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Friday, April 24, 2015

COVERED: Health Bill Promises New Social Security Benefits for College Students and Divorcees

Bob Rosenblatt, Special Correspondent

 

Throughout 2015, the Academy is working with partners to create a platform for dialogue around the history and future of these two vital programs, including this weekly Covered blog series. Covered is written by Bob Rosenblatt, a Senior Fellow at the National Academy of Social Insurance and editor of the website HelpWithAgingLearn more about the Academy’s celebration of the 50th anniversary of Medicare and Medicaid.


Health Bill Promises New Social Security Benefits for College Students and Divorcees

April 24, 1965

By Bob Rosenblatt, Special Correspondent

Washington, DC – Major changes in Social Security benefits are coming in the legislation now moving through Congress, promising extended payments  through age 21 to help the children of deceased or disabled workers go to college and offering benefits for the first time to some ex-spouses.

Recognizing the increasing importance of a college education in the modern economy, Social Security would extend benefits for children of disabled, retired or deceased workers from age 18 to age 21, as long as the child is enrolled in college or vocational school.

"A child who cannot look to a father for support (because the father has died, is disabled or retired), is at a disadvantage in completing his education as compared with the child who can look to his father for support," the House Ways and Means Committee said in its report on the bill passed by the House last  month. "Not only may the child be prevented from going to college by loss of parental support and loss of his benefits; he may even be prevented from finishing high school or going to a vocational school. With many employers requiring more than a high school education as a condition for employment, education beyond the high school level has become almost a necessity in preparing for work," the committee said.

The legislation for the first time would permit divorced persons to collect spousal benefits or the benefits as a survivor. The payments would be available to someone who was married for at least 20 years before the divorce took place, did not remarry, and met certain other requirements in terms of how much support they received from the ex-spouse. These new provisions are important since divorce has increased significantly in the United States since the creation of Social Security 30 years ago.

"These changes would provide protection mainly for women who have spent their lives in marriages that are dissolved when they are far along in years – especially housewives who have not been able to work and earn Social Security protection of their own – from loss of benefit rights through divorce," the Ways and Means report said.

Public attention and debate has been focused on provisions in the legislation providing health care for people over the age of 65, but other proposed benefit expansions reflect major social changes in American society.

The legislative package also includes a seven percent boost in monthly retirement checks for all 20 million people enrolled in Social Security. For the first time, the payment increase would be retroactive, going back to January of this year. House and Senate members agreed last year to hike benefits, but the bill died in conference after House Ways and Means Chairman Wilbur Mills (D-AR), opposed the health care provisions in the package.

After the 1964 election, when the Democrats amassed a big majority in both the House and the Senate, Mills decided the health care coverage, called Medicare, was inevitable; he dropped his opposition to the bill in favor of trying to shape the program. The House approved the bill last month, and passage seems likely in the Senate, which passed the bill in 1964.

The creation of a new Social Security benefit to pay for the hospital costs of those over 65 was prompted by rapid inflation in the cost of medical care. Since other prices are rising generally faster than the incomes of older people, the benefit boost was an easy vote for members of Congress. The last benefit increase was in January, 1959.

"Since that date, there have been changes in wages, prices, and other aspects of the economy," the Ways and Means committee said in its official report on the legislation.  "For the aged, who generally are the most economically disadvantaged group, the combined effect of the 7% increase and the hospital insurance benefits will be to provide a substantial improvement in levels of living," according to the report.

The basic benefit increase and the other Social Security changes for children and divorcees have not been controversial, according to an Administration staff member who has attended discussion of the issues. Only Medicare has generated any debate, he said.

With the boost in benefits, the monthly retirement check would range from $44 to $135.90, compared with the current amount, which ranges from $40 to $127.

Currently, when a child under the age of 18 receives benefits, a payment also goes to the parent caring for that child. This benefit won't be extended to individuals over 21 since the parent "is not required to stay home to care for the child as she may have been when he was younger," according to the committee report.

The report estimated that 295,000 individuals age 18 and older will be eligible for the new benefit, starting with the school year in September. About $195 million will be spent by Social Security in 1966 for the benefit.

These new benefits for certain groups of people already accepted by Congress when last year’s health bill fell short of passage will eventually bring economic benefits to millions in a quiet expansion of the nation's social safety net.

► Read the next post in the COVERED series, "Soaring Health Costs May Give Future Taxpayers a Big Tab for Medicare"
► Directory of COVERED posts
► Learn more about the Academy's celebration of the 50th anniversary of the enactment of Medicare and Medicaid

Posted on April 24, 2015  |  Add your comment
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Little did they know that the benefit for children to attend college would end with President Reagan's 1981 Omnibus Budget Reconciliation Act (OBRA). Or that the bill's legislative history would explain that the poorest children would still be able to get benefits through the AFDC program, but that another provision of the very same law, i.e. OBRA, would prevent that AFDC benefit from being offered.

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