SOCIAL SECURITY

Office of the Chief Actuary

MEMORANDUM
Date:

August 8, 2013

To:

Alice H. Wade, Deputy Chief Actuary

From:

Sven Sinclair, Economist

Dan Nickerson, Actuary

Subject:

Estimated OASDI and HI Financial Effects of a Proposal to Cover Earnings of

Individuals with Selected Non-Immigrant Visas

Refer To:

TCC

The U.S. government grants non-immigrant temporary visas to qualified individuals from other
countries. There are several different non-immigrant visa categories, some permitting individuals
to work and exempt their earnings from Social Security and Medicare coverage.
The proposal would extend Social Security and Medicare coverage to the following categories of
non-immigrant visa holders, unless an existing coverage exclusion precludes coverage (e.g.,
work performed by students for an educational institution that has elected to exclude students
from coverage):

F-1academic students
H-2Atemporary agricultural workers
J-1exchange visitors
M-1vocational or non-academic students
Q-1international cultural exchange visitors
Q-2Irish peace process visitors

For the purpose of this estimate, we assume the proposal would be effective for work performed
on or after January 1, 2014 under these visa categories. For 2014, we estimate that this proposal
would extend coverage to about 290,000 visa holders and the average taxable wage for these visa
holders would be about $12,400. The extra payroll tax from extending coverage would provide
additional income to the combined Old-Age and Survivors Insurance and Disability Insurance
(OASDI) Trust Funds and the Hospital Insurance (HI) Trust Fund. Because most of these visa
holders will ultimately have less than 10 years of coverage, we expect only a small offsetting
effect for benefit payments from this extra coverage. The table below displays the year-by-year
net OASDI savings from the proposal through 2022, as well as the projected increase in
Medicare (Part A: Hospital Insurance) tax revenue:

Calendar year
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022

Net OASDI program savings

(in millions)
$0
425 1
474
503
533
563
590
618
646
674

Increase in Medicare
(HI) Tax Revenue
(in millions)
$0
105
111
118
125
132
139
145
152
159

Total, 2013-2022

5,026

1,186

Table 1, attached, details the OASDI financial effects of this proposal over the 75-year longrange period. The overall effect of this proposal would be to increase (improve) the long-range
(75-year) OASDI actuarial balance by an estimated 0.01 percent of taxable payroll. We base all
estimates on the intermediate assumptions of the 2013 Trustees Reports.

Sven Sinclair

Dan Nickerson

The 2014 values for specific visa category are as follows:

Net OASDI program

Increase in HI
Visa category
Number of workers
Average earnings
savings (millions)
revenues (millions)
H-2A
73,000
$12,400
$106
$26
J-1
205,000
$12,800
$309
$76
M-1
10,000
$2,800
$3
$1
Q-1
2,000
$33,800
$7
$2
We assume no persons would be affected in the Q-2 visa category, and assume no effect from extending coverage to
students on F-1 visa because their employment would be excluded based on other existing coverage exclusions.

Table 1 - OASDI Cost Rate, Income Rate, Annual Balance, and Trust Fund Ratio
Starting in 2014, extend OASDI coverage to immgrants with F-1, H-2A, J-1, M-1, Q-1, and Q-2 Visas.
Proposal

Change from Present Law

Expressed as a percentage of present-law

Year
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
2053
2054
2055
2056
2057
2058
2059
2060
2061
2062
2063
2064
2065
2066
2067
2068
2069
2070
2071
2072
2073
2074
2075
2076
2077
2078
2079
2080
2081
2082
2083
2084
2085
2086
2087
2088

Cost Rate
13.95
14.04
13.97
13.91
13.88
13.91
14.06
14.26
14.44
14.70
14.97
15.23
15.48
15.71
15.93
16.14
16.33
16.49
16.63
16.75
16.86
16.93
16.98
17.01
17.02
17.02
16.99
16.96
16.93
16.89
16.86
16.84
16.83
16.82
16.81
16.79
16.79
16.78
16.79
16.81
16.84
16.87
16.91
16.96
17.00
17.05
17.10
17.14
17.19
17.23
17.27
17.31
17.36
17.40
17.45
17.50
17.54
17.59
17.62
17.66
17.68
17.71
17.72
17.73
17.74
17.74
17.75
17.76
17.78
17.80
17.83
17.87
17.92
17.96
18.02
18.07

Income
Rate
12.69
12.84
12.87
12.89
12.91
12.94
12.96
12.97
13.00
13.03
13.05
13.06
13.08
13.09
13.10
13.12
13.13
13.14
13.15
13.16
13.16
13.17
13.17
13.17
13.18
13.18
13.18
13.18
13.18
13.18
13.18
13.18
13.18
13.18
13.18
13.18
13.18
13.18
13.18
13.18
13.18
13.18
13.19
13.19
13.19
13.20
13.20
13.20
13.20
13.21
13.21
13.21
13.22
13.22
13.22
13.22
13.23
13.23
13.23
13.23
13.23
13.24
13.24
13.24
13.24
13.24
13.24
13.24
13.24
13.24
13.24
13.25
13.25
13.25
13.25
13.26

Annual
Balance
-1.26
-1.20
-1.10
-1.02
-0.97
-0.98
-1.10
-1.28
-1.44
-1.67
-1.92
-2.16
-2.40
-2.62
-2.82
-3.02
-3.20
-3.35
-3.49
-3.60
-3.69
-3.77
-3.81
-3.83
-3.85
-3.84
-3.82
-3.79
-3.75
-3.72
-3.69
-3.67
-3.65
-3.64
-3.63
-3.62
-3.61
-3.61
-3.61
-3.63
-3.65
-3.69
-3.72
-3.77
-3.81
-3.85
-3.90
-3.94
-3.98
-4.02
-4.06
-4.10
-4.14
-4.19
-4.23
-4.27
-4.32
-4.36
-4.39
-4.42
-4.45
-4.47
-4.48
-4.49
-4.50
-4.50
-4.51
-4.52
-4.54
-4.56
-4.59
-4.63
-4.67
-4.71
-4.76
-4.81

Trust Fund
Ratio
1-1-year
330
315
301
286
271
258
244
231
218
204
189
174
158
142
125
108
90
72
52
32
12
----------------------------------------------------------------------------------------------------------------------------------------------------------------------

Summarized Rates: OASDI

Actuarial Year of reserve

Cost Rate
Income Rate
Balance
depletion1
16.60%
13.88%
-2.71%
2033
2013 - 2087
Based on Intermediate Assumptions of the 2013 Trustees Report
Under present law the year of Trust Fund reserve depletion is 2033

Expressed as a percentage of present-law

Cost Rate
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00

Income
Rate
0.00
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01

Annual
Balance
0.00
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01

Summarized Rates: OASDI

Change in
Change in
Change in
Actuarial
Cost rate Income Rate
Balance
0.00%
0.01%
0.01%
Office of the Chief Actuary
Social Security Administration
August 8, 2013