2016 Green Book

Letter of Transmittal

Chapter 1: Social Security

Overview

Social Security is a self-financed program that provides monthly cash benefits to retired or 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).  (SSA also administers the Supplemental Security Income (SSI) program authorized under Title XVI of the Social Security Act.  See Section 3 of the Green Book for a discussion of SSI, a means-tested program for the aged, blind, or disabled.)  As of June 2016, there were nearly 61 million Social Security beneficiaries. Of those, 44 million were retired workers and their family members, 11 million were disabled workers and family members, and 6 million were the survivors of deceased workers.[1]

Social Security is financed primarily by payroll taxes paid by covered workers and their employers.  In 2015, an estimated 168 million workers were covered by Social Security.[2]  Employees and employers each pay 6.2% of covered earnings up to an annual limit ($118,500 in 2016); self-employed individuals pay 12.4% of net self-employment income up to an annual limit ($118,500 in 2016).[3]  Self-employed persons may deduct one-half of their Social Security payroll taxes for federal income tax purposes.[4]  Social Security is also credited with tax revenues from the federal income taxes paid by some beneficiaries on a portion of their benefits, reimbursements from the general fund of the U.S. Treasury that are made for a variety of purposes, and interest earned on Social Security trust funds’ assets. 

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.[5]  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.[6]  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.

In 2015, the Social Security trust funds had total income of $920 billion, total expenditures of $897 billion, and accumulated holdings (asset reserves) of $2.8 trillion.[7]  Because the assets held by the trust funds are federal government securities, the trust fund balance ($2.8 trillion at the end of 2015) represents the amount of money owed to the Social Security trust funds by the general fund of the U.S. Treasury.

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 2016 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.

IF10426: Social Security Overview

R42035: Social Security Primer

Social Security Financing and the Trust Funds

RL33028: Social Security: The Trust Funds

R43318: Social Security Disability Insurance (DI) Trust Fund: Background and Current Status

Social Security Benefits and Eligibility

R43542: How Social Security Benefits Are Computed: In Brief

R44670: The Social Security Retirement Age

RL32552: Social Security: Calculation and History of Taxing Benefits

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

IF10203: Social Security: The Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO)

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

Program Administration and Administrative Funding

R44645: Social Security Administration (SSA): FY2017 Appropriations and Recent Trends

Legislative History

The following provides a legislative history of Social Security since the program began in 1935.

RL30920: Social Security: Major Decisions in the House and Senate Since 1935

This page was prepared October 2016 for the 2016 version of the House Ways and Means Committee Green Book.


[1] Social Security Administration (SSA), Monthly Statistical Snapshot, June 2016, Table 2.

[2] Currently, 94% of workers in paid employment or self-employment are covered by Social Security. Social Security Administration, 2016 Social Security/SSI/Medicare Information, February 2016.

[3] The annual limit on covered wages and net self-employment income subject to the Social Security payroll tax (the taxable wage base) is adjusted annually based on average wage growth, if a Social Security cost-of-living adjustment (COLA) is payable.

[4] Self-employed individuals are required to pay Social Security payroll taxes if they have annual net earnings of $400 or more.  Only 92.35% of net self-employment income (up to the annual limit) is taxable.

[5] The OASI and DI trust funds are referred to on a combined basis as the Social Security trust funds.

[6] Social Security Act, Title II, §201(d) [42 U.S.C. §401(d)].

[7] In 2015, 86% of Social Security’s total income was from dedicated payroll taxes, 10% was from interest earned on trust fund assets, 3% was from federal income taxes paid on Social Security benefits, and the remainder was from general fund reimbursements to the trust funds for a variety of purposes.  Of total expenditures, 99% was for benefit payments; the remainder was for administrative expenses and transfers to the Railroad Retirement program. See Social Security Administration, Office of the Chief Actuary, Financial Data For A Selected Time Period.

Chapter 2: Medicare

Overview

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).  The program is administered by the Centers for Medicare & Medicaid Services (CMS).  Total program outlays are estimated to reach about $696 billion in fiscal year 2016. Net federal outlays, after deduction of beneficiary premiums and other offsetting receipts, are expected to be close to $592 billion in 2016.

Medicare is administered by CMS within the U.S. Department of Health and Human Services (DHHS).  Day-to-day program operations, including processing benefits and paying claims, are conducted by private Medicare contractors.

The Internal Revenue Code contains federal tax law, including provisions that affect health care.  The Affordable Care Act made sweeping changes to the tax code.

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 2016 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.

Medicare Benefits and Payments

R40425: Medicare Primer

R40082: Medicare: Part B Premiums

R43962: The Medicare Access and CHIP Reauthorization Act of 2015

R42401: Medicare Skilled Nursing Facility (SNF) Payments

R42998: Medicare Home Health Benefit Primer: Benefit Basics and Issues

R40611: Medicare Part D Prescription Drug Benefit

R42745: Medigap: A Primer

Medicare Financing

R43122: Medicare Financial Status: In Brief

RS20946: Medicare: Insolvency Projections

The Affordable Care Act

R43215: Patient Protection and Affordable Care Act (ACA): Resources for Frequently Asked Questions

Legislative History

This section summarizes major Medicare and health related tax legislation enacted into law during the first session of the 114th Congress through October of the second session of the 114th Congress. 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 or health related tax amendments. Included are provisions that 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 Tax Increase Prevention Act of 2014 (TIPA, P.L. 113-295)

Physicians

Accelerated the beginning date to 2016 (from 2017) for adjustments of relative value targets for misvalued services in Medicare physician fee schedules, as provided for in the Protecting Access to Medicare Act (PAMA) of 2014. (PAMA required that adjustments be made in years 2017 through 2020.) Revised the annual target rates for identifying misvalued services from 0.5% of the estimated amount of fee schedule expenditures for 2017 through 2020 to 1.0% for 2016 and 0.5% for 2017 and 2018.

Durable Medical Equipment

Prohibited coverage for items and services for vacuum erection systems furnished on and after July 1, 2015, until such time as Medicare covers erectile dysfunction drugs under Part D.

Dialysis Services

Amended the American Taxpayer Relief Act of 2012 to delay from 2024 to 2025, the inclusion of oral-only end-stage renal disease (ESRD) related drugs in the ESRD prospective payment system.

Taxation

Amended the Internal Revenue Code to increase from 15% to 30% the rate of the continuous levy on payments due to a Medicare provider or supplier for overdue taxes. (The IRS can collect overdue taxes through a continuous levy on certain Federal payments until the overdue taxes are paid in full, or other arrangements are made to satisfy the debt; this includes Medicare provider and supplier payments.)

Medicare Access and CHIP Reauthorization Act of 2015 (MACRA; P.L. 114-10)

Physician Payment System Reform

MACRA made fundamental changes to the way Medicare payments to physicians are determined, how they are updated, and how they incentivize physicians. The Act: 1) repealed the SGR methodology for determining updates to the Medicare physician fee schedule, established annual fee updates in the short term, and put in place a new method for determining updates afterward; 2) established a merit-based incentive payment system to consolidate and replace several existing incentive programs; 3) incentivized the development of, and participation in, alternative payment models; and 4) made other changes to Medicare physician payment statutes.

Specifically, MACRA permanently repealed the sustainable growth rate (SGR) methodology previously used to determine the annual conversion factors in the formula for payment for physicians’ services, and revised the update in rates for 2015 and subsequent years. It froze the update to the single conversion factor at 0.0% for January 1 through June 30, 2015, set the update at 0.5% for July1 through December 31, 2015, at 0.5% annually for 2016 through 2019, and then reduces it to 0.00% for 2020 through 2025.

Beginning in 2019, the amounts paid to providers will be adjusted through one of two methods, depending on whether the physician chooses to participate in a merit-based incentive payment system (MIPS) or an alternative payment model (APM).

MACRA directed the Secretary of Health and Human Services (the Secretary) to combine components of the three specified existing performance incentive programs (the Physician Quality Reporting System, the Value Modifier, and the Medicare Electronic Health Record incentive program) into a new incentive program (MIPS). Under the new MIPS, eligible professionals (including physicians, physician assistants, nurse practitioners, clinical nurse specialists, and certified registered nurse anesthetists, but excluding most APM participants) are to receive annual payment increases or decreases based on their performance as measured by standards the Secretary is to establish according to specified criteria. A final rule was issued on October 14, 2016 that provides detail and specifics for many of the changes.

In addition to creating the MIPS, MACRA established pathways for implementing new, alternative, payment models that might eventually replace traditional fee-for-service-based payment. The term alternative payment model is defined to mean any of the following: 1) a model under the Centers for Medicare & Medicaid Services (CMS) Center for Medicaid and Medicare Innovation (other than a health care innovation award); 2) a Medicare shared savings program accountable care organization; 3) a demonstration under Section 1866C of the Social Security Act (SSA); or 4) a demonstration required by federal law.

Eligible Medicare professionals will be incentivized to participate in Medicare APMs through higher payments. Beginning in 2019 and ending in 2024, eligible professionals in a qualifying APM that is providing covered services will receive payment for the services provided that year as well as an amount equal to 5% of the estimated aggregate payment amounts for covered professional services for the preceding year. The incentive payment will be made in a lump sum on an annual basis. Beginning in 2026, there will be two update factors, one for items and services furnished by a participant in a new APM and another for those who do not participate in an APM. The update factor for the APM participants will be 0.75%, and the update factor for those not participating in an APM will be 0.25%. To advise and evaluate the development of APMs, the Act established an ad hoc committee called the Physician-Focused Payment Models Technical Advisory Committee.

Hospitals

Extended through fiscal year (FY) 2017 the increased inpatient hospital payment adjustment for certain low-volume hospitals to account for the higher incremental costs associated with a low volume of discharges. Under the low-volume hospital extension, hospitals with fewer than 1,600 Medicare discharges and that are 15 road miles or more from the nearest like hospital receive a graduated payment adjustment of up to 25%. (Upon expiration, the adjustment will revert to the original statutory standards of fewer than 800 total discharges and more than 25 road miles.)

Extended the Medicare Dependent Hospital Program through FY2017 to allow qualifying small rural hospitals with a high proportion of Medicare patients to continue receiving enhanced payments.

Amended the Protecting Access to Medicare Act of 2014 to allow the continuation of the Medicare Administrative Contractor (MAC) “probe and educate” program on a pre-payment basis to assess provider understanding of and compliance with the “two-midnight rule” through FY2015.  (Under the Medicare two-midnight rule, inpatient admissions are presumed to be medically appropriate if a physician expects a beneficiary’s treatment to require a two-night hospital stay and admits the patient under that assumption.) Also continued to delay the enforcement of the two-midnight rule by Medicare Recovery Audit Contractors (RACs) through September 30, 2015, unless there is evidence of systemic gaming, fraud, abuse, or delays in the provision of care by a provider of service.

Amended the TMA, Abstinence Education, and QI Programs Extension Act of 2007, as amended by the American Taxpayer Relief Act of 2012 (ATRA), to adjust hospital inpatient prospective payment system (IPPS) rates for discharges occurring during FY2018 through FY2023, replacing the ATRA one-time 2018 payment increase of 3.2% with a phased-in payment rate increase of 0.5% per year for fiscal years 2018 through 2023. (ATRA authorized the Secretary to reduce  IPPS rates for hospital discharges in FY2014 through FY2017 in order to recoup $11 billion in past overpayments related to documentation and coding adjustments under the new Medicare Severity Diagnosis Related Group (MS-DRG) system that did not reflect real changes in patient case-mix.)

Post-Acute Care Providers

Set the Medicare annual payment updates for skilled nursing facilities, inpatient rehabilitation facilities, long-term care hospitals, and hospices to 1% for FY2018 and for home health agencies to 1% for calendar year (CY) 2018, after application of the productivity adjustment.

Home Health

Extended the 3% payment increase for home health services provided to beneficiaries in rural areas through December 31, 2017.

Authorized the Secretary to require Medicare home health agencies to post a surety bond of at least $50,000 or an amount commensurate with the volume of Medicare payments to the home health agency.

Physicians and Other Practitioners

Extended through December 31, 2017 the 1.0 floor for the work geographic practice cost index (GPCI) used in determining relative values for physician’s services under the Medicare physician payment system. (The Medicare physician fee schedule is adjusted geographically for three factors to reflect differences in the cost of resources needed to produce physician services: physician work, practice expense, and medical malpractice insurance. The geographic adjustments are indices that reflect how each area compares to the national average in a “market basket” of goods.)

Allowed automatic extensions of any two-year period for which a physician or practitioner opts out of the Medicare claims process under a private contract. Directed the Secretary to make publicly available through an appropriate HHS website information on the number and characteristics of opt-out physicians and practitioners. (Physicians and certain practitioners are able to enter into private contracts (under SSA §1861(r)) with Medicare Part B beneficiaries, provide services, and bill patients without being subject to the upper payment limits specified by Medicare.)

Directed the Secretary to make publicly available, on an annual basis, information with respect to physicians and other eligible professionals on items and services furnished to Medicare beneficiaries. Beginning in 2016, this information must be integrated on the Physician Compare website.

Prohibited the Secretary from implementing the November 13, 2014 final rule that would have required the transition of all 10-day and 90-day global surgical packages to 0-day global periods. (Reimbursement for a global surgical package, also called global surgery, includes payment for all necessary services normally furnished by a surgeon before, during, and after a procedure, a time-span constituting the global period.) Directed the Secretary through rulemaking to develop and implement a process to gather, from a representative sample of physicians, information needed to value surgical services.

Chronic Care Services

Required the Secretary to make payment under the Medicare physician fee schedule for chronic care management services provided by a physician, physician assistant, nurse practitioner, clinical nurse specialist, or certified nurse midwife furnished on or after January 1, 2015, and directed the Secretary to conduct an education and outreach campaign to inform relevant professionals and Medicare Part B enrollees of the benefits of chronic care management services and to encourage individuals with chronic care needs to receive such care. This campaign is to be directed by the Office of Rural Health Policy within HHS and the Office of Minority Health within CMS, and is to focus on encouraging participation by underserved, rural populations and racial/ethnic minority populations.

Therapy Services

Extended through December 31, 2017 the process under which providers and practitioners may request an exception on an individual’s behalf to the dollar limits (caps) on medically necessary outpatient therapy services (physical therapy services, speech-language pathology services, and occupational therapy services) when those services are reasonable and necessary. Directed the Secretary, in place of the manual medical review process (as implemented under the Middle Class Tax Relief and Job Creation Act of 2012, P.L. 112-96), to implement a targeted medical review process for outpatient therapy services.

Ambulance Services

Extended through December 31, 2017 the temporary increase in payments for ground ambulance services, including urban, rural, and super rural ground ambulance services.

Expanded the prior authorization of repetitive scheduled non-emergent ambulance transports model, effective no later than January 1, 2016, to six additional areas: Delaware, the District of Columbia, Maryland, North Carolina, Virginia, West Virginia. (Ambulance suppliers or beneficiaries began submitting prior authorization requests in South Carolina, New Jersey and Pennsylvania on December 1, 2014 for transports occurring on or after December 15, 2014.) If deemed appropriate by the Secretary, the model is to be expanded to all states.

Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS)

Modified the DMEPOS competitive acquisition program by adding the requirements that 1) DMEPOS suppliers meet applicable state licensure as a condition for being awarded a contract under the competitive bidding program (which codified an existing program requirement), and 2) suppliers bidding for contracts, beginning between January 1, 2017 and January 1, 2019, obtain a bid surety bond of between $50,000 and $100,000 for each bidding area. Suppliers who bid at or below the median composite bid rate, and are offered a contract but do not accept it, will be required to forfeit their surety bond. Authorized physicians, physician assistants, nurse practitioners, or clinical nurse specialists to document the face-to-face encounters that they themselves conduct. (A face-to-face evaluation of a beneficiary is required as a condition for payment of selected DMEPOS items.) This provision made the requirement similar to the face-to-face requirement for power wheelchairs.

Medicare Advantage

Extended the authorization for specialized Medicare Advantage (MA) plans for special needs individuals (SNPs) through December 31, 2018.

Required that reasonable cost plans that can no longer qualify to be cost plans be transitioned into MA plans, and allowed cost plans that otherwise would qualify under the statutory requirement to voluntarily transition into MA plans.

Medigap

Prohibited the sale of Medigap policies that cover Part B deductibles on or after January 1, 2020. (This provision does not affect policies sold before 2020.)

Part B and Part D Premiums

Adjusted income thresholds used to determine Medicare Parts B and D premiums paid by high-income enrollees, for years beginning with 2018. In 2020, requires adjusting the threshold for inflation based on the 2019 income threshold amounts, and updating the thresholds for inflation each year thereafter.

Assistance for Low-Income Beneficiaries

Made permanent the qualifying individual (QI) program. Under the QI program, using funds transferred from the Medicare Supplementary Medical Insurance Trust Fund, states pay Medicare Part B premiums for low-income Medicare beneficiaries with incomes between 120% and 135% of the federal poverty level. Extended funding for the QI program through FY2016, and set a formula for setting allocations for subsequent years.

Medicare Administrative Contractors

Extended the MAC contract terms, from 5 years to 10 years. Requires the Secretary to publish performance information on each MAC.

Required each MAC to establish an improper payment outreach and education program for providers and suppliers in its respective geographic service areas.

Program Integrity

MACRA contained numerous provisions designed to reduce waste, fraud, and abuse in the Medicare program. Among other things, it directed the Secretary to: 1) establish procedures to ensure that a Social Security number is not displayed on an individual's Medicare card; 2) establish procedures to ensure that Medicare payments are not furnished to incarcerated individuals, individuals not lawfully present in the United States, and deceased individuals; 3) develop a plan to revise the incentive reward program under the Health Insurance Portability and Accountability Act of 1996 to encourage greater participation by individuals in reporting fraud and abuse in the Medicare program; 4) require valid prescriber National Provider Identifiers on pharmacy claims for Part D drugs beginning in CY2016; and 5) establish a medical review process for certain chiropractic manipulation treatments for claims submitted after December 31, 2016. The Act also allows the Secretary to assess the cost effectiveness and feasibility of using electronic (smart) Medicare cards for beneficiaries and providers, gives beneficiaries the option to receive the Medicare summary notice electronically beginning January 1, 2017, and enables hospitals and critical access hospitals to compensate physicians for reducing medically unnecessary services without being subject to civil monetary penalties.

Health Information Technology

Declared it a national objective to achieve widespread exchange of health information through interoperable certified electronic health records (EHR) technology nationwide by December 31, 2018. Directed the Secretary to establish related metrics. Required the Secretary to examine the feasibility of establishing one or more mechanisms to assist providers in comparing and selecting certified EHR technology products.

Medicare Improvement Fund

Removed the $195 million in funds from the Medicare Improvement Fund that were added by the Improving Medicare Post-Acute Care Transformation Act of 2014, leaving the fund with $0.

Taxation

Amended the Internal Revenue Code to increase the percentage of Medicare provider and supplier payments subject to continuous federal levy from 30% (set in TIPA) to 100%. This provision is applicable to payments made 180 days after enactment.

Trade Preference Extension Act of 2015 (P.L. 114-27)

Dialysis Services

Required Medicare coverage and payment of renal dialysis services provided by an outpatient renal dialysis facility to individuals with an acute kidney injury, effective for services provided on or after January 1, 2017.

Steve Gleason Act of 2015 (P.L. 114-40)

Durable Medical Equipment

Required that speech generating devices and accessories be paid under the “Payment for inexpensive and other routinely purchased durable medical equipment category” (which can be made as a lump sum or on a rental basis) when furnished on or after October 1, 2015 and before October 1, 2018.

Notice of Observation Treatment and Implication for Care Eligibility Act of 2015 (NOTICE; P.L. 114-42)

Hospital Outpatient Services

Effective 12 months after enactment, required hospitals, including critical access hospitals, to give each individual who receives observation services as an outpatient for more than 24 hours an adequate oral and written notification within 36 hours after beginning to receive them which: 1) explains the individual's status as an outpatient and not as an inpatient and the reasons why; 2) explains the implications of that status on services furnished (including those furnished as an inpatient), in particular the implications for cost-sharing requirements and subsequent coverage eligibility for services furnished by a skilled nursing facility; 3) includes appropriate additional information; 4) is written and formatted using plain language and made available in appropriate languages; and 5) is signed by the individual or a person acting on the individual's behalf (representative) to acknowledge receipt of the notification, or if the individual or representative refuses to sign, the written notification is signed by the hospital staff who presented it.

Protecting Affordable Coverage for Employees Act of 2015 (P.L. 114-60)

Medicare Improvement Fund

Made funds available in the amount of $205 million to the Medicare Improvement Fund for services provided during and after FY2020.

Bipartisan Budget Act of 2015 (BBA 15, P.L. 114-74)

Site Neutral Payment for Hospital Outpatient Services

Excluded outpatient hospital services provided on or after January 1, 2017 by new off-campus hospital provider-based outpatient departments from the outpatient hospital prospective payment system, with certain exceptions. These services are to be reimbursed under the Medicare physician fee schedule.

Sequestration

Extended the sequestration of direct (mandatory) spending, including Medicare, an additional year, through FY2025. (Sequestration is a process of automatic spending reductions under which budgetary resources are permanently cancelled to enforce specific budget policy goals. Under sequestration, Medicare benefit payment reductions are limited to 2%.) Also adjusts the limits, so that the 2% limit is raised to 4% for the first six months of FY2025 and reduced to 0% for the last six months of FY2025.

Part B Premiums

Revised the methodology used to determine Medicare Part B premiums for 2016 to mitigate significant premium increases for those not protected under the hold-harmless rule in that year. (The hold-harmless rule protects Part B enrollees whose benefits are deducted from their Social Security benefits from premium increases that would result in a smaller net benefit from Social Security. In 2016, about 70% of Part B enrollees qualified for such protection, while 30% did not.) The reduced premium revenue is to be replaced with additional general revenue transfers from the Treasury, which is to be repaid over time through the application of a $3.00 per month premium surcharge (higher for higher-income beneficiaries). The methodology is to again apply in 2017 if, as in 2016, there is no increase in monthly Social Security benefits. The provision also reduced the increase in 2016 Part B deductibles for all Part B enrollees.

Securing Fairness in Regulatory Timing Act of 2015 (P.L 114-106)

Medicare Advantage

Extended from 45 days to 60 days the annual notice period for the announcement of payment rates under Medicare Advantage (MA) beginning in 2017. MA organizations are to have at least 30 days to comment on proposed changes.

S.1461 - A bill to provide for the extension of the enforcement instruction on supervision requirements for outpatient therapeutic services in critical access and small rural hospitals through 2015 (P.L. 114-112)

Therapy Services

Required HHS to continue to instruct Medicare contractors not to enforce requirements for direct physician supervision of outpatient therapeutic services in critical access and small rural hospitals through December 31, 2015.

Consolidated Appropriations Act of 2016 (CAA, P.L. 114-113)

Hospitals

Modified payments to certain rural long-term care hospitals for treatment of severe wounds for discharges occurring prior to January 1, 2017, temporarily halting pending Medicare site-neutral payment reductions for these services.

Hospitals in Puerto Rico

Increased the Medicare inpatient hospital payment rates for Puerto Rico hospitals. For discharges on or after January 1, 2016, the payment calculation associated with inpatient hospital operating costs is to be based on 100% of the applicable Federal percentage (rather than a blend of 25% Puerto Rico and 75% of Federal). Made Puerto Rico hospitals eligible for Medicare incentive payments for the adoption and meaningful use of certified electronic health record technology beginning January 1, 2016.

Durable Medical Equipment/Home Health

Established a separate Medicare payment to home health agencies for the use of disposable alternatives to negative pressure wound therapy equipment, effective January 1, 2017.

Imaging Services

Modified Medicare payments for traditional x-ray imaging in order to incentivize providers to transition to digital radiography. Specifically, reduces payment for the technical component of film x-rays under the hospital outpatient prospective payment system and under the physician fee schedule by 20% beginning in 2017, reduces payment for the technical component of x-rays taken using computed radiography technology by 7% during 2018 through 2022, and by 10% beginning in 2023. The payment discount for the professional component of multiple imaging services furnished to the same patient during a single visit is also reduced from 25% to 5% in 2017 and beyond.

Medicare Improvement Fund

Reduced from $205 million to $5 million the amount available to the Medicare Improvement Fund.

Health Insurance Plan Tax

Amended Section 9010 of the Patient Protection and Affordable Care Act (ACA) to suspend the annual tax on large health insurance providers during calendar year 2017. This includes some insurance companies which provide coverage of Medicare services under MA and Part D.

High Cost Employer-Sponsored Health Coverage Excise Tax

Amended Sections 9001(c) and 10901(c) of the Patient Protection and Affordable Care Act (ACA), as amended by section 1401(b) of the Health Care and Education Reconciliation Act of 2010 to delay the high cost employer-sponsored health coverage excise tax two years to years beginning after December 31, 2019; Section 4980I(f) to allow for the deductibility of the tax; and to allow for a study on suitable benchmarks for age and gender adjustment of excise tax on high cost employer-sponsored health coverage.

Medical Device Tax

Amended Section 4191 of the Internal Revenue Code to suspend the excise tax on the sale of medical devices during calendar years 2016 and 2017.

Patient Access and Medicare Protection Act (PAMPA; P.L.114-115)

Radiation and Imaging Services

Modified rules for certain radiation therapy and related imaging services to reduce payment volatility in 2017 and 2018 and prohibited these services from being considered as potentially misvalued services under the Medicare physician fee schedule in 2017 or 2018. Requires the Secretary to submit to Congress a report on the development of an episodic alternative payment model for radiation therapy services furnished in non-facility settings.

Durable Medical Equipment

Exempted through December 31, 2016, Medicare payments adjustments based on the competitive acquisition program for wheelchair accessories and seat and back cushions furnished in connection with Group 3 complex rehabilitative power wheelchairs. 

Health Information Technology

Extended the ability of eligible providers to apply for a hardship exemption from requirements (and associated penalties) for meaningful use of EHR technology through 2017. (Applications for this exemption were to have been received from eligible professionals by March 15, 2016 and from hospitals by April 1, 2016.)

Program Integrity

Increased penalties for the illegal purchase, sale or distribution of a beneficiary’s identification number or a health care provider’s unique health identifier.

Required CMS to provide specified incentives for MACs, to reduce improper payment error rates within their jurisdictions.

Medicare Improvement Fund

Eliminated the $5 million in funding from the Medicare Improvement Fund, reducing the fund balance to $0.

Comprehensive Addiction and Recovery Act of 2016 (CARA; P.L. 114-198)

Outpatient Prescription Drug Benefit (Part D)

Provided authority for Medicare Part D plan sponsors, and MA organizations offering combined MA and Part D plans, to create lock-in programs to identify enrollees deemed at high risk of abusing prescription drugs and to limit such beneficiaries’ choice of prescribers or pharmacies in order to better monitor their drug use. Sponsors that offer such programs are to provide beneficiaries deemed at risk of prescription drug abuse with notice of their status; consider beneficiaries’ input on the allowable pharmacies and prescribers, so long as the beneficiaries’ choices do not pose a risk of fraud or abuse; and provide beneficiaries the right to appeal and apply to terminate their at-risk status. Authorizes additional utilization management tools designed to prevent abuse of Part D drugs, such as retrospective utilization review.

Medicare Improvement Fund

Deposited the $140,000,000 in savings generated from the Part D lock-in provisions into the Medicare Improvement Fund.

This page was prepared October 2016 for the 2016 version of the House Ways and Means Committee Green Book.

Chapter 3: Supplemental Security Income

Overview

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. In June 2016, there were 8.3 million SSI recipients receiving $4.7 billion 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 Act Amendments of 1950. Under these 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. These 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 SSI program to be more than just a federal version of the former state adult assistance programs, which it replaced. In describing the 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 Old-Age, Survivors, and Disability Insurance (OASDI) programs. 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.  

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.

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 – which are comprised of personal income taxes, corporate taxes, and other taxes. Social Security benefits are funded primarily 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 most cases, state supplementary payments are administered by the state instead of SSA.

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 2016 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. For prior reports, please see the 2012 Green Book and 2014 Green Book.

Program Basics

IF10482: Supplemental Security Income (SSI)

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

Program Administration and Administrative Funding

R44645: Social Security Administration (SSA): FY2017 Appropriations and Recent Trends

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

Legislative History

The following provides a legislative history of Supplemental Security Income (SSI) from the second session of the 113th Congress through the first session of the 114th Congress. For prior history, please see prior editions of the Green Book. 

113th CONGRESS

Stephen Beck, Jr., Achieving a Better Life Experience Act of 2014 (Division B of P.L. 113-295)

The Stephen Beck, Jr., Achieving a Better Life Experience Act (ABLE Act) of 2014 amended the Internal Revenue Code to permit a state to sponsor a tax-advantaged savings program through which contributions may be made to the ABLE account of an eligible disabled individual to pay for disability-related expenses. Assets in an ABLE account and distributions from the account for qualified disability expenses are disregarded in determining the account owner’s eligibility for most federal means-tested programs. Under the SSI program, only the first $100,000 in an ABLE account is disregarded. The balance of an ABLE account above $100,000 is treated as a financial resource to the SSI recipient and is counted against the program’s $2,000 limit ($3,000 for a couple). If an ABLE account owner becomes ineligible for SSI due solely to excess ABLE funds, his or her cash benefits are suspended (without a time limit) until the balance of the ABLE account falls to or below $100,000. This suspension does not affect the individual’s eligibility for Medicaid.

114th CONGRESS

Ensuring Access to Clinical Trials Act of 2015 (P.L. 114-63)

The Ensuring Access to Clinical Trials Act of 2015 made permanent a provision in the Improving Access to Clinical Trials Act of 2009 (P.L.111-255) that disregards the first $2,000 per calendar year received by an SSI recipient as compensation for participation in a clinical trial involving research and testing of treatments for a rare disease or condition.

Protecting Americans from Tax Hikes Act of 2015 (Division Q of P.L. 114-113)

The Protecting Americans from Tax Hikes Act of 2015 amended the ABLE Act to eliminate the requirement that an ABLE account be established only in the account owner’s state of residence. A SSI recipient in one state may open an ABLE account in another state, provided that state permits out-of-state residents to participate in its ABLE program.

This page was prepared October 2016 for the 2016 version of the House Ways and Means Committee Green Book.

Chapter 4: Unemployment Insurance

Overview

A variety of benefits may be available to unemployed workers to provide them with income support during a spell of involuntary unemployment. The primary source of this support is the joint federal-state Unemployment Compensation (UC) program, which may provide income through the payment of state UC benefits for up to a maximum of 26 weeks in most states. 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, one purpose of the UC program was to help counter economic fluctuations such as recessions. 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 typically funded 50% by the federal government and 50% by the states who decide to operate a program.

In addition, Congress can authorize temporary unemployment insurance programs: most recently, the Emergency Unemployment Compensation (EUC08) program, which began in July 2008 and expired at the end of December 2013. The expired EUC08 benefit was 100% federally funded. State UC agencies administered the EUC08 benefit along with regular UC benefits and the EB program. The creation of the EUC08 program was the eighth time Congress created a federal temporary program to extend unemployment compensation during an economic slowdown.

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 2016 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. For prior reports, please see the 2012 Green Book and 2014 Green Book.

Programs and Benefits

IF10336: The Fundamentals of Unemployment Compensation

RL33362: Unemployment Insurance: Programs and Benefits

R43044: Expediting the Return to Work: Approaches in the Unemployment Compensation Program

R43993: Unemployment Insurance: Legislative Issues in the 114th Congress

R42936: Unemployment Insurance: Legislative Issues in the 113th Congress

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

R42643: Receipt of Unemployment Insurance by Higher-Income Unemployed Workers (“Millionaires”)

Trust Fund and Financing

R44527: Unemployment Compensation: The Fundamentals of the Federal Unemployment Tax

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

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 document provided below, Chronology of Federal Unemployment Compensation Laws, was prepared by the Department of Labor and provides information on the history and chronology of unemployment compensation law since 1935. This version was last updated on April 18, 2016.

Chronology of Federal Unemployment Compensation Laws 

This page was prepared October 2016 for the 2016 version of the House Ways and Means Committee Green Book.

Chapter 5: Railroad Benefits

Overview

Retirement, survivor, disability, unemployment, and sickness insurance benefits for railroad employees are administered by the U.S. Railroad Retirement Board (RRB), an independent 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.

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 2016 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.

IF10481: Railroad Retirement Benefits

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

RS22782: Railroad Retirement Board: Trust Fund Investment Practices

Legislative History

There were no legislative changes to Railroad Benefit programs during the 114th Congress. For prior legislative history, please see prior editions of the Green Book .

This page was prepared October 2016 for the 2016 version of the House Ways and Means Committee Green Book.

Chapter 6: Trade Adjustment Assistance

Overview

Trade Adjustment Assistance (TAA) is a group of programs that provide federal assistance to parties that have been adversely affected by trade. TAA programs are authorized by the Trade Act of 1974, as amended, and were last reauthorized by the Trade Adjustment Assistance Reauthorization Act of 2015 (TAARA; Title IV of P.L. 114-27).

The largest TAA program, TAA for Workers (TAAW), provides federal assistance to groups of workers who have become separated or partially separated from their employment or have been threatened with total or partial separation due to trade.. The largest components of the TAAW program are (1) funding for career services and training to prepare workers for new occupations and (2) income support for workers who are enrolled in an eligible training program and have exhausted their unemployment compensation. The TAAW program is administered at the federal level by the Department of Labor.

TAA programs also are authorized for firms and farmers that have been adversely affected by increased imports.  TAA for Firms, administered by the Department of Commerce, supports trade-impacted businesses by providing technical assistance in developing business recovery plans and by providing matching funds to implement those plans. The TAA for Farmers program was reauthorized by TAARA but the program has not received an appropriation since FY2011.

The eligibility and benefit provisions of TAARA are authorized to continue through June 30, 2021.

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 2016 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.

R44153: Trade Adjustment Assistance for Workers and the TAA Reauthorization Act of 2015

Legislative History

The following provides a legislative history of the Trade Adjustment Assistance programs during the 114th Congress. For prior legislative history, please see prior editions of the Green Book.

For the most recent legislative history of Trade Adjustment Assistance programs, please see the Appendix of CRS Report, R44153: Trade Adjustment Assistance for Workers and the TAA Reauthorization Act of 2015.

This page was prepared October 2016 for the 2016 version of the House Ways and Means Committee Green Book.

Chapter 7: Temporary Assistance for Needy Families

Overview

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. In FY2015, states reported that cash welfare represented only 25% of state and federal spending in the TANF program, and states now use TANF funds for 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 contained in 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, which have broad flexibility in how to administer their programs. 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.

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 2016 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. For prior reports, please see the 2012 Green Book and 2014 Green Book.

IF10036: The Temporary Assistance for Needy Families (TANF) Block Grant

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

RL32760: The Temporary Assistance for Needy Families (TANF) Block Grant: Responses to Frequently Asked Questions

R44668: The Temporary Assistance for Needy Families (TANF) Block Grant: A Legislative History 

Legislative History

The following provides a legislative history of the Temporary Assistance for Needy Families program.

R44668: The Temporary Assistance for Needy Families (TANF) Block Grant: A Legislative History

This page was prepared October 2016 for the 2016 version of the House Ways and Means Committee Green Book.

Chapter 8: Child Support Enforcement

Overview

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. 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 61 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 recipients, (TANF, Title IV-A), 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.

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.

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 2016 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. For prior reports, please see the 2012 Green Book and 2014 Green Book.

IF10013: The Child Support Enforcement Program: In Focus

RS22380: Child Support Enforcement: Program Basics

RL32875: The Child Support Enforcement Program: A Review of the Data

RS22499: Child Support: An Overview of Census Bureau Data on Recipients

R41204: Child Support Enforcement: Tribal Programs

R43779: Child Support Enforcement and the Hague Convention on Recovery of International Child Support

R44423: The Child Support Enforcement Program: A Legislative History

RL31025: Fatherhood Initiatives: Connecting Fathers to Their Children

R44077: Modification of Child Support Orders: Background, Policy, and Concerns

Legislative History

The following report provides a legislative history of the Child Support Enforcement program since 1950, please see R44423: The Child Support Enforcement Program: A Legislative History.

This page was prepared October 2016 for the 2016 version of the House Ways and Means Committee Green Book.

Chapter 9: Child Care

Overview

Child care has been an ongoing issue of public policy concern primarily because, in most American families with children, parents are working outside the home and must arrange for care for their children.  This is true regardless of whether parents 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 availability, 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 FY2016 funding level for the CCDF was roughly $5.7 billion, which included $2.8 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, which was reauthorized through FY2020 by the Child Care and Development Block Grant Act of 2014 (P.L. 113-186).  Mandatory CCDF funding is authorized in Section 418 of the Social Security Act (sometimes referred to as the "Child Care Entitlement to States"). These mandatory funds have generally been operating under temporary extensions of the Temporary Assistance for Needy Families (TANF) program since FY2011.

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.

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 2016 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. For prior reports, please see the 2012 Green Book and 2014 Green Book.

IF10511: Child Care Entitlement to States

IF10416: CCDBG Act of 2014: Key Provisions and Implementation Status

R44528: Trends in Child Care Spending from the CCDF and TANF

Additional Tables and Figures

Figure 9-1. Federal Funding Appropriated to the CCDF, FY1997-FY2016

Figure 9-2. Total Federal and State CCDF Expenditures, FY1997-FY2014

Figure 9-3. Total CCDF Expenditures (Federal and State) in Nominal and Constant FY2014 Dollars, FY1997-FY2014

Figure 9-4. CCDF Expenditures in Constant FY2014 Dollars and Average Monthly Children Served, FY1998-FY2014

Figure 9-5. Percent of Children Eligible under State Rules Who Were Served by the CCDF in FY2013

Table 9-1. Characteristics of Selected Early Childhood Care and Education Programs and Tax Provisions

Table 9-2. CCDF Funding History, FY1997-FY2016

Table 9-3. CCDF State Allocations Based on Appropriations for FY2016

Table 9-4. CCDF Expenditures in Nominal Dollars and Constant FY2014 Dollars, FY1997-FY2014

Table 9-5. Estimated Average Monthly Number of Families and Children Served by the CCDF, FY1998-FY2014

Table 9-6. Labor Force Participation Rates of Women by Presence and Age of Youngest Child, Selected Years, 1947-2014

Table 9-7. Labor Force Participation Rates of Women with children by Marital Status and Age of Youngest Child, Selected Years, 1980-2014

Table 9-8. Average Hourly Wages for Child Care Workers and Preschool Teachers, May 2015

Legislative History

The following provides a legislative history for child care for the second session of the 113th Congress and for the 114th Congress.  For prior legislative history, please see prior editions of the Green Book.

Child Care and Development Block Grant

The Child Care and Development Block Grant Act of 2014 (P.L. 113-186) was signed into law on November 19, 2014. This law reauthorized and amended the CCDBG Act for the first time since the welfare reform law of 1996 (P.L. 104-193). The law included a number of provisions focused on health and safety, the needs of working families, consumer education for parents, and the overall quality of child care. In September 2016, the U.S. Department of Health and Human Services (HHS) issued implementing regulations on this law.

To better protect the health and safety of children in child care, the 2014 law and accompanying regulations require states to conduct comprehensive criminal background checks for providers receiving CCDBG funds, as well as providers who are licensed, regulated, or registered in the state (with the exception of individuals exclusively caring for relatives). The law also expands the required content for state health and safety standards to include topics such as first aid, cardiopulmonary resuscitation (CPR), and emergency preparedness, among others. The law requires all CCDBG providers to receive pre-service and ongoing training on all health and safety topics. Further, the law requires states to conduct regular inspections for compliance with health, safety, and fire standards. This includes pre-licensure and annual unannounced inspections for all licensed child care providers receiving CCDBG funds, as well as annual inspections of license-exempt providers receiving CCDBG funds. The law also requires licensing inspectors to be trained in the state’s health and safety standards and licensing rules.

To better support working families, the 2014 law established a 12-month eligibility period for children. This means that once a child is deemed eligible, the child should generally continue to receive CCDBG support for a full year, regardless of temporary changes in parental work status or family income, as long as family income does not increase above the federal threshold of 85% of state median income. In addition, the law requires “graduated phaseout” of CCDBG assistance when incomes rise. This means that states must establish a two-tier eligibility system that allows for continued assistance to children whose family income at the time of their eligibility redetermination has increased above the state’s initial income threshold, but remains below the federal income threshold of 85% SMI.

To help parents learn about the availability and quality of child care in local communities, the 2014 law requires states to have a website describing licensing, monitoring, and background check processes. States must make the results of monitoring and inspection reports available electronically, along with information on deaths, serious injuries, and substantiated child abuse in child care facilities. In addition, state websites must have a searchable list of licensed and license-exempt child care providers, along with information about the provider’s quality rating (if available).

To support states in improving the quality of child care, the 2014 law increased the share of funds states must reserve for quality improvement activities. Specifically, the law incrementally increases the quality spending requirement from 4% of all child care funds (under prior law) up to 9% by FY2020. Beginning in FY2017 (and in every year thereafter), states must also spend an additional 3% on quality activities targeted to infants and toddlers. This means that by FY2020, states will be required to spend a minimum of 12% on combined quality activities. The new law outlines a number of activities states may support with quality spending. For instance, states may offer professional development or other workforce supports, develop or implement tiered quality rating and improvement systems, or cultivate statewide systems of child care resource and referral services. In addition, states must develop or implement early learning and developmental guidelines covering essential domains of development from birth to kindergarten entry. The law requires states to establish qualification requirements for child care providers and to require CCDBG providers to participate in ongoing training and professional development. 

The 2014 law also includes a number of more technical changes. For instance, the law amended the state plan process to be triennial, rather than biennial. The FY2016-FY2018 state plans are the first to reflect the requirements of the 2014 law. In addition, the 2014 law included several changes to the program’s allocation formula. Specifically, the 2014 law adds new reservations for a national toll-free hotline and website (up to $1.5 million annually), technical assistance (up to 0.5% annually), and research, demonstration, and evaluation (0.5% annually). The 2014 law also revised the statutory reservation for tribes and tribal organizations, requiring HHS to reserve at least 2% for tribes and tribal organizations (with flexibility to reserve more if certain conditions are met). The 2014 law also gave HHS the authority to waive provisions of the law for up to three years (with an optional one-year extension) at a state’s request.

The CCDBG Act of 2014 authorized discretionary appropriations for each of FY2015-FY2020. The FY2015 and FY2016 appropriations laws each appropriated discretionary CCDBG funding in excess of the authorized levels: $2.435 billion in FY2015 and $2.761 billion in FY2016.

This page was prepared October 2016 for the 2016 version of the House Ways and Means Committee Green Book.

AttachmentSize
  • IF10511 - Child Care Entitlement to States.pdf »
  • 264.68 KB
  • IF10416 - CCDBG Act of 2014 - Key Provisions and Implementation Status.pdf »
  • 230.39 KB
  • R44528 - Trends in Child Care Spending form the CCDF and TANF.pdf »
  • 1.08 MB
  • Figure 9-1. Federal Funding Appropriated to the CCDF, FY1997-FY2016.pdf »
  • 68.29 KB
  • Figure 9-2. Total Federal and State CCDF Expenditures, FY1997-FY2014.pdf »
  • 64.93 KB
  • Figure 9-3. Total CCDF Expenditures (Federal and State) in Nominal and Constant FY2014 Dollars, FY1997-FY2014.pdf »
  • 65.2 KB
  • Figure 9-4. CCDF Expenditures in Constant FY2014 Dollars and Average Montly Children Served, FY1998-FY2014.pdf »
  • 75.25 KB
  • Figure 9-5. Percent of Children Eligible under State Rules Who Were Served by the CCDF in FY 2013.pdf »
  • 62.9 KB
  • Table 9-1. Characteristics of Selected Early Childhood Care and Education Programs and Tax Provisions.pdf »
  • 78.29 KB
  • Table 9-2. CCDF Funding History, FY1997-FY2016.pdf »
  • 60.48 KB
  • Table 9-3. CCDF State Allocations Based on Appropriations for FY2016.pdf »
  • 157.44 KB
  • Table 9-4. CCDF Expenditures in Nominal Dollars and Constant FY2014 Dollars, FY1997-FY2014.pdf »
  • 148.12 KB
  • Table 9-5. Estimated Average Montly Number of Families and Children Served by the CCDF, FY1998-FY2014.pdf »
  • 130.03 KB
  • Table 9-6. Labor Force Participation Rates of Women by Presence and Age of Youngest Child, Selected Years,1947-2014.pdf »
  • 149.62 KB
  • Table 9-7. Labor Force Participation Rates of Women with Children by Marital Status-Age of Youngest Child,1980-2014.pdf »
  • 147.33 KB
  • Table 9-8. Average Hourly Wages for Child Care Workers and Preschool Teacher, May 2015.pdf »
  • 140.18 KB

    Chapter 10: Social Services Block Grant

    Overview

    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.

    The SSBG has received annual appropriations of $1.7 billion in every year since FY2002.  However, since FY2013, the appropriated funding level for the SSBG has been reduced each year due to budget sequestration.  (Sequestration is a spending reduction process under which budgetary resources are canceled to enforce budget policy goals.)  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 Hurricane Sandy in 2013, 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 here; the purpose of this chapter of the Green Book is to provide an overview of the SSBG.

    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 2016 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. For prior reports, please see the 2012 Green Book and 2014 Green Book.

    IF10115: Social Services Block Grant

    94-953: Social Services Block Grant: Background and Funding

    Additional Tables and Figures

    Figure 10-1. SSBG Annual Appropriations in Nominal and Constant FY2016 Dollars, FY1982-FY2016

    Figure 10-2. SSBG Expenditures by Selected Spending Categories, FY2014

    Table 10-1. SSBG Funding Levels in Nominal and Constant FY2016 Dollars, FY1982-FY2016

    Table 10-2. SSBG Allocations by State and Territory, Selected Fiscal Years 1998-2016

    Table 10-3. Number of States Offering Selected Services, Fiscal Years 1999-2014

    Table 10-4. Use of SSBG Funds by Expenditure Category, Fiscal Years 2001-2014

    Legislative History

    The following provides a legislative history of Social Services Block Grant from the second session of the 113th Congress through the first session of the 114th Congress. For prior history, please see prior editions of the Green Book.

    The annual appropriations acts for FY2015 (P.L. 113-235) and FY2016 (P.L. 114-113) maintained the SSBG appropriation at $1.7 billion. However, this amount was reduced in both years due to sequestration, with final funding levels totaling $1.576 billion in FY2015 and $1.584 billion in FY2016.  These annual appropriations acts both maintained the 10% TANF transfer authority for states.

    This page was prepared October 2016 for the 2016 version of the House Ways and Means Committee Green Book.

    Chapter 11: Child Welfare

    Overview 

    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 state level, the child welfare “system” consists of public child protection and child welfare workers, private child welfare and social service workers, state and local judges, prosecutors, and law enforcement personnel.  These representatives of various state and local entities assume interrelated roles while carrying out child welfare activities, including investigating reports of child abuse and neglect, providing services to strengthen and support biological, adoptive, and kinship families, removing children from their homes when that is necessary for their safety, supervising and administering payments for children placed in foster care, working to permit safe reunification of children with their parents or, when this is not possible, finding them a new permanent family through adoption, legal guardianship or placement with a fit and willing relative, and providing services to help youth who “age out” of foster care become successful adults.

    Children and Families Served

    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 74 million children in the nation, and in FY2014 state or local child protective service workers investigated or otherwise provided a response to allegations of abuse or neglect involving some 3.2 million children.  An estimated 1.3 million of those children and their families receive additional services following this child protective services response and states identified 702,000 children as victims of child abuse or neglect under state law.  The large majority of children who received child welfare agency services after an abuse or neglect investigation or response were served in their own home rather than being removed to foster care.

    Foster care is a temporary living arrangement for children who cannot safely remain in their own homes.  There were some 265,000 children who entered foster care in FY2014, This represented an increase of 10,000 children compared to FY2013 and was the highest one-year total of children entering care in five years. For most of the children entering foster care in FY2014 (60%) states reported that neglect was one of the circumstances that led to their removal from their homes and placement in foster care.  Other circumstances of removal for children entering care in FY2014 included (alone or in combination with additional factors) drug abuse by the child’s parent (30%), “caretaker inability to cope” due to physical or mental illness or other reason (15%), physical abuse (13%), a child behavior problem (12%), inadequate housing (10%), parental incarceration (8%), alcohol abuse by child’s parent (6%), abandonment (5%), and sexual abuse (4%).

    The number of children remaining in foster care on a given day of the year declined from a high of 567,000 children who were reported in foster care on the last day of FY1999 to a low of 397,000 as of the last day of FY2012.  On the last day of FY2013, states reported 402,000 children in foster care, and this number increased to 415,000 by the end of FY2014.  The general decline in the number of children in foster care across much of the past decade and a half 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. The more recent increases in entries to foster care, which has at least anecdotally been linked to rising parental substance abuse, may explain the increase in the overall foster care caseload.

    Requirements and Oversight

    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).  

    State Spending on Child Welfare Purposes

    States spend substantial funds on child welfare purposes and, on a national basis, generally exceed the amount needed to access full federal child welfare funding.  For example, in FY2014 federal dedicated child welfare funding was about $8.0 billion, and given the level of non-federal dollars states are required to provide to fully draw down those federal funds states would be expected to spend around $6.1 billion in state and local funds for child welfare purposes.  This suggests total federal, state, and local spending authorized under federal child welfare programs of just above $14 billion.  However, according to a survey of state child welfare agency spending for state fiscal year 2014 (the most recent available), those public agencies spent $29.1 billion on child welfare activities in that year with more than half of this spending ($16.3billion or 57%) coming from state or local funds.  The remainder ($12.8 billion or 43%) drew on federal funds, including the funding streams discussed above that are dedicated to child welfare purposes (primarily Title IV-E and Title IV-B), as well as additional federal funding that states may choose to direct to child welfare purposes.  Principally this “non-dedicated” funding is expended by states’ child welfare agencies out of federal funds provided under the Temporary Assistance for Needy Families (TANF) block grant, the Social Services Block Grant (SSBG), and Medicaid. [1] 

    [1] Kristina Rosinsky and Dana Connelly. Child Welfare Financing SFY2014: A survey of federal, state, and local expenditures, Child Trends. Casey Family Programs, and Annie E. Casey Foundation (October 2016).  

    Congressional Research Services (CRS) Reports

    The House Ways and Means Committee is making available selected reports by the Congressional Research Service (CRS) for inclusion in its 2016 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. For prior reports, please see the 2012 Green Book and 2014 Green Book.

    R43458: Child Welfare: An Overview of Federal Programs and Their Current Funding

    RL34499: Youth Transitioning from Foster Care: Background and Federal Programs

    R43930: Maternal and Infant Early Childhood Home Visiting (MIECHV) Program: Background and Funding

    Selected Acts Amending Child Welfare Programs

    R43757: Child Welfare and Child Support: The Preventing Sex Trafficking and Strengthening Families Act (P.L. 113-183)

    R42027, Child Welfare: The Child and Family Services Improvement and Innovation Act (P.L. 112-34)

    RL34704, Child Welfare: The Fostering Connections to Success and Increasing Adoptions Act of 2008 (P.L. 110-351)

    RL33354, Child Welfare: Enactment of the Child and Family Services Improvement Act of 2006 (P.L. 109-288)

    RL33155, Child Welfare: Foster Care and Adoption Assistance Provisions in the Deficit Reduction Act of 2005 (P.L. 109-171)

    RL30759, Child Welfare: Implementation of the Adoption and Safe Families Act (P.L. 105-89)

    Additional Tables and Figures

    Figure 11-1. Trend in Title IV-E Foster Care and Permanency Assistance Caseload, FY1996-FY2017 and Table 11-1. Title IV-E Caseload by Type of Assistance, Number and Rate, FY1984-FY2015

    Figure 11-2. CBO Caseload and Federal Outlay Estimates for the Title IV-E Program and Table 11-2. Estimated Federal Outlays under the Title IV-E Program, FY2016-FY2021

    Figure 11-3. Trends in Foster Care Use, FY1982-FY2015 and Table 11-3.  National Estimates of Foster Care Use, FY1982-FY2015 

    Figure 11-4. Rate of Entry to Foster Care by State, FY2015; Figure 11-4A. Rate of Children in Foster Care by State, FY2015; Figure 11-4B. Percentage Change in Number of Children in Foster Care on the Last Day of FY2011 versus the Last Day of FY2015 by state; and Table 11-4. Number of Children Entering, Served, Exiting or in Foster Care by State FY2011 and FY2015

    Figure 11-5. Trend in Title IV-E Foster Care Coverage and able 11-5. Estimated Share of Foster Care Caseload Eligible for and Receiving Title IV-E Foster Care Maintenance Payments by State, FY2015

    Figure 11-6. Trend in Federal and State Title IV-E Spending for Foster Care, Adoption Assistance, and Kinship Guardianship Assistance, FY1989-FY2016 and Table 11-6. Federal and State Title IV-E Spending for Foster Care, Adoption Assistance, and Kinship Guardianship Assistance, FY1989-FY2016

    Figure 11-7. Trend in Federal Title IV-E Spending by Program Component, FY1989-FY2016; Figure 11-8. Share of Federal Title IV-E Spending by Program Component, FY1989-FY2016; and Table 11-7. Federal Title IV-E Spending by Component, FY1989-FY2016 

    Table 11-8. Title IV-E Foster Care, Adoption Assistance, and Kinship Guardianship Assistance Spending by State, FY2015

    Figure 11-9. Trend in Total Title IV-B Funding, FY1990-FY2016; Table 11-9. Total Title IV-B Funding, FY1990-FY2016; and Table 11-9A. Title IV-B Funding by State, FY2015 

    Figure 11-10. Foster Care Entry Rates by Age at Entry, Selected Fiscal Years; Table 11-10. Number of Children Entering Foster Care by Age, FY2003-FY2015; Table 11-10A. Rate of Children Entering Foster Care by Age, FY2003-FY2015; and Table 11-10B. Share of Children Entering Foster Care by Age, FY2003-FY2015 

    Figure 11-11. Length of Stay in Foster Care by Race/Ethnicity, Selected Fiscal Years  and Table 11-11. Number of Months in Foster Care, by Race/Ethnicity as of the last day of FY2004-FY2015 

    Figure 11-12. Share of Children Exiting Foster Care by Reason for Exit, FY2001-FY2015 and Table 11-12. Children Exiting Foster Care During FY2001-FY2015, by Reason for Exit 

    Legislative History

    No new legislation affecting the child welfare programs authorized in Title IV-B and Title IV-E of the Social Security Act had been enacted in the 114th Congress (2015-2016).  For a legislative history of child welfare programs for prior years, see prior editions of the Green Book

    This page was prepared October 2016 for the 2016 version of the House Ways and Means Committee Green Book.

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  • RL34499 - Youth Transitioning from Foster Care - Background and Federal Programs.pdf »
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  • R43930 - Maternal and Infant Early Childhood Home Visiting (MIECHV) - Background and Funding.pdf »
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  • R43757 - Child Welfare and Child Support - The Preventing Sex Trafficicking and Strengthening Families Act (PL 113-183).pdf »
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  • R42027 - Child Welfare - The Child and Family Services Improvement and Innovation Act (PL 112-34).pdf »
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  • RL34704 - Child Welfare - The Fostering Connections to Success and Increasing Adoptions Act of 2008 (PL 110-351).pdf »
  • 399.08 KB
  • RL33354 - Child Welfare - Enactment of the Child and Family Services Improvement Act of 2006 (PL 109-288).pdf »
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  • RL33155 - Child Welfare Foster Care and Adoption Assistance Provisions in the Deficit Reduction Act of 2005 (PL 109-171).pdf »
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  • RL30759 - Child Welfare - Implementation of the Adoption and Safe Families Act (PL 105-89).pdf »
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  • Figure 11-1 and Table 11-1.pdf »
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  • Figure 11-4, 11-4A, 11-4B and Table 11-4.pdf »
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  • Figure 11-7, Figure 11-8 and Table 11-7.pdf »
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  • Table 11-8.pdf »
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    Chapter 12: Pension Benefit Guaranty Corporation (PBGC)

    Overview

    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 multiemployer program.  Single-employer pension plans are plans to which one employer makes contributions. Multiemployer 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% of promised benefits.  There is a statutory maximum benefit that the PBGC is allowed to pay, which is indexed annually for inflation ($60,136 per year for a participant in a pension plan terminated in 2016 who receives a single-life annuity beginning at age 65).  Most participants in terminated single-employer pension plans receive the full benefit earned at the time of plan termination. 

    The PBGC does not directly pay benefits to participants in multiemployer pensions.  Rather, the PBGC provides insolvent multiemployer plans with financial assistance, sufficient to pay PBGC guaranteed benefits and reasonable administrative expenses.  Such assistance is in the statutorily-required form of loans, which the PBGC indicates are rarely repaid.  The PBGC statutorily guaranteed benefit for a participant in a multiemployer plan generally is the participant’s years of service times 100% of the first $11 of the monthly benefit rate and 75% of the next $33 of the monthly benefit rate. Thus, a participant with 30 years of service would receive a maximum annual benefit of $12,870.  This benefit amount is not indexed for inflation.

    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.

    Legislative History

    The following provides a legislative history of the PBGC during the end of the 113th and beginning of the 114th Congresses. For prior legislative history, please see the prior editions of the Green Book.

    The Multiemployer Pension Reform Act of 2014, enacted as Division O in the Consolidated and Further Continuing Appropriations Act, 2015 (MPRA; P.L. 113-235)

    The Multiemployer Pension Reform Act of 2014 (MPRA) contained several provisions that affected the PBGC.  MPRA increased the premiums that the sponsors of multiemployer defined benefit pension plans pay to PBGC to $26 per participant in 2015 and provided for the premium to be indexed to changes in the average national wage beginning in 2016.  MPRA also changed the PBGC’s authorities with regard to facilitating mergers and partitions of multiemployer pension plans.

    Further details about MPRA's effects on the PBGC may be found in the General Explanation Of Tax Legislation Enacted In The 113th Congress, which was prepared by the Staff of the Joint Committee on Taxation in March of 2015. 

    This page was prepared October 2016 for the 2016 version of the House Ways and Means Committee Green Book.

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    Appendix A: Federal Benefits and Services for People with Low Income

    Many of the programs that fall under the jurisdiction of the House Committee on Ways and Means and are featured in the Green Book are authorized under the Social Security Act and are designed to provide benefits and services to low-income populations. Eligibility for benefits such as cash assistance or supportive services is typically determined using income or other needs-based standards. In some cases, these programs serve overlapping population groups. Reviews of programs designed to serve specifically low-income populations generally exclude social insurance programs, such as Social Security, Unemployment Insurance, and Medicare.

    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 2016 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. The following CRS reports provide cross-cutting information on low-income programs and policies.

    R44574: Federal Benefits and Services for People with Low Income: Overview of Spending Trends, FY2008-FY2015

    R44327: Need-Tested Benefits: Estimated Eligibility and Benefit Receipt by Families and Individuals

    R43400: Work Requirements, Time Limits, and Work Incentives in TANF, SNAP, and Housing Assistance

    R42394: Drug Testing and Crime-Related Restrictions in TANF, SNAP, and Housing Assistance

    This page was prepared October 2016 for the 2016 version of the House Ways and Means Committee Green Book.

    Appendix B: Social Welfare Programs in the Territories

    Many, but not all, social welfare programs that are available in the 50 states and the District of Columbia are also available in the United States territories of American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands.[1]  Some programs are only available in certain territories and for some programs the territories receive funding based on different formulas or under different circumstances than do the states.

    Overview

    This Appendix provides information on the availability in each territory of the following two types of social welfare programs:

    1. Federal Programs that Make Direct Payments to Individuals--These programs have federal eligibility and benefit rules, and are administered directly by the federal government.[2]

    2. Federal-State Programs--For these programs, states, and in some cases localities, have a role in the design, administration, and often financing of benefits and services.  For a territory to participate in the joint federal-state programs, federal law must make the territory eligible for the program, and the territory’s government must act to meet the program’s conditions for federal assistance.

    Information on the coverage of each territory for each direct payment program is provided in Table B-1 while information on coverage for each federal-state program is provided in Table B-2.  Additional information on certain programs under the jurisdiction of the House Committee on Ways and Means is also provided.

    Federal Programs that Make Direct Payments to Individuals

    The federal government administers several large social welfare programs that provide benefits directly to individuals. These benefits are in the form of retirement, disability, and survivors benefits administered by the Social Security Administration (SSA), Railroad Retirement Board (RRB), and Department of Veterans Affairs (VA), as well as medical benefits provided by the Medicare program and by the VA.  Direct benefits are also provided to needy aged, blind, and disabled persons and through Department of Education grant and loan programs.

    Supplemental Security Income (SSI)

    The Supplemental Security Income (SSI) program provides means-tested cash assistance to needy aged, blind, and disabled individuals, including disabled children. Benefits are paid without regard to work or insurance requirements, and are financed by general revenue funds.  Eligibility in the SSI program is limited to residents of the 50 states, the District of Columbia, and the Northern Mariana Islands.

    Prior to the establishment of the SSI program by the Social Security Amendments of 1972, benefits for the needy aged, blind, and disabled were provided by the states and territories, with the exception of American Samoa, and financed by federal grants under Titles I, X, XIV, and XVI of the Social Security Act.  The 1972 amendments replaced this system of grants with the federal SSI program in the states and District of Columbia only. Residents of the territories were excluded from the SSI program. The territories of Guam, Puerto Rico, and the U.S. Virgin Islands remain eligible for federal grants for aid to the aged, blind, and disabled. Residents of American Samoa are not eligible for SSI or benefits under the aged, blind, and disabled grants.  Eligibility for SSI for residents of the Northern Mariana Islands was included in the 1976 covenant that established the Northern Mariana Islands as a United States territory.

    Federal-State Programs

    Many social welfare programs are operated by the states and territories using federal funds and in accordance with federal guidelines.  Often, in order for a state or territory to participate in one of these programs, the state or territorial government must provide matching funds or meet other program requirements.  As a result, in some cases, a state or territory may be eligible for a program but may choose not to participate in that program.

    Major federal-state programs include the unemployment compensation system and the nation’s major public assistance, nutrition assistance, and child care assistance programs. Federal-state programs also provide benefits to older persons and persons with disabilities, and finance certain education and rehabilitation programs.

    Consolidated Grants to the Territories

    The Omnibus Territories Act, enacted in 1977, authorizes federal agencies to consolidate grants, except for grants that provide direct services to individuals, awarded to American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands.  Consolidated grant funds may be co-mingled and used for any purpose permitted under any of the programs consolidated into the grant.  Puerto Rico is not eligible for grant consolidation. Today it is common for territories to consolidate several grants from the Department of Health and Human Services into larger grants such as the Social Services Block Grant.[3]  One advantage to grant consolidation for the territories is that it allows the territories to receive federal funds in some cases without having to meet all of the program rules that apply to states.

    Section 1108 Ceiling on Certain Grants to the Territories

    Section 1108 of the Social Security Act places a ceiling on the total amount of annual grant funding that may be awarded by the Department of Health and Human Services for certain programs to American Samoa, Guam, Puerto Rico, and the U.S. Virgin Islands.[4]  Section 1108 does not set a ceiling for grants to the Northern Mariana Islands. Grants for Aid to the Aged, Blind, and Disabled; Temporary Assistance for Needy Families (TANF); and foster care and adoption assistance under Title IV-E of the Act are included in this ceiling. The current ceilings, set by statute and not subject to any automatic adjustment, are:

    • American Samoa: $1,000,000;
    • Guam: $4,686,000;
    • Puerto Rico: $107,255,000; and
    • U.S. Virgin Islands: $3,554,000.

    Table B-2 provides a list of territorial eligibility for and participation in selected federal-state programs.  Programs under the jurisdiction of the House Committee on Ways and Means that have special rules for territorial eligibility are discussed below.

    Unemployment Compensation

    Puerto Rico and the U.S. Virgin Islands are the only territories eligible under federal law for the Unemployment Compensation program.  These two territories have Unemployment Compensation programs as certified by the Department of Labor.  As a result, Puerto Rico and the U.S. Virgin Islands can access federal Unemployment Compensation benefits when available through temporary programs, such as the now-expired Emergency Unemployment Compensation (EUC08) program, or the permanent Extended Benefit (EB) program.

    Child Support Enforcement

    Under the federal-state child support enforcement program, the federal government finances 66% of a state or territory’s child support enforcement program. The federal government also provides incentive payments to state and territorial child support enforcement programs to encourage program effectiveness. While each of the territories is eligible to participate in the federal-state child support enforcement program, only Guam, Puerto Rico, and the U.S. Virgin Islands currently have territorial programs that qualify for federal support.

    Foster Care and Adoption Assistance

    The federal government provides foster care and adoption assistance to states and territories under Title IV-E of the Social Security Act.  In addition, states and territories that participate in the Title IV-E program are eligible for grants under the John H. Chafee Foster Care Independence Program to help current and former youths in foster care achieve self-sufficiency.  While Title IV-E of the Social Security Act does not specifically define which territories may be eligible for foster care and adoption assistance, the definition of “state” provided in Title XI of the Social Security Act states that for the purposes of Title IV of the Act, the term “state” includes American Samoa, Guam, Puerto Rico, and the U.S. Virgin Islands, but not the Northern Mariana Islands.

    Puerto Rico is the only territory that currently participates in the federal foster care and adoption assistance program. However, Puerto Rico has historically received limited or no funding for its program because it has not been able to determine program eligibility to the satisfaction of the Department of Health and Human Services and has not developed a required cost-allocation plan.

    Temporary Assistance for Needy Families (TANF)

    The Temporary Assistance for Needy Families (TANF) program provides block grants to states and eligible territories to provide cash welfare and other benefits to qualified needy families. Guam, Puerto Rico, and the U.S. Virgin Islands are eligible for TANF funds and participate in the program.  American Samoa is eligible for TANF funds but does not participate in the program.  Under federal law, the Northern Mariana Islands is not eligible for TANF funds.

    This page was prepared October 2016 for the 2016 version of the House Ways and Means Committee Green Book.


    [1] This appendix discusses the availability of social programs in the five major territories and provides an overview of special rules that apply in the territories. It does not discuss federal financial assistance for three areas that were formally part of the trust territories and are now independent in "free association" with the United States: the Marshall Islands, the Federated States of Micronesia, and Palau. These areas remain eligible for some residual aid from the United States.

    [2] This appendix’s classification of programs making direct payments to individuals differs from that found in federal budget documents and the Census Bureau’s published Consolidated Federal Funds Report. This appendix classifies unemployment compensation as a federal-state program because states administer and design their own programs within federal guidelines. The Supplemental Nutrition Assistance Program (SNAP) program is also classified in this appendix as a federal-state program because it is administered by the states.

    [3] The rules for the consolidation of grants from the Department of Health and Human Services are provided in the Code of Federal Regulations at 45 C.F.R. §§ 97.10-97.16.

    [4] Section 1108 of the Social Security also sets ceilings on Medicaid funding for the territories.

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    Appendix C: Federal Benefits for Noncitizens

    A complex set of rules governs the eligibility of noncitizens for federal benefits, including under many of the programs overseen by the House Committee on Ways and Means and featured in the Green Book. These rules are determined largely by the type of noncitizen in question and the nature of the services being offered. Unauthorized aliens are not eligible for federal public benefits, except for a narrow set of specified emergency services and programs.

    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 2016 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. The following CRS reports provide an overview of policies affecting noncitizen eligibility and access to selected federal benefit programs.

    RL34500:  Unauthorized Aliens’ Access to Federal Benefits: Policy and Issues

    RL32004: Social Security Benefits for Noncitizens

    RL33809: Noncitizen Eligibility for Federal Public Assistance: Policy Overview 

    R43561: Treatment of Noncitizens under the Affordable Care Act

    This page was prepared October 2016 for the 2016 version of the House Ways and Means Committee Green Book.

    Appendix D: Poverty

    Overview

    Many programs under the jurisdiction of the House Committee on Ways and Means featured in the Green Book provide benefits and services to individuals and families living near or below the poverty line, an income threshold calculated by the Census Bureau based on household size. The official poverty thresholds do not vary geographically, but they are updated for inflation each year using Consumer Price Index (CPI-U). This new appendix includes Congressional Research Service (CRS) reports and data that provide a statistical picture of poverty in the United States.

    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 2016 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.

    R44644: Poverty in the United States in 2015: In Brief

    R44698: Demographic and Social Characteristics of Persons in Poverty, 2015

    CRS-Computed Poverty Rates

    At the request of the House Committee on Ways and Means, CRS computed pre-transfer, pre-welfare, and total money income poverty rates. Also at the request of the Committee, CRS computed poverty rates based on alternative inflation adjustments to the poverty thresholds, using the Personal Consumption Expenditures (PCE) price index rather than the Consumer Price Index (CPI) used for the official poverty rates. The poverty rates based on the PCE price index were computed by adjusting the poverty thresholds on the CPS microdata files by the ratio of the PCE to the CPI price index, with both price indices rebased to either 1968 or 2015. CRS did not evaluate the pros and cons of using the PCE price index versus the CPI.

    The tabulations are included in a workbook available here:

    CRS Poverty Rate Special Calculations

    Tabulations included in this workbook are based on the available Annual Social and Economic Supplement (ASEC) to the Current Population Survey (CPS) public use data files. The available public use data files for the years covering 1987 to 2015 annual income are from a CRS collection obtained from the U.S. Census Bureau annually. The public use data files for 1968 to 1986 are those available from the National Bureau of Economic Research (NBER), except the 1969 data are from a file obtained from the Inter-university Consortium for Political and Social Research maintained at the University of Michigan.

    The Census Bureau sometimes makes revisions to its poverty data, which are not always reflected on the available public use data files. Therefore, for some years, the poverty rates reported in this workbook might differ from those posted on the Census Bureau website.

    This page was prepared October 2016 for the 2016 version of the House Ways and Means Committee Green Book.