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H.R. 12580

2. Covers service of U.S. citizens after 1960 working for certain labor organizations organized in the Panama Canal Zone by modifying the definition of American employer to include labor organizations which are chartered by labor organizations created or organized in the United States. Validates certain wage credits for which taxes were erroneously paid for service after 1954 and

before 1961 for such employees. Effective date: No benefits payable or increased

for month of enactment or prior month. No lump sum death payments payable or increased if individual died prior to date of

enactment. Bill: Sec. 106(d). House report: pp. 21, 81-82.

b. and c. No change.

Eliminates the requirementsthat an individual

I. COVERAGE-Continued


Present law

C. Geographical scope-Con.

Coverage outside of the United States is limited

a. American citizens either self-employed
or employed by an American employer, ex-
cept ministers outside the United States if
they serve a congregation predominantly
made up of United States citizens even
though their employer may not be a United
States employer.

b. Citizens of the United States employed by certain foreign subsidiaries of American corporations are covered by voluntary agreements between the Federal Government and the parent American company.

The domestic corporation can include some or all of its foreign subsidiaries in the agreement and must agree to pay the equivalent of both employer and employee taxes on behalf of the subsidiaries included.

c. Individuals, regardless of citizenship, who are employed on American registered ships and aircraft if either the contract of service was entered into in the United States or the plane or vessel touches a port in the United States.


must have attained age 50 in order to be

eligible for benefits.
Effective date: 2d month after the month of

Bill: Sec. 401.
House report: pp. 12, 102.

A. Nature of the Provisions
1. Benefits..

Provides an insurance benefit (for months

beginning July 1957) for disabled workers
between ages of 50 and 65 meeting eligibil-
ity requirements. Benefits are computed
in the same way as retirement benefits and
are payable from the Federal Disability

Insurance Trust Fund.
2. Disability "freeze".- Provides that when an individual for whom a

period of disability has been established dies
or retires on account of age or disability his
period of disability will be disregarded in
determining his eligibility for benefits and
his average monthly wage for benefit com-

putation purposes.
B. Eligibility requirements
1. Definition.

For benefits an individual must be precluded from engaging in any substantial gainful activity by reason of a physical or mental impairment. The impairment must be medically determinable and one which can be expected to be of long-continued and indefinite duration or to result in death.

No change.



Present law

H.R. 12580

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Provides that people who become disabled

within 60 months (5 years) after termination of a period of disability would not be required to serve another 6-month "waiting period” before they are again eligible to

receive benefits. Effective date: Benefits payable for month of

enactment and subsequent months. Bill: Sec. 402. House report: pp. 13-14, 103–4. Provides alternative work requirement for in

dividuals who have (1) 20 quarters of coverage, whenever acquired, and (2) quarters of coverage in all calendar quarters elapsing after 1950 up to the quarter in which they become disabled, but not less

than 6 quarters. Bill: Sec. 404. House report: pp. 14, 106-107.

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C. Rehabilitation..

The policy of Congress is stated that disabled

persons applying for a determination of disability be promptly referred to State vocational rehabilitation agencies for necessary rehabilitation services. Act provides for deduction of benefits for refusal, without good cause, to accept rehabilitation services available under a State plan approved under the Vocational Rehabilitation Act in such

amounts as the Secretary shall determine. A member or adherent of a recognized church

or religious sect that relies on spiritual healing who refuses rehabilitation services

is deemed to have done so with good cause. A disabled person who is receiving rehabilita

tion services from a State vocational rehabilitation agency and returns to work shall not, for at least 1 year after his work first started, be regarded as able to engage in substantial gainful activity solely by reason of such work.

Broadens present provision to allow, in effect,

a 12-month trial work period for all beneficiaries (including childhood disability beneficiaries) who attempt to work. If, after 9 months, the beneficiary has demonstrated that he is no longer disabled within the meaning of the law, he will receive benefits for an additional 3 months. (Only 1 trial work period permitted for each period of disability; no trial work period for persons

disabled a 2d time within 60 months.) Any beneficiary who has been determined to

be no longer disabled within the meaning of the law will be given an additional 3 months

of benefits as above. Effective date: Month beginning after month

of enactment. Bill: Sec. 403. House report: Pp. 12–13, 104-106.


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Number of quarters of coverage required for fully insured status under present law and under

H.R. 12580

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1 This column represents the requirement under the basic insured status formula in existing
law; for those individuals who meet the "special (continuous coverage) insured status" test
established by the Social Security Amendments of 1954, the requirement would be somewhat
less for persons dying or reaching retirement age before October 1960.

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Present law

H.R. 12580

B. Survivors of workers who

died prior to 1940.

Persons who died before Sept. 1, 1950, and Provides that any person who died or attained

after 1939 with at least 6 quarters of cover- retirement age before 1951 and had at least
age are considered fully insured for pur- 6 quarters of coverage would be fully in-
poses of survivors' benefits (other than for sured.
former wife divorced).

Effective for benefits starting with the month

after the enactment of the bill; effective for lump-sum death payments based on deaths

occurring after month of enactment.
Bill: Sec. 204.

House report, pp. 14-15, 86-88.
Benefits are not payable to otherwise eligible Allows benefits to such individuals even though

widows, children, and parents if the wage earner died before 1940 if he had at least
earner had died prior to 1940.

6 quarters of coverage.
Effective for month after month of enactment.
Bill: Sec. 205.

House report: pp. 16, 88-89.
Benefits are not payable to eligible widowers Eliminates August 1950 cutoff date.

unless the insured worker's death was after Effective for month after month of enactment.
August 1950 and she was fully and cur- Bill: Sec. 205.
rently insured.

House report: pp. 16, 88–89.
Benefits are not payable to an otherwise Permits payment of benefits to children born

eligible child unless he was born, or adopted, or adopted after worker's disability. A
or became a stepchild before the worker child cannot become entitled unless he is the
became disabled.

natural child or stepchild of the disabled
worker or is adopted within 2 years after
the month in which the worker became

entitled to benefits.
Effective for September 1958.
Bill: Sec. 201.
House report: pp. 33, 84-85.

C. Widowers of workers who

died prior to 1950.

D. Children born or adopted

after parent's disability.

E. Dependency of stepchild on

natural father.

A child is deemed dependent on natural father

or adopting father for benefit purposes un-
less the father is not contributing to the
child's support and the child is living with
and being supported by the stepfather at
the time he files application.

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Provides for payment of child's benefit even

though the child was living with and re-
ceiving more than 4% of his support from his

Effective for month of enactment.
Bill: Sec. 202.
House report: pp. 16, 85.
Provides that the 3-year duration requirement

be changed to 1 year.
Effective for month of enactment.
Bill: Sec. 207.
House report: pp. 17, 90.
Provides that certain invalid marriages of in-

sured workers wi not result in ineligibility.
Applicant must have gone through the mar-
riage ceremony with insured worker in the
belief that it would create a valid marriage
and the couple must have been living to-
gether at the time of the worker's death or,
be living together at the time of appli-

cation for benefits.
Effective for month of enactment.
Bill: Sec. 208.
House report: pp. 16, 91-92.

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Present law

H.R. 12580

H. Lump sum death payment. Lump sum death payment paid in cases

where no eligible spouse survives) only after burial expenses are paid.

Allows lump sum to be sent directly to funeral

director on application of person who assumes responsibility for funeral home expenses. If any of the lump sum remains, it is paid to person who paid funeral bill; if any still remains to persons who paid other burial

expenses in a certain order of priority. Effective date: For deaths after enactment and

for deaths before enactment if no application is filed before the 3d month after month of

enactment. Bill: Sec. 203. House report: pp. 30–31, 85–86.


A. Computing average

monthly wage.

In general, an individual's average monthly

wage for computing his monthly old-age insurance benefit amount is determined by dividing the total of his creditable earnings after the applicable starting date and up to the applicable closing date, by the number of months involved. Excluded from this computation are all months and all earnings in any year any part of which was included in a period of disability under the disability "freeze" (except that the months and earnings in the year in which the period of disability begins may be included if the resulting benefit would be higher). Also excluded from the computation are all months in any year prior to the year the individual attained age 22 if less than 2 quarters of such year were quarters of coverage. Starting dates may be last day of (1) 1936, or (2) 1950, or, if later, the year

of attainment of age 21. The closing date may be either (1) the

1st day of the year the individual died or became entitled to benefits or (2) the 1st day of the year in which he was fully insured and attained retirement age, which

ever results in a higher benefit. Applicable starting and closing dates are

those which yield the highest benefit amount. The minimum divisor is 18 months.

Provides for computation of the average

monthly wage, in retirement cases, on the basis of a constant number of years, regardless of when, before age 22, the person started to work or when, after age 65 (age 62 in the case of a woman), he files application for benefits. The number of years would be equal to 5 less than the number of years (excluding years in periods of disability) elapsing after 1950 or after the year in which the individual attained age 21, whichever is later, and up to the year in which the person was first eligible for old-age insurance benefits (generally the year in which he attained age 65—or age 62 in the case of a woman). In death and disability cases the number of years would be determined by the date of

death or disability. In those cases where a larger benefit would

result (because the individual's best earnings were in years before 1951) the number of years would be those elapsing after 1936, rather than 1950; this alternative is similar to the 1936 alternative "starting date" available under present law in such cases. The subtraction of 5 from the number of elapsed years is the equivalent of the present dropout of the 5 years during which the individual's earnings were the lowest.

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