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1 97th Congress1st SessionCOMMITTEE PRINTOMNIBUS BUDGET RECONCILIATION ACT OF 1981,PUBLIC LAW 97-35(Selected Provisions Affecting the Elderly)AN INFORMATION PAPERPREPARED BY THESPECIAL COMMITTEE ON AGINGUNITED States SENATEWITH THE ASSISTANCE RESEARCH SERVICE*OF THE LIBRARY OF CONGRESSSEPTEMBER 1981 This document has been printed for information purposes. It does findings, or recommendations by this GOVERNMENT PRINTING OFFICE-262 0 WASHINGTON: 1981 For sale by the Superintendent of Documents, Government Printing OfficeWashington, 20402 SPECIAL COMMITTEE ON AGINGJOHN HEINZ, Pennsylvania, ChairmanPETE V. DOMENICI, New Mexico LAWTON CHILES, FloridaCHARLES H. PERCY, Illinois JOHN GLENN, OhioNANCY LANDON KASSEBAUIM, Kansas JOHN MELCHER, MontanaWILLIAM S.

2 COHEN, Maine DAVID PRYOR, ArkansasLARRY PRESSLER, South Dakota BILL BRADLEY, New JerseyCHARLES E. GRASSLEY, Iowa QUENTIN N. BURDICK, North DakotaDAVID DURENBERGER, Minnesota CHRISTOPHER J. DODD, ConnecticutJOHN C. ROTHEa, Staff Director and Chief CosnelE. BENTLEY Lspscos, Minority Staff DirectorROBIN L. KROPF, Chief Clerk(11)PREFACEThe Omnibus Budget Reconciliation Act of 1981 (Public Law 97-35) was approved by CONGRESS on July 31, 1981 and signed by thePresident on August 13, result of diligent work in both the House and Senate , the bill isa major step toward restricting the growth in the size of the the case of entitlement programs, the Reconciliation Act makeschanges in current law that determine eligibility and benefit levels andwill thus affect Government spending without further action by the case of nonentitlement programs, the act reduces authoriza-tion levels for appropriations below the spending path implied by pol-icies that have been in effect.

3 Final decisions on the nonentitlementprograms, however. will depend upon actions on 13 appropriationsmeasures pending before the following information paper was prepared by the staff of theSpecial Committee on Aging with assistance from the CongressionalResearch Service of the LIBRARY of CONGRESS . It includes a summaryof the most relevant provisions affecting older Americans, as well assome background information -and the budget proposals set forth bythe believe this will be a valuable resource for the elderly, prac-titioners in the field of aging, policymakers, and others concerned withthe quality of life for older HEINZ,Chairman,LAWTON CILES,Ranking Minority 1 Socialsecurity-------------------------- -------------------------1 Supplemental security income ---------------------------------------C ivil service and military retirement------------------------------ ----4 Railroad retirement------------------------------ ----------------4 Food stamps ----------------- ----------------------------Low-income energy assistance------------------------------ ---------6 Veterans'pensions ---------------------------------------- -------8 Veterans'burialbenefits----------------- --------------------------8 Medicare-------------------------------- ----------------------8 Medicaid

4 ---------------------------------------- ----------National Institute on Aging----------------------------------- -----10 Veterans' health---------------------------------- --------------- 10 Other health programs-------------------------------- ------------- 111. Preventive health and health services block grant ------------------112. Primary care block grant----------------------------------- -- Alcohol, drug abuse, and mental health block grant program ---------124 Maternalanchl health block grant------- --------------- 12 Administration on Aging ---------------------------------------- --- 13 Senior volunteer programs-------------------------------- ---------- 14 Social services-------------------------------- ------------------- 14-Community services block grant --------- 7--------------------------- 15 Legal services-------------------------------- ------------------- 16-Weatherization----------------------- --------------------------- 17 Employment------------------------------ ---------------------- 17 Education.

5 -------------------------- ------------------------ 18 Housing ---------------------------------------- --------------- 19(v)OMNIBUS BUDGET. RECONCILIATION ACT OF 1981,PUBLIC LAW 97-35(Selected Provisions Affecting the Elderly)INTRODUCTIONThe Omnibus Budget Reconciliation Act of 1981 (Public Law97-35) was approved by CONGRESS on July 31, 1981, and signed by thePresident on August 13, 1981. Following is a summary of selectedprovisions affecting programs which assist the SECURITYIn fiscal year 1982, more than 95 percent of the Nation's citizensaged 65 or older, and their dependents, will be eligible for social se-curity benefits.#Under current law, fiscal year 1982 expenditures forbenefits for this group are exceed $159 billion.

6 The Reaganbudget proposed no structural revisions to the social security Reagan administration estimates that social security benefits willrise percent in July 1982, when the next adjustment for price in-flation is budget included two proposals with significant poten-tial impact on older Americans and their , the administration's budget submission assumed eliminationof the minimum benefit to present and future social security recipiontsfor fiscal year 1982, with savings of $ billion. Prior law assured thatbeneficiaries whose average lifetime earnings in covered employmentare low, received a minimum benefit higher than the benefit they wouldotherwise receive. This provision of the statute was originally intendedto help the poor but also benefits those with other sources of retirementincome.

7 The administration's budget also assumed that retirees whocould meet income eligibility requirements would have the minimumbenefit replaced by payments from the supplemental security income(SSI) program, resulting in a $300 million increase in Federal spend-ing for that program. The Omnibus Budget Reconciliation Act of1981 eliminated the minimum benefit for all present and future bene-ficiaries. In the final Reconciliation Act provision as with the Reaganbudget proposal, those individuals over 65, or blind, or disabled, whomeet SSI eligibility requirements, will have their social security bene-fits replaced with SSI payments. In addition, under the bill as enacted,persons aged 60 to 64 who were entitled to a minimum benefit for themonth of July 1981 will become eligible for a sipecial SSI benefit, if theyqualify under all SSI rules except that pertaining to age.

8 Net savingsfor fiscal year 1982 are estimated to be $459 , the administration's budget submission assumed elimina-tion of the lump-sum death benefit in instances in which there is neither2a widow nor a dependent child to receive the survivor's benefits. Fiscalyear 1982 savings were estimated to be $200 million. Current law pro-vides a lump-sum death payment of $255 when a worker who is fullyor currently insured dies. If there is no spouse to receive the paymentsunder prior law, the money could be paid to a relative or other personwho assumed responsibility for the funeral expenses. A funeral homeitself could also apply to receive the payment directly for these ex-penses. This proposal, restricting the payment of lump-sum deathbenefits, is included in the final reconciliation addition to the minimum benefit and lump-sum death benefitprovisions, the following other social security provisions were in-cluded in the Omnibus Budget Reconciliation provision was enacted, although not proposed by the Reaganadministration, which will delay eligibility for social security benefitsfor a worker retiring at age 62, and his dependents, until the first fullmonth during which all factors of eligibility are met.

9 Under priorlaw, social security benefits were always payable for the entire monthduring which the beneficiary first met all requirements for eligibility,regardless of when during the month all requirements were met. Thisprovision is estimated to save $190 million in fiscal year provision of the Omnibus Budget Reconciliation Act notproposed by the administration will affect older worlers by delayingthe time when the retirement test exempt age is lowered from 72 to prior law, all workers 70 and older would have become exemptfrom the retirement earnings test in 1982; under the new law, theexempt age will remain 72 until January 1983, when it will drop to fiscal year 1982 savings from this change are $380 , in passing the Omnibus Budget Reconciliation Act, Con-gress voted to restrict Federal funding for reimbursement of rehabili-tative services furnished by State vocational rehabilitation agenciesto beneficiaries of disability insurance (DI) under the social securityprogram.

10 The new rule permits Federal reimbursement only for "re-habilitated" DI beneficiaries who succeed in performing substantialgainful activity (now defined as earning $300 a month) for a con-tinuous period of 9 months. The Congressional Budget Office estimatesthat the new rule will cut Federal outlays by $87 million in fiscal year1982. $86 million in fiscal year 1983, and $73 million in fiscal year Reagan administration had recommended outright repeal of reim-bursement at an estimated annual savings of $87 billions of dollars]Fiscal year outlays1981 1982 Prior law- --------------- ---------------------------------------- --- $ $ ngsMinimum benefit:Reagan proSooal Budget Reconciliation death benefit:Reagan proposal ---------------------------------------- --- Budget Reconciliation Act------------------------------------- ------------ of entitlement: Omnibus Budget ReconcilIation Act test exempt age: Omnibus Budget Reconciliation Act----------7 -------------------- services.