individual first becomes eligible, whichever is later. This change effectively eliminated prorated payments for the month of application, while continuing emergency advance payments and subsequent repayments over several months in certain cases.

Reduction in Cash Benefits Payable to Institutionalized Individuals whose Medical Costs are Covered by Private Insurance – PRWORA limited to not more than $30 a month, cash benefits payable to children who are in an institution receiving medical care covered by private insurance.

Installment Payments of Large Past Due SSI Payments – A schedule for paying large retroactive SSI benefit amounts at 6 month intervals was established.

Dedicated Savings Accounts – PRWORA required the establishment of a bank account to maintain large retroactive SSI benefits, to be used for education or job skill training, special equipment, medical rehabilitation, or other appropriate items or services related to the impairment of the child.

Public Law 104-208, the Omnibus Consolidated Appropriations Act, 1997

Public Law 104-208, the Omnibus Consolidated Appropriations Act, 1997, included the Illegal Immigration Reform and Immigrant Responsibility Act of 1996, which amended Public Law 104-193 with regard to noncitizens' eligibility for SSI benefits. Noncitizen individuals and their children who are battered or abused were added to the list of “qualified aliens.” Sponsorship affidavits of support were made legally binding and sponsor to immigrant deeming of income and resources in the SSI Program continued until noncitizens become U.S. citizens or they, their spouses, or parents work 40 quarters in the United States. The law also provided additional exceptions to sponsor to immigrant deeming for indigent noncitizens whose sponsors do not provide them with income sufficient to obtain food and shelter and for battered individuals and their children.

In addition, Public Law 104-208 required several reports to Congress. The Commissioner of Social Security is required to report the aggregate number of Social Security numbers issued to noncitizens not authorized to work but under which earnings were reported and the extent to which Social Security numbers and Social Security cards are used by noncitizens for fraudulent purposes. These two reports were due no later than 3 months after the end of each fiscal year, and within 1 year after the date of enactment, respectively. The GAO was required to report to Congress and the Department of Justice within 180 days after the date of enactment on the extent to which means tested benefits are being paid to noncitizens acting as representative payees who are not “qualified aliens.”

105th CONGRESS

Public Law 105-18, 1997 Emergency Supplemental Appropriations Act for Recovery from Natural Disasters, and for Overseas Peacekeeping Efforts, Including Those in Bosnia

Public Law 105-18 provided a one month extension for noncitizens who were receiving benefits on the date of enactment of Public Law 104-193, August 22, 1996, and who would not continue to be eligible under the noncitizen restrictions in that law by changing the date by which SSI redeterminations of eligibility had to be completed from August 22, 1997 to September 30, 1997.

Public Law 105-33, the Balanced Budget Act of 1997

Public Law 105-33, the Balanced Budget Act of 1997, made several major changes in SSI. These include:

SSI Eligibility for Aliens Receiving SSI on August 22, 1996 and Certain Disabled Legal Aliens – Public Law 105-33 provided that, despite restrictions in the 1996 welfare reform law, noncitizens lawfully residing in the United States who were receiving SSI on August 22, 1996, remain eligible for SSI. In addition, noncitizens lawfully residing in the United States on August 22, 1996, are eligible for SSI if they become disabled in the future. The law also provided that members of Native American Indian tribes who are noncitizens are not affected by the SSI restrictions in Public Law 104-193. In addition, individuals who received SSI prior to January 1, 1979, continue to be eligible for benefits if the Commissioner of Social Security lacks clear and convincing evidence that such individuals are noncitizens ineligible for benefits.

Extension of Eligibility Period for Refugees and Certain Other Qualified Aliens from 5 to 7 Years for SSI and Medicaid; Status of Cuban/Haitian Entrants and Certain Amerasians – Public Law 105-33 extended from 5 years to 7 years the initial eligibility period for SSI and Medicaid for refugees, asylees, and noncitizens who have had their deportations withheld. In addition, Cuban and Haitian entrants and Amerasian immigrants are added to the categories of noncitizens who are considered "qualified aliens." These groups are eligible for SSI for their initial 7 years, and are exempt from the 5 year eligibility ban on noncitizens entering the United States after August 22, 1996.

Exceptions for Certain Indians from Noncitizen Limitations on Eligibility for Supplemental Security Income and Medicaid Benefits – Public Law 105-33 exempted noncitizen members of federally recognized Indian tribes or noncitizen Native Americans from the SSI and Medicaid restrictions in the 1996 act.

Exemption from Noncitizen Restrictions on SSI Program Participation by Certain Recipients Eligible on the Basis of Very Old Applications – Public Law 105-33 exempted certain individuals who have been on SSI rolls since before January 1, 1979, from the noncitizen restrictions in the 1996 act.

Derivative Eligibility for Noncitizens for Medicaid and Food Stamp Benefits – Public Law 105-33 provided that noncitizens who were otherwise ineligible for Medicaid under the 1996 act may be eligible for Medicaid if they receive SSI benefits and if the State's Medicaid plan provides Medicaid eligibility for SSI recipients. The legislation also clarified that noncitizens who are otherwise ineligible under the 1996 act for food stamps would not be made eligible for food stamps because they receive SSI benefits.

Fees for Federal Administration of State Supplementary Payments – Public Law 105-33 increased fees for SSA's administering State supplementary payments, with added collections available for SSA administrative purposes.

Timing of Delivery of October 1, 2000, SSI Benefit Payments – In order to meet budget targets, Public Law 105-33 provided that the October 2000 SSI check be paid on October 2, which is a Monday, rather than on the last Friday in September.

Medicaid Coverage for Certain Workers and Children – Public Law 105-33 gave the States the option of permitting individuals who had been receiving SSI disability benefits, but are working, to buy into Medicaid if their family income is less than 250 percent of poverty. In addition, States were required to continue Medicaid coverage for children who were receiving SSI disability benefits as of August 22, 1996, but whose eligibility would end because they do not meet the new, more strict SSI childhood disability eligibility criteria established under PWWORA.

Technical Amendments to the 1996 Welfare Reform Law – The legislation made a number of technical clarifications with regard to the disabled children's redetermination and continuing disability review requirements. Technical changes also clarified the meaning of the term "final adjudication" with regard to SSI disability cases based on drug addiction or alcoholism and expanded the applicability of provisions in Public Law 104-121 that required treatment referrals and authorization of fees for organizations serving as representative payees for SSI beneficiaries who have a DAA condition.

Technical corrections also were made that clarified when the reporting incentives involving prisoners apply and that allow SSA to charge a fee as a condition of processing requests for information by law enforcement authorities regarding SSI recipients who are fugitive felons and probation or parole violators. Clarifications were made concerning SSI dedicated savings account funds and terminology relating to medical treatment facilities and the applicability of the $30 SSI payment limit were updated. Noncitizens technical correction provisions included adding battered parents to the definition of “qualified alien” and the exemptions from sponsor to immigrant deeming, clarifying that veterans’ widows may be eligible for benefits, and authorizing SSA to disclose noncitizens' quarters of coverage information to other governmental agencies for the purpose of carrying out the noncitizen restriction provisions.

Public Law 105-306, Noncitizen Benefit Clarification and Other Technical Amendments Act of 1998

Public Law 105-306, the Noncitizen Benefit Clarification and Other Technical Amendments Act of 1998, provided continuing eligibility for SSI for nonqualified aliens who were receiving benefits on August 22, 1996.

106th CONGRESS

Public Law 106-169, the Foster Care Independence Act of 1999

Public Law 106-169, the Foster Care Independence Act of 1999, contained numerous provisions related to SSI fraud reduction and overpayment recovery. These provisions are summarized below.

Overpayments and Debt Collection – The law amended the Social Security Act to make representative payees liable for the repayment of Social Security benefit checks distributed after the recipient's death. SSA will monitor these repayments using representative payees' Social Security numbers. Beginning on December 14, 2000, SSA is authorized to recover up to 50 percent of lump sum SSI benefit payments made to individuals or eligible spouses who are themselves liable for the repayment of SSI benefits. The law also authorized SSA to intercept Federal and State payments owed to individuals, use debt collection agencies, and other techniques to collect overpayments.

Treatment of Assets – Public Law 106-169 changed the way assets held in trusts were treated when determining SSI Program eligibility and benefit amounts. Assets and income in irrevocable trusts may not be revoked or used by an individual for personal support and maintenance. These trusts, previously exempt from SSI resource limit calculations, are counted toward the resource limit for program eligibility and used to determine benefit amounts. All trusts established after January 1, 2000, regardless of the purpose of the trust, degree of trustee discretion, or restrictions on distribution, are affected by the law. However, the new law allowed the Commissioner of Social Security to waive the consideration of a trust if doing so would create an undue hardship for an individual. The criteria for undue hardship is determined by the Commissioner.

Disposal of Resources – The law also imposed new rules regarding resources disposed of at less than fair market value. Individuals or their spouses who dispose of resources at less than fair market value are ineligible for SSI benefits from the "look back" date, the date the individual applied for benefits or, if later, the date the individual disposed of resources for less than fair market value, for a length of time calculated by SSA. The ineligibility period is determined by dividing the total value of the disposed resources by the maximum monthly benefit and the maximum applicable State supplementary payment. This ineligibility period may not exceed 36 months. Similar restrictions on the treatment of assets and the disposal of resources were already in effect for the Medicaid Program before enactment of Public Law 106-169.

Certain resources are exempt from this provision: resources transferred to a trust, if the trust is considered a resource available to the individual; the transfer of a home to family members under certain conditions; the transfer of resources to a spouse for the spouse's sole benefit; or the transfer of resources to an individual's blind or disabled child under age 65. Furthermore, a resource may be exempt if an individual proves to the Commissioner that he intended to dispose of the resource at fair market value; or that the resource was transferred for reasons other than to qualify for the SSI Program; or if the Commissioner determines that denial of eligibility would cause an undue hardship.

Penalties for False or Misleading Statements – The law contained provisions authorizing SSA to establish a new administrative process to determine whether individuals have fraudulently claimed benefits in cases considered too small to prosecute in court. The law provided for increasing penalties of 6, 12, and 24 months of ineligibility depending on the nature of the case. However, the imposition of these penalties does impact an individual's receipt of other assistance. The penalty procedure applies only to false and misleading statements made after the date of the law's enactment, December 14, 1999. The Commissioner was required to develop regulations detailing the administrative process for imposing the penalties within 6 months of enactment.

Health care providers and attorneys convicted of fraud or administratively fined for fraud involving SSI eligibility determinations were barred from participating in the SSI Program for at least 5 years. SSA will provide individuals with reasonable notice and opportunity for a hearing and judicial review. SSA is required to notify the State agencies that employ such individuals and the State licensing agencies that license or certify them. Attorneys and health care providers are required to inform SSA of any past violations or convictions. The Commissioner or Inspector General of Social Security may waive the exclusion from involvement with the SSI Program for an individual who is the only provider of services to a community and may terminate exclusions on a case by case basis.

Information Sharing Requirements – There were a number of provisions regarding information sharing between Federal and State agencies in the new law. SSA was authorized to obtain financial records for SSI recipients to ensure that they meet SSI's resource restrictions and remain eligible for benefits.

States were required to provide the Commissioner with information for determining individuals' eligibility for Social Security and SSI benefit programs. State prisons were also required to provide inmate information to Federal and Federally assisted benefit programs in the Act. SSA was required to share its prisoner database with other Federal agencies and departments.

The law directed SSA to conduct computer matches with Medicare and Medicaid data maintained by the Department of Health and Human Services on individuals who are residents of public institutions. Data obtained from these matches may be used as a substitute for a physician's certification that an individual's stay in an institution will be less than 3 months. The Commissioner and the Secretary of Health and Human Services will mutually determine the terms of the data matching.

Reporting Requirements – The law required the Commissioner to include an itemized account of the amount of funds required to support efforts to combat fraud by applicants and beneficiaries in the SSA annual budget.

Benefits for Filipino Veterans – The law established the “Special Benefits for Certain World War II Veterans” program which provided a reduced benefit equal to 75 percent of the Federal SSI benefit rate to any World War II veteran who, after receiving benefits, moved out of the United States. This provision primarily affected veterans of Filipino military units that served alongside American forces during World War II.

Public Law 106-170, the Ticket to Work and Work Incentives Improvement Act of 1999

Public Law 106-170, the Ticket to Work and Work Incentives Improvement Act of 1999, expanded Medicaid coverage and provided work incentives for disabled beneficiaries of SSI. The law also created a "ticket to work" system whose purpose is to expand the numbers and types of providers that SSI beneficiaries may choose to assist them in receiving employment and vocational rehabilitation services. In addition, the law has several other provisions:

Greater Accessibility to Vocational Rehabilitation Providers – Individuals on the SSI rolls were given access to a broader pool of vocational rehabilitation providers. SSI recipients are provided with “tickets” that they can use as vouchers to obtain employment services, case management, vocational rehabilitation, and support services from the providers of their choice, including State vocational rehabilitation agencies. This program was implemented on a gradual basis within 1 year of its enactment at test sites and within 4 years in every State.

The law also authorized the Commissioner to make grants of up to $7 million each year for fiscal years 2000-2004 to protection and advocacy organizations providing information and advice about obtaining vocational rehabilitation and employment services. The Secretary of Health and Human Services was authorized to award grants to States to design, establish, and operate infrastructures providing items and services to support working individuals with disabilities, and to conduct outreach campaigns to publicize the new benefits under the legislation.

Creation of Employment Networks –The Act required that employment networks consist of a single public or private provider or an association of providers combined into a single entity which assumes responsibility for the coordination and delivery of services. Employment networks, which must be experienced in providing relevant employment and support services to individuals with disabilities, will work with beneficiaries to develop employment plans and employment goals. The employment networks are responsible for providing periodic performance reports to beneficiaries holding tickets and periodic quality assurance reviews. The Commissioner must establish mechanisms for resolving disputes between employment networks and beneficiaries. State vocational rehabilitation agencies and employment networks must enter into agreements with individuals referred by an employment network to a State vocational rehabilitation agency for services.

Limitations on Continuing Disability Reviews (CDRs) for Ticket to Work Participants – The law prohibited the Commissioner from initiating a CDR for a beneficiary participating in the Ticket to Work and Self Sufficiency Program. Further, if beneficiaries do not succeed at their work effort, the law provided for the reinstatement of SSI benefits without requiring re application.

Medicaid Expansion – Under Public Law 106-170, States can cover persons with disabilities at higher income and resource levels than otherwise permitted (i.e., over 250 percent of the Federal poverty level and over $2,000, respectively), and whose medical conditions would not otherwise permit them to be covered. States can require these individuals to "buy into" Medicaid coverage by paying premiums or other cost sharing charges on a sliding-fee scale based on income, as established by the State.

Demonstration Projects and Studies – The law extended Social Security demonstration projects relating to disabled beneficiaries and establishes a new demonstration project to test phasing-out disability benefits for earnings above a certain level of income. Further, the GAO was required to study the effects of the substantial gainful activity level on recipients who return to work, and report on whether disregarding certain income for calculating benefits is appropriate.

Other – The law permitted the Commissioner to withhold an assessment charge of  6.3 percent of the attorney's fees for the purpose of recovering costs to SSA of withholding and payment of attorneys fees. SSA was authorized to penalize States that are late in paying administrative fees to SSA.

Public Law 106-386, the Victims of Trafficking and Violence Protection Act of 2000

Public Law 106-386, the Victims of Trafficking and Violence Protection Act of 2000, provided that noncitizens who are victims of “severe forms of trafficking in persons in the United States” shall be treated as refugees for purpose of SSI and be eligible for SSI benefits for the first 7 years they are in the United States.

Public Law 106-395, the Child Citizenship Act of 2000

Public Law 106-395, the Child Citizenship Act of 2000, provided that certain blind and disabled children may become citizens of the United States earlier than previously permitted. This citizenship status would provide these children eligibility for SSI benefits.

Public Law 106-245, the Radiation Exposure Compensation Act Amendments of 2000

Public Law 106-245, the Radiation Exposure Compensation Act Amendments of 2000, excluded as countable income for SSI purposes the compensation received under this statute. 

107th CONGRESS

Public Law 107-73, the Economic Growth and Tax Reconciliation Act of 2001

Public Law 107-73, the Economic Growth and Tax Reconciliation Act of 2001, was signed into law on June 7, 2001. The law increased child tax credit amounts gradually from $500 for each child to $1,000 in 2010 and expanded the child tax credit by making it refundable for low-income workers. Previously, the child tax credit was refundable in very limited situations. The credit is excluded from income or resources in determining eligibility for means-tested programs, including SSI, and is also excluded as part of resources in the month of receipt and the following month. 

Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act, 2002

Public Law 107-116 provided that $7 million of the funds appropriated for the Supplemental Security Income Program are to be used for outreach efforts under section 1144 of the Social Security Act to identify individuals who may be eligible for Medicare cost sharing under the Medicaid program.

108th CONGRESS

Public Law 108-203, the Social Security Protection Act of 2003

Public Law 108-203 included the following provisions related to the SSI Program:

Rules Regarding Representative Payees – The Act gave SSA limited authority to reissue benefits misused by representative payees. The law also gave SSA greater authority to monitor the activities of representative payees and requires that organizational payees forfeit any fees collected in association with their misuse of benefits. Public Law 108-203 disqualified fugitives and persons with certain criminal convictions from serving as payees and makes representative payees liable for the benefits they misuse. The law also required and funded a study to be conducted by the SSA on how representative payments are managed by payees.

Rules Regarding Attorneys – Public Law 108-203 placed a cap on the assessments charged by SSA to attorneys representing Social Security and SSI claimants.  The law also extended, for five years, the past-due benefits fee system used by attorneys to charge Social Security and SSI claimants for services. Public Law 108-203 mandated that SSA design and conduct a demonstration project extending the attorney fee withholding system to non-attorney representatives and required the GAO to study the processes used to pay representatives.

Amendments to the Ticket to Work Program – Public Law 108-203 expanded the work incentive outreach program to include 1619(b) recipients and reauthorized until 2009 the Benefits, Planning, Assistance, and Outreach (BPAO) and protections and advocacy programs.

Treatment of Infrequent Income – Public Law 108-203 created an SSI income exclusion for infrequent income of up to $60 of unearned and $30 of earned income per month.

Treatment of Underpayments as Resources – Public Law 108-203 extended from six to nine months, the time during which money received because of an underpayment cannot be considered a resource.

Student Earned Income Exclusion – The law set at 22 the maximum age for eligibility for the student earned income exclusion.

Nonrecurring Income – Public Law 108-203 established that non-recurring income would be considered income in the month in which it is paid.

Children Born to Military Parents Overseas – The law removed the restriction on paying SSI benefits to children who were either born to military parents overseas or who become blind or disabled while living overseas with military parents.

Education-Related Income and Resources – Public Law 108-203 excluded gifts provided for tuition or other education-related fees from income under the SSI Program. The law also excluded as resources for 9 months any grants, scholarships, or education-related gifts received.

Military Pay – Public Law 108-203 provided that any military pay is treated as income only in the month in which it is earned.

109th CONGRESS

Public Law 109-171, the Deficit Reduction Act of 2005

Public Law 109-171, the Deficit Reduction Act of 2005, made two changes to the SSI Program. First, the law provided that SSA review SSI disability and blindness determinations made by State agencies according to the following schedule:

• 20 percent of all favorable determinations made in FY2006;
• 40 percent of all favorable determinations made in FY2007;
• 50 percent of all favorable determinations made after FY2007.

Second, the law provided that any retroactive SSI benefits that equal more than 3 times, rather than 12 times as previously provided, the maximum monthly Federal benefit must be paid in up to 3 installments at 6 month intervals.

110th CONGRESS

Public Law 110-161, Consolidated Appropriations Act, 2008

Public Law 110-161 provided SSA an additional $168 million in administrative funding above the President’s budget request for the agency with the understanding that much of this additional funding would be used to address the backlog in the processing of Social Security and SSI determinations, hearings, and appeals.

Public Law 110-245, Heroes Earnings Assistance and Relief Tax Act of 2008

Public Law 110-245, included changes to the SSI program to treat cash remuneration paid to a member of the uniformed services as earned income and certain housing payments to such members as in-kind support and maintenance for SSI program purposes. The law additionally excluded state annuity payments to blind, disabled, or aged veterans for purposes of SSI benefit determinations and excluded any cash or in-kind benefit paid to an AmeriCorps participant from SSI income eligibility and benefit determinations.

Public Law 110-328, SSI Extension for Elderly and Disabled Refugees Act

Public Law 110-328 extended, through FY2011, SSI eligibility of certain aliens (refugees, asylees, and elderly noncitizens with pending naturalization applications) and victims of trafficking in persons, including such aliens and victims whose SSI benefits ceased in prior fiscal years.

111th CONGRESS

Public Law 111-5, American Recovery and Reinvestment Act of 2009

Public Law 111-5 provided a one-time payment of $500 to each eligible individual age 18 or over who, during the three-month period immediately preceding enactment of the law, was entitled to Social Security benefits, railroad retirement benefits, or veterans disability benefits.

Public Law 111-115, No Social Security Benefits for Prisoners Act of 2009

Public Law 111-115 prohibits retroactive payments to individuals during periods for which individuals are prisoners, fugitive felons, or probation or parole violators.

Public Law 111-142, Social Security Disability Applicants' Access to Professional Representation Act of 2010

Public Law 111-142 provided for a permanent extension of attorney fee withholding procedures to qualified non-attorney claimant representatives.

Public Law 111-255, Improving Access to Clinical Trials Act of 2009

Public Law 111-255 authorized SSA to exclude from income for SSI eligibility purposes any compensation in the amount of the first $2,000 per year received by an individual for participation in clinical trials involving research and testing of treatments for rare diseases or conditions.

Links to Additional Resources

Government Sources

• U.S. Social Security Administration, SSI Annual Statistical Report, 2009

https://www.socialsecurity.gov/policy/docs/statcomps/ssi_asr/2009/index.html

• U.S. Social Security Administration, Annual Statistical Supplement, 2010

https://www.socialsecurity.gov/policy/docs/statcomps/supplement/2010/index.html

Introduction

A variety of benefits may be available to unemployed workers to provide them with income support during a spell of unemployment. The cornerstone of this support is the joint federal-state Unemployment Compensation (UC) program, which may provide income through the payment of UC benefits for up to a maximum of 26 weeks.[i] Other programs that may provide workers with income are more specialized. They may target special groups of workers, be automatically triggered by certain economic conditions, be temporarily created by Congress with a set expiration date, or target typically ineligible workers through a disaster declaration.

Originally, the intent of the UC program, among other things, was to help counter economic fluctuations such as recessions.[ii] This intent is reflected in the current UC program’s funding and benefit structure. When the economy grows, UC program revenue rises through increased tax revenues while UC program spending falls as fewer workers are unemployed. The effect of collecting more taxes than are spent dampens demand in the economy. This also creates a surplus of funds or a “cushion” of available funds for the UC program to draw upon during a recession. In a recession, UC tax revenue falls and UC program spending rises as more workers lose their jobs and receive UC benefits. The increased amount of UC payments to unemployed workers dampens the economic effect of earnings losses by injecting additional funds into the economy.

UC benefits may be extended at the state level by the permanent Extended Benefit (EB) program if high unemployment exists within the state. Once regular unemployment benefits are exhausted, the EB program may provide up to an additional 13 or 20 weeks of benefits, depending on worker eligibility, optional state laws, and economic conditions in the state. The EB program is funded 50% by the federal government and 50% by the states, although the 2009 stimulus package (P.L. 111-5, as amended) temporarily provides for 100% federal funding of the EB program.

A temporary unemployment insurance program, the Emergency Unemployment Compensation (EUC08) program, began in July 2008. The authorization for the EUC08 program expires the week ending on or before January 3, 2012. Those beneficiaries receiving tier I, II, III, or IV EUC08 benefits before December 31, 2011 (January 1, 2012, in New York), are “grandfathered” for their remaining weeks of eligibility for that particular tier only. There will be no new entrants into any tier of the EUC08 program after December 31, 2011. If an individual is eligible to continue to receive his or her remaining EUC08 tier I benefit after December 31, 2011, that individual will not be entitled to tier II benefits once those tier I benefits are exhausted. This was the eighth time Congress has created a federal temporary program that has extended unemployment compensation during an economic slowdown.[iii] The EUC08 benefit is 100% federally funded. State UC agencies administer the EUC08 benefit along with regular UC benefits and EB.

Authorization

The underlying framework of the UC system is contained in the Social Security Act (the Act). Title III of the Act authorizes grants to states for the administration of state UC laws, Title IX authorizes the various components of the federal Unemployment Trust Fund (UTF), and Title XII authorizes advances or loans to insolvent state UC programs. The EB program was established by the Federal-State Extended Unemployment Compensation Act of 1970 (EUCA), P.L. 91-373 (26 U.S.C. 3304, note). The EUC08 program is temporarily authorized by the Supplemental Appropriations Act of 2008 (P.L. 110-252), as amended.

Appropriation and Outlays

The federal government appropriates funds for federal and state UC program administration, the federal share of EB payments, EUC08 benefits, and federal loans to insolvent state UC programs. In FY2010, states received $5.5 billion from the federal government for the administration of their UC programs, $7.8 billion for the federal share of EB payments, and $72.1 billion for the temporary, federally financed EUC08 program. In FY2011, a preliminary estimate from the President’s Budget Proposal FY2012 is that the states will receive an estimated $5.5 billion from the federal government for the administration of their UC programs, $9.5 billion for the federal share of EB payments, and $55.4 billion for the temporary EUC08 program.

Administration

The U.S. Department of Labor (DOL) administers the federal portion of the UC system, which operates in each state, the District of Columbia, Puerto Rico, and the Virgin Islands. Federal law sets broad rules that the 53 state programs must follow. These include the broad categories of workers that must be covered by the program, the method for triggering the EB and EUC08 programs, the floor on the highest state unemployment tax rate to be imposed on employers (5.4%), and how the states will repay UTF loans. If the states do not follow these rules, their employers may lose a portion or all of their state unemployment tax credit when their federal income tax is calculated. The federal tax pays for both federal and state administrative costs, the federal share of the EB program, loans to insolvent state UC accounts, and state employment services.

Chapter Overview

This chapter of the Green Book includes a series of Congressional Research Service (CRS) Reports organized under the following general headings.

• Unemployment Insurance: Programs and Benefits
• Unemployment Trust Fund and Financing
• Other Unemployment Benefits and Alternative Programs

Readers should consult the reports listed under each of these headings for information and data related to these topics. A separate section identifies Tables and Figures included in the CRS reports and also provides additional tables and figures related to the UI  program. Additional sections include Legislative History and Links to Additional Resources.

Congressional Research Service (CRS) Reports

The House Ways and Means Committee is making available selected reports by the Congressional Research Service (CRS) for inclusion in its 2011 Green Book website. CRS works exclusively for the United States Congress, providing policy and legal analysis to Committees and Members of both the House and Senate, regardless of party affiliation. Certain CRS reports with cover dates earlier than 2011 are included here because their content remains relevant.

Unemployment Insurance: Programs and Benefits

RL33362: Unemployment Insurance: Programs and Benefits

RS22915: Temporary Extension of Unemployment Benefits: Emergency Unemployment Compensation (EUC08)

R41622: Unemployment Insurance: Legislative Issues in the 112th Congress

R41777: Antipoverty Effects of Unemployment Insurance

RL34340: Extending Unemployment Compensation Benefits During Recessions

R41859: Unemployment Insurance: Consequences of Changes in State Unemployment Compensation Laws

Unemployment Trust Fund and Financing

RS22077: Unemployment Compensation (UC) and the Unemployment Trust Fund (UTF): Funding UC Benefits

RS22954: The Unemployment Trust Fund: State Insolvency and Federal Loans to States

RS22006: The Unemployment Trust Fund and Reed Act Distributions

RS21356: Taxation of Unemployment Benefits 

Other Unemployment Benefits and Alternative Programs

R41253: The Self-Employment Assistance (SEA) Program

R40689: Compensated Work Sharing Arrangements (Short-Time Compensation) as an Alternative to Layoffs

RS22440: Unemployment Compensation (Insurance) and Military Service

Legislative History

The Department of Labor, Chronology of Federal Unemployment Compensation Laws, provides information on the history and chronology of unemployment compensation law since 1935. 

• Chronology of Federal Unemployment Compensation Laws

Tables and Figures in CRS Reports

Following is a list of tables and figures related to Unemployment Compensation that can be found in the CRS reports section of this chapter.

Unemployment Insurance: Programs and Benefits

RL33362: Unemployment Insurance: Programs and Benefits

Figure A-1. Unemployment Insurance: Available Unemployment Benefits

Table 1. State Unemployment Compensation Benefits Amounts, January 2011

Table 2. State Unemployment Taxes: Taxable Wage Base and Rates, January 2011

Table 3. Revenue and Expenditures Associated with Unemployment Compensation, FY2001-FY2011

Table B-1. Emergency Unemployment Compensation Program: Public Law, Benefits, Effective Dates, and Financing

RS22915: Temporary Extension of Unemployment Benefits: Emergency Unemployment Compensation (EUC08)

Figure A-1. Unemployment Insurance: Available Unemployment Benefits

Table 1. Summary of Emergency Unemployment Compensation (EUC08) Program: Public Law, Benefits, Effective Dates, and Financing

Table 2. Summary of EUC08 Program Authorization Lapses

R41777: Antipoverty Effects of Unemployment Insurance

Figure 1. Monthly and Annual Average Unemployment Rate

Figure 2. Median Duration of Unemployment among Unemployed Workers in Weeks,

January 1987 to February 2011

Figure 3. Unemployment Rate and an Alternative Measure of Underutilization (BLS U-6 Definition)

Figure 4. Percent of Unemployed Receiving Unemployment Benefits

Figure 5. Percentage of Unemployed Receiving Temporary (EUC, TEUC, or EUC08) Benefits or Extended Benefits

Figure 6. Pre- and Post-UI Benefit Poverty Rates of Persons, 1987-2009

Figure 7. Number of Persons Lifted Above Poverty as a Result of UI Benefit Receipt, 1987-2009

Figure 8. Pre- and Post-UI Benefit Poverty Rates of Persons in Families that Received UI Benefits, 1987-2009

Figure 9. Percent Reduction in the Poverty Rate as a Result of UI Benefit Receipt, Overall Poverty Rate and Poverty Rate for Persons in Families that Received UI Benefits, 1987 - 2009

Figure 10. UI Benefits: Aggregate Dollars and Dollars Reducing Poverty, 1987-2009

Figure 11. Share of Aggregate UI Benefits Going Toward Reducing Poverty, 1987-2009

Figure 12. Pre-Post UI Poverty Rates Among Unemployed Persons Who Received UI Benefits and Those Who Did Not, 1987-2009

Figure B-1. Persons Who Reported UI Benefit Receipt, by Labor Force Status: 2009

Figure B-2. Share of Unemployed and Underutilized Workers at Any Time During the Year Compared to Monthly and Annual Average Unemployment

Figure B-3. Expanded Definitions of Unemployment and Labor Underutilization, 1987-2009

Figure B-4. An Expanded Definition of Unemployed and Underutilized Workers, 1987-2009

Figure B-5. Unemployment Insurance Receipt Among Persons, by Selected Labor Force Status, 1987 - 2009

Figure C-1. UI Recipients and Aggregate UI Dollars CPS/ASEC Estimates as a Percent of Administrative Benchmarks 1987 to 2009

Table 1. General Description of Temporary Federal Unemployment Insurance Programs, 1987- 2010

RL34340: Extending Unemployment Compensation Benefits During Recessions

Figure 1. Economic Recessions, Percentage of Regular UC Beneficiaries to All Unemployed, and UC Benefit Exhaustees, January 1979-November 2010

Figure 2. Recessions, Changes in Unemployment Compared with the Same Month in Previous Year, Unemployment Rates, and Temporary Federal Benefit Availability,

January 1979-November 2010

Figure 3. Recessions, Changes in Regular UC Benefit Exhaustions Compared with the Same Month in Previous Year, and Unemployment Rates, January 1979-November 2010

Figure 4. Recessions, Changes in Long-Term Unemployment Compared with the Same Month in Previous Year, and Unemployment Rates, January 1979-November 2010

Table A-1. Summary of Extended Unemployment Compensation Programs

Table A-2. Details: Federal Supplemental Compensation (FSC) Benefits

Table A-3. Details: Emergency Unemployment Compensation (EUC) Benefits of 1991

Table A-4. Details: Emergency Unemployment Compensation (EUC08) Benefits of 2008

Table A-5. Timing of Recessions, 12-Month Change of at Least One Million, and Extended Unemployment Benefits, 1990-2010

Table A-6. Funding Temporary Unemployment Programs

R41859: Unemployment Insurance: Consequences of Changes in State Unemployment Compensation Laws

Table 1. States with Unemployment Compensation (UC) Law Changes in 2011 That Decrease Benefit Duration

Table 2. Adjusted Maximum EUC08 and EB Benefit Duration Resulting from Changes to State Maximum UC Benefit Duration

Table 3. Extended Benefit (EB) Trigger Components Enacted by States

Unemployment Trust Fund and Financing

RS22077: Unemployment Compensation (UC) and the Unemployment Trust Fund (UTF): Funding UC Benefits

Figure 1. The Unemployment Trust Fund

RS22954: The Unemployment Trust Fund: State Insolvency and Federal Loans to States

Table 1. State Unemployment Trust Fund Accounts: Financial Information by State, 1st Quarter 2011

Table 2. Schedule of State Tax Credit Reduction and Net Federal Unemployment Tax Act (FUTA) Tax for July 2011 Onwards

RS22006: The Unemployment Trust Fund and Reed Act Distributions

Table 1. Reed Act Distributions

RS21356: Taxation of Unemployment Benefits 

Table 1. Returns With Unemployment Benefits and Amount of UC Benefits, Tax Years 1998-2009

Table 2. Estimated Effect of Taxing Unemployment Compensation, by Income Class, 2005

Other Unemployment Benefits and Alternative Programs

R41253: The Self-Employment Assistance (SEA) Program

Table 1. States with SEA Programs

Table 2. Number of Recent Participants in the Self-Employment Assistance (SEA) Program, by State, 2000-2010

R40689: Compensated Work Sharing Arrangements (Short-Time Compensation) as an Alternative to Layoffs

Table 1. Short-Time Compensation (STC) and Regular Unemployment Insurance (UI) Beneficiaries, 1982 to 2010

Table 2. State Legislation and Short-Time Compensation (STC) First Payments as Percentage of Regular Unemployment Compensation First Payments

Table A-1. States with Short-Time Compensation Programs

RS22440: Unemployment Compensation (Insurance) and Military Service

Table 1. Unemployment Compensation Benefit Eligibility for Workers Who Voluntarily Quit Because of a Spousal Transfer

Additional Tables and Figures Related to Unemployment Insurance

Links to Additional Resources

Federal Laws

Below are selected major federal statutes for the Unemployment Compensation program, the Extended Benefits program, and the Emergency Unemployment Compensation program.

Please note that the official version of the US Code was last published in 2006 with supplements.  Some of the links below are to the unofficial version of the US Code updated and maintained by the Office of the Law Revision Counsel (OLRC).  For recent updates to the US Code, please consult the US Code classification tables on the OLRC’s website, a commercial source such as LexisNexis or Westlaw, or contact CRS.

Statutes and the US Code

1. General Unemployment Compensation and Federal Law

2. Emergency Unemployment Compensation (EUC08) Federal Law

3. EUC08 Amendments and Reauthorizations

4. Extended Benefits Federal Law

5. Disaster Unemployment Assistance Federal Law

6. Unemployment Compensation for Federal Employees Federal Law

1.  General Unemployment Compensation and Federal Law

General provisions of unemployment compensation are included in the following titles of the Social Security Act as amended (below). They are codified in Title 42 of the U.S. Code.

• Grants to States for Unemployment Compensation Administration, Title III
• Miscellaneous Provisions Relating to Employment Security, Title IX
• Advances to State Unemployment Funds, Title XII 
• Compilation of the Social Security Laws, Staff of H. Comm. on Ways and Means.

 The Federal Unemployment Tax Act (FUTA), along with state unemployment taxes, provides for payments of unemployment compensation.

• The Federal Unemployment Tax Act, Pub. L. 94-12, 89 Stat. 26  (codified as amended in scattered sections of 26 U.S.C.).

2.  Emergency Unemployment Compensation (EUC08) Federal Law

The Emergency Unemployment Compensation (EUC08) legislation was originally included in the Supplemental Appropriations Act, 2008, Pub. L. 110-252, Title IV, 122 Stat. 2353 (p. 31 of the PDF). This legislation was subsequently amended and the authorization extended several times.    

3.  EUC08 Amendments and Reauthorizations

• Supplemental Appropriations Act, 2008, Pub. L. 110-252, Title IV, 122 Stat. 2353 (p. 31 of the PDF)
• Unemployment Compensation Extension Act of 2008, Pub. L. 110-449, 122 Stat. 5014.
• American Recovery and Reinvestment Act of 2009, Pub. L. 111-5, Title II, Subtitle A, 123 Stat. 436 (p. 322 of the PDF). 
• Worker, Homeownership, and Business Assistance Act of 2009, Pub. L. 111-92, §§ 2-10, 123 Stat. 2984.
• Department of Defense Appropriations Act, 2010, Pub .L. 111-118, § 1009, 123 Stat. 3471.
• Temporary Extension Act of 2010, Pub. L. 111-144, 124 Stat. 42. 
• Continuing Extension Act of 2010, Pub. L. 111-157, 124 Stat. 1116.
• Unemployment Compensation Extension Act of 2010, Pub. L. 111-205, 124 Stat. 2236.
• Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Pub. L. 111-312, Title V, 124 Stat. 3307 (p. 13 of the PDF).

For additional information on the EUC08 program, please see  RS22915, Temporary Extension of Unemployment Benefits: Emergency Unemployment Compensation (EUC08)

4.  Extended Benefits Federal Law

• Federal-State Extended Unemployment Compensation Act of 1970 (EUCA), Pub. L. 91-373, 26 U.S.C. 3304, note.

5.  Disaster Unemployment Assistance Federal Law

• Disaster Unemployment Assistance authorized by the Robert T. Stafford Disaster Relief and Emergency Relief Act, Pub. L. 91-606, 42 U.S.C. §  5177.  

6.  Unemployment Compensation for Federal Employees Federal Law

• Unemployment compensation for federal employees, is codified as amended in Title 5, Government Employees, Chapter 85, Unemployment Compensation.  

State Resources

The following sources highlight state and regional unemployment insurance (UI) benefits and programs.

Department of Labor, Employment and Training Administration

• Comparison of State Unemployment Compensation Laws
• Regions & States (State and local contacts, state and local resources)

National Association of State Workforce Agencies This organization includes state administrators of unemployment insurance laws and employment services centers.

National Conference of State Legislatures, Labor & Employment  This site compiles data on state unemployment and labor related issues, including pending legislation and monthly reports on state unemployment trends and spending.

Statistics and Data

The following sources represent selected federal agency statistics and databases on unemployment insurance program statistics (such as weekly claimants), unemployment trends, and demographic data. 

Department of Labor

Employment and Training Administration, Unemployment Insurance, Program Statistics

• UI Weekly Claims, Data available for the regular UC program, Extended Benefits program, and the EUC08 program
• UI Characteristics of the Insured Unemployed, Demographic data including age, gender, race/ethnicity, and industry
• UI Chartbook, Unemployment trend data for the U.S. and each state beginning with data from 1967

Bureau of Labor Statistics

• Employment Situation Summary, BLS monthly report summarizing national statistics including the total nonfarm payroll employment, the unemployment rate, demographic data, part-time employment, and selected industry data
• Unemployment Rate for States, BLS monthly report from Local Area Unemployment statistics survey 
• Regional and State Employment and Unemployment Summary, BLS monthly report on state and regional unemployment statistics

Introduction

Retirement, survivor, disability, unemployment, and sickness insurance benefits for railroad employees are administered by the U.S. Railroad Retirement Board (RRB), a Federal agency headquartered in Chicago. The term “Railroad Retirement Board” (RRB) refers both to the agency that administers the Federal benefits of industry employees and to the 3-member governing board that oversees the agency.

The programs are governed by the Railroad Retirement Act and the Railroad Unemployment Insurance Act.  Railroad retirement came into existence in 1936, and was substantially modified by the Railroad Retirement Act of 1974 (Public Law 93-445) which provided for closer coordination with the Social Security system. In the House of Representatives, jurisdiction over the Railroad Retirement and Unemployment Benefit Programs is divided between two standing committees. The Transportation and Infrastructure Committee has jurisdiction over legislation pertaining to “railroads . . . and railroad retirement and unemployment (except revenue measures related hereto).” The Subcommittee on Railroads of the committee has primary responsibility for the Railroad Retirement Act (RRA) and amendments affecting railroad retirement. The Committee on Ways and Means has jurisdiction over all revenue measures, including the Railroad Retirement Tax Act (chapter 22 of the Internal Revenue Code). Within the Committee on Ways and Means, jurisdiction over employment taxes and trust fund operations relating to the Railroad Retirement System lies within the Subcommittee on Social Security.

RAILROAD RETIREMENT AND SURVIVOR BENEFITS

Railroad retirement and survivor benefits are financed by: (1) payroll taxes paid by covered employees and employers on railroad earnings, up to a certain maximum wage base; (2) income from the financial interchange with the Social Security trust funds; (3) appropriations from general revenues (including transfers of income taxes collected on benefits); and (4) investment income. The primary source of income to the Railroad Retirement Account is payroll taxes levied on covered employers and their employees. These taxes are imposed on wages below an annual maximum amount, known as the “wage base.” Currently, both employers and employees pay a tier 1 tax that is equivalent to the combined Social Security (Old-Age, Survivors and Disability Insurance) and Hospital Insurance (Part A of Medicare) tax rate. In addition, a tier 2 tax is paid by both rail employers and employees. Since 1994, there has been no wage limit for the hospital insurance portion of the tax (1.45 percent on employers and employees, each). The Railroad Retirement and Survivors’ Improvement Act of 2001 (Public Law 107-90) made significant changes to the way the Railroad Retirement System is financed. The 2001 law provided for investment of railroad retirement funds in nongovernmental assets (as well as government securities), adjustments in payroll tax rates paid by employers and employees, and repeal of the supplemental annuity work-hour tax paid by employers.

Employees are eligible for a tier 1 retirement annuity if they have at least 10 years of total railroad service, or at least 5 years of railroad service after 1995 and “insured status” under the Social Security rules (generally 40 quarters of coverage) based on combined railroad retirement and Social Security-covered earnings. The tier 1 benefit is roughly equal to what the Social Security benefit would have been had the worker's railroad employment been covered by the Social Security program. Tier 2 benefits, which are payable in addition to tier 1 benefits, are based entirely on the employee's service in the railroad industry. For current retirees, the tier 2 benefit is equal to seven-tenths of 1 percent of the employee's average monthly earnings in the 60 months of highest earnings, times the total number of years of railroad service. Annuities may be payable under both tiers to spouses, surviving spouses, children, and certain other beneficiaries.  Supplemental annuities are payable to employees age 65 or older with 25 or more years of railroad service who have a current connection with the railroad industry, and some service prior to October 1981, and whose regular annuities were awarded after June 30, 1966.  (An employee generally has a current connection if he or she has 12 months of railroad service in the 30 months preceding retirement or death, or if the employee did not perform any regular employment between the end of the 30-month period containing the last 12 months of railroad service and the month of retirement or death.) Employees retiring after June 1974 with 30 or more years of service are eligible to receive supplemental annuities as early as age 60.

DISABILITY ANNUITIES

Workers who are totally and permanently disabled for all employment are eligible for tier 1 and tier 2 benefits if they have at least 10 years of total railroad service. Workers who have at least 5 years of railroad service after 1995 (but less than 10 years of total service) are eligible only for tier 1 benefits before age 62 if their combined railroad retirement and Social Security earnings credits satisfy Social Security eligibility requirements (tier 2 benefits would be payable at age 62). Otherwise, workers with employment covered under Social Security would have their railroad retirement credits transferred to Social Security and eligibility for Social Security disability insurance would be determined under Social Security rules. In addition, workers who become totally disabled for their regular railroad occupation are eligible for an occupational disability benefit at age 60 with at least 10 years of railroad service, and at any age with at least 20 years of railroad service. To qualify, the worker must have a current connection with the industry, which generally means that he or she worked for a railroad in at least 12 of the 30 consecutive months before the month in which an annuity begins to accrue.

FINANCIAL INTERCHANGE

The Railroad Retirement System and the Social Security program have been coordinated financially since 1951. The purpose of the financial interchange is to place the Social Security Trust Funds in the same position in which they would have been if railroad employment had been covered under Social Security since its inception. Doing so involves computing the amount of Social Security payroll and income taxes that would have been collected by the Social Security Trust Funds if railroad employment had been covered directly by Social Security, as well as the amount of additional benefits which Social Security would have paid to railroad retirement beneficiaries during the same fiscal year. In the computation of the latter amount, credit is given for any Social Security benefits actually paid to railroad retirement beneficiaries. When benefit reimbursements exceed payroll and income taxes, the difference, with an allowance for interest and administrative expenses, is transferred from the Social Security Trust Funds to the RRB’s Social Security Equivalent Benefit Account. (Before 1985, transfers were made to the Railroad Retirement Account.) If taxes exceed benefit reimbursements (which has not happened since 1951), a transfer would be made in favor of the Social Security Trust Funds. The determination of the amount to be transferred through the financial interchange for a given fiscal year is made no later than June of the year following the close of the preceding fiscal year.

THE RAILROAD UNEMPLOYMENT INSURANCE PROGRAM

The Railroad Unemployment Insurance Act (Public Law 75-722) was passed in 1938 to provide a uniform unemployment insurance system for all railroad workers, regardless of the State in which they worked or lived. The main reasons for this action were to avoid administrative problems in handling claims for railroad workers who earned wages in a number of States and to accommodate the railroad unions' desire that individuals throughout the industry be treated the same for purposes of unemployment compensation.

A new benefit year for unemployment and sickness benefits begins on July 1 of each year. To qualify in the benefit year beginning July 1, 2011, an employee must have had railroad earnings of at least $3,325 in calendar year 2010, not counting earnings over $1,330 in any month. If the base year was the first year of railroad service, the worker also must have worked in 5 months of that year. No benefits are payable for the first 7 days of the first claim (or claims) for unemployment and sickness in a benefit year. This generally results in a 1-week waiting period. A claimant is normally paid for benefits if he or she is unemployed or sick for more than 4 days in a 14-day period. The maximum daily benefit payable in the benefit year that began July 1, 2011 is $66, and maximum benefits for biweekly claims is $660.  The program offers “normal” and “extended” benefits. Qualified workers can receive normal benefits for up to 130 days (26 weeks), but the total may not exceed their creditable wages in the base year. Workers with at least 10 years of railroad service may receive up to 65 additional days (13 additional weeks) of extended benefits. During 2009-2011, Congress provided up to 13 additional weeks of extended benefits to unemployed railroad workers, regardless of years of railroad service.

Sickness benefits, established in 1946, are paid during short-term illnesses or injuries of railroad employees. They are financed out of the same employer-paid payroll taxes used to finance unemployment compensation benefits.

The Railroad Unemployment and Sickness Benefit Programs are financed by payroll taxes on railroad employers. The earnings base is adjusted each year to equal approximately two-thirds of the cumulative increase in the maximum base for railroad retirement tier 1 taxes since 1984. Experience-based tax rates, under which employers with higher levels of unemployment pay somewhat higher rates, were phased in on a partial basis in 1991 and 1992, and became fully effective in 1993 with a minimum rate of 0.65 percent and a maximum rate of 12 percent. The future maximum rate could be 12.5 percent if a maximum surcharge is in effect. The Railroad Unemployment Insurance and Railroad Unemployment Insurance Administration Accounts are part of the Federal Unemployment Trust Fund. Since 1959, the Railroad Unemployment Trust Fund has been able to borrow funds from the railroad pension fund when employer taxes have not been sufficient to cover the costs of unemployment and sickness benefits. The RRB is required to submit an annual financial report to Congress on the status of the Unemployment Insurance System. 

Chapter Overview

This chapter of the Green Book includes two Congressional Research Service (CRS) Reports. A separate section identifies Tables and Figures included in the CRS reports and also provides additional tables and figures related to Earned Entitlements for Railroad Employees. Additional sections include a Legislative History and Links to Additional Resources.

Congressional Research Service (CRS) Reports

The House Ways and Means Committee is making available selected reports by the Congressional Research Service (CRS) for inclusion in its 2011 Green Book website.  CRS works exclusively for the United States Congress, providing policy and legal analysis to Committees and Members of both the House and Senate, regardless of party affiliation. 

RS22350:  Railroad Retirement Board: Retirement, Survivor, Disability, Unemployment, and Sickness Benefits

RS22782: Railroad Retirement Board: Trust Fund Investment Practices

Legislative History

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In the final quarter of the 19th century, railroads were among the largest companies in America. The first industrial pension in North America was established in the rail industry in 1874. The commercial success of the rail industry peaked in the period between 1900 and 1920, and rail employment decreased significantly in the 1920s.

In the mid-1920s, more than 80 percent of all rail workers were covered by pension plans. By the early 1930s, these pension plans began to face enormous financial problems.

Rail pension plans were for the most part poorly constructed. There was no regulation of railroad pensions and plans were frequently terminated, pension funds were chronically underfinanced, and most funds could not survive the financial pressures of the depression. These problems, plus a tradition of Federal regulation of the railroads, led to the enactment of the Railroad Retirement Act of 1934.

This act structured the Railroad Retirement System to provide annuities to retirees based on rail earnings and length of service. Benefits were disbursed for retirees at age 65, although workers with 30 years of service could retire at age 60 with a reduction in payments. The original disability provisions were very stringent. Little was provided for dependents and nothing for spouses.

The Railroad Retirement System has been modified many times by Congress. In the late 1940s and 1950s, benefits were liberalized, and the Railroad Retirement System was brought into closer conformity with Social Security. For instance, in 1946, benefits were extended to survivors, based on combined railroad and Social Security-covered employment. This extension demonstrated congressional concern for the social goal of providing income security in old age, or social insurance, rather than simply rewarding career performance.

In the 1970s and 1980s, the Railroad Retirement System encountered recurrent financial crises as a result of employment declines in the industry, inflation, and more beneficiaries. Major legislation was enacted in 1974, 1981, 1983, and 1987 to prevent the system from becoming insolvent.

The Railroad Retirement Solvency Act of 1983 (Public Law 98-76) increased payroll taxes on employers and employees, deferred cost-of-living increases, reduced early retirement benefits, made tier 2 benefits and vested dual benefit payments subject to Federal income taxes on the same basis as private and public service pensions, and provided other measures designed to improve railroad retirement financing. (Earlier that year, the Social Security Amendments of 1983 (Public Law 98-21) made up to 50 percent of tier 1 benefits subject to Federal income taxes on the same basis as Social Security benefits.) Without the enactment of this legislation, the Railroad Retirement Board would have been required to substantially reduce benefit payments in 1983.

Financial measures to assist the Railroad Unemployment Insurance Account were also included in the 1983 Railroad Retirement Solvency Act. The legislation raised the taxable limit on monthly earnings and the base-year qualifying amount for unemployment benefits. The waiting period for benefits during strikes was increased from 7 to 14 days. A temporary repayment tax on railroad employers began July 1, 1986, to initiate repayment of the loans made by the Railroad Retirement Account. The 1983 legislation also mandated the establishment of a Railroad Unemployment Compensation Committee to review the unemployment and sickness benefit programs and submit a report to Congress. The Committee convened in 1984 and reviewed all aspects of the Railroad Unemployment Insurance System, especially repayment of the system's debt to the Railroad Retirement Account and the viability of transferring railroad unemployment benefit payments to State programs.

The Consolidated Omnibus Budget Reconciliation Act of 1986 (Public Law 99-272) amended the temporary unemployment insurance loan repayment tax beginning July 1, 1986, continued authority for borrowing by the Railroad Unemployment Insurance Account from the Railroad Retirement Account, and provided a contingency surtax on rail employers if further borrowing took place.

The Omnibus Budget Reconciliation Act (OBRA) of 1987 (Public Law 100-203) increased tier 2 tax rates in January 1988 by a total of 2 percentage points: 1.35 percentage points on employers and 0.65 percentage points on employees. In addition, the law extended for 1 year, until October 1, 1989, the time during which revenues from Federal income taxes on tier 2 railroad retirement benefits could be transferred from the general fund of the U.S. Treasury to the Railroad Retirement Account for use in paying benefits.

Railroad retirement amendments were included with railroad unemployment insurance amendments in the Technical and Miscellaneous Revenue Act of 1988 (Public Law 100-647). This legislation ensured repayment of the Railroad Unemployment Insurance Account's debt to the Railroad Retirement Account by extending a temporary unemployment insurance tax until the debt was fully repaid with interest in June 1993. Public Law 100-647 also eased work restrictions and the crediting of military service in certain cases and provided more equitable treatment of severance pay for railroad retirement purposes. The 1988 amendments improved financing by indexing the tax base to average national wages and experience rating employer contributions. Changes enacted under the Act were based on the recommendations of the Railroad Unemployment Compensation Committee.

The Omnibus Budget Reconciliation Act of 1989 (Public Law 101-239) included a number of railroad retirement and Social Security provisions that affected payroll taxes and benefits beginning in 1990. The law increased the amount of earnings subject to Social Security and railroad retirement payroll taxes by including contributions to 401(k) deferred compensation plans in the measure of average wages, which is used to index the wage base. It also extended for 1 additional year, until October 1, 1990, the time during which revenues from Federal income taxes on tier 2 railroad retirement benefits may be transferred to the Railroad Retirement Account for use in paying benefits.

The Omnibus Budget Reconciliation Act of 1990 (Public Law 101-508) further extended the date of this transfer until October 1, 1992, and also permanently exempted supplemental annuities from reductions under the Gramm-Rudman deficit reduction measures adopted by Congress.

In 1991, a contingency surtax (3.5 percent), effective in the event of further borrowing by the Railroad Unemployment Insurance Account, was eliminated. Instead, a surcharge will be added to employers' unemployment insurance taxes for a calendar year if the balance in the unemployment insurance account on the previous June 30 goes below $100 million (as indexed). The surcharge rate would be 1.5, 2.5, or 3.5 percent depending on how low the balance has fallen. If a 3.5 percent surcharge goes into effect for a given year, the maximum rate for any employer would be 12.5 percent rather than 12 percent. If the account balance on the preceding June 30 is above $250 million (as indexed), the excess will be refunded to the employers in the form of a rate reduction for the year through a pooled credit.

The Omnibus Budget Reconciliation Act of 1993 (Public Law 103-66) removed the maximum taxable earnings base for purposes of paying the Medicare payroll tax, thus making all railroad retirement tier 1 earnings subject to the Medicare payroll tax. Public Law 103-66 also increased the amount of Social Security and railroad retirement tier 1 benefits subject to Federal income taxes for persons with higher incomes. A provision in the Social Security Administrative Reform Act of 1994 (Public Law 103-296) extended the transfer of Federal income taxes on tier 2 railroad retirement benefits to the Railroad Retirement Account on a permanent basis and a retroactive payment was made, covering the period October 1, 1992 through September 30, 1994.

In 1996, Congress enacted the Railroad Unemployment Insurance Amendments Act of 1996 (Public Law 104-251). Among other provisions, this law raised daily benefit rates for unemployment and sickness benefits and revised the formula for indexing future rates. The Act shortened the waiting period for initial unemployment and sickness benefits, cut the weeks of extended benefits payable to rail workers with more than 15 years' service, and established an earnings test for workers with claims for intermittent unemployment.

The Senior Citizens’ Freedom to Work Act (Public Law 106-182) eliminated the earnings limitation on beneficiaries beginning with the month the beneficiary reaches the full retirement age. In the calendar years before the year in which the beneficiary reaches the full retirement age, $1 in benefits is withheld for every $2 earned above an exempt amount ($14,160 in 2011). For months in the calendar year in which the beneficiary reaches the full retirement age (up to the month the beneficiary reaches the full retirement age), $1 in benefits is withheld for every $3 earned above an exempt amount ($37,680 in 2011).

The Railroad Retirement and Survivors’ Improvement Act of 2001 (Public Law 107-90) made a number of changes to railroad retirement benefits and financing. In terms of benefit changes, the 2001 law: (1) liberalized early retirement benefits for 30-year employees and their spouses (employees with 30 years of railroad service and their spouses may retire at age 60 with full tier 1 and tier 2 annuities); (2) repealed the cap on total monthly retirement and disability benefits payable to an employee and spouse; (3) lowered the minimum service requirement for retirement annuities from 10 years to 5 years of service performed after 1995; and (4) increased benefits for some widow(er)s.

In terms of financing changes, the 2001 law: (1) established the National Railroad Retirement Investment Trust, which is authorized to invest funds in nongovernmental assets as well as government securities (the Board of Trustees invests assets, pays administrative expenses and transfers funds to a disbursing agent responsible for the payment of benefits); (2) adjusted payroll tax rates paid by employers and employees (beginning in 2004, tier 2 tax rates are based on a 10-year “average account benefits ratio” with employer rates ranging from 8.2 percent to 22.1 percent and employee rates ranging from 0 percent to 4.9 percent); (3) repealed the supplemental annuity work-hour tax; (4) eliminated the Supplemental Annuity Account and transferred the balance in the account to the Trust (the Trust will pay supplemental annuity benefits); (5) provided authority to transfer Railroad Retirement Account funds not needed to pay current administrative expenses to the Trust (the Trust will pay tier 2 benefits); (6) provided authority to transfer Social Security Equivalent Benefit Account (SSEBA) funds not needed to pay current benefits and administrative expenses to the Trust (the SSEBA will pay the Social Security level of tier 1 benefits and the Trust will pay the portion of tier 1 benefits in excess of the Social Security level); (7) provided authority to transfer Dual Benefit Account funds needed for dual benefit payments to a disbursing agent; and (8) provided tax-exempt status for the Trust. The 2001 law was based on joint recommendations to Congress negotiated by rail labor organizations and rail freight carriers.

In the 109th Congress, several minor changes were made to the Railroad Retirement System. The Railroad Retirement Disability Earnings Act of 2006 (Public Law 109-478) increased the monthly earnings limit for RRB disability beneficiaries from $400 to $700 in 2007 and indexed the disability earnings limit for subsequent years to the Average Wage Index ($780 in 2011). The Pension Protection Act of 2006 (Public Law 109-280) eliminated the requirement that a railroad employee must be entitled to and receiving an annuity in order for his or her divorced spouse to receive an annuity. It also extended the payment of tier 2 annuities to surviving former spouses pursuant to court decrees upon the death of the railroad employee. Finally, the Railroad Retirement Technical Improvement Act of 2006 (Public Law 109-305) required the Secretary of the Treasury to continue to serve as disbursing agent for railroad retirement benefits.

In the 111th Congress, the American Recovery and Reinvestment Act of 2009 (ARRA, Public Law 111-5) provided a one-time economic recovery payment to several groups, including all adult railroad retirement beneficiaries. ARRA also added an additional 13 weeks to the maximum amount of time railroad workers could receive extended unemployment benefits, allowing for up to 13 weeks (less than 10 years of railroad service) or 26 weeks (10 or more years of railroad service) of extended benefits in addition to the 26 weeks of normal benefits provided under current law. ARRA also provided that up to $2,400 in railroad unemployment and sickness benefits would not be subject to federal or state income taxes in 2009. The Work, Homeownership, and Business Assistance Act of 2009 (WHBAA, Public Law 111-92) extended these provisions by one year to June 30, 2010. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Public Law 111-312) extended the WHBAA provisions by one year to June 30, 2011. The special extended unemployment benefit periods could begin no later than December 31, 2011

Links to Additional Resources

National Railroad Retirement Investment Trust, Annual Management Report for Fiscal Year 2010, Washington, DC, at https://www.rrb.gov/pdf/nrrit/reportFY2010.pdf .

National Railroad Retirement Investment Trust, Quarterly Update for the Period Ending March 31, 2011, Washington, DC, at https://www.rrb.gov/pdf/nrrit/qrtlyupd033111.pdf .

National Railroad Retirement Investment Trust, annual and quarterly reports,https://www.rrb.gov/mep/nrrit.asp

National Railroad Retirement Investment Trust, Questions and Answers, at https://www.rrb.gov/nrrit/QandA.asp .

U.S. Railroad Retirement Board, An Agency Overview, Washington, DC, January 2011, at https://www.rrb.gov/opa/agency_overview.asp .

U.S. Railroad Retirement Board, 2010 Annual Report, Washington DC, at https://www.rrb.gov/opa/AnnualRprt/Ann_Rpt_toc.asp .

U.S. Railroad Retirement Board, Financial, Actuarial, and Statistical Monthly and Quarterly Railroad Retirement Act and Railroad Unemployment Insurance Act Data, at https://www.rrb.gov/act/RRA_and_RUIA.asp .

U.S. Railroad Retirement Board, Railroad Retirement Handbook, 2009, at

https://www.rrb.gov/general/handbook/toc.asp .

U.S. Railroad Retirement Board, Bureau of the Actuary, Railroad Retirement System: Annual Report Required by Railroad Retirement Act of 1974 and Railroad Retirement Solvency Act of 1983, Washington, DC, June 2011, at https://www.rrb.gov/pdf/act/Section_502.pdf . 

U.S. Railroad Retirement Board, Bureau of the Actuary, Railroad Unemployment Insurance System: Annual Report required by Section 7105 of the Technical and Miscellaneous Revenue Act of 1988, Washington, DC, June 2011, at https://www.rrb.gov/pdf/act/Section_7105.pdf .

U.S. Railroad Retirement Board, Bureau of the Actuary, Twenty-fourth Actuarial Valuation of the Assets and Liabilities under the Railroad Retirement Acts as of December 31, 2007, Washington, DC, at  https://www.rrb.gov/pdf/act/valuation.pdf .

Whitman, Kevin, An Overview of the Railroad Retirement Program, Social Security Bulletin, Vol. 68 No. 2, 2008, at https://www.ssa.gov/policy/docs/ssb/v68n2/v68n2p41.html .

Introduction

Trade Adjustment Assistance (TAA) is a group of four programs that separately target federal assistance to workers, firms, farmers, and communities that have been adversely affected by foreign trade. TAA was created by the Trade Expansion Act of 1962 (P.L. 87-794) and has been reauthorized and expanded several times in subsequent years, most prominently as part of the Trade Act of 1974 (P.L. 93-618), the Trade Act of 2002 (P.L. 107-210), the Trade and Globalization Adjustment Assistance Act of 2009, and the Act to extend the Generalized System of Preferences, and for other purposes (including Title II, the Trade Adjustment Assistance Extension Act of 2011) (P.L. 112-40).

The largest TAA program, TAA for Workers (TAAW), is administered by the U.S. Department of Labor (DOL). Reduced trade barriers are widely acknowledged to yield benefits to the wider population but may also have concentrated effects on domestic workers in industries that face increased competition. TAAW aims to mitigate these adverse effects by providing federal assistance to workers who have been separated from their jobs because of increased imports or because their jobs moved to a foreign country. The largest components of the TAAW program are training assistance and extended income support for workers who are enrolled in an eligible training program and have exhausted their unemployment compensation. Under the 2011 reauthorization, TAAW eligibility and benefits are set to be reduced in 2014 and the program will expire at the end of 2014.

Other TAA programs target firms, farmers, and communities that have been affected by trade. Trade Adjustment Assistance for Firms was created alongside TAAW in 1962 and is administered by the U.S. Department of Commerce (DOC). It provides federal funding to pay for technical assistance from industry experts to improve firms’ international competitiveness. Trade Adjustment Assistance for Farmers was first authorized in 2002 and is administered by the U.S. Department of Agriculture. It targets producers of agricultural commodities and fishermen who are adversely affected by increased imports and provides technical assistance as well as seed money to implement the recommended operational adjustments. Trade Adjustment Assistance for Communities was created in 2009 and is administered by DOC and DOL. Under the 2011 reauthorization, the program was pared back from what was authorized in 2009 and was limited to provide grants to eligible higher education institutions to offer, develop, or improve training opportunities for workers covered by the TAAW program.

Chapter Overview

This chapter of the Green Book includes a series of Congressional Research Service (CRS) Reports, one of which provides a legislative history of TAA and the others discuss  TAA programs. A subsequent section lists all Tables and Figures contained in these CRS reports, and includes additional tables and figures related to TAA. The chapter also includes Links to Additional Resources.

Congressional Research Service (CRS) Reports

The House Ways and Means Committee is making available selected reports by the Congressional Research Service (CRS) for inclusion in its 2011 Green Book website. CRS works exclusively for the United States Congress, providing policy and legal analysis to Committees and Members of both the House and Senate, regardless of party affiliation.

Legislative History of TAA

R41922: Trade Adjustment Assistance and Its Role in U.S. Trade Policy

TAA Programs

R42012: Trade Adjustment Assistance (TAA) for Workers

R40863: Trade Adjustment Assistance for Communities: The Law and Its Implementation

RS20210: Trade Adjustment Assistance for Firms: Economic, Program, and Policy Issues

R40206: Trade Adjustment Assistance for Farmers

Tables and Figures in CRS Reports

The following tables and figures related to TAA can be found in the CRS reports section of this Green Book chapter.

R41922: Trade Adjustment Assistance and Its Role in U.S. Trade Policy

Appendix.  TAA Reauthorization, 1962-2011

R42012: Trade Adjustment Assistance (TAA) for Workers

Table 1. TAA Group Certification Requirements Under the Trade Adjustment Assistance Extension Act of 2011

Table 2. TAA Benefits Under the Trade Adjustment Assistance Extension Act of 2011

Table 3. Petitions and Certifications, FY2003-FY2010

Table 4. Training and Benefit Data for TAA-Certified Workers, FY2003-FY2010

Table 5. Ten Largest Recipients of TAA Training Funds, FY2010

Table 6. Trade Readjustment Allowance Participation and Costs, FY2003-FY2010

Table 7. Reemployment Trade Adjustment Assistance, FY2003-FY2010

Table 8. Employment Outcomes for TAA Exiters

R40863: Trade Adjustment Assistance for Communities: The Law and Its Implementation

Table 1. Elements EDA will Consider When Evaluating Strategic Plans

Table 2. Authorization and Appropriation Levels for CTAA

Table 3. Authorization Levels and Appropriations for the Community College and Career Training Grant Program: FY2009-FY2012

RS20210: Trade Adjustment Assistance for Firms: Economic, Program, and Policy Issues

Table 1. Firm TAA Authorizations and Appropriations, FY2001-2011

Table 2. Trade Adjustment Assistance, Select Program Indicators for FY2003-2010

R40206: Trade Adjustment Assistance for Farmers

 Table 1. TAAF Funding and Outlays by Type, FY2003-FY2011

Table 2. Certified TAAF Petitions, Fiscal Years 2004-2011

Table 3. Activity Under Trade Adjustment Assistance for Farmers Program, FY2003-FY2011

 Additional Tables and Figures Related to Trade Adjustment Assistance

The following additional tables and figures appear in this section of the Green Book chapter on TAA.

Table 6-1. Number of Petitions Instituted and Certified and Estimated Number of Workers Petitioning and Certified for TAA for Workers, Fiscal Years 1975-2010

Table 6-2. Total Outlays, Number of New Recipients, and Average Weekly Payments for Trade Readjustment Allowances, Fiscal Years 1975-2010

Table 6-3.  Training, Job Search, and Relocation Allowances: Outlays, Total Number of Workers, Fiscal Years 1975-2010

Links to Additional Resources

Government Sources

TAA for Workers Participation and Outcome Statistics by State in FY2010 (from DOL-ETA)

https://www.doleta.gov/tradeact/TAPR_2010.cfm

Data on Employment Outcomes for TAA for Workers exiters (from DOL-ETA)

https://www.doleta.gov/tradeact/taa_reports/summary.cfm

Introduction

The Temporary Assistance for Needy Families (TANF) block grant provides grants to states, Indian tribes, and territories for a wide range of benefits, services, and activities that address economic disadvantage. TANF is best known for funding state cash welfare programs for low-income families with children. It was created in the 1996 welfare reform law (The Personal Responsibility and Work Opportunity Reconciliation Act of 1996, P.L. 104-193), replacing the Aid to Families with Dependent Children (AFDC) cash welfare program and several related programs. However, in FY2009, cash welfare represented only 28% of TANF funds. TANF funds a wide range of activities that seek to both ameliorate the effects and address the root causes of child poverty. In addition to state block grants, TANF includes competitive grants to fund healthy marriage and responsible fatherhood initiatives.

Federal TANF law is Title IV-A of the Social Security Act. At the federal level, TANF is administered by the Department of Health and Human Services (HHS). However, benefits and services are provided by the states, territories, and tribes. TANF programs operate in all 50 states, the District of Columbia, Puerto Rico, Guam, and the Virgin Islands. American Samoa is eligible to operate a TANF program, but has not opted to do so.

The 1996 welfare reform law provided funding for TANF through FY2002. Subsequent to that, TANF was continued through a series of temporary extensions until enactment of the Deficit Reduction Act of 2005 (DRA, P.L. 109-171). The DRA funded TANF through FY2010. A one-year extension of TANF, through the end of FY2011, was included in the Claims Resolution Act of 2011 (P.L. 111-291). A subsequent three- month extension of TANF (P.L. 112-35) was enacted for the first quarter of FY2012.

Chapter Overview

This chapter of the Green Book includes a Congressional Research Service (CRS) Report detailing the financing and federal rules regarding the TANF block grant. It is followed by a section of Tables and Figures that includes tables on TANF expenditures and unspent grant funds, the cash assistance caseload, characteristics of the cash assistance caseload,  TANF cash assistance benefits, and work participation rates among cash assistance recipients. It concludes with a Legislative History of TANF and Links to Additional Resources, which include a set of links to Department of Health and Human Services (HHS) web sites and research organizations for additional information about TANF.

Congressional Research Service (CRS) Reports

The House Ways and Means Committee is making available selected reports by the Congressional Research Service (CRS) for inclusion in its 2011 Green Book website.  CRS works exclusively for the United State Congress, providing policy and legal analysis to Committees and Members of both the House and Senate, regardless of party affiliation.

Federal Funding and Program Rules for TANF

RL32748: The Temporary Assistance for Needy Families (TANF) Block Grant: A Primer on TANF Financing and Federal Requirements

Tables and Figures

TANF Funding, Expenditures, and Unspent TANF Balances

The  following figure and tables provide information on how states have used their TANF funds. They provide information for or (in the case of historical tables) through Fiscal Year 2009.

Figure 7-1.Federal TANF and State MOE Funds Used in FY2009, By Major Benefit and Service Category

Table 7-1.  Use of TANF and State Maintenance of Effort Funds:  FY2009

Table 7-2.  Federal and State Expenditures and Transfers from TANF and Predecessor Programs: FY1987-FY2009

Table 7-3.  Federal and State Expenditures on Cash Assistance Under Aid to Families with Dependent Children and TANF:  FY1987 to FY2009

Table 7-4.  Federal TANF and MOE Child Care Expenditures and Transfers:  FY1997-FY2009

Table 7-5.  Use of FY2009 TANF and MOE Funds by Category and State

Table 7-6.   Use of TANF and State Maintenance of Effort Funds as a Percent of Total TANF and Maintenance of Effort Funds, by Category and State, FY2009

Table 7-7.    Unspent TANF Grants:  FY1997 through FY2009

Table 7-8.    Unspent TANF Grants by State:  FY2009

The TANF Cash Assistance Caseload

The following figure and tables provide information on the cash assistance caseload under TANF and its predecessor program, Aid to Families with Dependent Children (AFDC).

Figure 7.2. Number of Families Receiving Cash Assistance

Table 7-9.   Trends in the Cash Assistance Caseload:  1961 to 2010

Table 7-10.  TANF Cash Assistance Families by Type:  1998 through 2010

Table 7-11.  Average Monthly Number of Recipients of Cash Assistance by State as a Percent of the State’s Total Population:  Selected Years 1960-2009

Table 7-12.  Average Monthly Number of Child Recipients of Cash Assistance by State as a Percent of the State’s Population Under Age 18:  Selected Years 1960-2009

Table 7-13.  Ratio of Child Recipients of Cash Assistance to Number of Children in Poverty by State:  Selected years 1969 through 2009.

Characteristics of the Cash Assistance Caseload

The following tables provide information on the characteristics of the cash assistance caseload under TANF in FY2009, often comparing the characteristics of the cash assistance caseload in FY2009 with earlier years under AFDC. Additional state-by-state detail on the characteristics of families and persons receiving TANF cash assistance can be found on the Department of Health and Human Services, Administration for Children and Families, Office of Family Assistance web site referenced in the Links to Additional Resources section of this chapter.

Table 7-14.   Summary Characteristics of the AFDC and TANF Cash Assistance Caseload, Selected Years, FY1988-FY2009

Table 7-15.  AFDC and TANF Cash Assistance Caseload, By Family Type, Selected Years, FY1988-FY2009

Table 7-16.  TANF Cash Assistance Families, By Family Type and State, FY2009

Table 7-17.  TANF Cash Assistance Families, By Family Type and State, As a Percent of All Cash Assistance Families in the State, FY2009

Table 7-18.  AFDC and TANF Cash Assistance Recipient Adults, By Race/Ethnicity, Selected Years, FY1988-FY2009

Table 7-19.  AFDC and TANF Cash Assistance Recipient Children, By Race/Ethnicity, Selected Years, FY1988-FY2009

Table 7-20.  Recipient Children in TANF Cash Assistance Families, By Family Category and Racial/Ethnic Group, FY2009

Table 7-21. TANF Cash Welfare Families, By Family Type and Age of Youngest Child, FY2009

Table 7-22.  Percent of TANF Cash Assistance Families Receiving Supplemental Nutrition Assistance Benefits:  FY2009

Cash Assistance Benefits

The following tables provide cash assistance benefit amounts by state. Additional information on the rules that apply in cash assistance programs (e.g. asset limits, earnings eligibility limits, earnings disregards, and sanction policy) can be found in the Urban Institute’s Welfare Rules Database on the Urban Institute’s web site, referenced in the Links to Additional Resources section of this chapter.

Table 7-23.  Maximum Monthly TANF Cash Benefit Amounts, By Family Size and State, July 2009

Table 7-24.  Maximum AFDC and TANF Cash Benefits for a Family of Three, By State, Selected Years 1981-2009

Table 7-25.  Combined TANF Maximum Cash and SNAP Benefits for a Family of Three, By State, July 2009

Work Participation Among Recipients of Cash Assistance Programs

The following tables provide information about work participation rates in TANF cash assistance programs. Additional state-by-state detail on work participation rates and work activities can be found on the Department of Health and Human Services, Administration for Children and Families, Office of Family Assistance web site referenced in the Links to Additional Resources section of this chapter.

Table 7-26.  TANF Work Participation Rates, U.S. Average, FY1997 through FY2009

Table 7-27.  TANF Work Participation Rates by State, FY2009

Legislative History

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P.L. 104-193, the Personal Responsibility and Work Opportunity Reconciliation Act established the block grant of Temporary Assistance for Needy Families.  Appropriated funds for the block grant through FY2002.  August 22, 1996.

P.L. 105-33, the Balanced Budget Act of 1997, raised the cap limiting the counting of vocational educational training and teen parents engaged in education from 20 percent of those considered engaged in work to 30 percent of those considered engaged in work, and temporarily removed from that cap teen parents through FY1999; set the maximum allowable TANF transfer to Title XX social services at 10 percent of the block grant (rather than one-third of total transfers); and made technical corrections to P.L. 104-193.  P.L. 105-33 also established the $3 billion over two-years (FY1998 and FY1999) Welfare-to-Work (WTW) grant program within TANF, but administered by the Department of Labor at the Federal level, with local administration by State workforce investment boards and competitive grantees.  August 5, 1997.

P.L.. 105-89, the Adoption and Safe Families Act, reduced the contingency fund appropriation by $40 million.  November 19, 1997.

P.L. 105-220, the Transportation Act for the 21st Century, permitted the use of Federal TANF funds to be used as matching funds for reverse commuter grants.

P.L. 106-113, the Consolidated Appropriations Act for 2000, broadened eligibility for recipients to be served by the WTW grant program and added limited authority for vocational educational or job training to be WTW activities.   November 29, 1999.

P.L. 106-554, the Consolidated Appropriations Act for 2001, gave grantees two more years to spend WTW grant funds (a total of five years from the date of the grant award).

P.L. 107-147, the Job Creation and Worker Assistance Act, extended supplemental grants and contingency funds, both of which had expired on September 30, 2001,  through FY2002.  (Supplemental grants were extended at FY2001 levels).  March 9, 2002.

P.L. 107-229 extended TANF basic grants, supplemental grants, bonus funds, and contingency funds (and other related programs) through December 20, 2002 .  September 30, 2002.   Other “temporary extensions” of TANF grants were made in: P.L. 107-294, through March 30, 2003 (November 22, 2002); P.L. 108-7, through June 30, 2003 (February 20, 2003); P.L. 108-40, through September 30, 2003 (June 30, 2003); P.L. 108-89, through March 31, 2004 (October 1, 2003); P.L. 108-210, through June 30, 2004 (March 31, 2004); P.L. 108-262, through September 30, 2004 (June 30, 2004); P.L. 108-308, through March 31, 2005 (September 30, 2004); P.L. 109-4, through June 30, 2005 (March 25, 2005); and P.L. 109-19, through September 30, 2005 (July 1, 2005).

P.L. 108-199 rescinded all remaining unspent WTW formula grant funds, effectively ending the WTW grant program.  January 23, 2004.

P.L. 109-68 provided extra funding to help States provide benefits to families affected by Hurricane Katrina, allowing States to draw upon contingency funds to assist those displaced by the hurricane; allowing directly affected States to receive funds from the loan fund, with repayment of the loan forgiven; and suspending penalties for failure to meet certain requirements for States directly affected by the hurricane.  Also, temporarily extended TANF grants through December 30, 2005.  September 21, 2005.

P.L. 109-161 extended TANF grants through March 30, 2006.  December 30, 2005.

P.L. 109-171, the Deficit Reduction Act of 2005, extended most TANF grants through FY2010 (supplemental grants expire at the end of FY2008); eliminated TANF bonus funds; established competitive grants within TANF for healthy marriage and responsible fatherhood initiatives; revised the caseload reduction.  February 8, 2006.

P.L. 110-275 included an extension of TANF supplemental grants through the end of FY2009.  July 15, 2008.

P.L. 111-5, the American Recovery and Reinvestment Act, established a $5 billion Emergency Contingency Fund (ECF) to reimburse states for increased costs associated with the 2007-9 recession for FY2009 and FY2010.  The fund reimbursed states, territories, and tribes for 80% of the increased costs of basic assistance, non-recurrent short-term benefits, and subsidized employment.  The law also permitted states to “freeze” caseload reduction credits at pre-recession levels, allowed states to use TANF reserve funds for any benefit or service (before it was restricted to assistance), and extended supplemental grants through the end of FY2010.  February 17, 2009.

P.L. 111-242, the first continuing appropriations resolution for FY2011, extended TANF funding through Dec. 3, 2010.  September 30, 2010.  P.L. 111-290, the second continuing resolution, continued TANF funding authority through December 18, 2010.  December 4, 2010.

P.L. 111-291, the Claims Resolution Act of 2010, extended basic TANF funding through the end of FY2011, September 30, 2011, but reduced funding and provided supplemental grants only through June 30, 2011.  Also required some additional reporting on work activities and TANF expenditures.  December 8, 2010.

P.L. 112-35, the Short-Term TANF Extension Act, extended basic TANF funding for three month, through December 31, 2011. No funding was provided for supplemental grants.  September 30, 2011.

Links to Additional Resources

Government Sources

Federal TANF Law (Note:  Title IV-A, Sections 401-419 comprise TANF).

https://www.ssa.gov/OP_Home/ssact/title04/0400.htm

Department of Health and Human Services Sites:

Office of Family Assistance (OFA) of the Administration for Children and Families.  The office administers TANF, and its site includes policy documents and program data:

https://www.acf.hhs.gov/programs/ofa/

Office of Policy Research and Evaluation (OPRE) of the Administration for Children and Families.  This office funds research related to programs administered within the Administration for Children and Families.  It has a site devoted to research on welfare and self-sufficiency issues:

https://www.acf.hhs.gov/programs/opre/index.html

Office of the Assistant Secretary for Planning and Evaluation (ASPE).  This office also funds research projects and maintains a web page on welfare and self-sufficiency issues:

https://aspe.hhs.gov/_/topic/topic.cfm?topic=Welfare,%20Work,%20and%20Self-Sufficiency

Nongovernment Sources

MDRC has a long history of evaluating social programs, particularly welfare-to-work initiatives. 

https://www.mdrc.org/

Mathematica Policy Research also has a long history of program evaluations, including welfare-to-work programs.

https://www.mathematica-mpr.com/

The Urban Institute produces studies on the low-income population, including those receiving cash assistance.  It is also the home of the Welfare Rules Database:

https://www.urban.org/

Introduction

The federal Child Support Enforcement (CSE) program was signed into law in 1975 by President Gerald Ford. It was part of the Social Services Amendments of 1974 (P.L. 93-647). The CSE program is Title IV-D of the Social Security Act. The CSE program is based on the premise that both parents are financially responsible for their children. Child support is the cash payment that noncustodial parents are legally obligated to pay for the financial support of their children. It generally is established when parents divorce or separate or when the custodial parent applies for welfare. It is usually paid on a monthly basis.

When the CSE program was first established, its goals were to reimburse the states and the federal government for the welfare payments it provided families and to help other families obtain consistent and ongoing child support payments from the noncustodial parent so that they could remain self-sufficient and stay off welfare. Congress through legislative changes has broadened the mission of the CSE program. The CSE program has evolved over time from a “welfare cost-recovery” program into a “family-first” service delivery program that seeks to enhance the well-being of families by making child support a reliable source of income. The mission of the CSE program is to enhance the well-being of children by helping custodial parents and children obtain financial support from the noncustodial parents on a consistent and continuing basis. Child support payments enable parents who do not live with their children to fulfill their financial responsibility to their children by contributing to the payment of childrearing costs.

The CSE program provides seven basic services on behalf of children. It (1) locates noncustodial parents, (2) establishes paternity, (3) establishes child support orders, (4) reviews and modifies child support orders, (5) collects child support payments from noncustodial parents, (6) establishes and enforces medical child support, and (7) distributes child support payments to custodial parents.

The CSE program is administered at the federal level by the Office of Child Support Enforcement (OCSE) in the Department of Health and Human Services (HHS). The CSE program is available in all 50 states, the District of Columbia, the territories of Guam, Puerto Rico, and the Virgin Islands, and about 50 tribal nations. The CSE program is usually operated at the county-level of government.

The CSE program is a federal-state program that provides services to both welfare and non-welfare families. Welfare families (i.e., Temporary Assistance for Needy Families (TANF, Title IV-A) recipients, federal foster care families (Title IV-E), and Medicaid recipients (Title XIX)) are automatically enrolled in the program, free of charge. Non-welfare families must sign-up for CSE services and pay an application fee. Also non-welfare families pay a $25 annual user fee if at least $500 per year is collected on behalf of the custodial parent.

There are four primary funding streams for the CSE program. (1) States spend their own money to operate a CSE program. (2) The federal government reimburses each state 66% of all expenditures on CSE activities. (3) States collect child support made on behalf of TANF and foster care families to reimburse themselves and the federal government for the cost of TANF and child welfare payments and/or services to the families. (4) The federal government provides states with an incentive payment to encourage them to operate effective CSE programs. In addition, application and user fees and costs recovered from non-welfare families may help finance the CSE program.

In FY2010, about 14% of the CSE caseload consisted of TANF families; about 43% were families who had at some point been on the TANF program, and 43% were families that had never received TANF benefits. In FY2010, the CSE program collected $26.6 billion in child support payments from noncustodial parents and served 15.9 million child support cases. Of the $26.6 billion collected in child support payments, about 93% went to families, 6% went to state and federal governments, and 1% consisted of medical support payments or fees paid to states. On average, in FY2010 the CSE program collected $4.88 in child support payments for each $1 spent on the program. In FY2010, total CSE expenditures amounted to $5.8 billion.

Not all child support goes through the CSE program. The CSE program handles between 50-60% of all child support cases; the rest are handled by private attorneys or collection agencies, or through mutual agreements between parents.

Chapter Overview

This chapter of the Green Book includes a series of Congressional Research Service (CRS) Reports organized under the following general headings. Readers should consult the reports listed under each of these headings for information and data related to these topics.

• General Information
• CSE Financing
• CSE Location Methods
• CSE Collection Techniques
• CSE Payors

A separate section identifies Tables and Figures included in the CRS reports and also provides additional tables and figures related to the CSE program. Additional sections include a Legislative History and Links to Additional Resources:

Congressional Research Service (CRS) Reports

The House Ways and Means Committee is making available selected reports by the Congressional Research Service (CRS) for inclusion in its 2011 Green Book website. CRS works exclusively for the United States Congress, providing policy and legal analysis to Committees and Members of both the House and Senate, regardless of party affiliation. Certain CRS reports with cover dates earlier than 2011 are included here because their content remains relevant.

General Information

RS22380: Child Support Enforcement: Program Basics

R41204: Child Support Enforcement: Tribal Programs

RS22499: Child Support: An Overview of Census Bureau Data on Recipients

CSE Financing

RS22753: Child Support Enforcement: $25 User Fee

RL34203: Child Support Enforcement Incentive Payments: Background and Policy Issues

RL34105: The Financial Impact of Child Support on TANF Families: Simulation for Selected States

CSE: Location Methods

RS22889: The National Directory of New Hires

CSE: Collection Methods

R41762: Child Support Enforcement and Driver’s License Suspension Policies

CSE Payors

RL31025: Fatherhood Initiatives: Connecting Fathers to Their Children

R41431: Child Well-Being and Noncustodial Fathers

R40499: Child Support and Ex-Offenders

Tables and Figures in CRS Reports

Following is a list of tables and figures related to Child Support Enforcement that can be found in the CRS reports section of this Green Book chapter.

RS22380: Child Support Enforcement: Program Basics

Table 1. Child Support Data—FY2010 (Preliminary)

R41204: Child Support Enforcement: Tribal Programs

Table 1. Tribal CSE Program Financial and Statistical Data, FY2004-FY2008

Table 2. Tribal CSE Program, Expenditures and Collections Per Case, FY2004-FY2008

Table 3. Tribal CSE Summary Data by Tribe, FY2008

Table A-1. Tribal CSE Collections by Tribe, in Rank Order, FY2008

Table A-2. Tribal CSE Expenditures by Tribe, in Rank Order, FY2008

Table A-3. Tribal CSE Caseload by Tribe, in Rank Order, FY2008

Table A-4. Tribal CSE Program: Paternities Established by Tribe, in Rank Order, FY2008

Table A-5. Tribal CSE Program: Child Support Orders Established by Tribe, in Rank Order, FY2008

Table A-6. Tribal CSE Program: Collections Per Dollar of Expenditures by Tribe, in Rank Order, FY2008

Table B-1. Comprehensive Tribal Child Support Enforcement Programs, September 2008

Table B-2. Start-Up Tribal Child Support Enforcement Programs, FY2008

Table C-1. Population Figures for Tribes with Tribal CSE Programs: Tribal Enrollment (2005), BIA Service Population (2005), and Census AIAN Populations in Census- Defined Federal AIAN Areas (2000)

Figure 1. Map of Tribal CSE Programs

Figure 2. Tribal CSE Program: Collections and Expenditures, FY2004-FY2008

RS22499: Child Support: An Overview of Census Bureau Data on Recipients

Table 1. Child Support Award and Receipt, 1993-2007

Table 2. Demographic Characteristics of Custodial Parents by Child Support Award and Receipt Status, 2007

RS22753: Child Support Enforcement: $25 User Fee

Table 1. Method By Which $25 CSE Annual User Fee Is Imposed

RL34203: Child Support Enforcement Incentive Payments: Background and Policy Issues

Table B-1. Actual Incentive Payments, by State, FY2002-FY2005

Table B-2. Child Support Enforcement Incentive Payments and Unaudited Incentive Performance Scores, FY2002

Table B-3. Child Support Enforcement Incentive Payments and Unaudited Incentive Performance Scores, FY2003

Table B-4. Child Support Enforcement Incentive Payments and Unaudited Incentive Performance Scores, FY2004

Table B-5. Child Support Enforcement Incentive Payments and Unaudited Incentive Performance Scores, FY2005

Table B-6. Child Support Enforcement Unaudited Incentive Performance Scores, FY2006

Figure 1. Paternity Establishment Scores: Maximum, Median, Minimum

Figure 2. Child Support Order Establishment Scores: Maximum, Median, Minimum

Figure 3. Child Support Current Collections Scores: Maximum, Median, Minimum

Figure 4. Child Support Arrearage Cases Scores: Maximum, Median, Minimum

Figure 5. Cost-Effectiveness Scores: Maximum, Median, Minimum

RL34105: The Financial Impact of Child Support on TANF Families: Simulation for Selected States

Table 1. Treatment of Monthly Child Support Income by the TANF Program, April 2007

Table 2. Monthly TANF and Child Support Income of a Mother with No Earnings and Two Children, Pre- and Post-DRA Policies

Table 3. Monthly TANF and Child Support Income of a Mother with No Earnings and Two Children, With $300 in Child Support

Table 4. Monthly TANF and Child Support Income of a Mother with Half-Time Earnings and Two Children, With $300 in Child Support

Table 5. Monthly TANF and Child Support Income of a Mother with Full-Time Earnings and Two Children, With $300 in Child Support

Table 6. Source of Payment for Increase in Monthly Family Income Resulting From DRA Policy, for a Mother with Two Children, With $300 in Child Support

Table A-1. Impact of DRA Policy on Total Monthly Income for a Single Mother With Two Children in California

Table A-2. Impact of DRA Policy on Total Monthly Income for a Single Mother With Two Children in Illinois

Table A-3. Impact of DRA Policy on Total Monthly Income for a Single Mother With Two Children in Maine

Table A-4. Impact of DRA Policy on Total Monthly Income for a Single Mother With Two Children in Maryland

Table A-5. Impact of DRA Policy on Total Monthly Income for a Single Mother With Two Children in Oklahoma

Table A-6. Impact of DRA Policy on Total Monthly Income for a Single Mother With Two Children in West Virginia

Table B-1. Impact of DRA Policy on Distribution of Child Support Payments for a Mother with Two Children: California

Table B-2. Impact of DRA Policy on Distribution of Child Support Payments for a Mother with Two Children: Illinois

Table B-3. Impact of DRA Policy on Distribution of Child Support Payments for a Mother with Two Children: Maine

Table B-4. Impact of DRA Policy on Distribution of Child Support Payments for a Mother with Two Children: Maryland

Table B-5. Impact of DRA Policy on Distribution of Child Support Payments for a Mother with Two Children: Oklahoma

Table B-6. Impact of DRA Policy on Distribution of Child Support Payments for a Mother with Two Children: West Virginia

R41762: Child Support Enforcement and Driver’s License Suspension Policies

Table 1. Total Child Support Collections Received by Methods of Collection, FY2009

Table 2. Access to a Car in 10 Cities, by Employment Status

Table A-1. State CSE Driver’s License Suspension Policies

R41431: Child Well-Being and Noncustodial Fathers

Table 1. Employment Rates in March of Selected Years for Men without a High School Diploma, by Race/Ethnicity and Age

Table 2. Earned Income Tax Credits: Maximum Credits and Income Eligibility Amounts for Filers With and Without Children, 2011

Table 3. Federal Funding for Teen Pregnancy Prevention Programs, FY2011

Figure 1. Poverty Rates for Children, by Family Type: 1959-2009

Figure 2. Percent of all Related Children Under Age 18 Living in Single-Parent, Female-Headed Families, 1959-2009

Figure 3. Median Annual Earnings of Men and Women Who Work Full-Time, Full-Year: 1960-2009

Figure 4. Average Inflation-Adjusted Earnings for Men Aged 18 and Older, by Education Level: 1975-2008

Figure 5. Employment Rates for Men and Women Ages 16 and Older, 1948-2010

Figure 6. Employment Rates for Men by Age, 1948-2010

Figure 7. Unemployment Rates for Men and Women and the Gap in Rates Between Men and Women, 1948-2011

Figure 8. Incarceration Rates for Selected Years, by Gender, 1995 to 2009

Figure 9. Percent of Men Who Lack a High School Diploma, by Race/Ethnicity, 2009

Figure 10. Average Earnings for Men without a High School Diploma, by Race/Ethnicity, 1975 and 2008

Figure 11. Incarceration Rate for Men in 2009, by Race/Ethnicity   

R40499: Child Support and Ex-Offenders

Figure 1. Estimated Number of Parents in State and Federal Prisons—Data for 1991, 1997, 1999, 2004, and 2007

Additional Tables and Figures Related to Child Support Enforcement

The following additional tables and figures appear in this section of the Green Book chapter on Child Support Enforcement.

Table 8-1. Summary Of National Child Support Program  Statistics, Selected Fiscal Years 1978-2010

Table 8-2. Child Support Collections Made By Various Enforcement Techniques,

Selected Fiscal Years 1995-2010

Table 8-3. Financing Of The Federal/State Child Support Enforcement Program,

Fiscal Year 2008

Legislative History

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1950

The first Federal child support enforcement legislation was Public Law 81–734, the Social Security Act Amendments of 1950, which added section 402(a)(11) to the Social Security Act (42 USC 602(a)(11)). The legislation required State welfare agencies to notify appropriate law enforcement officials upon providing Aid to Families with Dependent Children (AFDC) to a child who was abandoned or deserted by a parent. Also that year, the National Conference of Commissioners on Uniform State Laws and the American Bar Association approved the Uniform Reciprocal Enforcement of Support Act (URESA; subsequent amendments to this act were approved in 1952, 1958, and 1968).

1965

Public Law 89–97, the Social Security Amendments of 1965, allowed a State or local welfare agency to obtain from the Secretary of Health, Education, and Welfare the address and place of employment of an absent parent who owed child support under a court order for support.

1967

Public Law 90–248, the Social Security Amendments of 1967, allowed States to obtain from the Internal Revenue Service (IRS) the address of nonresident parents who owed child support under a court order for support. In addition, each State was required to establish a single organizational unit to establish paternity and collect child support for deserted children receiving AFDC. States were also required to work cooperatively with each other under child support reciprocity agreements and with courts and law enforcement officials.

1975

Public Law 93–647, the Social Security Amendments of 1974, created part D of title IV of the Social Security Act (sections 451, et seq.; 42 USC 651, et seq.). The key child support enforcement provisions, which reflect 3 years of intense congressional attention, are as follows: The Secretary of the Department of Health, Education, and Welfare (now the Department of Health and Human Services or HHS) has primary respo sibility for the program and is required to establish a separate organizational unit to operate the program. Operational responsibilities include: (1) establishing a parent locator service; (2) establishing standards for State program organization, staffing, and operation; (3) reviewing and approving State plans for the program; (4) evaluating State program operations by conducting audits of each State’s program; (5) certifying cases for referral to the Federal courts to enforce support obligations; (6) certifying cases for referral to the IRS for support collections; (7) providing technical assistance to States and assisting them with reporting procedures; (8) maintaining records of program operations, expenditures, and collections; and (9) submitting an annual report to the Congress.

Primary responsibility for operating the Child Support Enforcement program was placed on the States pursuant to the State plan. The major requirements of a State plan are that: (1) the State designate a single and separate organizational unit to administer the program; (2) the State undertake to establish paternity and secure support for individuals receiving AFDC and others who apply directly for child support enforcement services; (3) child support payments be made to the State for distribution; (4) the State enter into cooperative agreements with appropriate courts and law enforcement officials; (5) the State establish a State parent locator service that uses State and local parent location resources and the Federal Parent Locator Service; (6) the State cooperate with any other State in locating an absent parent, establishing paternity, and securing support; and (7) the State maintain a full record of collections and disbursements made under the plan.

In addition, the 1975 legislation established procedures for the distribution of child support collections received on behalf of families on AFDC, created an incentive system to encourage States to collect payments from parents of children on AFDC, and subjected moneys due and payable to Federal employees to garnishment for the collection of child support.

New eligibility requirements were added to the AFDC program requiring applicants for, or recipients of, AFDC to make an assignment of support rights to the State, to cooperate with the State in establishing paternity and securing support, and to furnish their Social Security number to the State. The effective date of Public Law 93–647 was July 1, 1975, except for the provision regarding garnishment of Federal employees, which was effective upon enactment. However, several problems were identified prior to the effective date and Congress passed Public Law 94–46 to extend the effective date to August 1, 1975. In addition, Public Law 94–88 was passed in August 1975 to allow States to obtain waivers from certain program requirements under certain conditions until June 30, 1976 and to receive Federal reimbursement at a reduced rate. This law also eased the requirement for AFDC recipients to cooperate with State child support agencies when such cooperation would not be in the best interests of the child and provided for supplemental payments to AFDC recipients whose grants would be reduced due to the implementation of the Child Support Enforcement program.

1976

Public Law 94–566, effective October 20, 1976, required State employment agencies to provide absent parents’ addresses to State child support enforcement agencies.

1977

Public Law 95–30, effective May 23, 1977, made several amendments to title IV–D. Provisions relating to the garnishment of a Federal employee’s wages for child support were amended to: (1) include employees of the District of Columbia; (2) specify the conditions and procedures to be followed to serve garnishments on Federal agencies; (3) authorize the issuance of garnishment regulations by the three branches of the Federal Government and by the District; and (4) clarify several terms used in the statute. Public Law 95–30 also amended section 454 of the Social Security Act (42 USC 654) to require the State plan to provide bonding for employees who receive, handle, or disburse cash and to insure that the accounting and collection functions are performed by different individuals. In addition, the incentive payment provision, under section 458(a) of the Social Security Act (42 USC 658(a)), was amended to change the rate to 15 percent of AFDC collections (from 25 percent for the first 12 months and 10 percent thereafter).

Public Law 95–142, the Medicare-Medicaid Antifraud and Abuse Amendments of 1977, established a medical support enforcement program under which States could require Medicaid applicants to assign to the State their rights to medical support. State Medicaid agencies were allowed to enter into cooperative agreements with any appropriate agency of any State, including the IV–D agency, for assistance with the enforcement and collection of medical support obligations. Incentives were also made available to localities making child support collections for States and for States securing collections on behalf of other States.

1978

Public Law 95–598, the Bankruptcy Reform Act of 1978, repealed section 456(b) of the Social Security Act (42 USC 656(b)), which had barred the discharge in bankruptcy of assigned child support debts. (This section of the act (now 546(h)) was restored by Public Law 97–35 in 1981.)

1980

Public Law 96–178 extended Federal financial participation (FFP) for non-AFDC services to March 31, 1980, retroactive to October 1, 1978.

Public Law 96–265, the Social Security Disability Amendments of 1980, increased Federal matching funds to 90 percent, effective July 1, 1981, for the costs of developing, implementing, and enhancing approved automated child support management nformation systems. Federal matching funds were also made available for child support enforcement duties performed by certain court personnel. In another provision, the law authorized IRS to collect child support arrearages on behalf of non-AFDC families. Finally, the law provided State and local IV–D agencies access to wage information held by the Social Security Administration and State employment security agencies for use in establishing and enforcing child support obligations.

Public Law 96–272, the Adoption Assistance and Child Welfare Act of 1980, contained four amendments to title IV–D of the Social Security Act. First, the law made FFP for non-AFDC services available on a permanent basis. Second, it allowed States to receive incentive payments on all AFDC collections as well as interstate collections. Third, as of October 1, 1979, States were required to claim reimbursement for expenditures within 2 years, with some exceptions. The fourth change postponed until October, 1980 the imposition of the 5 percent penalty on AFDC reimbursement for States not having effective Child Support Enforcement programs.

1981

Public Law 97–35, the Omnibus Budget Reconciliation Act of 1981, amended IV–D in five ways. First, IRS was authorized to withhold all or part of certain individuals’ Federal income tax refunds for collection of delinquent child support obligations. Second, IV–D agencies were required to collect spousal support for AFDC families. Third, for non-AFDC cases, IV–D agencies were required to collect fees from absent parents who were delinquent in their child support payments. Fourth, child support obligations assigned to the State no longer were dischargeable in bankruptcy proceedings. Fifth, States were required to withhold a portion of unemployment benefits from absent parents delinquent in their support payments.

1982

Public Law 97–248, the Tax Equity and Fiscal Responsibility Act of 1982, included the following provisions affecting the IV–D program: FFP was reduced from 75 to 70 percent, effective October 1, 1982; incentives were reduced from 15 to 12 percent, effective October 1, 1983; the provision for reimbursement of costs of certain court personnel that exceed the amount of funds spent by a State on similar court expenses during calendar year 1978 was repealed; the mandatory non-AFDC collection fee imposed by Public Law 97–35 was repealed, retroactive to August 13, 1981, and States were given the option of recovering costs by imposing fees on non-AFDC parents; States were allowed to collect spousal support in certain non-AFDC cases; as of October 1, 1982, members of the uniformed services on active duty were required to make allotments from their pay when support arrearages reached the equivalent of a 2- month delinquency; beginning October 1, 1982, States were allowed to reimburse themselves for AFDC grants paid to families for the first month in which the collection of child support is sufficient to make a family ineligible for AFDC.

Public Law 97–253, the Omnibus Budget Reconciliation Act of 1982, provided for the disclosure of information obtained under authority of the Food Stamp Act of 1977 to various programs, including State child support enforcement agencies.

Public Law 97–252, the Uniformed Services Former Spouses’ Protection Act, authorized treatment of military retirement or retainer pay as property to be divided by State courts in connection with divorce, dissolution, annulment, or legal separation proceedings.

1984

Public Law 98–378, the Child Support Enforcement Amendments of 1984, featured provisions that required improvements in State and local Child Support Enforcement programs in four major areas:

Mandatory enforcement practices

All States must enact statutes to improve enforcement mechanisms, including: (1) mandatory income withholding procedures; (2) expedited processes for establishing and enforcing support orders; (3) State income tax refund interceptions; (4) liens against real and personal property, security or bonds to assure compliance with support obligations; and (5) reports of support delinquency information to consumer reporting agencies. State law must allow for the bringing of paternity actions any time prior to a child’s 18th birthday and all support orders issued or modified after October 1, 1985, must include a provision for wage withholding.

Federal financial participation and audit provisions

To encourage greater reliance on performance-based incentives, Federal matching funds were reduced by 2 percent in 1988 (to 68 percent) and another 2 percent in 1990 (to 66 percent). Federal matching funds at 90 percent were made available for the development

and installation of automated systems, including computer hardware purchases, to facilitate income withholding and other newly required procedures. State incentive payments were reset at 6 percent for both AFDC and non-AFDC collections. These percentages could rise as high as 10 percent for each category for cost-effective

States, but a State’s non-AFDC incentive payments could not exceed its AFDC incentives. States were required to pass incentives through to local child support enforcement agencies if these agencies had accumulated child support enforcement costs. Annual State audits were replaced with audits conducted at least once every 3 years. The focus of the audits was altered to evaluate a State’s effectiveness on the basis of program performance as well as operational compliance. Penalties for noncompliance are from 1

to 5 percent of the Federal share of the State’s AFDC funds. The Federal Government may suspend imposition of a penalty based on a State’s filing of, and complying with, an acceptable corrective action plan.

Improved interstate enforcement

States were required to apply a host of enforcement techniques to interstate cases as well as intrastate cases. Both States involved in an interstate case may take credit for the collection when reporting total collections for the purpose of calculating incentives. Special demonstration grants were authorized beginning in 1985 to fund innovative methods of interstate enforcement and collection. Federal audits were focused on States’ effectiveness in establishing and enforcing obligations across State lines.

Equal services for welfare and non-AFDC families

Several specific requirements were directed at improving State services to non-AFDC families. All of the mandatory practices must be made available for both classes of cases; the interception of Federal income tax refunds was extended to non-AFDC cases; incentive payments for non-AFDC cases became available for the first time; States were required to continue child support services to families terminated from the welfare rolls without charging an application fee; and States were required to publicize the availability of support enforcement services for non-AFDC parents.

Other provisions

States were required to: (1) collect support in certain foster care cases; (2) collect spousal support in addition to child support where both are due in a case; (3) notify AFDC recipients, at least yearly, of the collections made in their behalf; (4) establish State commissions to study the operation of the State’s child support system and

report findings to the State’s Governor; (5) formulate guidelines for determining appropriate child support obligation amounts and distribute the guidelines to judges and other individuals who possess authority to establish obligation amounts; (6) offset the costs of the program by charging various fees to non-AFDC families and to delinquent

nonresident parents; (7) allow families whose AFDC eligibility is terminated as a result of the payment of child support to remain eligible to receive Medicaid for 4 months (sunsets on October 1, 1988); and (8) establish medical support orders in addition

to monetary awards. The Federal Parent Locator Service was made more accessible and effective in locating absent parents. Sunset provisions were included in the extension of Medicaid eligibility and Federal tax offsets for non-AFDC families.

Public Law 98–369, the Tax Reform Act of 1984, included two tax provisions pertaining to alimony and child support. Under prior law, alimony was deductible by the payor and includable in the income of the payee. The 1984 law revised the rules relating to the definition of alimony. Generally, only cash payments that terminate on the death of the payee spouse qualify as alimony. Alimony payments, if in excess of $10,000 per year, generally must be payable for at least 6 years and must not decline by more than $10,000. The prior law requirement that the payment be based on a legal support obligation was repealed and payors were required to furnish to the IRS the Social Security number of the payee spouse. A $50 penalty for failure to do so was imposed. The provision was effective for divorce or separation agreements or orders executed after 1984. The 1984 law also provided that the $1,000 dependency exemption for a child of divorced or separated parents be allocated to the custodial parent unless the custodial parent signs a written declaration that she will not claim the exemption for the year. For purposes of computing the medical expense deduction for years after 1984, each parent may claim the medical expenses that he or she pays for the child.

1986

Public Law 99–509, the Omnibus Budget Reconciliation Act of 1986, included one child support enforcement amendment prohibiting the retroactive modification of child support awards. Under this new requirement, State laws must provide for either parent to apply for modification of an existing order with notice provided to the other parent. No modification is permitted before the date of this notification.

1987

Public Law 100–203, the Omnibus Budget Reconciliation Act of 1987, required States to provide child support enforcement services to all families with an absent parent who receives Medicaid and have assigned their support rights to the State, regardless of whether they are receiving AFDC.

1988

Public Law 100–485, the Family Support Act of 1988, emphasized the duties of parents to work and support their children and, in particular, emphasized child support enforcement as the first line of defense against welfare dependence. The key child support provisions include:

Guidelines for child support awards

Judges and other officials are required to use State guidelines for child support unless they rebut the guidelines by a written finding that applying them would be unjust or inappropriate in a particular case. States must review guidelines for awards every four years. Beginning 5 years after enactment, States generally must review and adjust individual case awards every 3 years for AFDC cases. The same applies to other IV–D cases, except review and adjustment must be at the request of a parent.

Establishment of paternity

States are required to meet Federal standards for the establishment of paternity. The primary standard relates to the percentage obtained by dividing the number of children in the State who are born out of wedlock, are receiving cash benefits or IV–D child support

services, and for whom paternity has been established by the number of children who are born out of wedlock and are receiving cash benefits or IV–D child support services. To meet Federal requirements, this percentage in a State must: (1) be at least 50 percent;

(2) be at least equal to the average for all States; or (3) have increased by 3 percentage points from fiscal years 1988 to 1991 and by 3 percentage points each year thereafter. States are mandated to require all parties in a contested paternity case to take a genetic

test upon request of any party. The Federal matching rate for laboratory testing to establish paternity is set at 90 percent.

Disregard of child support

The child support enforcement disregard authorized under the Deficit Reduction Act of 1984 is clarified so that it applies to a payment made by the noncustodial parent in the month it was due even though it was received in a subsequent month.

Requirement for prompt State response

The Secretary of HHS was required to set time limits within which States must accept and respond to requests for assistance in establishing and enforcing support orders as well as time limits within which child support payments collected by the State IV–D agency must be distributed to the families to whom they are owed.

Requirement for automated tracking and monitoring system

Every State that does not have a statewide automated tracking and monitoring system in effect must submit an advance planning document that meets Federal requirements by October 1, 1991. The Secretary must approve each document within 9 months after submission. By October 1, 1995, every State must have an approved system in effect. States were awarded 90 percent Federal matching rates for this activity until September 30, 1995.

Interstate enforcement

A Commission on Interstate Child Support was created to hold national conferences on interstate child support enforcement reform and to report to Congress no later than October 1, 1990 on recommendations for improvements in the system and revisions in the Uniform Reciprocal Enforcement of Support Act.

Computing incentive payments

Amounts spent by States for interstate demonstration projects are excluded from calculating the amount of the States’ incentive payments.

Use of INTERNET system

The Secretaries of Labor and HHS are required to enter into an agreement to give the Federal Parent Locator Service prompt access to wage and unemployment compensation claims information useful in locating absent parents.

Wage withholding

With respect to IV–D cases, each State must provide for immediate wage withholding in the case of orders that are issued or modified on or after the first day of the 25th month beginning after the date of enactment unless: (1) one of the parties demonstrates, and the court finds, that there is good cause not to require such withholding; or (2) there is a written agreement between both parties providing for an alternative arrangement. Prior law requirements for mandatory wage withholding in cases where payments are in arrears apply to orders that are not subject to immediate wage withholding. States are required to provide for immediate wage withholding for all support orders initially issued on or after January 1, 1994, regardless of whether a parent has applied for IV–D services.

Work and training demonstration programs for noncustodial parents

The Secretary of HHS is required to grant waivers to up to five States to allow them to provide services to noncustodial parents under the JOBS program. No new power is granted to the States to require participation by noncustodial parents.

Data collection and reporting

The Secretary of HHS is required to collect and maintain State-by-State statistics on paternity establishment, location of absent parent for the purpose of establishing a support obligation, enforcement of a child support obligation, and location of absent parents for the purpose of enforcing or modifying an established obligation.

Use of Social Security number

Each State must, in the administration of any law involving the issuance of a birth certificate, require each parent to furnish his or her Social Security number (SSN), unless the State finds good cause for not requiring the parent to furnish it. The SSN shall appear in the birth record but not on the birth certificate, and the use of the SSN obtained through the birth record is restricted to child support enforcement purposes, except under certain circumstances.

Notification of support collected

Each State is required to inform families receiving AFDC of the amount of support collected on their behalf on a monthly basis, rather than annually as provided under prior law. States may provide quarterly notification if the Secretary of HHS determines that monthly reporting imposes an unreasonable administrative burden. This provision is effective 4 years after the date of enactment. The Medicaid transition benefit in child support cases is extended from October 1, 1988 to October 1, 1989.

1989

Public Law 101–239, the Omnibus Budget Reconciliation Act of 1989, made permanent the requirement that Medicaid benefits continue for 4 months after a family loses AFDC eligibility as a result of collection of child support payments.

1990

Public Law 101–508, the Omnibus Budget Reconciliation Act of 1990, permanently extended the Federal provision that allows States to ask the IRS to collect child support arrearages of at least $500 out of income tax refunds otherwise due to noncustodial parents. The minor child restriction is eliminated for adults with a current support order who are disabled, as defined under OASDI or SSI. The IRS offset can be used for spousal support when spousal and child support are included in the same support order. The life of the Interstate Child Support Commission was extended from July 1, 1991 to July 1, 1992, and the Commission was required to submit its report no later than May 1, 1992. The Commission was allowed to hire its own staff.

1992

Public Law 102–521, the Child Support Recovery Act of 1992, imposed a Federal criminal penalty for the willful failure to pay a past due child support obligation with respect to a child who resides in another State that has remained unpaid for longer than a year or is greater than $5,000. For the first conviction the penalty is a fine of up to $5,000, imprisonment for not more than 6 months, or both; for a second conviction, the penalty is a fine of not more than $250,000, imprisonment for up to 2 years, or both.

Public Law 102–537, the Ted Weiss Child Support Enforcement Act of 1992, amended the Fair Credit Reporting Act to require report information on child support delinquencies provided by or verified by State or local child support agencies, which antedates the report by 7 years.

1993

Public Law 103–66, the Omnibus Budget Reconciliation Act of 1993, increased the percentage of children, from 50 to 75, for whom the State must establish paternity and required States to adopt laws requiring civil procedures to voluntarily acknowledge paternity (including hospital-based programs). The act also required States to adopt laws to ensure the compliance of health insurers and employers in carrying out court or administrative orders for medical child support and included a provision that forbids health insurers to deny coverage to children who are not living with the covered individual or who were born outside marriage.

1994

Public Law 103–383, the Full Faith and Credit for Child Support Orders Act, requires each State to enforce, according to its terms, a child support order by a court (or administrative authority) of another State, with conditions and specifications for resolving issues of jurisdiction

Public Law 103–394, the Bankruptcy Reform Act of 1994, stipulates that a filing of bankruptcy does not stay a paternity, child support, or alimony proceeding. In addition, child support and alimony payments are made priority claims and custodial parents are able to appear in bankruptcy court to protect their interests without paying a fee or meeting any local rules for attorney appearances.

Public Law 103–403, the Small Business Administration Amendments of 1994, makes parents who fail to pay child support ineligible for small business loans.

Public Law 103–432, the Social Security Act Amendments of 1994, includes a provision that requires States to implement procedures that require the State to periodically report to consumer reporting agencies the name of debtor parents owing at least 2 months of overdue child support, and the amount of child support overdue.

1995

Public Law 104–35 extends for 2 years the deadline by which States are required to have in effect an automated data processing and information retrieval system for use in the administration of their Child Support Enforcement program (from October 1, 1995, to October 1, 1997). The 90 percent Federal funding was not extended.

1996

Title III of the 1996 welfare reform bill (Public Law 104–193) was devoted to major reforms of the Child Support Enforcement program. A section-by-section summary of these reforms follows:

  Sec. 301--Imposes a State obligation to provide child support enforcement services for each child receiving assistance under IV-A (TANF), IV-E (foster care and adoption), and title XIX (Medicaid). Services must also be provided for others who apply, including families ceasing to receive assistance (no application is permitted for this group).

  Sec. 302--Changes distribution priorities to provide that families leaving welfare receive priority in payment of arrears. Changes are effective October 1, 1997 for post-assistance arrears and October 1, 2000 for pre-assistance arrears. Exception is made for collections from the Federal Tax Refund Offset program. Provides a hold harmless provision so that States are protected if the amount they lose because of changes in distribution exceeds what they gain from the elimination of the $50 pass-through (eliminated October 1, 1996).

  Sec. 303--Protects privacy rights with respect to confidential information.

  Sec. 304--Requires States to have procedures for providing notices of proceedings and copies of orders to recipients of program services or parties to cases being served under title IV-D.

  Sec. 311--Specifies requirements for the central State registry, including maintaining and updating a payment record and extracting data for matching with other databases. Allows automated linkages of local registries.

  Sec. 312--Specifies requirements for the centralized collection and disbursement of support payments, including the monitoring of payments, generating wage withholding notices, and automatic use of administrative enforcement remedies. Under some circumstances, permits linkages of local disbursement units to form centralized State disbursement unit for collection and disbursement of child support payments. Requires distribution within 2 business days of receipt of collection; requires transmission of withholding orders to employers within 2 business days of notice of income source subject to withholding.

  Sec. 313--Requires employers and labor organizations to report name, address, SSN, and employer identification number of new hires to State directory of new hires within 20 days of hire (in the case of an employer transmitting reports magnetically or electronically, reports may be made by two monthly transmissions); requires the report to be the W-4 or equivalent at option of the employer with penalties assessed for failure to report. State directory must perform database matching using SSNs and report findings to any State; directory must also report information to the National directory within 3 business days, and issue withholding notices within 2 business days of match, among other requirements.

  Sec. 314--Strengthens and expands income withholding from wages to pay child support by reducing the time for employers to remit withheld wages to 7 business days and adding a State law requirement that allows issuance of electronic withholding orders by State agency and without notice to obligor.

  Sec. 315--Includes requirements for access by State child support agency to locator information from State motor vehicle and law enforcement systems.

  Sec. 316--Expands the authority of the Federal Parent Locator Service (FPLS) to obtain information and locate individuals. Permits access to the FPLS for the enforcement of child custody and visitation orders but specifies that requests must come through courts or child support agencies. Requires establishment of a Federal case registry of child support orders, and details guidelines for the National directory of new hires. Allows disclosure of certain information, including Federal tax offset amounts, to child support enforcement agents.

  Sec. 317--Requires use of SSNs on applications for professional licenses, commercial driver's licenses, occupational license or marriage licenses, and in records for divorce decrees, support orders, paternity determinations or acknowledgments and death certificates.

  Sec. 321--Mandates adoption by all States of the Uniform Interstate Family Support Act.

  Sec. 322--Clarifies priorities for recognition of orders.

  Sec. 323--Requires States to respond within 5 business days to a request from another State to enforce a support order; electronic means are allowed for transmitting requests.

  Sec. 324--Calls for the promulgation of forms, developed by the Secretary of HHS, to be used in interstate income withholding cases, the imposition of liens, and administrative subpoenas across State lines.

  Sec. 325--Grants authority to State IV-D programs to order genetic testing for paternity establishment, issue a subpoena for financial or other information, and require all entities to respond to requests for information “without the necessity of obtaining an order from any other judicial or administrative tribunal, but subject to due process safeguards as appropriate.'' Grants States access to public records such as vital statistics of marriage, birth and divorce, State and local tax records, real and titled personal property, license records, employment security records, public records. Also grants access to certain private records such as public utility and cable television records and financial institution data, among other administrative measures.

  Sec. 331--Streamlines the legal processes for establishment of paternity, allows establishment of paternity anytime before a child turns 18, and provides for mandatory genetic testing in contested cases, among other provisions.

  Sec. 332--Mandates that State programs publicize the availability and encourage the use of procedures for voluntary establishment of paternity and child support.

  Sec. 333--Requires States to determine whether recipients of aid under the TANF program or Medicaid are cooperating with the State in conducting child support activities against the noncustodial parent.

  Sec. 341--Requires the Secretary of HHS to develop a new cost-neutral incentive system by March 1, 1997 which provides additional payments to any State based on such State's performance. Increases the mandatory IV-D paternity establishment percentage in graduated phases from 75 to 90 percent.

  Sec. 342--Changes the audit process to be based on performance measures and requires the Secretary to ensure that State data meets high standards of accuracy and completeness.

  Sec. 343--Requires States to collect and report program data in a uniform manner as a State plan requirement.

  Sec. 344--Creates additional requirements for the State automated data processing systems, and sets a deadline of October 1, 2000 for implementation. Contains a new implementation timetable that extends to October 1, 1997 the deadline by which a State must have an automated case tracking and monitoring system meeting all Federal IV-D requirements up through the enactment of the Family Support Act of 1988. Caps aggregate spending on the new automated system at $400,000,000 and requires the Secretary to devise a formula for distributing these funds among the States. The Federal Government will pay 80 percent of State costs of meeting the new requirements.

  Sec. 345--Sets aside 1 percent of the Federal share of reimbursed public assistance for information, training, and related technical assistance concerning State automated systems and research, demonstration, and special projects of regional or national significance. An additional 2 percent is set aside for the operation of the FPLS.

  Sec. 346--Clarifies data collection requirements and eliminates requirements for unnecessary or duplicate information. Several new data reports are to be included in the annual report to Congress, including information about State compliance.

  Sec. 351--Requires processes for periodic modification of all child support orders, with review occurring every 3 years, upon request.

  Sec. 352--Expands access and use of consumer reports by child support agencies for establishing and modifying child support.

  Sec. 353--Specifies that depository institutions are not liable for disclosing financial information to the CSE Agency; the CSE Agency is prohibited from disclosing information obtained except for child support purposes.

  Sec. 361--Makes technical corrections to the Social Security Act section on IRS collection of arrearages.

  Sec. 362--Eliminates separate withholding rules for all Federal employees. Establishes procedures by which Federal agencies must aggressively pursue child support collections from Federal employees.

  Sec. 363--Establishes procedures by which all branches of the armed forces must aggressively pursue child support collections from Federal employees.

  Sec. 364--Requires States to have laws that prevent obligor from transferring income or property to avoid paying child support.

  Sec. 365--Requires State child support officials to have the authority to seek a judicial or administrative order that requires any individual owing past-due support to pay such support in accordance with a plan approved by the court or participate in work activities.

  Sec. 366--Provides a definition of a support order.

  Sec. 367--Requires all child support delinquencies and their amounts to be reported to credit bureaus.

  Sec. 368--Requires liens on real and personal property and the extension of full faith and credit to liens arising in another State in cases of past-due child support.

  Sec. 369--Requires States to have laws providing for the suspension of driver's, professional, occupational, and recreational licenses.

  Sec. 370--Establishes a process by which HHS can submit the names of delinquent noncustodial parents who are at least $5,000 in arrears on their child support payments to the State Department for the denial of their passports.

  Sec. 371--Authorizes Federal officials to declare any foreign country to be a foreign reciprocating country for purposes of establishment and collection of child support obligations.

  Sec. 372--Requires States to enter agreements with financial institutions doing business in the State to develop a data match system by which records on individuals having accounts with the financial institution are matched against the list of child support obligors who have overdue payments.

  Sec. 373--Adds a State option that a child support order of a child of minor parents, if the mother is receiving cash assistance, may be enforceable against parents of the noncustodial parent of the child.

  Sec. 374--Clarifies that child support assigned to a State in assistance cases is not dischargeable in bankruptcy.

  Sec. 375--Allows States to enter cooperative agreements with Indian tribes; allows the Secretary to make direct Federal funding to Indian tribes meeting certain criteria.

  Sec. 381--Requires the application of the Employee Retirement Income Security Act (ERISA) to support orders that are judgments, decrees or orders issued by any court of competent jurisdiction or through a State administrative process.

  Sec. 382--Adds a new State law requirement providing that the State IV-D agency have procedures for notifying a new employer of an absent parent, when the absent parent was providing health care coverage of the child in the previous job, of the medical support obligation.

  Sec. 391--Provides $10 million per year to the Secretary to award grants to States for the purpose of establishing programs to facilitate noncustodial parents' access to and visitation of their children.

1997

Public Law 105-33, the Balanced Budget Act of 1997, made 28 technical changes to the 1996 welfare reform law (Public Law 104-193).

1998

Public Law 105-187, the Deadbeat Parents Punishment Act of 1998, established two new categories of felony offenses, subject to a 2-year maximum prison term: (1) traveling in interstate or foreign commerce with the intent to evade a support obligation if the obligation has remained unpaid for more than 1 year or is greater than $5,000; and (2) willfully failing to pay a child support obligation regarding a child residing in another State if the obligation has remained unpaid for more than 2 years or is greater than $10,000.

Public Law 105-200, the Child Support Performance and Incentive Act of 1998, established a new cost/budget-neutral incentive system based on five performance measures that create strong incentives for States to operate efficient and effective programs. The law also imposed less severe financial penalties on States that failed to meet the October 1997 deadline for implementing a statewide CSE automated data processing and information retrieval system. It also included provisions related to medical support and privacy protections, and makes other minor changes.

Public Law 105-306, the Noncitizen Benefit Clarification and Other Technical Amendments Act of 1998, included a correction to Public Law 105-200 that allows a State that failed to comply with the 1996 child support data processing requirements to have its annual penalty reduced by 20 percent for each of the five performance measures under the child support incentive system for which it achieves a maximum score. In addition, the provision clarified the date by which States must pass laws implementing medical child support provisions to allow time for State legislatures that meet biennially to pass laws after final Federal regulations are issued in year 2000.

1999

Public Law 106-113, the Fiscal Year 2000 Consolidated Appropriations Bill, provided an alternative penalty for States that are not in compliance with the centralized State disbursement unit requirement, but which have submitted a corrective compliance plan by April l, 2000, that describes how, by when, and at what cost the State would achieve compliance with the State disbursement unit requirement. The Secretary of HHS is required to reduce the amount the State would otherwise have received in Federal child support payments by the penalty amount for the fiscal year. The penalty amount percentage is 4 percent in the case of the first fiscal year of noncompliance; 8 percent in the second year; 16 percent in the third year; 25 percent in the fourth year; or 30 percent in the fifth or any subsequent year. In addition, the law provides for coordination of the alternative disbursement unit penalty with the automated systems penalty so that States that fail to implement both the automated data processing requirement and the State disbursement unit requirement are subject to only one alternative penalty.

Public Law 106-169, the Foster Care Independence Act of 1999, limited the hold harmless requirement of current law by stipulating that States would only be entitled to hold harmless funds if the State's share of child support collections are less than they were in fiscal year 1995 and the State has distributed and disregarded to welfare families at least 80 percent of child support collected on their behalf in the preceding fiscal year or the State has distributed to former welfare recipients the State share of child support payments collected via the Federal Income Tax Offset program. If these conditions are met, the State's share of child support collections would be increased by 50 percent of the difference between what the State would have received in fiscal year 1995 and its share of child support collections in the pertinent fiscal year. Public Law 106-169 repealed the hold harmless provision effective October 1, 2001.

2006

Public Law 109-171, the Deficit Reduction Act of 2005, made several changes to the CSE program. P.L. 109-171 reduced the Federal matching rate for laboratory costs associated with paternity establishment from 90 percent to 66 percent, ended the Federal matching of State expenditures of Federal CSE incentive payments reinvested back into the program, and required States to assess a $25 annual user fee for child support services provided to families with no connection to the welfare system. It also simplified CSE distribution rules and extended the "families first" policy by providing incentives to States to encourage them to allow more child support to go to both former welfare families and families still on welfare. In addition, P.L. 109-171included provisions that (1) lower the threshold amount for denial of a passport to a noncustodial parent who owes past-due child support; (2) allow States to use the Federal income tax refund offset program to collect past-due child support for persons not on TANF who are no longer minors; (3) authorize the Secretary of HHS to compare information of noncustodial parents who owe past-due child support with information maintained by insurers concerning insurance payments and to furnish any information resulting from a match to CSE agencies so that they can pursue child support arrearages; (4) allow an assisting State to establish a CSE interstate case based on another State's request for assistance (thereby enabling an assisting State to use the CSE statewide automated data processing and information retrieval system for interstate cases); (5) require States to review and, if appropriate, adjust child support orders of TANF families every three years; and (6) require that medical child support for a child be provided by either or both parents.

2009

Public Law 111-5, the American Recovery and Reinvestment Act of 2009 temporarily reinstated federal matching of incentive payments for FY2009 and FY2010.

Links to Additional Resources

Government Sources

Federal Office of Child Support Enforcement --https://www.acf.hhs.gov/programs/cse/

Annual Reports and Statistics -- https://www.acf.hhs.gov/programs/cse/pubs/index.html#annual

U.S. Bureau of the Census: Child Support Data -- https://www.census.gov/hhes/www/childsupport/childsupport.html

Introduction

Child care has been an ongoing issue of public policy concern primarily because, in most American families with children, mothers work. This is true regardless of whether mothers are married or unmarried and regardless of the age of their children, although mothers of school-age children have a higher rate of employment than mothers of preschoolers. Thus, some form of child care is a fact of life for the majority of families with children, and federal grants and tax credits exist to help offset the expense for those who purchase child care.

Over time, policymakers have debated the appropriate federal role in addressing questions of adequacy, affordability, and quality of child care. The role of child care as a work support for low-income and welfare-recipient families has been a particular focus of debate. In recent years, child care as a policy issue has broadened into the related areas of early childhood development and education, as research has focused on the connection between children’s early experiences and their successful long-term development. Child care discussions increasingly include a focus on content and quality, while discussions of early childhood development and education increasingly address the need for coordination with child care services to fit the schedules of working families.   

The federal government has used a number of different strategies to invest in child care, including broad-based social programs as well as targeted child care programs and tax provisions. This section of the Green Book focuses primarily on the Child Care and Development Fund (CCDF), a term used to refer to the combination of mandatory and discretionary child care funding streams administered jointly by the U.S. Department of Health and Human Services (HHS). The CCDF is the primary source of federal funding dedicated solely to child care subsidies for low-income working and welfare families.

The FY2011 funding level for the CCDF is roughly $5.1 billion, which includes $2.2 billion in discretionary funds and $2.9 billion in mandatory funds. Discretionary CCDF funding is authorized by the Child Care and Development Block Grant Act of 1990 (as amended), which is currently due for reauthorization. Mandatory CCDF funding is authorized in Section 418 of the Social Security Act (sometimes referred to as the "Child Care Entitlement to States") and is also due for reauthorization in the 112th Congress.

The CCDF provides block grants to states, according to a formula, which are used to subsidize the child care expenses of working families with children under age 13. In addition to providing funding for child care services, funds are also used for activities intended to improve the overall quality and supply of child care for families in general.

Chapter Overview

This chapter of the Green Book includes a Congressional Research Service (CRS) Report on the CCDF (CRS Report RL30785). A Tables and Figures section lists the tables and figures found in the CRS report, and also includes a number of additional tables and figures that provide historical and current (FY2009) data on CCDF program statistics and funding. A limited number of these tables go beyond the scope of the CCDF, providing contextual information on labor force participation of mothers and average wages of child care workers. This chapter of the Green Book also includes a Legislative History of federal investments in child care, with a focus on the evolution and implementation of the CCDF.  Finally, this chapter concludes with a list of Links to Additional Resources, including links to CCDF administrative and expenditure data published by the U.S. Department of Health and Human Services, as well as national estimates of child care costs and arrangements produced by the U.S. Census Bureau.

Congressional Research Service Reports

The House Ways and Means Committee is making available selected reports by the Congressional Research Service (CRS) for inclusion in its 2011 Green Book website. CRS works exclusively for the United States Congress, providing policy and legal analysis to Committees and Members of both the House and Senate, regardless of party affiliation.

RL30785, The Child Care and Development Block Grant: Background and Funding

Legislative History

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The federal government entered the child care business during the 1930s when federally-funded nursery schools were established for poor children. The motivation for creating these nursery schools was not specifically to provide child care for working families. Rather, the schools were designed primarily to create jobs for unemployed teachers, nurses, and others, and also to provide a wholesome environment for children in poverty. When mothers began to enter the work force in large numbers during World War II, many of these nursery schools were continued and expanded. Federal funding for child care and other community facilities was available during the war years under the Lanham Act, which financed child care for an estimated 550,000-600,000 children before it was terminated in 1946.

The end of the war brought the expectation that mothers would return home to care for their children. However, many women chose to remain at work and labor force participation of mothers continued to rise. In 1954, Congress enacted a comprehensive revision of the Internal Revenue Code, establishing a statutory tax deduction for child and dependent care expenses. (In 1976, the deduction was replaced with a tax credit known as the Child and Dependent Care Tax Credit.) The appropriate federal role in supporting child care through grants, particularly for poor families, was a topic of debate at least as early as the 1960s, when Congress authorized a limited use of funds to subsidize the child care costs of welfare recipients. 

Concerns that child care may be in short supply, not of high enough quality, or too expensive for many families escalated during the late 1980s into a national debate over the nature and extent of the nation’s child care problems and what, if any, federal interventions would be appropriate. The debate centered on questions about the type of federal subsidies that should be made available and for whom, whether the federal government should set national child care standards, conditions under which religious child care providers could receive Federal funds, and how best to assure optimal choice for parents in selecting child care arrangements for their children, including options that would allow a mother to stay home. Differences stemming from philosophical and partisan views, as well as jurisdictional concerns, were reflected throughout the debate.

The debate culminated in the enactment of legislation in 1990 that expanded federal support for child care by establishing two new child care grant programs to states. The programs—the Child Care and Development Block Grant (CCDBG) and the At-Risk Child Care Program—were enacted as part of the Omnibus Budget Reconciliation Act of 1990 (Public Law 101-508). These programs were preceded by enactment of a major welfare reform initiative, the Family Support Act of 1988 (Public Law 100-485), which authorized expanded child care assistance for welfare families and families leaving welfare. The combined effect of the 1988-1990 legislation was the creation of four programs to support child care, of which three were associated with the cash welfare system. Families on welfare (then Aid to Families with Dependent Children, or AFDC) were entitled to free child care. Families who left the AFDC rolls for employment were entitled to 12 months of “transitional” subsidized child care. The third AFDC program targeted families who would be “at-risk” of dependence on AFDC in the absence of subsidized child care. These three programs were all funded with mandatory money and fell under the same congressional committee jurisdiction (the House Ways and Means and Senate Finance Committees). However, they operated under separate rules and targeted three separate populations. The fourth program was the Child Care and Development Block Grant (CCDBG), which supported child care for low-income families not connected with the AFDC cash welfare system. The block grant subsidized child care for families with incomes up to 75% of state median income, and also provided funds for activities to improve the overall quality and supply of child care. Unlike the three AFDC-related programs, the block grant was funded with discretionary funds and was overseen by the committees now known as the House Committee on Education and the Workforce and the Senate Committee on Health, Education, Labor and Pensions (HELP).

The 1996 welfare reform law (Public Law 104-193) repealed AFDC and its related child care programs. Instead of preserving three separate child care programs, the 1996 law created a consolidated block of mandatory funding under section 418 of the Social Security Act. Like the earlier three programs, this consolidated block of child care funding was designed to be largely targeted toward families on, leaving, or at-risk of receiving welfare (now called Temporary Assistance for Needy Families, or TANF), although welfare families were no longer entitled to child care support.

To create a simpler and more unified child care system, the 1996 law directed that the new mandatory funding be transferred to each state’s lead agency managing the CCDBG and be spent in accordance with CCDBG rules. In addition to creating the mandatory child care funds, the 1996 law reauthorized and amended the CCDBG, expanding eligibility to 85% of state median income. Mandatory funding remained under House Ways and Means and Senate Finance Committee jurisdiction; discretionary funding in the CCDBG stayed under House Education and the Workforce Committee and Senate HELP Committee jurisdiction. In implementing the 1996 law, the Department of Health and Human Services (HHS) referred to the combined mandatory and discretionary funding as the Child Care and Development Fund (CCDF).

As a component of welfare reform, the 1996 child care provisions were intended to support the overall goal of promoting self-sufficiency through work. However, separate from the context of welfare reform, the legislation aimed to address concerns about the effectiveness and efficiency of child care programs. The four separate child care programs that were enacted in 1988 and 1990 had different rules regarding eligibility, time limits on the receipt of assistance, and work requirements. Consistent with other block grant proposals considered in the 104th Congress, the child care provisions in the 1996 welfare law were intended to streamline the federal role, reduce the number of federal programs and conflicting rules, and increase the flexibility provided to states.

In the aftermath of the 1996 welfare reform law, discretionary child care funding continued to be provided through the annual appropriations process.  However, the 1996 law authorized and directly appropriated (or pre-appropriated) mandatory child care funding for each of FY1997 through FY2002. Beginning in FY2003, a series of twelve temporary extensions provided mandatory child care funding into FY2006, when—following a four-year debate—Congress enacted the Deficit Reduction Act of 2005 (DRA, P.L. 109-171), extending TANF and mandatory child care funding through FY2010. The DRA increased mandatory child care funding by $200 million per year (a total increase of $1 billion over five years), resulting in a total of $2.9 billion in mandatory funding for each of FY2006-FY2010. 

Throughout welfare reauthorization discussions in 2002-2005, the funding level for child care was a major point of contention. Welfare caseloads had declined since 1996, thus “freeing up” funds previously used for cash assistance for other services such as child care. However, the decline in the welfare caseload had not translated into a decline in the larger low-income population that the CCDF was created to serve, regardless of welfare status. With respect to the welfare population, the welfare reauthorization debates of 2002-2005 also focused on the effect that proposed increases in required hours of work and other activities by welfare recipients would have on the need for child care. As the hours of work and other activities required of welfare recipients were increased, many argued that increased child care funding was even more essential. Child care remained an issue in the debate over how to move welfare recipients toward employment and self-sufficiency; mothers on welfare may have difficulty entering the labor force because of child care problems.

While the DRA reauthorized mandatory child care funding through FY2010, this law did not extend the authorization of discretionary appropriations for the CCDBG.  However, Congress has continued to enact appropriations for the CCDBG each year since its expiration in 2002, providing roughly $2.1 billion annually through FY2010.  In addition to annual discretionary appropriations for FY2009, the CCDBG received $2 billion in supplemental funds from the American Recovery and Reinvestment Act (ARRA), which was signed into law by President Obama on February 17, 2009 (P.L. 111-5). The ARRA specified that the $2 billion in CCDBG funds should be used to supplement, not supplant, state general revenue spending on child care assistance for low-income families. The ARRA also specified that a sum of approximately $255 million be reserved, out of the total appropriated to CCDBG, for activities designed to (1) provide comprehensive consumer education to parents and the public, (2) increase parental choice, and (3) improve quality and availability of child care (such as resource and referral services). This sum augmented the amount that states were already required by law to use for such activities (not less than 4% of the total amount received by each state). Of the $255 million, nearly $94 million was reserved for activities designed to improve the quality of infant and toddler care.

CCDF funds appropriated in the ARRA were made available for obligation by HHS through the end of FY2010. However, HHS opted to provide states with their full allocations in FY2009, nearly doubling discretionary CCDF allotments to states for that fiscal year. CCDF grantees were required to obligate, or commit, their ARRA funds by the end of FY2010 (September 30, 2010), but have until the end of FY2011 (September 30, 2011) to expend their ARRA awards. States have reported spending the majority of CCDF ARRA funding on direct services. For instance, states have used these funds to lower parental co-payments, increase payment rates to child care providers, expand income eligibility thresholds, and add or extend eligibility to parents searching for jobs. Some states have also reported using ARRA funds to avoid, shorten, or eliminate waiting lists for eligible children. In addition to spending on direct services, states have used ARRA funds to expand investments in quality activities. For instance, states have used ARRA funds to create or expand Quality Rating and Improvement Systems, support programs targeted to infants and toddlers, and improve state and local health and safety standards.

The authorization and pre-appropriations for mandatory child care funding were set to expire at the end of FY2010, but the Claims Resolution Act of 2010 (P.L. 111-291) provided a one-year extension (through September 30, 2011) of mandatory child care funding at the FY2010 level of $2.917 billion. (Prior to the enactment of the Claims Resolution Act, Congress had provided two short-term extensions—enacted in P.L. 111-242 and P.L. 111-290—which provided mandatory child care funding for the first few months of FY2011.) 

For FY2011, discretionary CCDBG funding was provided under a series of eight continuing resolutions (CRs), culminating with a final full-year CR that was enacted into law (P.L. 112-10) on April 15, 2011. When taking into account an across-the-board rescission of 0.2%, the final FY2011 CR provided $2.223 billion in discretionary CCDBG funding for FY2011. This amount is nearly $96 million more than the FY2010 funding level of $2.127 billion. In a break from recent annual appropriations, the FY2011 CR eliminated CCDBG set-aside funding for the Child Care Aware toll-free hotline (typically funded at $1 million annually), a phone line staffed by child care consumer education specialists, who respond to questions from parents and child care providers about the elements of quality child care and how to locate child care programs in local communities. 

Links to Additional Resources

Government Sources

U.S. Department of Health and Human Services (HHS), Administration for Children and Families (ACF), Office of Child Care (OCC)

HHS/ACF/OCC Homepage

https://www.acf.hhs.gov/programs/ccb/

CCDF Reports to Congress

https://www.acf.hhs.gov/programs/ccb/ccdf/rtc/index.htm

FY2010-FY2011 CCDF State Plan Summary

https://nccic.acf.hhs.gov/files/resources/sp1011full-report.pdf

CCDF Monthly Income Eligibility Limits for a Family of Three, FY2010-FY2011 (see Table 9, pages 27-28)

https://nccic.acf.hhs.gov/files/resources/sp1011full-report.pdf

State Plan Summaries for Prior Years (FY1999-FY2011)

https://www.acf.hhs.gov/programs/ccb/ccdf/index.htm#pubs

Historical CCDF Funding Allocations by State, FY1997-FY2011

https://www.acf.hhs.gov/programs/ccb/law/allocations/state.htm

Historical CCDF Expenditure Data, FY1999-FY2009

https://www.acf.hhs.gov/programs/ccb/data/index.htm#expenditure

Historical CCDF Program Statistics, FY1998-FY2009

https://www.acf.hhs.gov/programs/ccb/data/index.htm

FY2009 Preliminary CCDF Program Statistics (Tables 1-17)

https://www.acf.hhs.gov/programs/ccb/data/ccdf_data/09acf800_preliminary/list.htm

Table 1. Average Monthly Adjusted Number of Families and Children Served 

https://www.acf.hhs.gov/programs/ccb/data/ccdf_data/09acf800_preliminary/table1.htm

Table 2. Percent of Children Served by Payment Method

https://www.acf.hhs.gov/programs/ccb/data/ccdf_data/09acf800_preliminary/table2.htm

Table 3. Percent of Children Served by Types of Care 

https://www.acf.hhs.gov/programs/ccb/data/ccdf_data/09acf800_preliminary/table3.htm

Table 4. Average Monthly Percentages of Children Served in Regulated Settings vs. Settings Legally Operating Without Regulation

https://www.acf.hhs.gov/programs/ccb/data/ccdf_data/09acf800_preliminary/table4.htm

Table 5. Of Children in Settings Legally Operating Without Regulation, Average Monthly Percent Served by Relatives vs. Non-Relatives

https://www.acf.hhs.gov/programs/ccb/data/ccdf_data/09acf800_preliminary/table5.htm

Table 6. Average Monthly Percentages of Children Served in All Types of Care

https://www.acf.hhs.gov/programs/ccb/data/ccdf_data/09acf800_preliminary/table6.htm

Table 7. Number of Child Care Providers Receiving CCDF Funds 

https://www.acf.hhs.gov/programs/ccb/data/ccdf_data/09acf800_preliminary/table7.htm

Table 8. Consumer Education Strategies Summary 

https://www.acf.hhs.gov/programs/ccb/data/ccdf_data/09acf800_preliminary/table8.htm

Table 9. Monthly Average Percent of Children In Care By Age Group 

https://www.acf.hhs.gov/programs/ccb/data/ccdf_data/09acf800_preliminary/table9.htm

Table 10. Reasons for Receiving Care, Average Monthly Percentage of Families

https://www.acf.hhs.gov/programs/ccb/data/ccdf_data/09acf800_preliminary/table10.htm

Table 11. Average Monthly Percentages of Children by Racial Group

https://www.acf.hhs.gov/programs/ccb/data/ccdf_data/09acf800_preliminary/table11.htm

Table 12. Average Monthly Percentages of Children by Latino Ethnicity

https://www.acf.hhs.gov/programs/ccb/data/ccdf_data/09acf800_preliminary/table12.htm

Table 13. Average Monthly Percentage of Children in Child Care by Age Category and Type of Care

https://www.acf.hhs.gov/programs/ccb/data/ccdf_data/09acf800_preliminary/table13.htm

Table 14. Average Monthly Hours for Children In Care By Age Group and Care Type

https://www.acf.hhs.gov/programs/ccb/data/ccdf_data/09acf800_preliminary/table14.htm

Table 15: Average Monthly Payment to Provider (Including Family Co-payment) by Age Group and Care Type

https://www.acf.hhs.gov/programs/ccb/data/ccdf_data/09acf800_preliminary/table15.htm

Table 16. Average Monthly Percent of Families Receiving TANF

https://www.acf.hhs.gov/programs/ccb/data/ccdf_data/09acf800_preliminary/table16.htm

Table 17. Monthly Mean Family Co-payment as a Percent of Family Income

https://www.acf.hhs.gov/programs/ccb/data/ccdf_data/09acf800_preliminary/table17.htm

U.S. Census Bureau, Supplemental Income and Program Participation (SIPP) Survey

U.S. Census Bureau, SIPP Survey, Child Care Home (including historical tables with select data from 1985 forward)

https://www.census.gov/population/www/socdemo/childcare.html

Who’s Minding the Kids?  Child Care Arrangements:  Summer 2006 Detailed Tables (Tables 1-6)

https://www.census.gov/population/www/socdemo/child/tables-2006.html

Table 1A: Child Care Arrangements of Preschoolers Under 5 Years Old Living with Mother, by Employment Status of Mother and Selected Characteristics: Summer 2006 (Numbers)

https://www.census.gov/population/www/socdemo/child/tables-2006.html

Table 1B: Child Care Arrangements of Preschoolers Under 5 Years Old Living with Mother, by Employment Status of Mother and Selected Characteristics: Summer 2006 (Percentages)

https://www.census.gov/population/www/socdemo/child/tables-2006.html

Table 2A: Primary Child Care Arrangements of Preschoolers Under 5 Years Old Living with Employed Mothers by Selected Characteristics: Summer 2006 (Numbers)

https://www.census.gov/population/www/socdemo/child/tables-2006.html

Table 2B: Primary Child Care Arrangements of Preschoolers Under 5 Years Old Living with Employed Mothers by Selected Characteristics: Summer 2006 (Percentages)

https://www.census.gov/population/www/socdemo/child/tables-2006.html

Table 3A: Child Care Arrangements of Gradeschoolers 5 to 14 Years Old Living with Mother, by Employment Status of Mother and Selected Characteristics: Summer 2006 (Numbers)

https://www.census.gov/population/www/socdemo/child/tables-2006.html

Table 3B: Child Care arrangements of Gradeschoolers 5 to 14 Years Old Living with Mother, by Employment Status of Mother and Selected Characteristics: Summer 2006 (Percentages)

https://www.census.gov/population/www/socdemo/child/tables-2006.html

Table 4. Children in Self-Care, by Age of Child, Employment Status of Mother, and Selected Characteristics for Children Living Mother: Summer 2006 (Numbers and Percentages)

https://www.census.gov/population/www/socdemo/child/tables-2006.html

Table 5. Families with Employed Mothers that Make Child Care Payments, by Age Groups and Selected Characteristics: Summer 2006 (Numbers and Percentages)

https://www.census.gov/population/www/socdemo/child/tables-2006.html

Table 6. Average Weekly Child Care Expenditures of Families with Employed Mothers that Make Payments, by Age Groups and Selected Characteristics: Summer 2006 (Numbers and Percentages)

https://www.census.gov/population/www/socdemo/child/tables-2006.html

Who’s Minding the Kids?  Child Care Arrangements:  Spring 2005 Detailed Tables

https://www.census.gov/population/www/socdemo/child/ppl-2005.html

Table 1A: Child Care Arrangements of Preschoolers Under 5 Years Old Living with Mother, by Employment Status of Mother and Selected Characteristics: Spring 2005 (Numbers)

https://www.census.gov/population/www/socdemo/child/ppl-2005.html

Table 1B: Child Care Arrangements of Preschoolers Under 5 Years Old Living with Mother, by Employment Status of Mother and Selected Characteristics: Spring 2005 (Percentages)

https://www.census.gov/population/www/socdemo/child/ppl-2005.html

Table 2A: Primary Child Care Arrangements of Preschoolers Under 5 Years Old Living with Employed Mothers by Selected Characteristics: Spring 2005 (Numbers)

https://www.census.gov/population/www/socdemo/child/ppl-2005.html

Table 2B: Primary Child Care Arrangements of Preschoolers Under 5 Years Old Living with Employed Mothers by Selected Characteristics: Spring 2005 (Percentages)

https://www.census.gov/population/www/socdemo/child/ppl-2005.html

Table 3A: Child Care Arrangements of Gradeschoolers 5 to 14 Years Old Living with Mother, by Employment Status of Mother and Selected Characteristics: Spring 2005 (Numbers)

https://www.census.gov/population/www/socdemo/child/ppl-2005.html

Table 3B: Child Care arrangements of Gradeschoolers 5 to 14 Years Old Living with Mother, by Employment Status of Mother and Selected Characteristics: Spring 2005 (Percentages)

https://www.census.gov/population/www/socdemo/child/ppl-2005.html

Table 4. Children in Self-Care, by Age of Child, Employment Status of Mother, and Selected Characteristics for Children Living Mother: Spring 2005 (Numbers and Percentages)

https://www.census.gov/population/www/socdemo/child/ppl-2005.html

Table 5. Families with Employed Mothers that Make Child Care Payments, by Age Groups and Selected Characteristics: Spring 2005 (Numbers and Percentages)

https://www.census.gov/population/www/socdemo/child/ppl-2005.html

Table 6. Average Weekly Child Care Expenditures of Families with Employed Mothers that Make Payments, by Age Groups and Selected Characteristics: Spring 2005 (Numbers and Percentages)

https://www.census.gov/population/www/socdemo/child/ppl-2005.html

U.S. Department of Labor, Bureau of Labor Statistics

Women in the Labor Force: A Databook, 2010 Edition

https://www.bls.gov/cps/wlf-databook-2010.pdf

Table 6. Employment status of women by presence and age of youngest child, marital status, race, and Hispanic or Latino ethnicity, March 2009

https://www.bls.gov/cps/wlf-table6-2010.pdf

Table 7. Employment status of women by presence and age of youngest child, March 1975–2009

https://www.bls.gov/cps/wlf-table7-2010.pdf

Historical Editions of Women in the Labor Force: A Databook (2004 edition onward)

https://www.bls.gov/cps/publications.htm

BLS Occupational Employment Statistics Homepage

https://www.bls.gov/oes/home.htm

BLS Occupational Employment Statistics on Child Care Workers (May 2010)

https://www.bls.gov/oes/current/oes399011.htm

BLS Occupational Employment Statistics on Preschool Teachers (May 2010)

https://www.bls.gov/oes/current/oes252011.htm

Introduction

The Social Services Block Grant (SSBG) is permanently authorized by title XX, subtitle A, of the Social Security Act as a “capped” entitlement to states. This means that states are entitled to their share of funds, as determined by formula, out of an amount of money that is capped in statute at a specific level (also known as a funding ceiling). Block grant funds are given to states and territories to achieve a wide range of social policy goals, which include promoting self-sufficiency, preventing child abuse, and supporting community-based care for the elderly and disabled. States have broad discretion over the use of these funds. In FY2009, the largest expenditures for services under the SSBG were for child care, foster care services for children, and special services for the disabled.

The SSBG has received annual appropriations of $1.7 billion in every year since FY2002. In addition to funding from annual appropriations, the SSBG has occasionally received supplemental appropriations, most recently to support states in responding to the effects of natural disasters in 2008 and the Gulf Coast hurricanes of 2005.

At the federal level, the SSBG is administered by the U.S. Department of Health and Human Services (HHS). Legislation amending title XX is typically reported by the House Ways and Means Committee and the Senate Finance Committee.

Title XX of the Social Security Act was created in 1975 (P.L. 93-647); however, it was the Omnibus Budget Reconciliation Act of 1981 (P.L. 97-35) that amended title XX to establish a Block Grant to States for Social Services.  More recently, health reform legislation enacted in March 2010 (P.L. 111-148) inserted a new subtitle on elder justice into title XX, which was itself re-titled as Block Grants to States for Social Services and Elder Justice. (Under this new law, the SSBG is authorized in subtitle A of title XX, while the elder justice provisions are contained in subtitle B of title XX.) The health reform law also amended subtitle A of title XX to establish two demonstration projects to address the workforce needs of health care professionals and a new competitive grant program to support the early detection of medical conditions related to environmental health hazards.  These other components of title XX are not addressed in great detail here; the purpose of this section of the Green Book is to provide an overview of the SSBG.

Chapter Overview

This chapter of the Green Book includes a Congressional Research Service (CRS) Report on the SSBG (CRS Report 94-953). A separate section identifies Tables and Figures included in the CRS report and provides additional tables and figures, which present historical and current (FY2009) data on SSBG expenditures by state and service category.  A Legislative History of the SSBG is provided in the next section, including a description of earlier efforts by the federal government to support state spending on social services. Finally, this chapter concludes with Links to Additional Resources, including links to SSBG administrative data published by the U.S. Department of Health and Human Services.

Congressional Research Service (CRS) Report

The House Ways and Means Committee is making available selected reports by the Congressional Research Service (CRS) for inclusion in its 2011 Green Book website. CRS works exclusively for the United States Congress, providing policy and legal analysis to Committees and Members of both the House and Senate, regardless of party affiliation.

CRS Report 94-953, Social Services Block Grant: Background and Funding

Tables and Figures in CRS Report

The following tables and figures related to the SSBG that can be found in the CRS report section of this Green Book chapter.

94-953: Social Services Block Grant: Background and Funding

Figure 1. HHS Allocation Methodology for the FY2009 SSBG Supplemental Funding

Table 1. Estimated FY2011 SSBG Allotments to States and Territories

Table 2. State Allocations and Spending from the FY2009 SSBG Supplemental

Table 3. SSBG Funding, FY1985-FY2011

Table 4. Total SSBG Expenditures by Service Category, FY2009

Table A-1. TANF Transfers to the SSBG in FY2009

Table B-1. State Spending from the FY2006 SSBG Supplemental

Additional Tables and Figures Related to the SSBG

The following additional tables and figures appear in this section of the Green Book chapter on SSBG.

Figure 10-1. SSBG Annual Appropriations in Nominal Dollars and Constant 2010 Dollars, FY1982-FY2010

Figure 10-2. SSBG Expenditures by Select Service Categories, FY2009

Table 10-1. SSBG Funding Levels, in Nominal Dollars and Constant 2010 Dollars, FY1982-FY2010

Table 10-2. SSBG Allocations by State and Territory, Selected Fiscal Years 1997-2011

Table 10-3. Comparison of the Number of States Offering Selected Services, Fiscal Years 1999-2009

Table 10-4. Use of SSBG Funds by Expenditure Category, Fiscal Years 2001-2009

Legislative History

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Social services for recipients of public aid were not funded under the original Social Security Act of 1935, although it was later argued that cash alone would not sufficiently address the needs of the poor.  State social services expenditures for welfare recipients became eligible for 50% federal funding in 1956, but many states chose not to participate at that time.  In 1962, states were given additional incentives to provide social services, especially preventative and rehabilitative services, to poor families when Congress increased the federal matching rate to 75%.  The 1962 amendments also expanded eligibility for social services to both former and potential welfare recipients.  No limit was placed on the federal expenditure level.

In 1967, the Social Security Act was again amended to authorize funding for so-called “hard” social services, such as job training and child care, in a more aggressive effort to move people from welfare to work.  The new legislation also required states to establish a single organizational unit in the state agency responsible for administering social services, and provided an enhanced match of 85% for social services provided during the first year after the law took effect.

Administration of the federal social services program was formally separated from administration of the Federal Cash Assistance Program in 1967, as part of a reorganization within the Department of Health, Education, and Welfare.  In 1972, states were required by regulation to separate the administration of cash assistance and social services.

Federal spending for social services increased from $281.6 million in FY1967 to $1.688 billion in FY1972, prompting legislation (P.L. 92-512) which placed a ceiling on federal expenditures for social services of $2.5 billion and directed that funds be divided among states according to their relative populations.  The law also limited to 10% the amount of funds that could be spent on services to former or potential welfare recipients.

Legislation signed into law on January 4, 1975, established title XX of the Social Security Act.  Under title XX, the $2.5 billion ceiling on federal social services expenditures was retained, along with the population-based allocation formula. The legislation was designed to give maximum flexibility to the states in designing their social services programs, but included public participation planning requirements, limitations on the use of funds for certain activities, and certain eligibility requirements.

By FY1981, the entitlement ceiling for the title XX social services program was $2.9 billion.  An additional $16.1 million was available apart from title XX for social services expenditures by the territories, and $75 million was available to the states for staff training costs related to title XX activities, bringing the total for all federal social services expenditures to $2.991 billion.  Under P.L. 96-272, enacted in 1980, the title XX entitlement ceiling was scheduled to increase to $3.3 billion in FY1985.

However, the Omnibus Budget Reconciliation Act (OBRA) of 1981 (P.L. 97-35) amended title XX to establish a block grant, under which funds for social services and for staff training for those providing social services were combined.  The legislation reduced the title XX entitlement ceiling to $2.4 billion for FY1982 and provided for increases to $2.45 billion for FY1983, $2.5 billion for FY1984, $2.6 billion for FY1985, and $2.7 billion for FY1986 and years thereafter.  The law also eliminated federal mandates regarding priority recipients, and eliminated provisions relating to the targeting of services to low-income individuals and families.

The emergency jobs bill (P.L. 98-8), enacted in March 1983, appropriated an additional $225 million for the title XX block grant for FY1983-FY1984.  These additional funds were allocated to the states on the basis of a formula intended to respond to the needs of the unemployed served by the jobs bill.  Half of the funds were allocated on the basis of population; one-third based on the number of unemployed individuals in the state; and one-sixth among states with an average unadjusted unemployment rate from June 1982 through November 1982 of 9.4% or higher.  In October 1983, as part of legislation to extend the Federal Supplemental Compensation Program (P.L. 98-135), the title XX ceiling was increased by $200 million for FY1984 to $2.7 billion and by $100 million for FY1985 to $2.8 billion.

Because of congressional concern about reports of child sexual abuse in day care centers, a $25 million increase in title XX funding for FY1985 was appropriated for use by the states in providing training to child day care staff, state licensing and enforcement officials, and the parents of children in child day care.  The earmarked funds were included in the continuing resolution for FY1985 (P.L. 98-473).  States were required to have in effect by September 30, 1985, procedures for screening and conducting background and criminal history checks of child care staff, or one-half of the child day care training allotment was to be deducted from the regular state title XX allocation in FY1986 or FY1987.  According to HHS, only six states enacted such procedures by the required date.  As required by P.L. 98-473, in January 1985, the Secretary of HHS distributed to states a Model Child Care Standards Act that addressed staff training and supervision, employment history checks, and parent visitation.

The 1987 Budget Reconciliation Act (P.L. 100-203) included a $50 million increase in the title XX entitlement ceiling for FY1988, but these funds were not appropriated. This law also extended eligibility for title XX funds to American Samoa (previously, only four territories were eligible for title XX funding: Guam, the Northern Mariana Islands, Puerto Rico, and the Virgin Islands).

The Medicare and Medicaid Patient and Program Protection Act of 1987 (P.L. 100-93) amended title XX to exclude individuals and entities that committed acts of fraud or abuse under the Medicaid, Medicare, Maternal and Child Health, or the title XX programs from receiving title XX funds. 

OBRA 1989 (P.L. 101-239) included a permanent $100 million increase in the title XX entitlement ceiling to $2.8 billion, beginning for FY1990.

OBRA 1993 (P.L. 103-66) made $1 billion available on an entitlement basis under title XX for the Secretary of HHS to make grants to States for social services in qualified empowerment zones and enterprise communities (the legislation also provided certain tax incentives for zones and communities). On December 21, 1994, President Clinton selected 105 designees to participate in this program (six urban and three rural empowerment zones, 60 urban and 30 rural enterprise communities, two supplemental empowerment zones and four enhanced enterprise communities). These funds remained available for expenditure for 10 years. The Taxpayer Relief Act of 1997 (P.L. 105-34) authorized a second round of enterprise zone and community designations, but no title XX funding was included for the second round. (For more information on this prior use of title XX funding for social services in empowerment zones and enterprise communities, see previous editions of the Green Book.)

The Omnibus Consolidated Rescissions and Appropriations Act (P.L. 104-134) appropriated only $2.381 billion for title XX in FY1996, roughly $419 million less than the permanently authorized entitlement ceiling of $2.8 billion at that time.  The Personal Responsibility and Work Opportunity Reconciliation Act (P.L. 104-193) subsequently set the annual entitlement ceiling for title XX at $2.38 billion in each of fiscal years 1997-2002. Under this legislation, the entitlement ceiling was scheduled to return to the permanent level of $2.8 billion in fiscal year 2003. (Enactment of P.L. 105-178 in 1998 subsequently lowered this ceiling—see below.) Despite the newly established ceiling of $2.38 billion, Congress appropriated $2.5 billion for title XX in fiscal year 1997, in the Omnibus Consolidated Appropriations Act (P.L. 104-208).

The FY1998 appropriations measure, the Department of Labor, Health and Human Services and Education and Related Agencies Appropriations Act (P.L. 105-78) decreased title XX funding to $2.299 billion, once again falling below the $2.38 billion ceiling established under the welfare reform law of 1996.

In June 1998, the Transportation Equity Act (TEA, P.L. 105-178) was enacted. The law included a provision which scheduled the title XX ceiling to be reduced to $1.7 billion beginning in FY2001. In addition to reducing the ceiling, the TEA contained a provision to reduce the percentage of a state’s annual TANF allotment may be transferred to title XX, beginning in FY2001, from 10% to 4.25%.  (Subsequent appropriations laws have superseded the TEA transfer authority provision for each of FY2001-FY2011.)

Funding for title XX continued to decline with a $1.909 billion appropriation under the Omnibus Consolidated Appropriations Act for FY1999 (P.L. 105-277). For FY2000, the Consolidated Appropriations Act (P.L. 106-113) set title XX funding at $1.775 billion.

The Consolidated Appropriations Act of 2001 (P.L. 106-554) included $1.725 billion for title XX ($25 million above the entitlement ceiling) and maintained the 10% transfer authority from TANF (superseding the TEA provision which called for the transfer authority to be lowered to 4.25% in that year). The following year, Congress appropriated $1.7 billion for title XX in FY2002, and once again maintained the transfer authority at 10% in the Departments of Labor, Health and Human Services, and Education Appropriations Act (P.L. 107-116).

Since FY2002, annual appropriations laws have maintained SSBG funding at $1.7 billion. These laws have also maintained states’ ability to transfer 10% of their TANF block grants to the SSBG.  There has been some confusion about whether or not the Deficit Reduction Act (DRA, P.L. 109-171) permanently reinstated the 10% transfer authority. This law reauthorized TANF, through the end of FY2010, in the manner authorized for FY2004. In that fiscal year, the Social Security Act capped states’ authority to transfer TANF funds to the SSBG at 4.25%, but this law was superseded by the FY2004 Consolidated Appropriations Act (P.L. 108-199), which maintained the practice of allowing 10% transfers from TANF to the SSBG. In the wake of the DRA, Congress has continued to ensure that the transfer ceiling stays at 10% by including language to that effect in appropriations legislation.

Total funding for title XX in fiscal year 2006 exceeded the $1.7 billion level that had been appropriated for each of the prior four years. As in prior years (but following three continuing resolutions in an extended appropriations process), an appropriations bill was enacted into law (P.L. 109-149), which included $1.7 billion for title XX and maintained the 10% transfer authority. However, in addition to the $1.7 billion appropriated through the act providing funding for HHS programs, the FY2006 Defense Appropriations Act (P.L. 109-148) included supplemental title XX funding in the amount of $550 million for use in covering expenses related to the consequences of the Gulf Coast hurricanes of 2005.

The Act containing the supplemental funding for title XX expanded the potential services for which the additional $550 million could be used to include “health services (including mental health services) and for repair, renovation and construction of health facilities (including mental health facilities).”  Factors used to allocate these supplemental funds among states included the number of Federal Emergency Management Agency (FEMA)  registrants from hurricanes Katrina, Rita, and Wilma, as well as the percent of individuals in poverty in each state. HHS distributed funds to all states that took in evacuees, not just the states that were directly affected, but five states – Louisiana, Mississippi, Texas, Florida, and Alabama – received the bulk of the supplemental funds (roughly 94%).  States were initially given until the end of FY2007 to expend the supplemental funds; however, on May 25, 2007, a supplemental appropriations act for FY2007 was signed into law (P.L. 110-28), extending the availability of these funds for expenditure through September 30, 2009.  According to HHS, states failed to spend approximately $28.7 million (or about 5%) of the $550 million in supplemental funds prior to the revised expenditure deadline. Unspent funds reverted to the U.S. Treasury.

The process for determining the full FY2007 appropriation of regular title XX funding extended into the second quarter of the fiscal year, and included several continuing resolutions. Ultimately, the fourth continuing resolution was signed into law (P.L. 110-5), maintaining regular title XX funding at the annual level of $1.7 billion. This mirrored the level (of regular funding) that had been appropriated in the previous year, as well as the level that had been approved by the House and Senate Appropriations Committees (H.R. 5647 and S. 3708 respectively), but deviated from the President’s FY2007 budget proposal to provide only $1.2 billion for title XX. In the Administration’s budget justification, it contended that “while the Social Services Block Grant provides State flexibility, as the Congress intended, it fails to ensure that funds are directed towards activities that achieve results.” In addition, it argued that “the purposes of the Social Services Block Grant overlap substantially with other categorical and flexible Federal social service programs.”

The President’s proposed budget for FY2008 again requested a decrease in title XX funding to a level of $1.2 billion. However, following another lengthy appropriations process, the Consolidated Appropriations Act of 2008 was signed into law (P.L. 110-161), maintaining both the $1.7 billion in funding and states’ authority to transfer up to 10 percent of their TANF block grants to title XX.  In addition, the Disaster Relief and Recovery Supplemental Appropriations Act of 2008 (enacted into law as Division B of the first continuing resolution for FY2009, P.L. 110-329) provided $600 million in supplemental funds for the SSBG in FY2008.  These funds were appropriated on the last day of FY2008 and were not allotted to states by HHS until FY2009. The supplemental funds were appropriated for necessary expenses resulting from “major disasters” (as declared by the President and defined in title IV of the Stafford Act) occurring during 2008, including hurricanes, floods, and other natural disasters. The law also made these funds available for necessary expenses resulting from Hurricanes Katrina and Rita.

The Act containing the $600 million in supplemental funds specified that in addition to other uses permitted by title XX of the Social Security Act, states could use their supplemental SSBG funds to provide social and health services (including mental health services) for individuals, as well as to support the repair, renovation, or construction of health care facilities, mental health facilities, child care centers, and other social services facilities affected by related disasters.  The Act explicitly required HHS to distribute the supplemental SSBG funding to eligible states based on “demonstrated need in accordance with objective criteria that are made available to the public.” According to a memorandum issued by HHS in January 2009, states experiencing a qualifying disaster were allocated funding based on relative population size and each state’s proportional share of FEMA registrants for Individual Assistance (that is, individuals from affected communities who had submitted a valid registration with FEMA after the natural disaster).

States receiving funds from this supplemental initially had until the last day of FY2010 (September 30, 2010) to spend their allotments. However, most states were not on track to spend all of their funds by then and ultimately Congress passed a bill (S. 3774), which the President signed into law (P.L. 111-285) on November 24, 2010, extending the expenditure deadline for these funds by one fiscal year (to September 30, 2011).  According to HHS, states had spent more than $501 million (or nearly 84%) of the $600 million in supplemental funds as of July 28, 2011.

The President’s proposed budget for  FY2009 originally called for $1.2 billion in funding for the SSBG. This was the same amount the President had proposed for FY2007 and FY2008, and would have reflected a $500 million decrease from the authorized funding level.  However the Bush Administration subsequently submitted to Congress two amendments to the initial budget request, which combined to reduce the proposed FY2009 SSBG funding level to $0.  Ultimately, Congress rejected the proposed cuts to the SSBG and, following two continuing resolutions for FY2009, President Obama signed into law the Omnibus Appropriations Act (P.L. 111-8), which provided $1.7 billion in SSBG funding for that fiscal year. This law also maintained states’ authority to transfer up to 10% of their TANF block grants to the SSBG.

In addition to annual appropriations contained in the FY2009 Omnibus, many programs also received FY2009 funding from the American Recovery and Reinvestment Act (ARRA), signed into law by President Obama on February 17, 2009 (P.L. 111-5). The original Senate-passed version of this bill (H.R. 1) would have appropriated $400 million in SSBG funds, to be obligated to states within 60 calendar days from the date at which they become available for obligation. The original House-passed version of H.R. 1, meanwhile, included no funds for SSBG. Ultimately, the enacted version of this legislation adopted the House position on this and, as a result, the SSBG received no supplemental funds from the ARRA.

The Consolidated Appropriations Act, 2010, was signed into law (P.L. 111-117) in December 2009 and provided $1.7 billion for the SSBG for FY2010. This law also maintained the states’ authority to transfer up to 10% of their TANF funds to the SSBG. No supplemental funds were appropriated to the SSBG in FY2010. However, health reform legislation enacted during that year did include provisions affecting title XX of the SSA.

On March 23, 2010, President Obama signed into law a comprehensive health care reform bill, the Patient Protection and Affordable Care Act (PPACA; P.L. 111-148). This law included three provisions that amended the SSBG’s authorizing legislation, title XX of the SSA. These provisions created new programs related to elder justice, the health care workforce, and environmental health hazards. Although these changes did not substantively amend provisions governing the SSBG itself, they did affect title XX as a whole. For instance, the health reform law re-titled title XX as Block Grants to States for Social Services and Elder Justice (formerly, title XX was entitled Block Grants to States for Social Services). The law also divided title XX into two subtitles: subtitle A retained provisions related to the SSBG, while subtitle B comprised a series of new provisions related to elder justice. The elder justice provisions established (1) an Elder Justice Coordinating Council; (2) an Advisory Board on Elder Abuse, Neglect, and Exploitation; (3) a new grant program for stationary and mobile forensic centers to develop forensic expertise pertaining to elder abuse, neglect, and exploitation; and (4) several new grant programs (and other activities) to promote elder justice. 

In addition, the health care reform law also included provisions establishing two new sections within subtitle A of title XX. The first created two demonstration projects related to the health care workforce. The second called for HHS to establish a competitive grant program for the early detection of medical conditions related to environmental health hazards. The health reform law established these new programs within the SSBG subtitle of title XX and subjected their funding to the same prohibited uses as SSBG funds (though the new law made two exceptions to this rule). However, these new programs do not substantively alter the SSBG itself. The funding for these programs was provided separately in the health reform law (through mandatory pre-appropriations) and is not subject to the SSBG allocation formula.

Congress passed eight continuing resolutions for FY2011. The final full-year FY2011 continuing resolution, P.L. 112-10, maintained SSBG funding at $1.7 billion and also maintained states’ ability to transfer 10% of their TANF block grants to the SSBG.

Links to Additional Resources

Government Sources

U.S. Department of Health and Human Services (HHS), Administration for Children and Families (ACF), Office of Community Services (OCS), Social Services Block Grant (SSBG) Homepage

https://www.acf.hhs.gov/programs/ocs/ssbg/index.html

HHS/ACF/OCS SSBG Annual Reports Homepage

https://www.acf.hhs.gov/programs/ocs/ssbg/reports/reports.html

Title XX of the Social Security Act Online

https://www.ssa.gov/OP_Home/ssact/title20/2000.htm

Introduction

Federal child welfare policy is largely concerned with preventing the abuse or neglect of children in their own homes and responding to the consequences of such abuse or neglect. The primary goals of the policy are to ensure children’s safety and permanence  and to promote the well-being of children and their families.  Under the U.S. Constitution, states are believed to have the primary obligation to ensure the welfare of children and their families. At the same time, the federal government has demonstrated longstanding interest in working with states to strengthen their child welfare services and supports. Through the provision of funding to states, the federal government is able to require certain standards for those services and supports.

State Child Welfare Agency Spending for Child Welfare Purposes

States spend significant resources on child welfare functions. A survey of state child welfare agencies found they expended some $25.7 billion for child welfare purposes in state fiscal year 2006.[i] A little more than half of this spending ($13.3 billion, 52%) represented expenditures of state and local dollars; the remainder ($10.7 billion, 48%) represented expenditures of federal funds.[ii]

A slight majority of these federal dollars spent by child welfare agencies (53%) was received by states via programs authorized in Title IV-B or Title IV-E of the Social Security Act. These parts of the law (along with the Child Abuse Prevention and Treatment Act, CAPTA) provide funds dedicated to child welfare purposes and they also spell out federal child welfare policy. The remaining federal funds expended by child welfare agencies were derived from programs not exclusively or primarily dedicated to child welfare. Close to one-third (31%) came from funds provided via the Temporary Assistance for Needy Families (TANF) block grant and the Social Services Block Grant (SSBG). Neither TANF nor SSBG are solely dedicated to child welfare purposes. However, both are relatively flexible funding streams and they have one or more program purposes that overlap with or are consistent with those of federal child welfare programs. (For more information on TANF and SSBG, see Green Book Chapters 7 and 10, respectively.) Additionally, about 13% of state child welfare agency expenditures were of federal Medicaid dollars.[iii] Medicaid dollars spent by child welfare agencies (i.e., dollars for which the child welfare agency was required to provide the non-federal share of support) have typically been used to provide children in foster care with rehabilitative services (e.g., behavior modification or residential treatment) and targeted case management.[iv] Finally, the remaining 3% of state child welfare agency spending of federal funds for child welfare purposes was derived from Supplemental Security Income (SSI, see Green Book Chapter 3) and a variety of additional, smaller funding sources (including CAPTA).

Congressional Interest in Child Welfare

At least since enactment of legislation to create the federal Children’s Bureau in 1912 – which currently administers nearly all federal child welfare programs –  the Congress has actively sought to improve public child welfare services. The current constellation of federal child welfare programs, authorized primarily in Title IV-B and Title IV-E of the Social Security Act, developed over the last 75 years, with significant program developments in: 1935 (first federal funds authorized to states to improve public child welfare services); 1961 (original authorization of federal support solely for foster care to children removed from low income families); 1974 (some federal funds tied to requirement that each state have a system to receive and respond to allegations of child abuse and neglect); 1980 (establishment of ongoing federal support for eligible children adopted, primarily out of foster care); 1985 (funds authorized for services specifically to assist children “aging out” of foster care); 1993 (creation of new child and family services program to help strengthen families and prevent entry to foster care when possible); and 2008 (establishment of ongoing support for eligible children who leave foster care for legal guardianship with a relative). Significant policy developments have also occurred in the more recent decades, sometimes as a part of legislation making structural changes in federal support for child welfare services and sometimes in independent bills. Notably, these include the 1980 effort to support greater permanence for children in foster care, the 1997 focus on both their safety and timely permanence, and the more recent statutory attention (2006, 2008 and 2011) to the well-being of children in foster care – specifically health and education needs.

Federal Funding Dedicated to Child Welfare Purposes

Federal funding dedicated to child welfare purposes is largely distributed to state-level child welfare agencies, and most federal child welfare program requirements apply to those same agencies.[v]  For FY2011, federal funding dedicated to child welfare purposes was expected to total about $7.7 billion. The large majority of that funding was authorized under Title IV-B or Title IV-E of the Social Security Act (98%), distributed to state child welfare agencies (97%), and provided on a mandatory or direct funding basis (92%). Figure 1 shows general purposes for which these funds were provided.

Services and Assistance Under Title IV-B and Title IV-E of the Social Security Act

 Most children or families served by a public (state or local) child welfare agency first come into contact with that agency following an allegation of child abuse or neglect. There are some 75 million children in the nation and, in a given year, states respond to allegations of abuse or neglect involving some 3.6 million children. An estimated 1.1 million of those children and their families receive additional services following this child protective services response – most in their own homes. However, a minority of these children (less than 1 in 4) are removed from their homes and placed in foster care to ensure their safety.

Funds distributed to all states via programs authorized in Title IV-B of the Social Security Act (i.e., Stephanie Tubbs Jones Child Welfare Services and Promoting Safe and Stable Families programs) are the primary source of dedicated federal support for child welfare-related services to children and their families. Services are available without regard to whether a child lives at home, lives in foster care, or previously lived in foster care. States spend the majority of their Title IV-B funds to provide child protection services, as well as family support, family preservation, family reunification, and adoption promotion and support services.

The largest part of federal child welfare policy and funding is concerned with the smaller number of children for whom foster care is provided. The number of children in foster care has declined over the past decade – from a recorded high of 567,000 children on the last day of FY1999 to a recent low of 408,000 on the last day of FY2010. The decline may be credited to successful efforts by states to – reduce the length of time children spend in care; locate more permanent homes for children; and, in more recent years, reduce the number of children entering care. Most federal support provided to states for children in foster care is provided under Title IV-E and is tied to that portion of a state’s caseload that meets federal Title IV-E eligibility criteria. As of FY2010, that was estimated to be less than half of all children in foster care (or some 181,100 children on an average monthly basis).

Additional federal funding (also under Title IV-E) is available for children who leave foster care for adoption or legal guardianship (with kin). The number of children on whose behalf federal adoption assistance was paid more than doubled between FY1999 – when this assistance was paid on behalf of 195,200 children on an average monthly basis and FY2010 – when some 429,200 children received this assistance in an average month. Federal Title IV-E support for kinship guardianship was initially authorized effective with FY2009, and the number of guardianship recipients has been small but is expected to grow considerably as more states take the option to provide this kind of Title IV-E support. (In FY2009 about 100 children received Title IV-E kinship guardianship assistance on an average monthly basis; in FY2010 that number was 3,600.)

Further, there is some federal policy and dedicated funding (under the Chafee Foster Care Independence Program, also under Title IV-E of the Social Security Act) related to meeting the needs of youth who are expected to “age out” of foster care without placement in a permanent family and for those who have aged out. The number of  youth aging out (also referred to as “emancipating”) grew from an estimated 19,000 during FY1999 to close to 30,000 during FY2008; during FY2010, the number of youth aging out was roughly 28,000. Services and other supports provided are intended to help these youth make a successful transition to adulthood, and they are generally available for youth under the age of 21.

Federal child welfare programs authorized under Title IV-B and Title IV-E of the Social Security Act are administered by the Children’s Bureau, within the Administration on Children, Youth and Families (ACYF), Administration for Children and Families (ACF), at the U.S. Department of Health and Human Services (HHS). In Congress, those programs are under the jurisdiction of the House Committee on Ways and Means and the Senate Committee on Finance.

CAPTA and Other Child Welfare Programs. A comparatively small amount of dedicated federal child welfare funding ($113 million in FY2011) is provided under several grants authorized in the Child Abuse Prevention and Treatment Act (CAPTA). Under CAPTA, first established in 1974, states are required to have a system in place to receive and respond to allegations of abuse and neglect, among other requirements. CAPTA is also administered by the Children’s Bureau, and in Congress is under the jurisdiction of the House Education and the Workforce Committee and the Senate Health, Education, Labor and Pensions (HELP) Committee.

Other federal child welfare programs authorized outside of the Social Security Act include primarily competitive grants to states, local governments and nongovernmental agencies to – improve opportunities and remove barriers to adoption for children for whom being reunited with their parents is not possible or appropriate and who because of age, race/ethnicity, emotional or mental health concerns, or other issues (as specified by a state) might be less likely to be adopted; fund training and technical assistance for programs that provide court-appointed special advocates for children in abuse or neglect proceedings; fund children’s advocacy centers and other support for multidisciplinary responses to child abuse and neglect; provide services for abandoned infants and children with AIDS or other serious health issues; and support a range of federally administered research and demonstration projects related to preventing abuse and neglect and improving services to children and their families. Most of the programs authorized outside the Social Security Act have annual funding of less than $30 million each and are administered by ACF; a few are administered by the Office of Justice Programs within the Department of Justice. In the House, jurisdiction of these programs has traditionally been spread over the Education and the Workforce, Judiciary, and Energy and Commerce Committees and, in the Senate, over the HELP, Judiciary, and Finance Committees.

Requirements and Oversight

As noted earlier, most federal child welfare requirements are included in Title IV-B and Title IV-E of the Social Security Act. To receive federal support through the federal child welfare programs authorized under those parts of the law, states must provide no less than 20% of total program costs, and may be required to provide up to 50% of total program costs (depending on the program and kind of activity). As a condition of receiving these federal funds, states must also provide certain protections to each child in foster care (and without regard to whether or not the child meets federal Title IV-E eligibility criteria). Further, states must meet additional federal requirements related to planning for and administering services to children and families. State compliance with these requirements is subject to various federal audits and conformity reviews, of which the most comprehensive is the Child and Family Services Review (CFSR).  

Chapter Overview

This chapter focuses on programs that authorize federal child welfare funding to all states, and that must be used for child welfare purposes and are authorized under Title IV-B and Title IV-E of the Social Security Act. It includes links to several Congressional Research Service (CRS) Reports about those programs. A separate Tables and Figures section lists all the tables and figures included in those CRS reports. Additional parts of this chapter include a Legislative History and Links to Additional Resources.

Congressional Research Service Reports

The House Ways and Means Committee is making available selected reports by the Congressional Research Service (CRS) for inclusion in its 2011 Green Book website. CRS works exclusively for the United States Congress, providing policy and legal analysis to Committees and Members of both the House and Senate, regardless of party affiliation.

RL34121, Child Welfare: Recent and Proposed Federal Funding

R42027, Child Welfare: The Child and Family Services Improvement and Innovation Act (P.L. 112-34)

RL34499, Youth Transitioning from Foster Care: Background and Federal Programs

Tables and Figures in CRS Reports

The following tables and figure related to Child Welfare can be found in the CRS reports section of this Green Book chapter.

RL34121, Child Welfare: Recent and Proposed Federal Funding

Table 1. Funding Appropriated or Proposed, by General Category

Table 2. Recent and Proposed Federal Funding Dedicated to Child Welfare

RL34499, Youth Transitioning from Foster Care: Background and Federal Programs

Table A-1. Comparison of Outcome Domains Between Young Adults in the Midwest Study and Young Adults in the Add Health Study

Table B-1. Final FY2009 and Estimated FY2010 CFCIP General and ETV Allotments by State

Table B-2. FY2008 Chafee Foster Care Independence Program: Final Funds Allotted, Expended, and Returned to Federal Treasury, by State

Table B-3. FY2008 Chafee Foster Care Education and Training Voucher Program: Final Funds Allotted, Expended, and Returned to Federal Treasury, by State

Legislative History

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This legislative history is primarily, but not exclusively, concerned with the development of programs currently authorized under Title IV-B and Title IV-E of the Social Security Act. While it is somewhat detailed, it is not comprehensive.

Early Years

In 1912 (P.L. 62-116) Congress created the federal Children’s Bureau requiring it to “investigate and report. . . upon all matters pertaining to the welfare of children and child life among all classes of our people.” The Children’s Bureau was instrumental in a number of early twentieth century reforms aimed at reducing infant mortality and ending child labor.

In addition, in the first part of the 1930s the leaders of the Children’s Bureau were instrumental in helping to shape several titles of the original Social Security Act (P.L. 74-271), enacted in 1935. Among these were the provisions related to Child Welfare Services (originally authorized in Title V, Part 3 of the Social Security Act, but moved to Title IV-B by the Social Security Amendments of 1967, P.L. 90-248). Specifically the 1935 act authorized $1.5 million in funds, annually (and on an indefinite basis), “for the purpose of enabling the United States, through the Children’s Bureau, to cooperate with State public welfare agencies in establishing, extending, and strengthening, especially in predominantly rural areas, public [child] welfare services . . .  for the protection and care of homeless, dependent, and neglected children, and children in danger of becoming delinquent.” All cooperating states received a base allotment of funds ($10,000), with remaining funds distributed based on each state’s relative share of the rural population.

Congress made limited legislative changes to Child Welfare Services in each of 1939 (P.L. 76-379) (funding authorization raised to $1.510 million); 1946 (P.L. 79-719) (funding authorization raised to $3.5 million and state base allotment increased to $20,000); 1950 (P.L. 81-734) (funding authorization raised to $10 million, state base allotment increased to $40,000 with remainder of funds distributed based on rural population under the age of 18, and use of funds to pay cost of returning a runaway child, under age 16, to home state permitted); and 1956 (P.L. 84-880) (funding authorization raised to $12 million).

The Social Security Act Amendments of 1958 (P.L. 85-840) made the most extensive amendments to the Child Welfare Services program since its enactment. Use of funds was no longer restricted to “predominantly rural” or “special needs” areas. The program’s funding authorization was raised to $17 million (with each state’s base allotment raised to $60,000, provided a certain level of funding was appropriated); the remainder of funds were to be allotted based on a state’s relative share of population under age 21 and a factor representing state per capita income. For the first time, states were required to provide non-federal matching funds under the program. Further, Congress specifically authorized use of funds under the Child Welfare Services program for the return of runaway children up to age 18 (along with 15 days of maintenance for that child) and it permitted their use for administration of the state plan.

1960s

The Social Security Amendments of 1960 (P.L. 86-778) raised Child Welfare Services funding authorization to $25 million; set each state’s base allotment at no less than $50,000 (or up to $70,000, depending on appropriation level). Further, the law added a new and separate funding authorization for grants by the Secretary of the Department of Health, Education, and Welfare (HEW) – forerunner of the Department of Health and Human Services, HHS – to support child welfare research of regional or national significance or for projects that demonstrated new methods or facilities and showed substantial promise of advancing the field of child welfare. Eligible grantees included public or other nonprofit institutions of higher learning, and public or other nonprofit agencies and organizations engaged in research or child welfare activities.  Funding was authorized on an indefinite (no year) basis at “such sums as Congress may determine.”

Enacted in 1961, P.L. 87-31 [no short title] permitted states, on a temporary (13-month) basis to seek open-ended federal reimbursement for a part of the cost of providing foster care for children who could not remain in their own homes. To be eligible for this assistance the child had to be –  1) removed (after April 30, 1961) from the home of a parent or other relative as a result of a judicial determination that staying in the home was “contrary to the welfare” of the child;  2) eligible for, and receiving – in the month of the removal proceedings – cash welfare authorized under the federal program then known as Aid to Dependent Children (ADC) (and authorized under Title IV of the Social Security Act);  3) under the placement and care responsibility of the state agency that administered the ADC program; and 4) placed in a state-licensed foster family home. States that opted to provide foster care assistance to eligible children under their ADC programs were also permitted to claim some federal reimbursement under that program for administrative costs associated with placing children in a foster family home and they were expected, to the maximum extent practicable, to use employees of the state or local agency administering the Child Welfare Services program for this purpose. Further, these states were expected to develop (and periodically review) a plan to assure that each ADC child in foster care received proper care and that services were designed to improve the child’s home so he could return there or be placed with another relative. 

In 1962, the Public Welfare Amendments of 1962 (P.L. 87-543) renamed the ADC program as the Aid to Families with Dependent Children (AFDC) program and made permanent the provision that permitted states to provide foster care assistance under their AFDC plans. The law also expanded eligibility for federal foster care support in two ways – 1) by also allowing federal foster care support for otherwise eligible children who were under the care and placement responsibility of a public agency other than the AFDC agency – provided that the other agency had an agreement with the AFDC agency, developed a plan for the child in foster care, and met other AFDC objectives; and 2) by allowing states (subject to limitations prescribed by the Secretary of HEW) to receive support for placement of otherwise eligible children in a state-licensed, public or private non-profit child care institution. The 1962 amendments also provided that foster care payments could be made directly to a foster family or child care institution or could be paid to a public or private, non-profit child placement agency. (These eligibility changes were initially permitted on a temporary basis but both were made permanent within the decade.)

The 1962 Public Welfare Amendments (P.L. 87-543) also made significant changes to the Child Welfare Services program, including formally defining “child welfare services” as “public social services which supplement, or substitute for parental care and supervision for the purpose of (1) remedying or assisting in the solution of problems which may result in, the neglect, abuse, exploitation, or delinquency of children, (2) protecting and caring for homeless, dependent, or neglected children, (3) protecting and promoting the welfare of working mothers; and (4) otherwise protecting and promoting the welfare of children, including the strengthening of their own homes where possible 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.” The law also  raised the  funding authorization for Child Welfare Services from $25 million to $30 million for FY1963 and, in stages, to $50 million for FY1969 and each succeeding year; it also provided that each state must receive a base allotment out of those funds of $70,000 (provided appropriations reached a certain level). Additionally it stated that any amount of funds appropriated for the program that was above $25 million was to be reserved to provide day care (up to a maximum of $10 million).

The 1962 law further established several state plan requirements for the Child Welfare Services program stipulating that a state must 1) provide for coordination of services under the program with those provided under the AFDC program; 2) make a “satisfactory showing” that services of trained child welfare personnel would be extended in areas of greatest need and available to children on a statewide basis no later than July 1, 1975; and 3) provide that, with regard to day care services provided under the program, the state would make certain arrangements and put in place certain safeguards. Finally, the 1962 law expanded the purposes of the separate funding authorization for grants to support child welfare research and demonstration projects to include support for training of child welfare workers.

The Social Security Amendments of 1965 (P.L. 89-97) established the Medicaid and Medicare programs. Eligibility for medical assistance under the Medicaid program was provided on a categorical basis to individuals receiving AFDC benefits, which included children in foster care receiving those benefits. That law also increased the authorized funding level for the Child Welfare Services program (to $40 million for FY1965, and in stages, to $60 million for FY1970 and each succeeding year) and it fixed  the base allotment of funds to each state (regardless of appropriation level) at $70,000. The 1965 law repealed the specific reservation of funds for day care services under the Child Welfare Services program. However, use of funds for the day care of working mothers remained a part of the definition of “child welfare services” as did certain state plan requirements related to provision of day care services under the program. Further, the 1965 law required that day care provided with Child Welfare Services funds must be provided in a state-licensed setting, whether a private family home or other facility.

The Social Security Amendments of 1967 (P.L. 90-248) (enacted January 1968) required every state to provide foster care assistance as a part of its AFDC program. The law also permitted eligibility for federal foster care assistance if a child would have been eligible for AFDC in the month removal proceedings occurred had someone applied for those benefits or, if the child was living with a relative for no more than 6 months after leaving the home that was found “contrary to the welfare” of the child and would have been eligible for benefits. (Previously a child must have actually been receiving benefits before removal to be eligible for federal foster care assistance.)

P.L. 90-248 also moved the Child Welfare Services program (from its original location in Title V) into a new Title IV-B of the Social Security Act (and this meant that the AFDC program was now located in Title IV-A of the Act). The law also added a new state plan requirement that the same state agency that administered (or supervised administration of) the AFDC program must also administer the Child Welfare Services program. Additionally, it authorized funding for the Child Welfare Services program at $55 million for FY1968; $100 million for FY1969; and $110 million for each succeeding fiscal year. Finally, the 1967 act added a state plan requirement related to providing for training and effective use of paid sub-professionals in administering the Child Welfare Services program and for use of unpaid or partially paid volunteers to provide services or assist child welfare advisory committees.

1970s

The Social Security Amendments of 1972 (P.L. 92-603) again adjusted the funding authorization for the Child Welfare Services program, raising it to $196 million for FY1993 and, in stages, to $266 million for FY1977 and each succeeding fiscal year.

In 1974 the Child Abuse Prevention and Treatment Act (CAPTA) (P.L. 93-247) was enacted. Among other things, the new law required states to have a system for receiving and responding to allegations of child abuse or neglect, and for protecting the confidentiality of related records. Further, CAPTA required that any programs or projects supported under Title IV-B (Child Welfare Services, and Child Welfare Research, Training and Demonstration) or Title IV-A (AFDC) must comply with the CAPTA provisions on receiving and responding to allegations of child abuse or neglect as well as maintaining confidentiality of related records.

As early as 1956, P.L. 84-880, Congress had authorized provision of social services under the ADC, later AFDC, program. The 1974 Social Services Amendments (P.L. 93-647) law moved this social services funding stream to a new title of the Social Security Act, establishing the Title XX program. One of the five purposes of the new social services program was “ preventing or remedying neglect, abuse, or exploitation of children and adults unable to protect their own interest, or preserving, rehabilitating or reuniting families.” The 1974 law required that the same state agency that administered the new Title XX program must also administer the Child Welfare Services program.

The Child Abuse Prevention and Treatment and Adoption Reform Act of 1978 (P.L. 95-266) required HEW (predecessor of HHS), to directly, or by grant or contract, establish and operate a national adoption and foster care data gathering and analysis system. (HEW used this authority to fund a voluntary system of reporting.) This same 1978 act established the Adoption Opportunities program, which required HEW to establish an “appropriate administrative arrangement” to provide a centralized focus for planning and coordination of all department activities related to foster care and adoption. Further, it authorized funds to support competitive grants, demonstration projects, and other activities related to removing barriers to the adoption of children with special needs (i.e., primarily those adopted from foster care).

In 1978 Congress sought to reverse the high rate at which Indian children were involuntarily separated from their tribes and families by federal, state, and private agencies. The Indian Child Welfare Act (P.L. 95-608) set minimum federal standards for the removal of Indian children from their families and the placement of such children in foster or adoptive homes. The law provided procedural protections for parents and tribes in state court proceedings and authorized some assistance to Indian tribes in the operation of child and family services programs.

1980s

A keystone of the current federal child welfare policy and financing structure, the Adoption Assistance and Child Welfare Act of 1980 (P.L. 96-272) created the federal adoption assistance program and established independent program authority for the federal foster care program under a new Title IV-E of the Social Security Act. The Title IV-E foster care and adoption assistance program followed many of the same rules and practices that had been established under the AFDC foster care program, while adding support for adoption assistance. Funding for foster care and adoption assistance was established under Title IV-E as a permanent entitlement for assistance to eligible children. The federal share of Title IV-E program costs was changed to equal (in all states) the share a state received under the Medicaid program (i.e., the federal medical assistance percentage or FMAP). Eligibility for Title IV-E foster care assistance closely tracked provisions in the AFDC program (as established in the 1960s). However the 1980 law did permit some children who were voluntarily removed from their homes to be eligible and it stipulated that children placed in detention or related child care institutions were not eligible, and neither were those placed in  public child care institutions that housed more than 25 children.  Eligibility for Title IV-E adoption assistance largely followed the rules for Title IV-E foster care except that alternatively, children who were eligible for Supplemental Security Income (SSI, Title XVI of the Social Security Act) could also receive federal assistance provided that in either case (whether following the AFDC or SSI pathway) the child was determined to have “special needs.” The 1980 law described children with “special needs” as those for whom the state determined that the child cannot or should not be returned to his or her parents’ home; and for whom the state additionally found a special factor or condition existed that made it reasonable to conclude that the child would not be adopted without provision of adoption assistance. The law allowed states to stipulate what the special needs factors would be but it suggested a child’s age, membership in a sibling group, race/ethnicity, and emotional, physical or mental disabilities as possible factors. Finally, it added – before “special needs” status could be established – that reasonable efforts to place a child without adoption assistance must be made except in situations were doing this would not be in the child’s best interest (e.g., because “significant emotional ties” existed between a child and his/her prospective adoptive parents due to the fact that the prospective adoptive parents were the child’s foster parents).

As part of its attention to both reducing placements in foster care and establishing permanency for children who did enter care, P.L. 96-272 required states to make “reasonable efforts” to prevent a child’s placement in foster care and to reunite a child who had been removed to foster care. Prior law case planning requirements were strengthened to ensure that the child’s case plan was a written document and that it addressed the appropriateness of the child’s foster care placement and provision of services to the child, child’s parents, and foster parents to enable the child to return home or find a new permanent placement. Periodic review of the case plan was stipulated as every 6 months, and in addition to a review of the appropriateness of services provided, was to project a likely date for which the child could be returned home or placed for adoption or legal guardianship. Additionally, any child receiving Title IV-E assistance remained categorically eligible for Medicaid.

The 1980 law also linked the new Title IV-E program to a revamped Child Welfare Services program (for which actual appropriations  – as opposed to the discretionary funding authorization level – jumped from $56.5 million in FY1979 to $163 million in FY1981). The law revised the definition of “child welfare services” and required that the new Title IV-E program be administered by the same state agency that administered the Child Welfare Services (Title IV-B) program and that services provided under Title IV-B (as well as those provided under the AFDC program and Title XX) be coordinated with Title IV-E. Additionally, the 1980 law sought to encourage use of funds for preventive services. It limited states’ ability to use federal Child Welfare Services funds for foster care maintenance payments (and to pay for day care of working mothers), offered increased funding (full allotment) under the Title IV-B program to states that provided pre-placement prevention services and a broader set of child protections both for those who were eligible for Title IV-E assistance and those who were not. Finally, it permitted states, under certain circumstances, to transfer “unused” Title IV-E funds for use in their Child Welfare Services (Title IV-B) program. 

Separately, the 1980 law established a mandatory cap on federal reimbursement of state foster care expenditures under certain circumstances. However, the circumstances requiring a mandatory cap occurred in one fiscal year only, FY1981, and the language requiring a cap on Title IV-E funds – along with the language permitting transfer of “unused” Title IV-E funds – was repealed in 1994 (P.L. 103-432).)  (For a more detailed discussion of changes made by P.L. 96-272 see the 1994 Green Book.)

With regard to funding services for children and their families, the 1980 Adoption Assistance and Child Welfare Act (P.L. 96-272) also set capped entitlement funding under the Title XX Social Services program at $2.9 billion for FY1981, rising annually until it reached $3.3 billion for FY1985. However, the 1981 Omnibus Budget Reconciliation Act (OBRA), P.L. 97-35, converted Title XX into the Social Services Block Grant (SSBG) and cut the entitlement ceiling to $2.4 billion for FY1982. (Subsequent legislation in the 1980s increased the SSBG entitlement ceiling to $2.7 billion and by FY1990 it was back to $2.9 billion.)

The Consolidated Omnibus Budget Reconciliation Act of 1985 (P.L. 99-272) authorized federal capped entitlement funds ($45 million), under a new Section 477 of the Social Security Act, for services to help Title IV-E eligible youth in foster care, age 16 and older, transition to adulthood successfully.

As part of the Omnibus Reconciliation Act of 1986 (P.L. 99-509) Congress added a new Section 479 to the Social Security Act that required HHS to name an Advisory Committee charged with studying and reporting on various methods of establishing, administering, and financing a system for the collection of adoption and foster care data, and required HHS to draw on this study to promulgate final regulations for a reporting system. (Final regulations for the Adoption and Foster Care Analysis and Reporting System (AFCARS) were published in December 1993 with implementation effective October 1, 1994.)

The Title IV-E (Section 477) Independent Living Program was extended by the Technical and Miscellaneous Revenue Act of 1988 (P.L. 100-647), which also expanded eligibility for services under the program to include youth age 16 or older in care who were not Title IV-E eligible as well as specified youth for up to 6 months after they left care.  

The Omnibus Reconciliation Act of 1989 (P.L. 101-239) extended the  Independent Living Program through 1992; increased its funding entitlement ceiling to $50 million for FY1990, $60 million for FY1991, and $70 million for FY1992. Further, it established a state match requirement for the Independent Living Program beginning in FY1991. OBRA 1989 also increased the authorization level of the Child Welfare Services program from $266 million to $325 million, effective with FY1990.

1990

During the second session of the 101st Congress, the Omnibus Budget Reconciliation Act of 1990 (Public Law 101-508)  made several minor amendments to the Child Welfare Services and Title IV-E foster care and adoption assistance programs, including requiring states to distinguish between traditional  administrative costs and child placement costs. It also gave states  the option of providing independent living services to youth who aged out of foster care up to age 21.

1993

The 103rd Congress enacted significant child welfare amendments in the Omnibus Budget Reconciliation Act of 1993  (P.L. 103-66). This legislation created a new subpart 2 of Title IV-B authorizing capped entitlement funds to states for provision of “family support” and “family preservation” services to families with children (including foster, adoptive, and extended families). States were required to spend no more than 10% of federal program funds on plan administration and “significant” amounts of the remaining 90% of program funds on each of those two categories of services. Funding for the program was fixed at $60 million for FY1994 (first year of the program) and rose each year until FY1998 when funding was to equal the greater of $255 million or the amount provided in FY1997 ($240 million), increased by inflation. To receive funds, states were required to make a broad plan for provision of child and family services (every five years) and to include goals. Further they were required to annually report on the services provided and progress toward the plan goals. Program funds were to be distributed based on a state’s relative share of children receiving Food Stamps (since renamed Supplemental Nutrition Assistance Program or SNAP benefits) and states were required to provide some non-federal matching funds to receive their full federal program allotment. The legislation also included an annual set-aside for grants to the highest court in each state (beginning with FY1995) for assessments and improvements of judicial child welfare proceedings (i.e., the Court Improvement Program, which was moved to Section 438 of the Social Security Act by P.L. 107-133).

Separately, P.L. 103-66 permanently authorized capped entitlement funding for the Independent Living Program; permanently authorized a 75  percent matching rate for certain state training expenses under Title IV-E; and also authorized a 3-year enhanced match to states for planning, designing, developing or installing child welfare data collection systems.

1994

The Social  Security Act Amendments of 1994 (P.L. 103-432) was enacted in the second session of the 103rd Congress. The law made provision of certain protections (e.g., case planning and case review) a state plan requirement under the Child Welfare Services program and applicable for all children in foster care, not just those who were Title IV-E eligible (effective no later than April 1, 1996). In addition, P.L. 103-432 authorized a new federal conformity review system (under Section 1123A of the Social Security Act) to  monitor and enforce state compliance with state plan provisions under Title IV-B and Title IV-E.

P.L. 103-432 also required states to describe  measures taken to comply with the Indian Child Welfare Act in their Title IV-B state plans; and required “dispositional” hearings to be held at least every 12 months after the first such hearing; established additional case plan and case review procedures for children placed outside  their home state; and established a timetable for federal  review of state foster care and adoption assistance claims.  

Further, the 1994  legislation authorized HHS to conduct child welfare  demonstrations (a.k.a. “waiver projects”) in up to 10 states, allowing HHS to waive certain Title IV-B and Title IV-E provisions in states choosing to demonstrate alternative ways to achieve child welfare policy goals. Finally, P.L. 103-432 established a new Section 1130A of  the Social Security Act, addressing judicial review of Social  Security Act provisions that are required as components of  state plans. This provision was developed in response to a  Supreme Court ruling in Suter v. Artist M., an Illinois child welfare case.

The Multiethnic Placement Act (MEPA) (P.L. 103-382), prohibited any agency or entity that received federal assistance from discriminating on the basis of the child’s or the potential adoptive or foster parents’ race, color, or national origin. As enacted in 1994, MEPA permitted agencies to consider the child's cultural, ethnic, or racial background, and the capacity of the prospective parents to meet the child's needs, as one of the factors used to determine the child’s best interest with regard to placement. The 1994 legislation also provided a right of action in U.S. district court for individuals who were aggrieved by a MEPA violation and deemed noncompliance with MEPA to be a violation of Title VI of the Civil Rights Act. In addition, MEPA amended the Child Welfare Services program (Title IV-B, Subpart 1 of the Social Security Act) to add, as a state plan requirement, that states must provide for the diligent recruitment of potential foster and adoptive families that reflect the ethnic and racial diversity of children who need homes.

1996

In 1996 Congress revised the MEPA provisions as part of the Small Business Job Protection Act (P.L. 104-188). This 1996 law repealed the prior MEPA provision that allowed consideration of a child's cultural, ethnic, or racial background in making placement decisions. Further, the law amended Title IV-E of the Social Security Act to provide that neither the state nor any other entity that receives federal funds may discriminate in adoption or foster care placements on the basis of race, color or national origin. The law specified certain fiscal penalties for states that violate this Title IV-E plan requirement and provided that private agencies that violate the interethnic provisions must pay back any federal funds received. Also under the law, private individuals may continue to seek relief in U.S. district court, however, P.L. 104-188 provides that no action may be brought more than 2 years after the alleged violation occurs. Finally, this 1996 law stipulated that none of these interethnic placement provisions affect the application of the Indian Child Welfare Act.

Also in 1996 Congress enacted comprehensive welfare reform legislation, the Personal Responsibility and Work Opportunity Reconciliation Act (P.L. 104-193), which contained provisions affecting child welfare. The centerpiece of P.L. 104-193 was the repeal of AFDC and creation of a new block grant to states for Temporary Assistance for Needy Families (TANF). As a condition of receiving TANF funds, states must operate a foster care and adoption assistance program under Title IV-E of the Social Security Act. However, eligibility for Title IV-E historically had been linked to AFDC eligibility. Thus, P.L. 104-193 provided that foster or adoptive children are eligible for Title IV-E subsidies if their families would have been eligible for AFDC, as it was in effect in their state on June 1, 1995. (Technical amendments enacted in 1997, P.L. 105-33, subsequently changed this date to July 16, 1996.) Children eligible for SSI continued to be eligible for Title IV-E adoption assistance and all Title IV-E eligible foster and adoptive children continue to be categorically eligible for Medicaid.

The 1996 welfare reform legislation also amended Title IV-E to require states, as a component of their Title IV-E plans, to consider giving preference to adult relatives in determining a foster or adoptive placement for a child; enable for-profit child care institutions to participate in the federal foster care program; and extend an enhanced federal matching rate for certain data collection costs through FY1997. Separately (under Title IV-B of the Social Security Act) it required HHS to conduct a national random sample study of children at risk of abuse or neglect or who had experienced abuse or neglect (implemented as the National Survey of Child and Adolescent Wellbeing, NSCAW).

Finally, P.L. 104-193 also included funding for the prior law AFDC- Emergency Assistance (EA) program in the new TANF block grant and permitted states to use those block grant funds for purposes permitted in the state’s prior law, EA program. For  many states this included some provision of foster care and other child welfare-related activities, especially family preservation activities. Separately, the law lowered the entitlement cap for the Social Services Block Grant (SSBG), which is now set at $1.7 billion annually, but it permitted states to transfer some share of their TANF funds to use for SSBG purposes. (States continue to use significant SSBG funds, including TANF transfers for child welfare purposes.)

1997

With the Adoption and Safe Families Act of 1997 (P.L. 105-89), Congress enacted the most significant changes to Title IV-E of the Social Security Act since its 1980 creation. ASFA sought to promote adoption and ensure safety for children in foster care. The law established that a child’s health and safety must be of “paramount” concern in any efforts made by the state to preserve or reunify the child’s family. The law retained, but clarified the requirement that states make “reasonable efforts” to preserve or reunify a child’s family, establishing exceptions to this requirement. Also to promote safety, ASFA required states to conduct criminal background checks for all prospective foster or adoptive parents, and required states to develop standards to ensure quality services that protect children’s health and safety while in foster care. To promote permanency, the law required states to make reasonable efforts to place children, in a timely manner, who have permanency plans of adoption or another alternative to family reunification, and to document these efforts. Additional provisions were intended to eliminate inter-jurisdictional barriers to adoption. ASFA changed the name of dispositional hearings to “permanency” hearings, and required that they occur within 12 months of a child's placement in foster care (rather than the first 18 months). The law also revised the list of permanency goals, eliminating specific reference to long-term foster care, and required that foster parents, pre-adoptive parents, and relative care givers be given notice and opportunity to be heard at reviews and hearings. Further, the law required that states initiate or join proceedings to terminate parental rights on behalf of children who have been in foster care for 15 of the most recent 22 months, although certain exceptions are allowed.

ASFA also authorized incentive payments to states to increase the number of foster and special-needs children who are placed for adoption (Section 473A) and it contained provisions intended to expand health insurance coverage for special-needs adoptive children who are not eligible under Title IV-E.  The 1997 law also reauthorized the new program under Title IV-B, subpart 2 of the Social Security Act – renaming it the Promoting Safe and Stable Families Program – and required states to spend significant amounts of funds received under that program for “time-limited family reunification” and “adoption promotion and support services” (in addition to spending significant sums on the prior law purposes of family support and family preservation services). The law increased funding to be provided under the program, fixing its FY1998 mandatory funding level at $255 million and providing for annual program funding increases, through FY2001, when mandatory funding would reach $305 million. ASFA also permitted HHS to grant waivers to as many as 10 states annually (for each of FY1998-FY2002). Finally, it required HHS to establish child welfare outcome measures and to publish data annually on state performance compared to those measures (Sec. 479A of the Social Security Act).

1999

The Foster Care Independence Act of 1999 (P.L. 106-169) was enacted during the 106th Congress. It revised the Independent Living Program (under Section 477) and renamed it the John H. Chafee Foster Care Independence Program in honor of the late Senator John Chafee. The legislation provided greater flexibility to states in their use of funds to help older foster children obtain the education and employment services necessary for a successful transition to adult living, doubled the entitlement ceiling for the program (from $70 million to $140 million), and revised the state allocation formula to use more current foster care data. The law also established an option under Medicaid for states to cover youth aged 18-20 who on their 18th birthday were in foster care under the responsibility of the state. Finally, it required HHS to develop outcome measures as well as a data collection system to quantify services provided and measure outcomes. [FY2011 was the first year of operation for the National Youth in Transition Database (NYTD), which collects demographic and outcome information on current and former foster youth.]

2001

The Promoting Safe and Stable Families Amendments of 2001 (P.L. 107-133) (enacted January 2002) reauthorized the Promoting Safe and Stable Families program for 5 years (FY2002 through FY2006). It maintained the annual mandatory (capped entitlement) funding level of $305 million for each of those years but authorized additional discretionary funds for the program of up to $200 million annually. The 2001 amendments to the program also added strengthening parental relationships and promoting healthy marriages to the definition of “family support services” provided in the program and it added support for infant safe haven programs (established via state law) under the definition of family preservation services. It also established new program authority for HHS to fund programs that mentor children of prisoners and expanded the Chafee Foster Care Independence Program by authorizing new discretionary funds for post-secondary education and training vouchers (valued at up to $5,000 annually).

2003

The Adoption Promotion Act of 2003 (P.L. 108-145) extended the authorization for adoption incentive payments to states for five additional years. The law amended the awards available for increases in special needs adoption, limiting it to increases of adoptions of children under age 9 who have special needs, and it added an additional incentive for increased adoptions of foster children ages 9 or older. The law also required specific penalties for states that fail to submit AFCARS data to HHS and mandated a report by HHS on state efforts to promote adoption or other permanency options for foster children.

2005

The Fair Access to Foster Care Act of 2005 (P.L. 109-113) permits states to claim reimbursement under Title IV-E even if an otherwise eligible child’s foster care maintenance payments are provided to his or her institutional, or family, foster care provider, via a for-profit placement agency.

The Deficit Reduction Act of 2005 (DRA, P.L. 109-171) (enacted in February 2006) made changes to the federal Title IV-E eligibility language intended to clarify the meaning of “home of removal.” The Act codified a longstanding HHS interpretation of Title IV-E eligibility language and effectively nullified the 2003 Rosales decision. P.L. 109-171 also placed limitations on the ability of states to make claims for federal reimbursement of the costs of administering their Title IV-E foster care programs, including limits on the length of time a child may be considered a “candidate” for foster care and new restrictions on administrative claims related to foster children placed in unlicensed relative homes or other settings that are “ineligible” under the federal foster care program. P.L. 109-171 also amended the confidentiality provisions of Title IV-E to assert that they did not limit a state’s flexibility in determining public access to child abuse and neglect proceedings, provided that the state’s policy, at a minimum must “ensure the  safety and well-being of the child, parents, and family.”

The DRA (P.L. 109-171) also increased the mandatory funding authorization for the Promoting Safe and Stable Families Program (Title IV-B, subpart 2) to $345 million; amended both Child Welfare Services  (Title IV-B, subpart 1) and the Court Improvement Program (Section 438) to require ongoing and meaningful collaboration between courts and child welfare agencies; authorized two new Court Improvement Program grants (related to data collection and training) and appropriated $100 million for those grants ($20 million in each of FY2006-FY2010). Finally, the DRA made changes to Medicaid (Title XIX), which were intended to clarify when state child welfare agencies could use targeted case management to provide certain services for children in foster care.

2006

The Safe and Timely Interstate Placement Act of 2006 (P.L. 109-239) established a federal 60-day deadline for completing an interstate home study and a 14-day deadline for the state that requests this study to act on that information. P.L. 109-239 also authorized $10 million in each of FY2007 through FY2010 for incentive payments to states for every interstate home study completed in 30 days and it repealed the authority to make these incentive awards effective with the first day of FY2011. (No funds were appropriated under this authority and it is now repealed.)

Further, P.L. 109-239 prohibited states from restricting the ability of a state agency to contract with a private agency to conduct interstate home studies, and, for children in foster care who will not be reunited with their parents, the law encouraged (or in some cases requires) identification and consideration of both in-state and out-of-state placement options as part of mandatory case planning and review procedures. Separately, P.L. 109-239 required courts, as a condition of receiving certain Court Improvement Program funding, to notify any foster parent, pre-adoptive parent, or relative caregiver of a foster child of any proceedings to be held regarding the child; strengthened language requiring the child welfare agency to maintain and update a complete health and education record for each child in foster care; and required that youth leaving foster care custody because they have reached the age of majority must be given a free copy of their health and education record.

The Adam Walsh Child Protection and Safety Act of 2006 (P.L. 109-248) required states to include fingerprint-based FBI checks as part of their criminal background checks of prospective foster and adoptive parents; eliminated the ability of additional states to opt out of the federal background checks as of September 30, 2005; required prior opt out states to comply with all federal background check procedures as of October 1, 2008; and additionally required all states to check child abuse and neglect registries for information about prospective foster or adoptive parents or any adult living in their home. (Separately, P.L. 109-248 requires HHS, in consultation with the Justice Department, to establish a national registry of substantiated cases of child abuse and neglect.)

The Child and Family Services Improvement Act of 2006 (P.L. 109-288) replaced the permanent funding authority for the Child Welfare Services program with a five-year authority that coincides with the funding authority for the Promoting Safe and Stable Families program, and required states to establish standards that ensure children in foster care have a well-planned visit with their caseworker at least once a month; have procedures to maintain child welfare services in the wake of a disaster; and describe in their state plan how they consult with medical professionals to assess the health of and provide medical treatment to children in foster care. The law replaced the definition of “child welfare services” that had been in the law with a new purposes section and limited the use of Child Welfare Services funds, both federal and state/local matching funds, for program administrative purposes to no more than 10 percent and prohibited any use of those federal funds for adoption assistance payments or child care above the amount of federal Child Welfare Services funds spent for those purposes in FY2005. Further, it prohibited the use of both federal and state/local Child Welfare Services funds for foster care maintenance payments above the amount of those funds spent for that purpose in fiscal FY2005.

As part of reauthorizing funding for the PSSF program for FY2007 through FY2011, P.L. 109-288 mandated that states must report on their actual use of funds under Title IV-B and required HHS to annually compile both planned and actual expenditure forms required of states and to submit them to Congress. The law limited administrative spending of state matching dollars under the PSSF program to no more than 10 percent of total program expenditures (prior law providing this same restriction for federal program funds was retained as well). It also set-aside a part of the mandatory Promoting Safe and Stable Families program funding to provide targeted support to states for monthly caseworker visits ($95 million, across FY2006 through FY2011) and to fund competitive grants to “regional partnerships” for activities that improve the outcomes for children affected by their parent/caretaker’s methamphetamine or other substance abuse ($145 million across FY2007 throughFY2011). Separately, the law increased the annual funding set-aside for tribal child and family services under the Promoting Safe and Stable Families program. The law also reauthorized the Mentoring Children of Prisoners program and authorized HHS to fund a demonstration of the effectiveness of vouchers as a way to improve the delivery of (and access to) mentoring services for children of prisoners. Finally, P.L. 109-288 amended the Title IV-E case review procedures to require that the court (or court-approved administrative body) conducting a required permanency hearing for a child in foster care consult with the child in an “age-appropriate manner” regarding the permanency plan.

The Tax Relief and Health Care Act of 2006 (P.L. 109-432) exempted all foster children – without regard to Title IV-E eligibility – from otherwise applicable requirements that individuals submit certain forms documenting their citizenship or nationality in order to be eligible for Medicaid. (The documentation requirements were created by the DRA (P.L. 109-171), and the amendment made by P.L. 109-432 was made effective as if it had been included in that earlier law.) P.L. 109-432 also amended Title IV-E to require states to have procedures for verifying the citizenship or immigration status of each child in foster care, whether or not the state claims Title IV-E support for the child, and it required that state compliance with this new federal requirement be checked as part of child welfare conformity reviews.

2007

In the 110th Congress, P.L. 110-275 amended Title IV-E to fix at 70 percent the federal reimbursement rate (FMAP) applicable to the District of Columbia for purposes of payments made under the Title IV-E program.

2008

The 110th Congress approved an omnibus child welfare bill, the Fostering Connections to Success and Increasing Adoptions Act of 2008 (P.L. 110-351) that includes the most far-reaching changes to federal child welfare financing since the 1980 creation of Title IV-E. Among the changes in federal financing of child welfare programs, P.L. 110-351 permits states to claim federal reimbursement under Title IV-E for the cost of providing kinship guardianship assistance payments to eligible children who leave foster care for placement in legal guardianship with a relative who has been their foster parent; as of FY2010 it permits eligible tribal entities to seek direct federal reimbursement under Title IV-E, as well as direct tribal access of Chafee Foster Care Independence Program funds; beginning with FY2010 it provides permanent annual funding of $3 million for grants to tribes seeking to implement a tribal Title IV-E program and for technical assistance to tribes and states related to meeting requirements for cooperating to better serve Indian children; as of FY2011, defines “child” for purposes of Title IV-E and Title IV-B in a manner that will effectively permit states to continue providing federal foster care maintenance payments to otherwise eligible youth who remain in foster care up to their 21st birthday (provided they are in school, working, or engaged in an activity to remove barriers to employment or, are unable to do any of those things due to a documented medical condition); will phase in (FY2010 through FY2018) expanded eligibility for federal Title IV-E adoption assistance by removing certain income tests and other rules linked primarily to the prior law cash welfare program (AFDC); and provides $15 million annually for Family Connection grants (FY2009 through FY2013). Finally, with regard to financing and Title IV-E eligibility, P.L. 110-351 redefines “foster care maintenance payment” to include the cost of transporting a child to his/her “school of origin” and it permits states to claim federal support for foster care maintenance payments made on behalf of youth age 18 or older who are placed in supervised independent living situations, subject to HHS regulations.

P.L. 110-351 also requires states to work with appropriate education agencies to ensure education stability for children entering and in foster care and to coordinate efforts between the state child welfare agency and the state Medicaid agency to create a plan to ensure health and mental health care for children in foster care; also requires states to assure that any child receiving Title IV-E assistance (kinship guardianship, foster care maintenance or adoption assistance) is enrolled in school, if age appropriate, or has completed high school; requires states to locate and provide notification to relatives when a child enters, or is about to enter, foster care; requires states to ensure siblings are placed in the same kinship guardianship, foster care, or adoption placement unless this is not in the interest of one of the siblings; and authorizes more direct access to federal Parent Locator Services for state child welfare agencies.

2009

States are generally entitled to claim federal reimbursement for the cost of making Title IV-E foster care maintenance, adoption assistance, and kinship guardianship assistance at their federal medical assistance percentage (FMAP). State FMAPs are recalculated annually and may range from a low of 50% in states with highest per capita income (relative to the nation as a whole) to as high as 83% in states with lowest per capita income. The American Recovery and Reinvestment Act (ARRA, P.L. 111-5)  temporarily increased the federal matching rate for Title IV-E foster care maintenance, adoption assistance, and kinship guardianship assistance payments. The law provided a general 6.2 percentage point increase in each state’s FMAP that applied from October 1, 2008 through December 2010. Further, it ensured that no state had a lower calculated FMAP (before application of the general increase) than it had in FY2008 or any subsequent year during the temporary increase period. To be eligible for the increased FMAP (for both the Title IV-E and Medicaid programs) states were required to maintain their Medicaid eligibility standards, methodologies, and procedures as they were in effect on July 1, 2008, and they were not permitted to require local governments to pay a larger part of the state’s non-federal Medicaid program costs than otherwise would have been required on September 30, 2008.

2010

In August 2010, Congress passed the popularly titled Education Jobs and Medicaid bill which was enacted as P.L. 111-226. That law amended ARRA to extend the temporary enhanced FMAP reimbursement, for 6 months, but at phased down levels. Specifically, it authorized a general 3.2 percentage point increase to a state’s FMAP for the first three months of calendar year 2011 (i.e., the second quarter of FY2011) and 1.2 percentage points for the second three months of that calendar year. As with ARRA, the general percentage point increase was applied to a state’s highest regularly calculated FMAP for any preceding year, beginning with FY2008. Further, ARRA conditions for receipt of this enhanced funding (described above) continued to apply and states were additionally required to submit a notice to HHS indicating that they would seek this enhanced funding. The level of federal participation in the Title IV-E program returned to its regular reimbursement rates beginning on July 1, 2011.

The Patient Protection and Affordable Care Act (P.L. 111-148) amended programs under Title IV-B and Title IV-E to ensure that youth who have aged out of care (and who are receiving services or supports) and those who are aging out of foster care have information and education about having a health care power of attorney or health care proxy and that they are provided the option to execute a document providing for this. Specifically, for any youth who is aging out of foster care, the required transition planning is amended to stipulate that youth must be informed about a health care power of attorney or health care proxy and must be given the opportunity to execute a document to assign health care decision-making. Further, as part of their Chafee Foster Care Independence Program, states must certify that any youth  participating in the program (whether still in care or already aged out of care) must be educated about -- health care power of attorney, health care proxy, or an other similar document; whether such document is recognized under state law; and how to execute such a document (if the youth chooses). Finally, as part of the health care oversight plan required under the Stephanie Tubbs Jones Child Welfare Services plan, states must outline steps they will take to ensure that the health care-related transition planning provisions are carried out, including, 1) informing youth about their health insurance options; 2)  informing youth about health care power of attorney, health care proxy, or other similar document; and 3) giving youth the option to execute a health care power of attorney or similar document.

The health care law (P.L. 111-248) also amended Medicaid to provide categorical eligibility for all youth under the age of 26 who have emancipated from foster care at age 18 (or whatever older age – up to age 21 – the state uses to define “child” under its Title IV-E program).

Further, P.L. 111-248, as amended by the Health Care and Education Reconciliation Act (P.L. 111-252) raised the federal medical assistance percentage (FMAP) for territories to 55% (from 50%) effective as of July 1, 2011. This change was made in the Medicaid part of the statute, but is applicable to the Title IV-E program as well.

2011

The Continuing Appropriations Act, 2011 (P.L. 111-242) amended the Promoting Safe and Stable Families Program to raise the mandatory funding authorization for the overall program to $365 million for FY2011 (a $20 million increase from previous year). That law also fixed at $30 million, the permanent annual set-aside of mandatory Safe and Stable funds for the Court Improvement Program. (This represented a $20 million increase from previous permanent and annual mandatory set-aside of $10 million established as of FY1996, by P.L. 103-66.)

Enacted on September 30, 2011, the Child and Family Services Improvement and Innovation Act (P.L. 112-34) extended (FY2012-FY2016) the annual funding authorization for the Stephanie Tubbs Jones Child Welfare Services Program at $325 million; and it authorized total annual funding authorized for the Promoting Safe and Stable Families Program for those same five years at $545 million ($345 million mandatory basis and $200 million discretionary).

P.L. 112-34 also added new requirements to the Stephanie Tubbs Jones Child Welfare Services state plan and amended the health oversight plan requirement previously included in that plan. States are newly required to describe activities they take on behalf of children they serve who are under five years of age to 1) reduce the amount of time they are without a permanent family; and 2) address their developmental needs. Further, they are required to describe what sources are used to compile information on child deaths due to maltreatment (for purposes of reporting these data to HHS); and, if applicable, to describe why certain sources of information are not used (i.e., information from the state vital statistics department, child death review teams, law enforcement agencies or offices of medical examiners); and how the information will be included. Further, the previously existing requirement for a health oversight plan for children in foster care was amended to require state child welfare agencies to outline in this plan how they will monitor and treat trauma children experience because of abuse or neglect, or because of removal from their homes (and which is identified through screenings for health needs); and further to require states to include protocols for appropriate use and monitoring of psychotropic medication (as part of their more general oversight of prescription medications).

The Child and Family Services Improvement and Innovation Act extends the requirement (enacted in 2006) that a state must provide more of its own (non-federal) funds to receive its full allotment of Child Welfare Services program funds  if it fails to conduct monthly caseworker visits. However, it adjusts how data are used to measure a state’s compliance with this requirement and provides that every state must complete no less than 90% of its required monthly caseworker visits.

The Child and Family Services Improvement and Innovation Act also amended the state plan requirements for the Promoting Safe and Stable Families Program to require states to describe how they identify populations at greatest risk of maltreatment and how services are targeted to them. Additionally the definition of “family support services” under the program was amended to specify mentoring (as a means to enhancing child development) and the definition of “time-limited family reunification services” was amended to include peer-to-peer mentoring and support groups for parents and primary caregivers and activities to aid parents and siblings in visiting children in foster care.

In addition, P.L. 112-34 extended authorization for the Court Improvement Program, adding a purpose related to improving court engagement with families, with annual mandatory funding continued at $30 million (reserved out of mandatory Safe and Stable funds) plus 3.3% of any discretionary funding provided for the Safe and Stable Program. The 2011 law also authorized continued mandatory funding (reserved out of the mandatory funds provided for the Safe and Stable Program) for regional partnership grants to improve outcomes for children affected by parental substance abuse (special emphasis on methamphetamine abuse was removed) ($20 million for each of FY2012-FY2016) and for grants related to monthly caseworker visits of children in foster care (use of grant funds changed to stress improved caseworker visits and planning rather than to permit workers to “access benefits of technology”) ($20 million for each of FY2012-FY2016).

The 2011 law (P.L. 112-34) also requires HHS, with the Office of Management and Budget (OMB) in consultation with states, to issue regulations on standard data elements and standard data reporting requirements for any category of information to be reported under Title IV-B. (These requirements are placed in a new Subpart 3 of Title IV-B.)

Finally, the Child and Family Services Improvement and Innovation Act also renewed authority (FY2012-FY2014) for HHS to grant waivers of certain requirements under Title IV-E or Title IV-B so that as many as ten states annually may demonstrate alternative ways to achieve federal child welfare policy goals. However, states newly seeking the ability to operate a waiver project must implement no less than two of 10 specific child welfare improvement policies (no less than one of which must be implemented after application for the waiver). HHS may not give greater approval consideration to proposed projects that plan to use random assignment as part of their evaluation procedures. All waiver projects, whether initiated before or after enactment of P.L. 112-34, must cease to operate no later than September 30, 2019.

Links to Additional Resources

Federal Laws

The Social Security Administration maintains an online compilation of the Social Security Act: https://www.ssa.gov/OP_Home/ssact/ssact-toc.htm. Child welfare programs and activities authorized in the Social Security Act are listed below by Title and with section(s) number.

Social Security Act

Title IV-B – CHILD AND FAMILY SERVICES

Subpart 1 – Stephanie Tubbs Jones Child Welfare Services Program

• Stephanie Tubbs Jones Child Welfare Services Program (Sections 420-425, 428)
• Research, Training and Demonstrations (Section 426)
• Family Connection Grants (Section 427)
• National Random Sample Child Welfare Study (Section 429)

Subpart 2 – Promoting Safe and Stable Families Program

• Promoting Safe and Stable Families Program (Sections 430 – 437)
• Court Improvement Program (Section 438)
• Mentoring Children of Prisoners (Section 439)

Subpart 3 – Common Provisions

• Data Standardization (Section 440)

Title IV-E – FEDERAL PAYMENTS FOR FOSTER CARE AND ADOPTION ASSISTANCE

• Foster Care, Adoption Assistance and Kinship Guardianship Assistance
  (Sections 470-473, 474-476, 478-479B)
• Adoption Incentives (Section 473A)
• Chafee Foster Care Independence Program, including Education and Training Vouchers (Section 477)

Title XI – GENERAL PROVISIONS

• Effect of failure to carry out State Plan (Section 1123); (identical language also enacted at Section 1130A)
• Reviews of child and family services programs and of foster care and adoption assistance programs, for conformity with State plan requirements (Section 1123A)
• Child Welfare Demonstration Projects (Section 1130)

Child Abuse Prevention and Treatment Act, Adoption Opportunities, and Abandoned Infants Awareness

The Children’s Bureau maintains a compilation of these acts on its website. The document at this link incorporates all amendments made to them through their most current reauthorization, P.L. 111-320, enacted in December 2010.

https://www.acf.hhs.gov/programs/cb/laws_policies/cblaws/capta/capta2010.pdf

Data on Number, Characteristics, and Certain Outcomes of Children and Families Who Come Into Contact with Child Welfare

Child Maltreatment – An annual report that includes national and state-by-state information on number of children found to be victims of child abuse or neglect, number of child abuse or neglect fatalities, and other related data. https://www.acf.hhs.gov/programs/cb/stats_research/index.htm#can

Adoption and Foster Care Analysis Reporting System (AFCARS) Reports – An annual report that includes national data concerning children entering or exiting foster care in a given fiscal year, those who remain in foster care on the last day of the fiscal year, those who were waiting to be adopted on the last day of the fiscal year, and those who were adopted during the fiscal year. https://www.acf.hhs.gov/programs/cb/stats_research/index.htm#afcars

Number of Children Entering or Exiting Foster Care During the Fiscal Year and Number in Care on the Last Day of the Fiscal Year – A table showing data by state.
https://www.acf.hhs.gov/programs/cb/stats_research/afcars/statistics/entryexit2010.pdf

Adoption – Multiple tables providing state-level data on adoptions with public child welfare agency involvement. From link below scroll down to “State Specific Adoption Statistics.” https://www.acf.hhs.gov/programs/cb/stats_research/index.htm#afcars

Child Welfare Outcomes Database – An interactive site that allows users to select which state or states they would like to see information about and for what years. The website was launched in January 2011 and is to be annually updated. The site includes all the data that is published in the congressionally mandated  Child Welfare Outcomes report (Section 479A of the Social Security Act), as well as data showing state performance on certain standards used to assess states as part of the Child and Family Services Review (CFSR). The website continues to be developed and readers may want to check back periodically to learn about any new resources posted. https://cwoutcomes.acf.hhs.gov/data/

National Survey of Child and Adolescent Well-Being (NSCAW) – Reports and other information based on the congressionally mandated national random sample study of child welfare (Section 429 of the Social Security Act). Includes links to research briefs, reports, and other information based on nationally representative samples of children who come into contact with child welfare agencies and their families. https://www.acf.hhs.gov/programs/opre/abuse_neglect/nscaw/

Information on Federal Policies and State Laws and Policies

Child Welfare Policy Manual – The Children’s Bureau has issued both formal federal regulation as well as less formal “program instructions” to interpret and implement federal child welfare law. The online Child Welfare Policy Manual draws on these sources (and current law) to offer guidance on federal child welfare policy. Information is organized, topically, by program and is provided in a question and answer format. https://www.acf.hhs.gov/cwpm/programs/cb/laws_policies/laws/cwpm/index.jsp

State Statute Series – Available via the Children’s Bureau supported information clearinghouse (known as the Child Welfare Information Gateway),  the State Statute Series provides a brief overall summary of state statutes regarding selected child abuse and neglect, foster care, and adoption issues. It also shows the relevant excerpt of state law for each issue. https://www.childwelfare.gov/systemwide/laws_policies/state/

State Child Welfare Policy Data Base – This website was developed and is managed by the social policy research group, Child Trends, with funding from Casey Family Programs. As of October 2011, it primarily includes state-level information, collected via surveys, on policies and practices related to kinship care, child welfare financing, and older youth in care. https://www.childwelfarepolicy.org/

Fostering Connections.org – This website, primarily managed by Child Trends and funded by a variety of child welfare interest groups, provides resources and information on state implementation of the Fostering Connections to Success and Increasing Adoptions Act of 2008 (P.L. 110-351). https://www.fosteringconnections.org/

Accountability

States are held accountable to federal child welfare policy through a variety of mechanisms and reviews. Links to information about two reviews are provided below.

Child and Family Services Review – The Child and Family Services Review (CFSR) is the most comprehensive federal effort to determine whether states are in “substantial conformity” with state plan requirements made under Title IV-B and Title IV-E of the Social Security Act. The review is periodically conducted and focuses on outcomes achieved by the state for the children and families it services as well as the systems in place to achieve those outcomes. Each review includes a statewide assessment and an onsite review. State “substantial conformity” is determined using standardized data measures, case record reviews, and stakeholder interviews. States found not in “substantial conformity” with federal child welfare policy face fiscal penalty unless they are able to successfully implement a Program Improvement Plan (PIP). Information about the CFSR, and copies of state assessments and state final reports are available online. https://www.acf.hhs.gov/programs/cb/cwmonitoring/index.htm#cfsr

Title IV-E Eligibility Review – A Title IV-E Eligibility Review is periodically conducted in each state to ensure the state accurately applies federal eligibility rules related to determining federal eligibility for Title IV-E foster care assistance. Information about the review, including state final reports is available online. https://www.acf.hhs.gov/programs/cb/cwmonitoring/index.htm#title

Federally Supported Clearinghouses or Resource Centers

Training and Technical Assistance Network – The Children’s Bureau supports an array of resource centers and information clearinghouses as part of its training and technical assistance network. You can read about (and link to) all members of that network online. https://www.acf.hhs.gov/programs/cb/tta/

Direct links to selected members of this training and technical assistance network are provided below. These sites typically include many resources, and only a few of them are highlighted below.

Child Welfare Information Gateway – Clearinghouse of information on broad range of child welfare topics. https://www.childwelfare.gov/

AdoptUSKids – Among other things, includes a photo listing of children available for adoption as well as information and resources, nationally and by state, for families seeking to adopt. https://www.adoptuskids.org/

National Resource Center for Permanency and Family Connections – Among other things maintains a “hot topics” list with easily accessible information on range of foster care and related issues. https://www.hunter.cuny.edu/socwork/nrcfcpp/hottopics.html

National Resource Center for Legal and Judicial Issues in Child Welfare – Provides access to information on Court Improvement Program activities by state and other legal resources for child welfare. https://www.apps.americanbar.org/child/rclji/home.html

National Resource Center for Youth Development – Provides information on state services and activities for youth in care and those who have aged out of care. https://www.nrcyd.ou.edu/

Introduction

The Pension Benefit Guaranty Corporation (PBGC) is a federal government agency that was established in 1974 to protect the benefits of participants in private-sector defined benefit pension plans. The PBGC runs two insurance programs: a single-employer program and a multi-employer program. Single-employer pension plans are plans to which one employer makes contributions. Multi-employer pensions are collectively bargained pension plans to which more than one employer contributes. The single-employer program is the larger of the two insurance programs.

The PBGC oversees the termination of single-employer defined benefit pension plans and pays the benefits to participants in those terminated plans which do not have assets sufficient to pay 100 percent of promised benefits. There is a statutory maximum benefit which the PBGC is allowed to pay (currently $54,000 per year for a worker in a pension plan terminated in 2011 who receives a single-life annuity beginning at age 65). Most participants in terminated pension plans receive the full benefit earned at the time of plan termination.

The PBGC does not pay benefits to participants in multi-employer pensions. Rather, the PBGC provides insolvent multiemployer plans with financial assistance, in the statutorily-required form of loans, sufficient to pay PBGC guaranteed benefits and reasonable administrative expenses.

The two insurance programs are financed by premiums paid by sponsors of defined benefit plans, investment income, assets from pension plans trusteed by the PBGC, and recoveries from the companies formerly responsible for the trusteed plans. The PBGC does not receive any funds from general tax revenues and the obligations of the PBGC are not obligations of the U.S. government. The PBGC had a deficit of $23.2 billion at the end of fiscal year 2010, of which $21.6 billion was from the single-employer program. Although the program currently operates at a deficit, the PBGC has sufficient assets to pay the benefits of retirees for the foreseeable future.

Chapter Overview

This chapter of the Green Book includes Congressional Research Service (CRS) Reports, a Tables and Figures section, and a Legislative History. An update of the 2008 Green Book chapter on PBGC is included among the CRS reports.

Congressional Research Service Reports

The House Ways and Means Committee is making available selected reports by the Congressional Research Service (CRS) for inclusion in its 2011 Green Book website. CRS works exclusively for the United States Congress, providing policy and legal analysis to Committees and Members of both the House and Senate, regardless of party affiliation. Certain CRS reports with cover dates earlier than 2011 are included here because their content remains relevant.

PBGC: Update of the 2008 Green Book Chapter

CRS Report 95-118: Pension Benefit Guaranty Corporation (PBGC): A Fact Sheet

CRS Report RS22624: The Pension Benefit Guaranty Corporation and Single-Employer Plan Terminations

Tables and Figures

The following tables and figure can be found in the CRS reports section of this chapter.

PBGC: Update of the 2008 Green Book Chapter

Table 12-1-- Claim Experience From Single-Employer Plans, 1975- 2009

Table 12-2-- Total Number Of Terminated Single-Employer Plans, Number Of Plans With Claims Against PBGC, And Net Position, 1975- 2009

Table 12-3--Federal Budgetary Treatment Of The Pension Benefit Guaranty Corporation, 1975-2009

Figure 12-1-- Financial Structure Of The Pension Benefit Guaranty Corporation

Legislative History

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SINGLE-EMPLOYER INSURANCE PLAN

        The PBGC was established under the Employee Retirement Income Security Act of 1974 (ERISA, P.L. 93-406) for the purpose of insuring benefits under defined benefit pension plans. As originally structured, in the case of a single-employer plan, termination of a plan triggered the PBGC insurance mechanism. The contributing employer was liable to the PBGC for unfunded insured benefits up to 30 percent of the net worth of the employer. If unfunded insured liability exceeded this amount, the PBGC had to absorb the excess and spread the loss over insured plans. Employers generally faced no restrictions on their ability to terminate an underfunded plan.

The Single Employer Pension Plan Amendments Act of 1986 (SEPPAA)

        Congress passed SEPPAA (title XI of P.L. 99-272, the Consolidated Omnibus Budget Reconciliation Act of 1985) in response to rapidly growing PBGC deficits. SEPPAA raised the per-participant premium from $2.60 to $8.50, established certain financial distress criteria that a sponsoring employer and every member of the employer’s controlled group must meet in order to terminate an underfunded plan, expanded PBGC’s employer liability claim, and created a new liability to plan participants for certain nonguaranteed benefits.

Omnibus Budget Reconciliation Act of 1987 (OBRA 1987)

        The Omnibus Budget Reconciliation Act of 1987 (P.L. 100-203) contained additional measures to strengthen the PBGC’s long-term solvency. The act increased the PBGC’s basic per-participant premium for single-employer plans to $16 and added a variable rate premium for these plans tied to the degree of plan underfunding (capped at $53 per participant). The act also expanded the PBGC’s employer liability claim to include all plan benefit liabilities, provided that the PBGC share a portion of its recoveries from employers with plan participants, and required faster funding of plan benefits to reduce the PBGC’s exposure in the event of plan termination. The act also contained other provisions relating to the plan termination distress criteria, the bankruptcy treatment of unpaid employer contributions, PBGC’s lien authority, and various pension funding requirements.

Retirement Protection Act of 1994 (RPA)

           In response to the persistent growth in pension underfunding, Congress passed significant reforms in the Retirement Protection Act (RPA, enacted December 8, 1994) as part of the GATT legislation (the Uruguay Round Agreements (P.L. 103-465)). The RPA strengthened the pension funding rules for underfunded plans by accelerating funding, eliminating double counting of certain funding credits, and constraining the assumptions that may be used to calculate pension contributions. RPA also required severely underfunded plans to maintain minimum levels of liquid assets. The RPA phased out the $53 per-participant cap on the variable rate premium over a 3-year period as an incentive to improve funding in underfunded plans and made certain changes to the interest rate and mortality assumptions used to calculate plan underfunding.  The RPA established a program under which the PBGC serves as a clearinghouse for benefits of missing participants in plans terminating in a standard (fully funded) termination.

The Trade Act of 2002

           The Trade Act of 2002 (P.L. 107-210) provided individuals aged 55 to 64 who are receiving pensions from either program of the PBGC with a tax credit equal to 65 percent of the cost of their health insurance premiums.

The Deficit Reduction Act of 2005

           The Deficit Reduction Act of 2005  (P.L. 109-171) increased the per capita premium for single-employer plans from $19 to $30 for 2006 and indexed the premium to the annual rate of growth in the national average wage, beginning in 2007. The DRA also created a new per-participant premium of $1,250 per participant to be assessed on any underfunded single-employer plan that undergoes a distress termination or is involuntarily terminated by the PBGC, to be paid annually for each of the three years beginning the month following the date of termination and each anniversary, or if later, the employer’s exit from bankruptcy. This premium is in addition to any other PBGC premiums that are due for the plan year. As enacted by the DRA, the special premium would not have applied to plans terminated after December 31, 2010.

The Pension Protection Act of 2006 (PPA)

           Under prior law, a plan was exempted from  the variable-rate premium of $9 per $1,000 of underfunding if it was not underfunded in any two consecutive years out of the previous three years. The Pension Protection Act of 2006 (P.L. 109-280) requires the variable  premium to be assessed on all underfunded plans, regardless of the plan’s funding status in earlier years.

           The PPA prohibits shut-down benefits and other “contingent event benefits” from being paid by pension plans that are funded at less than 60% of full funding unless the employer makes a prescribed additional contribution. The PBGC guarantee for such benefits will be phased in over a five-year period commencing when the event occurs. This provision is not applicable for the first five years of a plan’s existence.

           The PPA made permanent the surcharge premium of $1,250 per participant for certain distress terminations, which was added by the Deficit Reduction Act of 2005 and was to expire in 2010. The PPA also authorizes the PBGC to pay interest on overpayment of premiums. The PPA requires the director of the Pension Benefit Guaranty Corporation to be appointed by the President, subject to confirmation by the Senate Committee on Finance and Senate Committee on Health, Education, Labor and Pensions.

The Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010

The funding obligations for pension plans increased sharply in 2008 as a result of the economic recession that began in December 2007. Three factors have contributed to the increase in DB pension plans sponsors' funding obligations: (1) the PPA changed some of the methods that plan sponsors use to value plan assets and liabilities; (2) the decline in the stock market in 2008 caused the value of pension plan assets to decrease because many pension plans hold part of their portfolios in equities; and (3) the decline in interest rates caused the value of pension plan benefit obligations to increase. Congress provided funding relief to DB pension plan sponsors in 2010 in The Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (P.L. 111-192). The law allowed pension plan sponsors to amortize their funding shortfalls either over nine years, with the first two years of payments consisting of interest only on the amortization charge and the next seven years consisting of interest and principal, or over 15 years. The law also contained provisions that required plan sponsors that chose one of these amortization schedules to make additional contributions to the plan if the plan sponsors pay excess compensation or declare extraordinary dividends.

MULTIEMPLOYER PLAN INSURANCE PROGRAM

Multiemployer Pension Plan Amendments Act of 1980

           Coverage for multiemployer plans under ERISA was structured similarly to that of single-employer plans. However, the PBGC was not required to insure benefits of multiemployer plans that terminated before July 1, 1978. Congress extended the deadline for mandatory pension coverage several times, until enactment of the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA, P.L. 96-364). The MPPAA required more complete funding for multiemployer plans, especially those in financial distress. It also improved the ability of plans to collect contributions from employers. The MPPAA changed the insurable event that triggers PBGC protection to plan insolvency, rather than plan termination. Thus, if a multiemployer plan becomes financially unable to pay benefits at the guaranteed level when due, the PBGC will provide financial assistance to the plan, in the form of a loan. Finally, MPPAA imposed withdrawal liability on employers who ceased to contribute to a multiemployer plan.

Consolidated Appropriations Act of 2001

           The Consolidated Appropriations Act of 2001 (P.L. 106-554) increased the benefit guarantee in multiemployer plans to the product of a participant’s years of service multiplied by the sum of (1) 100 percent of the first $11 of the monthly benefit accrual rate and (2) 75 percent of the next $33 of the accrual rate.

Trade Act of 2002

           The Trade Act of 2002 (P.L. 107-210) provided a tax credit equal to 65 percent of the premiums they pay for health insurance as an additional benefit available to plan participants aged 55 to 64 who are receiving pensions from either program of the PBGC.

Deficit Reduction Act of 2005

           The Deficit Reduction Act of 2005 increased the flat-rate per participant premium for multiemployer defined benefit plans from $2.60 to $8.00. For the 2007 plan year and later plan years, the premium is indexed to the rate of growth of the national average wage.

The Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010

Under the PPA, multiemployer pension plans can amortize their investment losses over 15 years. Under The Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (P.L. 111-192) multiemployer plans could have (1) elected to amortize their net investment losses from 2008 and 2009 over 30 years if the plan sponsor can certify the plan's solvency over the amortization period; and (2) used asset valuation methods that result in asset values that range from 80% to 130% of market value.

Federal Benefits and Services for People with Low Income: Programs, Policy, and Spending, FY2008-FY2009

Social Welfare Programs in the Territories

Noncitizen Eligibility for Federal Public Assistance: Policy Overview and Trends

Unauthorized Aliens’ Access to Federal Benefits: Policy and Issues