Notch Fairness Act of 1996

Notch Fairness Act of 1996 - Amends title II (Old Age, Survivors and Disability Insurance) (OASDI) of the Social Security Act to revise the formula for the computation of minimum old age insurance benefits for individuals who reached age 65 in or after 1979 and to whom applies the 15-year transition period for the changes in benefit computation rules enacted in the Social Security Amendments of 1977.

Sets forth a schedule of additional benefit increases for such beneficiaries (and related beneficiaries), with percentages declining from 55 percent to five percent and keyed to the year an individual became eligible for such benefits between 1979 and 1988.

Requires actual dependency of a stepchild in order to receive a child's insurance benefit under OASDI. Repeals the benefit eligibility of a stepchild living with the stepparent but not dependent on the stepparent for at least half of his or her support.

Terminates a child's insurance benefit based upon the work income of a stepparent six months after the month in which the Commissioner of Social Security receives formal notification of the divorce of such stepparent from the natural parent of the child.

Prohibits payment of OASDI disability benefits if alcoholism or drug addiction would be a contributing factor material to the Commissioner's determination that such individual is disabled. Requires the payment of disability benefits to a representative payee if the Commissioner determines that a disabled individual also has an alcoholism or drug addition condition that prevents the individual from managing such benefits. Directs the Commissioner to refer an individual with such a condition to the appropriate State agency administering the plan for substance abuse treatment services under the Public Health Service Act. Amends title XVI (Supplemental Security Income) (SSI) of the Social Security Act to make the same requirements with respect to SSI beneficiaries.

Appropriates funds for FY 1997 and 1998 for supplemental funding of State and tribal alcohol and substance abuse treatment programs under the Public Health Service Act. Requires State or tribal governments receiving such funds to consider as a priority in their expenditure those activities relating to the treatment of the abuse of alcohol and other drugs.