Statement by Lawrence H. Thompson,
Principal Deputy Commissioner of Social Security,
before the House Committee on Ways and Means,
Subcommittee on Oversight

June 22, 1995

Madame Chairman and Members of the Subcommittee:

I am pleased to be here today to discuss the role of the Social Security Administration (SSA) under the Coal Industry Retiree Health Benefit Act of 1992 (Coal Act). Let me begin by briefly reviewing the requirements of the law and the responsibilities which were assigned to SSA. Then, I will discuss SSA's progress in carrying out these responsibilities.

Requirements of the Law

The Coal Act merged the 1950 and 1974 benefit plans of the United Mine Workers of America (UMWA) into a new "Combined Fund," administered by a board of trustees as a private tax-exempt employee benefit plan. This new Fund is designed to provide lifetime health benefits (and death benefits) for beneficiaries of the old plans--retired miners and their dependents or survivors. Benefits are financed from funds transferred from UMWA pension plans, premiums paid by coal operators, and transfers of amounts from the Abandoned Mine Land Reclamation fund.

Under the law, coal operators pay premiums for all beneficiaries who are determined to be their responsibility. The premiums are established by formulas in the law. The law provides for them to pay a pro rata share of the premium cost for beneficiaries for whom no assignment of responsibility can be made (unassigned beneficiaries). However, because the Fund had adequate financing for the two years ending September 30, 1995, the coal operators did not have to pay premiums for unassigned beneficiaries for those years. With the plan year beginning October 1, 1995, these premiums will be transferred to the Fund by the Department of the Interior out of the Surface Mining Control and Reclamation Trust Fund.

SSA Responsibilities

SSA was assigned three responsibilities under the Coal Act:

• To calculate the amount of the health benefit premium for each beneficiary;
• To assign each miner to a coal operator who will be responsible for the health {and death) benefit premiums for that miner and any beneficiaries eligible because of their relationship to the miner, and notify the operator of that assignment; and
• To decide requests by the coal operators for review of assignments.

Let me now briefly discuss each of these responsibilities of that employment, and the date the wage agreement was signed by the operator and the UMWA.

More specifically, the law states that a miner must be assigned to a coal operator according to the following order of priority:

• To the last active signatory operator (as defined previously) for whom the miner worked at least 2 years under a UMWA agreement (or if an inactive signatory, to its related company, if any) provided that the operator is also a 1978 signatory.
• To the last active signatory operator for whom the miner worked under a UMWA agreement (or if an inactive signatory, to an active related company, if any) provided the operator is also a 1978 signatory.
• To the active signatory operator of any agreement for whom the miner worked the longest under a UMWA agreement (or if an inactive signatory, to an active related company) in the period prior to 1978.
• If no assignment can be made under the above criteria, the miner is treated as "unassigned." This means that, because responsibility for the premium cannot be assigned to a particular signatory operator, the miner is assigned to a pool, for which each assigned operator pays a pro rata share of the premiums.

Before we could even begin the assignment process, we had to develop lists of assignable coal operators. These lists were developed by SSA using information which was provided to us by the Bituminous Coal Operators Association and the UMWA, SSA employer records, information provided by operators in court suits and testimony in those suits, and other available sources of information on the coal mining industry, such as the Keystone Manual. It was very difficult to develop an accurate list of coal operators because most sources of information on companies did not include the employer identification number which SSA records use to differentiate companies with similar (often identical) names. We used as much information as was available, such as similar addresses, but still had many companies erroneously included in the information provided by the UMWA. In fact, we continue to update the lists throughout the assignment process and the review process as we learn more about the companies.

In order to make an assignment using the criteria I described above, we must perform two separate operations: searching Social Security earnings records to reconstruct a miner's individual employment history; and matching that history

SSA spent $8 million of the supplemental appropriation in Fiscal Year 1993, and carried over $2 million into Fiscal Year 1994. SSA spent another $1.3 million of the supplemental in Fiscal Year 1994, and carried over $0.7 million into Fiscal Year 1995. If SSA receives requests for reviews of subsequent assignments at a rate comparable to the rate of requests for review of the initial assignments, we estimate the cost could increase by as much as $10 million. We expect this amount to be spent over the Fiscal Year 1995-1996 period. Part of this work will be funded through the remaining supplemental appropriation, and the balance from the administrative expense account, with subsequent reimbursement from general revenues.

Conclusion

In conclusion, Madame Chairman, despite being given a difficult and complex task, SSA has carried out all of its responsibilities under the Coal Act concerning the calculation of premiums and the initial assignment of miners to operators. We continue the process of adjusting the status of the assigned miners as companies bring out new facts about corporate relationships and are processing the remaining requests for review as quickly as we can. I would be happy to answer any questions you may have.