TABLE OF CONTENTS
Sec. 1. Short title and table of contents.
TITLE I—IMPROVEMENTS IN ADMINISTRATIVE DETERMINATIONS
OF DISABILITY ENTITLEMENTS
Sec. 101. Authority for the Secretary of Health and Human Services to assume
from States the disability determination function.
Sec. 102. Conversion to Federal employment of State employees whose disabil-
ity determination function is assumed by Secretary.
Sec. 103. Requirement of fully-insured status of worker for entitlement to
child’s or parent’s insurance benefits.
Sec. 104. Report regarding demonstration projects piloting case management
techniques.
Sec. 105. Effective date.
TITLE II—ESTABLISHMENT OF SOCIAL SECURITY COURT AND
ABOLITION OF APPEALS COUNCIL
Sec. 201. Entitlement to judicial review.
Sec. 202. Social Security Court.
Sec. 203. Abolition of Appeals Council.
Sec. 204. Effective date and transitional rules.
TITLE I—IMPROVEMENTS IN ADMINISTRATIVE
DETERMINATIONS OF DISABILITY ENTI-
TLEMENTS
SEC. 101. AUTHORITY FOR THE SECRETARY OF HEALTH
AND HUMAN SERVICES TO ASSUME FROM
STATES THE DISABILITY DETERMINATION
FUNCTION.
(a) AMENDMENTS TO PROVISION DELEGATING TO
STATES THE DISABILITY DETERMINATION FUNCTION.—
Section 221(a)(1) of the Social Security Act (42 U.S.C.
421(a)(1)) is amended—
(1) by striking clause (A) of the first sentence
and inserting the following: ‘‘(A) the Secretary has
not assumed the disability determination function
from the State under subsection (b)(1), and’’; and
(2) by striking ‘‘makes the finding described in
clause (A)’’ in the second sentence and inserting
‘‘assumes the disability determination function from
the State as described in clause (A)’’.
(b) AUTHORITY OF THE SECRETARY TO ASSUME
FUNCTION.—Section 221(b)(1) of such Act (42 U.S.C.
421(b)(1)) is amended to read as follows:
‘‘(b)(1) The Secretary, in his or her discretion, may
at any time assume the disability determination function
from any State in order to assure the effective, equitable,
and uniform administration of the program. Determina-
tions by the Secretary pursuant to the assumption of such
function under this paragraph shall not be made earlier
than 180 days after the date on which the Secretary noti-
fies the State of his or her intention to assume the func-
tion unless the Secretary and the State agree upon an ear-
lier date.’’.
(c) TREATMENT OF STATE EMPLOYEES AFFECTED
BY ASSUMPTION OF FUNCTION BY THE SECRETARY.—
Section 221(b)(3) of such Act (42 U.S.C. 421(b)(3)) is
amended—
(1) by striking subparagraph (B); and
(2) by striking ‘‘(3)(A) The Secretary’’ and all
that follows down through ‘‘from a State agency’’
and inserting the following:
‘‘(3)(A) In any case where the Secretary notifies a
State of his or her intention to assume the disability deter-
mination function from such State under paragraph (1)
or where a State notifies the Secretary under paragraph
(2) that it no longer wishes to exercise such function, sec-
tion 102 of the Social Security Procedural Improvements
Act of 1993 shall apply with respect to the positions of
persons employed by the State in the disability determina-
tion process under this section, and with respect to the
persons holding those positions, in the manner and to the
extent provided in such section 102; except that in a case
where the notification involved is given by the State under
paragraph (2) the Secretary may elect to apply subpara-
graph (B) of this paragraph instead of such section 102.
‘‘(B) If the notification involved is by a State under
paragraph (2) and the Secretary elects to apply this sub-
paragraph instead of section 102 of the Social Security
Procedural Improvements Act of 1993, the Secretary shall
develop and initiate all appropriate procedures to imple-
ment a plan with respect to the assumption by the Sec-
retary of the disability determination function from the
State’’.
(d) CONFORMING AMENDMENT.—Section 221(g) of
such Act (42 U.S.C. 421(g)) is amended by striking ‘‘or
which has been found by the Secretary’’ and all that fol-
lows down through ‘‘guidelines,’’ and inserting ‘‘or in
which the Secretary has assumed the disability determina-
tion function under subsection (b)(1) or (b)(2),’’.
SEC. 102. CONVERSION TO FEDERAL EMPLOYMENT OF
STATE EMPLOYEES WHOSE DISABILITY DE-
TERMINATION FUNCTION IS ASSUMED BY
SECRETARY.
(a) IN GENERAL.—Except as provided in this section
and in the amendments made by section 101, and notwith-
standing any law, rule, regulation, or decision to the con-
trary, the positions of persons permanently employed by
a State in the disability determination process under sec-
tion 221 of the Social Security Act (42 U.S.C. 421) which
exist on the day the Secretary notifies the State of his
or her intention to assume the disability determination
function from such State under subsection (b)(1) of such
section or the State notifies the Secretary of Health and
Human Services under subsection (b)(2) of such section
that it no longer wishes to exercise such function, which
are continued by the State from the day of such notifica-
tion until the day before the assumption of such function
by the Secretary, and which the Secretary determines are
affected by such assumption, and the persons holding
those positions on that day, shall, on and after the effec-
tive date of such assumption, be considered (unless sub-
section (b)(3) of such section applies) to be positions in
and employees of the Department of Health and Human
Services and employees of the United States to the same
extent as other positions in and employees of such Depart-
ment.
(b) CREDITING OF STATE SERVICE.—
(1) IN GENERAL.—All service of an employee
whose position is converted under subsection (a),
performed for the State by which he or she was em-
ployed on the day before the effective date of such
conversion and otherwise creditable under an em-
ployee retirement system of (or plan sponsored by)
such State, shall be included and credited in the de-
termination of his or her length of service as a Fed-
eral employee for purposes of leave, Federal employ-
ees’ pay, group life and health insurance, severance
pay, tenure, and status.
(2) CREDITING OF LEAVE.—Annual leave (not
in excess of 240 hours), and sick leave, to which an
employee whose position is converted under sub-
section (a) was entitled on the day before the effec-
tive date of such conversion, shall be credited to
such employee in his or her new position.
(c) RETIREMENT.—
(1) IN GENERAL.—Except as provided in sub-
section (d)(1), every person whose position is con-
verted under subsection (a) shall be automatically
covered by chapter 84 of title 5, United States Code,
beginning on the effective date of such conversion.
(2) CREDITING OF STATE SERVICE.—
(A) IN
GENERAL.—Subject to subpara-
graph (B), service of any person whose position
is converted under subsection (a), performed for
the State by which such employee was employed
on the day before the effective date of the con-
version and otherwise creditable under an em-
ployee retirement system of (or plan sponsored
by) such State, shall be considered ‘‘creditable
service’’ for purposes of the Federal Employees’
Retirement System, in accordance with section
8411(b)(5) of title 5, United States Code.
(B) ANY
STATE
RETIREMENT
REFUND
MUST BE PAID INTO THE CIVIL SERVICE RE-
TIREMENT AND DISABILITY FUND.—In the case
of any person who has made contributions to an
employee retirement system of (or plan spon-
sored by) the State and who under applicable
State law would be entitled upon the conversion
to request and receive a refund of such con-
tributions, subparagraph (A) shall not apply
unless (under arrangements satisfactory to the
Director of the Office of Personnel Manage-
ment) such person requests and receives such
refund and pays it into the Civil Service Retire-
ment and Disability Fund or the State trans-
fers the full amount thereof directly to such
Fund. The Director may enter into such ar-
rangements as may be necessary to carry out
this subparagraph with respect to any person
who, with the consent of the State concerned,
is allowed to remain covered by a State retire-
ment system (or plan) after the conversion of
such person’s position under subsection (a).
(3) ELECTION TO CONTRIBUTE TO THE THRIFT
SAVINGS FUND.—
(A) IN
GENERAL.—Any person who be-
comes subject to chapter 84 of title 5, United
States Code, under paragraph (1) shall, under
regulations prescribed by the Executive Direc-
tor of the Federal Retirement Thrift Invest-
ment Board, be eligible to contribute to the
Thrift Savings Fund beginning not later than 6
months after so becoming subject to such chap-
ter.
(B) TERMS AND CONDITIONS OF PARTICI-
PATION.—The terms and conditions governing a
person’s participation in the Thrift Savings
Plan pursuant to this paragraph shall be the
same as those applicable to any other employee
of the Department of Health and Human Serv-
ices under chapter 84 of title 5, United States
Code. Nothing in the preceding sentence shall
be considered to authorize any Government con-
tributions under section 8432(c) of such title
for any period before the period in which the
person first becomes eligible to begin contribut-
ing to the Thrift Savings Fund.
(d) CONTINUED COVERAGE UNDER STATE RETIRE-
MENT ARRANGEMENTS
IN LIEU
OF FEDERAL COV-
ERAGE.—
(1) 
ELECTION.—Notwithstanding 
subsection
(a), a person whose position is converted under such
subsection, and who on the day before the effective
date of such conversion has attained age 50 and has
performed at least 5 years of service creditable
under an employee retirement system of (or plan
sponsored by) the State concerned, may elect, not
later than the effective date of such conversion, to
be excluded from the application of subsection (c)
and, with the consent of the State, to remain cov-
ered by the employee retirement system of (or plan
sponsored by) the State.
(2) AUTHORITY
FOR
FEDERAL
PAYMENT
OF
EMPLOYER CONTRIBUTIONS FOR PERSONS ELECTING
TO
REMAIN
COVERED
BY
A
STATE
SYSTEM
OR
PLAN.—In the case of any person who files a valid
election under paragraph (1) to remain covered by
an employee retirement system of (or plan sponsored
by) a State, the United States may pay the amount
of the employer’s contributions to that system (or
plan) that become due for periods beginning on or
after the effective date of the conversion under this
title. However, such payment by the United States
may not exceed the amount which the employing
agency would otherwise contribute on behalf of the
person to the Civil Service Retirement and Disability
Fund under section 8334(a) of title 5, United States
Code. Notwithstanding any other provision of law,
service covered by a valid election filed by any per-
son under paragraph (1) shall not be credited or
taken into account in determining such person’s eli-
gibility for (or the amount of) any rights, payments,
benefits, or privileges to which retired civilian em-
ployees of the United States may be entitled by rea-
son of Federal civilian service (other than under the
Social Security Act, if applicable).
(e) ASSIGNMENT OF FEDERAL PAY RATES.—The
Secretary of Health and Human Services shall fix the rate
of basic pay of positions converted under subsection (a)
in accordance with the General Schedule set forth in sec-
tion 5332, or under the appropriate prevailing rate sched-
ule in accordance with section 5341, of title 5, United
States Code, as applicable (or, for any position classified
above GS–15 pursuant to section 5108 of such title, in
accordance with section 5376 of such title). In fixing such
rate—
(1) if the person is receiving a rate of basic pay
which is less than the minimum rate of the appro-
priate grade of the General Schedule, or which is
less than the minimum rate of the appropriate grade
or compensation level of the appropriate prevailing
rate schedule, as applicable, in which his or her posi-
tion is placed (or, in the case of a person whose po-
sition is classified above GS–15, less than the mini-
mum rate required under section 5376(b)(1)(A) of
such title), such person’s basic pay shall be in-
creased to that minimum rate;
(2) if the person is receiving a rate of basic pay
which is equal to a rate of the appropriate grade or
pay level under the appropriate prevailing rate
schedule, as applicable, in which his or her position
is placed, such person shall receive basic pay at that
rate of the General Schedule, or at that rate under
the prevailing rate schedule, as applicable;
(3) if the person is receiving a rate of basic pay
which is between two rates of the appropriate grade
of the General Schedule, or which is between two
rates of the appropriate grade or pay level under the
appropriate prevailing rate schedule, as applicable,
in which his or her position is placed, such person
shall receive basic pay at the higher of those two
rates under the General Schedule or appropriate
prevailing rate schedule, as applicable; and
(4) if the person is receiving a rate of basic pay
which is in excess of the maximum rate of the ap-
propriate grade of the General Schedule, or which is
in excess of the maximum rate of the appropriate
grade or pay level of the appropriate prevailing rate
schedule, as applicable, in which his or her position
is placed (or, in the case of a person whose position
is classified above GS–15, in excess of the maximum
rate allowable under section 5376(b)(1)(B) of such
title), such person shall continue to receive basic pay
without change in rate until—
(A) he or she leaves that position, or
(B) he or she is entitled to receive basic
pay at a higher rate,
but, when any such position becomes vacant, the
rate of basic pay of any subsequent appointee there-
to shall be fixed in the manner provided by applica-
ble law and regulation.
(f) CONVERSION NOT TREATED AS TRANSFER OR
PROMOTION.—The conversion of positions and employees
to the appropriate grades of the General Schedule set
forth in section 5332 of title 5, United States Code, and
the initial adjustment of rates of basic pay of those posi-
tions and persons provided for by this section, shall not
be considered to be transfers or promotions within the
meaning of section 5334(b) of such title 5 and the regula-
tions issued thereunder.
(g) CREDITING OF EARNED PROSPECTIVE PAY IN-
CREASE.—Each person performing service for a State on
the effective date of this title whose position is converted
under this section to the General Schedule set forth in
section 5332 of title 5, United States Code, or to the ap-
propriate prevailing rate schedule, as applicable, and who
prior to the initial adjustment of his or her rate of basic
pay under subsection (e) has earned, but has not been
credited with, an increase in that rate, shall be granted
credit for such increase before his or her rate of basic pay
is initially adjusted under that subsection.
(h) CREDITING OF SATISFACTORY SERVICE.—Each
person performing service for a State on the effective date
of this title whose position is converted under this section
to the General Schedule set forth in section 5332 of title
5, United States Code, or to the appropriate prevailing
rate schedule, as applicable, shall be granted credit, for
purposes of his or her first step increase under the General
Schedule or prevailing rate schedule, for all satisfactory
service performed since his or her last increase in pay
prior to the initial adjustment of his or her rate of basic
pay under subsection (e).
(i) TREATMENT OF CONVERSION PAY INCREASE IN
RELATION TO GENERAL SCHEDULE STEP INCREASES.—
An increase in rate of basic pay by reason of the enact-
ment of subsection (e) shall not be considered to be an
equivalent increase with respect to step increases for per-
sons whose positions are converted to the General Sched-
ule set forth in section 5332 of title 5, United States Code,
or the appropriate prevailing rate schedule, under author-
ity of this section.
(j) TRANSFERS TO THE CIVIL SERVICE RETIREMENT
AND DISABILITY FUND.—
(1) TRANSFERS.—There shall be transferred
periodically to the Civil Service Retirement and Dis-
ability Fund in accordance with paragraph (2), from
the Federal Old-Age and Survivors Insurance Trust
Fund, the Federal Disability Insurance Trust Fund,
and the general fund in the Treasury, such sums as
the Director of the Office of Personnel Management
deems necessary for any fiscal year and so certifies
to the Managing Trustee of the Trust Funds, on ac-
count of—
(A) any annuities or survivor annuities
which are paid or are to be paid during such
fiscal year from such Retirement and Disability
Fund under subchapter II, IV, or V of chapter
84 of title 5 of the United States Code and
which are payable, or the amount of which is
increased, by reason of the inclusion and credit-
ing (for Federal retirement or disability pur-
poses) of State service under subsection (c)
(and the amendments made by subsection (k)),
(B) the additional administrative expenses
resulting or expected to result therefrom, and
(C) any loss of interest to such Retirement
and Disability Fund resulting from the pay-
ment of such annuities,
in order to place such Retirement and Disability
Fund in the same position at the end of such fiscal
year as the position in which it would have been if
such subsection (c) (and the amendments made by
subsection (k)) had not been enacted. In carrying
out the preceding provisions of this paragraph, any
amounts paid into such Retirement and Disability
Fund under subsection (c)(2)(B) shall be taken into
account.
(2) SOURCE DISTRIBUTION OF TRANSFERRED
FUNDS.—The sums required to be transferred to the
Civil Service Retirement and Disability Fund under
paragraph (1) for any fiscal year shall be taken—
(A) from the Federal Old-Age and Survi-
vors Insurance Trust Fund to the extent that
(as determined by the Secretary of Health and
Human Services and so certified to the Manag-
ing Trustee of the Trust Fund) the claims con-
sidered in the exercise of the disability deter-
mination function during that fiscal year by the
Secretary (pursuant to his or her assumption of
such function from the various States under
section 221(b)(1) of the Social Security Act) in-
volve benefits which are or would be payable
from that Fund;
(B) from the Federal Disability Insurance
Trust Fund to the extent that (as so deter-
mined and so certified to the Managing Trustee
of the Trust Fund) the claims considered in the
exercise of the disability determination function
during that fiscal year by the Secretary (pursu-
ant to his or her assumption of such function
from the various States under such section
221(b)(1)) involve benefits which are or would
be payable from that Fund; and
(C) from funds appropriated from the gen-
eral fund in the Treasury (and the appropria-
tion of such funds is hereby authorized) to the
extent that (as so determined and so certified
to the Secretary of the Treasury) the claims
considered in the exercise of the disability de-
termination function during that fiscal year by
the Secretary of Health and Human Services
(pursuant to his or her assumption of such
function from the various States under such
section 221(b)(1)) involve benefits which are or
would be payable under title XVI of such Act.
(k) AMENDMENTS TO FEDERAL EMPLOYEES’ RE-
TIREMENT PROVISIONS
IN CHAPTER 84 OF TITLE 5,
UNITED STATES CODE.—
(1) DEFINITION
OF
CREDITABLE
SERVICE.—
Section 8411(b) of title 5, United States Code, is
amended—
(A) by striking ‘‘and’’ at the end of para-
graph (3);
(B) by striking the period at the end of
paragraph (4) and inserting ‘‘; and’’; and
(C) by inserting after paragraph (4) the
following new paragraph:
‘‘(5) for an individual who becomes an employee
pursuant to section 102(c)(1) of the Social Security
Procedural Improvements Act of 1993, service per-
formed for the State by which the individual was
employed on the day before the effective date of the
conversion of the individual’s position under section
102(a) of such Act (to the extent that such service
was performed before the effective date of the con-
version), subject to section 102(c)(2)(B) of such Act,
and only if that service is or would (but for the So-
cial Security Procedural Improvements Act of 1993,
and disregarding any refund described in section
102(c)(2)(B) of such Act) be creditable under an
employee retirement system of (or plan sponsored
by) such State.’’.
(2) SERVICE FOR WHICH DEPOSITS NOT RE-
QUIRED.—Section 8422 of title 5, United States
Code, is amended by adding at the end the follow-
ing:
‘‘(f) Except as provided in section 102(c)(2)(B) of the
Social Security Procedural Improvements Act of 1993, de-
posit may not be required for any service described in sec-
tion 8411(b)(5) of this title.’’.
(3) ADJUSTMENT
OF
ANNUITY
TO
ACCOUNT
FOR STATE RETIREMENT BENEFITS.—
(A) IN GENERAL.—Title 5, United States
Code, is amended by inserting after section
8470 the following new section:
‘‘§ 8470a. Offset relating to certain State retirement
benefits
‘‘(a)(1) Subject to paragraph (2), in computing an
annuity under subchapter II or V of this chapter based
in whole or in part on an individual’s service described
in section 8411(b)(5) of this title, the amount of the annu-
ity (as otherwise so computed) shall be reduced by an
amount equal to the amount of any retirement benefits
payable by a State to or with respect to such individual
on the basis of that service.
‘‘(2) In no event shall the application of paragraph
(1) result in the reduction of an annuity by an amount
greater than that portion of the annuity which is attrib-
utable to service described in section 8411(b)(5).
‘‘(b) Any survivor annuity under subchapter IV of
this chapter which is computed based on the annuity of
an individual which is subject to reduction under sub-
section (a) of this section shall be computed based on the
annuity of such individual after such reduction.
‘‘(c) The Office of Personnel Management shall pre-
scribe such regulations as may be necessary to carry out
this section.’’.
(B) CHAPTER ANALYSIS.—The analysis for
chapter 84 of title 5, United States Code, is
amended by inserting after the item relating to
section 8470 the following new item:
‘‘8470a. Offset relating to certain State retirement benefits.’’.
(l) AMENDMENTS TO THE SOCIAL SECURITY ACT
AND THE INTERNAL REVENUE CODE OF 1986.—
(1) SERVICE TREATED AS EMPLOYMENT UNDER
TITLE II OF THE SOCIAL SECURITY ACT.—Section
210(a)(5) of the Social Security Act (42 U.S.C.
410(a)(5)) is amended by adding at the end the fol-
lowing:
‘‘and except that, in the case of an individual serving
in a position as of the day before the effective date
of a conversion of such position under section 102(a)
of the Social Security Procedural Improvements Act