Social Security Benefit Enhancements for Women Act of 2002 (H.R. 4069)
CRS Report for Congress
Received through the CRS W eb
Social Security Benefit Enhancements for
Women Act of 2002 (H.R. 4069)
Analys t i n Social Legislation
Domestic Social Policy Division
On May 14, 2002, the House p assed t he Social S ecurity Benefit Enhancements for
Wo men A ct of 2002 (H.R. 4069), as amended, by a vote o f 418-0. H.R. 4069 includes
benefit enhancements targeted to certain divorced spouses and d isabled and e l d e rly
widow(er)s. S peci fically, t he meas ure would: (1) eliminat e t he requirement that
widow(er)s seeking disability benefits must have become disabled within 7 years of t he
worker’s death; (2) eliminate t he 2-year wa iting p eriod for divorced spouse’s b enefits
when the worker h as remarried; and (3) d isre gard months after t he worker’s death i n t he
application of early retirem ent rules fo r p u rposes of determining t he limit on
widow(er)’s b e n e f i t s p ayable o n t he worker’s record. P reliminary estimates b y t he
Congressional Budget Office show that H.R. 4069 would affect over 120,000 persons
and cost $3.3 billion over 1 0 years. The S ocial S ecurity Administration’s Office of the
Chief Act uary es timates t hat t he meas ure would h av e o n l y a negligible effect on the
long-range actuarial balance o f t he Soci al Sec u r i t y t r u s t funds. This report will be
updated as l egislative action o ccurs.
The S ocial S ecurity program provides benefits to retired and disabled workers, t o
their d ependent s , and t o t he survivors o f d eceased workers. In 2000, there were 4 5
million S ocial S ecurity reci pients. Of t hose, 53% were women (compared to 39% men,
8% children); and 81% o f t h e t otal recipient population was age 6 2 o r o lder. Benefit
amounts v aried b y gender. The average benefit was $928 for m en and $696 for women.
For retired workers, the average benefi t was $951 for men, $730 for women; for the
spouses of retired workers, $243 for m en, $431 for women; for disabled workers, $883
for m en, $661 for women; for nondisabled wi dow(er)s, $607 for m en, $812 for women;
and for disabled widow(er)s, $362 for m en, $524 for women.
Soci al Security is the primary source of income for t he elderly (persons age 6 5 and
older). In 2000, 90% of the elderly population h ad income from S o c i a l S e c u rity
(compared t o 29% with private p ensions and 14% with government employee pensions).
For 64% of el derl y reci pi ent s , S oci al S ecuri t y represent ed at l east h al f o f t o t a l i n com e.
Congressional Research Service ˜ The Library of Congress
Fo r 20% of elderly recipients, i t was the onl y s ource of income (Social S ecurity was t he
only s ource of income for 11% of married couples and 26% of nonmarried persons). 1
Social Security prevents many of the elderly from falling i nto poverty. Fo r ex ample,
in 2000, 8.5% of elderly S ocial S ecurity recipients were poor. W ithout Social Security,
48.1% would h ave b een poor. Although t he poverty rate for elderly S ocial S ecurity
recipients is lower t han t hat for the elderly population overall (8.5% compared to 10.2%),
poverty rates for elderly Social Security reci pients vary by gender and marital s tatus. In
2000, t he povert y rat e for marri ed Soci al Security reci pients was 2.8%, compared t o
the rate was 12.3% for m en, 15.0% for women. For never m arried recipients, t he rate was
Thes e s tatistics illustrate the importance of S ocial S ecurity for t he el derly i n general ,
and for wom en i n p art i cul ar. O n average, w om en earn l ower benefi t s t h an m en b ecause
they earn l es s and spend m ore time outside the l abor force. In addition, women t end t o
l i v e l onger t h an m en; are l ess l i k el y t o h ave o t h er sources of ret i rem ent i ncom e; and are
more likely t o b e poor.
On March 20, 2002, Representative S haw i ntroduced H.R. 4069, a b ill design ed to
enhance b enefits for certain divorced spouses and d i s a b l ed and elderly widow(er)s. 3
Although t he benefit changes in H.R. 4069 would b e gender n eutral, t he measure t argets
benefits most often p aid t o women.4 On May 14, 2002, a m anager’s amendment t o H.R.
the m eas ure did not go through t he House W ays and Means S ocial S ecurity Subcommittee
or the full C ommittee).5 The House p assed H.R. 4069, as amended, by a vote o f 418-0.
Preliminary estimates by t he Congressional Budget Office (CBO) s how that the m eas ure
would affect over 120,000 persons and cost $3.3 billion from fiscal years 2003-2012. 6
SSA’s Office of the C hief Actuary estimates t hat t he effect on the l ong-ran ge act u arial
balance o f t he Social Security trust funds woul d b e n egligible (i.e., less than .005 percent
of taxable payroll) based on the intermediate assumptions of the 2001 Social Security
1 “Nonmarried” i ncludes persons who are separated or married but living apart from t heir spouse.
2 Pover t y r a t e s f or t he elderly are based on f amily income. For more information, see: Social
Security Admi nistration ( SSA), Income of the Population 55 or Older, 2000 ; Annual Statistical
Supplement, 2001;andFast Fact s & Fi gures, J une 2001.
3 H.R. 4069 is a bipartisan measure s ponsored by Re presentative Shaw, Chairman of the House
Ways and Means Social Security Subcommittee, and co-spons o r e d b y Representative M atsui,
Ranking Democrat on t he Social Security Subcommittee, along with 38 other M embers.
4 In December 2000, 4,661,540 wome n a nd 37,120 me n r eceive d nondisabled wi dow(er)’s
benefits. Similarly, of the 200,130 persons who r eceived disabled widow(er)’s benefits, 168,590
were widows, 26,750 were surviving divorced wive s, and 4,790 were widowers.
5 Under s uspension of t he rules, floor amendments were not allowed a nd a t wo-t hirds maj ority
vote was r equired f or passage .
6 The estimated cost of H.R. 4069, amended, as passed by the House (i.e., including the tax
provisions incorporated in the manager’s amendment t o H.R. 4069) is $3.3 billion over 10 years.
T he estimated 10-year cost of H.R. 4069 as introduced (i.e., benefit changes only) is $4 billion.
Trustees’ report. The m ajor provisions of H.R. 4069, amended, as passed b y t he House
on May 14, 2002, are d escribed below. 7
Major P rovi sions of H.R. 4069
R e p e a l of 7-Year Restriction on E ligibility for Widow (er)’s Insurance
Benefi ts Based on Disability. Under current law, surviving s pouses ( i ncluding
divorced spouses) m ay be entitled t o widow(er)’s benefits begi nning at age 60. However,
surviving s pouses may b e entitled t o b enefits as early as age 5 0 i f t hey are disabled and
the qualifyi ng disability occu rred (1) before or within 7 years o f t he worker’s deat h; (2)
within 7 years of having been previously entitled t o benefits on the worker’s record as a
surviving s pouse with a child in care; or (3) within 7 years o f h aving b een previously
entitled t o b enefits as a d isabled s urvivi ng spouse t hat ended b ecause the qualifyi ng
disability ended (whichever i s l at er). Benefits for disabled widow(er)s begi nning at age
5 0 w e r e e n acted in 1967 when workers aged 50-59 needed to work for u p t o 7 years i n
order t o qualify for disability benefits on thei r o wn reco rd. The 7-year requirement was
design ed to protect disabled widow(er)s by a llowing them to qualify for benefits if they
lacked the work history needed to qualify for disability benefits on thei r own record.
H.R. 4069 would eliminate t he requirement that surviving s pouses m u st become
disabled within 7 years o f t he worker’s deat h i n o rder to qualify for widow(er)’s benefits
from ages 50-59 (i.e., it would allow d isabled s urviving spouses to q u alify for
widow(er)’s benefits from ages 50-59 regardles s of w hen t he disability occurred). This
provision would apply t o b enef i t s p a yable for months after November 2002. CBO
estimates t hat t his p rovision would affect 26,000 persons.
Exemption from 2 -Year Waiting P eriod for Di vorced Spouse’s Benefits
Upon Other S pouse ’ s Remarriage. Under current law, spouse’s b enefits are
payabl e p rovi ded t hat t he worker i s recei vi ng benefi t s . However, i f t he worker i s el i gi b l e
to receive benefits (but i s n o t r e ceiving them), a d ivorced spouse m ay be eligible for
benefits on the worker’s record, but only i f t he divorce has been final for a t l east 2 years .
This 2-year waiting period i n cas es of divorce was established t o discourage i ndividuals
from s eeking divorce as a way to gain independent entitlement on the worker’s record.
H.R. 4069 would d eem the 2 -year requirement met i f t he worker marries someone
other t han t he former spouse during t he 2-year period following the d ivorce. This would
allow the divorced spouse t o claim benefits on the worker’s record immediately, assuming8
other eligibility requirements are met. Under a conforming a m e ndment, divorced
spouses who qualify for benef its under t he 2-year ex emption would not be affected by the
earnings t est as i t applies t o t he worker (i.e., the d ivorced spouse’s b enefit would not be
affect ed i f t h e w orker h as earni ngs t hat cau se benefits payable o n h is or her record to be
7 On May 17, 2002, Senator Gordon Smith introduced S . 2533 (the Social Security Benefit
Enhancements for Women Act of 2002). S. 2533 contains the s ame provi sions as H.R. 4069 as
introduced on March 20, 2002.
8 T o qualify f o r old-age benefits on a worker’s record, t he divorced spouse must have been
married to the worker f or at least 10 years before t he divorce became f inal; must be at l east age
w i t hhel d ). (S ee t h e “Ex pl anat ory Not es” s ect i o n for a d escri p t i o n o f t he earni ngs t est . )
This provision would apply t o benefits payable for months after November 2002. CBO
es timates t hat t his provision would affect fewer t han 500 persons.
Months Afte r Deceas ed Indivi dual’s Death Disregarded in Applyi ng
Early Retirement Rules w ith Respect to Deceased Individual for Purposes
of Limitation on W i dow (e r)’s Be ne fits . Under cu r r ent law, surviving s pouses
(including divorced spouses) m ay be eligible for widow(er)’s b e n efits begi nning at age
60 (or age 50 if disabled). The widow(er)’s basic b enefit is equal t o 100% of the worker’s
“primary insurance amount.”9 If the widow(er) files for benefits before the NRA, h is or
her b enefits are t hen p ermanently reduced to take into account early retirement. However,
if the worker filed for benefits before the NR A and t he widow(er)’s benefit p ayable on the
worker’s record ex ceeds t he benefi t t he worker was recei vi ng before hi s o r h er deat h, t h e
widow(er)’s benefit i s s ubject to a lim i t under a special provision of the law called the
“widow(er)’s limit provision .” Under t he widow(er)’s limit provision, the w i d o w(er)’s
benefit i s limited t o t he high er of: (1) the b enefit the worker would b e receiving if he or10
she were s till alive and (2) 82.5 % o f t he worker’s PIA. If the worker d ied b efore
reachi n g t he NR A and he or she h ad benefi t s wi t hhel d due t o t h e earni ngs t est , t h e
worker’s benefit i s recomputed to take into account months for which benefits were not
paid for purposes of determining t he limit on the widow(er)’s benefit.11
H.R. 4069 would t reat months of nonpaym ent b etween the worker’s retirement and
attainment of the NRA due to the w orker’s death in the s ame m anner as m onths of
nonpaym ent due to the earnings t est. That is, if a worker elects early retirement and dies
before reaching t he NRA, t h e worker’s benefit would b e recomputed (at t he time the
worker woul d h ave reached t h e NR A) t o ex cl ude t h e m ont h o f d eat h, and al l subsequent
months leading up t o t he worker’s attainment of the NRA, from t he actuarial reduction
for early ret i r em en t. Basing the early retirement reduction i n t he worker’s benefit only
on the number of months the w orker collect ed benefits bet w een hi s o r h er ret i rem ent and
the NRA, rather t han the t otal number of months during t hat period, would rai se the limit
on the widow(er)’s benefit p ayable on the worker’s record. This p rovision would apply
9 T he “primary i nsurance amount” ( PIA) is the basic benefit amount before any adj ustments for
early or delayed r etirement. If an indivi dual f iles f or benefits before the “normal r etirement age”
(NRA — t he age a t which unreduced benefits are f irst payable), his or her benefits are
permanently reduced to take into account the l onger period of be n e f i t r eceipt. Similarly, if an
indivi dual f iles f or benefits after the NRA, his or her benefits are permanently increased to take
into account the shorter period of benefit receipt.
10 For mo r e i n f o r ma tion, see: SSA, Office of Policy, Office of Re search, Eva luation, and
St atistics. The Widow(e r )’s Limit Provision of Social Security by Da vi d A. Weaver. ORES
Working Paper Series, Number 92, J une 2001.
11 If a r ecipient’s benefits are withheld due to the earnings t est ( see t he “Explanatory Notes”
section f or a description of t he earnings t est), his or her benefit is recomputed at the NRA to take
into account months for which benefits were not p a i d ( i . e ., the actuarial reduction f or early
retirement does not apply t o months of nonpayment due to the earnings t est, resulting i n a higher
monthly benefit). If t he recipient dies befor e r eaching t he NRA, the deceased worker’s benefit
is recomputed in the same manner ( at the time of t he worker’s death) to determine t he limit on
the widow(er)’s benefit.
to benefits payable for months after November 2002. CBO estimates t hat t his provision
would affect 96,000 persons.
Offsetting Tax P rovi sions. H.R. 4069, amended, as passed b y t he House,12
contains three o ffs etting tax provisions. One provision would allow i ndividual
t ax p ayers t o ex cl ude from gross i n com e a n y i nt erest p aym ent s recei ved from t he
government on tax overpaym e n t s (i.e., t he interest paym ents would not be subject to
federal i nco m e t a x e s ) . In addition, the i nt erest p aym ent s w oul d not be t reat ed as “t ax -
ex em pt interest” for the purpose of det ermining t he portion of S ocial S ecurity benefits
subject to federal i ncome t ax es. 13 The ex clusion from gross income would apply only i n
cases where t ax overpaym ent s were m ade i n error (i . e., i t woul d not appl y i n cases where
t h e S ecret ary o f t he Treasu r y d et erm i n es t h at a t ax overpaym ent was m ade d el i b erat el y
to take advantage o f t he ex clusion). This p rovision wo u l d a pply t o i nterest p ayments
received after December 31, 2006.
A s econd provision would allow t a x p a ye rs to make a cas h deposit to the Treas ury
whi ch m ay be t reat ed as paym ent for i n com e, e s t a t e , gi ft and cert ai n ex ci se t ax es, not
assessed at t he time of the deposit, to stop the accumulation o f i nte r e s t c h a r g e s on a
potent i a l t a x u n d erpaym ent (for ex ample, i n cases where a p roposed tax d eficiency i s
being d isputed by the t ax payer). The portion o f t he deposit attributable to a disputed tax
i t em woul d earn i nt erest . Tax p ayers woul d be allowed t o withdraw deposits not used for
the p ayment of tax at any time upon written request, unless t he Secret ary d etermines that
collection o f t he tax i s i n j eopardy. (Inter est earned o n withdrawn amounts would not be
eligible for t he ex clusion from gross income provided for under t he first p rovision.) If the
tax p ayer’s position i s u ltimately upheld in a t ax dispute, the t ax payer would b e refunded
the d eposit plus interest ( t h e r efund woul d b e t reat ed as an overpaym ent of t ax ).
Alternativel y, if the t ax payer l oses , t he tax would b e t reated as having been paid (and the
accrual o f i n t e r e s t c harges on the underpayment stopped) at the time the d eposit was
made. This p rovision would apply t o d e posits made after t he date of enactment.
A t hird provision would authorize t he Secret ary of t he Treas ury t o enter into written
agreem ent s wi t h t ax p ayers for partial paym ent of t ax liabilities i n i nst a l lments (rather
than only full paym ent as authoriz ed under current law) if the S ecretary d etermines that
the agreem ent will facilitate collection of t he tax liability. It would require the S ecret ary
to review partial paym e n t i n s t allment agreem ents at leas t once every 2 years. This
provision would apply t o agreements enteredintoonorafterthedateofenactment.
12 S i milar provi sions were included i n H.R. 3991 (the Taxpayer Protection and IR S
Accountability Act of 2002, H. Rept. 107-394), a s a me nded, which was defeated in the House by
a vote of 205-219 on April 10, 2002.
13 Under c urrent law, up to 50% of Social Security benefits are s ubj ect to federal i ncome t axes
if modified adj usted gr oss i ncome ( AGI) ( AGI plus tax-exempt interest) plus one-half of Social
Security benefits exceeds $25,000 f o r a single person or $32,000 for a married couple f iling
j ointly. Up t o 85% of Social Security benefits ar e t axable if modified AGI plus one-half of Social
Security benefits exceeds $34,000 for a single p e r s o n o r $ 44,000 for a married couple f iling
j ointl y. Revenue from t he first tier of benefit taxation i s credited t o t he Social Security trust
funds. Revenue from t he second tier i s credited t o t he Medicare Hospital Insurance trust f und.
The J oint Committee on Tax ation estimates t hat t he tax provisions would res ult i n
a n et revenue increase o f $ 694 million over 1 0 years (fiscal years 2003-2012). (The
provisions would result i n revenue gains during t he first p art o f t he projection p eriod and
revenue losses during t he latter p art.) All revenue effects are assumed t o b e “on-budget”
(i .e., S o ci al S ecuri t y revenues would not be affected).14
Explanatory N otes
Social Security Earnings Test. Under t he earnings t est, benefits are withheld
if the recipient i s b elow the NRA and h as earnings from work above a s pecified amount
($11,280 in 2002). Benefits are withheld by $ 1 for every $2 of earnings above that
amount. The earnings t est n o l onger applies b eginning with the m onth t he r e c i p i e n t
reaches the NRA. During t he year in which a recipient reaches the NRA, a high er annual
ex empt amount applies ($30,000 in 2002), and benefits are withheld by $1 for every $3
of earnings above that amount. The annual ex empt amounts are index ed t o average wage
growt h . T he earni ngs t est appl i es t o t he work e r’s ret i rem ent b enefi t and t o d ependent ’s
and s urvivor’s benefits payable o n t he work er’s record. H owever, b enefi t s for d i vorced
spouses are not withheld if the d ivorce has b een final for at least 2 years.
Re tirement Age Increase. Under t he Social S ecurity Amendments of 1983,the
norm al ret i rem ent age (NR A ) i s b ei ng i n creased gradual l y from 6 5 t o 67. In J anuary
persons age 6 2 i n 2000) through 1943. The NRA will remain 66 for p ersons born i n 1944
through 1954. It will increase again in 2-month i ncrements until it reaches 67 for p ersons
born i n 1960 and l ater. The earliest eligibility age remains 62.
Adjustments for Early Retirement. If a worker files for benefits before the
NRA, his o r h er benefits are p ermanently reduced to take into account the l onger ex pected
peri od of benefi t recei pt . T he adj u st m ent s m ade for earl y ret i rem e n t are “act uari al ” i n
t h at , assum i n g t he i ndi vi dual s urvi ves t o l i fe ex p ect ancy, h e o r s he wi l l recei ve t h e s am e
total l ifetime benefit as if he or she had filed for benefits at the NRA. The majority of
workers el ect earl y ret i rem ent .
14 T he f irst tax provi sion would have only a secondary effect with regard to federal i ncome t axes
paid on Social Security benefits. Over 10 years, the estimated net cost of H.R. 4069, as amended,
is $3.307 billion ( $850 million i n net “on-budget” costs and $2.456 billion i n “off-budget” costs).