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pendent and self-sufficient. Untold numbers on the social security roles are prevented from accepting part-time employment because of the retirement test. Many more are forced to work only intermittently or-worse still-to accept wages below what their skills would ordinarily command in order to retain their employment.

These unfortunate effects of the retirement test as it is now written have been made clear to us time and time again. I have had scores of letters from people in my State pointing out the inequities which the present retirement test has produced in their own situations.

Members of this committee will recall that during 1961 the Special Committee on Aging, of which I am a member, held hearings in 34 cities and towns throughout the country. In each of these hearings there were what we called townhall sessions in which senior citizens were invited to speak from the floor on any problem that was of concern to them. The problem most frequently mentioned related to the cost of health care. However, aside from that, one of the most frequently mentioned problems was some kind of inequity or frustration arising out of the social security retirement test. Bear in mind, Mr. Chairman, that these were not witnesses making prepared statements, but were ordinary citizens speaking extemporaneously in townhall fashion. The desire for useful employment and the desire to be self-sufficient were recurrent themes in these meetings in all parts of the country, and the barrier of the retirement test was one of the chief complaints in the minds of our older citizens.

Mr. Chairman, I serve as a member of the Subcommittee on Employment and Retirement Incomes of the Elderly of the Special Committee on Aging. That subcommittee, under the chairmanship of the distinguished Senator from West Virginia, Mr. Randolph, conducted hearings and supplementary studies earlier this year on ways to increase the opportunities available to our older citizens for part-time employment. One of the major conclusions of the subcommittee was that the retirement test should be both liberalized and simplified to enable older people to capitalize on the opportunities for part-time employment that exist or may be created. At the last meeting of the Special Committee on Aging this recommendation (No. 4) as well as several other recommendations of the subcommittee, were introduced and adopted as the recommendations of the full committee. Mr. Chairman, with your permission, I should like the record to show at this point the recommendation in the report of the Special Committee on Aging with respect to the retirement test, together with the pertinent discussion.

The bill which I have introduced, and which is now before you, would carry out this recommendation. It would bring about a more balanced accommodation between the conflicting considerations which call for a retirement test. and would meet the legitimate demands of our older people for a reasonable and understandable retirement test.

This bill would simply raise the basic exemption amount from $1,200 to $2,400 a year and provide for dollar-for-dollar reduction in benefits for earnings over $2,400. The basic exemption of $1,200 has remained unchanged since it was put into law in 1954. Living costs and wage rates have increased so much since that time that it is no longer a realistic base figure. I am convinced that this bill is needed to alleviate the discriminatory effect of the retirement test on those who are ready, willing, and able—and in many cases forced-to work.

I ask that the provisions of my bill, S. 466, be accepted as an amendment to H.R. 11865, the measure before the committee to amend the Social Security Act.

STATEMENT BY MRS. JUDY COLEMAN, OF THE AMERICAN ASSOCIATION OF MEDICAL ASSISTANTS, INC., RE H.R. 11865

Mr. Chairman and members of the committee, my name is Judy Coleman, I am a resident of Dallas, Tex., and I have the privilege of representing, as president, over 12,000 members of the American Association of Medical Assistants. Members of our association are secretaries, receptionists, bookkeepers, nurses, and technicians in the employment of physicians in offices, clinics, hospitals, and nursing homes throughout our country.

We are in daily contact with millions of patients and feel that we have an unusual opportunity to evaluate the standards and facilities of health care in this Nation. Many of us are bookkeepers, and we discuss the financing of health and hospital care with patients daily. We know the costs, the ability of the patient to meet these costs and how the patient provides for himself by

prepayment voluntary health insurance and other personal means to meet the costs.

We are opposed to the financing of health or hospital care, optional or compulsory, through the social security system.

The majority of our members fall into the income bracket and age bracket who must pay this tax. The tax has increased in recent years and will continue to increase at a rapid rate should any such health care plan through the social security system be adopted.

We do not feel that such a health care plan is necessary or wanted by the average American. We see evidence daily that the American people have access to the best medical care in the world. We see patients daily who are adequately providing for their medical care through voluntary prepayment health care plans. We observe with regularity that our physician employers make it possible for every citizen to secure the medical care that he needs regardless of his economic status, his age, or any other circumstance.

We ask with great earnestness and with great respect for your sense of fairness that you stand with the American Association of Medical Assistants, Inc., in opposing any provision for financing of health or hospital care through the social security system.

Thank you for this opportunity to present our views.

STATEMENT OF CONGRESSMAN EUGENE KEOGH ON SECTION 9 OF H.R. 11865,
SOCIAL SECURITY AMENDMENTS OF 1964

Mr. Chairman, I appreciate the opportunity to comment on section 9 of H.R. 11865, providing for covering as wages and therefore counting toward social security benefits, cash tips received by an employee in the course of his employment.

This proposal will provide better protection under the social security program for more than a million employees and their dependents. Since the cash wages of employees who customarily receive tips are relatively low, social security benefits based on their cash wages only are correspondingly low. The vast majority of these employees want social security protection based on their tip income. The inequity of forcing these employees to pay income taxes on tips while denying them the benefits of the social security program based on tip income is apparent.

Employer groups have complained to me that the proposal adopted by the House of Representatives will create serious bookkeeping problems for them. This is because the proposal would require the employee to report to his employer in writing the amount of tips received and the employer would report the employees tips along with the employees regular wages.

I do not believe anyone wants to create unnecessary or unjustified administrative problems for employers. In my opinion these problems can be virtually eliminated by the Senate Finance Committee by making a few changes in section 9 of H.R. 11865.

I would suggest, first, that employers be permitted to estimate tip income of employees for purposes of withholding employees contributions to the social security program. To prevent some employers who might fail to withhold any employee social security contribution, I would suggest that the employers would be required to estimate that wages including tips as defined under section 3121a be not less than $1 an hour.

Secondly, I would suggest that employees be permitted to report tip income to employers within 10 days after the close of each quarter. If employees fail to report within that time, the estimate of the employer will be presumed correct for employer and employee social security contributions.

These changes would eliminate, for all practical purposes, reporting by the employee of tip income to the employer. In some cases, of course, where employers significantly missed the mark employees would report but the employer could then adjust the estimate for future withholding of the social security contributions. With these changes penalties of employees for failure to report tip income to employers could be eliminated. With these changes every employee would be guaranteed social security protection on an income equivalent to at least $1 an hour. With these changes I would estimate that we would approach the maximum social security protection available on a practical basis for employees who customarily receive a substantial portion of their income in the form of tips.

I do not see how employers can, in justice, complain about this proposal if these changes are adopted. Tipped employees derive their tip income because of their employment. Because of the practice of tipping, employers pay these employees substantially lower wages than would ordinarily be required to obtain their services. Certainly, then, if coverage of tip income can be worked out on a practical basis employers have little grounds for complaint.

I take the liberty of suggesting that the foregoing might be accomplished by the following amendments to section 9 (see attached).

Thank you, Mr. Chairman.

PROPOSED AMENDMENT TO SECTION 9 OF H.R. 11865 RE COVERAGE OF TIPS UNDER SOCIAL SECURITY PROGRAM

1. Amend section 9(a) (2) by striking the word, "month" and inserting in lieu thereof the word, "quarter".

2. Amend section 9(b) (1) by striking the words, "are included in a written statement furnished to the employer" and inserting in lieu thereof the words, "as computed" and by striking the word, "month" and inserting in lieu thereof the word, "quarter".

3. Amend section 9(b) (3) by striking the word, "month" and inserting in lieu thereof the word, "quarter".

4. Amend section 9(c) (1) by striking the words, “are reported by the employee to the employer" and inserting in lieu thereof the words, "as computed".

5. Amend section 9(c) (2) by striking proposed new section 6053 of the code and inserting in lieu thereof the following new section: "Section 6053—Computing of Tips". Every employer of an employee who, in the course of his employment, receives tips which are wages as defined in section 3121a shall estimate not more than the reasonable tip income of said employee for purposes of withholding social security taxes under section 3102. Said estimate shall not be less than an amount necessary when added to other wages as defined by section 3121a to equal $1 per hour.

Every employee who, in the course of his employment by an employer, receives tips which are wages as defined in section 3121a may furnish to his employer within 10 days after the end of the calendar quarter in which the tips were received, a written statement of all such tips. Said statements shall be furnished under such regulations and in such form and manner as may be prescribed by the Secretary or his delegate and shall be used for purposes of section 3101, 3111, 6051a, and 6652c only to the extent that the tax imposed with respect to such tips by section 3101 can be collected by the employer under section 3102. For purposes of section 3101, 3111, 6051a, and 6652c tips of an employee shall be considered equal to the amount estimated by his employer as provided above unless the employee reports tips to his employer within the period prescribed at the end of the calendar quarter as above provided.

6. Amend section 9 (c) (2) B by striking the word, "Reporting" and inserting in lieu thereof the word, "Computing".

7. Amend section 9(c) (3) by striking it in its entirety.

8. Amend section 9(d) by striking the words, "reported by the employee to the tax payer" and inserting in lieu thereof the word, "computed".

9. Amend section 9(e) by striking the words, "who is furnished by an employee a written statement" and inserting in lieu thereof the words, "or an employee who receives" and by striking the words, "such statement is furnished the total amount of the tips so reported by the employee as received" and inserting in lieu thereof the words, "the tips received by the employee".

STATEMENT OF THE GOVERNMENT EMPLOYES' COUNCIL, AFL-CIO, ON H.R. 11865 (SOCIAL SECURITY AMENDMENTS-COVERAGE FOR FIREMEN)

Mr. Chairman and members of the committee, the Government Employes' Council, with 29 affiliated AFL-CIO unions representing classified, postal, and wage board employees in Federal agencies, desires to urge that the committee delete section 11 from the pending bill.

Amendment No. 1774, offered by Senator Abraham Ribicoff, will accomplish this purpose.

Existing law excludes social security coverage for service of firemen subject to a State or local staff retirement plan.

Section 11 establishes a uniform program for all firemen and policemen. Pension programs for firemen were among the original staff retirement plans in this country. These systems have advanced over a long period of years with recognition of the special conditions firemen and their families encounter. There is little need to emphasize the unique physical dangers and health hazards to which these public employees are exposed daily. As an example, some States have approved legislation recognizing heart conditions of firefighters as prime facie evidence of duty-related injury. In other cases, firemen are permitted to retire between 50 and 55 years of age with a minimum number of years of service because of the constant exposure to injury and even death in carrying out their official duties. In this case OASDI retirement at age 65 or age 62 is not realistic for fire department employees since their work life is curtailed by the hazards of the job.

In 1950, social security was extended to public employees not subject to a State or local retirement plan. Firemen were excluded. And even with the 1954 amendments providing social security coverage under certain conditions for State and local workers having staff retirement benefits, the firefighters' exclusion was continued.

Excellent justification exists for these precedents. Social security is designed as an insurance program to guarantee older workers a minimum standard of living when they can no longer participate in a gainful occupation. Staff retirement programs are developed to meet the special needs of superannuated employees. Their coverage and benefits are based upon salary, length of service, age, and contributions. The worker with social security eligibility only is provided with a minimum subsistence monthly benefit. Individuals who desire a higher standard are expected to supplement this basic income with a staff plan or savings or other means.

Much of the apprehension of firefighters is based upon the threat of social security reducing the retirement special features now in effect in many communities for these public servants, and ultimately the annihilation of these staff plans in favor of the OASDI approach.

In localities where no programs for firemen exist, States and communities now possess the right to provide social security coverage to firefighter personnel. While section 11 authorizes cities to undertake elections to determine the desire of firemen concerning coverage, this apparent advantage is offset by the peril to the existing staff systems.

It may be argued that acceptance of section 11 poses no immediate threat to an individual's equity in a local plan. Our concern is long range. Availability of OASDI coverage could very well lead in the years ahead to attempts by State and local officials to abandon the staff program because of cost.

One method of pursuing the authority in section 11 would be to maintain both the social security and staff retirement systems simultaneously as separate entities. It is known as supplementation. In that case, both the employee and the employer would contribute 3.8 percent of salary to OASDI. The worker and management would continue to maintain the staff plan and to finance it as before. An obvious advantage of this approach is the full benefits of both systems to be reaped by the employee when eligible for them.

However, in many cases, the total cost would be prohibitive to the workers and could very well be to the public department as the employer.

Another approach continues the same contributions by the employee for retirement purposes. This amount is divided into two parts-the money necessary to make the normal social security contribution, with the remainder being allocated to the staff plan. The employee is then permitted to retire at the normal age under the staff arrangement and to receive the original benefits provided by the staff system. However, upon reaching age 65 and receiving social security payments, the fire service's share is reduced by the amount of the social security benefits. This arrangement is titled "Integration."

A version of this plan involves the same procedure outlined under "integration," but requires the employee to pay one-half the cost of social security and to receive in return one-half of OASDI benefits in addition to the normal pension. It would probably necessitate no greater investment by the employee.

But both of these methods could involve considerably greater expense for the community over a number of years. This, in turn, could encourage local government bodies to seek some other less costly way to finance the plan. An attractive alternative from their standpoint would be to gradually embrace social security as the sole means of retirement income.

A fourth plan "coordinates" the social security and staff systems. Entitlement to OASDI benefits is accompanied by a reduction in the annuity paid by the local retirement plan. In this case, however, the State or city makes advance adjustments in contributions and benefits during the employee's working life prior to his receipt of a retirement annuity and social security. The department computes the retirement benefits accruing to an individual employee at age 65 less the amount to be received through OASDI. It then revises the contributions and payments to account for this difference.

These are the methods available to achieve a closer relationship between two systems with completely different objectives. For the local firefighter retirement plan, they spell one result-absorption by the social security plan of the specialized annuity programs tailored to the specific needs of employees and public management.

Certainly there is a need to provide improved financial assurance to American workers when they complete their years of productive work. This principle applies to both private industry and public employees. But for those whose work for Government enterprise involves special consideration, we believe these improvements should occur within their own programs. Even if a longer span of time is needed to accomplish these changes because of the size of the plan and the funds available, it is essential that the independence of such systems be maintained. The desirable aspects of huge social programs should not be permitted to blind us to the necessity for continuing to protect the equities of small groups of citizens. We are convinced that in the case of firemen and their State and local retirement systems fairness dictates that they be preserved. This will enable the employees and local government bodies to continue the progress of their plans on the basis of the special needs of the workers and the ability of both the employer and the employee to finance desired improvements.

For these reasons, Mr. Chairman, we earnestly solicit the assistance of the committee in deleting section 11 from the bill now under consideration.

STATEMENT BY REPRESENTATIVE THOMAS P. GILL ON H.R. 11865

Mr. Chairman, I appreciate the chance to share a few thoughts with you on medical care for the aged. The House bill now before you was passed on a "closed rule," and it was impossible for us to add medical care to the improvements in social security benefits. However, it is the hope of many of us that you will do so in the Senate, and give us a chance to vote for this long overdue program.

Few contest the basic facts. After age 65, 9 out of 10 people are hospitalized at least once; 2 out of 3 more than once. People over 65 use three times as much hospital care as people under 65, and when they are in the hospital they stay twice as long. Hospital costs have gone up from about $9 a day in 1946 to around $36 today. Incomes of persons over 65 tend to be fixed and are often very low; half the couples over 65 have less than $2,800 a year between them, which is below the poverty level; half the single persons over 65 have far less in the vicinity of $1,000 to $1,200 annually.

Only a few months ago the opponents of hospital insurance under social security used to say that the Kerr-Mills medical welfare program met the need. It has become abundantly clear that it does not and will not. Only about threefifths of the States have implemented the Kerr-Mills law in any fashion and in most it is inadequately funded. In many States the beneficiaries under the Kerr-Mills law are largely old cases, formerly corried under old-age assistance. My State of Hawaii is a case in point. We have been cited as one of the States with a better than average Kerr-Mills program, yet less than 2 percent of our people over 65 are receiving benefits. If you disregard the number of cases who were already getting benefits under old-age assistance the percentage will drop to about 1 percent or less. The figures supplied by the State of Hawaii Department of Social Services on June 19, 1964, are as follows: "The percentages of persons over 65 in Hawaii who have actually received and are receiving KerrMills assistance since the law went into effect are shown below by years."

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